CONTENTS PAGE CONTENTS PAGE. Sustainability Report Cover Our Approach to Our Stakeholders 16

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4 REPORT CONTENTS CONTENTS PAGE CONTENTS PAGE Sustainability Report Cover Our Approach to Our Stakeholders 16 Introduction by the Managing Director 2 Our stakeholders Ownership & Director Profiles 3 Social Project History Organizational Structure 4 Health & Safety at the Work Place and Child & Young Labor 22 Company Profiles 6-7 Trainings 23 Our Customers 8 Environment Management 25 Our Suppliers 9 Restored Habitat Ajara Textile Our Products 10 Our Carbon Footprint Financial Management 11 Energy Consumption of Companies Awards & Certificates 12 Introduction of Labor Management 33 Business standards & Ethics 13 Labor Management with numbers and figures Our most important issues 14 GRI Index 36-37

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6 SUSTAINABILITY REPORTING Cycle: January December 2009; Biennial Report; First Report Boundary of the report: The report covers the activities in textile business of Milteks as main office and factories of Milteks in Fatsa Blacksea/Turkey (Ceseka Tekstil) and Batumi/Georgia (Ajara Textile). The aspects chosen from economic, environmental and social performances are described in order to explain the sustainability performance of the business overall. References & Process in the determination of the report's content & Limitations: RG Sustainability Report Guidelines Version GRI Step by step guidance in the preparation of a basic GRI sustainability report Hand Book The main point in determining the aspects was the Milteks work flow however in order to operate our business; we definitely need our stakeholders and their opinions which are vital in this issue. Some aspects were selected via questionnaires which were sent to almost all our stakeholders. We made use of the feedbacks in the determination of different indicators that correspond to different aspects. The report only covers the activities of Milteks and its factories regarding economical, social and environmental performances. Data gathering had been coordinated by the Milteks Marketing & PD Manager and the HR Manager. Our report has been written and designed by our Marketing and PD Manager with the technical support of GRI and Systain. Milteks aims to cover more stakeholders in the next biennial company report. No significant changes occurred regarding organizational structure and the size of company during the reporting period. Application Level: C Level, 13 indicators selected from economic, environmental and social aspects. Contact information: Milteks Tekstil San. Ve Tic. A.S. BAKSAV, Mustafa Kurtoglu Cad. No: 8 Beylikduzu Istanbul / TURKEY Contact persons: Irem Karay Marketing & Project Development Manager Ozturk Aktepe Human Resources Manager Tel: (10 lines) Fax: info@milteks.com.tr Web site: *** For GRI Index please see the end of the book.

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9 OWNERSHIP & DIRECTOR PROFILES OWNERSHIP STRUCTURE Milteks is owned by 7 members of Bilgingulluoglu family. Only Kemal (25%) and Cemal (23%) are active in the business. The rest of the family is the silent supporter of the company. DIRECTOR PROFILES Kemal Bilgingulluoglu was born in October 05, 1963 in Diyarbakir/Southeast Turkey. When he was fifteen, he moved to Istanbul with his family where he pursued his education. In 1982, he and his brother, by borrowing a small capital from their father, opened their first textile company. They started producing jogging suits and team sport garments under their own brand CESEKA. They were also importing fabric from Far East to sell in the local market. When big brands became popular in Turkey, Ceseka sales decreased and the owners of this brand started to look for different options for their brand. This is how they started to work with brands such as Lotto and Taylor Bowls. With time and effort, in 1999, the company started to work with Puma which is now the biggest customer of Milteks. Kemal is the Managing Director of Milteks since He is involved in every aspect of the business. Cemal Bilgingulluoglu was born in July 17, 1960 in Diyarbakir/Southeast Turkey. After graduating from high school, he went abroad for education. In 1982, he started his first textile business with his brother Kemal. In 1997, they took over the licensee and distributorship of Puma in Turkey and Cemal became the General Manager of the company. In 2005, they signed a joint venture agreement with Puma. During his management term, sales in Turkey increased by a significant amount. By the end of 2008, they decided to sell their shares to Puma and Cemal quit management. He was convinced that the business in Georgia needed a leader when more investments were also being planned. He is now the Managing Director of Ajara Textile in Georgia. But he is also a part of the management in other companies of the family Business.

10 YEAR BY YEAR HISTORY OF THE COMPANY Establishment of the company Moved to existing location in Beylikdüzü / Istanbul Started working with foreign brands (Lotto Sport, TFG Group UK, KL Rupert and Taylor Bowls) Distributorship & licensee of Puma in Turkey (By one of Group Company) Started working with Puma AG Joint venture agreement with Puma AG (By one of Group Company) Start of the Establishment of first factory in Blacksea Ceseka Tekstil Ceseka Tekstil started production Start of the renovation of the second factory in Georgia Ajara Textile Selling shares of Puma Turkey to Puma AG (By one of Group Company) Donation to TEMA for a Milteks Forest Ajara Textile started production ISO & ISO certificates achieved for Milteks and Ceseka GOTS certificates (OE100 & OE blended) achieved for Milteks, Ceseka and Ajara Publishing first Sustainability Report of company MILTEKS/ISTANBUL ORGANIZATION STRUCTURE OF THE COMPANIES Milteks Tekstil San. Ve Tic. A.S. is a family run company headquartered in Istanbul. Embellishment, production and trimming activities are conducted outside the company; mainly in its own factories located in Black Sea/Turkey (Ceseka Tekstil Konfeksiyon San. Ve Tic.A.S.) and Georgia (Ajara Textile Ltd.) Apart from weekly held general meetings regarding managerial and production issues, yearly meetings are being held only with the participation of the board members to discuss the current situation and activities of the companies. Out of 7 board members, only two of them are active in the business and one is the executive member of Milteks as the managing director of the company while the other is responsible for the activities in Georgia. The chart above represents our organization structure in all our factories. Assisting breakdowns are not demonstrated. Our factories have separate managements but the final report is presented to the managing directors. We do not have a designated team for sustainability. Marketing and project development team and HR managers of Milteks are working on projects and managing different aspects of our factories. The top management is also involved in all steps with their financial support and opinions to take the firm to further levels ahead.

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12 COMPANY PROFILES MILTEKS & CESEKA & AJARA Locations of Milteks & Ceseka & Ajara 803 km km 515 km MILTEKS TEKSTIL Milteks Tekstil San.ve Tic.A.S. was founded in 1984 as a small company in Istanbul. At the beginning, the scope of the business only included the production of jogging suits and team sports wear under their own brand name: Ceseka. The company was also importing fabric from Far East to sell it in the local market. In order to take further steps into growing, the business owners applied for holding the production of important brands. First customers were Lotto Italy, Taylor Bowls UK, TFG Group UK and KL Rupert. In 1992, due to the growth of business and the need of a larger place to operate, Milteks moved to its new building in Beylikduzu/Istanbul where the company is currently located. Milteks is operating in textile business in Istanbul/Turkey where its headquarters and suppliers are located, furthermore in Fatsa-Blacksea/Turkey and Batumi- Adjara/Georgia where its factories are currently operating. In Milteks factory sampling activities are carried out however production does not take place. With regards to production; pattern, sampling, cutting, heat transfer, fabric warehouse and laboratory and administrative departments are located in factory. Milteks is working with 197 people. All workers remuneration, except for the management, is minimum wage required by government. In addition, the workers social security premiums are paid to the government. Milteks also offers transportation and lunch to its employees free of charge. Salary increase is annually implemented. Administrative staff wages may vary depending on the position, working years and performance of the staff. In Milteks (also in Ceseka & Ajara), video conference system is in use for contacting factories in case of an emergency. The system is also suitable for communicating with customers and other companies in case of a need. Milteks and other group companies have a strong capital approximately and an annual budget of more than As a result none of our companies take loans from any financial institution. Total production capacity (Ceseka, Ajara and Istanbul subcontractors included) can be defined as pcs/year. Our main business is polyester garments for team sports which includes mainly replicas of the clubs sponsored by our customers.

13 COMPANY PROFILES MILTEKS & CESEKA & AJARA Starting from 2005, Milteks started searching for new ways to achieve lower production costs and to offer lower garment prices to customers while maintaining the same delivery terms. With this aim, at the beginning of 2007 Milteks visited the Black Sea region and subsequently invested there with the support of Government promotions. The factory was established in 2, 5 months. The workers are paid minimum wage as defined by the government (same as in Istanbul) apart from the social security premiums, in addition lunch and transportation are provided by the company. Salary increases are implemented based on the workers annual performance. Currently the production in Ceseka is carried out with 268 people. With 7 sewing lines, the annual production capacity is approximately pieces. Capacity may vary depending on the difficulty of the particular styles and worker circulation. An additional production building is being planned for This will let us reach a higher capacity for the upcoming World Cup with approximately 500 workers. CESEKA TEKSTIL STATEMENT REGARDING SUSTAINABILITY By moving production to Fatsa industrial zone, Milteks provided job opportunities to the local community. People in Fatsa were not experienced in textile business however during the construction period, they were given elaborate trainings which were not limited to how to sew and pack a garment but also included subjects such as how to behave in the work place or in case of an emergency. In the end, when all workers moved to the main building, they had a new perspective with regards to life and work. Basic trainings on work flow and health & safety at work are still being conducted periodically. Government promotions were the main reason to move the production to Fatsa/Black Sea. The land was provided to Milteks with a small profit margin on condition that Milteks continues operating for at least 5 years. Incentive law no requires for the government to pay the employer's share of the social security premium calculated over the minimum wage. In the event that the wage is higher than the minimum wage, then the employer is responsible for covering the balance. Currently, Ceseka has the highest number of employees in the area where its business is located. AJARA TEXTILE Textile business requires a never ending improvement process. Therefore Milteks has never stopped looking for new ways to grow after establishing Ceseka. During the construction of Ceseka, Milteks management also visited Georgia in order to search for options to build a textile factory. After many visits organized to Batumi and meetings held with the government of the Autonomous Republic of Adjara (Adjara with its capital Batumi is an autonomous republic in Georgia) Milteks management reached an agreement with the government on the renovation of an old tea factory built in In January 2009, Ajara Textile started production activities with 3 lines and 125 employees. The land and the factory are 100% owned by Milteks. Manufactured garments are marked Made in Georgia. Georgia is a GSP country so there is not a tax requirement for shipments to European countries. Finished garments are taken into to Turkey with EUR 1 certificate and Turkish custom delivery procedures are then valid in order to export goods to customers. Georgian and Turkish laws are different. In Georgia, there is not a defined minimum wage so the salaries are determined on the working contract with the confirmation of the Georgian Government and apart from the salary; social security, lunch and transportation are also supplied to the workers free of charge. Currently the production in Ajara continues with 10 lines and 487 people. The targeted annual capacity is pieces.

14 OUR CUSTOMERS We are fully committed to our business and we owe all of our accomplishments to our customers who always believe in us. We have been chosen as a supplier due to our wide range of fabric and our care for quality and flexibility in all stages of the operation. Milteks is a garment manufacturing company that supplies readymade team and leisure wear garments to its customers and exports them to many countries all around the world depending on the customers request. Approximately 35% of the entire production is shipped to Germany and around 20% to Italy. The rest is being dispatched to several countries. Jurgen Mahn WORLD CAT Sourcing Director Apparel As one of our global strategic partners Milteks has proven for many years that close cooperation is the best way to be successful. Kemal and Cemal performed outstanding in all aspects of the business and with their factory opening in Georgia they again showed that the company is following a clear future strategy of brand commitment. I'm extremely proud to see all the progress regarding sustainability and this report is another mile stone in that area. Together as partners we established SAFE as an integral part of our business and exactly the same we will do with sustainability. All the best Juergen Mahn Global Sourcing Director Apparel PUMA - World Cat Ltd CUSTOMER PORTFOLIO SALEWA; 5% since 2007 TAYLOR BOWLS; 3% since 1992 ERIMA; 12% since 2008 PUMA AG; 60% since 1999 LOTTO SPORT; 20% since 1992 PUMA AG LOTTO SPORT ERIMA SALEWA TAYLOR BOWLS In October 2009, Venice Beach and Do You Football brands were also added into our customer portfolio. With our increasing capacity in 2010, we hope to start working in larger quantities and with more leading brands. With the support of our suppliers and our customers, we will be able to put more effort into sustainability.

15 OUR SUPPLIERS Our suppliers are the backbones of our company since they support us in giving the best service to our customers. In order to achieve the best quality with the best timing, we prefer to choose our suppliers based on their approach to customer satisfaction and also to a sustainable production. Here we would like to point out our main suppliers which have the highest impacts on our production stages with their high quantity deliveries. They are also the forces that challenge us to be more sustainable with the projects they are developing. In order to produce a garment, we need a large supply chain. Purchase of all materials from the same supplier may seem as a better solution but we choose to work with experts and a company cannot possibly be an expert for all materials. Accessory: We supply almost all accessories from Turkey. Print & Embroidery & Heat Transfer: We only import most of our heat transfers according to our customer requests. Fabric: Milteks does not import fabric. All requested fabrics by our customers are developed by our nominated suppliers in Turkey Sublimation paper: In order to achieve the best results, we prefer to import our paper from companies that use advanced technology methods Subcontractor: We mainly use our factories and audited subcontractors for finished garment production. We have a nominated supplier for scarf production.

16 OUR PRODUCTS GENERAL INFORMATION ON SHIPMENT QUANTITY Our product range consists of knitted fabrics. We are producing mainly t-shirts, shorts, pants, skirts, and sweats for team sports and tennis lines for our worldwide customers. In addition, we have a large product range for leisure wear. In 2009, our sales performance was satisfying but with our efforts to increase capacity, we also aim at increasing our sales during the reporting period. OUR FABRIC USAGE IN GENERAL FABRIC USED IN KGS Cmia cotton Organic cotton Normal cotton polyester Milteks product range is based on polyester and cotton fabrics. But as we are manufacturing mainly team sport garments for our customers, their preference of recycled polyester is very important to us for sustainability reasons. USED FABRIC PERCENTAGE Polyester 77,94% cmia cotton 2,32% organic cotton 0,26% normal cotton 19,48% FABRIC QUALITIES IN TERMS OF SUSTAINABILITY Milteks is offering organic cotton to its customers since 2005, but the customers did not start to use this fabric until With the increase of awareness among our customers, in 2010 organic cotton usage will become more common. We have already received a significant amount of estimates for the upcoming year. African made cotton entered in Milteks fabric range in This is a special project to help the improvement of the farmers and their families in Africa. It is an important project for sustainability. Recycled polyester became popular in 2009 and Milteks focused on a sustainable approach and reached an agreement with a Turkish yarn supplier in Istanbul. In 2009 only first trials of the fabric had been realized. In total, 300 kgs of fabric had been produced in order to be used only for sampling at the moment. With the rising awareness of our customers and our additional efforts, we believe that the use of sustainable products will further increase in 2010.

17 FINANCIAL MANAGEMENT BY NUMBERS MILTEKS NET SALES IN 2009: ,31 Milteks, Ceseka and Ajara financial managements are based on sales and operating costs of the companies. None of the companies has government ownership within their shareholder structure. All income stems from sales and no other financial investment is included. Even though Ceseka and Ajara are owned by Milteks, as they are also our subcontractors, their accounting books and annual profits are independent. production costs labor costs general management costs general costs taxes SGK premiums donations trainings investment 0,10% 0,02% 5,86% 7,67% 2,05% 8,60% 3,05% 3,83% MILTEKS OPERATING COST BREAKDOWN According to total income: government promotions= 0,22% profit= 13,54 % 68,82% CESEKA OPERATING COST BREAKDOWN production costs labor costs general management costs general costs taxes SGK premiums trainings 0,19% 15,54% 17,75% 1,11% 0,31% 1,92% According to total income: government promotions= 13,79 % profit= 14,34 % 63,19% CESEKA NET SALES IN 2009: ,88 Ceseka and Ajara are working as if they are just like any other subcontractor of Milteks. Their production price for each style includes also the profit of the company. The companies output records are kept under the same headers within the system hence the information will be presented herein with respect to these headers. AJARA NET SALES IN 2009: ,45 In terms of sustainability, we believe that we have an impact on the financial performance of all our subcontractors and the governments of the countries where we operate moreover on the living and social standards of our employees. AJARA OPERATING COST BREAKDOWN production costs labor costs general management costs taxes SGK premiums trainings 47,71% 4,77% According to total income: government promotions= 0 % profit= -76,02 % 9,09% 1,25% 0,16% 37,01%

18 AWARDS & CERTIFICATES AWARDS: LTEKS /APRIL 2009 = From ITKIB (Istanbul Textile and Confection Exporters Union) For being one of the first 100 exporting textile firms in Turkey (among firms) CESEKA/ MAY 2009 = From SGK For employing the highest number of employees to Social Security Association (SGK) and paying the premiums on a timely manner LTEKS/ MAY 2009 = Istanbul Taxing Authority Chairmanship For being in the 2 nd row in terms of corporation tax contribution CESEKA/ AUGUST 2009 = From Fatsa Football Club Management For providing team sport garments for Fatsa team players. MILTEKS/ AUGUST 2009 Istanbul Chamber of Industry For being in the first firms among all industrial establishments in Turkey Row number: 996 LTEKS/ DECEMBER 2009 From Puma For being the Most Committed Supplier CERTIFICATES: ISO 14001:2004 (Milteks - including Ceseka Tekstil) is a step taken to protect the natural structure and environmental features. ISO 18001:2007 (OHSAS) (Milteks - including Ceseka Tekstil) is the Work Health and Safety Management System Standard which includes the conditions that need to comply with the legal obligations for workers in terms of reducing accidents, worker health and working safety. GOTS (OE100): (Milteks, including Ceseka Tekstil & Ajara) OE 100 certificate refers to the follow up of the usage of 100% organic cotton in all steps of the production; starting from yarn to shipment to customer. GOTS (OE Blended): (Milteks, including Ceseka Tekstil & Ajara) OE Blended is a binding standard that certifies the organic cotton in every step of the production; starting from yarn to shipment to customer. This standard is applied to all garments containing a minimum of 5% organic cotton.

19 BUSINESS STANDARDS & BUSINESS ETHICS Milteks is a Turkish company run under the equal opportunity principle by a Turkish family from the South East of Turkey and its employees consist of Turkish people who moved to this region from all around Turkey. Our mission is to produce a Turkish product that complies with world class quality standards. As a supplier working with major brands, we have already declared our environmental and ethical commitments. These commitments may also be observed in all our factories. In the preparation of our commitments, we also took our customers requirements into account. MILTEKS GROUP CODE OF CONDUCT MILTEKS, Ceseka and Ajara declare their commitment to the universal principals stated below: MILTEKS shall never employ unwilling workers or force workers basing on their contract, MILTEKS shall follow all legal procedures of Child Labor. No child below minimum age required by the law shall be hired MILTEKS shall not impose or let others impose any corporate punishment or any physical or psychological harassment or compulsion, MILTEKS shall pay all the mandatory wages and benefits of the workers as indicated within the law, MILTEKS shall follow the requirements of current laws and obligations in the determination of working hours, MILTEKS shall employ workers and determine the wage & promotion terms based on their work performances, but not on their race, language, religion, ethnic origin or gender, MILTEKS shall follow the requirements regarding Work Health & Safety and also the Code of Conduct of the customers, MILTEKS shall be responsible to take all necessary actions for the possible working area risks and to embrace a working concept that always puts the safety and health of workers first, MILTEKS shall respect its employees' freedom of association and other social rights provided that they respect the laws of the Turkish Republic, MILTEKS shall organize its environment related activities and make an effort to prevent pollution in order to reach the highest standards regarding environment & health issues by complying with environmental rules defined by law. MILTEKS GROUP CODE OF ETHICS MILTEKS respects and upholds the laws and legal requirements in all countries where it operates, MILTEKS and its employees are not allowed to participate in any activity which may cause conflict of interest or result in illegal benefits, MILTEKS does not financially support any political party, MILTEKS encourages and supports its employees efforts to participate in charitable work, MILTEKS believes that all people have the right to act against discrimination. MILTEKS supports equal opportunity in its employment policy and respects human rights hence, expects its partners and employees to behave in the same ethical manner, MILTEKS does not tolerate any form of violence or abuse and in case of any violations legal action will be taken, MILTEKS respects everyone's freedom of religion, MILTEKS respects customer and supplier privacy and will not share any personal information without the consent of the customer or the supplier in order to respect confidentiality rights, MILTEKS is committed to operate while maintaining a healthy environment and to always work for a sustainable development,

20 OUR MOST IMPORTANT ISSUES ISSUE PERFORMANCE TARGET Securing enough orders to preserve continuity for the company and its factories 10% expansion in business & Shorter delivery periods High number of resignations in Ajara Textile/Georgia Implementing 100% lean manufacturing system in all factories Building a wind mill in Adjara/ Georgia More efficient work flow So far, we have been able to work with reliable and supportive customers and we are very pleased to have long term employees. But it is our responsibility to keep this machinery going. Our main objective is to receive more orders from our existing customers and also to work with more major brands. These targets shall be achieved by cost and delivery term reductions which pushes us to move our production sites outside Istanbul in order to benefit from government promotions. As a cultural habit, Georgian people prefer to work in seasonal jobs. Our aim is to change this habit. In addition to salaries, lunch and transportation are also provided to employees. Minimum wage is higher than other similar companies in Georgia. Detailed trainings are organized. There is a continuity bonus implementation in place. During the lean seminar in Milteks, our factories had been evaluated and were found 46% adequate for this system. Even though the company's efforts have been useful until now, we still have a 56% way to go. Our consultants will lead us to the implementation of LEAN. The project will be finalized by the end of After detailed researches, the Wind mill project is planned to be implemented by the end of 2010 or the latest, Since Georgia is a developing country and our commitment to the environment has already changed, there is a big challenge for us. With this project which will change the structure of the village Bobokvati, our aim is to eliminate generator usage by producing our own electricity for the factory. After receiving the feedbacks from our suppliers we have come to a conclusion that our company must be more environment friendly, especially during the development process. Fabric planning has to be done more efficiently for new coming collections. Print artworks should be more reliable and also should be available in bulk for the benefit of the customers. Furthermore, the issue that we have been receiving the highest level of complaints is unrealistic forecasts. When the orders are lower than the forecasts, both the supplier and the manufacturer face difficulties in terms of general expenses. To continue providing our existing customers the best service and to look for opportunities to work in higher volumes. To search for new customers without having the need to change any work policy. To maintain all workers to keep their performance at high levels all the time. Searching for new production sites where government promotions are available and applying new techniques in order to minimize energy consumption hence realizing the best production with the best practice. Raising awareness regarding working conditions and environmental issues by organizing more training. Investing on environment friendly high technologies. To reduce the number of resignations To define different bonuses even for smaller performance increases in order to encourage workers to become more efficient. To continue training employees about manners of working. To continue organizing social activities. Lean training finished and the consultancy process has started. Performance evaluations for workers should be more detailed and a new format is in process. Production steps have to be minimized in order to save time and cost. A more detailed waste management system must be developed. Searching for suitable areas to build a wind mill. Supplying work force for the establishment and further needs. By negotiating with the government of Adjara and the local governments, organizing an investing budget of the project with the finance department of the company. To communicate swiftly and hold more meetings in order to share ideas for saving more time and decreasing waste. Communicating with the customer in case of a mould change. Monetary expenses should be balanced for both the part of the customer and the print supplier. Hoping to achieve more realistic forecast from the customer and to combine more orders of the same style in order to reduce the general costs of all suppliers. Consequently, to become more sustainable by saving the energy that is used to produce a garment.

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22 OUR APPROACH TO THE STAKEHOLDERS For us, our stakeholders are the keys to open new doors. Some have influences on us and some are influenced by our activities directly or indirectly. We shall define our stakeholders as customers, suppliers, employees, private consultancy companies, NGO s and government. In Milteks, Ceseka and Ajara, we have a worker voice committee which consists of women and men. They are selected by the workers of the factories and announced by factory managements on clipboards. These committees are the bridges between the workers and the management regarding suggestions and requests. HR Manager supports this committee by organizing meetings with them on a regular basis and by suggestion boxes, face to face interviews or phone calls. Administrative staff directly contacts the HR Managers of factories via , phone call or face to face dialogues. Depending on the urgency, but generally on a monthly basis all requests are reported to top management for the glance of the members. The evaluation results are hanged on clipboards for the information of the workers. Employees in all our factories have the possibility and right to communicate with their managers directly or they may use the suggestion boxes provided in all our factories to share their opinions and requests. All other stakeholders, such as our customers or suppliers, may contact to the representatives in our departments or directly the top management in order to present their concerns or satisfaction. For our first report, we decided to send out questionnaires to most of our stakeholders in order to get their opinions about our companies and sustainability. Among all our stakeholders, we chose to contact the ones that experienced more business opportunity with us because their response would be more realistic and useful. But our main focus was our employees as at the moment we have over 900 employees including our factories and they create the biggest impact in our daily life. As a result of our survey, we realized that we have not expressed our companies sufficiently in terms of sustainability. We need to put more effort in this issue and share our activities more with all our stakeholders. Our company is run by a family that shows great respect to sincerity and as a result transparency in all departments is very important for us in order to prevent any personal interest. This transparency is also valid in top management so that the business overall shall be protected against corruption. Continuous Communication Surveys Meetings COMMUNICATING STAKEHOLDERS Suggestion Boxes , phone, face to face discussion

23 OUR STAKEHOLDERS OUR CUSTOMERS Our customers are the most inspiring group among our stakeholders since they always encourage us to move forward with their requests and demands. This report is the first opportunity for us to get their opinions in written. The survey had been conducted via and the results were evaluated regarding customer satisfaction and sustainability issues. Lately, Milteks has been very sensitive with regards to environmental issues and implemented various new projects and as a result of these efforts received many certificates. Milteks also respects Puma's requirements and works for improving its existing level of success while getting more and more sustainable and environment friendly in their operations. Dilek Ergen / PUMA LO TURKEY Our long term Business relationship definitely proves that Milteks is an ideal business partner for us. We have an idea about Milteks' current efforts regarding sustainability but we would also like to get more information. LOTTO SPORT ITALIA S.P.A. We are very satisfied with the level of product and service quality that Milteks offers and we would be pleased to be a part of Milteks' objectives and benefit from their vision towards growth. ERIMA GMBH OUR SUPPLIERS: We rely on our suppliers in this business and the feeling of trust is mutual. In order to give the best service to our customers we prefer to work with big and reliable suppliers. We are also working on sustainability projects and would like to know more about Milteks' projects. In addition we would also like to work with Milteks on more new projects. We are in close relationship with Milteks and aware of their projects. We support them in their efforts to improve sustainability and wish to do the same for our companies. Our mission is to produce the best quality sustainable products by minimizing our energy consumption and ensure customer satisfaction. This is our common ground with Milteks and we hope to move this business relationship further. OTHER SUPPLIERS AND NGO S: Consultants and NGO s lead us to manage our business in best way possible., Giz is the internal production management system developed by the company Giz with the guidance of the Milteks management. Milteks worked with Systain on the Carbon Foot print project. Milteks conducted a Project with Keig & Kadav on equal opportunities and gender equality at the work place.

24 OUR STAKEHOLDERS Our main focus is on the opinions of our employees since we owe them all our accomplishments. Furthermore, they always support us in our commitment to the environment and we would like them to know that they can contribute to the sustainable growth of our company. In order to find out our shortcomings we prepared a questionnaire for them consisting of important key topics on which they may also wish to comment such as; Salaries and Social Rights, Trainings, Performance Evaluation and Social and Environmental Responsibility. All our employees in every factory received the same questionnaire. We preferred not to use multiple choice but yes or no questions followed by blank spaces where they could write in their comments. We have been conducting similar surveys among our workers since However for the first time Ajara, our suppliers and customers were also included. At the end this survey had been a more efficient and comprehensive one that allowed us to analyze our company from a different point of view. For the evaluation process, we preferred to combine the results of the employee questionnaires as the answers from the three factories were very similar to one another. Total number of questionnaires distributed in Milteks : 120 Questionnaires returned to HR : 84 Rate: : 70 % Total number of questionnaires distributed in Ceseka : 180 Questionnaires returned to HR : 120 Rate: : 67 % Total number of questionnaires distributed in Ajara : 310 Questionnaires returned to HR : 220 Rate: : 71 % DO YOU RECEIVE YOUR SALARIES ON TIME AND BELIEVE THAT YOUR COMPANY PROVIDES YOU ALL OF YOUR SOCIAL RIGHTS? To receive the proof of our respect to effort was very pleasing for us. Our aim is to always have the same score of 100% in our records. ON TIME 100% People are talking about the economic crisis. Well, I do not feel it here, I always get my salary on time and my social security is working like a clock. (A Worker from Milteks) WOULD YOU LIKE YOUR COMPANY TO PROVIDE MORE TRAINING FOR YOU? It is really great to work here. No other company gave me a chance; all they said was that I did not have enough experience. Look at me know, I have achieved the experience that the others did not even bother to offer me. (A Worker from Ajara) NO,NOT NECESSARY 55% YES, MORE WOULD BE BETTER 45% Here we should reconsider our existing training programs. The ratio is almost equal so we have to take into consideration some possible new training subjects for DO YOU THINK A BETTER PERFORMANCE EVALUATION WILL HELP YOU TO IMPROVE YOURSELF? By the end of 2009, we already started to develop a new performance evaluation system in terms of adjustment to Lean manufacturing. To know that most of our workers are pleased has been very encouraging for us. MAYBE 34% YES, DEFINETEL Y 57% I think the government is not on our side, could they survive a month with minimum wage? I want my government to take us into consideration. (A Worker from Milteks) NO, NO NEED 9% ARE YOU INFORMED ABOUT THE SOCIAL AND ENVIRONMENTAL INITIATIVES OF YOUR COMPANY? Would it be possible to have more benches in the garden so that we can sit outside when the weather is nice? And also a canteen to shop during breaks. (Worker from Ceseka) NO 46% YES 19% NOT ENOUGH 35% This should definitely be our main concern because we received similar results from our suppliers and customers. This means we have to inform all of our stakeholders regularly while developing projects or putting them in action.

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26 EQUAL OPPRTUNITIES AND GENDER EQUALITY AT THE WORK PLACE PROJECT NOTES OF THE MANAGING DIRECTOR Milteks attended a new Project of Puma which was only for the women in the factory. The Project was to inform the women on Equality between men & women and women's rights. The training had very positive effects on our workers. First of all, they now have higher self confidence. They also learnt about their rights with respect to labor law. They all admitted that even though they had all details in hand, have never read it before. When the training was over, it was a pleasure for us to see their smiling faces. They were very happy for being involved in this Project because they now know what they mean to this world and can get from life. We, as management of Milteks, are determined to preserve this level of communication and take it even further. We are also planning to organize similar seminars in our factories to raise awareness with regards to laws and also rights inside and outside the work place. EQUAL OPPORTUNITIES AND GENDER EQUALITY AT THE WORKPLACE PROJECT The Project was implemented by the Women s Solidarity Foundation (KADAV) and the Social Development and Gender Equality Policies Center (SOGEP), two members of the Women s Labor and Employment Initiative Platform (KEIG), and sponsored by PUMA AG. The main objectives of the project were to empower women workers and to contribute to the information of a more equal work place. The main activity of the Project was conducting seminars on different issues related to women s rights and empowerment of the women. All seminars were conducted by women rights experts from different women s NGO's and universities. The seminars took place every Monday and Tuesday for 4 hours. Each day two groups consisting of 25 female workers, 50 in total, participated in the seminars. All seminars were conducted during working hours and the factory management had not made any deductions of the participants salaries for the hours spent at the seminars. In addition, since it was also important to draw the male workers' attention to women issues, two seminars were conducted with the participation of 50 male workers, in two groups. Topics of the seminars conducted were as follows: Gender Women s situation in Turkey. Violence against women, regulations of Turkish penal code and the law on the protection of the family Turkish civil code and women s rights Turkish labor code and the global situation Sexual harassment at the work place Local politics and women s participation Communication with parents and their attitudes Women s health & Women s reproductive health Women s movement in Turkey In addition, two seminars were conducted with the participation of men workers on Gender Attitudes of parents, During the seminars participatory methods were used in order to get employees' own experiences. Experts supplied different documents and booklets for the participants and made presentations on subjects such as women's health, women's reproductive health and the latest developments in Turkey regarding women's movements. Finally, a training hand book including all the details of the seminars was printed and handed out. The Project was important for all the parties involved; the NGO s, Puma and Milteks. It was intended to be an example for other factories and brands. This experience has been very valuable for all parties.

27 EQUAL OPPRTUNITIES AND GENDER EQUALITY AT THE WORK PLACE PROJECT Ayse Guney Nilufer Circi Gulsen Keskin Zuhal Demircioglu When I first heard about the training, I thought it was unnecessary. But after it started, day by day, I learned that I have many rights. In fact, I learned that I am a human being, an individual who has rights. Of course everything around me is not changing that quickly, but I realize that it will happen little by little. Gülsen Keskin Classification Department Things have started to change with the Project. My mother and my sister also work here and they also attended the seminars. Our relationship has started to change that now we are talking about the issues that we have never talked about before. Zuhal Demircioglu Sampling Department (Sewing operator) Sevda Kiziltepe Hayriye Ibrahimoglu Umran Demircioglu The only change in my life is that I know my rights and what I can do. The thing that will not change is equality. I know men and women are not equal, it only exists in words. This is what I believe. But I also learned about women's health and realized that I did not know many things. Thank you. A worker who did not want to mention her name. The organization of this program proves that we are valued and respected by the management. My self confidence has increased. I learned where to apply if I suffer from any wrongdoing. I will make sure that I pass on the information I have learnt to everyone I know. Hayriye Ibrahimoglu Pattern Department Mergul Eser A lot of things have changed for me. Now, I know my rights at work and outside the work place. I can now protect and defend myself; I can take care of myself. I cannot believe that there are so many things that I did not know. Many thanks to everyone. Mergül Eser - Sampling Department (Sewing operator) Tugba Bas Dilek Sakar Sevtap Saglam

28 HEALTH & SAFETY AT THE WORK PLACE Milteks already set its Health & Safety at work policy in 2008 and it is valid for all the factories operated by the company. The scope of the health and safety concept includes all necessary measures taken in order to protect our workers and our guests to ensure the continuity of their daily living. Milteks considers this issue as a priority in all operations therefore chooses to take support from a professional company to achieve the best results in health and safety at work. Milteks has been organizing Health & Safety annual trainings and seminars since 2008 for all the employees of all factories. This is also considered as a responsibility for the subcontractors working with Milteks. The authorized committees are working in facility level as each factory has its own committee of 9 people (Of all workers; 5% in Milteks; 3% in Ceseka and 2% in Ajara). This committee sets up monthly meetings with the H&S Specialist in order to discuss the action plans and to set new goals. In addition to the committee members, an emergency team was also selected in all factories. This team consists of 7 divisions (fire fighting, rescue, first aid, protection, communication, technical support and chemicals) containing 6 people in each division. The team members also attend semiannual trainings. CHILD & YOUNG WORKERS Even though Turkey is a developed country, we still face shortcomings with regards to child labor and poor conditions for young workers. Turkish labor law 4857 defines young labor age as over 16 and below 18 and clearly defines the conditions and varieties of works they may perform. Child laborer is defined as children who have completed the compulsory education (above 14 and not above the age of 15). Children and young workers shall be hired according to certain standards that are clearly mentioned in the Turkish labor law. When we think about our factories, we can easily determine what children and young workers can and cannot do. Actually, there is not any suitable job for them in a textile company. Regardless of the country where we are operating, be it in Turkey and/or Georgia; child labor and young workers are definitely out of our vision. It is clearly mentioned in our Code of Conduct that Milteks will definitely not hire any child labor. In order to be on the safe side, every employee who applies for a job has to present ID and the HR department gets a copy to keep in the files. The data on the ID is also checked from related governmental websites. With regards to other firms that Milteks' management has chosen to work with, their child labor records are also being checked. We are very determined in the elimination of this problem and consider it as a step to take for moving further towards sustainability. We should never forget that children are our future and they have the vision to shape the world with their limitless imagination.

29 TRAININGS IN 2009 TRAININGS ON HEALTH & SAFETY AT THE WORK PLACE TRAINING SUBJECT Health & Safety at Work Place Emergency & Fire Risk Analysis Hygiene Safety in Maintenance Activities Work Illness & KKD Noise Management Emergency & Fire Fighting Carrying, Stocking and Storage Safe Using of Hand Tools Electricity Risks & security Chemicals and MSDS DURATION 2 hours 1 hour 2 hours 1 hour 1 hour 1 hour 1 hour 1 hour 1 hour 1 hour 1 hour 1 hour Health & Safety at Work Place trainings were organized in Milteks, Ceseka and Ajara. Total Training hours: 14 hours EQUAL OPPORTUNITIES AND GENDER EQUALTY AT THE WORK PLACE Training and seminars started in 8 December 2008 and ended in February 3, Schedule: 2 days a week / 4 hours per day 2009 training hours: 40 hours GRI CERTIFIED SME TRAINING PROGRAMME Training organized by GRI and Systain with the participation of Puma LO Turkey. Schedule: July 2009 (Full day attendance) Total training hours: 16 hours ISO & OHSAS TRAINING PROGRAMME Trainings were provided by the Consultant Company to the managerial staff during certificate receiving process. Total training hours: 4 hours LEAN MANUFACTURING SEMINARS Training organized for Milteks' administrative staff. Schedule: 18 July October 2009 / 8 hours per week Total training hours: 96 hours The aim of the training was to lead our staff towards a more efficient working method. Now, it is time to look for the reasons of waste and take actions in order to reduce it. One of our objectives for 2010 is to search for areas to apply Lean methods and to focus on what can be done within these areas. We aim at planning a form of production which causes less pollution for the environment without increasing our costs. Furthermore, with the use of necessary lean methods, our workers will become more efficient and by having less overtime hours, our staff will become even more motivated. Milteks factories Ceseka & Ajara were evaluated with respect to lean standards and found 46 % appropriate for the lean system. By the time the consultancy process is finalized by 2011, we are aiming for 100% lean appropriateness.

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31 ENVIRONMENTAL MANAGEMENT RESPONSIBILITIES REGARDING ENVIRONMENT Milteks, by establishing new factories since 2008, have caused more damage to the environment. Our aim is to minimize the side effects of these damages by developing new projects and putting them into action. Surely, the government will impose many statutory obligations by 2012 and when these regulations become obligatory, we wish to be at the best stage in order to be a forerunner among other companies and present ourselves in the best way. We, as Milteks, restructured our environment policy during ISO 14001:2004 receiving process in According to our new policy, raising awareness on environmental issues has become one of our most important principles. Our aim is to reduce our negative impacts on the environment and human health by reaching the minimum and economical usage of natural resources and implementing an efficient management on noise and air pollution. In the manufacturing of readymade garments, we are in contact with many suppliers and responsible for inspecting our suppliers' environmental policies as a part of our own engagement to our regulations. We are also enthusiastic in developing new projects or attending projects developed by our suppliers in order to raise environmental consciousness. In order to achieve a more efficient environmental management, we need to take our workers and other stakeholders opinions into consideration. We believe it will be necessary to organize more training on environmental issues. GROWING GREENER When we started working on this report and observing our surroundings on a more detailed manner, we realized that all of our workers were carrying their personal belongings to work in plastic bags. We have a total number of 952 workers which means a minimum of 952 plastic bags released to the environment every day. Consequently, we developed eco-friendly raw linen bags that can be used for a longer period. We designed new bags that are carrying the logos of our three factories and distributed to our workers by the end of December Our objective was to prove our commitment to the environment through including our workers into the process by helping them to contribute to the environment. In 2009, we applied to the local government for our paper waste which until then was delivered to TEMA. We are also giving out our fabric waste to collectors. Regarding polyester fabrics; colored fabrics go through gin processing with special machines and the fuzzes are then used to manufacture blankets while white polyester fabrics are used to produce felts for car furnishings. Cotton fabric waste is being recycled and turned into yarn for reuse in the production of mainly open end fabric quality. In Milteks, the lunch is cooked inside the factory and it is a known fact that frying oil causes the most serious pollution on waters. Since 2008, we have been storing our frying oil and periodically sending it to the company Kolza which is certified by the government for turning this waste into biodiesel fuel. In August, we applied to TEMA in order to plant a forest of trees in the name of Milteks. The aim was to balance our paper consumption and the negative impacts we caused on the environment during the year We also conducted our Carbon Foot Print Evaluation with Systain and the improvements planned in accordance with the results, will be developed and put in action in the nearest future.