Annual Report 2012

www.cimsa.com.tr Annual Report 2012

www.cimsa.com.tr

Contents 02 Agenda or the Ordinary General Assembly 04 Our Vision, Mission, Values 06 Corporate Rofile 06 Milestones 08 Message From The Chairman 10 Board Of Directors 11 Senior Management 12 Biographies of Board of Directors 14 Biographies of Senior Management 18 An Assesment of The Cement Industry in 2012 20 Domestic Cement Facilities 24 Foreign Terminals 26 Cement Types 28 Ready Mixed Concrete Products 30 Ready Mixed And Concrete and Aggregate Operations 32 2012 Investments 34 Çimsa Sustainability Approach 36 Social Responsibility 38 Corporate Development and Human Resources 42 Annual Report 2012 59 Auditor s Report 60 Consolidated Financial Statements and Report of Independent Auditors 140 Profit Distribution Table as of December 31 st 2012 142 Addresses

Agenda of the Ordinary General Assembly The Agenda of the Ordinary General Assembly for ÇİMSA ÇİMENTO SANAYİ ve TİCARET A.Ş. to be held on March 27 th 2013 Agenda: 1. Call to order and composition of the Administrative Board. 2. Authorization of the Administrative Board to approve the meeting minutes of the General Assembly. 3. Reading and Discussion of the 2012 Board of Directors Annual Report and the summaries of Audit Committee s report and the Independent Auditor s report. 4. Informing the General Assembly on donations and charities made within year 2012. 5. Determining the limits of donations the company will make regarding year 2013. 6. Informing the General Assembly regarding transactions done with related parties within year 2012. 7. Informing the General Assembly regarding indemnities, securities, liens given in favor of 3rd parties and obtained incomes or benefits within year 2012. 8. Reading, discussion and confirmation of the balance sheet and the profit/loss accounts of year 2012. 9. Acquaintance of the Members of the Board of Directors and the Audit Committee due to their year 2012 activities. 10. Determining the usage of 2012 profit, profit allocation and dividend share proportions. 11. Submission of the members elected to serve for the remainder of the activity year replacing the vacated positions of members of the General Assembly to the approval of the General Assembly. 2 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

12. Election and tenure determination of the auditor. 13. Approval of internal directive by the General Assembly on the working Principles and Procedures prepared by the Board of Directors. 14. Approval of the Amendment of the Company s Articles of Association as in the attached Draft Amendment with regard to the Permit Obtained from the Capital Markets Board and from the Republic of Turkey s Ministry of Customs and Trade. 15. Informing the General Assembly on transactions indicated on the 1.3.7 Numbered principle of the Capital Market Corporate Governance. 16. Authorization of the Chairman and the members of the Board of Directors to conduct procedures as set out in articles 395 and 396 of the Turkish Commercial Code. Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 3

Our Vision To be the most valuable cement and concrete company in Turkey. Our Mission To be a business partner to cement and concrete users at a global level. Our Values Our values are those core qualities of our culture that carry us into the future: reliability, customer orientation and collaboration. We are a reliable and collaborative organization that has been working with its customers, employees, suppliers and business partners for a long time. We understand our customers needs and we are always increasing the value that we provide to our customers through the creation of new solutions to satisfy their needs. 4 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

MERSİN ESKİŞEHİR Çimsa is exactly 40 years old with the excitement of the first day! KAYSERİ NİĞDE AFYONKARAHİSAR ANKARA Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 5

Corporate Profile Çimsa, creating value for all its shareholders and focusing on growth with profit, aims to maintain this in the future as well. Milestones 1972 Established In Mersin. 1988 Stepped into ready-mixed concrete sector. 1995 Mill /packing facility in Kayseri were acquired. 2000 600 thousand ton capacity new white clinker line is put into use. With the addition of this facility Mersin became the largest capacity under one roof white cement plant in the world. 1975 Started manufacturing with 1 million ton / year capacity. 1990 The World s first customizable Grey/white clinker production line is put into use. 1996 Malatya packing terminal is purchased. Spain - Sevilla terminal is built. 2002 First Calcium Aluminate Cement production in Turkey started. 6 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

Çimsa has been established in Mersin in 1972. Clinker production capacity of Çimsa s facilities in Mersin, Kayseri, Eskisehir and Niğde, which started its activities in 1975 with its first production facility reached from 5 million tons to 5.5 million tons together with acquiring of 51% of the shares of Afyon Çimento Sanayi T.A.Ş on 31.05.2012. Afyon Cement Factory has started production in 1957 and its production capacity is 460 thousand tons. Çimsa also reaches its customers through its cement grinding and packing facility in Ankara, Marmara Route Port and Malatya cement packing facilities. Celebrating its 40th establishment anniversary in 2012, Çimsa is continuing its activities as a 40 years young company. Çimsa, by manufacturing special cements such as white cement and Calcium Aluminate Cement and innovative concretes besides grey cement, is leading the Turkish cement and ready-mixed concrete regarding innovation. Being a ready-mixed concrete manufacturer since 1988, Çimsa offers services in Adana, Kahramanmaraş, Osmaniye, Mersin, Kayseri, Nevşehir, Karaman, Aksaray, Eskişehir, Kütahya, Bursa, Adapazarı, Bilecik, Konya and Denizli cities, and its ready-mixed concrete sales have reach 2.7 million cubic meters in 2012. Aiming to grow in aggregate line of work also, Çimsa is also active in this sector with its 5 aggregate facilities. Çimsa, being one of the first three brands in the world in white cement field, is an international cement manufacturer with its facilities located in Hamburg (Germany), Trieste (Italy), Seville (Spain), Alicante (Spain), Gazimağusa (TRNC), Constanta (Romania) and Novorossiysk (Russia). Çimsa, having its consolidated net sales reach 857.2 million TL in 2012, has acquired 115.3 million TL net profits belonging to its main partnership interests. 2005 Kayseri Plant clinker line is put into use. Standard Çimento is acquired (Eskişehir Cement Plant and Ankara Cement Grinding Facility). 2007 Took over Oysa Niğde Plant. 2009 Çimsa s Russia terminal was put into use. 2011 Spain Alicante terminal was put into use from June onward. Hot Disc (Waste Supply and Waste Energy Recovery) investment was competed in Eskisehir plant. 2006 Terminal in Northern Cyprus was acquired. Romania sales office is established. 2008 Eskişehir s second line was put into use. With the acquisition of Bilecik ready-mixed concrete facility, Çimsa became the largest producer in Turkey s ready-mixed concrete sector in terms of no. of facilities. 2010 In February 2010 60% of Medcon company, owner of Trieste terminal, shares were acquired. Çimsa Süper Bims Cement production started. 2012 51% of Afyon Cimento Sanayi ve T.A.S was acquired from Italicementi company on 31.05.2012. On December 2012 Denizli Üçler Ready-Mixed Concrete Facility and Aggregate operations were acquired. Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 7

Message from the Chairman Dear Business Partners Global crises have caused a deceleration and uncertainty for the future in the economies of developed countries, and growth rate of developing economies to stay in 2-3% rates. 2012 has been a year Turkey s economy was affected from developments in the world and growth has decelerated. Economic growth is expected to realize in the rate of 3%. Parallel to economic growth, there is also deceleration in the construction sector. In the sector where double digit growth numbers occurred one after the other, with this soft decline trend growth by the end of 2012 is expected to stay in 1% rate. Cement Sector Continues to Grow Total cement consumption in 2012 is estimated to have grown by 3% to be 3.7 billion tons. For 2013 as well, global cement demand is expected to show parallelism to economic growth and show a growth between 4-5%. Turkey market cement consumption in 2012, by showing 2.8% growth, actualized as 58 million tons*. In 2013, depending on various infrastructures, residence and urban transformation projects, cement consumption is expected to increase in the same rate as economic growth. In 2012, capacity continued to remain above local demand and surplus capacity has been exported regardless of difficulties in foreign markets and uncertainties in Middle East and North Africa markets. Total cement and clinker export of Turkey in 2012 actualized as 13.6 million tons. This amount is 6% below the total 2011 export amount. In 2013, negative effects of political uncertainties in Middle Eastern and North African countries to export markets are expected to continue although they will decrease. 40 Years Young Çimsa aims Sustainable Growth Celebrating its 40th Establishment anniversary in 2012, being a 40 Years Young company, Çimsa, with its vision of being Turkey s most valuable cement and concrete company, continued to grow and create value by acquiring 51% of the shares of Afyon Çimento Sanayi T.A.Ş. In addition, Çimsa, by acquiring Denizli Üçler Ready-mixed Concrete Facility and Aggregate Operations actualized another step towards its aim of sustainable growth. Çimsa increased its consolidated turnover to 857.2 million TL by increasing it by 7% and its consolidated operating profit to 168.7 million TL by increasing it by 5% in 2012 and took its place among the most profitable companies of cement sector. Possessing special products like white cement and calcium aluminate cement besides grey cement, Çimsa leads the Turkish cement and ready-mixed concrete sector in innovation. It is known as indispensable working partner of our customers on special products and their solutions. Çimsa is one of the first three most important brands in the world in white cement field. Acting with its global player identity with its foreign terminals in the export field, Çimsa markets its products under its own brand in more than 50 countries. *It is a company assumption using Turkish Cement Manufacturers Association data and adding estimated sales of non-member manufacturers. 8 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

Calcium Aluminate Cement ISIDAÇ 40, on the other hand, is the first and only calcium aluminate cement manufactured in Turkey. It is a special cement for tile, construction chemicals and precast sectors, and especially refractory industry. Çimsa, with its Innovative and Environmentally Friendly Projects Continues to Create Value Çimsa continued its works toward sustainability in 2012. First important results have also been obtained from renewable energy investments. With the electric production from waste gas investment completed in Mersin Plant, 50% of the electricity consumed in two lines of the plant is aimed to be produced. At the same time, carbon emission of the factory will decrease by 33.000 tons per year. With the Hot Disc investment put in work in Eskişehir Plant in 2011, waste fuel usage rate of the plant in 2012 increased by 21% per each related unit. Sustainability Report in GRI B+ level has been published in December 2012. highest of the three degrees that can be obtained, In general in compliance with the standards report has been given as a result of the audit. We are proud to announce to its investors, shareholders and public opinion that Çimsa, leaving 40 years full of successes within Hacı Ömer Sabancı Holding body, is moving forward emphatically in the path of its vision of being the most valuable cement and ready-mixed concrete company with its transparent operation accepted by international authorities. Çimsa, being a 40 years young company, will also continue to produce value for our shareholders, working partners and our country in 2013 with the projects it will actualize in profitability and energy efficiency, by showing outstanding performance on its innovative works adding a different point of view to the sector. I express our gratitude to all our shareholders who contributed to Çimsa s leadership, strong market position and efficiency. Best regards, Mehmet Göçmen Chairman In addition, Çimsa s Misis, Kozan, İnegöl and Pamukova Ready-Mixed Concrete Facilities received Green Dot Environment Rewards in 2012. In My Clean Turkey competition organized by the Ministry of Environment and Urban Planning, Çimsa Kayseri Cement Plant was chosen as Turkey s Cleanest Industrial Facility. Çimsa, with CEM IV 32.5 R grey cement manufactured in its Kayseri Plant, received (IBU) Environment Friendly Product Certificate from German Building and Environment Institute. Çimsa is the first cement company in Turkey that possesses the Environmentally Friendly Product Certificate given by evaluating product specifications and production processes. The Internal Audit Activities being done in International Standards have been documented Çimsa, breaking a new ground again, has been one of the few in the world and the first and only Cement Company in Turkey that documented its conducting Internal Audit activities conformed with International Standards. With its internal audit process being audited by Ernst&Young, one of the independent establishments accredited by International Internal Audit Institute, the Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 9

Board of Directors 5 1 4 6 3 7 2 Board of Directors 1- Mehmet Göçmen, Chairman 2- Mustafa Nedim Bozfakıoğlu, Vice President 3- Serra Sabancı, Member 4- Seyfettin Ata Köseoğlu, Member 5- Hasan Cihat Erbaşol, Independent Member (Since 24.04.2012) 6- Mehmet Kahya, Independent Member (Since 24.04.2012) 7- Mehmet Hacıkamiloğlu, General Manager 10 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

Senior Management 6 5 1 4 3 7 2 Senior Management 1- Mehmet Hacıkamiloğlu, General Manager 2- Nevra Özhatay, Assistant General Manager (Financial Affairs) 3- Hüseyin Özkan, Assistant General Manager (Local Sales) 4-Tamer Denizci, Assistant General Manager (Supply Chain) 5- Şahap Sarıer, Assistant General Manager (Cement Production) 6- Mutlu Doğruöz, Assistant General Manager (Investment) (Until 01.06.2012) 7- Ülkü Özcan, Strategy and Marketing Manager Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 11

Board of Directors Mehmet GÖÇMEN Chairman Born in 1957, Mehmet Göçmen, after Galatasaray High School and Middle East Technical University Industrial Engineering education, has done a masters degree in Syracuse University in U.S.A. in Industrial Engineering and Operational Research. Starting his career in 1983 in Çelik Halat ve Tel San. A.Ş. Göçmen served as the General Manager of Lafarge Ekmel Beton A..S. and as the Vice President for Business Development and Foreign Affairs in Lafarge Turkey between 1996-2002. He served as the General Manager at Akçansa from June 2003, he was appointed as the Head of Human Resources Group on 01.08.2008 and as Head of Sabancı Holding Cement Group on 20.07.2009. Since 15.09.2004 he has been chosen as Member of the Board of Directors of Çimsa Çimento Sanayi ve Ticaret A.Ş. Mustafa Nedim BOZFAKIOĞLU Vice Chairman Born in Tarsus in 1950, Nedim Bozfakıoğlu graduated from Istanbul University School of Economics in 1972. He served as Finance Manager and Financial Affairs Assistant Manager at Lassa and Kordsa. Served as Head of Budgeting, Accounting and Consolidation in Sabancı Holding, Bozfakıoğlu is still serving as General Secretary in Sabancı Holding. Since 26.04.2004 he has been chosen as Member of the Board of Directors of Çimsa Çimento Sanayi ve Ticaret A.Ş. Serra SABANCI Member Born in 1975 in Adana, she completed her education in Portsmouth University and Istanbul Bilgi University s Department of Economics where she graduated as first in her class. Worked in Temsa company, Serra Sabancı, received training in Institute of Directors in London on Company Acquisition and Board of Directors Memberships. Serra Sabancı continues as Member of the Board of Directors in Sabancı Holding and various group companies, and as Member of the Board of Trustees in Sabancı Foundation. Since 18.12.2009 she has been chosen as Member of the Board of Directors of Çimsa Çimento Sanayi ve Ticaret A.Ş. Levent DEMİRAĞ Member (Until 24 April 2012) Born in 1959 in Erzurum, Levent Demirağ, graduated from the Ankara University Faculty of Political Sciences in 1980. He served as Financial Analyst in Ministry of Finance between 1980 and 1992. Having served since 1994 in various positions in Hacı Ömer Sabancı A.Ş., Levent Demirağ continues as the Head of Sabancı Holding Financial Affairs and Legal Department. 12 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

Seyfettin Ata KÖSEOĞLU Member Born in 1960 in Akşehir, Ata Köseoğlu graduated from Boğaziçi University Department of Mechanical Engineering. Later on, he completed his Electrical Engineering masters degree in Lehigh University, and received his M.B.A. from Boston University. Starting his banking career in İktisat Bank, Köseoğlu, served respectively in Finansbank, Bear Stearns, Societe Generale Investment Bank, Credit Suisse First Boston Bank and BNP Baribas/TEB firms. On 01.07.2011 he began to serve as the Head of Sabancı Holding Strategy and Business Deveopment Group. Since 15.08.2011 he has been chosen as Member of the Board of Directors of Çimsa Çimento Sanayi ve Ticaret A.Ş. Hasan Cihat ERBAŞOL Independent Member He was born in 1944 in Istanbul. Graduating from Darüşşafaka Private High school in 1962, Erbaşol finished Washingtonpark High School - Racine / Wisconsin school in 1963, and Istanbul University Law School in 1967. Starting his career as an attorney in Marshall Boya Sanayii, Erbaşol, served as legal advisor in Man Kamyon Sanayii and as the Head of the Legal Department of Kordsa - Lassa (Brisa) - Beksa companies within the Sabancı Holding body and of Sabancı Holding. Working as freelance since 2000, he does legal counseling. Since 24.04.2012 he has been chosen as Member of the Board of Directors of Çimsa Çimento Sanayi ve Ticaret A.Ş. Mehmet KAHYA Independent Member He received Chemical Engineering and Economy degrees in Yale University; Finance, Marketing and Operational Research M.B.A. degrees in Kellogg Graduate School of Management. He served as Chief of Management Services at Sasa, as President at MKM International and Sibernetik. Respectively, he served as Vice President at Sabancı Group Automotive Group, as Temsa Vice President and President, as Toyotasa Vice President and has been Member of the Sabancı Holding Planning and Steering Commission and Member of the Board of Directors of Temsa, Toyotasa, Sasa and Sapeksa. He has served as Carnaud Metalbox Executive Director and Vice Chairman of Board of Directors, Uzel Makine Chairman and Uzel Holding Executive Committee Member and Paint Group Vice Chairman, Sarten Ambalaj Executive Committee Member, Gierlings Velpor Vice Chairman of Board of Directors and Assan Alüminyum Chairman. As the founder, he is conducting consultancy at Kronos Company on strategy, restructuring, profit turnover, growth, purchasing and integration processes. He is in Board of Directors of Yaşar Holding, Altınyunus, DYO, Viking Kâğıt as independent Member; and is also in Yaşar Holding Head of Risk and Audit Committee, Viko and Kalibre Boru companies Administrative and Executive Councils. Since 24.04.2012 he has been chosen as Member of the Board of Directors of Çimsa Çimento Sanayi ve Ticaret A.Ş. Mehmet HACIKAMİLOĞLU General Manager After earning a bachelor s degree in Civil Engineering from Boğaziçi University, Mehmet Hacıkamiloğlu completed the International Business Specialization Program at Istanbul University and the Executive-MBA program at Sabancı University. Mr. Hacıkamiloğlu then joined Sabancı as the Facility Manager of Betonsa, moving on to become a company s Investment and Planning Specialist. From 1997 to 1999, Mr. Hacıkamiloğlu was Akçansa s Strategy Development and Planning Manager and Agregasa s Company Manager from 1999 to 2001. After a further two years as Akçansa s Financial Coordinator, he joined Çimsa as the Assistant General Manager for Financial and Administrative Affairs. He was appointed as General Manager at Çimsa on June 1, 2006. Mehmet Hacıkamiloğlu still serves as Çimsa s General Manager. Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 13

Senior Management Mehmet HACIKAMİLOĞLU General Manager Please refer to page 13 for a brief resume. Nevra ÖZHATAY Assistant General Manager, Financial Affairs After completing her MBA at Exeter University in the UK, following a bachelor s degree in Business Administration from Boğaziçi University, Nevra Özhatay began to work at Sabancı Holding Cement Group in 1994 as a Financial Specialist and a Talnet Pool candidate Ms. Özhatay, being Management Support Manager at Akçansa in 1996, has been appointed as Strategy and Business Development Expert in 1998, Planning and Control Manager in 2000, Strategy and Business Development Manager in 2004 and from year 2008 onwards Logistics, Strategy and Business Development Director. Since 01.01.2009, Ms. Özhatay has been working as the Financial Affairs Assistant General Manager at Çimsa. Hüseyin ÖZKAN Assistant General Manager, Domestic Sales A graduate of METU s Economics Department, in 1983, Hüseyin Özkan started his career as a Marketing Supervisor at Exsa Export A.Ş. In 1986 he joined Çimsa Çimento as the Internal and External Trade Supervisor, being promoted to the position of Sales and Marketing Manager. Since 1999 he has been the company s Assistant General Manager for Marketing and Sales. He was appointed as the Assistant General Manager Responsible for Domestic Sales on 01.01. 2011 Tamer DENİZCİ Assistant General Manager, Supply Chain Graduated from Istanbul Technical University Department of Industrial Engineering, Tamer Denizci began his career at Dusa Endüstriyel Sanayi as Financial Affairs Supervisor. After 4 years of experience in Dusa, he worked at Yes International A.Ş. between 1992 and 1994 as Financial and Administrative Affairs Manager. After his Financial Affairs Manager position at Lafarge Beton A.S., where he started in 1994, he worked as Export and Sales Director at Lafarge Aslan Çimento. Starting to work at Çimsa in 2006 as Financial Affairs Assistant General Manager, Mr. Denizci is still holding the position of Assistant General Manager responsible for Supply Chain. Şahap SARIER Assistant General Manager, Cement Production Şahap Sarıer began his career in 1995 as a Field Engineer at Betonsa after completing his Civil Engineering education at Dokuz Eylül University. Continuing from 1995 to 1997 as Betonsa s Operating Supervisor, Mr. Sarıer worked as the Regional Manager of Akçansa Ready-Mixed Concrete from 1998 to 2004. In addition, he received Executive MBA education at Sabancı University between 2000-2001. For the next two years he was Karçimsa A.Ş. s Operations Manager. In 2006 Mr. Sarıer became Assistant General Manager Responsible for Ready-Mixed Cement at Çimsa, and was appointed as the Assistant General Manager Responsible for Cement Production as of 01.01. 2011. 14 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

Ayfer GÜREŞ Assistant General Manager, Corporate Development and Human Resources (Untill 31.12.2012) Ayfer Güreş holds a bachelor s degree in Psychological Counseling and Guidance from Boğaziçi University and a master s degree in Organizational Psychology from Columbia University. Starting her career at Mudo A.S. as a Human Resources Specialist, after completing her post graduate education, in 1994 started working as a specialist in Sabancı Holding. Continuing her career between 1997 and 2007, at Sabancı Holding as Human Resources Manager, she started to work in 2007 at Çimsa Çimento as a Corporate Development and Human Resources Manager. Served as the Assistant General Manager in charge of Corporate Development and Human Resources until the end of 2012. Ülkü ÖZCAN Strategy and Marketing Manager After graduating from Galatasaray High School and Marmara University s Department of Business Administration (English), Ülkü Özcan began her career at Lafarge Turkey in 1999. Respectively she served as a Strategic Planning Expert (1999 2003), as Strategy and Business Development Manager (2003 2005), and Marketing Project Manager (2005-2007). Since January 2010 serving as Strategy and Business Development Manager at Çimsa, began to work as Strategy and Marketing Manager since 2011. Mutlu DOĞRUÖZ Assistant General Manager, Investment (Until 01.06.2012) An electrical engineering graduate from Boğaziçi University, Mutlu Doğruöz began his career in 1983 as an Electronics Supervisor at Enka Teknik where, for five years, he was in charge of the maintenance and operations of their automation systems. In 1989 he was appointed Deputy Project Manager at Saudi Services Group. Following four years of experience there he joined Çimes Elektronik Sanayi. At Çimes, Mr. Doğruöz served as the Company Manager, the Assistant General Manager and the General Manager respectively. Joining Çimsa Çimento as the company s Investment Manager in 2006, Mutlu Dogruöz was appointed as Assistant General Manager responsible for investments on 01.06.2007. Since 01.06.2012 he has been appointed as the General Manager of Afyon Çimento Sanayi T.A.Ş. Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 15

Çimsa, working to improve Turkey s standard of living for 40 years. 16 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

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An Assessment of the Cement Industry in 2012 In 2012, cement production actualized in the level of 69 million tons, and cement consumption actualized in the level of 58 million tons. While demand for cement in the world in general has been in low levels in developed countries, it has increased considerably in developing countries. In 2012, while cement consumption in developed countries shrank by 6%, it increased by 3% in developing countries (except China and India). Global Cement players have been affected by the recession in the developed markets, political developments in the Middle East and North Africa and increase in energy prices and thus no improvement took place in their profit margins. In 2012, while the cement sector shrank in Northern Europe by 6%, Southern Europe by 21%, it recorded growth in Central Asia by 3%, Middle East by 3%, Eastern Europe by 2%, Africa by 6%, Latin America by 5%. North America, by showing 9% growth, became the most growing region. Rapid increase in the construction sector in Turkey in 2011 increased the sector s demand and the sector retained its current status in 2012. Construction sector, according to cumulative results of 2012 third quarter, has recorded 1% growth compared to previous year. Turkey, being the leader in Europe on cement production, is on 4th place in the world after China, India and U.S.A. In Turkish Cement sector 48 integrated plants, 19 grinding and packing plants totaling 67 plants are active. Cement production in 2012 in Turkey actualized in the level of 69 million* tons and cement consumption actualized in the level of 58 million* tons. Capacity exceeding the local demand has been exported. However, especially the civil war in Syria, social and political disturbances in the Middle East and North Africa region causes Turkey s cement and clinker export to go down in 2012. Total cement and clinker export in 2012 actualized as 14 million tons by decreasing by 6% compared to 2011. Cement sector, while continuing to grow, being aware of its environmental responsibilities, has aimed to obtain an effective role regarding expansion of sustainable growth. Sustainable development especially within the frame of European Union compliance regulations has been the prominent subject in 2012 just as it was in 2011. With the aim to decrease energy costs and percentage of carbon dioxide released into the atmosphere, use of waste fuels, alternative raw materials, waste water discharges and prevention of soil pollution indicate as the most important subjects. *It is a company assumption using Turkish Cement Manufacturers Association data and adding estimated sales of non-member manufacturers. 18 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

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Domestic Cement Facilities Çimsa sustains its domestic activities with its 5 integrated plants in Mersin, Eskişehir, Kayseri, Niğde and Afyonkarahisar, 1 grinding plant in Ankara, Marmara Route Harbor, Cement Packing plant and Malatya Cement Packing Plant. Mersin Plant In Mersin Plant grey clinker/cement, white clinker/ cement, calcium aluminate clinker/cement production is done with 4 production lines. Grey clinker production capacity is 1.250 thousand tons/year, white clinker production capacity is 1.100 thousand tons/year and calcium aluminate clinker production capacity is 30 thousand tons/year. Plant s first production line which started production in 1975 has a rotary furnace without calcinations in 5.25 m diameter and 83 m long. In 1983, to save on fuel costs, it has been modernized by adding coal grinding and burning systems. There are two crushers, one pre-homogenization unit, two raw material ball mills, two raw meal bin and two closed clinker stock halls in the plant. With the modernization work completed in the first quarter of 2010, FLS SF-Cooler type cooling system with grid was built after changing the existing planet type clinker cooling system. With this investment, its capacity reached 3.700 tons/day and the necessary heating consumption for clinker production decreased. Çimsa, in its Mersin Plant, aims to compensate 50% of the electricity used in these two lines transforming the waste gas from 1st and 2nd production lines with the Electricity Production from Waste Gas Project put into work in April of 2012. In addition, contribution is done to the environment with less carbon oscillation. Hacı Sabancı White Cement Production Plant (Third plant production line) taken into operation in December 1999 has a rotary furnace in 3.75 m diameter and 57 m length that has 2.000 tons/day production capacity. Plant consists of one raw materials mill that has crusher and pre-homogenization facility, one coal mill, one raw meal bin, rotary furnace and clinker stock hall. Calcium Aluminate Cement Production Facility was built with a furnace having clinker production capacity of 2 tons/hour, one cement mill having a 5 tons/hour crushing capacity and a packaging unit. By adding a second furnace with 2 tons/hour clinker capacity in 2007, the facility s production capacity has been increased. With the packaging unit built in 2009, the products are offered to customers with 25 kg bags, with pallets and with 1.5 tons big bags. Rotary kiln with 3,6m diameter, 49m length in the second plant production line that can produce both grey and white clinker was put into work on December 1989. Plant consists of a raw material mill that has crushers and pre-homogenization system, one coal mill, two raw meal bins, rotary furnace and a clinker stock hall. Production capacity of this plant that has ability to produce both grey and white clinker according to sales demand is; 1,845 tons/day grey clinker, 1.470 tons/day white clinker. Paper Bag Facility In 2012, 9.4 million pieces of paper bags were produced in Mersin Plant and used in Mersin, Kayseri, Niğde, Eskişehir and Ankara Plant. Kayseri Plant Çimsa Kayseri Plant was built by Akçimento, one of Sabancı Holding companies, in 1992 with 1.6 million tons cement grinding and packing capacity and was acquired by Çimsa in 1995. In 2005, to increase the cement grinding capacity and decrease energy 20 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

consumption, pre-crusher system was built for the cement mill. With the aim to transform the current facility into a integrated cement plant, in the plant where the foundations of clinker production line was made in October 9, 2004, as the construction, assembly and implementation works completed, firs clinker production actualized on December 26, 2005. In the facility where the latest technology is used, ILC type low NOx emission pre calcination system as the main unit, pre warmer with five level cyclone and rotary furnace with 55 m length and 3.6 m diameter are located. In the plant with clinker capacity of 2.500 tons/ day, there are also one raw material crusher, clay and lime stone pre homogenization facility, one coal ball mill, one vertical raw meal mill, and tow cement ball mills. As a successful result of Çimsa s understanding of respect to the environment and sustainability, Çimsa Kayseri Plant was chosen as Turkey s cleanest industrial establishment in 2012 during the My Clean Turkey activities done within the scope of June 5 World Environment Day and was rewarded with Environment Award. Eskişehir Plant Eskişehir Cement Plant has been put into work in 1957 With 3.6 m diameter, 125 m long wet furnace with 150 thousand tons/year capacity and continued its production until 1987. The current first production line was put into work in 1976 with three level pre warmer and dry system furnace with 3,6 m diameter and 52 m length with a 275 thousand tons/year capacity and reached 425 thousand tons/year level. Eskişehir Plant was turned over from Saving Deposit Insurance Fund to Çimsa Çimento Sanayi ve Ticaret A.S. on 27 December 2005. Following the acquisition of the plant by Çimsa in May 2007, the first production line had a dynamic separator added to its raw material mill, the current clinker cooler was replaced, the rotary kilns burning systems, dosage systems and its new electro filter units were renewed. As a result of these investments, a clinker production capacity of 1,750 tonnes/day was achieved. A new closed circuit cement mill with a capacity of 85 tons/ hour was also put into work. On September 2007, a completely new coal vertical mill system was commissioned. This could serve both production lines and has a capacity of 40 tons/hour. The old coal systems were deactivated. On January 2008, a completely new second production line was commissioned. This line had a similar structure to that of the current Kayseri plant, a capacity of 2,300 tons/day, bringing the plant s total production capacity to 4,050 tons/day. The Eskişehir Cement Plant became a modern production facility following the installation of its raw material crusher and a raw material pre homogenization system which were both installed in January 2008, at the same time as the second production line. The plant s cement silos were installed in 2009. The plant also features three ball cement mills used for production of the final cement product. Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 21

Domestic Cement Facilities It is Çimsa s goal to become one of Turkey s leading waste disposal companies. The Hotdisc Project (Waste Supply and Waste Energy Recovery) was carried out at the Eskişehir Plant as part of this plan. The Hotdisc Project will control, both, the kilns processes and its overall product quality, in addition to generating from waste 30% of its total calorific consumption. Niğde Plant Established in 1957, the Niğde Cement Plant started production in 1964 following the completion of its production line. At the time it was a wet system with a capacity of 85,000 tons/year. The plant s total production capacity was increased to 350,000 tonnes/year after the its second production line, a dry system, was put into work, on September 2, 1976. Over the following years, the wet system clinker line was shut down because it had reached the end of its economic and technological life, while production continued using the dry system s rotary furnace. After the privatization of the plant, the kilns capacity of 850 tons/day was increased to 1,240 tons/ day following investments made during 1993 including the replacement of the rotary furnace unit s cyclone, a modernization of its transport, cooling and burning systems, and the replacement of its exhaust gas fan and its electro-filter. Pursuant to the Competition Authority s ruling regarding the termination of the Sabancı and Oyak partnership, the Oysa Niğde Cement Plant was renamed to the Çimsa Çimento San. ve Tic. A.Ş. Niğde Cement Plant as of November the 1st, 2007, continuing production under this name. After it was acquired by Çimsa, many production and energy efficiency improvements were made at the Niğde Cement Plant and it has currently reached a clinker production capacity of 1,380 tons/day. In addition to the rotary furnace with its four-stage pre-heater and grate cooler, a diameter of 3.8 m and a length of 52 m, the plant has one production line and one hammer crusher, one ball raw meal mill, a vertical coal mill and a cement mill with a single roller press grinding system. Afyon Plant Afyon Cement Plant, began production in 1957 by engaging 2,8 m diameter and 69,5 m long wet system furnace with 85 thousand tons capacity. In 1965, by turning the furnace into a semi-wet system, clinker production increased to 160 thousand tons. The 2nd furnace, again built as semi-wet system, with 3.6 m diameter, 53.5 m long was engaged in 1966 and the production capacity of the plant increased to 400 thousand tons. In the facility with the capacity reaching 460 thousand tons today with improvement done in different dates, there are 2 hammer crushers, 2 ball raw meal mills, 2 ball coal mills and 3 ball cement mills. 51% of its shares bought by Çimsa on 31 May 2012, Afyon Çimento Sanayi Türk Anonim Şirketi, are continuing its activities as one of Çimsa participants. Ankara Cement Grinding and Packing Facility Ankara Lalahan Cement Grinding and Packing facility was construction began in January 2001 and was put to work on July 2002. In 2005 it was added to Çimsa group together with Eskişehir Cement Plant. 22 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

Not having a rotary kiln, the clinkers provided by Çimsa s other Plants are grinded in Ankara Plant and turned into cement and sold. In Ankara Cement Grinding and Packing facility, besides 85 hour capacity cement mill, there is one raw material crusher, two cement bins and a packing unit. Marmara Rota Port Cement Packing Facility Located at the Kocaeli Yarımca Gulf Rota Port, the Marmara Facility has been leased by Çimsa in June 2008. 2012 Production Numbers It has an installed silo capacity of 5,000 tons, and a bagged and bulk cement packing/loading capacity of 100 tons/hour. Çimsa Super White Cement is sent from Mersin in bulk and stored in facility s 5,000 tons capacity horizontal silo. White cement is sold both in bulk and in packages from the Marmara Facility. Malatya Cement Packing Facility Established in 1996 near the Malatya Battalgazi Train Station, the Malatya Cement Packing Facility has a processing and packing capacity of 60,000 tons/year. At the facility there are three cement silos with a total capacity of 900 tons. Cement is sold here both packaged and in bulk. 2012 Production Numbers Clinker Production Cement Production Grey Clinker 4.283.798 ton Grey Cement 5.132.610 ton White Clinker 895.923 ton White Cement 902.293 ton ISIDAÇ - 40 Clinker 28.792 ton ISIDAÇ - 40 28.371 ton Sulphate Resistant Clinker 24.950 ton SDÇ Cement 20.082 ton Total 5.233.463 ton Total 6.083.356 ton 2012 Rotary Kiln Capacity Usages Mersin Rotary Kiln I 82% Mersin Rotary Kiln II 90% Mersin Rotary Kiln III 92% Kayseri Rotary Kiln 93% Eskişehir Rotary Kiln I 85% Eskişehir Rotary Kiln II 95% Niğde Rotary Kiln 99% Afyon Rotary Kiln I 47% Afyon Rotary Kiln II 85% Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 23

Foreign Terminals Çimsa, one of the first three brands in the world in white cement field, is an international cement manufacturer with its terminals in; Hamburg (Germany), Trieste (Italy), Seville (Spain), Alicante (Spain), Famagusta (TRNC), Constanta, (Romania) and Novorossiysk (Russia). Cimsa Cement Sales North GmbH (Germany) Built from 50% each partnership of German CTN GmbH and Çimsa, CSN is conducting white cement and ISIDAC 40 marketing activities in Germany with its 7,500 ton capacity bulk cement silo and is marketing white cement in bulk to Germany, France and Benelux countries. Terminal makes it possible to reach the Italian market which is Europe s third largest white cement consumer after Spain and France, with Çimsa brand. The terminal, with its advantageous location, is in a position to not only sell to Northern Italy, but alto to developing Bosnia- Herzegovina, Slovenia and Croatia, developed South Eastern Germany and Austria. Company, in addition, is given service to the market with a sales office in Hamburg and an administrative office in Emden. SIDAÇ 40 sale is also done from the terminal. ISIDAÇ 40 is transported from Turkey with bags. German white cement market, together with the Spanish market is one of Europe s most important markets. Conducting sales through the terminal since 2000 to the market, Çimsa reaches directly to customers in this market with its own brand. Cimsa Adriatico S.R.L (Italy) Çimsa, by acquiring majority shares of Medcon Company on February 9, 2010, became the majority owner of 4 units of 5.000 tons silos at the Trieste Port. Company title was changed to Çimsa Adriatico SRL on April 26, 2010. Terminal is suitable to store and pack both white and grey cement. In addition, it also procures ISIDAÇ 40 cement. Cimsa Cementos Espana S.A.U. (Spain) Çimsa, with its terminal located in Seville since 1996, is reaching directly to Spanish white cement consumer and this way it is increasing marketing effectiveness of its cement. White cement, produced in Mersin Cement Plant comes to Seville Port by vessels in bulk. With the help of cement trailers, they are transported from here to two 5.000 ton silos Çimsa Cementos owns. Besides the 125 tons/day capacity packing facility, there is also a facility producing cement mixed floor covering material in the terminal. Çimsa Cementos Seville is marketing Çimsa white cement to Madrid, Cordoba and Granada markets since 1996. 24 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

ISIDAÇ 40 (Calcium Aluminate Cement), on the other hand, is transported from Turkey in bags and is again being sold from the terminal. With the aim to increase the focus to Spanish consumer who is Europe s most important ten most sophisticated white cement market, Çimsa Alicante terminal with its construction completed, is put to use since June 2011. Alicante terminal, active since 2011, addresses to Europe s most important white cement consumer, the Spanish market. There is 1 silo with 10.000 ton capacity and 1 packing facility in the terminal. For customers who want cement in bags, Çimsa imports cement in bags from Mersin and sells them. Cimsarom Marketing Distributie S.R.L. (Romania) In order to serve the Romanian market which is rapidly developing after joining the European Union, company established in Constanta is marketing Çimsa white cement and ISIDAC 40 to mainly Romania and surrounding markets. Cimsa - Rus Cement Trading Company Limited (Russia) Çimsa Cement Free Zone Ltd. (TRNC) Çimsa, Turkish Republic of Northern Cyprus (KKTC), is giving service to the market since 2005 with a terminal having 5,000 tons grey cement storage capacity. Grey cement produced by Çimsa in Mersin Cement Plant is transported to Cyprus Famagusta Port from Mersin Port and is pressed in Çimsa Cement Free Zone silos from the ships by re-claimers. Sales from silos are done in bulk according to demand in the market. Çimsa, in order to meet the demands in rapidly growing Russia decided to build a terminal in Novorossiysk in 2008 and establishment procedures of ÇİMSA RUS CTK titled company s completed by July 2008. 7.000 tons silo capacity white cement packing facility, active since 2008, is meeting the demands of customers in the Russian market. In this market, suitable also for special product customers, ISIDAÇ 40 product is highly demanded as well. Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 25

Cement Products Çimsa, with its innovative approach brought by its 40 years of experience and technologic infrastructure is offering special products and applications geared towards its customers needs. Standard Products Çimsa is producing mixed and pure Portland cements in compliance with TS EN 197-1 standards, with resistance class 32.5 & 42.5, with early and normal resistance. All produced cements are CE certified and are offered for sale as bulk, big bag, and sling bag and with bags. Portland Cement CEM I 42.5 R Portland cement produced according to TS EN 197-1 standards ensures high early and final endurance. Suitable for general use, it can be used in cases where early mold needs to be taken, especially in prefabricate applications. It is a product preferred in concrete casting in cold weather. Portland Composite Cement CEM II / B-M (V- L) 42.5 R Portland composite cement produced according to TS EN 197-1 standards is suitable for general use since its firs resistance is high. It is preferred in concrete casting in hot weather. It can be applied on industrial grounds containing mid degree sulfate. It can also be used in buildings where Alkali aggregate reaction risk is high. Pozzolanic Cement CEM IV / B (P) 32.5 R pozzolanic cement produced according to TS EN 197-1 standards is preferred in applications such as plastering, cement finish and grouts. Sulfate Resistant Portland Cement CEM I SR 5 42,5 R sulfate resistant Portland cement produced according to TS EN 197-1 standards can be used in environments faced with high sulfate such as sea water, sewage. Çimsa Super Bims Cement CEM II / A-L 42.5 R Çimsa Super Bims cement produced according to TS EN 197-1 standards are Portland cement with limestone type and is especially designed for bims manufacturers. It ensures high performance in taping and transportation with early wall socket extraction, early high endurance and low curing durations. Blast Furnace Slag Cement CEM III / A 32.5 R cement produced according to TS 26 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

EN 197-1 standards, with its low heat of hydration, is suitable for use especially in production of big building materials and concrete casting in high temperatures. It is preferred in plaster, cement finish and grout productions. Special Products White cement and calcium aluminate cement are found in the specific products portfolio produced for specific needs. Çimsa Super White Cement Çimsa Super White Cement which is CEM I 52,5 R white Portland cement produced according to EN 197-1 standards is used in building chemicals, tile production, pre-casting (prestressed sleeper and concrete applications) sectors. Ecowhite Ecowhite, taking place in CEM II / B-L 42,5R Portland lime stone cement class, produced according to TS EN 197-1 standards, finds vast usage possibilities in tiling, building chemicals and precast fields. It is Turkey s whitest cement (min. 86.5% whiteness). Calcium Aluminate Cement ISIDAÇ 40 TS EN 14647 standards, is used in ISIDAC 40, refractor, building chemicals and precast fields. In Turkey it is only being produced by Çimsa and is in special cement classification. With its 6 and 24 hour high endurance values, it possesses much higher resistance than Portland cement. Its thermal resistance and sulfate endurance is very high. Produced in Turkey for the first time by Çimsa, ensures aesthetics and high endurance with minimum 85% whiteness it possesses. Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 27

Ready Mixed Products Çimsa, by carefully following technological and scientific developments in ready-mixed concrete sector, continues to develop innovative products and to offer specific solutions that answer different needs of its customers. Standard Product Çimsa, besides its specific products, by producing high endurance concrete (C50-C200) and, all concretes determined by TSE standards, continues its activities as a company that emphasizes customer satisfaction, sustainable improvement and quality. Special Products Visko Concrete (Self-Compacting Concerete Visko Concrete is a product having much superiority when compared to a regular concrete that Self- Compacting Concerete. Visko Concrete, despite its liquidity, will spread itself without decomposing and without a need to tighten it with a vibrator, by rapidly moving between dense fittings, it will ensure a smoothes and full surface. Drabeton (Concrete With Dramix ad Fiber) It is a product offering complete solution on floor concretes with fittings. Drabeton; is a composite material, is flexible, is ductile, has high load endurance features. Drabeton, with the help of dramix steel fibre reinforced in it, without a need for additional fittings, is offered to the market as a concrete that has high resistance against pulling and stretching resistances, has durability. Deko Concrete (Decorative Colored Imprinted Concrete) Deko Concrete, known as Textured Decorative Concrete, is a floor covering material that can easily be used on interior and exterior areas. Obtaining the surface image the customer wants directly from the concrete, at the same time aging of the concrete are specifics of this concrete type. İzoşap (Ready Lightweight Screed) İzoschappe is a product with high amount of drifted air and with low density due to special chemical additives in it. This way, it contributes to heat insulation. Besides these specifications, it is a new product that can be easily pumped and is user friendly. 28 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

Uyubet (Sleeping Concrete) Sleeping Concrete, is a special product of Çimsa, which does not sacrifice its quality for any reason, produced for critical building elements, used on long distance concretes, in hot weathers, on important buildings where hydration in the concrete is demanded ( mass concrete), slow concrete flows due to building type, on productions where surface finishing takes a long time. Loss of consistency, when compared to regular concrete is much slower; it can ensure easier usage in high temperatures. Concrete surface finishing operations can be done much easier. Sleeping Concrete, in many subjects like these is a solution partner to customer needs. Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 29

Ready Mixed Concrete and Aggregate Activities Çimsa, with healthy and safe works it continues to sustain in ready-mixed concrete field, has received many rewards in 2012. Çimsa Ready-mixed Concrete started production in 1988 with its Zeytinli Ready-Mixed facility in Adana. Çimsa has a wide distribution network with its total of 38 ready-mixed concrete facilities active in Adana, Mersin, Kayseri, Osmaniye, Kahramanmaraş, Nevşehir, Aksaray, Karaman, Bilecik, Adapazarı, Bursa, Eskişehir, Kütahya, Konya and Denizli cities. Following technological and scientific development carefully, the company offers new development to its customers as new products, new machinery and service. In the facility where 125 people who are experts in their fields work, total of 300 trans-mixers, 73 mobile and 5 immobile pumps are used. With the Central Transportation Project started at Çimsa in 2010 and continuing its expansion also in 2012, by putting forth the value added service quality to its ready-mixed concrete customers, Çimsa is aiming to make sure on time deliveries and thus to increase customer satisfaction and loyalty. Beginning t o change production software in all its facilities, Çimsa, is able to conduct all kinds of data flow from the field to headquarters automatically. It is moving forward on the road to be the first company in Turkey to use its own production software in its facilities. Çimsa, while meeting the needs of its customers in towns from its built facilities, it finds solutions to project needs in harsh conditions either with its mobile facilities or through its working partners. Most prominent projects served with the 10 project facilities continuing in 2012 are; Ankara - İstanbul Fast Train Project part two, Inönü - Köseköy Line, Enerjisa Sarıgüzel and Kandil Hydroelectricity Power Plant and Enerjisa Tufanbeyli Thermal Power Plant projects. In 2010, formed to be a separate field, Çimsa Agregate work field with 2 active facilities is conducting its sales through Mersin, Tarsus, Eskişehir, İnegöl, Kayseri and Denizli with the certifications being provided by Çimsa. Aggregate sales done from these 5 facilities in 2012 was 2.4 million tons. In 2012, roofs of crushing, eliminating facilities in İnegöl, Tarsus, Mersin facilities have been completed. Çimsa aggregate facilities are at a point to serve as a model the sector with its environmental investments, outer appearance and the possibilities it possesses. As a result of 4th Green Spot Environment Rewards Competition arranged by Turkish Ready-mixed Concrete Association to encourage production in compliance with the nature and the urban environment in the ready mixed concrete sector, four ready mixed concrete facilities of Çimsa; Pamukova, Kozan, Misis and İnegöl have been given Green Spat Environment Rewards. In addition, Pamukova ready mixed concrete facility, by obtaining the right to receive The International Representative Reward, has been rewarded by the European Ready mixed Concrete Organization (ERMCO) as Turkey s representative. Sustainable work health and safety works in ready mixed concrete continued in 2012 as well. Within the scope of green and Safe Facility Project done in 2012, all the ready mixed concrete facilities have been audited in total of 90 times under the subjects of Work safety, Traffic, Environment and Construction Site. As a result of these audits, Misis facility received number one reward in 2012 and obtained the right to carry the Green and Safe Facility flag for one year. 30 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 31

2012 Investments Çimsa s investments, in the matter of moving towards a sustainable future with confident steps, are continuing in 2012. Cement and ready-mixed sector s leading and innovative establishment, Çimsa, is focused on sustainable growth by maintaining its profitability. Solidifying its leadership in the sector by its performed investments, Çimsa, while doing this, is carrying the benchmark to a higher place all the time in sustainability and in the fields of environment and work safety. By focusing to grow in the long run by creating value, Çimsa aims to integrate sustainability principles to its business model. In 2012, modernization and renewal investments in Turkey have been made, keeping sustainability investments as priority. In 2012, total of 38.6 million U.S. Dollar investment expenses have been made. 21.2 million of this amounts is related to sustainability an environmental matters. Main projects put to work in 2012 are: Electricity production from waste gas facility in the 1st and 2nd production lines in Mersin, Hot Disc Project (Waste Feed and Waste Energy Regain) which is an alternative fuel burning system and Refuse Derived Fuel (RDF) preparation facility in Eskisehir 2nd product line, transforming of the raw meal/furnace electro-filters to filters with bags in Kayseri, and Eskisehir Plant Concrete Road Project: In addition, adding of dust free systems to the existing ones in the plants projects are also continuing. Investments done in 2012 can be summarized as below: Electricity Production from Waste Gas Project which s investment started in 2011, has been put to work in April 2012 and electricity production started. Total investment value of the project is 22.5 million US Dollars. The aim with this project is to produce 50% of the used electricity in 1st and 2nd facility production lines from waste gases that come out of these two lines. Expectation is for this project to reduce the carbon dioxide oscillation by 33.000 tons/year. The Hot Disc (Waste Feed and Waste Energy Regain) Project which will ensure meeting 30% of the fuel need of the Eskişehir 2nd production facility has been completed in January 2012. Investment cost of the project is 7.7 million US Dollars. The aim with this project is reduction of fossil fuel consumption to decrease by 30% in the 2nd production facility and elimination of the wastes in the most appropriate way. 5.4 million US Dollars have been spent again in Eskişehir Plant within 2012 for new entrance buildings and Concrete Road Projects. 1.8 km long Concrete Road Project is one of the firsts done in Turkey in this field. Due to reasons like structural Life span of concrete roads being longer than asphalt, maintenance expenses being low, not including any petroleum by products, being more resistant against seasonal conditions, 32 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

In addition, landscaping silo filter automation and work health and safety investments have been done. load carrying strength being high, and not harming the environment, aim is to make the Concrete Road Project a model project. Also in Kayseri Plant, within the scope of sustainability and environment investments, the transformation from raw meal/kiln electro filters to filters with bags has been conducted in 2012. At the top of the list of investments done in aggregate field is the new Sucular crushing eliminating facility, completed in 2012. Solid, liquid waste gathering and storing areas have been made form Sucular, Sığırlıdağ, İnegöl, Süpren facilities. Tavas facility in Denizli has been acquired. In addition, environmental arrangement and work safety investments have been done. In 2012 primary investments done in Ready-mixed concrete field are building of; Kayseri (Başakpınar), Eskişehir and Adana (İncirlik) ready-mixed concrete facilities. In addition, in Tece and Silifke facilities in Mersin, Kozan facility in Adana, Nevşehir facility, Ereğli and Karaman facilities in Konya, Pamukova readymixed concrete facilities movement from dry system to wet system have been accomplished. Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 33

Çimsa Sustainability Approach Çimsa lead the way by continuing its activities within the scope of Sustainable Development and continuous improvement, by releasing a B+Sustainability Report in 2012. Internal Audit Activities Compliance Certificate International Institute of Internal Auditors-IAA has certified that the internal audit activities conducted at Çimsa are done in compliance with international standards. Çimsa, with its internal audit process being audited by Ernst&Young which is an independent institution accredited by IIA, after the inspection received the highest of the three degrees that can be obtained which is in general in compliance with the standards in its report and became of the few cement company in the world and the only cement company in Turkey that earned the right to document this. B+ Sustainability Report Çimsa s environment policy is to continuously improve its environmental performance, to make sustainable contributions to its activities and to the society. Çimsa bases its activities on sustainable development and continuous improvement principles. With sustainability understanding, Çimsa, while posting the B level report it prepared in 2010 according to GRI (Global Reporting Initiative) Sustainability Reporting principles in 2012, it submitted it to outside audit and by publishing it with B+ level became the first in the Turkish cement sector. Alternative Fuel and Raw Material Usage Çimsa, in the cement sector where energy and raw material usage is extensive, supports sustainable development by using natural resources in the most efficient way. With this aim, it pays importance to increasing alternative fuel and alternative raw material consumption by decreasing the use of fossil fuels. In order to reach this aim, in 2011, the Hot Disc Waste Burning System which is applied first in Turkey and Electricity Production from Waste Gas Project completed in Çimsa Eskişehir Plant, and the system was put to use in mid January of 2012. 34 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

With the Hot Disc Waste Burning System Project and furnace process operation, by taking stack gas emissions under control according to product quality regulations, aim was to obtain 30% of the total calorific fuel consumption from refuse derived fuel, waste rubber and liquid wastes and to ensure production of refuse derived fuel a Refuse Derived Fuel preparation facility was built in the Eskisehir Plant in September 2012. Energy Efficiency With the Electricity Production facility from Waste Gas Facility built in Mersin Plant, the aim is to provide 50% of the consumed electricity by the 1st and 2nd facility production lines. Since April 2012 32 million kwh/ year has been produced from this facility. On CO 2 oscillations, on the other hand, 15.850 tons decrease has been obtained. Dust Emissions Çimsa, continued to lower the dust emissions in rotary furnace chimneys, which is one of the important parameters in the cement sector, to very low levels in 2012 also. Electro filters of Kayseri Plant Rotary Furnace and Mersin Plant 2nd facility Rotary Furnace were turned into New Technology Filters with Bags. Eskişehir Plant Concrete Road Project was actualized and in some ready-mixed concrete facilities, the process moved from dry system to wet system. Environment Friendly Product Certification Çimsa with the CEM IV 32.5 R grey cement product its Kayseri Cement Plant produces received the Environment Friendly Product Certificate from the German Building and Environment Institute (IBU). Çimsa became the first cement company in Turkey possessing the Environmentally Friendly Product Certificate given by evaluating product specifications and production processes. This certification pays attention to the all the stages of the full life cycle of the product starting from the pre production stage of raw material procurement of the product, covering the production stages, transportation, usage by the consumer and how it will be demolished as waste after usage. Environmental Awards Çimsa Kayseri Cement Plant has been chosen as The Cleanest Industrial Facility in Turkey in the My Clean Turkey contest held by Ministry of Environment And Urban Planning and has been awarded with Environmental Award. Çimsa s Misis, Kozan, İnegöl and Pamukkova Ready-Mixed Concrete facilities received Green Spot Environment Rewards in 2012. Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 35

Social Responsibility Çimsa is increasing the contribution of it s actualizes projects in social responsibility area to the society with the support of Çimsa volunteers. Sabancı Planetarium Sabancı Planetarium is built in Eskişehir Science Park on a 2.751 m2 area. As the largest space house in Turkey, it is equipped with the latest technology. In the Planetarium that has the same features as its resembles in the world, scientific observations are one under the 360 degree full dome based on data and models and lets the observers experience an in-life journey experience in the universe. Sabancı Spring Sabancı Spring activity, together with the Sabancı Holding, has been done in 2012 also. This activity which is the only university festival organized with the suggestions of the young people has been conducted in 5 different cities with the participation of the university youth. Voluntary Works With Çimsa s wish to move the instinctively developed volunteer works of its employees in different fields to a corporate level, in the last months of 2011 small teams to lead voluntary works were formed in its plants. In the work where the priority target groups were the workers families and the surrounding population in the locations the plants was in, the areas voluntary works will be done in were determined from the feedback received from the employees. In the work starting with volunteer trainings given by Private Sector Volunteers Foundation which works to make volunteering a part of employees lives in the private sector in Turkey, 5 volunteer teams in 5 plants determined the needs of the employee families and the surrounding population regarding social and cultural development. Afterwards, the 5 volunteer teams, working together with different non-governmental organizations such as the Turkish Education Volunteers Foundation, Foundation for the Support of Women s Work, signed on meaningful projects. More than 200 Çimsa volunteer reached more than 1500 people with these activities. Niğde Plant volunteer team Takim Yildizi exhibited the marbling made during the course the employees spouses also joined with the support of Nigde governorship. They donated 4 battery operated and one manual wheel chairs they bought with the obtained money to the Nigde Handicapped Foundation. During the blood donation campaign with the participation of the employee, their families and even business partners 62 voluntary blood donations and 33 voluntary organ donation have been found. Sending the excess food from the factory cafeteria to the animal shelter is also one of the activities done by the team. Trainings in the summer camp which first started 36 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

with the participation of the employees and organized especially according to children s age groups, were given by trainers expert in their fields and the factory employees participated voluntarily in the activities. The Çığ team made up of Mersin Plant volunteers, with the cooperation of Turkish Education Volunteer Foundation started a 16 week Travel to Myself program geared towards the 8-11 age children of Çimsa employees. Aim of the program is for children to discover and understand their own areas of interest, different and strong points and thus gain their own awareness; and also to develop their body language, communication and friend making abilities. Volunteers, besides this activity, arranged seminars on healthy living habits for employee families and career days for university and high school students on career choices of young people. Gonulcelen team made up of Kayseri Plant volunteers made communication within family as their focus point and gave seminars enriched with staged plays and sitcoms on this subject to employees spouses and to neighboring population of Ağırnas and Bünyan. result of study done with Red Crescent and became Red Crescent volunteers. Team, not only encouraged the factory workers to volunteership, but it also donated the income obtained from a play it put together with a volunteer team of workers children to a foundation working to support children. Working to provide hand craft abilities to the spouses of the workers, Ankara Plant volunteer team Hanimeli also supported the marketing of the products the workers spouses made in the hand crafts course they arranged. The factory volunteers guided the children whose others participated in the training to participate in the cultural and scientific activities. A training program on entrepreneurship, besides hand craft courses, has been arranged together with the Foundation for the Support of Women s Work. Aim of the Çimsa volunteer teams is to continue their work next year also and include more employees to their activities and to reach the surrounding public as well as the families of the employees. Nar Tanesi team made up of Eskişehir volunteers arranged trainings like first aid, disaster awareness, 21 plant employees received first aid certificate as a Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 37

Corporate Development and Human Resources After the 2012 organizational transformation process 2012 became a year focusing on competencies that came forth. Transformation journey starting with the aim to form the organizational structure that will carry Çimsa to the future most effectively, to be closer to the market and the customer, to be able to manage with extensive participation and efficiently and to actualize all of these with a suitable infrastructure also brought the need for development in many areas. In 2012, this need for development that evolved was focused on. Development programs for sustainability of the formed structure have been designed, studies to form an integrated human resources system with strengthened with information technologies infrastructure have been done. Development Programs Programs designed to answer the transformation need in the domestic sales and supply chain management organizations aim to increase the development of knowledge and abilities in these areas. Within the frame of Customer and Market Focus approach, Development of Sales and Customer Relations Abilities Program has been developed to increase the effective operation of the channel based sales organization, to develop the abilities of all the employees in contact with the customer on customer relations. By bringing together the Sales team and employees in different positions who are in direct contact with the customer and customer groups, where the training needs come forth have been determined and the trainings in the scope of the program have been identified in this direction and put into action. All the Çimsa employees and subcontractor employees who get in direct contact with the customer participated in these Service Quality and Customer Relations trainings within this program. Evaluation and follow up works identified regarding sustainability of these studies are planned to be actualized within 2013. Acting from the critical importance of procurement activities within the value chain, development need of the new procurement organization, which is different than the classic procurement approach, having expertise according to categories in the direction of efficiency and effectiveness targets, continuously in contact with the end users, moving proactively, have been re- handled in a similar approach. Within the scope of this development program where trainings are supported with project follow-up studies, by developing systematic approaches on intakes which have critical 38 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

importance for Çimsa like energy, transportation, investment, raw material, considerable improvements have been obtained. Process Trainings actualized due to importance of technical development in especially engineer team for sustainability of the level reached on cement production, on the other hand, formed the last link on the chain of development studies. Within the scope of this program, a process starting from necessity analyses, done together with Cement training unit of Cemnet who is the publisher of Global Cement Report which has expertise in cement process trainings in international level, extending to evaluation and enhancement works has been followed. Extension of this program has been handled within the scope of Cement Academy. Approach to ensure sustainability and extension of the obtained knowledge and abilities, Supply Chain Management Abilities Field Trainings within the scope of Supply Chain Abilities Development Program which was put to life in 2011 have been conducted. The quality systems, work health and safety, environment, automation, lean six sigma trainings to contribute to sustainability by improving the processes, increasing awareness on environment and SHE (Safety, Health and Environment) subjects have been included also in the studies done in 2012. In addition, foreign language courses which gained critical importance for the follow up of international developments related to the sector has been added within the continuous studies. The Occupational Trainings for Workers Working in Difficult and Hazardous Jobs which started in Eskişehir Plant are being completed in other plants step by step as well. Focus of 2013 has been determined as team leader and blue collar development needs. Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 39

40 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

Çimsa, with durable materials it produces, is proud to increase Turkey s quality of living for 40 Years. Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 41

Year 2012 Annual Report 1- GENERAL INFORMATION 1.1 Report Accounting Period: 01.01.2012-31.12.2012 1.2 Company s Commercial Title: Çimsa Çimento Sanayi ve Ticaret A.Ş. Commercial Registration number: Istanbul Registry of Commerce, 708500 Internet site: www.cimsa.com.tr 1.3 Capital: Company is subject to recorded capital system, and maximum recorded capital is 200.000.000,- TL. Issued Capital is 135.084.442,-TL. 1.4Partnership Structure: SHARE HOLDER AND ADDRESS SHARE RATE SHARE AMOUNT NO. OF SHARES % ( TL ) HACI ÖMER SABANCI HOLDİNG A.Ş. 49,42 66.765.209 6.676.520.873 Sabancı Center Kule II Kat:22-26 4.Levent 34330 / İSTANBUL ABERDEEN ASSET MANAGERS LIMITED 13,95 18.844.280 1.884.428.000 10 Queen`s Terrace, Aberdeen, UK, AB10 1YG AKÇANSA ÇİMENTO SANAYİ A.Ş. 8,98 12.130.560 1.213.056.000 Kısıklı Cad. No:38 Altunizade - Üsküdar / İSTANBUL ADANA ÇİMENTO SANAYİ T.A.Ş. (*) 5,11 6.902.815 690.281.500 Ceyhan Yolu Üzeri P.K.10 ADANA HACI ÖMER SABANCI VAKFI 0,11 150.000 15.000.000 Sabancı Center 4.Levent 34330 / İSTANBUL Open to Public 22,43 30.291.578 3.029.157.827 GRAND TOTAL 100,00 135.084.442 13.508.444.200 (*) On December 31 2011: 9.54% 42 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

1.5 Privileged Shares and Share Rights: None. 1.8 Senior Management: 1.6Board of Directors: Mehmet GÖÇMEN - Chairman Mustafa Nedim BOZFAKIOĞLU - Vice Chairman Serra SABANCI - Member Levent DEMİRAĞ - Member (Until 24 Nisan 2012) Seyfettin Ata KÖSEOĞLU - Member Hasan Cihat ERBAŞOL - (Independent Member) Mehmet KAHYA - (Independent Member) Chairman Mehmet GÖÇMEN and Vice Chairman Mustafa Nedim BOZFAKIOĞLU are present as executive members in the General Assembly. Board of Directors, according to Articles of Partnership, consists of six members chosen among the share holders. There are two independent members within the members chosen for the General Assembly. During the Ordinary General Assembly Meeting held on 24 April 2012, a new election was done for Board of Directors memberships, their serving periods have been determined as three years until the Ordinary General Assembly meeting of 2015 where results of 2014 activity year will be discussed. During the Board of Directors meeting held on 24 April 2012, Mehmet GÖÇMEN was chosen as the Chairman and Mustafa Nedim BOZFAKIOĞLU as the Vice Chairman. 1.7 Board of Supervisors: İlker YILDIRIM Nur ŞENOL During the Ordinary General Assembly Meeting held on 07 April 2010 election took place for the memberships with expired service period, serving periods have been determined as three years until the Ordinary General Assembly Meeting to be held in 2013 where results of 2012 will be discussed. During the Ordinary General Assembly Meeting held on 06 April 2011election of the Board of Supervisors membership with expired serving period was done and Nur ŞENOL has been elected. Serving period has been determined as two years until the Ordinary General Assembly Meeting to be held in 2013 where results of 2012 will be discussed. Mehmet HACIKAMİLOĞLU - General Manager Nevra ÖZHATAY - Assistant General Manager (Financial Affairs) Hüseyin ÖZKAN - Assistant General Manager (Domestic Sales) Tamer DENİZCİ - Assistant General Manager (Supply Chain) Şahap SARIER - Assistant General Manager (Cement Production) Ayfer GÜREŞ - Assistant General Manager (Corporate Development and Human Resources) (Until 31.12.2012) Mutlu DOĞRUÖZ - Assistant General Manager (Investment) (Until 31.05.2012) Ülkü ÖZCAN - Strategy and Marketing Manager 1.9 Number of Personnel: As of 31.12.2012 total of 1.138 personnel are working in the Çimsa group work places included in the consolidation. During the 01.01.2012-31.12.2012 period while total of 59 personnel left from Çimsa Group, 60 personnel were hired. 1.10 Prohibition of Transactions and Competition with the Company During the current period, the Members of the Board of Directors did not perform any activities that should be identified as transaction with, or competition with, the company. 2- CORPORATE MANAGEMENT ETHICS COMPLIANCE REPORT 2.1 Business Ethics Compliance Declaration: Necessary care has been shown to be in compliance with the subjects within the Corporate Management Ethics revised in 2005 and published by the company necessary /not necessary regulations explained in detail below within 2012. In addition, compliance works within the scope of Erial IV, No: 56 numbered Notification Regarding Determination and Application of Corporate Management Ethics published by CMB on 30 December Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 43

Year 2012 Annual Report 2011on the Official Gazette and became effective are being done in our company. Compliance works for the regulations in the Notification in subject which are mandatory to be in compliance, have been completed and the compliance works for the other regulations compliance is not necessary for are continuing. PART I-SHARE HOLDERS 2.2 Relations with Shareholders Unit: There is a Corporate Investors Relations Unit regarding share holders in our company. This unit operates under coordination of Assistant General Manager (Financial Affairs) Nevra Özhatay (n.ozhatay@çimsa.com.tr). In this unit, UFRS and Consolidation Administrator Zeynep Özde Görkey (o.gorkey@çimsa.com. tr), Marketing Expert Ebru Arslan (e.arslan@çimsa. com.tr), UFRS and Consolidation Expert Borhan Tosun (b.tosun@çimsa. com.tr) are positioned. Related persons can also be reached by 0 (216) 651 53 00 numbered telephone and 0 (216) 651 14 15 numbered fax. This unit is appointed to proceed the relations with the share holders. Within the frame of these responsibilities, in 2012, in the contents of conferences and road shows within and outside of Turkey, 55 one on one and group meetings took place. In addition, regarding previous years, stock transfer transactions of 11 of our shareholders who could not participate in capital increase have been processed. 2.3 Use of Right to Information by the Share Holders: There is no privilege or priority given to shareholders by our company on usage of their right to information. With the aim the extend the rights to information of the shareholders and for them to use these rights effectively, necessary information and documents, besides the financial charts are offered to the attention of the shareholders in Turkish and in English within their obligatory notification periods by being updated continuously in electronic environment within the corporate internet site of our company (www.çimsa. com.tr). in 2012, on subjects like previous period capital increases, dividend payment information, exchange and recording of stocks, Transferring to the system and general assembly information requests have been answered by telephone, e-mail, fax and face to face meetings. 5 share holders were answered in writing regarding stoppage on the dividends. In addition, 5 annual reports have been requested and have been sent to the shareholders by post. Shareholders can follow updated information on the company from www.çimsa.com.tr address, special case explanations done to the Public Disclosure Platform (www.kap. gov.tr), and from newspaper notifications. There is no provision regarding appointment of a special auditor in the Articles of Partnership. There has been no demand from the shareholders in this subject in 2012. 2.4 General Assembly Meetings: On 24.04.2012 Ordinary General Assembly Meeting was held and existing meeting quorum realized as 65.87%. Beneficiaries, who wished, by completing the necessary formalities, joined the General Assembly. Invitation to the General Assembly was done in accordance with Turkish Commercial Law and the Articles of Partnership, and this has been approved by the Ministry of Customs and Trade Commissioner. Meeting notification and meeting agenda has also been announced to the shareholder before the meeting through KAP, Turkish Commercial Registry Gazette. Right to question has been given to the shareholders during the meeting and the necessary explanations were made. Annual Report has been prepared and distributed to the partners who joined the General Assembly and information has been given on the previous year s activities to the partners. According to suggestions given by the shareholders, elections for the Board of Directors and Audit members for the emptied positions due to resignations have been done. Meeting minutes regarding the General Assembly is being kept in Company headquarters and is given to 44 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

the shareholders upon their request. Meeting minutes have been published on Turkish Commercial Registry Gazette. In addition, General Assembly participants list and meeting minutes is announced on the company s www.cimsa.com.tr internet address. Decisions in Turkish Commercial Law, counted as important are being submitted for approval to the shareholder during the General Assembly. When legal compliance of Corporate Management Principles is ensured, all decisions counted as important in the changed laws will be submitted to the approval of the shareholders during the General Assembly. General Assembly participation requests of the investors will be evaluated by the Central Recording Establishment (CRE) and necessary documents will be given to the investors who will vote by applying CRE process and procedures. In addition, related people who want to participate as observers will be allowed in the meeting. On article 1527 of the 13.01.2011dated and 6102 numbered Turkish Commercial Law, it has been resolved that joining, making suggestions, giving opinions for incorporated company general assembly bears all the legal results of physical participation and voting; in addition participation and voting system in electronic environment for companies listed in the stock exchange became obligatory. In order to determine the application principles of article 1527 of TCL, Regulations Regarding General Assemblies to be done in Electronic Environments released by the Ministry of Customs and Trade have been posted on 28395 numbered Official Gazette on 28.08.2012, and the Notification on the Electronic General Assembly System to be Applied on the General Assembly of Incorporated Companies that regulates the regulations and principles related to set up, process, tecknical matters and security criteria of the electronic general assembly system has been published on 28396 numbered and 29.08.2012 dated Official Gazette and the effective date of the regulation in subject has been determined as 01.10.2012. According to third paragraph of the 5th article of EGAS Regulations, participation in electronic environment, appointing of a representative, making suggestions, declaration of an opinion, and election transactions to the general assembly companies listed in the stock exchange hold will be done through electronic general assembly system (EGAS) provided by the Central Registry Agency. Articles 415 and 417 of the TCL also foresee important changes on the subject of general assembly participations of incorporated partnerships that is followed up by record by the CRA. According to article 10/A of Capital Market Law, list of the owners of the followed shares by record whocan participate in the general assembly will be arranged according to the Shareholders Chart provided electronically by CRA through EGAS. In case the real Persons in this list participate in the meeting physically, It will be sufficient for them to show their identification Card and for the representatives of legal entities to show their representation certificate. 4th paragraph of TCL, on the other hand, resolves that the right to participate in the general assembly cannot be linked to the condition of obtaining a proof of document on share ownership or to pre storage of the share certificate. In the new TCL capital sectors the blockage system that used to be applied previously has been ended. According to article 5 of TCL, also, with the condition of being limited to the day the General Assembly takes place, whether endorsing of shared can be prohibited or not Will be determined through a notification by the Stock Exchange Commission. Delegation system, applied during the old TCL period is maintained as optional. Together with this, legal reforms that will provide very important benefits to the Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 45

Year 2012 Annual Report general assembly application such as appointing of a representative through EGAS with electronic methods have been put into effect. Representative appointed with electronic methods, not only can participate in the general assembly meeting through electronic method, but also can participate in the meeting physically as a representative. On the list with the share holders the company will obtain from the CRA through EGAS, the representation information (like the name of the representative) given through EGAS will also be included. A separate submission of a physical representation document is not needed for the representative who is appointed through EGAS by electronic method. 2.5 Voting Right and Minority Rights: The Articles of Association does not contain privileged vote rights. There is no arrangement for cumulative voting in the Articles of Association. With the thought that granting of a cumulative vote under the current partnership structure will ruin the harmony of the company s management structure, no arrangement has been made om this. 2.6 Dividend Rights: The company s dividend distribution policy is specified in article 26 of its Articles of Association. Accordingly, the dividend is distributed once obligatory taxes are subtracted from the gross profit to obtain the net profit, in the proportion specified by the proposal of the Board of Directors and approved by the General Assembly under the company s Articles of Association, considering its legal reserve funds and CMB Legislations. Accordingly, Dividend distribution policy is covered in a separate section in the company s annual report and is disclosed to shareholders and the public at the General Assembly. Our company s dividend distribution is done within the legal period. The company has adopted a policy of the distribution of a minimum of 50% of the distributable profit to its partners before the end of the May following the end of the accounting period. This policy can be reviewed every year by the Board of Directors in accordance with national and global economic conditions, and given the current status of the company s projects and its funds. No privileges are available for any shareholder in terms of the dividend distribution. 2.7 Transfer of Shares: Company Articles of Association does not have any provision that limits the transfer of shares. PART II DISCLOSURE AND TRANSPARENCY 2.8 Company Information Policy: The Board of Directors is authorized and responsiblefor tracking, monitoring and improving Çimsa Çimento Sanayi ve Ticaret A.Ş. s disclosure and information policy. The Information Policy was created and approved by the Board of Directors in accordance with the CMB Corporate Governance Principles. It was disclosed through a Disclosure of Specific Events on 30 April 2009, being available at www.çimsa.com.tr as of this date. The Information Policy was submitted to partners at the company s Extraordinary General Meeting of 28 August 2009. In accordance with this policy, each year the company discloses to the public independently audited financial statements in the sixth and twelfth month, and nonaudited financial statements in the year s third and ninth month. Announcement of the consolidated reports prepared in accordance with International Financial Reporting Standards (IFRS) are made within the period legally specified by the CMB. The company s disclosure of information is made through press bulletins, e-mail messages, telephone conversations, interviews with media organizations and via press agents. 46 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

In addition, information about the company is available on its web site as recommended by the CMB Corporate Management Principles published in 2005, with amendments and additions in line with the company s Information Policy. The sub-headings under the Investment section of the web site are as follows; Partnership Structure Board of Directors Board of Directors Committees Articles of Association Trade Registry Information Information Policy Corporate Compliance Report Profit Share Distribution General Assembly Information Annual Report All Financial Information Resolutions of the Board of Directors Special Situation Statements Investors Relations Frequently asked Questions 2.9 Company Website and its Contents: The company has a website that can be reached from www.çimsa.com.tr. address. The information specified in the part 2.2 of the notification published on 30.12.20011 with serial:iv, nmber 56 where amendments and additions were made is availbale on this website. Our website contains infromation such as Corporate, Sustainability, Cement, Ready-Mized Concrete, Agregate, Investor, Corporate Development, Media and Contact information. 2.10 Annual Report: Company disclosed information counting as Company Corporate Management Principles within the annual report prepared in December period. PART III- STAKEHOLDERS 2.11 Informing of the Stakeholders: Informing of all stakeholders are made through the İstanbul Stock Exchange by periodic public notifications, as required by the relevant legislation and through the specific events disclosure forms. Matters such as Ordinary and Extraordinary General Assembly Meetings and dividend distributions are announced in newspaper announcements as stipulated in the relevant legislation and in the Company s Articles of Association. Notifications are also made through meetings with the press, press releases and in interviews with media organizations. Furthermore, company employees are notified through the company s quarterly newsletter, through information sent by e-mail, in internal training sessions, via the Çimsa Portal and at annual briefing meetings. Notifications for clients are made through annual meetings, in publicity activities and through trainings and seminars. Partners are concurrently notified of all information, other than confidential and trade secret information, accurately and clearly. 2.12 Participation of Stakeholders in the Management: At least once a year, the Company organizes meetings With its employees where the activities of the previous year are evaluated, targets for the next year are shared and employee feedbacks are obtained. Within the scope of business excellence, learning organization works and suggestion system, team work is encouraged, their participation in matters concerning the company such as target determination of the project teams, process improvements and investments are ensured. Participation of the partners to the company management is done through Ordinary and Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 47

Year 2012 Annual Report Extraordinary General Assembly Meetings. Participation of the customers in the company management, on the other hand, is ensured through dealers meetings and prepared client loyalty surveys. 2.13 Human Resources Policy: The Company s corporate development and human resources vision is to create a culture of high performance; its mission is to ensure organizational change and development. In line with this, an effective and uniform structural performance management, with individual work and ability targets determined parallel to company startegy and company aims is being conducted. Also in order to increase the competitive strength of the company and to meet the changing needs, policies geared towards organizational change and development are being planned and applied. Issues related to union member employees are managed under the scope of the Collective Labor Agreement in effect. In addition, there are departments to manage relationships with all employees, including Corporate Development and Human Resources, Corporate Communications, the Code of Ethics Consultancy, and the Work Health and Safety. There are also detailed and updated written guidelines and procedures that embody all of the relevant regulations and practices related to business life. To date, no discrimination issues have been reported by Çimsa employees. 2.14 Ethical Rules and Social Responsibility: Work Ethics rules have been formed and put into effect in our company. Work ethics rules have been disclosed to the public by announcing them on the corporate website. Informing of the workers on the rules, on the other hand, are ensured by publishing of the rules in the inter company communication portal, distribution of the printed booklets to all the employees and conducting informative trainings. In addition, at the end of each year, employees update their knowledge related to work ethics rules with an e-learning program and renew their loyalty to work ethics rules with the Work Ethics Compliance Declaration for they fill. Çimsa, enriching the projects it conducts within the social responsibility field with the support of Çimsa volunteers, is continuously increasing its contribution to the society. Sabancı Planetarium Sabancı Planetarium is built in Eskişehir Science Park on a 2.751 m2 area. As the largest space house in Turkey, it is equipped with the latest technology. In the Planetarium that has the same features as its resembles in the world, scientific observations are one under the 360 degree full dome based on data and models and lets the observers to experience an in-life journey experience in the universe. Sabancı Spring Sabancı Spring activity, together with the Sabancı Holding, has been done in 2012 also. This activity which is the only university festival organized with the suggestions of the young people has been conducted in 5 different cities with the participation of the university youth. Voluntary Works With Çimsa s wish to move the instinctively developed volunteer works of its employees in different fields to a corporate level, in the last months of 2011 small teams to lead voluntary works were formed in its plants. In the work where the priority target groups were the workers families and the surrounding population in the locations the plants was in, the areas voluntary works will be done in were determined from the feedback received from the workers. In the work starting with volunteer trainings given by Private Sector Volunteers Foundation which works to make volunteering a part of workers lives in the 48 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

private sector in Turkey, 5 volunteer teams in 5 plants determined the needs of the worker families and the surrounding population regarding social and cultural development. Afterwards, the 5 volunteer teams, working together with different non-governmental organizations such as the Turkish Education Volunteers Foundation, Foundation for the Support of Women s Work, signed on meaningful projects. More than 200 Çimsa volunteer reached more than 1500 people with these works. Niğde Plant volunteer team Takim Yildizi, exhibited the marbling made during the marbling course the workers spouses also joined with the support of Nigde governorship and donated 4 battery operated and one manual wheel chairs they bought with the obtained money to Nigde Handicapped Foundation. During the blood donation campaign with the participation of the workers, their families and even working partners 62 voluntary blood donation and 33 voluntary organ donations have been found. Sending the excess food from the factory cafeteria to the animal shelter is also one of the works done by the team. Trainings in the summer camp which first started with the participation of the workers and organized especially according to children s age groups were given by trainers expert in their fields and the factory workers participated voluntarily in the activities. The Cig team made up of Mersin Plant volunteers, with the cooperation of Turkish Education Volunteer Foundation started a 16 week Travel to Myself program geared towards the 8-11 age children of Çimsa workers. Aim of the program is for children to discover and understand their own areas of interest, different and strong points and thus gain their own awareness; and also to develop their body language, communication and friend making abilities. Volunteers, besides this activity, arranged seminars on healthy living habits for worker families and career days for university and high school students on career choices of young people. Gonulcelen team made up of Kayseri Plant volunteers took communication within family as their focus point and gave seminars enriched with staged plays and sitcoms on this subject to workers spouses and to neighboring population of Ağırnas and Bünyan. Nar Tanesi team made up of Eskişehir volunteers arranged trainings like first aid, disaster awareness, and 21 plant workers received first aid certificate as a result of study done with Red Crescent and became Red Crescent volunteers. Team, not only encouraged the factory workers to volunteership, but it also donated the income obtained from a play it put together with a volunteer team of workers children to a foundation working to support children. Working to provide hand craft abilities to the spouses of the workers, Ankara Plant volunteer team Hanimeli also supported the marketing of the products the workers spouses made in the hand crafts course they arranged The factory volunteers guided the children whose mothers participated in the training to participate in the cultural and scientific activities. A training program on entrepreneurship besides hand craft courses have been arranged together with the Foundation for the Support of Women s Work. Aim of the Çimsa volunteer teams is to continue their work next year also and include more employees to their activities and to reach the surrounding public besides the families of the employees. PART IV BOARD OF DIRECTORS 2.15 Structure and Constitution of the Board of Directors: Board of Directors Mehmet GÖÇMEN - Chairman Mustafa Nedim BOZFAKIOĞLU - Vice Chairman Serra SABANCI - Member Levent DEMİRAĞ - - Member (Until 24 April 2012) Seyfettin Ata KÖSEOĞLU - Member Hasan Cihat ERBAŞOL - Independent Member Mehmet KAHYA - Independent Member Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 49

Year 2012 Annual Report Board of Directors, according to Articles of Partnership, consists of six members chosen among the share holders. There are two independent members within the members chosen for the General Assembly. During the Ordinary General Assembly Meeting held on 24 April 2012, a new election was done for Board of Directors memberships, their serving periods have been determined as three years until the Ordinary General Assembly meeting of 2015 where results of 2014 activity year will be discussed. During the Board of Directors meeting held on 24 April 2012, Mehmet GÖÇMEN was chosen as the Chairman and Mustafa Nedim BOZFAKIOĞLU as the Vice Chairman. During the Board of Directors Meetings done on 21.09.2012 and 24.09.2012,in accordance with article 25 of the Law on Effectiveness and Application method of 6103 numbered Turkish Commercial Law (TCL), a reelection has been done for the emptied memberships due to resignation of the real persons chosen to represent Haci Omer Sabancı Holding A.S., although the chosen new members were the same individuals, decision was taken to submit the result to the first General Assembly according to article 363 of the TCL. 2.16 Board of Directors Principles of Activities: As mentioned in company s articles of association, Çimsa s Board of Directors consists of 6 members selected from among its shareholders by the General Assembly. There are two independent members among the members chosen during the General Assembly. As mentioned in the Company s Articles of Association, each member for the Çimsa s Board of Directors is elected for maximum three years and the members whose serving time is filled can be re-elected. As mentioned in the Company s Articles of Association, the Members of the Board of Directors elect a Vice President to represent the President in his or her absence. The Board of Directors gathers at least once a month (as required by the articles of association) to review the monthly activity results. The agenda of the Company s Board of Directors Meetings is determined and suggested by the Company s General Manager. Financail Affairs Assistant General Manager, by assuming secretariat position, will ensure supply of information to the members of the Board of Directors and communication. Company Board of Directors gathered 24 times in 2012 and reached 68 decisions. During the meetings held during 2012, no opinions were expressed in opposition to the decisions made by the Members of the Board of Directors. While the issues contained in the SPK Corporate Management Principles IV. part 2.17.4. published in 2005 with amendments and additions were being resolved, the actual participation of those Members who did not present any apologies for any of their absences was provided for at the Board of Directors meetings. Since the Members of the Board of Directors did not have any questions regarding these issues, none have been appended to the record. The Members of the Board of Directors were not entitled to a majority vote and/or to the right of veto in regard to these decisions. 2.17 The Number, Structure and Independence of the Committees established by the Board of Directors: Reporting to the Board of Directors, the Audit Committee was formed from the non-executive members of the Board of Directors. Comittee members were chosen as a committee member from independent members and with the aim ot benefit from thie global experiences and expertise. Chairman Mehmet GÖÇMEN and Vice Chairman Mustafa Nedim BOZFAKIOĞLU are present as executive members in the General Assembly. There have been no conflicts of interest during 2012 due to the committees member structure. 2.18 Risk Management and Internal Control Mechanisms: The main function of the Internal Audit Department is to render independent and unbiased security and 50 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

counselling services, utilizing the Global Internal Audit Standards pertaining to Çimsa Çimento San. ve Tic. The Internal Audit Department, affiliated with the Audit Committee and composed of members of the Board of Directors, conducts inspections, investigations and examinations to protect the rights and interests of the Company. It then develops recommendations regarding each internal and an external risk. It carries out each of the following duties in order to contribute to the growth, development and institutionalization of the company: a) To examine each site s and department s internal control systems, in the company s offices in central and rural areas including all of its terminals, warehouses and international enterprises. These examinations are to ensure compliance with corporate management principles and ethical values, to ensure the effectiveness and efficiency of its risk management practices, to prepare audit plan programs and to implement these in accordance with the pre-determined schedule, b) To monitor audit report practices, and to ensure that all work and transactions are carried out in accordance with the agreements made and in compliance with the directions of the General Directorate; c) To conduct inspection, research and investigation in relation to special tasks assigned by the Chairman of the Board of Directors, the Audit Committee and the General Manager; to submit the results of these studies, as a report, to the relevant authority; d) To monitor the execution of all company regulations, procedures, communiques and unit-specific directions, ensuring that they are enforced and to then make suggestions in connection to those matters that need to be remedied; e) To ensure that the activities and transactions of all units are carried out in line with the Board of Directors decisions, plans and budget targets and in accordance with all legislation, regulations, procedures, communiques, directions etc.; f ) To make financial and economic analyses in relation to the work and transactions conducted and to develop suggestions hat will ensure those efficiency increases; g) To keep the Audit Committee continuously informed about all audit activities, the adequacy of the domestic control system and to implement all of the committee s demands and suggestions; h) To carry out all the tasks as suggested by the Board of Directors and senior management, to provide value added consultancy and support services related to the achievement of the company s goals, to increase the value of the company s shares, to help develop the company s processes and activities, to increase service quality and customer satisfaction etc. The Board of Directors has decided that the Internal Audit Manager will report to the Committee Responsible for Audit. 2.19 Strategic Targets of the Company: Main Strategic Objectives:: Ensure Operational Excellence: Set targets for every function in value chain processes, including management, production, sales and delivery; follow these targets with key performance indicators; make continuous improvements in performance process; establish a corporate information database; take each necessary measure identified by the detailed scenariobased studies up of the cash flow forecasts; deliver operational excellence by managing each of these under a system approach discipline. Be a sustainable construction products company: Starting with the stakeholders who are most affected by the company s social and environmental impacts, effectively manage communication with all stakeholders; create long term value, both for stakeholders and for the Company. Be market and customer oriented: Listen to and understand the customers needs and requests by making the market and customers the focal point of all of the company s activities; thus creating added value for customers; be the customers most referred business partner. Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 51

Year 2012 Annual Report Grow profitably: Make investments in new and attractive areas that will create synergies with Çimsa s current operational markets in such a way that these investments will create added value for the company s other primary targets and will help the company to grow sustainably. 2.20 Financial Rights: According to the Articles of Association, each right, benefit and salary provided to the Members of the Board is determined by the General Assembly. In 2012 total of 148.200 TL salary payment has been done to the members of the Board of Directors. During 2011, the company did not lend any money to any Member of the Board of Directors; it did not give any loans; it did not allow the use of loans in the name of personal loans through third persons, and it did not give any assurances, such as bailments, in their favor. Total of salary and other benefits provided to the senior management such as general manager, general coordinator, and assistant general managers is 5.030.583 TL. 3- Company s R&D Studies Çimsa s environment policy is to continuously improve its environmental performance, to make sustainable contributions to its activities and to the society. Çimsa bases its activities on sustainable development and continuous improvement principles. With sustainability understanding, Çimsa, while posting the B level report it prepared in 2010 according to GRI (Global Reporting Initiative) Sustainability Reporting principles in 2012, it submitted it to outside audit and by publishing it with B+ level became the first in the Turkish cement sector. In alternative Fuel and Raw Material Usage, Çimsa, in the cement sector where energy and raw material usage is extensive, supports sustainable development by using natural resources in the most efficient way. With this aim, it pays importance to increasing alternative fuel and alternative raw material consumption by decreasing the use of fossil fuels. In order to reach this aim, in 2011, the Hot Disc Waste Burning System which is applied first in Turkey and Electricity Production From Waste Gas Project completed in Çimsa Eskişehir Plant, and the system was put to use in mid January of 2012. With the Hot Disc Waste Burning System Project and furnace process operation, by taking stack gas emissions under control according to product quality regulations, aim was to obtain 30% of the total calorific fuel consumption from refuse derived fuel, waste rubber and liquid wastes and to ensure production of refuse derived fuel a Refuse Derived Fuel preparation facility was built in the Eskisehir Plant in September 2012. Energy Efficiency, with the Electricity Production facility from Waste Gas Facility built in Mersin Plant, the aim is to provide 50% of the consumed electricity by the 1st and 2nd facility production lines. Since April 2012 32 million kwh/year has been produced from this facility. On CO2 oscillations, on the other hand, 15.850 tons decrease has been obtained. On the subject of Dust Emissions Çimsa, continued to lower the dust emissions in rotary furnace chimneys, which is one of the important parameters in the cement sector, to very low levels in 2012 also. Electro filters of Kayseri Plant rotary furnace and Mersin Plant 2nd facility rotary furnaces were turned into new technology filters with bags. In Eskişehir Plant also Concrete Road Project was actualized and in some ready-mixed concrete facilities, the process moved from dry system to wet system. 52 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

4- COMPANY ACTIVITIES AND IMPORTANT DEVELOPMENTS RELATED TO COMPANY ACTIVITIES 4.1 Participation information of the Company: Company Activity Data Share Rate (%) Çimsa Cement Free - Zone Limited NCTRKKTC 99,99 ÇİMSAROM Marketing Distributie S.R.L. Romania 99,99 Çimsa Cementos Espana, S.A.U. Spain 100 Cement Sales North Gmbh (CSN) Germany 50 Çimsa Mersin Serbest Bölge Şubesi Mersin 100 OOO Çimsa Rus CTK Russia 100 Çimsa Adriatico Srl Italy 60 Afyon Çimento Sanayi Türk Anonim Şirketi Turkey 51 Exsa Export San. Man. Sat.ve Arş. A.Ş Turkey 32,88 Hacı Ömer Sabancı Holding A.Ş. Turkey 1,06 Mesbaş Mersin Serbest Böl. İşl. A.Ş.(Mesbaş) Turkey 0,41 Anfaş Antalya Fuarcılık A.Ş.(Anfaş) Turkey 0,02 Temsa Araştırma Geliştirme ve Teknoloji A.Ş. Turkey 0,0025 4.2 Information related to its own shared the company acquired: Our company had not acquired its own shares in 2012. 4.3 Law suits against the company and which will affect the financial status of the company: There are no law suits against our company that will affect the financial status of the company. 4.4 Due to non- compliant Applications against Legislation Provisions Administrative and Legal Sanctions Applied on the Company and the Members of the Administrative Body: There are no administrative or legal sanctions applied to the Company or the members of the administrative body due to Applications not in compliance with the Legislation Provisions. 4.5 If the Objectives determined in previous period have been reached, if the General Assembly decisions have been followed, if objectives have not been reached or the decisions have not been followed, information on the reasons and evaluations: 2012 production and sales numbers, parallel to this, the consolidated gross and activity profits margins have been less than the same period of last year and the targeted number for 2012 due to heavy winter conditions. Ordinary General Assembly Meeting decisions taken on 24 April 2012 have been conducted. 4.6 Information on Extraordinary General Assembly held within the year: No Extraordinary General Assembly Meeting had been held within 2012. Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 53

Year 2012 Annual Report 4.7 Donations made during the year: Donations of 275.927,67 TL have been made to various public establishments and organizations within the year. 5- FINANCIAL STATUS 5.1 Measures thought to be applied to improve the company s financial structure: Çimsa, within the frame of the current market conditions, is taking action plans aiming for effective operational capital management, is conducting infrastructure, marketing and cost improving investments and works to increase its profitability. By planning existing TL, foreign currency incomes and needs, it is managing its financial structure according to procedures. 5.2 Financial Ratios: Net Operational Capital = Current Actives Current Passives Consolidated 31.12.2012 Consolidated 31.12.2011 (-)39.751.168 22.314.098 I-Liquidity Rates: 1-Current Rate = Floating Assets / Short Term Debts 0,89 1,08 2-Liquidity Rate = Floating Assets -Stocks-Other Floating 0,58 0,60 Assets / Short Term Debts II-Financial Structure Rates: 1-Total Debts / Resources 0,52 0,45 2-Short Term Debts / Total Actives 0,24 0,21 -Long Term Debts / Total Actives 0,11 0,10 III-Profitability Rates: 1-Net Period Profit / Net Sales 0,13 0,15 2-Net Period Profit / Total Actives 0,07 0,10 3-Net Period Profit / Resources 0,11 0,14 5.3 Sales: Domestic sales turnover within 1 January - 31 December 2012 period actualized as 678.38 million TL by increasing by 9% compared to the same period of last year. 6- RISKS AND EVALUATION OF THE BOARD OF DIRECTORS. 6.1 If there is any, the risk management policy of the company against expected risks: Finance of the company s investment and operational capital are being covered by short and long term export and Turkish Lira and foreign currency credits. Identification and tracking of all possible risks comprise the bases for risk management. Parallel to the risk management and application policies carried on by one of the partners, Haci Omer Sabancı Holding A.S. group companies, and corporate risk management procedures are being conducted. All the risks company may be faced with have been classified according to their priorities and have been taken under surveillance by the company senior management and Board of Directors. In order to prevent all the risks that can directly affect company s financial situation, in line with 54 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

Sabancı Holding risk management policies, are being insured under the coverage of global policies. Foreign exchange risks that will be born from foreign credits are being eliminated naturally with the export incomes and suitable instruments are being evaluated separately. Company, in order to be protected from foreign exchange rate fluctuations and related financial risks that may happen in the future, to be protected from cash flow risk, is preparing buy/sell agreements with terms not exceeding one year. With the cost of TL loans decreasing, TL credit usage began. Aim is to reduce finance costs by using short term TL credits. with the formation of the Corporate Risk management, one of the shareholders, Hacı Ömer, with the viewpoint of all the Sabancı Holding A.S. group companies conducts risk management and applications at Çimsa parallel to the procedures in those companies. All the risks company may be faced with have been classified according to their priorities and have been taken under surveillance by the company senior management and Board of Directors. Aim is to increase the trust of the foreign exchange owners even more. Corporate Risk Management Unit works to assure risk management is being used effectively the by Board of Directors. In the Corporate Risk management Unit, processes for effective risk management based on companies have been developed and put into application. The Company, with the Corporate Risk management Unit, is able to systematically measure and evaluate, prioritize, operational, financial, strategic and external risks that can be obstacles in the way of company s general strategy and reaching its objectives; require necessary resources and make coordination, take actions against identified critical risks and track them regularly. By establishing the Corporate Risk Management, expansion of Çimsa s risk management culture and view to all company units, development of proactive approaches, putting forth of possible opportunities, protection and increase of company values, development of natural hedging and portfolio management, increasing the trust of the beneficiaries even more have been targeted. Corporate Risk Management Unit will report if existing actions ensure the anticipated effect and development and the obtained results to the Board of Directors. 7- CHANGES IN THE ARTICLES OF PARTICIPATION WITHIN THE PERIOD: In the direction of Serial: IV, Number 56 notification related to Determination of Corporate Management Principles of the Capital Market Board, with the objective to comply with the Corporate Management Principles, Article 7 with the ADMINISTRATIVE Assembly, Article 7 with the header ANNOUNCEMENT of the Articles of Participation have been change, a new article with the header COMPLIANCE TO THE CORPORATE MANAGEMENT PRICINCIPLES as article 30 has been added, the number of the last article with the header LEGAL PROVISIONS have been changed to number 31. Changes passing the approval of 24 April 2012 Ordinary General Assembly, have been certified on 30 April 2012 and been published in the Turkish Commercial Registry Gazette on 04 May, 2012. Current status of the changed articles is as below. Administrative Assembly Article 7- Company will be managed and represented by six members chosen among the shareholders by Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 55

Year 2012 Annual Report the General Assembly within the frame of Turkish Commercial Law. Announcement Article 21- Announcements on the company keeping the 4th paragraph regulations of article 37 of the Turkish Commercial Law reserved, will be made with a newspaper being released in the location company headquarters is in within minimum 3 weeks. However, for the announcement regarding invitation of general committee to a meeting, the announcement must be done at least 3 weeks before according to provisions of article 368 of the Turkish Commercial Law. Compliance to the Corporate Management Principles: Article 30- Corporate Management Principles made obligatory by the Capital Market Board will be followed. Transactions and board of directors decisions made without complying with the obligatory principles will be null and counted as disputing the Articles of Participation. On transactions and announcements considered as important regarding Corporate Management Principles, Regulations of Capital Market Assembly s regulations regarding corporate management is followed on company s all kinds of related party transactions and guarantees to third parties. Number and specifications will be determined according to Capital Market Assembly s regulations. Legal Obligations: Article 31- Turkish Commercial Law, Capital Market Law and related legislative procedures will be applied on conditions not mentioned in this main agreement. Capital Market Law and related regulations will be followed. There are no deducted capital market vehicles. 9- POSITION OF ÇİMSA IN THE SECTOR IT IS ACTIVE IN Çimsa was established in 1972 in Mersin. Starting to work with its first production facility in 1975, 5 million tons production capacity of Çimsa s facilities in Mersin, Kayseri, Eskişehir, Niğde reached 5.5 million tons after acquiring 51% of the shares of Afyon Çimento Sanayi T.A.Ş. on 31.05.2012. Afyon Cement Plant, starting production in 1957 has a production capacity of 460 thousand tons. In addition, Çimsa reaches its customers through its cement grinding and packing facility in Ankara, Marmara Rota Port and Malatya cement packing facilities. Celebrating its 40th establishment anniversary in 2012, Çimsa is continuing its activities as a 40 years old young company. Çimsa, by manufacturing special cements such as white cement and Calcium Aluminate Cement and innovative concretes besides grey cement, is leading the Turkish cement and ready-mixed concrete regarding innovation. Çimsa, being a ready mixed concrete producer is giving service since 1988 in cities of Adana, Kahramanmaraş, Osmaniye, Mersin, Kayseri, Nevşehir, Karaman, Aksaray, Eskişehir, Kütahya,Bursa, Adapazarı, Bilecik, Konya and Denizli and its ready mixed concrete sales in 2012 reached 2,7 million cubic meters. imsa, targeting growth in aggregate field as well, is being active with its 5 aggregate facilities in this sector as well. Being one of the first 3 brands in the world in white cement, Çimsa, with its facilities in Hamburg (Germany), Trieste (Italy), Sevilla (Spain), Alicante (Spain), Famagusta (NCTR), Constanza (Rumania) and in Novorossiysk (Russia) is an International cement manufacturer. Çimsa, with its consolidated net sales reaching 857.2 million TL in 2012, obtained 115.3 million TL net profits belonging to main shareholders dividends. 8- IF EXISTS, SPECIFICATIONS AND AMOUNT OF DEDUCTED CAPITAL MARKET VEHICLES 56 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

10-PREDICTIONS ON COMPANY S DEVELOPMENT A member of Sabancı Cement Group, Çimsa, is enriching its regular strategic planning process with scenario-based approach it is implementing. In the most basic way, scenario-based strategic planning is to complete the necessary strategic options needed to be successful in future scenarios by developing them. Thus, Çimsa, instead of planning based on single predicted future, by determining the best strategic approach to any possible scenario, is ensuring flexibility in regards to preparation and planning for the future. 11- PRODUCTION UNITS OF THE OPERATION Çimsa Facility Information Production lines Clinker Production Raw meal furnace Cooler type Mill type Capacity (Tons/Day) diameter (m) Mersin Çimsa 1. Facility 3.700 grey clinker 5,25 Grid cooler Mill with ball 2. Facility 1.845 grey clinker 3,60 Grid cooler Mill with ball Or 2. Facility 1.470 white clinker 3,60 Grid cooler Mill with ball 3. Tesis 2.000 white clinker 3,75 Grid cooler Mill with ball 1. Isıdaç-40 55 Isıdaç-40 clinker 2. Isıdaç-40 55 Isıdaç-40 clinker Kayseri Çimsa Production line 2.500 grey clinker 3,60 Grid cooler Mill with ball Eskişehir Çimsa 1. Production line 1.750 grey clinker 3,60 Grid cooler Mill with ball 2. Production line 2.300 grey clinker 3,60 Grid cooler Upright mill Niğde Çimsa Production line 1.380 grey clinker 3,80 Grid cooler Mill with ball Afyon Çimento Sanayi Türk A.Ş. 1. Production line 500 grey clinker 2,80 Grid cooler Mill with ball 2. Production line 950 grey clinker 3,60 Grid cooler Mill with ball Grinding Facility Mill Capacity (Tons/ Day) Değirmen Diameter (m) Mill Cement Length (m) Mill Type Ankara Çimsa 2.040 4,20 13 Mill with ball Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 57

Year 2012 Annual Report 12- PERSONNEL ACTIVITIES AND COLLECTIVE LABOR AGREEMENT APPLICATIONS 12.1 Collective Labor Agreement applications: Collective Labor Agreement applied in our work place ended on December 31, 2012. Second of the new period collective labor agreement discussions with the Cement Industry Employers Union (CEIS) which we are a member of and T.Cimse-Is Union has been done on February 27, 2013, the third meeting will be held on March 06, 2013. 12.2 Personnel Salaries and Side Benefits: 12 gross salaries per year and 4 bonuses given in periods of March, June, September, December is being provided to white collar personnel. As described in the related Company procedures, according to size of the job and the position, fringe benefits like private life, private health insurance, and employer supported private retirement, corporate gsm line, mobile phone, company car can be provided. Salary package of 12 gross salaries and total of 4 bonuses a year in periods of March, June, September, December periods are given to the blue collar personnel. Besides the additional social support once a year and a shift premium given according to performance, on occasions such as wedding, moving, birth, and death other social helps in effect within the scope of the Collective Labor Agreement can be provided. 58 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

Auditors Report TO THE GENERAL ASSEMBLY OF ÇİMSA ÇİMENTO SANAYİ VE TİCARET A.Ş. The partnership s Title Headquarters Capital Field of Activity : Çimsa Çimento Sanayi ve Ticaret A.Ş. : İstanbul : 135.084.442. - TL : Cement Production and Trade Auditors Name - Last Name Work Periods Shareholder Status Number of participated Board of Directors and Auditors Assembly meetings Shareholder accounts, scope of the examination done on books and documents, date of the inspection and the obtained result Number and results of counting done on the shareholders cashier according to article 353/1-3 of T.C.L. Dates and results of the inspections done according to article 353/4 of T.C.L. Complaints and frauds brought up and actions taken : İlker YILDIRIM - Nur ŞENOL : According to article 400 of the temporary law 6/2 of 6102 numbered TCL, it is Until the ordinary general assembly meeting date when an auditor again advised by this law will be elected. : They have no partnership and are not company personnel. : Have not participated in the Board of Directors meetings. Auditing Assembly held four meetings. : Months of June-September-December 2012 and February 2013 have been examined regarding Commercial Law and Tax Legislations and did not come across any subject of criticism. It has been observed the decisions related to company management have been recorded in company books according to regulations. : All cash transactions of the company are being done through banks and since there was no safe of cashier no need was felt for counting. : During the monthly inspections, it has been determined that the valued papers and documents have been recorded in the books according to regulations. There have been no complaints. We have inspected account transactions of Çimsa Çimento Sanayi ve Ticaret A.Ş for the 01.01.2012-31.12.2012 periods according to accounting principles and standards in accordance with the 1534/4 article of 6102 numbered Turkish Commercial Law, 6762 numbered Turkish Commercial Law provisions (old), articles of participation and other accounting regulation generally accepted. In this respect, the balance sheet prepared on 31.12.2012 which we did not adapt the contents of it, reflects the real financial status of the partnership on the concerned date, the income statement belonging to 01.01.202-31.12.2012 period reflects the real activity results and distribution of the profits with the Annual Report found to be in accordance with reality have been found compliant with the law and Articles of Participation. We kindly request approval of the Balance Sheet and the Income Statement and acquittance of the Board of Directors to your votes. 01.03.2013 AUDITING ASSEMBLY İlker YILDIRIM Nur ŞENOL Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 59

60 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

ÇİMSA ÇİMENTO SANAYİ VE TİCARET ANONİM ŞİRKETİ AND ITS SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2012 TOGETHER WITH THE INDEPENDENT AUDITOR S REPORT (CONVENIENCE TRANSLATION INTO ENGLISH OF THE CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH) Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 61

Addresses GENERAL DIRECTORATE Çimsa Çimento Sanayi ve Ticaret A.Ş. Kısıklı Cad. No: 4, Sarkuysan - Ak iş Merkezi S Blok, Altunizade - İstanbul / Turkey Phone : (+90 216) 651 53 00 (+90 216) 651 05 00 (+90 216) 651 03 85 Fax : (+90 216) 651 14 15 CEMENT FACTORY AND TERMINALS Çimsa Mersin Toroslar Mah. Tekke Cad. Yenitaşkent - Mersin / Turkey Phone : (+90 324) 454 00 60 Fax : (+90 324) 454 00 75 Çimsa Eskişehir İstanbul Karayolu 22. Km Çukurhisar - Eskişehir / Turkey Phone : (+90 222) 411 32 00 Fax : (+90 222) 411 31 31 Çimsa Kayseri Kayseri Bünyan Yolu 35.km Bünyan - Kayseri / Turkey Phone : (+90 352) 712 16 07 Fax : (+90 352) 712 22 59 Çimsa Niğde Hacı Sabancı Bulvarı, Niğde Phone : (+90 388) 232 36 30 Fax : (+90 388) 232 36 34 Çimsa Afyon Güvenevler Mahallesi Fatih Cad. No:22 03040 Afyonkarahisar / Turkey Phone : (+90 272) 214 72 00 Fax : (+90 272) 214 72 09 Ankara Grinding and Packaging Plant Karşıyaka Mah. Fırat Cad. No: 3 Lalahan - Ankara / Turkey Phone : (+90 312) 865 23 96 Fax : (+90 312) 865 23 95 Çimsa Marmara Terminal Sahil Caddesi Rota Limanı İçi Yarımca, Körfez - Kocaeli / Turkey Phone : (+90 262) 528 42 33 Fax : (+90 262) 528 42 36 Çimsa Malatya Terminal TCDD Yanı Çimento Dolum Tesisi, Battalgazi - Malatya / Turkey Phone : (+90 422) 841 36 77 Fax : (+90 422) 841 32 30 READY-MIXED CONCRETE FACILITIES ADANA REGION Çimsa - Regional Directorate- Zeytinli Ready-Mixed Concrete Plant Adana - Mersin Yolu Üzeri 17. Km Kestel Mevkii Zeytinli, Seyhan - Adana / Turkey Phone : (+90 322) 441 19 01 Fax : (+90 322) 441 19 02 Çimsa - İncirlik Ready-mixed Concrete Plant Güzelevler Mah. Girne Bulvarı Bossa 2. Fabrika Yanı, Yüreğir - Adana / Turkey Çimsa - Misis Ready-mixed Concrete Plant Hacı Sabancı Organize Sanayi Bölgesi 6. Cadde Misis, Yüreğir - Adana / Turkey Çimsa - Osmaniye Ready-mixed Concrete Plant Tüysüz Beldesi Yolçatı Mevkii D - 400 Karayolu Üzeri, Toprakkale - Osmaniye / Turkey Çimsa - Kahramanmaraş Ready-mixed Concrete Plant Kayseri Yolu Üzeri 2. km Galericiler Sitesi Bitişiği, Kahramanmaraş / Turkey Çimsa - Kozan Ready-mixed Concrete Plant Kozan Organize Sanayi Bölgesi içi Kozan - Adana / Turkey Çimsa - Tufanbeyli Ready-mixed Concrete Plant Tufanbeyli Termik Santral Proje Sahası, Taşpınar Kapısı Girişi, Tufanbeyli-Adana / Turkey MERSİN REGION Çimsa - Regional Directorate - Yenihal Ready-mixed Concrete Plant Bahçelievler Mah. 1097 Sok. No: 2 Yenihal Yolu Yalınayak Kasabası - Mersin / Turkey Phone : (+90 324) 235 73 14 Fax : (+90 324) 235 73 17 Çimsa - Tarsus Ready-mixed Concrete Plant Çamlıyayla Yolu, Eshab - ı Kehf Yol Kavşağı, Tarsus - Mersin / Turkey Çimsa - Tece Ready-mixed Concrete Plant Cumhuriyet Mah. Mersin - Silifke Karayolu Üzeri, Tece Mevkii - Mersin / Turkey Çimsa - Silifke Ready-mixed Concrete Plant Kabasakallı Köyü Gökçeboyu Mevki, Silifke - Mersin / Turkey 122 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012

SAKARYA - ESKİŞEHİR REGION Çimsa - Regional Directorate - İnegöl Ready-mixed Concrete Plant Cerrah Kasabası Kalburt Mevkii Dereboyu, İnegöl - Bursa / Turkey Phone : (+90 224) 714 22 00 Fax : (+90 224) 714 22 03 Çimsa - Adapazarı Ready-mixed Concrete Plant Orta Mah. Plevne Cad. No: 31 Sakarya / Turkey Çimsa - Pamukova Ready-mixed Concrete Plant Yenice Mah. Murualtı Mevkii Pamukova - Sakarya / Turkey Çimsa - Osmaneli Ready-mixed Concrete Plant Camikebir Mah. Çörektepe Mevkii Osmaneli - Bilecik / Turkey Çimsa - Bilecik Ready-mixed Concrete Plant 1. Organize Sanayi Bölgesi 8. Cadde No: 3 Merkez - Bilecik / Turkey Çimsa - Eskisehir Ready-mixed Concrete Plant Muttalip Yolu 500. metre, Eskişehir / Turkey Çimsa - Çukurhisar Ready-mixed Concrete Plant Bursa yolu 20. km Çukurhisar Eskişehir / Turkey Çimsa - Kütahya Ready-mixed Concrete Plant Zafer Tepe Mahallesi Selçuklu Caddesi No: 36 Kütahya / Turkey Çimsa - Yenişehir Ready-mixed Concrete Plant Kurtuluş Mahallesi Terziler Yolu Sokak No: 107 Yenişehir - Bursa / Turkey Çimsa - Denizli Üçler Ready-mixed Concrete Plant Hacı Eyüpü Mah. 3125 Sok No:5 Üçler - Denizli / Turkey KAYSERİ - NİĞDE REGION Çimsa - Başakpınar Ready-mixed Concrete Plant Malatya Yolu Üzeri 10.km Başakpınar Gaziler Mevkii Talas - Kayseri / Turkey Phone : (+90 352) 224 67 40 (3 hat) Fax : (+90 352) 224 67 44 Çimsa - Ambar Ready-mixed Concrete Plant Ankara Karayolu Üzeri, Anbar Mevkii Bölge Trafik Arkası, Kayseri / Turkey Çimsa - Beyazşehir Ready-mixed Concrete Plant Cırgalan Mah. Engirgülü Kümeevler No: 325 Kocasinan - Kayseri / Turkey Çimsa - Nevşehir Ready-mixed Concrete Plant Niğde Yolu Üzeri 7. km Göre - Nevşehir / Turkey Çimsa - Aksaray Ready-mixed Concrete Plant Organize Sanayi Bölgesi, Aksaray / Turkey Çimsa - Karaman Ready-mixed Concrete Plant Organize Sanayi Bölgesi, Karaman / Turkey Çimsa - Ereğli Ready-mixed Concrete Plant Konya Yolu Üzeri 3. km Ereğli - Konya / Turkey Çimsa - Konya Ready-mixed Concrete Plant Horozluhan Mah. Anayurt Cad. No:10 Selçuklu - Konya / Turkey AGGREGATE DIRECTORATE 1097 Sk. No:2 Yenihal 33104 Mersin / Turkey Phone : (+90 533) 238 58 72 (+90 216) 554 70 00 Fax : (+90 324) 235 73 17 INTERNATIONAL TERMINALS Germany - Cimsa Cement Sales North GmbH Nesserlander Strasse, 5 Emden - Germany 26721 Phone : 00 49 40 70 20 93 14 Fax : 00 49 70 20 93 20/22 Italy - Cimsa - Adriatico S.R.L. Riva Cadamosto, 8-34147 Trieste - İtalyaItaly Phone : 00 39 040 2820918 Spain - Cimsa Cementos Espana S.A.U. Carretera de la Esclusa S/N, Darsena del Batan Notre, 41011 Puerto de Sevilla - spain Phone : 00 34 95 427 50 68 Fax : 00 34 95 427 19 36 Puerto De Alicante (Prolongación sur) Muelle 21 - Parcela 1 03008 Alicante - Spain Phone : 00 34 965 107 707 Fax : 00 34 965 286 628 KKTC - Çimsa Cement Free Zone Ltd. Serbest Liman, Gazi Magosa - KKTC Phone : 00 90 392 365 49 80 Fax : 00 90 392 365 49 81 Romania - CIMSAROM Marketing Distributie S.R.L. BdMamaia, Ofice Nr 5, Nr 251 Et 4, Constanta - Romania Phone : 00 40 241 585 333 Fax : 00 40 241 585 333 Russia - CIMSA - RUS Cement Trading Company Limited Malozemelskaya Str, No: 16, 353900 Novorossiysk - Russia Phone : 00 7 918 66 49 344 Çimsa Çimento Sanayi ve Ticaret A.Ş. Annual Report 2012 123