ALK M ALKAL K MYA ANON M fi RKET

Transcription

1 ALK M ALKAL K MYA ANON M fi RKET Printed in March 2008

2 ALK M ALKAL K MYA ANON M fi RKET ANNUAL REPORT 2007

3 Mr. Vedat Kora, born in 1923, and within the term he has graduated from the Faculty of Science of Istanbul University as Chemical Engineer with M.Sc. degree. He began his career as chemical engineer in the Turkish State Monopolies ( Tekel ) and then, he resigned and started as an entrepreneur to the production of various chemicals in a small factory. In 1963, he established a partnership with Essex Interore Chemicals ( Exxon ) of America, and the new company core of Alkim Alkali Chemical Corporation was born. Alkim, which was built upon these rationalistic and sound foundations, is now competing with the global giants of chemistry. Mr. Vedat Kora acquired patent rights for many processes and techniques developed by himself for the production of various chemicals used as raw materials in the basic sectors such as paper, glass, detergent and textile production. H. VEDAT KORA M.Sc Chemical Engineer We lost our leader H. Vedat KORA, whom we will always remember with deepest respect and love, on 30 th January 1975, by an airplane disaster at his most efficient and successful age, while he was working as President and CEO in Alkim and leading the company to a bright future with his high knowledge.

4 ALK M Board of Directors Dear Shareholders, Welcome to our Ordinary General Assembly Meeting where we shall discuss the activities we carried out in the fiscal year of As explained in detail in our Activity Report, we produced and sold tons of refined sodium sulphate, tons of light type sodium sulphate, and tons of salt during the fiscal year starting on January 1, 2007 and ending on December 31, A net profit of YTL was derived from these operations. While we sustained our ordinary operations in the fields of sodium sulphate and salt production in a successful manner, magnesium compounds were produced in 2007 for the first time in the history of our company at our Cihanbeyli Plants located by the side of the Lake Tersakan. Similarly, real and actual steps were taken for production of potassiumcontaining fertilizers at our Cihanbeyli Plants during the last months of 2007, and trial productions of leonite element were carried out. These activities represent very important steps taken by Alkim for putting at disposal of domestic economy a major part of the minerals that are available in lakewater. Another important aspect of these steps is that all the research and development activities were carried out and completed by the staff of Alkim using its own technical capabilities. R&D activities have reached their final stage for our mining field of glauberite element located in Ankara - Çay rhan with a total reserve of 200 million tons. Feasibility studies were commenced for the Integrated Sodium Sulphate Plants that shall be established in the said region, and that shall be the third largest facility of our company with an annual production capacity of tons. To be used for production of leonite-containing fertilizers that have rather important areas of use at greenhouses, this plant is being integrated to our sodium sulphate plants located at the Lake Bolluk, Cihanbeyli. This investment shall also be completed soon. In summary, Alkim Alkali Kimya Anonim fiirketi has left another successful, productive, and profitable operating year behind. We believe that investments to be made in Çay rhan sodium sulphate plants based on the high morale and sound equities of our company in 2008 would be completed as soon as practically possible with the approval and support of our valuable shareholders, and that our company would improve its global position further in the field of sodium sulphate production. We wish to thank all of our shareholders, and extend our respect to the General Assembly. Board of Directors Alkim Alkali Kimya A.fi.

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6 HEAD OFFICE Address: nönü Caddesi No: Taksim - STANBUL Phone: Fax: alkim@alkim.com Website:

7 1. INTRODUCTION 1.1. THE PERIOD COVERED BY THE REPORT : TRADE TITLE OF THE COMPANY : ALK M ALKAL K MYA ANON M fi RKET 1.3. BOARD OF DIRECTORS a) Below are the names, surnames, and titles of the members of the board of directors as well as the committee of auditors who were elected pursuant to Articles 9 & 13 of the Articles of Association of the Company: Name and Surname Position Profession Term in Office M. Reha KORA Chairman M.Sc. Mechanical Engineer A. Haluk KORA Deputy Chairman M.Sc. Mechanical Engineer Ferit KORA Deputy Chairman Economist Hüseyin A. KORA Member Physics Engineer Mithat KORA Member Lawyer Özay KORA Member Economist Tülay ÖNEL Member Public Relations Hüseyin ÜNER Member Retired Financier Nihat ERKAN Member - General Manager Political Sciences Yüksel KADIO LU Auditor Chartered Accountant b ) Limitations of Authority Limitations of authority are specified in the Turkish Commercial Code as well as in the Articles of Association of the company AMENDMENTS TO THE ARTICLES OF ASSOCIATION None CORPORATE CAPITAL AND SHAREHOLDING STRUCTURE a) The Company owns a capital of YTL b) Number of Shareholders of the Company * Our company went public at the end of February 2000, and its shares are currently traded at the Istanbul Stock Exchange. Following the public offering, number of the shareholders of our company, which was initially 11, increased with participation of individual investors, 362 employees of Alkim companies, 74 domestic corporate investors, and 8 foreign corporate investors. c) Daily stock prices of our share certificates can be found at the bulletins issued by the Istanbul Stock Exchange under the code 'Alkim'. d) Dividends distributed during the last three years * In 2004, a total amount of YTL was distributed as follows. YTL was distributed from the net distributable profit of the period as the first dividends; YTL YTL was distributed as the second dividends; and YTL was also distributed from the extraordinary reserves. * In 2005, a total amount of YTL was distributed as follows. YTL was distributed from the net distributable profit of the period as the first dividends; YTL YTL was distributed as the second dividends; and YTL was also distributed from the extraordinary reserves. * In 2006, a total amount of YTL was distributed as follows. YTL was distributed from the net distributable profit of the period as the first dividends; YTL YTL was distributed as the second dividends; and YTL was also distributed from the extraordinary reserves. f) Our shareholders who hold a share in excess of 10% of our corporate capital: Cihat KORA YTL ,75 14,88% M.Reha KORA YTL ,50 11,75% Hüseyin A. KORA YTL ,00 20,00 % 1

8 1.6. DETAILS OF THE SECURITIES ISSUED Our company has issued no security or bond so far SECTOR OF THE COMPANY, AND POSITION OF THE COMPANY IN THE SECTOR The main field of operation of our company is to produce sodium sulphate and sodium chloride (i.e. salt) at the lakes and underground mining fields for which we hold longtime operation licenses as per the Mining Law. Following completion of research activities in 2007, magnesium was registered as the third mineral to the operating license we hold for our Cihanbeyli Tersakan Plants for production of magnesium-containing compounds from lakewater. PRODUCTION OF SODIUM SULPHATE Our sodium sulphate plants are located in Konya-Cihanbeyli, Afyon-Dazk r, and Ankara-Çay rhan regions. With the enormous mineral reserves as well as longtime operating licenses, these mines cover considerably large areas. This kind of lake operations conducted to produce chemical substances, like those of Alkim, are available in a small number of countries in all over the world. Alkim is the 6th largest producer of sodium sulphate in the world, and is a member of the European Chemical Industry Council ( CEFIC ) as well as the Sodium Sulphate Producers Association ( SSPA ). Sodium Sulphate ( Na 2 SO 4 ) is one of the basic raw materials used in detergent, glass, paper, textile, and chemical industries. This substance is used for production of all kinds of detergents (except for liquid detergents) at the rate of 16 to 40%, and constitutes 3% of glass paste used in glass production industry. Sodium sulphate is also used by paper production industries for production of cellulose, for painting of textile products, and for production of various chemical substances. At our Tersakan-Bolluk plants located in Konya - Cihanbeyli region and our Ac göl plants located in Afyon-Dazk r region, production activities involve gathering of lakewater containing chemical substances (i.e. a solution) at large production pools (i.e. salting method); concentration thereof at the said pools, and picking through special methods and shipment thereof to our sodium sulphate plants for processing purposes. Although gallery-type mining operations were carried out at our underground sodium sulphate fields located in Çay rhan region, our R&D activities were also sustained for realization of underground solution mining operations in the year 2007, which were initiated in cooperation with the Polish Chemkop Company in Production pools of our company (i.e salinas) cover an aggregate area of 18 square kilometers. At the mining plants, we have a large number of (i.e. about 120) fully owned heavy construction equipments of all kinds, excavation machineries, loaders, dozers, heavy tractors, excavators of normal and boggy type, trucks, light duty trucks, vans, and other similar vehicles and machineries of general and special service type. We have the complete and full property of extremely valuable mining equipments, vehicles, devices, plants, warehouses, silos, various service workshops, administrative buildings, personnel houses, and etc. which are available at our mining enterprises. Alkim has a total annual production capacity of tons for finished refined sodium sulphate products, of tons for crystal sodium sulphate, and of tons for light type sodium sulphate. Our plants received ISO quality assurance certificates in 1996, and thereafter adopted TS - EN - ISO 9001 : 2000 Quality System Management standards, which stand for the ultimate point achieved in terms of quality systems. Among permanent customers of Alkim are the Turkish Bottle and Glass Factories as well as all the domestic manufacturers of detergent products. At foreign markets, detergent factories located in all the neighbor countries such as Romania, Bulgaria, Greece, Syria, Lebanon, Egypt, Saudi Arabia, Libya, Tunisia, and Israel are our direct and permanent customers. Alkim searches for and implements the most advanced, most productive, and most effective methods at all times for the purpose of offering the best quality to its customers. Ac göl Sodium Sulphate Plants located by the side of the Alkali Lake Ac göl as well as Bolluk Sodium Sulphate Plants located by the side of the Lake Bolluk are the plants which are the largest end the most modern sodium sulphate plants with an annual production capacity of up to tons, and which are operated using the Recompressed Vaporization Technologies and DCS Automation System. Thanks to the cogeneration units, these plants have reduced their energy costs to a minimum level by meeting their own electricity and steam requirements since Being a mining and chemical company, Alkim has been exporting its products since 1960s. Export activities currently constitute about 20% of the total turnover of the company. The entire volume of production of our sodium sulphate plants which run at their full capacities is sold to both domestic and foreign markets. Alkim conducts its sales at both domestic and foreign markets through its own initiatives, and does not employ any separate sales and marketing company for this purpose. 2

9 PRODUCTION OF SALT As known, our company has made legal applications, and obtained licenses for production of salt at our mining fields upon adoption of the Law No which nullified the former Salt Law. Investments in salt production operations started in 2002 following receipt of the licenses for salt production plants, and construction works of salt production pools were completed at our Konya - Cihanbeyli Plants in 2004, and at our Afyon - Ac göl Plants during the period of 2005 and Upon completion of salt production pools, activities were commenced for production of healthy and quality salt in a natural lake environment free from impacts of environmental pollution at our Ac göl plants located in Afyon - Dazk r region and at our Tersakan-Bolluk located in Konya - Cihanbeyli region. Our plants at Konya Cihanbeyli region have an annual production capacity of approximately tons on an overall salt production area of square meters. Our Ac göl plants at Afyon - Dazk r region own preliminary vaporization pools with a total area of 1.3 million square meters used for production of raw salt; and our production fields have reached a total area of 2.8 million square meters. Consequently our annual production capacity has increased to approximately tons. The investment in a refined salt production facility with an annual production capacity of tons, which was initiated at our Ac göl plants, was completed in 2007, and we carried out the first trial production of refined salt in October. Magnesium compounds and leonite-containing fertilizers Our Cihanbeyli plants successfully completed the trial production activities for magnesium - potassium sulphate- and leonite-containing fertilizers which were carried out at the Lake Tersakan for a while. At the same plants, magnesium chloride solutions were also produced in considerable tonnages using purely natural methods. Being used as an ice dissolvent at highways and municipalities, this chemical substance shall provide our company with new sales tonnages and extra turnovers starting from Raw Salt Heaps of Alkim PAPER INDUSTRY - ALK M KAGIT SANAY ve T CARET ANON M fi RKET Our paper production plants seated on an area of square meters in Kemalpafla Organized Industrial Zone, zmir, which are the most modern ones of Turkey, are capable of competing with many plants in Europe thanks to the excellence of its technological infrastructure. Converted into a separate judicial entity under the title Alkim Ka t Sanayi ve Ticaret A.fi. on , our paper production company is a subsidiary of Alkim Alkali Kimya A.fi. with a share of 79.9% owned therein. Within scope of the capital increase effected on November 2, 2000, the increased portion of 20% was offered to the public, and said portion of shares is currently traded at Istanbul Stock Exchange under the code 'Alka'. The total capital of Alkim Paper Company was increased to YTL as a result of the capital increase effected on , and Alkim Alkali Kimya A.fi has a share of YTL 41,962,500 in the said capital. INSURANCE SERVICES All the factory buildings, production and storage areas, management buildings, facilities, fixed and mobile construction machines, fixtures, finished and semi-finished product stocks, transportation vehicles and other vehicles as well as domestic and foreign transportation activities and other relevant activities and operations of Alkim Alkali Kimya A.fi and Alkim Ka t Sanayi ve Ticaret A.fi represent a huge insurance portfolio. Therefore, our board of directors adopted a resolution on September 24, 2002 for incorporation of an insurance company which would act as a corporate insurance agency for our own insurance deals. On November 4, 2002, "Alkim Sigorta Arac l k Hizmetleri Ltd fiirketi" was established in Istanbul with an initial capital of YTL 20 Million which was contributed by Alkim Alkali Kimya A.fi and Alkim Ka t San. ve Tic. A.fi on equal basis. 3

10 Koralkim Power Plant 4

11 2. OPERATIONS A. INVESTMENTS 1. DEVELOPMENTS ON THE SIDE OF INVESTMENTS The main field of operation of Alkim Alkali Kimya A.fi is to produce sodium sulphate. Alkim occupies the second rank in Europe, and the sixth rank in the world among producers of sodium sulphate. Alkim is a member of the European Chemical Industry Council (CEFIC) as well as the Sodium Sulphate Producers Association (SSPA). Alkim produces raw materials using the salification method at the lakes for which the company has a mining license. Our sodium sulphate production pools cover an area of approximately 18 square kilometers, and our preliminary vaporization pools cover an area of approximately 7 square kilometers. Furthermore, raw salt is produced at our salt production pools of approximately 2.8 square kilometers. The company has made huge investments so far, and shall continue to make investments for the purpose of processing lakewater chemicals available in these pools in a productive and rational manner. Alkim produces refined sodium sulphate with the purity of 99% at the plants established in an integrated fashion with the state-of-art technologies for processing of raw materials. Investments are now ongoing which are required to operate these plants in a productive and rational manner. DAZKIRI - ACIGÖL PLANTS a) Open Field Plants Repair and maintenance works were carried out for the sets and roads of preliminary vaporization and production pools available at our Ac göl plants. 500 meters of energy transmission lines were laid down in addition to the existing ones at salt (sodium chloride) pools. Two pools were constructed at the Crystal Cleaning Rotation and Ore Enrichment Unit, each having an area of square meters and capable of storing cubic meters of solution; and lateral surfaces thereof were covered with wooden materials. A salt washing unit was established with a capacity of 15 tons per hour at the stock field for raw salt. Two pools were established at the unit, each having a volume of cubic meters for storage of the solution that is used for washing of raw salt. A modern automation system was installed at the locations where all kinds of vehicles such as construction machines, trucks, light duty trucks, motopumps, and etc. are available at the open field plants. This system enables computerized control and tracing, at diesel fuel consumption points, of a 15-ton tanker which is operated as a mobile fuel oil station. Ac göl - Production Pools 5

12 b) Koralkim Plants Refined Salt Production Unit A refined salt production unit was established within scope of the K-2 Process. For this unit which is capable of producing refined salt at the rate of 5 tons per hour, or mechanical refined salt at the rate of 8 tons per hour; raw salt feeding, melting, post-vaporization thickening, centrifuging, fluid bed drying, and packaging systems were added to the K-2 Process. Production lines were integrated to the existing PLC Automation and Control System. Bulk Sodium Sulphate Conveyance System For shipment of sodium sulphate in bulk, a portal crane was installed by the side of railway junction line, which shall be used for transfer of containers on railway cars (each having a capacity of 25 tons of refined sodium sulphate) between railway cars and trucks. For the sake of worker's safety, a spreader apparatus was also installed to link containers to the crane which has a lifting capacity of 40 tons. 6

13 C HANBEYL - BOLLUK and TERSAKAN PLANTS Sodium Sulphate Factory in Bolluk Rehabilitation works were carried out, and certain units were installed at our Bolluk Sodium Sulphate Factory in 2005 and 2006 because production costs were high due to employment of old-fashioned production methods, and quality of products was inferior then that of refined sodium sulphate. Production method employed at the Factory was changed to the evaporation method which enables production of refined sodium sulphate with the purity of 99.8%. The Cogeneration System, which was available at our Dazk r - Koralkim Sodium Sulphate Plants, was also established at our Bolluk Plants for the purpose of producing, at the lowest possible cost, the steam and electricity which is required for the 4-Stage Evaporation and Vacuum Vaporization Process. In this regard, an autoproducer license was obtained, and an energy and steam plant was established. This plant includes a dust coal-operated steam boiler with a fluid bed as well as its premises, a demineralised water unit, a steam turbine, and electricity switching systems. 350 kwh of electricity is currently produced using the steam produced at the boiler equipped with a fluid bed, which was installed with a capacity of 15 tons of hot steam per hour (at 380 C and 30 bars), at the KKK Turbine (485 kva) that was transferred from our Dazk r - Koralkim Plants, and commissioned by our own staff. Activities are currently ongoing for commissioning of the EET Steam Turbine which was imported from Germany. Since coal is burned at the steam station, an electrostatic filter was added to the system in order to meet the environmental requirements. PLC Automation Control Systems were employed within the Process and at the Energy & Steam Plant. Each stage of the production process is supervised through computerized systems. Thanks to the Process which was designed and installed with a physical production capacity of tons of refined sodium sulphate per year, production of refined sodium sulphate has been continuing at a daily capacity of 240 tons since Fertilizers Production Plant, and Magnesium Chloride Filling and Transfer Tanks Our activities regarding production of potassium-containing fertilizers, which are totally imported to our country at present, have been continuing for a long period of time. The fact that potassium-containing fertilizers would be produced using the raw material derived from domestic resources increases the strategic importance of our activities further. As a result of the R&D activities conducted at the Lake Tersakan, we have secured a resource for the raw material to be used at our potassium- and magnesium-containing fertilizers production plant which is now under construction. We have obtained all the necessary production permits for this fertilizers production plant which is under construction in a fashion integrated to our Refined Sodium Sulphate Plants in Bolluk. Magnesium chloride, magnesium sulphate, potassium sulphate, and leonite (potassium - magnesium sulphate) shall be produced in the form of chemical fertilizers at this plant. Investment activities are under way so that the plant shall be commissioned in the second half of Sodium Sulphate Plants in Bolluk 7

14 LAKE TERSAKAN LAKE BOLLUK 8

15 The underground glauberite mining field located in Çay rhan has a reserve of approximately 200 million tons, and covers an area of 90 square kilometers. ANKARA - ÇAYIRHAN PLANTS The Solution Mining Method Ankara - Çay rhan'da Tenardit - Glauberit'in iç içe oluflturdu u Avrupa'n n en büyük yer alt Sodyum Sülfat maden At our mining field located in Çay rhan, Ankara which has the largest underground tenardite- and glauberite-containing sodium sulphate reserve of Europe, operations were carried out until recently using the underground mining methods, and it was failed to make a remarkable progress in achieving an economic level in mining operations using this method. Only approximately 67 million tons of pure sodium sulphate can be derived from 200 million tons of glauberite mineral. Various activities regarding the solution mining method, i.e. one of the recent technological advancements, and results obtained therefrom have made it mandatory to handle the existing mining field on a pilot scale for the purpose of putting the available reserves at disposal of domestic economy. As known, a sodium sulphate solution is obtained at varying concentrations depending upon certain factors such as time, heat, and surface when natural sodium sulphate minerals are exposed to water, and this solution is used for production activities using the solution mining method. As a result of laying down of nested pipes in the wells to be drilled at the mining field in Çay rhan, especially at the areas which contain extremely dense glauberite, and application of pressurized water and & air, a degree of dissolubility would be achieved in the wells, and the solution so obtained would be taken from well tops, and used for production of minerals. This would ensure processing of underground minerals available in a solid form which would, in turn, make considerable contributions to the domestic economy, and mining operations would be carried out totally under the ground without any harm to environment or nature. There is no country in the world where underground sodium sulphate mineral is converted into a solution as such, and then put at disposal of economy. In other words, Alkim shall be the pioneering company of the world in this regard upon implementation of the said important project. If this investment is realized, Alkim shall give a new dimension to the domestic approaches to mining operations. Activities are conducted in cooperation with TUB TAK due to the necessities regarding strategic confidentiality and due to the fact that TUB TAK is the most influential scientific organization of our country, and all the findings and data are shared with TUB TAK. R&D activities have reached their final stage for our glauberite mining field in Ankara - Çay rhan which has a total reserve of 200 million tons. Feasibility studies were started for the Integrated Sodium Sulphate Plants that shall be established at the said region with an annual production capacity of tons. TOTAL VALUE OF THE AFOREMENTIONED INVESTMENTS Images from the R&D activities conducted in Çay rhan 9 Total value of all the investments made in the year 2007 is YTL ,54.

16 B. DETAILS OF COMMODITY AND SERVICE PRODUCTION ACTIVITIES 1. FEATURES OF PRODUCTION UNITS a) Description of Production Units Dazk r Koralkim Plants Our Dazk r - Koralkim Plants have two units called K1 (Crystallization Unit No.1) and K2 (Crystallization Unit No.2). The only raw material used at these plants is the glauber salt obtained from the Lake Ac göl which is located 2.1 kilometers far from the plants. Glauber salt is allowed to precipitate in our pools located in the lake under cold weather conditions of winter seasons, and is then processed through a gradual evaporation process at our plants to produce refined anhydrous sodium sulphate with the purity of 99.5%. These plants are equipped with an energy production plant to meet their own steam and electricity requirements as well as with all kinds of technical, administrative, and social infrastructure facilities, various auxiliary units, and all the support systems which are required for a chemical plant of the same size. All the plants of Alkim Kimya are operated through computerized control systems. Pressurized steam produced at the energy production station of our plant passes through the turbine to produce both the steam required for the process and the electricity required for the entire plant. The maximum capacity of our steam turbine (i.e. our electricity generating power) is 3.5 MWh. As a result of considerable investments made for the purpose of producing granule sodium sulphate, i.e. a mineral demanded by some international detergent manufacturers, we have become able to produce such product with a particle size of 250 to 750 microns using the special technology at K2 unit, and this capability provides us with considerable benefits. Our products are offered for sale in ton bigbags, in 50 kg sacks, or in bulk depending upon demands of our customers. Productivity of the evaporation units owned by has been improved further thanks to employment of certain methods and techniques. The overall productivity has been increased to the maximum level by means of a thermocompression system located in front of the first unit, and an additional low vacuum balancing systems located at the last unit. Koralkim Sodium Sulphate Plants have a daily production capacity of 700 tons on average. During the period of to : Net working days at K1 unit (except for shutdowns) Net working days at K2 unit (except for shutdowns) 307 days 288 days Total production volume of these units is tons. Following quantities are consumed for the said production volume: Quantity of crystal consumed tons Quantity of coal consumed (former boiler) tons Quantity of dust coal consumed (new boiler) tons Overall quantity of electricity consumed by all the plants is kwh Quantity consumed at the turbine kwh Quantity purchased from TEDAfi kwh Cihanbeyli Plants, and Bolluk Sodium Sulphate Factory Established using the technologies and know-how of Alkim, Cihanbeyli plants produce refined sodium sulphate products from raw sodium sulphate which is obtained from mining operations carried out at the Lakes Tersakan and Bolluk. These plants also produce light type sodium sulphate, i.e. a raw material used at a part of the detergent industry. Provisions of the Regulation on Implementation of the Law No regarding Amendments to the Mining Law and Nullification of the Salt Law have allowed us to produce salt (NaCl) at our mining fields. Our company has begun producing salt after obtaining an operating license as well as a producing license for salt. At Bolluk Sodium Sulphate Factory During the period of to Net working days 313 days Production volume of refined type sodium sulphate kgs Quantity of crystal consumed kgs Quantity of dust coal consumed kgs Total quantity of electricity consumed 7.166,349 kwh 10

17 b) Production Activities C HANBEYL PLANTS Sodium Sulphate Production Activities Tersakan - Bolluk Plants Ordinary lake operating activities are carried out at twelve production pools which cover a total area of square meters. Product: Sodium Sulphate (Na 2 SO 4 ) Light type Sodium Sulphate Tons Tuvenan Sodium Sulphate Tons Crystal Sodium Sulphate Tons Refined Sodium Sulphate Tons Mixture Sodium Sulphate Tons Salt Production Activities In 2007, tons of raw salt were produced at Tersakan Plants. ACIGÖL PLANTS Our Ac göl plants represents the most important investment of our company in terms of sodium sulphate production, capacity, quality, and sales and export activities. Ac göl Plants At our Ac göl plants, there are sodium sulphate production pools of total square meters, and preliminary vaporization pools of total square meters. Our salt production pools cover an overall area of square meters, and preliminary vaporization fields used for production of salt cover an overall area of approximately square meters. In 2007, our Ac göl plants produced tons of Crystal Sodium Sulphate (Na 2 SO 4.10H 2 O) In 2007, tons of raw salt were produced at the salt pools of Ac göl plants. A part of raw salt produced passes through washing units located near the salt stock field to produce washed raw salt. In 2007, tons of washed raw salt were produced. KORALK M PLANTS Following quantities are produced at Koralkim Plants which are equipped with the most advanced technologies of the world, and which produce products of the best quality: Granule tons Refined Sodium Sulphate tons Total - Sodium Sulphate tons Refined Salt tons Dried Salt 985 tons Total Salt Production tons In 2007, the total volume of refined sodium sulphate products sold from our Koralkim sodium sulphate plants was tons; and out of this volume total tons were exported. c) Overall Capacity Rates Sodium Sulphate Total sodium sulphate production capacity of the company is tons; i.e tons of refined ( including granular) sodium sulphate at Dazk r Koralkim Plants, and tons of refined sodium sulphate and tons of light type sodium sulphate at Cihanbeyli Plants. (Tons) Capacity Production Capacity Usage %89 %91 %86 11

18 ALK M KA IT SANAY VE T CARET A.fi. Alkim Ka t Sanayi ve Ticaret A.fi was first established within the body of Alkim Alkali Kimya A.fi, but converted into an independent entity on % of the shares in our paper production company was offered to the public on , and its shares are currently traded at Istanbul Stock Exchange with the code ALKA. Our high-grade paper pulp and enamel paper production plants, established with an installed production capacity of tons per year, have reached a technological superiority and productivity, which enables the company to compete with the largest paper production plants of Europe thanks to the technology investments that were made for the last ten years starting from the first day of its incorporation. As of the end of 2007, our paper production plant has reached an annual production capacity of tons as a result of the cogeneration investment; increase of the capacity of the gas turbine to 5.5 MW; increase in the production capacity achieved by means of an increase in the speed of paper machinery to 700 meters per minute; and many other investments which were started in Alkim Kâ t Sanayi ve Ticaret A.fi is one of the most reputed producers of Turkish paper industry thanks to its advanced technological infrastructure and efficient planning strategies as well as a versatile range of products. We would like to state proudly and gladly that Alkim Ka t has broken the production and sales records in 2007 where the paper production sector suffered from many challenges as a result of fluctuations in prices quoted for both cellulose, i.e. the basic raw material, and for finished paper products. Productivity of our production activities was improved further this year thanks to the dedicated and considerable efforts of our directors and all members of our staff. Quality of our paper products has undisputedly occupied the first ranks not only in our country but also in Europe. Our turnover and tonnage figures accurately and visibly reflect said positive and successful results. An overall turnover of YTL was derived from a total sales volume of tons of paper products. In 2007, Alkim Ka t earned a profit of YTL

19 ALKIM Insurance Agency Inc. ( ) Activity Report Alkim Sigorta Arac l k Hiz. Ltd. fiti. was established on with an initial capital of YTL 20 Million contributed by Alkim Alkali Kimya A.fi and Alkim Ka t San. ve Tic. A.fi on equal basis. The General Assembly appointed Mr. Nihat Erkan as the company's manager in charge of corporate deals and trasactions. In 2002, this company received authorizations from Anadolu Sigorta and Koç Allianz Sigorta A.fi to act as an insurance agency. The company currently acts as an authorized insurance agency of Koç Allianz and Anadolu Sigorta. The company is seated at the Head Office of Alkim. The company has begun producing insurance policies in regard of building, machinery breakdown, fire, content, commodity, transportation, vehicle, traffic, and own insurances as well as group individual accident and health insurances for Alkim Alkali Kimya A.fi, Alkim Ka t San.ve Tic. A.fi, and Sodafl Sodyum San.A.fi. as well as its other customers subject to issuance of said policies by the head offices and district directorates of insurance companies. With a portfolio size of YTL 125 Million, Alkim Sigorta Arac l k Hiz. Ltd. fiti maintains its position as a large corporate agency in the insurance sector. Distribution of portfolio as of the end of 2007 ALK M K MYA A.fi ALK M KA IT A.fi OTHER ENTITIES AND INDIVIDUALS TOTAL YTL 39,5 Million YTL 65,3 Million YTL 20,2 Million YTL 125 Million 13

20 2. ACTIVITIES REGARDING PRODUCTION OF COMMODITIES AND SERVICES a) Developments in Production of Sodium Sulphate The rise of living standards in the world, especially in the Middle East, leads to use of washing machines to a greater extent, and consequently to the consumption of considerably higher quantities of detergents. Said rise in consumption of detergents also leads to an increase in use of sodium sulphate automatically. Percentage of sodium sulphate used has increased from 15-20% to about 45-50%. Alkim has reached huge capacities in production of sodium sulphate by means of respective investments for the purpose of meeting the said rise in demand, maintaining its global position, and making access to new markets. b) A comparative table regarding production activities Production quantities of sodium sulphate and salt are shown in the following table with a comparison to those of the preceding year. Quantity (in tons) Dazk r Crystal Refined Sodium Sulphate Light Type Raw Salt Tuvenan - - Washed Raw Salt Dried Salt Refined Salt Quantity (in tons) Cihanbeyli Tuvenan Light type Raw Salt Refined Mixture Crystal c) Average selling prices of sodium sulphate and salt products over years Selling prices of sodium sulphate has begun rising starting from the second half of 2007 based on the supply and demand equilibrium. It is expected that this rise shall continue in Unfortunately, sale prices of salt decreased in 2007 relatively. The salt market had become complicated due to import of huge masses of salt on the one hand, and privatization of the Great Salt Lake on the other hand, which was followed by offering, in consideration of lower prices, of stocks of hundreds of thousands tons of commodity by private companies for the purpose of overcoming their cash problems after taking transfer of said stocks. The prices started gaining equilibrium as a result of decrease in the said stocks starting from the last quarter of SALES ACTIVITIES a) Below is a summary of our sodium sulphate sales volumes with a comparison to those of the preceding year Dazk r Total Refined and Granular tons tons Light Type tons - Raw Salt tons tons Washed Raw Salt tons Dried Salt tons Refined Salt tons Cihanbeyli Light type tons tons Raw Salt tons tons Refined tons Mixture tons All the factories of Turkish Bottle, Glass, and Detergent Industry meet their sodium sulphate requirements from Alkim, and our sales to this corporation are carried out based on annual contracts. Our domestic contractual sales volume represents 90% of our overall volume of domestic sales. Detergent sector has the highest share in our domestic sales. A demand burst has occurred for sodium sulphate both in Turkey and in the Middle East since detergent producers have increased quantity of sodium sulphate ( which is the cheapest raw material when compared to other imported inputs ) in their formulations for the purpose of decreasing their production costs. For this reason, our existing plants are operated at their full capacities on the one hand, and our efforts are maintained at the highest level to benefit from our sodium sulphate reserves in Çay rhan for the purpose of meeting the increased demand of the domestic market for sodium sulphate on the other hand. In short, our company acts in a manner which is appropriate for fulfillment of the responsibilities assumed by a global company in the sodium sulphate sector. Our foreign sales are carried out on the basis of cash against documents, cash against goods, or cash through letters of credit depending upon status of countries of destination as well as customers. Majority of our foreign customers is comprised of detergent manufacturers. In general, we sell our products directly to customers. However, we employ our agencies for sales to Greece, Israel, Syria, Lebanon, and other similar countries. 14

21

22 Alkim-Ac göl Integrated Sodium Sulphate Plant

23 CONSOLIDATED BALANCE SHEETS AT 31 DECEMBER 2007 AND 2006 (Amounts expressed in New Turkish lira (YTL) unless otherwise indicated) Notes 31 December December 2006 ASSETS CURRENT ASSETS Cash and cash equivalents Marketable securities- net Trade receivables- net Leasing receivables- net Due from related parties- net Other receivables- net Biological assets- net Inventories- net Receivables from construction contracts in progress- net Deferred tax assets Other current assets NON-CURRENT ASSETS Trade receivables- net Leasing receivables- net Due from related parties- net Other receivables- net Financial assets- net Positive/ negative goodwill- net Investment property- net Property, plant and equipment- net Intangible assets- net Deferred tax assets Other non-current assets TOTAL ASSETS The consolidated financial statements prepared as at and for the year ended 31 December 2007 have been approved and signed by the Board of Directors on 6 March The accompanying notes form an integral part of these consolidated financial statements 17

24 CONSOLIDATED BALANCE SHEETS AT 31 DECEMBER 2007 AND 2006 (Amounts expressed in New Turkish lira (YTL) unless otherwise indicated) Notes 31 December December 2006 LIABILITIES CURRENT LIABILITIES Financial liabilities - net Short-term portion of long-term financial liabilities - net Lease liabilities - net Other financial liabilities- net Trade payables- net Due to related parties- net Advances received Construction progress billings- net Provisions Deferred tax liabilities Other liabilities- net NON-CURRENT LIABILITIES Financial liabilities - net Lease obligations- net Other financial liabilities- net Trade payables- net Due to related parties- net Advances received Provisions Deferred tax liabilities Other liabilities- net MINORITY INTEREST SHAREHOLDERS' EQUITY Share Capital Treasury share - - Capital Reserves Share premiums - - Profit from share cancellations - - Revaluation fund - - Revaluation fund for financial assets - - Inflation adjustment to shareholders' equity Profit Reserves Legal reserves Statutory reserves - - Extraordinary reserves Special reserves - - Property sales gains and investments shares To be added to capital - - Cumulative translation adjustment - - Net profit for the year Retained earnings TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES Provisions and contingent assets and contingent liabilities 31 The accompanying notes form an integral part of these consolidated financial statements. 18

25 CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS THEN ENDED 31 DECEMBER 2007 AND 2006 (Amounts expressed in New Turkish lira (YTL) unless otherwise indicated) 1 January - 1 January - Notes 31 December December 2006 Net sales Cost of sales 36 ( ) ( ) Service income- net Other revenue GROSS PROFIT Operating expenses 37 ( ) ( ) NET OPERATING PROFIT Other income Other expenses 38 ( ) ( ) Financial expenses 39 ( ) ( ) OPERATING PROFIT Gain/ loss on net monetary position (Profit)/ loss attributable to minority interest 24 ( ) PROFIT BEFORE TAX Taxes on income 41 ( ) ( ) NET PROFIT FOR THE YEAR EARNINGS PER SHARE 42 0,7373 0,4518 The accompanying notes form an integral part of these consolidated financial statements. CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS THEN ENDED 31 DECEMBER 2007 AND 2006 (Amounts expressed in New Turkish lira (YTL) unless otherwise indicated) Inflation adjustment to Total Share shareholder s Legal Extraordinary Retained Net profit shareholder s capital equity reserves reserves earnings for the year equity 1 January Dividend payment ( ) ( ) - ( ) Transfers to retained earnings and reserves ( ) - Net profit for the year December Dividend payment ( ) ( ) - ( ) Transfers to retained earnings and reserves ( ) - Net profit for the year December The accompanying notes form an integral part of these consolidated financial statements. 19

26 CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS THEN ENDED 31 DECEMBER 2007 AND 2006 (Amounts expressed in New Turkish lira (YTL) unless otherwise indicated) Cash flows from operating activities: 1 January - 1 January - Notes 31 December December 2006 Net profit before taxation on income Adjustments to reconcile net profit to net cash generated from operating activities Depreciation and amortisation 19, Provision for employment termination benefits Interest income 38 ( ) ( ) Interest expense Loss from sales of property, plant and equipment - net Taxes paid ( ) ( ) Profit/ (loss) attributable to minority interest ( ) Exchange (gains)/ losses on borrowings ( ) Changes in assets and liabilities Change in marketable securities ( ) Change in trade receivables 7 ( ) ( ) Change in due from related parties Change in other receivables ( ) Change in inventories Change in other current assets Change in other non-current assets 18 (65) Change in trade payables 7 ( ) ( ) Changes in due to related parties ( ) Changes in advances received Changes in short-term provisions Changes in other short-term liabilities Employment termination benefits paid 23 ( ) ( ) Net cash flows generated from operating activities Cash flows from investing activities Interest received Purchases of property, plant and equipment and intangible assets ( ) ( ) Proceeds from sales of property, plant and equipment Net cash used in investing activities ( ) ( ) Cash flows from financing activities (Decrease)/ increase in financial liabilites ( ) (Decrease)/ increase in lease obligations 8 ( ) Interest paid ( ) ( ) Dividend paid ( ) ( ) Net cash used in financing activities ( ) ( ) Net increase/ (decrease) in cash and cash equivalents ( ) Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year The accompanying notes form an integral part of these consolidated financial statements. 20

27 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2007 AND 2006 (Amounts expressed in New Turkish lira (YTL) unless otherwise indicated) NOTE 1 - ORGANISATION AND NATURE OF OPERATIONS Alkim Alkali Kimya A.fi (the Company ) was established in 1948 as Alkali Madencilik Limited fiirketi. Since 1963, the Company has continued its operations as Alkim Alkali Kimya A.fi. The nature of the operations of the Company is the mining of ores and the production and distribution of all kinds of chemical materials in domestic and foreign markets as disclosed in the articles of association. The nature of the businesses of the Subsidiaries is as follows: Subsidiaries Country Nature of business - Alkim Ka t Sanayi ve Ticaret A.fi. ( Alkim Ka t ) TurkeyKa t ürünlerinin üretimi ve sat fl - Alkim Sigorta Arac l k Hizmetleri Ltd. fiti. ( Alkim Sigorta ) Turkey Sigortac l k The Company and its subsidiaries ( the Group ) are registered in Turkey. The Company and its subsidiary Alkim Ka t, are publicly quoted companies and 29,18% (2006: 22,44%) of the Company's shares, 20,00% (2006: 20,00%) of Alkim Ka t shares are quoted on the Istanbul Stock Exchange ( ISE ) (Note 25). The address of the registered office is as follows: Gümüflsuyu Mahallesi nönü Caddesi No: Taksim- stanbul NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS 2.1 Accounting Standards The Group maintains its books of account and prepares its statutory financial statements in accordance with the Turkish Commercial Code, communiqués issued by the CMB and Turkish tax legislation. These financial statements are based on the statutory records, which are maintained under the historical cost convention with adjustments and reclassifications for the purpose of fair presentation in accordance with CMB Communiqué XI/25 Communiqué Regarding Accounting Standards in Capital Markets ( Communiqué ) dated 15 November Financial statements and notes to the financial statements are prepared in compliance with the formats required by the CMB announcement dated 10 December Other than the financial assets and liabilities carried at their fair values, consolidated financial statements are based on historical cost convention and prepared in terms of New Turkish Lira ( YTL ). 2.2 Financial reporting in hyperinflationary periods CMB declared by referring to the announcement dated 17 March 2005 that the application of inflationary accounting is not required for the companies which continue the operations in Turkey and prepare the financial statements in accordance with Communiqué; effective from 1 January