We have been creating happiness for the last 67 years...

Transcription

1 We have been creating happiness for the last 67 years...

2 Contents 01 Ülker means Key Financial Indicators 03 Operational Indicators 04 Capital Structure 05 Ülker on the ISE and Performance of Stock Shares 06 A Message from the Chairman of the Board 08 Board of Directors 10 A Message from the CEO 11 Our Strategies Business Activities 14 Economic Developments in the Global and Turkish Food Sector 16 Significant Developments 17 Production and Capacity 20 Investments 21 Subsidiaries 24 Human Resources 28 Quality and R&D 30 Social Responsibility 34 Corporate Governance Principles Compliance Report 42 Risk Management 43 Investor Relations 44 Profit Sharing Policy 45 Audit Board Report 47 Independent Audit Report

3 For 67 years, Ülker means Turkey s most loved biscuits, chocolates and cakes, One of Turkey s biggest, most reputable companies, Scores of successful brands, each a leader in its segment, Bright smiles on our children s faces, A powerful and effective distribution network covering 175,000 sales points across Turkey, Environmentally respectful and sustainable production, Steady growth and continuous investment, Protecting social values and carrying out social responsibility projects in an earnest manner, High quality, reliable and pleasing tastes, Ülker continues to multiply these values and rank among Turkey s leading companies.

4 Key Financial Indicators Shareholder s Equity (TL) ,097,250, ,527,207, ,125,668,600 Total Assets (TL) ,670,468, ,885,873, ,729,467,955 Operating Profit (TL) ,327, ,038, ,079,597 KEY FINANCIAL INDICATORS 2

5 Operational Indicators 2011 Production 2011 Sales 240,822 Biscuit Production (Tons) 239,586 Biscuit Sales (Tons) 56,537 Chocolate Production (Tons) 55,751 Chocolate Sales (Tons) 297,359 Total Production (Tons) 295,337 Total Sales (Tons) OPERATIONAL INDICATORS 3

6 Capital Structure Ülker s shareholder structure as of December 31, 2011 is presented below. No individual person directly owns more than 10% of the Company s shares. At year-end 2011, 29% of Ülker s shares were publicly traded. December 31, 2011 December 31, 2010 Shareholder Share Capital Ownership Share (%) Share Capital Ownership Share (%) Yıldız Holding A.Ş. 112,496, ,999, Dynamic Growth Fund 73,308, ,568, Other 82,795, ,032, Total 268,600, ,600, % Other 27.29% Dynamic Growth Fund 41.88% Yıldız Holding A.Ş. CAPITAL STRUCTURE 4

7 Ülker on the ISE and Performance of Shares A total of 29% of Ülker s shares are publicly traded on the ISE National Market under the Reuters ticker symbol ULKER.IS. In 2011, investors who sought a long-term investment and stable return preferred Ülker whose share price was TL 5.40 as of December 31, At year-end, the Company s total market value reached USD 769,627,638 while its publicly traded market value was up to USD 223,192,015. Company Reuters & Forex Code Sector Traded on the following ISE Indices Ülker Biscuits ULKER Foods XU100 XU050 XUTUM XUSIN XGIDA XYUZO XSANK XULUS As of December 31, 2011 Share price (TL) 5.40 Publicly traded (%) 29.0 Market value (USD million) Publicly traded market value (USD million) Share Performance (%) TL (1.8) USD (19.6) ISE 100 and Ülker ÜLKER XU100 (right axis) 70,000 65, , ,000 50,000 45, , ÜLKER ON THE ISE AND PERFORMANCE OF SHARES 5

8 A Message from the Chairman of the Board While the predictions that 2011 would be a good year for Turkey proved correct, this was not the case for much of the rest of the world. We saw the global economic crisis, which started in 2009 and spread around the world, profoundly impacted EU countries in The great debt problem threatening even the strongest countries in the Euro Zone was undoubtedly the most undesirable legacy passed from 2011 into Additionally, Japan, one of the world s largest economies, had to cope with the terrible consequences of natural disaster in While developed economies around the globe tottered under unusual crises, the economic growth rates of developing countries slowed. However, recording GDP growth of over 8% in 2011, Turkey was among the few bright spots in the global economy. The Turkish economy will continue its positive growth trend in 2012 I think the most gratifying news for Turkey is that society is hopeful about the future. Surveys show that the Turkish people share the belief that tomorrow will be better than yesterday, and that no one is pessimistic about the country s future. These positive sentiments and expectations lead to high hopes for the future. Therefore, I believe 2012 will be a good year with the high morale and enthusiasm of the Turkish people, despite current adversity. Yıldız Holding completed significant investments Looking back at 2011, Yıldız Holding achieved many proud accomplishments and continued on its growth path. In 2011, we updated Yıldız Holding s vision and mission in line with the present condition of the world as well as our country s economic and social realities. Parallel to our Holding s mission to become a leading international and Turkish food and beverage company, we implemented a vertical integration strategy as well as key investments in the complementary areas of food and beverages. The modifications and investments we completed within Yıldız Holding and Ülker advanced in parallel with the developments in the global economy. A MESSAGE FROM THE CHAIRMAN OF THE BOARD 6

9 We are ready to compete with global companies The upside down situation in the world s economies required multinational corporations to review their competitive strategies. During this period, global companies extended their target markets to a wider geography, such as from North Africa to the Middle East, and from Russia to Eastern Europe. In doing so, MNCs began to focus on our traditional markets. I would like to emphasize once again that we are prepared to compete with global companies in our region, thanks to our current strong market position. Company Ülker. By focusing on cost savings, synergy and productivity, we intend to take Ülker s leadership vision and competitive advantages into the future and also to create benefits for our consumers, customers, employees and shareholders. In 2012, we expect to sustain the positive operational and financial effects of the measures we implemented in Thanks to the reorganization efforts we undertook and the current size of our Company, we have reached a position to better compete with global rivals and to focus on our investment and growth objectives more effectively. Ülker has a new strategic focus In 2011, we completed the initiatives we began a year earlier to maintain Ülker s competitive advantages and to simplify the Company s financial structure. The main objective of this work was to exclude those subsidiaries and financial investments that are not related to the Company s main field of activity from Ülker s portfolio in order to focus solely on the production of biscuits, chocolates and cakes. To this end, we merged our production companies, İdeal Gıda, Fresh Cake, and Birlik A.Ş. with Ülker. As a result, we established a structure that includes the biscuits/cakes and chocolate subcategories, which constitute the major portion of the snacks category, especially when Ülker acquired the majority share of Ülker Chocolate. After this restructuring process, we decided to rename our In line with our ever-rising Company s growth targets, we will continue working to satisfy our shareholders, consumers, customers, and employees while providing them with maximum benefits. Respectfully, Murat Ülker Chairman of the Board of Directors A MESSAGE FROM THE CHAIRMAN OF THE BOARD 7

10 Board of Directors Murat Ülker Chairman of the Board Ali Ülker Deputy Chairman of the Board Mehmet Tütüncü Board Member and CEO Ahmet Özokur Board Member Murat Ülker began his professional career at Group in 1982 after graduating from Boğaziçi University, Faculty of Economics and Administrative Sciences, Department of Business Administration. He worked as Control Coordinator in the Group in 1984, and afterwards, attended various training courses (AIB and ZDS) abroad and worked as a trainee at the Continental Baking Company in the US. Mr. Ülker also worked in the export field for two years in the Middle East. Subsequently, he oversaw about 60 factories and facilities operating in the biscuit, chocolate and food industry in the US and Europe for three years. Mr. Ülker also participated in various IESC projects, and spearheaded many vertical integration related initiatives. After serving as Assistant General Manager for Enterprises, General Manager, Executive Committee Member, and Board Member in various companies of the Group, Mr. Ülker was elected the Chairman of the Board of Yıldız Holding in Mr. Ülker speaks English and German and his hobbies include sailing, as well as traveling with his family. He is married and has three children. Ali Ülker graduated from Boğaziçi University, Faculty of Economics and Administrative Sciences, Department of Economics and Business Management. He also attended various academic programs at IMD, Harvard and Wharton. Mr. Ülker took part in the De Boccard & Yorke Consultancy Company s Internal Kaizen Study (1992) and the IESC Sales System Improvement and Internal Organization Project (1997). He began his professional career in 1985 as a trainee in the Quality Control Department of Ülker Gıda A.Ş. Later, he served as a Sales Executive, Sales Coordinator, Product Group Coordinator and Product Group Manager between 1986 and 1998 at the chocolate production facilities and at Atlas Gıda Pazarlama A.Ş. He served as General Manager of Atlas Gıda Pazarlama in 1998, Deputy Chairman of the Consumer Group for Marketing and responsible for Chain Stores in 2000, General Manager of Merkez Gıda Pazarlama A.Ş. in 2001 and Deputy Chairman of the Organized Retail Food Group in In 2005, he was appointed Chairman of Ülker (Biscuit, Chocolate, Candy) Group. Mr. Ülker speaks English and German and his hobbies include fishing, watching movies, reading books, and playing basketball and billiards. He is married and has three children. Mehmet Tütüncü was appointed Chairman of the Food and Beverages Group in As of October 2009, Gum and Candy companies were incorporated into the Food Group; Mr. Tütüncü was appointed CEO for biscuitchocolate-cake operations in September 2011, in addition to his other duties. Mr. Tütüncü began his professional career in 1981 as an engineer at the Ministry of National Education, Construction Department. From 1983 to 1987, he worked as a Local Industry Specialist at the Ministry of Industry and Trade. From 1987 until 1996, he served as Production Manager, Business Manager and General Manager, respectively, at Best Rothmans Entegre Sigara ve Tütün Sanayi A.Ş. Mr. Tütüncü joined the Group in 1996 as Facilities Coordinator, and later served as General Manager of Ülker Biscuits and Chocolate production facilities in 1998; in 2000, he was the Deputy Chairman of the Ülker Group. Mr. Tütüncü graduated from Gazi University, Faculty of Engineering, Mechanical Engineering Department. In 1987, he won the IRI scholarship and studied Production, Quality Control and Maintenance Procedures in Italy. He also holds a Master of Science in the field of Industrial and Organizational Psychology. From 1993 to 1994, Mr. Tütüncü attended the Business Administration Training Program at Boğaziçi University where he studied Marketing Techniques, International Marketing, Factory Organization and Management. He also completed the Strategic Marketing Program at Harvard Business School and attended several training programs at IMD/Switzerland and Insead/ Singapore. Mr. Tütüncü speaks English and is a member of TÜSİAD (Turkish Industrialists and Businessmen s Association). Mr. Tütüncü was born in He is married and has three children. Ahmet Özokur studied Business Administration and Marketing at Indiana University, Department of Business Administration and at the European Business School. He began his professional career in 2004 as Executive Board Member at Hızlı Sistem A.Ş. In 2005, he was appointed General Manager of Datateknik, and he was promoted to the position of CEO of Datateknik Informatics Group within the same year. Post merger in 2006, Datateknik Informatics Group became a fully integrated group engaged in systems integration, distribution of computer components, software development and distribution, development of interactive applications, manufacturing and distribution of Expert branded products; it was a pioneering and innovative company in its sector. In 2008, with the restructuring of Datateknik Informatics Group under the roof of Yıldız Holding, Mr. Özokur was promoted to Assistant Chairman of the Holding. Within the same year, he was also appointed Project Leader at Yıldız Holding Real Estate Investment Group and Executive Member of Beta Marina İşletmeciliği A.Ş. On January 4, 2010, he was appointed General Manager of Sağlam Real Estate Investment Trust. Mr. Özokur is interested in aquatic sports. He is married and has two children. BOARD OF DIRECTORS 8

11 Alain Strasser Board Member (Independent) Alain Strasser was born in After first graduating from the Departments of Mathematics and Philosophy in 1964, he obtained an MBA from E.S.C. in Paris in 1968 and a Masters in Economics from the same university in Until 1972, he was employed at Senegal s Dakar University as an instructor in management. His career in the private sector began when he held several positions at Unilever, mainly in France, in the sales and marketing departments. In 1982, Mr. Strasser, who had become an expert in homecare products, joined Tambrands, and there he served as Sales and Marketing Director for France ( ), General Manager for France ( ), General Manager for the United Kingdom ( ), European Division Deputy Head ( ), and International Head ( ). After the acquisition of Tambrands by P&G, Mr. Strasser was appointed to Campell Soup Company in 1994 as President of Campbell Biscuits Europe. He was instrumental in the Campbell s acquisition of Danone s Liebig Soup and he served as the President of Delacre Biscuits and Liebig Soup until From 1998 to 2007, Mr. Strasser was employed by Artal, a Belgian private equity firm, as CEO of Harry s SAS, where he actively managed the company s restructuring and strategic partnership processes. After the company was sold to Barilla, he joined Ülker Group in January 2008, as Group Head of International Operations. Mr. Strasser is still a member on the Boards of several companies including SSL in London; Mood Media and Benedicta in Galapagos; Alpina in France; and Mankattan in China. Mr. Strasser is married and has three children. Cengiz Solakoğlu Board Member (Independent) Cengiz Solakoğlu graduated from the Istanbul Academy of Economic and Business Studies in 1964, and began his professional career in sales at Beko Ticaret A.Ş. He was promoted to Regional Sales Manager in 1969 and to Sales Director in After serving as the General Manager of Beko Ticaret from 1977 to 1983, he was appointed General Manager of Atılım A.Ş., another Koç Group company. During his eight year tenure in this position, he pioneered the efforts to strengthen the Arçelik Authorized Dealer System. In 1991, Mr. Solakoğlu was appointed Deputy Chairman of the Consumption Group of Koç Holding, and he was also a Member of the Executive Committee of the Group between 1996 and In 2002, he was appointed as Chairman of the Durable Consumer Goods Group of Koç Holding. Having worked in the Koç Group continuously for more than 37 years, Mr. Solakoğlu retired due to the Group s policy of mandatory retirement at age 60. He is among the founders of the Educational Volunteers Foundation of Turkey (TEGV) and the 1907 Fenerbahçe Association. Mr. Solakoğlu was named a Leader of Civil Society by the Ekonomist magazine in He is married and has two children. Mahmut Mahir Kuşculu Board Member (Independent) Mahmut Mahir Kuşculu graduated from Istanbul Erkek Lisesi, and then from Istanbul University, Faculty of Economics. He went on to complete his postgraduate education in marketing in the US. From 1970, Mr. Kuşculu served as Executive Manager and Board Member in the family glass industry businesses, Tamcam A.Ş. and Arsal Cam Sanayii. He founded Kutaş Dış Ticaret ve Pazarlama A.Ş. in 1982, and Erdem Dış Ticaret A.Ş. in 1985, while also taking part in the management of these companies. Mr. Kuşculu has served on the professional committees of the Istanbul Chamber of Commerce and the Istanbul Chamber of Industry for 20 years; also, he has served as a Member of the Assembly of Istanbul Chamber of Industry for 15 years. Mr. Kuşculu is married and has two children. BOARD OF DIRECTORS 9

12 A Message from the CEO Dear Shareholders, The important role of the food industry in the development of Turkey Our country continued its successful economic performance of the prior year into 2011, and recorded annual GDP growth of 8.5% as of year-end. As a result, Turkey was one of the few countries that distinguished themselves from the pessimistic scenario that prevailed throughout the year in the global economy. Despite the downturn in the European market, domestic demand in Turkey continued at full force, leading to a positive mood in the real sector. During the year, the food sector in Turkey catered to over 31 million foreign tourists, in addition to our country s population of 75 million citizens. The food sector outpaced many others in Turkey by registering growth of 7.6% by year-end. Our restructuring efforts focus on the future Thanks to the transformation initiative that followed the restructuring process, Ülker has become an even larger food company yet with a simpler structure. The efforts to merge the group companies engaged in the biscuit, chocolate and cake categories under Ülker and to exclude the businesses operating in other categories from the portfolio, have started to yield positive results in terms of sales income and profit margins. With the new structure implemented in 2011, the Company aims to: and cake categories, merger, timely manner. The results of our Company s activities in 2011 is summarized below: In conclusion The fundamental transformation and development process, outlined above, resulted in the decision to remove dividend privileges granted to certian share classes, which was approved at the Extraordinary General Meeting dated March 19, Our goal is to become the most productive company in all areas of the sector by offering our strong brands to consumers at reasonable prices. We also aim to achieve positive results that will satisfy all our stakeholders by ensuring the continuity of our brand investments via new resources. I would like to extend my gratitude to our shareholders, business partners, employees and customers who supported Ülker in I hope we will all share the gains and happiness of many successful initiatives in the next period of operations. Respectfully, Mehmet Tütüncü CEO A MESSAGE FROM THE CEO 10

13 Our Strategies In productivity, we aim to: the sector, chocolates and cakes by changing the Company s management and operational structure by eliminating all subsidiaries and financial investments that fall outside the main field of activity, distribution channels and sales points by merging the sales companies, In conclusion, we aim to: higher sales volumes and higher income in biscuit, chocolate and cake operations, highest level, happy. In brand investments, we aim to: reasonable prices, OUR STRATEGIES 11

14 2011 Business Activities 12

15 Ülker has undertaken investments in order to further solidify the Company s dominant market position, increase consumer satisfaction, improve product quality, and to render the cost base more competitive through increased efficiency.

16 Economic Developments in the Global and Turkish Food Sector The Global Food Sector The year 2011 witnessed economic fluctuations caused by the global financial crisis and a series of major political events. The debt crisis, which initially emerged in the US in 2008 in the mortgage market, went on to negatively affect the world s economies. Although it mainly affected EU countries and Japan, it continues to have an adverse impact on global markets. The problem of public debt sustainability in the Euro Zone, coupled with political turmoil spreading in North Africa and the Middle East, have the result that the global economy is teetering on an even more precarious balance. The historically significant role of affluent and developed countries in shaping the global economy is diminishing every day, and this dependence is fast becoming a relic of the past. As clearly seen in Turkey, developing countries may also attain rapid economic growth due to their own internal dynamics. With a growth rate of 9.8% over the previous year, the production sector played a major role during the country s recent growth process. However, Turkey s GDP growth was mainly tied to domestic demand, when the expenditure method is used to calculate this key economic indicator. The Food Sector in Turkey Achieving an economic growth rate of 8.5% by 2011 year-end, Turkey appears to be less affected by the ongoing crisis than the US and EU countries. Turkey realized 46.2% of its export activities with EU countries, which grew at a low rate of 1.5% in 2011 due to the debt crisis there. However, Turkey diversified its target export markets in 2011 and increased its total exports by 18.5% to USD 135 billion, despite all the turmoil. Additionally, Turkey realized an import volume of USD billion during the year. Dependence on foreign energy, an international trade deficit reaching a record level of USD 100 billion, and the sharply rising inflation rate were the main risk factors in the Turkish economy. In 2011, the private sector played a major role in Turkey s high growth results. Given the economic scenario outlined above, the food industry in Turkey continued to grow in Catering to 75 million Turkish citizens as well as 31.5 million foreign tourists, the country s food industry was successful in achieving its profitability and revenue targets. Outperforming many other sectors with annual growth of 7.6% by 2011 year-end, the food sector nevertheless has been greatly affected by the fluctuations in commodity food prices around the world. While prices hit a record high in February 2011, even exceeding the levels reached during the food crisis in 2007, they dropped on average by 7 percentage points in mid-year and closed 2011 with an increase of 26% on some items. Price instability, which cost net food importing countries an extra USD 1.29 trillion in total for ECONOMIC DEVELOPMENTS, THE FOOD SECTOR IN TURKEY AND THE WORLD 14

17 Due to the fall in the income distribution index in European countries, 2012 presents important opportunities for food exporters. Turkey is expected to increase its food exports to a volume of USD 10 billion in the coming year, up from USD 8.8 billion in With the slowdown in the world economy in 2012, commodity prices are expected to fall, leading to an increase in the profitability of the overall sector, depending on weather conditions. the year, was identified as one of the leading causes of famine, and was the top agenda item at the Paris meeting of Agricultural Ministers representing G-20 countries in June In 2012, the world economy is expected to expand at a slower pace, at a projected 2.5%. Meanwhile, the growth trend in developing countries is expected to continue, albeit with a slight decline in momentum. With strong domestic demand as the driving force, Turkey s economic growth rate is estimated to reach 4-5% for the year, despite the recession in Europe, the country s biggest export market. In order for Turkey to turn the recession in EU countries into an opportunity, it must sustain its competitive advantages by effectively executing information technology and production strategies, which have high added value, are R&D and innovation focused and are export oriented. 7.6% The Growth Rate of The Food Sector in Turkey Outperforming many other sectors with an annual growth rate of 7.6% by 2011 year-end, the food sector nevertheless has been greatly affected by the fluctuations in commodity food prices around the world. ECONOMIC DEVELOPMENTS, THE FOOD SECTOR IN TURKEY AND THE WORLD 15

18 Significant Developments In line with the efforts to simplify the Company s financial structure, the following were excluded from logistics company; Dünya Gümrükleme, the customs clearance company; Tire Kutsan, the packaging company, and a tranche of BİM shares. Similarly, Besler Gıda, Sağlam REIT, PNS Pendik Nişasta and Hero Gıda shares were sold in Ülker also sold its remaining shares in BİM, which was a financial investment of the Company, in Within the scope of restructuring efforts, Ülker acquired 91.67% of the shares of Ülker Çikolata Sanayi A.Ş. in September Ülker Çikolata Sanayi A.Ş. holds 99.99% of the shares of Atlantik Gıda Paz. ve Tic. A.Ş. Therefore, Ülker Çikolata Sanayi A.Ş. and Atlantik Gıda Paz. ve Tic. A.Ş. were fully consolidated as of September 30, İdeal Gıda Sanayi ve Ticaret A.Ş., Birlik Pazarlama Sanayi ve Ticaret A.Ş. and Fresh Cake Gıda Sanayi ve Ticaret A.Ş. were united under the Ülker umbrella via acquisitions finalized on December 30, In addition, the acquisition of AGS Anadolu Gıda San. A.Ş., intended for a merger with Biskot Bisküvi Gıda San. ve Tic. A.Ş., a subsidiary of Ülker, was also finalized on December 30, Through the above transactions and developments Ülker united all production and sales operations of biscuits, chocolates and cakes under the same roof % Ülker s share in Ülker Çikolata A.Ş. Within the scope of the Company s restructuring efforts, Ülker acquired 91.67% of the shares of Ülker Çikolata Sanayi A.Ş. in September As a result, the Company increased its competitive strength and positioned itself to take maximum advantage of the rapid growth in the chocolate and cake markets. Developments in Corporate Governance Practices The Company moved a step ahead by removing dividend privileges in order to ensure that all shareholders benefit equally from profit distribution. To this end, at the Extraordinary General Meeting dated the paid-in capital of Ülker by TL 73,400,000 to TL 342,000,000; to completely restrict the preferential rights of current partners; to remove dividend privileges; and to distribute in registered form the C Group bearer shares issued at a nominal value of TL 73,400,000 to Registered Stockholders and to A and B Group Privileged Stockholders, in exchange of turning over their dividend privileges and stock dividends, and in proportion to the removed privileges for privileged stockholders and in proportion to turned over stocks for stock dividend holders. SIGNIFICANT DEVELOPMENTS 16

19 Production and Capacity Biscuits In 2011, Ülker s production facility in Topkapı, operating with three shifts, reached an actual capacity utilization ratio of 75.2%. This level translates into the production of 51,258 tons of biscuits and net sales of 51,178 tons of biscuits during The Gebze factory, established in the Gebze Organized Industrial Zone in 1997, operates in a covered area of 41,000 m 2 built on an 85,000 m 2 tract of land. The Gebze factory has produced biscuits and crackers since Its capacity utilization ratio was 79.2% in 2011, with production of 37,934 tons and net sales of 37,899 tons. The Ankara factory is built on 110,000 m 2 tract of land with a covered area of 80,000 m 2, making it the largest biscuit production and warehousing facility in the Middle East. The factory has been one of the most important contributors to the region s economy for over 40 years. In 2011, the factory s actual capacity utilization ratio was 76.4%, with three work shifts. The factory produced 74,786 tons of biscuits, which resulted in net sales of 74,449 tons for the year. 240,822 ton Biscuit Production Volume Ülker realized total biscuit production of 240,822 tons at its Topkapı/Istanbul, Gebze/Kocaeli, Ankara and Karaman factories in The Main Brands Include Pötibör, Çizi, Krispi, Haylayf, Mavi Yeşil, Hanımeller, Bebe Biscuits, Biskrem, Krim Kraker, Probis, Çokoprens, As Kraker, Başak, İkram, Canpare, Rondo, Altınbaşak, 9 Kat Tat, Halley, Kat Kat Tat, Çubuk Kraker, Alpella Ring, Hasat, Bolero. Biskot Bisküvi, an Ülker subsidiary, produces biscuits in 20 facilities at its Karaman factory, which had a capacity utilization ratio of 68% in The factory produced 76,844 tons of biscuits, which resulted in net sales of 76,060 tons for the year. PRODUCTION AND CAPACITY BISCUIT 17

20 Production and Capacity Chocolates Ülker Çikolata, an Ülker subsidiary, carries out its production activities in three facilities built on a 26,742 m² tract of land with a total covered area of 67,745 m². In the last three months of the year, Ülker Çikolata realized a production volume of 28,165 tons at its Topkapı Factory, and net sales of 27,845 tons. The Company s capacity utilization ratio was 69% in The Main Brands Include Ülker Çikolata produces the categories of solid chocolate, chocolate covered products, chocolate cream, giftable chocolates and powder cocoa under the brands Ülker, Alpella and Lovells. The Company s leading brands/products are Ülker Chocolate Wafers, Çokokrem, Metro, Albeni, Çokonat, Dido, Cocostar and Caramio. 56,537 tons Chocolate Production Volume Ülker realized total chocolate production of 56,537 tons at its Topkapı and Karaman factories in PRODUCTION AND CAPACITY CHOCOLATES 18

21 Production and Capacity Cakes* Ülker produces cakes at its Esenyurt Factory, which was established in 1993 and has a covered area of 26,000 m². The factory s capacity utilization ratio was 68% in 2011; the factory produced 56,009 tons and had net sales of 55,233 tons. The Main Brands Include Dankek and Kekstra. 56,009 tons Cake Production Volume In 2011, Ülker realized total cake production of 56,009 tons at its Esenyurt Factory, which was established in * The merger with the cake company was finalized on December 30, Therefore, the above figures were not included in the consolidated statement for PRODUCTION AND CAPACITY CAKES 19

22 Investments In 2011, Ülker solidified its dominant position in the market with new investments including new installations in the factories, capacity increases, modifications of production lines, efficiency increase, improvement of hygienic conditions and warehousing procedures. The investments undertaken by Ülker aim to further solidify the Company s dominant position in the market, increase consumer satisfaction, improve product quality, and to render the cost base more competitive by increasing efficiency. In 2011, Ülker invested in the installation of new facilities, capacity increase, renovations, modifications to production lines, efficiency increase, improvements in the areas of hygiene and warehousing. The consolidated amount of expansion and modernization investments was about TL 85 million. 85 million The total amount of Ülker s expansion and modernization investments In 2011, Ülker invested a consolidated amount of TL 85 million in expansion and modernization. INVESTMENTS 20

23 Subsidiaries Affiliations and Subsidiaries (The current situation after the restructuring process) Biskot Bisküvi Gıda Sanayi ve Ticaret A.Ş. Ülker Çikolata Sanayi A.Ş. İstanbul Gıda Dış Ticaret A.Ş. Production Production Sales & Marketing Atlas Gıda Pazarlama Sanayi ve Ticaret A.Ş. Birleşik Dış Ticaret A.Ş. Atlantik Gıda Paz. ve Tic. A.Ş. Sales & Marketing Sales & Marketing Sales & Marketing Rekor Gıda Pazarlama A.Ş. Godiva Belgium BVBA G New Inc. Sales & Marketing Production Investment SUBSIDIARIES 21

24 Subsidiaries Biskot Bisküvi Gıda and Ülker Çikolata Biskot Bisküvi Gıda Thanks to the merger of AGS-Anadolu Gıda San. ve Tic. A.Ş., cake producing company, with Biskot Bisküvi Gıda San. ve Tic. A.Ş. at 2011 year-end, the Company attained a larger production volume. Biskot Bisküvi Gıda operates in a covered area of 102,000m² and has 2,900 employees, and it is one of the most important industrial companies and employers in the region. In 2011, the total production volume of Biscuits, Chocolates and Cakes was 127,840 tons at the five factories that have a total production capacity of 187,000 tons. Biskot Bisküvi Gıda Sanayi ve Ticaret A.Ş. s product portfolio consists of Pötibör, finger, bebe biscuits, crackers, cream-filled biscuits, sandwich biscuits, wafers, cakes, chocolate-covered bars, chocolate wafers, chocolate-covered cakes, rulokat, çokomel, chocolate cream, special biscuits, chocolate egg with toy, and giftable chocolates. Ülker Çikolata In 2011, Ülker acquired the majority shares in Ülker Çikolata, previously held by Yıldız Holding and Dynamic Growth Fund. Ülker Çikolata produces the categories of solid chocolate, chocolate covered products, chocolate cream, giftable chocolates and powder cocoa under the brands Ülker, Alpella, Lovells, Golden and Mavi Yeşil. The Company is the market leader in its sector and carries out its production in 3 facilities located in Topkapı/Istanbul with a total covered area of 67,745 m². 7% of Ülker Çikolata s turnover stems from export operations. The Company s total material warehouse space measures 18,600 m². Ülker Çikolata has a total production capacity of 203,000 tons, and its average capacity utilization ratio is 69%. As of today, Ülker Çikolata produces 184 different products under 5 main brands (Ülker, Alpella, Golden, Mavi Yeşil, Lovells) and 91 sub-brands. SUBSIDIARIES 22

25 Subsidiaries İstanbul Gıda ve Birleşik Dış Tic. İstanbul Gıda İstanbul Gıda closed 2011 with a turnover close to that of the previous year, despite the product categories, such as milk, beverages, and personal care, which are unrelated to its main field of activity. The Company transferred these businesses to other Holding companies. With a strong sales and distribution network, İstanbul Gıda, exports Ülker products to more than 80 countries mainly in the Balkans and the Middle East, and also to other countries including the Turkic Republics, Africa, Far East, the US, and Europe. The Company achieved a two-digit growth in unit sales, compared to the previous year. The number of employees were 74 as of 2011 year-end. Birleşik Dış Tic. A.Ş was a year of success for Birleşik Dış Ticaret A.Ş. as the Company s strategy to focus on main product categories, namely biscuits, chocolates, and cakes proved right. Thanks to the successful attempts of the sales organization, the Company attained organizational and regional efficiency and also increased its productivity. With a strong sales and distribution network, Birleşik Dış Ticaret exports Halk and Karsa branded Ülker products to the countries mainly in the Balkans and the Middle East, and also to the US, European, African and Far Eastern countries. In 2011, while the negative effects of the global economic crisis was still felt in the European market, to counterbalance these effects, the Company increased its marketing activities in the less-affected countries of the Middle East and Africa. This move resulted in a 26% rise in ton sales to the Middle East, a 50% rise in ton sales to Africa, and 21% rise in ton sales to Far East markets. The Company s net turnover increased by 36.2% at year-end. SUBSIDIARIES 23

26 Human Resources The vision of Human Resources at Ülker is to organize and implement the best human resources practices in all business fields of the Company. The mission of the Company s human resources department, on the other hand, is to become the most preferred food company by; reinforcing their loyalty to the Company, organization, Company s values. The Company aims to accomplish these goals through leaders who have a global perspective as well as innovative and sustainable Human Resources systems. Ülker shapes its human resources practices in line with Yıldız Holding s Human Resources Strategies and Values, which are expressed as, Our Customers Come First!, We Are Number 1 in Quality!, We Are Competitive!, We Achieve Together!, We Are Result Oriented! and We Are Driven By Change!. The Company aims to increase its competitive advantages in both domestic and foreign markets via effective human resources practices, which are aimed at achieving superior quality in all business processes, high motivation and loyalty of employees, and collaboration. In order to further increase the loyalty and motivation of its employees, Ülker conducts employee satisfaction surveys and carries out development programs according to the results obtained from these surveys. The Company also organizes social events with the participation of its employees and their families with the purpose of reinforcing the bond between the Company and its employees. To maintain a high level of employee satisfaction and boost loyalty, Ülker routinely inquires the opinions of its employees via questionnaires and evaluation forms. The results of the Voice of the Stars Employee Loyalty Survey, which was conducted throughout Yıldız Holding towards the end of 2011, were announced at the beginning of Following the analysis of these results, the Company plans to take actions in improvement areas, if there are any. Each year, Ülker holds meetings with workplace union representatives, in cooperation with the Industrial Relations Board. These meetings aim to improve the communication between the Company and its employees, and to provide opportunities for the sharing of ideas that will move the Company forward. Likewise, the Company organizes Partnership Communication Meetings to open new channels of communication, and to boost employee satisfaction and loyalty. As in previous years, the Company organized a series of events in 2011, in order to increase motivation, expand social interaction and strengthen the bonds between to strengthen the social communication network among employees; and also workplace tours and company information sessions were also arranged for the families of employees at various factories. an opportunity for employees and their families to socialize and spend time with each other in a fun environment outside of work. employees to attend the matches of Fenerbahçe Ülkerspor Basketball Team, of which Ülker is the main sponsor. HUMAN RESOURCES 24

27 who have been working for Ülker for 10 years and longer, and have added value to the Company with their dedicated work. They were presented with plaques to reward their loyalty, and this event was highly appreciated by all employees. Day, International Day of Persons with Disabilities, International Women s Day, and etc. were observed and celebrated with the workers. and Children s Festival events, a Painting Contest was organized for the children of employees. Besides, the Company enabled the employees children to attend the April 23rd Film Festival, which is sponsored by Ülker. successful ideas were awarded. Because this project was transferred to electronic media in 2011, it could be carried out more rapidly and there was a boom in the number of suggestions submitted. dinners were organized with the participation of employees and senior management of the Company. The Bayram spirit was shared with the employees at the ceremonies organized for exchanging greetings. organized seminars to help them quit smoking. These seminars were organized in collaboration with the Women s and Family Health Department of Istanbul Metropolitan Municipality, and helped raise employee awareness about certain health related issues. In addition, employees were provided with free check-ups. the employees for their special occasions, such as marriages, births and deaths. Besides, employees birthdays were celebrated with messages and small gifts. Project organized by YASED (International Investors Association of Turkey), two university students studying in Eastern and Southeastern Anatolia were offered summer internship opportunity at the Company in Additionally, within the framework of the protocol between Ülker and TOBB University of Economics and Technology, the Company offered internship opportunities to 3 university students at its Ankara factory in The internship program is divided into 3 parts, in a way that one student will attend the program for a period of 4 months, so that, in one year a total of 3 students will have benefited from the internship opportunity. also realized with the participation of employees, 3,932 cedar trees were planted in Akyurt/Ankara with the purpose of creating a Commemorative Forest for Ülker Employees. renovated and enriched with local and foreign books and periodicals in order to support employees cultural development and to increase their access to knowledge. Besides, employees were provided with access to electronic resources (contracted services of Yıldız Holding) on company computers. companies (tutoring schools, driving courses, supermarkets, hospitals, gas stations etc.) for the employees, to add enjoyment to their social lives and to help them meet their basic needs such as food, health, education, and transportation. Photography Club, which was established as a hobby and events club within Yıldız Holding, and they had the opportunity to improve their photography skills through training programs and trips. HUMAN RESOURCES 25

28 Human Resources framework of Ülker values and core competencies, had achieved better results than expected, displayed exemplary behavior and generally made a difference with their extraordinary job performance, were rewarded within the scope of Moments Awards in 2011 as well. Drawing upon the fact that corporate success can be guaranteed with employees who embrace company values, several events were organized in 2011 in order to encourage employees to embrace the renewed values of Yıldız Holding. Ülker s directly and indirectly employed workers participated in these events, which brought Yıldız Holding Family together. At the two events organized in Istanbul and Ankara, during which Yıldız Holding s vision, mission and values were shared, theatrical performances were staged and employees experienced happy moments. Ülker employees contributed to the production of the video clip of Anthem of Values with their voices and appearances. This video was broadcasted at common areas, posters describing the Company values were hung at visible spots, brochures were distributed, and training content was revised in line with the renewed values, all as part of efforts to launch the new values of the Holding. Similar activities will be carried out during the coming period as well. Ülker is aware of the need to adapt to changes in line with the developments around the world as well as to reflect high technologies and new opportunities to business life in the face of global competition. Thus, the Company implements a human resources policy that is always open to development. This way, the Company can focus on protecting its competitive advantage in the sector by greatly investing in technology and human resources. Regarding its employees as the biggest capital and the most important asset, Ülker is committed to ensuring and supporting the development of its employees, not only for the Company s business targets and competitiveness but also for their own development. Support for the personal and professional development of employees is given through training and development programs, so that they can maintain top performance in their jobs and help prepare Ülker and themselves for the future. Ülker offers its employees various opportunities for both on-site and off-site training on different subjects as Environmental Management System, OHSAS Occupational Health and Safety, Energy Management System, etc.) programs specified by the Regulations on Heavy and Dangerous Work and in collaboration with İŞKUR job placement agency of Turkey; Fire Training, First Aid Training, etc.) and Innovation Techniques, Personal Motivation, Work and Life Balance, Relationship Management and Communication Skills, etc.) for Management Program, Manager Development Program, Ülker Competencies and Behavioral Indicators, etc.) Siemens S7 200, Siemens S7 300, Predictive Maintenance, Machine Operator Training, Forklift Operator Training, etc.) Protective Equipment, Using Transpallets, Hand Washing Considerations, Using Respiratory Equipment for Fire Protection, etc.) Seminars over the Web. Ülker utilizes a Performance and Career Management System aimed at rewarding employees for their achievements and potential as well as determining areas of development. Under the Performance and Career Management System, Ülker strives to develop the roles and skills of every employee who contributes HUMAN RESOURCES 26

29 to the vision of the Company. In 2011, the competencies of Company s managers were evaluated against the competencies described in Ülker Leadership Model and within the frame of 360 Degree Evaluation System; and their targets were evaluated on the basis of Balanced Score Card results. In line with the Human Resources Planning, which was initiated across all Yıldız Holding companies in 2011, a backup system was developed for managerial positions to ensure the continuity of the Company s success. In addition, Individual Development Plans were devised to ensure employees career development and to prepare them for career opportunities that may arise in the future. Besides, new job openings are first announced to and shared with the employees of the Group. Educational Status (2011*) (%) 41.2 High School 5.1 Associate Degree 28.0 Graduate Degree and Higher 25.7 Elementary School Age Distribution (2011*) (%) 57.3 Between the ages of Ülker reinforces its existing workforce by recruiting qualified and skilled new employees. In this respect, the Company took part in the Istanbul Human Resources and Employment Convention, organized by İŞKUR in May This convention brought together all parties of the labor market, namely workers, employers, government corporations and institutions, and universities. At its booth, Ülker provided information about the Company and distributed booklets to the students and graduates of vocational schools and universities, teachers and administrators of vocational schools and to those who actively seek a job. Besides, the Company accepted all internship and job applications at its booth. In addition to the above, Ülker signed collaboration protocols about education with a number of industrial vocational high schools, namely Ankara Çubuk, Istanbul Kıraç, Bağcılar and Zeytinburnu in order to train the existing technical personnel of the Company as well as to source qualified and competent new technical staff. With superior quality standards, Ülker has been creating Happy Moments for Turkish people since 1944, and the Company is determined to develop its human resources in line with future goals and uninterrupted service principle and below Seniority Distribution (2011*) (%) years and less * The above data was given as of December 31, and above years and more to 10 years HUMAN RESOURCES 27

30 Quality and R&D Ülker offers innovative products that appeal to traditional taste buds both in Turkey and around the world. The locate and report facts; public good by adhering to existing laws and regulations as well as to the principles and goals of the Group; expectations; optimization in all products; our consumers a product that we would not consume ourselves, or give to our children. Thanks to its expert and experienced R&D personnel, Ülker continued to develop new products compliant with the Company s high quality standards in 2011, and took its innovative approach to higher levels. In this respect, the Company concentrated on R&D projects in order to fully utilize the capacity of the facilities, and achieved significant progress in capacity increase with new products. By 2011 year-end, 69 new projects were realized by the R&D departments of Istanbul and Ankara factories, and 12 of these projects were developed into new products and subsequently launched. In addition, four new products (Bolero Chocolate-covered Wafer with Hazelnut, Alpella Ring, Halley with 2-layers, and Hot Çiziviç) were launched by the Ankara factory; and eight new products (Krispi with nigella seeds, Spiced Krispi, Krispi Nacho with cheese, Hanımeller Tarsus Shortbread, Albeni 60 gr., Albeni Sticks, Albeni Snack Biscuits, Albeni Cracked Biscuit) by the Istanbul factory. In the area of product development, the Ankara factory developed one new product (Rondo 75g) and 11 new types of packaging (Snack-size Çokoprens 3 in MP, Mini Halley 4 in MP, Snack-size Çokoprens 4 in MP, Half Time Hazelnut Mille Feuille, Scoozi Banana Wafer, Scoozi Vanilla Wafer, Scoozi Strawberry Wafer, Scoozi Chocolate Wafer, Mini Halley 5 in MP, Hazelnut İkram 92g, Chocolate İkram 92g); and the Istanbul factory successfully developed 45 new types of packaging. Products developed by R&D departments in 2011 represented 2.6 % of the total tonnage of the Ankara Factory, and 5% of the total tonnage of the Istanbul Factory. Delicious, Healthy and Trusted Products In 2011 Ülker continued to conduct routine tests and analyses in areas such as raw materials and packaging, as well as carrying out evaluations on semi-manufactured and finished products, in order to guarantee consistent quality standards and reliable production, free from human error. Accordingly, production trials and analyses were performed on a total of 58 alternative raw materials in Ankara. In addition, results of raw-material analyses performed by accredited laboratories were requested from the suppliers and recorded. Within the scope of defined analysis methods and procedures, the Company carried out routine process controls, critical control point (CCP) checks, shelf life analyses, scoring, as well as supervision of equipment, workplace and employee hygiene. To set production standards of Ülker products, and to determine the differences in similar products manufactured by competitors, benchmarking was carried out on certain product groups including Halley, Pötibör, Çubuk Kraker, Çokoprens, Wafer, Rondo Cream, Canpare Cream, İkram Cream, Çizi, Mavi Yeşil and Altınbaşak. To ensure product safety and hygiene, in 2011 Ülker organized training sessions on Workers Hygiene, QUALITY AND R&D ACTIVITIES 28