Annual Report

Transcription

1 Annual Report

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3 Contents 02 Agenda of the Ordinary General Assembly 34 Foreign Terminals 04 Financial Highlights Investments 06 Our Vision, Mission, Values 38 Marketing and Sales Activities during Corporate Profile 40 Corporate Development and Human Resources 09 Milestones 41 Trainings at Çimsa 10 Message from the Chairman 12 Board of Directors and Audit Committee 13 Senior Management 14 Biographies of Board Members 16 Biographies of Senior Management 18 An Assessment of the Cement Industry for Learning Organization Teams for High Performance Culture 46 Çimsa s Sustainability Approach 48 Social Responsibility 50 Annual Report Corporate Governance Principles Compliance Report 20 Domestic Cement Facilities 64 Auditor s Report 26 Cement Types 30 Ready Mixed Concrete and Aggregate Operations 32 Ready Mixed Concrete Products 65 Consolidated Financial Statements and Report of Independent Auditors 142 Profit Distribution Table as of December the 31th Addresses

4 ÇİMSA ÇİMENTO SANAYİ VE TİCARET A.Ş. ANNUAL REPORT 2011 Agenda of the Ordinary General Assembly The Agenda of the Ordinary General Assembly for ÇİMSA ÇİMENTO SANAYİ ve TİCARET A.Ş. to be held on April the 24th 2012 AGENDA: 1. Call to Order and Composition of the Administrative Board, 2. Authorization of the Administrative Board to Approve the Meeting Minutes of the General Assembly, 3. Reading and Discussion of the Board of Directors' Annual Report and the Audit Committee s Report for 2011, 2 4. Informing the General Assembly about Donations Made and Aid Given during 2011, 5. Informing the General Assembly about Transactions with Related Parties during 2011, 6. Informing the General Assembly about Securities, Liens, Mortgages Established for Third Parties and the Income or Benefits that they Generated during Informing the General Assembly about the Remuneration Policy for Members of the Board and Senior Executives pursuant to the Company's Corporate Governance Principles, 8. Reading, Negotiation and Confirmation of the Balance Sheet and the Profit/ Loss Statements, and Approval or Rejection of the Profit Distribution Proposal by the Board of Directors for the year 2011, 9. Submission, for the Approval of the General Assembly, those Members Elected to be a Member of the Board of Directors for the Remaining Part of the Year to those Seats Vacated During the Year, 10. Release of the Members of the Board of Directors and the Audit Committee from Liability in relation to Activities during 2011,

5 11. Approval of the Amendment of the Company's Articles of Association as Suggested in the attached Draft Amendment pursuant to the Permit Obtained from the Capital Markets Board and from the Republic of Turkey's Ministry of Customs and Trade, 12. Election of the Members of the Board of Directors, Determination of the Independent Members of the Board of Directors and Determination of the Terms to be served by the Members of the Board of Directors, 13. Determination of the Remunerations to Be Paid to the Members of the Board of Directors, Approval of the Appointment of the Independent Audit Agency as Chosen by the Board of Directors, 15. Authorization of the Shareholders who Manage the Company, Members of the Board of Directors, Senior Managers and their Partners and Relatives by Blood and Marriage up to Second Degree to in relation to the Performance of any Transactions that May Cause Conflicts of Interest to Compete with their Affiliates, 16. Authorization of the Chairman and the Members of the Board of Directors to conduct procedures as set out in articles 334 and 335 of the Turkish Commercial Code

6 ÇİMSA ÇİMENTO SANAYİ VE TİCARET A.Ş. ANNUAL REPORT 2011 Financial Highlights Key Balance Sheet Indicators Cash and Cash Equivalents 13,444,392 10,681,165 Trade Receivables 145,035, ,195,061 Inventory 113,896,943 92,824,407 Current Assets Total 294,311, ,235,654 Financial Assets 233,236, ,304,929 4 Tangible Assets 564,540, ,255,188 Intangible Assets 16,690,657 18,136,992 Non-Current Assets Total 956,572, ,601,146 Total Assets 1,250,884,485 1,133,836,800 Equity Capitals 861,937, ,807,348 Key Income Statement Indicators Sales Revenue (net) 800,938, ,480,015 Operating Profit 158,745, ,199,284 Net Profit for the Year 123,395, ,249,803 Currency (Turkish Lira)

7 In 2011, we produced 4.9 Million tonnes of clinker. In 2011, we produced 3 Million m 3 of ready-mixed concrete. 5 In 2011, we generated Milllion TL of net sales revenue.

8 ÇİMSA ÇİMENTO SANAYİ VE TİCARET A.Ş. ANNUAL REPORT 2011 Our Vision To be Turkey s most profitable cementand concrete company. 6 Our Mission To be an international business partner for cement and concrete users.

9 Our Values Our values are those core qualities of our culture that carry us into the future: reliability, customer orientation, collaboration. We are a reliable and collaborative organization that has been working with its customers, employees, suppliers and business partners for a long time. We understand our customers' needs and we are always increasing the value that we provide to our customers through the creation of new solutions to satisfy their needs. 7

10 ÇİMSA ÇİMENTO SANAYİ VE TİCARET A.Ş. ANNUAL REPORT 2011 Corporate Profile Creating value for all of its stakeholders while remaining focused on profitable growth, Çimsa now seeks to maintain this in the future. 8 Founded in Mersin in 1972, Çimsa began operating its first production facility in 1975 in Mersin. Today, Çimsa's annual clinker production capacity across its facilities in Mersin, Kayseri, Eskişehir, Niğde and Ankara has reached five million tonnes. In addition to grey cement, Çimsa also produces special cements and innovative cement products, such as white cement and Calcium Aluminated Cement, and the company is the innovation leader in the Turkish cement and ready-mixed concrete industry. Becoming a ready-mixed cement manufacturer in 1988, Çimsa provides its services from Adana, Kahramanmaraş, Osmaniye, Mersin, Kayseri, Nevşehir, Karaman, Aksaray, Eskişehir, Kütahya, Bursa, Adapazarı, Bilecik, Antalya (since July 2011) and Bilecik. Its ready-mixed cement sales reached 3 million cubic meters in Aiming for growth in the aggregate business, Çimsa conducts its activities in this field from its aggregate facilities. Being one of the three most important white cement brands in the world, Çimsa is an international cement producer with terminals in Seville (Spain), Alicante (Spain), Emden (Germany), Constanta (Romania), Trieste (Italy), Novorossiysk (Russia) and Famagusta (the Turkish Republic of Northern Cyprus). With its consolidated net sales for 2011 having reached million TL, Çimsa has generated a total net profit of million TL.

11 Milestones 1972 Çimsa was founded in Mersin Çimsa entered the readymixed concrete industry A mill and packaging facility in Kayseri was acquired A new white clinker line was commissioned, adding an additional capacity of 600,000 tonnes per year. The Mersin plant has now become the world s largest capacity white cement plant Çimsa started production with a capacity of one million tonne/ year The world s first customizable gray/white clinker production line was commissioned The Malatya packaging terminal was acquired. Establishment of the Seville plant in Spain Turkey s first Calcium Aluminated Cement production plant began production The Kayseri Plant s clinker line was commissioned In Spain, the Alicante terminal came into operation in June. Standart Çimento was acquired. (The Eskişehir Cement Plant and the Ankara Cement Grinding Facility) 2007 Çimsa took over the Oysa Niğde Factory Çimsa s Russia terminal was commissioned. The HotDisc (Waste Supply and Waste Energy Recovery) investment in Eskişehir Plant was completed The terminal in Northern Cyprus was acquired. Founding of the Romania sales office Eskişehir s second line was commissioned. With the acquisition of the Bilecik Ready-Mixed Concrete Facility, Çimsa became, in terms of the number of its facilities, the biggest producer in Turkey s ready-mixed concrete industry In February, 60 percent of the shares of Medcon, the owner of the Trieste terminal, were acquired. Production of Çimsa Super Bims Cement began.

12 ÇİMSA ÇİMENTO SANAYİ VE TİCARET A.Ş. ANNUAL REPORT 2011 Message from the Chairman 10 Dear Business Partners, The effects of the crisis in global financial markets that started in the last quarter of 2008, coming, in 2009, to affect especially the productive sectors of the world's developed economies, continued to be felt during Both the uncertainties and the downside risks in the global markets continued to increase during the first half of The slowdown in developed countries' economic growth and uncertainties about the future reduced domestic demand in these countries. While the expected growth of the developed countries' economies for 2011 is around 1.6%, this figure is forecast to be as high as 6.2% for the economies of developing countries. The Turkish economy grew by 8.5% during Although the most important risk for the Turkish economy during 2011 was the current account deficit and the low quality of the financial markets, significant steps towards improvement were taken during the last quarter in regards to the management of the current account deficit. The construction sector grew by 11.2% by the end of The contribution of the sector to GDP increased to 5.8% as of This sector, now employing around 2 million people, rose to 8% of the nation's total employment. Cement Sector Continues to Grow In 2011, the world's total cement consumption was around 3.6 billion tonnes. The developing countries were once again the engine of the world s cement market. While developed countries' cement consumption increased by 2%, in the developing countries it grew by 7% (excluding China). The global cement demand is expected to run parallel to economic growth during Cement consumption increased from 50.5 million* tonnes in 2010 to 55.8 million* tonnes in During 2012, cement consumption is expected to grow by 5% due to a range of infrastructure, housing and urban transformation projects.the consumption per capita reached 758 kg in 2011 and is expected to increase to 785 kg by the end of The sectors' capacity continued to be greater than the domestic demand throughout The surplus of the capacity over domestic demand continued to be successfully exported, despite difficulties in foreign markets and political uncertainties in the Middle Eastern and North African markets. For 2011, Turkey's total exports reached 14.1 million tonnes. The negative effects on the export markets of the political uncertainty in the Middle East and North Africa is expected to continue but to a decreasing extent during An examination of our country's main segments' cement consumption reveals that 50-55% of the consumption goes to housing projects, 35% for infrastructure projects and the remaining 15% is consumed by other construction projects. The prioritization of energy and transportation infrastructure will ensure that Turkey's economic growth is sustainable and will ensure that the distribution of cement consumption becomes more balanced. The factors that will trigger growth in the future will be investments in urban transformation, energy and transportation infrastructure.the aim of urban transformation projects is to prevent *This is an estimation made by the company using data from the Turkish Cement Manufacturers Association and adding in the estimated sales of the manufacturers that are not members of the association.

13 unplanned urbanization and to ensure compliance with earthquake regulations and standardization processes in Turkey. Çimsa, one of the cement sector's most profitable companies, increased its consolidated turnover by 13% to million TL and its consolidated operating profit by 12.5% to million TL. Being a leader in the Turkish white cement market, Çimsa is one of the most important brands in this area worldwide. Thanks to its foreign terminals, it operates as a genuine global player in the export market. I believe that 2012 will also be a successful year for Çimsa and I extend my sincere gratitude to everyone who has contributed to the leadership, the strong market position, the profitability and all of the successful operations that have led the sector to view Çimsa as the unique company that it is. Best Regards, Mehmet GöçmenChairman Innovative and Environmentally- Friendly Projects from Çimsa Since 2010, Çimsa has focused on sustainability management. 11 The main goals of Çimsa for the next ten years are to create real long term added value for shareholders, to make contributions to society and to ensure a sustainable environment. Çimsa continuously examines and undertakes improvements in response to those economic, environmental and social impacts caused by and will be caused by activities of the past, the present and the future. The company does this by taking into consideration the whole process, from the extraction of raw materials to the products' final moment of use. Çimsa supports sustainable development and the use of natural resources in the most efficient way throughout the cement sector, which makes intense use of energy and raw materials. Therefore, its emphasis is on reducing the use of fossil fuels while increasing the use of alternative fuels and resources.

14 ÇİMSA ÇİMENTO SANAYİ VE TİCARET A.Ş. ANNUAL REPORT 2011 Board of Directors and Audit Committee Board of Directors 1- Mehmet Göçmen, Chairman 2- Serra Sabancı, Member 3- Mustafa Nedim Bozfakıoğlu, Vice Chairman 4- Levent Demirağ, Member 5- Mehmet Hacıkamiloğlu, General Manager6- Seyfettin Ata Köseoğlu, Member (since August 18, 2011) Audit Committeeİlker YILDIRIM, Bahadır BORAN (since ), Nur ŞENOL (since )

15 Senior Management Senior Management 1- Mehmet Hacıkamiloğlu, General Manager2- Nevra Özhatay, Assistant General Manager (Financial Affairs) 3- Hüseyin Özkan, Assistant General Manager (Domestic Sales) 4- Şahap Sarıer, Assistant General Manager (Cement Production) 5- Mutlu Doğruöz, Assistant General Manager (Investment) 6- Tamer Denizci, Assistant General Manager (Supply Chain) 7- Ayfer Güreş, Assistant General Manager (Corporate Development and Human Resources) 8- Ülkü Özcan, Strategy and Marketing Manager

16 ÇİMSA ÇİMENTO SANAYİ VE TİCARET A.Ş. ANNUAL REPORT 2011 Biographies of Board Members 14 Mehmet Göçmen, ChairmanBorn in 1957, Mehmet Göçmen graduated from Galatasaray High School and Middle East Technical University Industrial Engineering department. He received his graduate degree in Industrial Egineering and Operational Research from the Syracuse University, USA. He started his career at Çelik Halat ve Tel San. A.Ş. in Between 1996 and 2002, he served as the General Manager of Lafarge Ekmel Beton A.Ş., and as the Vice President for Business Development and Foreign Relations at Lafarge Turkey. He began serving as Akçansa's General Manager in June 2003 before being appointed to Sabancı Holding on August 1, 2008 as the Head of Group Human Resources. From 20 July he became Head of Sabanı Holding's Cement Group. Mustafa Nedim Bozfakıoğlu, Vice ChairmanBorn in Tarsus in 1950, Nedim Bozfakıoğlu graduated in 1972 from The Istanbul University School of Economics. He served at Lassa and Kordsa as Finance Manager and as Financial Affairs Vice Manager. He was subsequently appointed to the position of Head of Budgeting, Accounting and Consolidation Departments at Sabancı Holding, where he still serves as the Secretary General. Serra Sabancı, MemberBorn in 1975 in Adana, Serra Sabancı completed her higher education at the University of Portsmouth and at Istanbul Bilgi University s Economics Department, where she graduated with the best degree of her year. After working at Temsa, Ms. Sabancı received training in the fields of Company Acquisition

17 and Board Membership at London s Institute of Directors. Serra Sabancı is still the Head of the Board of Directors at Sabancı Holding, in addition to various other Group companies, while at the same time serving as a Member of the Board of Trustees of Sabancı Vakfı. Levent Demirağ, MemberBorn in 1959 in Erzurum, Levent Demirağ graduated from the Ankara University Faculty of Political Sciences in From 1980 to 1992 he worked as a Financial Analyst for the Ministry of Finance. Having served since 1994 in various positions within Sabancı Holding, Levent Demirağ is currently the Head of Sabancı Holding Financial Affairs and Finance Department. Mahmut Volkan Kara(until August 18, 2011), MemberBorn in Istanbul in 1973, Volkan Kara graduated from Robert College and from the Mechanical Engineering Department of Istanbul Technical University. At the University of North Carolina s Kenan-Flagler School of Management he completed his graduate education with an M.B.A. degree. In the USA he worked in Austin Texas for Dell Computers, in Chicago Illinois for A.T. Kearney and then in Milwaukee Wisconsin for SAB Miller. His current position is the Corporate Strategy and Planning Director of the Sabancı Holding Strategy and Business Development Group Presidency. On 1 June 2011 he was appointed as the Head of Strategy and Business Development Group for Sabancı Holding. Mehmet Hacıkamiloğlu, General ManagerAfter earning a bachelor s degree in Civil Engineering from Boğaziçi University, Mehmet Hacıkamiloğlu completed the International Business Specialization Program at Istanbul University and the Executive-MBA program at Sabancı University. Mr Hacıkamiloğlu then joined Sabancı as the Facility Manager of Betonsa, moving on to become the company s Investment and Planning Specialist. From 1997 to 1999, Mr Hacıkamiloğlu was Akçansa's Strategy Development and Planning Manager and Agregasa s Company Manager from 1999 to After a further two years as Akçansa s Financial Coordinator, he joined Çimsa as the Assistant General Manager for Financial and Administrative Affairs. He was appointed as Çimsa's General Manager on June 1, Mehmet Hacıkamiloğlu still serves as Çimsa's General Manager. 15 Seyfettin Ata Köseoğlu(since ), Memberborn in 1960 in Akşehir, Ata Köseoğlu graduated from Boğaziçi University's Department of Mechanical Engineering. He went on to complete his M.A. in the Electrical Engineering department of Leigh University and he received an M.B.A. from Boston University. After starting his career in the banking industry at İktisat Bank, Ata Köseoğlu served at Finansbank, Bear Stearns, Societe Generale Investment Bank, Credit Suisse First Boston Bank and BNP Baribas/TEB respectively.

18 ÇİMSA ÇİMENTO SANAYİ VE TİCARET A.Ş. ANNUAL REPORT 2011 Biographies of Senior Management 16 Mehmet Hacıkamiloğlu, General ManagerPlease refer to page 15 for a brief resume. Nevra Özhatay, Assistant General Manager (Financial Affairs)After completing her MBA at Exeter University in the UK, following a bachelor's degree in Business Administration from Boğaziçi University, Nevra Özhatay began to work at Sabancı Holding Cement Group as a Financial Specialist in In 1996 Ms. Özhatay joined Akçansa as the Management Support Manager, becoming the Strategy and Business Development Expert in 1998, the Planning and Control Manager in 2000, the Strategy and Business Development Manager in 2004 and the Logistics, Strategy and Business Development Director in Since the beginning of 2009, Ms. Özhatay has been working as the Financial Affairs Assistant General Manager at Çimsa. Hüseyin Özkan, Assistant General Manager (Domestic Sales) A graduate of METU s Economics Department, in 1983 Hüseyin Özkan started his career as a Marketing Supervisor at Exsa Export A.Ş. In 1986 he joined Çimsa Çimento as the Internal and External Trade Supervisor, being promoted to the position of Sales and Marketing Manager. Since 1999 he has been the company s Assistant General Manager for Marketing and Sales. He was appointed the Assistant General Manager Responsible for Domestic Sales on January 1, Şahap Sarıer, Assistant General Manager (Cement Production)Şahap Sarıer began his career in 1995 as a Field Engineer at Betonsa after completing his Civil Engineering qualifications at the Dokuz Eylül University. Continuing from 1995 to 1997 as Betonsa s Operating Supervisor, Mr Sarıer worked as the Regional Manager of Akçansa Ready-Mixed Concrete from 1998 to 2004.

19 For the next two years he was Karçimsa A.Ş. s Operations Manager. In 2006 Mr Sarıer became Çimsa's Assistant General Manager Responsible for Ready-Mixed Cement, being appointed as the Assistant General Manager Responsible for Cement Production as of 01 January Mr Sarıer holds an Executive MBA from Sabancı University. Mutlu Doğruöz, Assistant General Manager (Investment)An electrical engineering graduate from Boğaziçi University, Mutlu Doğruöz began his career in 1983 as an Electronics Supervisor at Enka Teknik where, for five years, he was in charge of the maintenance and operations of their automation systems. In 1989 he was appointed Deputy Project Manager at Saudi Services Group. Following four years of experience there he joined Çimes Elektronik Sanayi. At Çimes, Mr Doğruöz served as the Company Manager, the Assistant General Manager and the General Manager respectively. In 2006 he joined Çimsa Çimento as the company's Investment Manager, a position that he still holds. Tamer Denizci, Assistant General Manager (Supply Chain)Tamer Denizci began his career as the Financial Affairs Supervisor at Dusa Endüstriyel Sanayi. Following four years of experience at Dusa he worked from 1992 to 1994 as the Manager of Financial and Administrative Affairs at Yes International A.S.. In 1994, he moved to Lafarge Beton A.S. as their Financial Affairs Manager, following which he served as Lafarge Aslan Çimento s Export and Sales Director. In 2006, Denizci joined Çimsa as the company s Financial Affairs Assistant General Manager, and he continues to work at Çimsa as the company's Supply Chain Assistant General Manager. Mr Denizci is a graduate of İstanbul Technical University s Department of Management Engineering. Ayfer Güreş, Assistant General Manager(Corporate Development and Human Resources)Ayfer Güreş holds a bachelor s degree in Psychological Counseling and Guidance from Boğaziçi University and a master s degree in Organizational Psychology from Columbia University. Ms Güreş began her career at Mudo A.S. as a Human Resources Specialist. After completing her post graduate education, she joined Sabancı Holding as a specialist in Between 1997 and 2007, she worked as the Human Resources Manager at Sabancı Holding, and in 2007 she started to work as a Corporate Development and Human Resources Manager at Çimsa Çimento. Ayfer Güreş is currently the Assistant General Manager in charge of Corporate Development and Human Resources. Ülkü Özcan, Strategy and Marketing Manager After graduating from Galatasaray High School and Marmara University s Department of Business Administration (English), Ülkü Özcan began her career at Lafarge Turkey in She served as a Strategic Planning Expert from 1999 to 2003, as the Strategy and Business Development Manager from 2005 to 2007 and the Marketing Project Manager from 2005 to In January 2010, Özcan joined Çimsa Çimento as the company's Strategy and Business Development Manager. 17

20 ÇİMSA ÇİMENTO SANAYİ VE TİCARET A.Ş. ANNUAL REPORT 2011 An Assessment of the Cement Industry for The differentiation trend between the developed and the developing countries that started in 2010 continued in While the demand for cement in developing countries is generally low compared to developed countries, it has increased significantly. While developed countries' cement consumption increased by 2%, in the developing countries consumption grew by 7% (excluding China) in The global players in the concrete market were affected by the stagnation in the developed markets, the political developments in the Middle East and North Africa and the increase in energy prices and therefore could not improve their profit margins. While, in 2011, the cement sector contracted by 3% in the Middle East and by 5% in South Africa, it grew by 6% in Northern Europe, 4% in the Middle East and Africa and by 6% in Latin America. However, eastern Europe became the region with the highest growth in the world with a growth rate of 10%. In 2011, Turkey's construction sector grew by 15.3% in the first quarter, 13% in the second quarter, 10.2% in the third quarter and 7% in the fourth quarter, reaching a total growth of 11.2% in Turkey is the largest cement producer in Europe and the fourth largest worldwide, after China, the USA and India. In total, 65 facilities operate in the Turkish cement industry, 48 of which are integrated facilities and 17 are grinding and packing facilities. In 2011, cement production in Turkey was 63 million* tonnes and cement consumption was 56 million* tonnes. The industry's surplus capacity, after domestic demand was satisfied, was exported. However the social and political turbulence in the Middle East and North Africa, especially during the first quarter of 2011, caused a decrease in Turkey's total cement and clinker exports. Total cement and clinker exports for 2011 decreased by 24% in comparison to 2010, coming to 14.3 million tonnes. The cement sector, being aware of its environmental responsibilities, works to have an active role in extending sustainable growth while, at the same time, continuing to grow economically. Sustainable growth, within the regulatory framework of EU compliance, was an important topic throughout 2011, as it was in The use of waste fuel, alternative raw materials, the discharge of waste water and the prevention of soil pollution are each serious and important topics that our country pays a great deal of attention to in order to decrease total energy costs and carbon emissions. *This is an estimation made by the company using data from the Turkish Cement Manufacturers Association and then adding in the estimated sales of those manufacturers that are not members of the association.

21 In 2011, Turkey's cement production was 63 million * tonnes and its cement consumption was 56 million * tonnes. 19

22 ÇİMSA ÇİMENTO SANAYİ VE TİCARET A.Ş. ANNUAL REPORT 2011 Domestic Cement Facilities 20 Mersin Plant's First Facility Production Line.This facility started production in It features a rotary kiln 5.25 m in diameter and 83 m long. In 1983 the facility was modernized by the addition of a coal grinding and burning system to reduce its fuel costs. The facility has two crushers, one pre-homogenization facility, two ball mills for raw materials, two raw meal silos and two closed clinker stock halls. In the first quarter of 2010 the facility was further modernized. The current planet-type clinker cooling system was replaced and a FLS SF-Cooler type grate cooler system was installed. After this investment, the plant s production capacity reached approximately 3,700 tonnes/day, compared to a previous 3,400 tonnes/day. In addition, the total heat consumption required for the production of clinker has been reduced. Furthermore, this system has significantly contributed to the first facility's de-dusting practices. The Second Facility's Production Line. The second facility s rotary kiln, commissioned in December 1989, is capable of producing both grey and white clinker. It has a diameter of 3.6 m and a length of 49 m. The facility contains crushers, a raw material mill with pre-homogenization systems, a coal mill, two raw meal silos, a rotary kiln and a clinker stock hall. This facility, capable of producing both grey and white clinker according to the saled demand; it has a grey clinker production capacity of 1,845 tonnes/ day and a white clinker production capacity of 1,470 tonnes/day. The power generated by the Waste Heat Power Generation Project at Çimsa's Mersin Plant will supply the 50% of the total power requirement of the First and the Second facilities. In addition to meeting part of the power requirement, this project also contributes to the environment with reducing carbon emission. The Third Facility's Production Line.With a rotary kiln 3.75 m in diameter and 57 m long, the Hacı Sabancı White Cement Production Facility began operating in December The Third Facility has a production capacity of 1,750 tonnes/ day. The facility contains a crusher, a raw material mill with pre-homogenization facilities, a coal mill, a raw meal silo, a rotary kiln and a clinker stock hall. The Calcium Aluminate Cement Production FacilityThis facility, commissioned in 2002, has two kilns giving it a clinker production capacity of two tonnes/hour. This facility also features a cement mill with a grinding capacity of five tonnes/hour, and a packaging unit. In 2007, with the commissioning of a second kiln having a clinker production capacity of two tonnes/hour, the facility's production capacity was increased. In addition, after a packaging unit was installed in 2009, the products are now offered to customers in packages of 25 kg, in pallets, and in large bags of 1.5 tonnes. The Paper Bag Plant. In 2011, 27.2 million paper bags were produced by the Mersin paper bag plant. These were used in the Mersin, Kayseri, Niğde, Eskişehir and Ankara Plants. The investments in the Mersin plant with the aim to increase sustainability and to protect the environment continued in The Mersin Plant also has four cement mills, three of which are ball mills, the other being a vertical mill.

23 The Kayseri Plant.The Çimsa Kayseri Plant was established in 1992 by Akçimento, a Sabancı Holding company and was acquired by Çimsa in It has an annual cement grounding and packaging capacity of 1.6 million tonnes. A pregrinding system was added to the cement mill in 2005 to improve the cement grinding capacity and to reduce the energy consumption. In order to turn the facility into an integrated cement plant, the construction of clinker production line was started on October 9, After the completion of the construction, installation and commissioning operations, the plant's first clinker production took place on 26 December Equipped with state of the art technologies, the facility's main unit consists of an ILC type low NOx emission pre-calcination system, a pre-heater with five stages of cyclones and a rotary kiln 55 m long and 3.60 m in diameter. With a clinker production capacity of 2,300 tonnes/day, this facility also features a raw material crusher, pre-homogenization facilities for both clay and limestone, one coal ball mill, one vertical raw meal mill and two cement ball mills. The Kayseri Plant produces puzzolanic cement at the TS EN 197 CEM IV /B (P) 32.5 R standard. In the production of this cement, trass is used as an additive. The Kayseri trass drying project enables the drying of trass. This means that damp trass, extracted from a quarry only 10.3 kilometers away, can now be used instead of trass formerly provided from a quarry 180 kilometers away. absence of any additional fuel consumed in order to dry the trass. The Kayseri Plant became the first firm in the cement sector to obtain a TS EN Power Management Certificate, a certificate awarded only to firms that have implemented an effective power management system and system procedures. This again demonstrates the leading role that Çimsa plays in the sector in the reduction of costs and the elimination of greenhouse gas emissions. Noting that respect for the environment is an integral part of sustainability, in September 2011 Çimsa's Kayseri Plant succeeded in becoming the first cement factory to obtain an Environmental Permit and License for Waste Water Discharge, Air Emission and Waste Incineration. The Eskişehir Plant.The Eskişehir Cement Plant was commissioned in 1957 with a wet kiln 3.6 m in diameter and 125 m long, possessing the capacity to produce 150,000 tonnes/year. This plant operated until The first production line that we see operating today was commissioned in This line has a capacity of 275,000 tonnes/ year, a three stage pre-heater and a dry system kiln 3.6 m in diameter and 52 m long, which increased the line s total capacity to 425,000 tonnes/year. On 27 December 2005, TMSF transferred the Eskişehir Plant to Çimsa Çimento Sanayi ve Ticaret A.Ş. 21 This unique project supported by TUBITAK as part of its TEYDEP 1501 Industry R&D program, has further advantages including the elimination of the installation of a new drying unit and the complete Following the acquisition of the plant by Çimsa in May 2007, the first production line had a dynamic separator added to its raw material mill, the current clinker cooler was replaced, the rotary kiln s burning

24 ÇİMSA ÇİMENTO SANAYİ VE TİCARET A.Ş. ANNUAL REPORT 2011 Domestic Cement Facilities 22 systems, dosage systems and its new electrofilter units were renewed. As a result of these investments, a clinker production capacity of 1,750 tonnes/day was achieved. A new closed circuit cement mill with a capacity of 85 tonnes/hour was also commissioned. In September 2007, a completely new coal vertical mill system was commissioned. This could serve both production lines and has a capacity of 40 tonnes/hour. The old coal systems were decommissioned. In January 2008, a completely new second production line was commissioned. This line had a similar structure to that of the current Kayseri plant, a capacity of 2,300 tonnes/day, bringing the plant s total production capacity to 4,050 tonnes/day. The Eskişehir Cement Plant became a modern production facility following the installation of its raw material crusher and a raw material prehomogenization system which were both installed in January 2008, at the same time as the second production line. The plant's cement silos were installed in The plant also features three ball cement mills used for production of the final cement product. With the installation of new, modern electro-filters on the first and second facilities' rotary kiln lines during 2007 and 2008 respectively, the Eskişehir plant s dust emissions have now been significantly reduced. In addition, the dust cyclone on the line that fed hot gas from the second facility to the new coal mill has been replaced with a more efficient cyclone. Dust leakages from the plant have been reduced by the renewal and modernization of the plant s raw material and clinker hall. It is Çimsa s goal to become one of Turkey s leading waste disposal companies. The Hotdisc Project (Waste Supply and Waste Energy Recovery) was carried out at the Eskişehir Plant as part of this plan. The Hotdisc Project will control, both, the kiln s processes and its overall product quality, in addition to generating from waste 30% of its total calorific consumption. The Niğde Plant.Established in 1957, the Niğde Cement Plant started production in 1964 following the completion of its production line. At the time it was a wet system with a capacity of 85,000 tonnes/year. The plant's total production capacity was increased to 350,000 tonnes/year after the commissioning of its second production line, a dry system, on September 2, Over the following years, the wet system clinker line was shut down because it had reached the end of its economic and technological life, while production continued using the dry system s rotary kiln. After the privatization of the plant, the kiln s capacity of 850 tonnes/day was increased to 1,240 tonnes/ day following investments made during 1993 including thereplacement of the rotary kiln unit's cyclone, a modernization of its transport, cooling and burning systems, and the replacement of its exhaust gas fan and its electro-filter.

25 Pursuant to the Competition Authority s ruling regarding the termination of the Sabancı and Oyak partnership, the Oysa Niğde Cement Plant was renamed to the Çimsa Çimento San. ve Tic. A.Ş. Niğde Cement Plant as of November the 1st, 2007, continuing production under this name. After it was acquired by Çimsa, many production and energy efficiency improvements were made at the Niğde Cement Plant and it has currently reached a clinker production capacity of 1,380 tonnes/day. In addition to the rotary kiln with its four-stage pre-heater and grate cooler, a diameter of 3.8 m and a length of 52 m, the plant has one production line and one hammer crusher, one ball raw meal mill, a vertical coal mill and a cement mill with a single roller press grinding system. Always developing innovative products to satisfy every one of its customers needs, in 2010 Çimsa created and began producing its "Super Bims" Cement at its Niğde Plant. Four different groups using the 6-sigma methodology were established in order to increase efficiency in different areas and a number of significant efficiency results were achieved. Seeing the environment and sustainable growth as priorities in all its activities, the facility proved this sensitivity by planting 16,000 trees during The Ankara Lalahan Cement Grinding and Packing Facility.The construction of Ankara Lalahan Cement Grinding and Packing Facility started in January 2001 and it was commissioned in July In 2005, it was acquired by Çimsa along with the Eskişehir Cement Plant. As the Ankara Plant does not have a rotary kiln, clinker supplied from other Çimsa Plants is ground and converted into cement here before being sold. The Ankara Cement Grinding and Packing Facility has a single cement mill with a capacity of 85 tonnes/hour, one raw material crusher, two cement silos and a packing unit. The Marmara Rota Port Cement Packing Facility.Located at the Kocaeli Yarımca Gulf Rota Port, the Marmara Facility has been leased by Çimsa in June It has an installed silo capacity of 5,000 tonnes, and a bagged and bulk cement packing/loading capacity of 100 tonnes/hour. Çimsa Super White Cement is sent from Mersin in bulk and stored in facility's 5,000 tonne horizontal silo. The Marmara Facility was leased especially to be closer to the company's customers in the Marmara Region; from the facility white cement is sold both in bulk and packaged. The Malatya Cement Packing Facility. Established in 1996 near the Malatya Battalgazi Train Station, the Malatya Cement Packing Facility has a processing and packing capacity of 60,000 tonnes/year. At the facility there are three cement silos with a total capacity of 900 tonnes. Cement is sold here both packaged and in bulk. 23

26 ÇİMSA ÇİMENTO SANAYİ VE TİCARET A.Ş. ANNUAL REPORT 2011 Çimsa Facility Information Production Lines Clinker Production Capacity (tonnes/day) Raw Meal Kiln Diameter (m) Cooler Type Mill Type Mersin Çimsa 1. Facility 3,700 grey clinker 5.25 Grid cooler Ball mill 2. Facility 1,845 grey clinker 3.60 Grid cooler Roller mill or 2. Facility 1,470 white clinker 3.60 Grid cooler Roller mill 3. Facility 1,750 white clinker 3.75 Grid cooler Roller mill 1. Isıdaç Isıdaç-40 clinker 2. Isıdaç Isıdaç-40 clinker Kayseri Çimsa Production Line 2,300 grey clinker 3.60 Grid cooler Roller mill Eskişehir Çimsa 1. Production Line 1,750 grey clinker 3.60 Grid cooler Ball mill 2. Production Line 2,300 grey clinker 3.60 Grid cooler Ball mill Niğde Çimsa Production Line 1,380 grey clinker 3.80 Grid cooler Ball mill 24 Grinding Facility Mill Production Capacity (tonnes/ day) Mill Diameter (m) Mill Length (m) Cement Mill Type Ankara Çimsa ,20 13 Ball mill Production Figures for 2011 Clinker Production Cement Production Grey Clinker 3,956,079 tonnes Grey Cement 4,545,074 tonnes White Clinker 875,929 tonnes White Cement 1,020,988 tonnes Isıdaç-40 Clinker 27,207 tonnes Isıdaç-40 26,234 tonnes Sulphate Resistant Clinker 29,293 tonnes SDÇ Cement 25,637 tonnes Ekoharç 12,195 tonnes Total 4,888,508 tonnes Total 5,630,128 tonnes Capacity Utilization of the Rotary Kilns for 2011 Mersin Rotary Kiln I 91% Mersin Rotary Kiln II 95% Mersin Rotary Kiln III 96% Kayseri Rotary Kiln 97% Eskişehir Rotary Kiln I 90% Eskişehir Rotary Kiln II 96% Niğde Rotary Kiln 95%

27 CE Certified Certification EN CEM I 52,5 R White Portland Cement EN CEM I 42,5 R Grey Portland Cement EN Calcium Aluminate Cement EN CEM II/B-L 42,5 R White Portland Calcareous Cement EN CEM II/B-M (V-L) 42,5 R Portland Composite Cement EN MC 12,5 X Mortar Cement EN CEM II/B-M (P-L) 32,5 R Portland Composite Cement EN CEM II/A-M (P-L) 42,5 N Portland Composite Cement EN CEM II/A-M (P-L) 42,5 R Portland Composite Cement EN CEM IV/B (P) 32,5 R Puzzolanic Cement EN CEM II/A-L 42,5 R Portland Calcareous Cement EN CEM III/A 32,5 R Blast Furnace Cement EN Ground Blast Furnace Slag G Certified Certification TS 21 BPÇ 52,5 R/85 TS SDÇ 42,5 R White Portland Cement Sulphate Resistant Cement National Standards Compliance Certification BL I 52,5 R UNE (Spain) HR EN 197-1: 2005 CEM I 42,5 R (Crotia) Grey Portland Cement HR EN 197-1: 2005 CEM I 52,5 R (Crotia) White Portland Cement CEM I 52,5 R SONCAP Certificate (Nigeria) White Portland Cement CEM I 52,5 R SASO Certificate (Saudi Arabia) White Portland Cement CEM I 52,5 R GOST-R Certificate (Russia, Ukraine) White Portland Cement CEM I 42.5 R GOST-R Certificate (Russia, Ukraine) Grey Portland Cement TSE Compliance Certification TS 21 BPÇ 52,5 R/85 TS EN CEM I 42,5 R TS EN TS EN CEM II/B-L 42,5 R TS EN CEM II/B-M (V-L) 42,5 R TS EN MC 12,5 X TS EN CEM II/B-M (P-L) 32,5 R TS EN CEM II/A-M (P-L) 42,5 N TS EN CEM II/A-M (P-L) 42,5 R TS EN CEM IV/B (P) 32,5 R TS EN CEM II/A-L 42,5 R TS SDÇ 42,5 R TS EN CEM III/A 32,5 R Products White Portland Cement Grey Portland Cement Calcium Aluminate Cement White Portland Calcareous Cement Portland Composite Cement Mortar Cement Ekoharç Portland Composite Cement Portland Composite Cement Portland Composite Cement Puzzolanic Cement Portland Calcareous Cement Sulphate Resistant Cement Blast Furnace Cement Other Certification TSE EN ISO EN 9001: 2008 TSE EN ISO EN 14001: 2004 TSE_SG-OHSAS TS EN 16001: 2010 Mersin Kayseri Eskişehir Niğde Ankara Plant Plant Plant Plant Plant TS EN CEM I 42,5 R Portland Cement (Grey) x x x x x TS EN CEM II/B-M (V-L) 42,5 R Portland Composite Cement x TS EN CEM I 52,5 R Portland Cement (White) x TS EN CEM II/B-L 42,5 R Portland Calcareous Cement (White) x EN MC 12,5 X Mortar Cement (Ekoharç) x EN Calcium Aluminate Cement x TS EN CEM II/A-M (P-L) 42,5 R Portland Composite Cement x x x x TS EN CEM II/A-M (P-L) 42,5 N Portland Composite Cement x TS EN CEM II/B-M (P-L) 32,5 R Portland Composite Cement x x TS EN CEM II/A-L 42,5 R Portland Calcareous Cement x TS EN CEM III/A 32,5 R Blast Furnace Cement x TS EN CEM IV/B (P) 32,5 R Puzzolanic Cement x x x TS SDÇ 42,5 R Sulphate Resistant Cement x 25 Packaging Types and Variations Bagged Loading Capacity 3 tier bagged 3 tier craft paper 50 kg. 4 tier bagged 4 tier craft paper 50 kg bagged 1 tier white, 1 tier laminated dark and 2 tiers dark craft paper 50 kg bagged 1 tier white, 1 tier laminated dark and 3 tiers dark craft paper 50 kg bagged 1 tier white, 1 tier laminated dark and 4 tiers dark craft paper 50 kg bagged 1 tier white, 1 tier laminated dark and 2 tiers dark craft paper 25 kg. 2+1 bagged 2 tiers dark craft, 1 tier laminated dark craft 25 kg. 1 tier bagged 1 tier laminated polypropylene 50 kg. 2 tier bagged 50 kg. Sling Paletless 39 bags 1.95 tonnes 800 tonnes/days Big Bag 1.5 tonnes 800 tonnes/days Laminated Polypropylene 1,5 tonne 800 tonnes/days Slingbag 1.5 tonnes Laminated Polypropylene 1 tonne 800 tonnes/days Palette Wooden 15x100x120 cm bags (50 kg.) tonnes 800 tonnes/days Palette Wooden 15x100x120 cm 64 bags (25 kg.) 1.6 tonnes 800 tonnes/days Other Bulk Lime Truck tonnes 4,000 tonnes/days Clinker Bulk Ship 2,500 tonnes/days Big Bag Laminated polypropylene tonnes 800 tonnes/days

28 ÇİMSA ÇİMENTO SANAYİ VE TİCARET A.Ş. ANNUAL REPORT 2011 Cement Types Manufacturing special types of cement, including White Cement and Calcium Aluminate Cement, Çimsa is consistently innovative, continuing to lead the market due its flexible, customized products and services. 26 Portland Cement.Complying with the TS EN CEM I 42.5R standard and containing high levels of C3S, Portland Cement ensures high resistance development. It is the most commonly used type of cement in high-resistance concrete types and in multi-storey constructions. It is particularly preferred in prestressed, prefabricated implementations and used in tunnel formwork systems in housing concretes. Çimsa s Puzzolanic Cement has been EC certified by the Council for Quality and the Environment (CQE), giving it the right to display the CE trademark. composed of around 35% very finely ground volatile cinder and limestone. This very fine additional backfill material fills the micro-pores in the concrete, increasing the concrete's impermeability as it is compressed. The siliceous volatile cinder utilized in the manufacture of Portland Composite Cement accelerates the concrete s internal reactions as it sets, increasing the resultant concrete s resistance against exterior impacts thus ensuring that its final pressure tolerance is high. Çimsa's Portland Composite Cement has the TS EN 197-1:2002 CEM II/A-M (PL) 42.5 R standard marking and contains portland clinker, and maximum 21% puzzolana and limestone. It is classified as one of cements having the highest early resistance in its class. While its hydration temperature is low, its early resistance is high. Çimsa s Puzzolanic Cement has been EC certified by the Council for Quality and the Environment (CQE), giving it the right to display the CE trademark. Portland Composite CementPortland Composite Cement is in the high-early resistance cement group, in compliance with the TS EN CEM IIB-M (V-L) 32.5R standard. In addition to Portland Cement, it is Puzzolanic CementPuzzolanic Cement is developed through a process of grinding its mineral additives (puzzolana) with a specific proportion of Portland Cement clinker and limestone to a degree specified (maximum 55%) in its TS EN 197-1:2002 CEM IV/B (P) 32.5 R standard. Çimsa s Puzzolanic Cement has been EC certified by the Council for Quality and the Environment (CQE), giving it the right to display the CE trademark. During the concrete s testing processes, its water: cement ratio is relatively high. Thanks to its high levels of concrete agents, its

29 hydration temperature remains low; however, it has greatly elevated levels of resistance to alkali-aggregate reactions and to other external chemical reactions. Puzzolanic Cement is generally utilized in construction, repair works, plastering and in the manufacture of construction chemicals. Sulphate Resistant CementTS SDÇ 32.5 R cement is obtained by grinding SDÇ clinker with a precise ratio of C3A and C4AF, together with a specified amount of limestone. The declaration of conformity of Sulphate Resistant Cement against its affiliated standard (TS 10157) has been approved, in accordance with the Ordinance on National Regulations (Nr: YİG-15/2006-7) that is binding on all construction materials that are not required to hold a CE trademark but that are covered by the Construction Materials Ordinance ( 89 / 106 / EEC). Çimsa EkoHarç is easy to use in implementations that do not require pressure resistance, such as masonry and alum plastering. Interacting directly with the end user in affordable, long lasting and high quality constructions, this is an ecologically and environment friendly product, a product that generates much lower levels of gas emissions than cements or limestone products. Mortar Cement (MC 12.5 X) is a finely ground, homogenous and water-proof connector that, to enhance its resistance, contains at least 40% inorganic components, including Portland Cement clinker and natural puzzolana. Its components neither increase the corrosion rate on any metal parts in contact with the mortar, nor do they deteriorate under the impact of fire. Its classification under the Turkish standards system is TS 22-1 ENV The proportion of C3A (tricalcium aluminate) in Sulphate Resistant Cement is limited to 5% while its total C4AF + 2*C3A is limited to 25%. The preparation of raw materials and the furnacing techniques applied to this concrete shows slight differences in comparison to gray clinkers. Only few plants manufacture this type of concrete. As this type of cement is effectively inert against sulphate-containing waters, it is utilized in harbors, waste water facilities, dams, underground flood channels, irrigation channels and in refinery facilities. It is a type of cement suitable for any construction that requires substantial resistance to chemical reactions, including environments that interact with seawater or sulphates. Its 28-day resistance measurement is above that of the 42.5 R resistance class, falling between 46 and 50 N/mm 2. Mortar Cement (EkoHarç).Offering a high adhesive power, Çimsa s EkoHarç enables the production of a high breaking strength mortar plaster. Reducing the risk of thermal stress through its low contraction and hydration parameters, the mortars and plasters developed with Çimsa s EkoHarç also display high levels of resistance due their low water permeability. Requiring only silica and water, this is a product that enables the quick and easy production of a mortar of plaster, without the usage of any lime. The amount of air contained within the fresh mortar once it is mixed with the Mortar Cement (MC 12.5 X) is 4% by volume. The EkoHarç Mortar Cement has a water retention value of 85%. The specified air content ensures an adequate level of bonding, while its water retention value ensures proper performance and cohesion at either low or high degrees of saturation. The resistance values for cement with a ratio water:mortar ratio of 0.5 are 12.5 N/mm for seven days and 22.5 N/mm for 28 days. Mortar Cement (MC 12.5 X) blends at a suitable rate of malleability after mixing in only an amount of water and silica appropriate for the task at hand, without the requirement for any further additives. For all sorts of fine construction work - including plastering, ground alum, mosaics, hothouses, weatherresistant moldings, wall and floor tiles, glazed tiles and natural stones - Mortar Cement (MC 12.5 X) only requires the mixing in of the correct amounts of silica and water. As a component of alum concretes it results in lower risk stress due to its low contractile qualities; as an ingredient of external plasters it exhibits elevated resilience against humidity and harsh climactic conditions; in internal plasters it ensures smoothness, rigidness and respiration. 27