2011 ANNUAL REPORT A CENTENARY LINE. A SAFE FUTURE.

Transcription

1 2011 ANNUAL REPORT A CENTENARY LINE. A SAFE FUTURE.

2 Contents 2 OYAK in Brief 3 OYAK Group 4 History 6 Our Mission, Our Vision, Our Values 7 Highlights 8 Chairman s Message 10 Board of Directors and Board of Auditors 12 CEO s Message 15 Executive Management 16 OYAK and Group Companies in Developments in Member Services 42 Independent Auditors Report and Financial Statements 46 OYAK Ordu Yardımlaşma Kurumu Balance Sheet as at 31 December Assets 47 OYAK Ordu Yardımlaşma Kurumu Balance Sheet as at 31 December Liabilities 48 OYAK Ordu Yardımlaşma Kurumu Statements of Income for the Year Ended 31 December OYAK Group Companies

3 OYAK (Armed Forces Pension Fund), a unique and successful model for Turkey, has celebrated its 50 th year. Second Pillar Occupational Pension Funds is not a well-known concept in Turkey, but they have been successfully introduced in many developed countries around the world. These funds provide several benefits to their members during their careers and in their retirement, supplementing their main pension program. Various initiatives for starting such funds have been introduced in Turkey since the early 1900 s, but amongst them only OYAK has been successful and has come to the present day. OYAK has been an observer member of the European Federation for Retirement Provision since As a successful implementer of today s private pension system, OYAK has been one of our Republic s most valuable and financially strong organizations over the last 50 years, as well as a model institution in many aspects, which it is determined to maintain. Annual Report 2011 OYAK 1

4 OYAK in Brief What OYAK is not? It is not a part of the government s social security system. It is not a part of the Turkish Armed Forces. It is not an institution that receives aid or subsidies from the government and/or any agency. It is not a commercial institution that participates in defense industry activities. It is not an institution that does not pay taxes. It is not a corporation or limited company. It does not have capital and issued shares. Hence, neither the government nor personal investors have had OYAK shares. What is OYAK? OYAK is a second pillar occupational pension fund, which was founded to provide additional benefits to its members such as pensions, death and disablement benefits - in addition to the social security benefits offered by the government to the Turkish citizens - through using only the resources provided by its members. Initiatives like OYAK are frequently observed in countries with developed economies and advanced democracies. OYAK has been an observer member of the European Federation for Retirement Provision since OYAK is a legal entity which manages the long-term savings that only comprise of the premiums paid to OYAK by its members and the return generated by investing such premiums. OYAK has no separate money or any assets of its own legal entity. OYAK, as a trustee, manages all these savings within the framework of such principles as profitability, efficiency and corporate investment. OYAK transfers the profit it generates through managing its members savings to member accounts and keeps them in accounts until the dates of its members retirement. For this reason, all OYAK assets are registered to its members at all times. OYAK not only provides pension, death and disablement benefits to its members in line with legislation, but also various services such as housing and lending. OYAK, as per the Law no. 205, is a legal entity, subject to the provisions of the private law and is autonomous both administratively and financially. OYAK members include the members of the Turkish Armed Forces, members of the Gendarmerie General Command and, as set out in the Law, employees including civilians seeking to participate voluntarily. OYAK is a taxpayer that pays a variety of taxes, in contrast with unsubstantiated claims. OYAK: An exemplary model of sustainability Founded in 1961, OYAK is Turkey s first and largest, non-state, occupational pension fund. OYAK, a financially and administratively autonomous corporate entity, operates under Law 205, which it was founded with. OYAK operates as a pension fund manager and as a private equity investor and exploits its assets in financial and subsidiary investments, and aims primarily to achieve efficiency and profitability in all of its investments. OYAK is taking great pains to prepare a safer future for its members, which are now nearly 270,000. Under the service model it has designed, OYAK aims to provide its members with the highest possible return and to offer them services with high added value. Aiming to ensure the satisfaction, prosperity and safety of its members in its operations, OYAK reflects technology and modern management practices to its services in the most effective manner and goes to great lengths to create a better life for its members, both for now and for the future. OYAK stands by its members at every stage of their lives. OYAK is a life insurer in one sense, based on the services it offers its members. Offering a variety of loan products to cover its members needs and expectations emerging at various stages of life, OYAK also works as a financial institution. 2 Annual Report 2011 OYAK

5 History OYAK Group Providing added value to the Turkish economy in a continuous and growing manner Employing about 29,000 people, the OYAK Group includes nearly 60 companies operating in a range of branches such as industry, finance and services. The OYAK Group of companies has continuously and increasingly provided added value to the Turkish economy with their total sales, exports, productions and the taxes which they pay. Subsidiaries of the OYAK Group in the industry branch are the leading corporations of their sectors, such as the iron and steel, energy, cement production and automotive. These corporations own some of our country s largest facilities. OYAK Group s other predominant field of activity is the services sector, in which the Group holds many subsidiaries operating in branches such as construction, foreign trade, logistics, and technology. According to the combined financial results for the end of 2011, total sales of the OYAK Group of companies hit TRY 29.2 billion, while their assets reached TRY 32.1 billion. IRON & STEEL PRODUCTS ATAER ERDEMİR (Iron and Steel Production) İSDEMİR (Iron and Steel Production) CEMENT & CONCRETE Adana Çimento (Cement) OYAK Beton (Ready-mix Concrete) Adana Çimento Free Port, TRNC AUTOMOTIVE & LOGISTICS OYAK Renault (Automotive production) MAİS (Automotive distribution) OMSAN (Logistics) ERMADEN (Mining) ERENCO (Engineering & Consulting) ERDEMİR Lojistik (Logistics) Adana Çimento San. ve Tic. Ltd., TRNC Bolu Çimento (Cement) Ünye Çimento (Cement) OMSAN Logistique SARL, France OMSAN Lojistik EOOD, Bulgaria OMSAN Lojistik OOO, Russia ERSEM (Steel Service Center) ERDEMİR Romania ERGAZ Ünye Cem SRL, Romania Mardin Çimento (Cement) Aslan Çimento (Cement) BİRTAŞ OMSAN Logistica SRL, Romania OMSAN Denizcilik A.Ş. (Shipping) OMSAN Havacılık A.Ş. (Aviation) OMFESA Logistics SA, Spain Marmara Madencilik Aslan Beton (Ready-mix Concrete) AS-SAN İnşaat OYKA Kağıt (Craft Paper and Sacks) BİRÇİM ENERGY İSKEN (Power Plant) AYAS Enerji (Power Plant-Project) OYAK Enerji (Wholesaling) FINANCIAL SERVICES OYAK Anker Bank (Germany) VfG GmbH OYAK Yatırım (Securities) OYAK Yatırım Ortaklığı ORFİN Finansman (Automotive Financing) ANCILLARY HOLDING-OTHER OYAK İnşaat (Construction) HEKTAŞ (Agrochemicals, Pharmaceuticals) TAKİMSAN TUKAŞ (Food Processing) Tam Gıda (Biscuits) Eti Pazarlama (Marketing) OYTAŞ (Trade) Vize Agrega Asfalt Madencilik OYAK Güvenlik (Security Services) OYAK Teknoloji (Technology Services) OYAK Pazarlama (Services) OYAK Telekomünikasyon OYAK Konut (Housing) OYAK Girişim (Consultancy) Annual Report 2011 OYAK 3

6 OYAK was established on March 1 st, 1961 with the participation of about 65,000 members, in accordance with Law no. 205, to provide additional benefits for its members against any social and physical risk that they may encounter. OYAK entered a 1-year private partnership with Verdi Ticaret Ltd. (automotive sector). OYAK entered a 1-year private partnership with İbrahim Ethem Kimya Evi T.A.Ş. (pharmaceuticals production) OYAK made its first equity investment in Goodyear Lastikleri T.A.Ş., with a 7.41% stake in the company OYAK terminated its private partnership with Verdi Ticaret Ltd. after extending it for one more year. OYAK terminated its private partnership with İbrahim Ethem Kimya Evi T.A.Ş. after extending it for one more year. OYAK entered a 1-year private partnership with Mustafa Tumba (private partnership). OYAK bought a 25% stake in HEKTAŞ Ticaret T.A.Ş., the agro-chemicals company. OYAK bought a 93.55% stake in Türk Otomotiv Endüstrileri T.A.Ş. (automotive sector). OYAK entered the cement sector and bought a 52.38% stake in Çukurova Çimento Sanayi T.A.Ş. later named as Adana Çimento (production and sale of clinker and cement). OYAK undertook an equity investment in Grapette Amerikan Patentli Sodalı İçkiler Sanayii A.Ş., (soft drinks industry) with a 10% stake in the company OYAK terminated its private partnership with Mustafa Tumba. OYAK undertook an equity investment in Türkiye Petrolleri A.O. (fuel industry) with a 7.67% stake in the company. OYAK undertook an equity investment in Motorlu Araçlar Ticaret A.Ş. (automotive sector) with an 80% stake in the company OYAK undertook an equity investment in İleri Kimya Sanayii A.Ş., (cologne production) with a 0.1% stake in the company. OYAK undertook an equity investment in Turgutlu Konservecilik A.Ş., (food-tomato paste production) with a 93.9% stake in the company. OYAK s stake in the company rose to 96.6% by the end of the year. OYAK undertook an equity investment in OYAK Sigorta A.Ş. (insurance sector) during its establishment, with a 95.6% stake in the company. The company became operational in OYAK undertook an equity investment in Motorlu Araçlar İmal ve Satış A.Ş. (sale and after-sale services for Renault motor vehicles) during its establishment, with a 97.5% stake in the company, which was initially founded as a limited company (OYAK Group held 100% of the company) Founded as a limited company, MAİS was restructured as a joint-stock company OYAK undertook an equity investment in OYAK Renault Otomobil Fabrikaları A.Ş. (manufacture and export of Renault branded passenger cars and their mechanical parts) during its establishment, with a 42% stake in the company (OYAK Group held 43% of the shares in the company) OYAK terminated its investment in Grapette Amerikan Patentli Sodalı İçkiler Sanayi A.Ş. OYAK terminated its investment in İleri Kimya Sanayi A.Ş OYAK entered an equity investment in OYAK Yatırım ve Holding A.Ş. (later restructured as OYTAŞ) with a 100% stake in the establishment of the company OYAK undertook an equity investment in Askeri Elektronik Sanayi A.Ş. (defense industry) with a 15% stake in the company OYAK made an equity investment in OYAK Kutlutaş Konut İnşaat Sanayii ve Ticaret A.Ş. (construction sector) with a 24.2% stake in the company (OYAK Group held 40% of the company). The company was renamed as OYAK Kutlutaş Konut Holding A.Ş. in OYAK undertook an equity investment in Ağır Döküm ve Otomotiv San. Tic. A.Ş. (casting and automotive) with an 80% stake in the establishment of the company (OYAK Group held 100% of the company). OYAK undertook an equity investment in OMSAN Otomotiv Mamulleri Sanayi T.A.Ş. (firstly automotive sector and then logistics) with a 20% stake in the establishment of the company (OYAK Group held 100% of the company). The company was later renamed as OMSAN Lojistik A.Ş. OYAK undertook an equity investment in HEKTAŞ Ambalaj Sanayii ve Ticaret A.Ş. (package production for agricultural chemicals) (TAKİMSAN) - a subsidiary of HEKTAŞ - with a 0.4% stake in the establishment of the company (OYAK Group held 100% of the company) The foundation of OMSAN was completed OYAK undertook an equity investment in ETİ Pazarlama ve Sanayi A.Ş., (biscuit, confectionery sales and marketing) with a 26% stake in the establishment of the company. OYAK undertook an equity investment in TAM Gıda Sanayi ve Ticaret A.Ş., (biscuit, confectionery production) with a 26% stake in the establishment of the company. OYAK undertook an equity investment in OYAK İnşaat A.Ş. (construction sector) with a 100% stake in the establishment of the company OYAK undertook an equity investment in Pınar Entegre Et ve Yem Sanayii A.Ş., (meat industry) with a 15% stake in the company. OYAK undertook an equity investment in Yatırım Sanayi ve Ticaret A.Ş., (paint industry) with a 10% stake in the company OYAK terminated its investment in TOE. OYAK terminated its investment in MAT. OYAK terminated its investment in ADSAŞ. OYAK undertook an equity investment in ENTAŞ Entegre Tavukçuluk A.Ş. (poultry and egg production) with a 50% stake in the establishment of the company. OYAK acquired 100% of the shares of OYAK Menkul Değerler A.Ş. (OYAK Yatırım brokerage company) which was founded in 1982 by OYAK Yatırım ve Holding OYAK terminated its partnership with Kutlutaş OYAK set up the Donation-Based Pension Income System in order to ensure that its members have an additional income after they retire. A total of 497 members participated in this system. OYAK also launched a practice in which it lends up to 80% of its reserves. OYAK entered an equity investment in OYAK Turizm Tic. A.Ş. (tourism) with a 100% stake in the establishment of the company in return The number of OYAK s permanent members reached 117,000. OYAK undertook an equity investment in the First National Bank of Boston, with a 34.25% stake in the company. OYAK undertook an equity investment in SELYAK Petrol Ürünleri Üretim Paz. A.Ş. (fuel industry) with a 25% stake in the establishment of the company in return (OYAK Group held 32% of the company) OYAK terminated its investment in YASAŞ. OYAK undertook an equity investment in Halk Finansal Kiralama A.Ş. with a 39% stake in the establishment of the company (OYAK Group held 40% of the company) OYAK undertook an equity investment in Niğde Çimento San. Tic. A.Ş. (production and sale of clinker and cement) by means of the privatization tender, with a 10% stake in the company (OYAK Group held 39.2% of the company). OYAK entered an equity investment in İskenderun Çimento San. Tic. A.Ş. (production and sale of clinker and cement) by means of the privatization tender, with a 10% stake in the company (OYAK Group held 50% of the company) OYAK undertook an equity investment in Petkim Petrokimya A.Ş. (petrochemical industry) with a 20% stake in the company. OYAK entered an equity investment in Bolu Çimento Sanayii A.Ş. (production and sale of clinker and cement) with a 25% stake in the company. OYAK undertook an equity investment in Ünye Çimento Sanayii ve Ticaret A.Ş. (production and sale of clinker and cement) with a 40% stake in the company. OYAK undertook an equity investment in Mardin Çimento Sanayii ve Ticaret A.Ş. (production and sale of clinker and cement) with a 40% stake in the company. OYAK undertook an equity investment in OYAK Kutlutaş İnşaat Tes. San. T.A.Ş. (construction sector) with a 21% stake in the establishment of the company. OYAK undertook an equity investment in OYAK Kutlutaş Pazarlama A.Ş. (construction sector) with a 21% stake in the establishment of the company. OYAK undertook an equity investment in OYAK Kutlutaş İstanbul Prefabrike Eleman San. T.A.Ş. (construction sector) with a 22.5% stake in the establishment of the company The number of OYAK members hit 72,000. OYAK terminated its investment in Türkiye Petrolleri A.O. 4 Annual Report 2011 OYAK

7 1993 OYAK terminated its investment in Pınar Entegre Et ve Yem Sanayii A.Ş. OYAK sold its 20% stake in MAİS to Regie Renault, a French company OYAK s share in OYAK Bank increased to 100%. OYAK terminated its investment in Petkim Petrokimya A.Ş. OYAK sold its 11% stake in OYAK Sigorta to the French AXA Group OYAK terminated its investment in ASELSAN. OYAK undertook an equity investment in AXA OYAK Hayat Sigorta A.Ş. with a 40% stake in the establishment of the company in return OYAK set up the Pension Benefit System to ensure that its members continue to benefit from OYAK services and support after retirement. OYAK also set up the Housing Savings Fund for providing housing support to its members by making them save money in advance. OYAK undertook an equity investment in Elazığ Altınova Çimento San. ve Tic. A.Ş. (production and sale of clinker and cement) by means of the privatization tender with a 35% stake in the company (OYAK Group held 70% of the company) After the mutual share transfer between MAİS and OYAK Renault, OYAK has a 51% share in MAİS against the French Regie Renault s 49%; and OYAK has a 49% share in OYAK Renault against Regie Renault s 51% stake Ordu Pazarları, the first store of which was opened in 1963, were incorporated under the title, OYAK Büyük Mağazacılık Ticaret A.Ş. (OYPA) (retail sector), which was founded as a subsidiary fully owned by OYAK OYAK entered an equity investment in AXA OYAK Holding A.Ş. with a 50% stake in the establishment of the company. OYAK transferred its shares in AXA OYAK Sigorta and AXA OYAK Hayat Sigorta to this holding The total number of OYAK s permanent members reached 179,000, while the number of members participating in the Housing Savings Fund reached 38,000, with the members of Donation-Based Retirement Income System reaching 8,000. OYAK terminated its investment in ENTAŞ. OYAK undertook an equity investment in OYAK Güvenlik A.Ş. (security services) with a 100% stake in the establishment of the company OYAK acquired Sümerbank A.Ş. on August 9 th, 2001 in line with the share transfer contract signed with the Savings Deposits and Insurance Fund OYAK terminated its investment in SELYAK. Sümerbank was merged with OYAK Bank on January 11 th, 2002 through total subrogation. Accordingly, YADAŞ Bilgisayar ve Yazılım A.Ş., a Sümerbank subsidiary, was renamed as OYAK Teknoloji Bilişim ve Kart Hizmetleri A.Ş. (technology and information services) and became a subsidiary of OYAK Bank OYAK undertook an equity investment in OYAK Emeklilik A.Ş. (private pension fund) with a 100% stake in the establishment of the company. OYAK acquired 100% of the shares in OYTEK by purchasing the OYTEK shares held by OYAK Bank TAKİMSAN shares were sold to HEKTAŞ. OYAK undertook an equity investment in OYAK Beton A.Ş. (production and sale of ready-concrete) with a 51% stake in the establishment of the company in return (OYAK Group holds 100% of the company). OYAK undertook an equity investment in İskenderun Elektrik Üretim ve Ticaret A.Ş. (energy sector) with a 49% stake in the company. OYAK acquired 100% of the shares in OYAK Anker Bank GmbH by purchasing the Anker Bank shares held by OYAK Bank. OYTUR merged with OYAK Pazarlama and its legal identity was terminated OYAK terminated its investment in Goodyear Lastikleri T.A.Ş. OYAK won the tender called for the privatization of ERDEMİR (production and sale of flat steel) on October 4 th, On December 23 rd, 2005, OYAK entered an equity investment in ATAER Holding A.Ş. (to participate in companies operating in the iron and steel industry) with a 100% stake in the establishment of the company. OYAK undertook an equity investment in Birçim Çimento A.Ş. (cement industry) with a 22% stake in the company (OYAK Group held 100% of the shares in the establishment of the company) ATAER Holding took over 49.29% of ERDEMİR on February 27 th. OYAK terminated its investment in Elazığ Çimento OYAK terminated its investment in OYAK Bank. OYAK terminated its investment in OYSA Çimento, which was established with the merger between OYSA Niğde Çimento and OYSA İskenderun Çimento in OYAK terminated its investment in AXA OYAK Holding A.Ş. OYAK terminated its investment in OYAK Emeklilik A.Ş OYAK entered an equity investment in Lafarge-Aslan Çimento (production and sale of clinker and cement) with a 97.3% stake in the company. OYAK entered an equity investment in Lafarge Beton (production and sale of ready-concrete) with a 24.24% stake in the company (OYAK Group holds 100% of the shares in the company). OYAK made an equity investment in AYAS Enerji A.Ş. (energy sector) with a 49% stake in the company in return The total number of OYAK s permanent members reached 259,000, while the number of members participating in the Housing Savings Fund exceeded 107,000 with the number of Donation-Based Retirement Income System participants exceeding 26,000. OYAK sold all of its shares in OYAK Beton to the cement companies within the OYAK Group. OYAK undertook an equity investment in OYAK Konut İnşaat A.Ş. with a 100% stake in the establishment of the company. OYAK undertook an equity investment in Adana Kağıt Torba A.Ş. (kraft Sack and paper mill production) with a 75% stake in the company (OYAK Group holds 100% of the company). OYAK Büyük Mağazacılık s chain store activities were terminated. The company continued to operate in new areas under the title, OYAK Pazarlama Hizmet ve Turizm A.Ş. (hygiene services and tourism activities). OYAK entered an equity investment in OYAK Enerji A.Ş. (enery sector) with a 2% stake in the establishment of the company in return (OYAK Group holds 100% of the company) OYAK terminated its investment in Halk Finansal Kiralama A.Ş. OYAK acquired 100% of AYAS Enerji by purchasing the remaining 51% of the shares in the company. OYAK entered an equity investment in OYAK Girişim Danışmanlığı A.Ş. (evaluating investment opportunities) with a 100% stake in the establishment of the company. OYAK undertook an equity investment in ORFİN Finansman A.Ş. (consumer finance) with a 50% stake in the establishment of the company. OYAK signed the agreement for the sale of 50% of its stake in AYAS Enerji to AES Entek. Annual Report 2011 OYAK 5

8 Our Mission, Our Vision, Our Values Our Mission Taking a business-minded approach in providing all the services desired by its members at the highest standards of quality, Ordu Yardımlaşma Kurumu is an assistance and pension fund committed to achieve the highest financial returns for its members. It also functions as a holding company that manages a variety of portfolio and equity investments distinguished by their social and environmental value, in order to earn maximum returns for members while maintaining a sound actuarial balance. Our Vision OYAK aspires to achieve member satisfaction by being a forerunner of new ideas in Turkey, through investments that are beneficial both to herself and to the nation, and consistently distributing a higher return to members every year without putting its assets at risk Our Values The common values that direct all our behavior, decisions and business objectives: Integrity and Transparency Responsibility and Accountability Competition and Fairness Innovation and Excellence Mutual Respect Member and Associate Satisfaction 6 Annual Report 2011 OYAK

9 Highlights OYAK s Highlights 2011 (TRY Million) 2010 (TRY Million) (USD Million) (1) (USD Million) (2) Total Net Profit (Technical Interest + Actuarial Net Profit) 1, , , Actuarial Net Profit 1, , Annual Rate of Return to Members (%) CPI (Consumer Price Index) (%) Annual Rate of Return to Members/CPI (Coefficient) Equity (Members Reserves + Period Profit) 13, , , ,894.1 Total Assets 14, , , ,021.5 Number of Members 268, ,061 (1) Average USD/TRY rate ; year end USD/TRY rate (for the Year-ended 31 December 2011) (2) Average USD/TRY rate ; year end USD/TRY rate (for the Year-ended 31 December 2010) OYAK Group Combined Results (1) 2011 (TRY Million) 2010 (TRY Million) 2011 (USD Million) 2010 (USD Million) Total Gross Sales (2) 29, , , ,763.4 Total Exports 4, ,150.5 Total Transaction Volume (3) 73, , , ,329.3 Pre-tax Profit 2, , , ,215.9 Total Taxes Paid 2, , , ,055.1 Total Shareholders Equity 17, , , ,412.0 Total Assets 32, , , ,443.9 Number of Employees 28,917 28,571 (1) Excluding OYAK (2) The total of gross sales revenues for production and sales companies (3) Total transaction volume of financial sector subsidiaries OYAK s Credit Ratings Moody s Investors Service (as of ) Long Term Foreign Currency Long Term Local Currency Standard & Poor s (S&P) (as of ) Long Term Credit Rating Long Term (National Scale) Short Term (National Rating) Ba2 / Stable Outlook Ba2 / Stable Outlook BB+ / Stable Outlook TrAA+ TrA-1 Annual Report 2011 OYAK 7

10 Chairman s Message In 2011, OYAK celebrated its 50 th anniversary with great pride. OYAK exists with Turkey and produces added value not only for its members but for every Turkish citizen. It has maintained its position in 2011 as a model institution, a successful corporate citizen and a unique economic model for Turkey. OYAK is determined to grow and strengthen its assets under any global circumstances, both in 2012 and beyond. OYAK holds all the institutional competencies and resources necessary to achieve this target. In 2007, OYAK had predicted the approaching global financial crisis and decisively continued to advance on its growth path by undertaking the necessary revisions in its strategies, portfolio structuring and business plans. The proactive strategies we pursued, the business tactics we applied have aimed to minimize the impacts of the crisis, while paving the way for the growth our members assets. Five years ago, OYAK predicted the global crisis; since then, it has demonstrated an exemplary performance and continued to achieve its targets. Thanks to its highly risk-sensitive and cautious business approaches, OYAK added a total of TRY 1,724.4 million to its members savings in We managed to increase our members assets to TRY 13.8 billion by the end of the year and offer a rate of return of 14.1% - higher than the rate of inflation. At the same time, our institution conducted multidirectional efforts aimed at diversifying the services and assistance it provides its members in accordance with its primary mission. The results that we achieved throughout the year both in member services and housing production comply with our targets, strengthening member satisfaction. At the end of 2010, the number of our active members totaled 213,178, the number of members participating in the Pension Benefit System was 45,883 and the total number was 259,061. At the end of 2011, these numbers were 219,047, 49,065 and a total of 268,112, respectively. Five years ago, OYAK predicted the global crisis. Since then, OYAK has demonstrated an exemplary performance and continued to achieve its targets. OYAK is one of Turkey s largest economic powers. Its subsidiaries maintained their strong performance throughout 2011 as the leading participants of their sectors and continued to contribute to OYAK s revenue base on a consolidated basis. OYAK is a model institution and pension system not only for its members but also on an international platform, thanks to its credibility, financial strength, managerial structure and uniqueness. OYAK has been rated since 2005 by the globally renowned ratings agencies, Moody s and Standard & Poor s (S&P). The credit ratings assigned to OYAK by these agencies confirm its positive image. As one of the global companies and organizations to enjoy, first an equal, 8 Annual Report 2011 OYAK

11 and then a higher than the country rating, OYAK is listed by the same agencies among the top investment organizations/ holdings in the region. OYAK is one of the largest capital groups of not only Turkey, but also the entire region. We carry out all of our activities with a long-term view that aims to protect the future of our members. The level of corporate maturity that we have reached in terms of governance, transparency and accountability provide us with the energy and the experience we need in order to grow and look to the future with confidence. Celebrating its 50 th year of service with pride and satisfaction The foundations of our organization were laid down in 1911, and its functions were defined in Law 205, also known as the OYAK Law after In the last 50 years, OYAK turned its members savings into major investments and succeeded in becoming one of the most valuable and important corporations in the Turkish economy. As information is shared, awareness increases, and confidence and expectations grow stronger. The continuous support and trust of informed stakeholders is of paramount importance for every enterprise including OYAK. That is why the focus of all of our communication activities with our stakeholders and the public to promote our institution, was about what OYAK is and what it is not, as well as the value it represents to all Turkish people. OYAK has two identities: first, it is a corporation that operates based on such principles as equality, fair distribution of resources and sound actuarial balance. OYAK is a second pillar occupational pension fund (a fund that complements the primary pension system). Second pillar occupational pension funds form a system put in place to offer better living conditions to members of any occupational group during their business lives and in their retirement. The system has been successfully implemented in a many developed countries. I would like to express with pride that OYAK is the only representative of such an institution in our country with a successful history of 50 years and is ready to move forward towards the future. As OYAK leaves behind 50 successful years of operation, a deep rooted and sustainable system will be passed to future generations. At the same time, as we expressed in our New Year message that we shared with the public, we perceive as our social mission to guide and assist similar establishments and initiatives, deserved by millions of individuals from different occupational groups, and share our knowledge with them. Having broken so much ground in its 50-year history, OYAK will continue to save, produce and to be one of Turkey s leading economic powers. We think the unfavorable conditions of the global financial crisis will continue and affect the business world for some time to come. OYAK is prepared for this. We have the strength and, more importantly, the liquidity to best utilize the business opportunities without compromising our meticulous and cautious policies. On behalf of myself and in the name of our Board of Directors, I would like to express my sincerest thanks to our management, staff and all of our employees, who have set forth their professional competencies under the volatile market conditions of 2011, which marked a milestone in our corporate history. OYAK will continue to exist with the strong support and trust of our members. Yours sincerely, Yıldırım TÜRKER (Ret.) Lieutenant General Chairman OYAK s second identity is that it is an income generating investor aiming to fulfill its primary mission of providing acceptable returns to its members. With the awareness of being a pension fund, OYAK directs its members savings into financial investments, but also into subsidiary investments, in order to protect and continuously expand its assets. With this identity, OYAK operates under all conditions of competition in the market without privilege. Our group companies also compete and go to great lengths to maintain leadership in their sectors under the same rules and principles. Annual Report 2011 OYAK 9

12 Board of Directors and Board of Auditors Board of Directors Yıldırım TÜRKER (Ret.) Lieutenant General Chairman Nedim Güngör KURUBAŞ Major General Board Member İshak CEYLAN Major General Board Member Prof. Dr. Necdet SERİN Board Member Coşkun ULUSOY, Ph.D. Board Member and CEO Board of Auditors Mehmet ÇÖRTEN Major General Member Abdulkadir POLAT Member Emre CANKOREL Member 10 Annual Report 2011 OYAK

13 Osman KAYALAR Rear Admiral Board Member Yılmaz HIZLI, Ph.D. (Ret.) Brigadier General Board Member Lütfi Fikret TUNCEL (Ret.) Governor Board Member İlhan TALU Major General Board Member (Resigned effective August 2011) Annual Report 2011 OYAK 11

14 CEO s Message In 2011 OYAK continued to strengthen its financial performance and posted successful results. Under difficult market conditions that prevailed in 2011, OYAK s strategic priority was to build upon and to preserve its asset base. Our attention was focused on enlarging the funds under our management by taking the most appropriate actions to benefit from the best opportunities offered in the money and capital markets. Furthermore, the production and sales performance of OYAK s subsidiaries active in various sectors also made a substantial contribution to our results. OYAK s members assets reached TRY 13.8 billion in value in Total net profit (net actuarial profit + technical profit), the best indicator of our performance, amounted to TRY 1.7 billion, which, with an average exchange rate of 1.67, corresponds to a net profit of over USD 1 billion. With such earnings OYAK managed to announce an annual rate of return of 14.1%. These results show that OYAK has, once again, delivered returns to its members over and above the posted rate of inflation. In its simplest terms, the rate of return is the ratio of the value we create throughout the year in our business activities to our members assets. What we, as a pension fund, call the rate of return is actually comparable to what a company would call the return on equity. Thus when OYAK s results are compared with those of Turkey s biggest corporate groups, they are at least as good or better when measured both by total earnings and by the implied rate of return. This probably is the clearest evidence of how economically and commercially productive, and how effective and exemplary OYAK s business model is. OYAK, celebrating its 50 th anniversary, remains dynamic as ever and stands ready to share its knowledge and experience in providing guidance for similar new initiatives in Turkey. Achieved in the fourth year of the global fiscal crisis and in an economic conjuncture where a number of the world s developed economies verging on bankruptcy, these results, demonstrate a success story in which not just the OYAK community but all of Turkey may take pride. A great majority of our companies rank among the leaders of their respective sectors in terms of their business volumes and profits. Abiding by the same risk-sensitive and prudent business model as their parent does, OYAK subsidiaries continued to perform strongly in 2011 and to contribute to our profits and, thus, to the growth in our members assets. ERDEMİR, operating in the iron & steel sector, and the companies that make up the ERDEMİR Group, displayed a stellar performance in 2011 and announced a total net profit of TRY 1,005.6 million, the highest-ever in their history. The OYAK Cement Group companies, made up of the strongest players in Turkey s cement industry, also performed successfully in 2011 and were named as the sector s most profitable companies. Mardin, Ünye and Adana cement companies (in that order) had the highest rates of operational profitability. Both Bolu and Aslan cement companies posted results that were superior to those achieved in Looking at net profitability, the sector s top three positions were occupied by our companies. 12 Annual Report 2011 OYAK

15 In 2011, OYAK Renault sustained its strong financial performance and made a greater contribution to OYAK s total assets. OYAK Renault was the leading player in the Turkish automotives sector in terms of total exports and domestic production. Last year OYAK Renault s plants turned out their 3 millionth engine. The company has been the consistent manufacturing and exporting champion of the Turkish automotives industry for fourteen years in a row. MAİS, OYAK s other subsidiary in the automotive sector, dominated the total market for passenger car sales with Renault and, passenger cars and light commercial vehicles with Renault and Dacia brands. İSKEN, our investment in the energy sector, maintained its successful course again in We have signed an agreement to sell half our stake in AYAS, another energy company, to AES Entek, a joint venture of the Koç Group and AES. This newly-created union of strengths in the energy industry will begin working on an investment to build a 625 MW power plant in Adana-Yumurtalık area, pending formal approvals. OYAK also continued to effectively manage its cash and financial investments portfolio throughout the year by making use of the most appropriate instruments available in the money and capital markets. Despite all fragilities and volatilities witnessed in international markets, OYAK continued to earn more than satisfactory returns on its liquid assets. We took both pride and pleasure in celebrating the 50 th anniversary of OYAK in Founded in 1961, OYAK is Turkey s first and largest privately-owned, supplementary, occupational pension fund, representing an important milestone in the country s economic history. Its successful track-record, with a sustained growth in assets and a profitable financial performance made OYAK a distinguished supplementary pension model that attracted worldwide interest. Especially within the last decade, OYAK has been burnishing its reputation in the international investment circles as an exemplary institution whose credit ratings are superior or equal to its country, and whose strong financial structure is regarded as admirable. In its 2011 Global Pension Fund Awards, World Finance called OYAK The Pension Fund of the Year in Turkey. In its October issue Investment & Pensions Europe ranked OYAK 152 nd in its listing of Top 1000 European Pension Funds and 433 rd in its Top 1000 Global Institutional Investors listing. Looking at past efforts in this direction in Turkey, we see examples of initiatives such as MEYAK for civil servants and İYAK for workers. For a variety of reasons none of these undertakings proved to be successful. As OYAK, our hope is that everyone from the teacher to policeman and from the civil servant to the unskilled worker be given access to and enjoy the benefits of an appropriately-constituted supplementary occupational pension system. Such undertakings are in the interest not just of the systems members but of the whole country. By pooling individuals savings, other undertakings similar to OYAK will lead to the accumulation of capital that can be directed into big investments managed professionally with a long-term view. National capital is something which our country is the most in need of and which can address one of the most serious problems that confront its economy: the current account deficit. We embark upon our second half-century with an even more youthful energy, a greater dynamism and a stronger commitment. The achievements of the last decade in particular, have clearly demonstrated OYAK s strength. We owe the strong position we enjoy today to a properly managed mix of foresight, strategy, tactics, and execution. That same structure is what encourages us and gives us the strength we need for OYAK to achieve the goals it has set for the period ahead. It is only through the continued support and confidence of our members that we shall be able to remain a partner and supporter to them throughout their lives. We expect that 2012 is going to be a year filled with difficulties. The unlimited support program announced by the European Central Bank on December 21 st last year appears to have forestalled the most serious of the risks faced by the European banking system and to have mitigated at least some of the severity of the debt crisis. Despite this however, the global crisis will continue to affect the developed economies in general and Europe s in particular and that in turn will expose the developing economies to the effects of that crisis in various ways. In this process, the world economy will lose even more momentum and our own country will most consequently suffer from that. OYAK must therefore continue to take a proactive approach in shaping its strategies, in considering its investment options, and in channeling its members assets into the safest possible investment alternatives. OYAK s first and foremost avowed mission is to protect its members interests and futures under all conditions and at all times be they good or bad. With the constant support and confidence of its members, OYAK will remain committed to that path. OYAK is an asset for Turkey. It has made and continues to make multidimensional contributions to our national economy. OYAK exists and will always exist not just for its members but for the whole country. In closing and speaking on my own behalf as well as for my colleagues, I take this opportunity to express our gratitude to our Members, to our General Assembly, to our Board of Directors, and to our Board of Auditors and also to thank every employee of every OYAK Group company for their valued efforts and dedication. Coşkun Ulusoy, Ph.D. CEO Annual Report 2011 OYAK 13

16 Executive Management Coşkun ULUSOY, Ph.D. CEO Hülya ATAHAN Executive Vice President Financial and Administrative Affairs Ergün OKUR Executive Vice President Member Services Nihat KARADAĞ Executive Vice President Financial Investments Dinç KIZILDEMİR Executive Vice President Equity Participations Fatih TAR Executive Vice President ERDEMİR Group Celalettin ÇAĞLAR, MSc. Senior Advisor 14 Annual Report 2011 OYAK

17 Annual Report 2011 OYAK 15

18 OYAK and Group Companies in 2011 Having proudly celebrated its 50 th year in 2011, OYAK continued to produce value for its members and the Turkish nation. 16 Annual Report 2011 OYAK

19 General outlook 2011 marked the fourth year of the global financial crisis. Various policies, practices and solutions were put in effect throughout the year in most developed countries, particularly in Europe, in an attempt to resolve the public debt problem. As a result of mounting global distrust, the growth rates of emerging economies began to fall, while Europe entered a moderate recession. The environment of distrust resulted in a slowdown in global economic activity, while the Turkish economy remained one of the world s most rapidly growing economies with a rate of 8.5% in The major drivers behind this were stable monetary policies, lively domestic demand and a financial sector positioned on robust foundations. It would appear that 2012 world economy will be of variable market conditions and opposing expectations. While the soft landing in emerging markets continues, Europe will be focusing on finding solutions for the problems in public finance under recessionary circumstances. The Turkish economy is expected to keep growing in 2012 with the support of its strong internal dynamics, albeit at a slower pace due to the effect of negative economic circumstances in the Eurozone. Having celebrated its 50 th anniversary in 2011, OYAK will continue to produce value for its members and for the Turkish nation. OYAK s contributions to the national economy In 2011, OYAK Group companies: produced nearly 9.9 million tons of cement; exported more than 1.5 million tons of cement; produced 331,000 motor vehicles; exported 225,000 motor vehicles; produced nearly 7 million tons of finished steel products; exported about 1.2 million tons of finished steel products; met 4% of Turkey s need for electric power by generating more than 9,000 GWh of electricity, for the national grid; attained exports of USD 4,517 million; OYAK and Group companies paid a total of TRY 2,175 million in direct and indirect taxes (TRY 1,605 million in 2010) OYAK s contributions to employment The total number of personnel employed in OYAK, its subsidiaries and associates rose from 28,825 in 2010 to 29,165 in Besides direct employment, it is estimated that at least 200,000 families (members of which work in such areas as contract labor, farming, transportation services, etc.) make a living on OYAK s economic power The main developments that took place in group companies in 2011 are summarized below: Joining forces in AYAS Enerji OYAK signed a contract for the sale of 50% of its shares in AYAS Enerji Üretim ve Tic. A.Ş. to AES Entek, a subsidiary jointly established by the Koç Group (Turkey) and AES (USA). AYAS Enerji, will undertake a thermal power plant investment with an installed capacity of 625 MW in Yumurtalık, Adana. OYAK applied to the respective authorities for permission for the transfer of the shares; the Competition Board subsequently granted approval for the share transfer, while approval from the Energy Market Regulatory Authority is still pending. The power plant, which is planned to be built next to İSKEN, will be environmentally friendly and operate with high-quality imported coal. The plant is expected to generate about 4.5 billion kwh of electricity per year, and is targeted to enter operation in ERDEMİR: Increased rating from Standard & Poor s (S&P), Positive outlook from Moody s Standard & Poor s raised ERDEMİR s credit rating from B- to B, while affirming its credit outlook as stable. Moody s Investors Service confirmed ERDEMİR s B2 credit rating, while changing its credit outlook from stable to positive. ERDEMİR was chosen as the Most Liked Company in its Sector in the survey made in cooperation with Adecco, a Swiss human resources firm, and the Capital Magazine. In this survey, companies from 37 different sectors were evaluated. İSDEMİR completes its efforts to switch to flat steel production In 2011, İSDEMİR completed its series of investments to switch to flat steel production, as part of its modernization and transformation projects. The company will maintain its long steel production as well. The 4 th blast furnace, installed as part of such investments, became operational in August İSDEMİR s 4 th blast furnace is Turkey s largest and most modern blast furnace. Moreover, the 2 nd sinter plant, which is required in parallel with İSDEMİR s increasing liquid steel manufacturing capacity, was brought into operation in June ERMADEN s investment in its underground iron mine completed ERMADEN s investment in its underground iron mine in Ekinbaşı, in the district of Divriği in Sivas was completed in Annual Report 2011 OYAK 17

20 OYAK and Group Companies in 2011 ERSEM s new steel service centers Launched by ERSEM, the İskenderun Steel Service Center serves the shipbuilding, steel construction, automotive, general machinery and construction sectors. Work continues on the Ereğli Steel Service Center investment, in Ereğli, which will also operate under ERSEM. A new era in the Turkish automotive industry with OYAK Renault s serial production of its revolutionary new electric car, the Fluence In 2011, the Fluence ZE, which runs on an electric engine, joined OYAK Renault s range of models manufactured at the company s plant in Bursa. OYAK Renault broke a new ground in the Turkish automotive industry with the start of the mass production of electric car Fluence, in Q4/2011. The company began to export its Fluence model in November Moreover, the three millionth engine was produced at OYAK Renault s facilities. The company has maintained its leading position in production and exports in the Turkish automotive industry for a consecutive 14 years. MAİS still the market leader The Turkish automotive market broke a new sales record in 2011 and MAİS, our subsidiary, became the market leader in the passenger car market and in the passenger car and light commercial vehicles market with Renault and Dacia brands together. Symbol, one of the models included to the MAİS portfolio, became the best-selling private car in Turkey in 2011, while Fluence ranked 4 th. ORFIN Finansman was founded In 2011 ORFIN Finansman was founded by the Renault Group and OYAK, with 50/50 partnership. The company would operate in the field of consumer financing to support the sales of MAİS. The permission for the foundation of ORFIN was received, while efforts are under way to receive an operating license for the company. Award to OYAK Yatırım by Global Finance According to the study entitled World s Best Investment Banks 2012 which was performed by Global Finance, OYAK Yatırım was chosen as Turkey s best brokerage company. OMSAN Lojistik raises the bar in its sector OMSAN became the first in Turkey and the second logistics company in Europe to receive the ISO Certification, which is the Information Security Management System Standard. Moreover, at Logitrans Logistics Awards 2011, OMSAN received the winning award in the category of International Logistics Enterprises. Developments in the OYAK Cement Group Adana Çimento reached a decision to add a clinker production line to its plants in İskenderun in a bid to meet increasing demand for cement. The investment, which is appraised to cost about USD 80 million and be completed within 2 years, is expected to create about 500 jobs in the region. Ünye Çimento achieved record breaking levels of clinker production, domestic cement sales volumes and total cement sales in 2011, benefiting from developments in its region and the growth in the Black Sea market. Moreover, the company brought its 4 th cement mill into operation in June The Refuse-Derived Fuel plant brought into operation by Aslan Çimento in September 2011, aims to process about 24,000 tons of industrial refuse and waste, generating fuel from the waste and refuse, reducing energy costs by up to 20%, in With the completion of the second paper bag production line at the OYKA Çaycuma Sack Factory, the factory s capacity doubled and reached 140 million pieces per year. The factory also chalked up its highest ever monthly sales of bags (in unit terms) in its history. The OYAK Çaycuma Kraft Paper Factory broke a new record in terms of craft paper production on a monthly basis, following the press investment that completed in TUKAŞ: Offering the highest satisfaction of any brand According to the results of the Turkish Customer Satisfaction Index (TMME) as of Q3/2011, TUKAŞ offered the highest satisfaction in the category of Tomato Paste, Sauce and Canned Food of any brand. TUKAŞ was also one of the six highest ranking brands (on the basis of the TMME score) among all brands evaluated throughout Developments in housing projects in 2011 The 2 nd Phase of the 2 nd stage İkitelli OYAKKENT Project approaching completion In 2010, an announcement was made to OYAK Members who had completed 15 years of membership and who had not yet benefited from OYAK s Housing Services. The announcement was related to 507 apartment units being built within the 2 nd Phase 2 nd Stage of the Istanbul İkitelli OYAKKENT project. 46 units were allocated to the members following the announcement. Later on an additional 76 units were also allocated to members. As such, in this phase of the project, a total of 122 OYAK members became homeowners. The remaining 385 homes started being sold to third persons in March 2011 through OYAK İnşaat, the construction company, and 339 of these units were sold to third persons. All of the homes in this leg of the project are planned to be delivered to their new owners in May 2012, following the receipt of licenses once construction work has been completed. 18 Annual Report 2011 OYAK