annual report 2008

Transcription

annual report 2008

ANNUAL REPORT 2008
Contents
4
71
Introduction
Group Profile & Basic Indicators
Message from the Founding Partners
Vision and Mission
Board of Directors/Audit Board
Message from the President
Other Activities
Eurobank Tekfen
Tekfen Industry
Papfen
Tekfen Insurance
Antalya Studios
Management
21
Contracting Group
Tekfen Construction, the main company of the Contracting Group,
ranked among the top 100 international contracting companies for
many years, an important indicator of the Company's progress
79
over the past 52 years.
Social Responsibility
Support for social, cultural and environmental initiatives flows naturally
from Tekfen's corporate structure. Tekfen Holding has been active in
this regard for many years.
41
Agri-Industry Group
Tekfen places great emphasis on its Agri-Industry Group in the belief that
increasing Turkey's agricultural productivity and quality are vital for
87
sustainable development.
Corporate Governance
Corporate Goveranance Principles Compliance Report
Dividend Policy
Risk Management & Internal Control
59
Real Estate Development Group
Tekfen Real Estate Development Group creates attractive projects
with distinctive concepts and develops them in unique ways that
provide users with living and work spaces of superior quality.
111
Independent Auditor's Report
> Corporate Profile & Basic Indicators
Tekfen Group is a publicly traded corporation consisting of 49 companies and seven partnerships
operating in the areas of contracting, agri-industry, real estate development, and banking.
With annual revenue of TL2,518 million and total assets of TL2,997 million, 16,868 employees,
market-making abilities and brand power in its areas of operation, and consistent values,
Tekfen Group is one of Turkey's model corporations.
Revenues
Consolidated (Millions of Turkish Lira)
Breakdown (Millions of Turkish Lira)
2,518
2007
1,902
1,319
1,111
1,031
Tekfen Group is a publicly traded corporation
operating in the areas of contracting, agriindustry, real estate development, and
banking.
The largest area of operations is
contracting. Tekfen Contracting Group
has an active portfolio of $1.33 billion
and operates in 10 countries on three
continents. The Contracting Group has
amassed considerable competency in
industrial and infrastructure
contracting, with special expertise in
oil and natural gas facilities. According
to Engineering News Record data for
2008, Tekfen Contracting Group ranks
75th among the world's top 225
international contracting companies.
Eurobank Tekfen name through a
partnership with Eurobank EFG formed
in 2007. Despite the global crisis, the
equity of Eurobank Tekfen increased
in 2008 and the bank progresses
confidently towards its goal of
becoming one of Turkey's leading
commercial and consumer banks.
In the agri-industry field the Company
is engaged in chemical fertilizer
production, seedling production, tissue
culture, sapling production, grain and
feed stuff trade, marine terminal
operations, free trade zone
management, and bag production
activities under its Toros Tar›m brand.
These activities have turned Tekfen
Agri-Industry Group into Turkey's
largest corporation in this field. Toros
Tar›m is market leader in all its areas
of activity.
Tekfen Holding, owner of all the
Company's subsidiaries, is Tekfen's
standard bearer. Tekfen Group has
gained a reputation for integrity,
transparency and quality and it is these
values that, embraced by the Company
and its employees for the 52 years
since its establishment, constitute the
Group's most important asset.
Banking is one of the Company's most
rapidly developing business branches.
Tekfen Holding started banking
operations under the Tekfenbank brand
in 1989 and continued under the
4
2008
775
47
2007
2008
Contracting
Agri-Industry
31
49
Real Estate
58
Other
Breakdown (%)
2007
Agri-Industry
40.7%
The Real Estate Development Group
has put its hallmark on its sector
through its unique projects. It operates
in a dynamic sector with high potential.
2008
Real Estate
2.5%
Contracting
54.2%
Real Estate
1.2%
Agri-Industry
44.1%
Other 2.6%
Contracting
52.4%
Other 2.3%
EBITDA
Distribution of Total Assets
2008
2007
Real Estate
1.1%
247
109
191
Contracting
44.4%
111
147
75
Agri-Industry
28.9%
14
Total assets
-8
(2008)
TL 2,997 million
2007
2008
Contracting
Agri-Industry
Real Estate
-9
-2
Other
Other
25.6%
5
Summary Balance Sheet
Profit for the Period
Current Assets
Non Current Assets
2007
280
2008
Total Assets
(’000TL)
2007
2008
1,443,211
1,930,324
977,574
1,066,426
2,420,785
2,996,750
1,020,350
1,530,977
183,331
123,050
1,201,340
1,323,472
15,764
19,251
2,420,785
2,996,750
151*
91
155*
Current Liabilities
73
91
Non Current Liabilities
36
23
Equity of Parent Company
15
Minority Interest
125
-3
2007
Contracting
2008
Total Shareholders Equity and Liabilities
-14
Agri-Industry
Real Estate
Other
Summary of Revenues
* In 2007, TL 155 million profit generated from Discontinued Operations.
2007
2008
1,901,909
2,517,891
Gross Profit
275,271
319,157
Operating Profit
125,654
158,494
Profit Before Taxation from Continuing Operations
150,894
133,227
125,001
90,855
279,890
90,855
Revenue
11 Countries,
49 Companies, 7 Partnerships
16,868 Employees
(’000TL)
Profit for the Year from Continuing Operations
Profit for the Year
(’000TL)
Important Ratios
Number of Employees
2007
2008
1.41
1.26
Total Shareholders Equity and Liabilities / Equity of Parent Company
1.00
1.25
Current Liabilities / Total Shareholders Equity and Liabilities
0.85
0.93
Gross Profit Margin
14.47%
12.68%
EBITDA Margin
10.05%
9.80%
Profit Margin from Continuing Operations
6.57%
3.61%
Profit Margin for the Period
14.72%
3.61%
Liquidity
Current Ratio
Liability and Indebtness
Consolidated
Breakdown
16,868
Agri-Industry
1,119
15,738
Contracting
13,426
Agri-Industry
1,113
Contracting
14,659
Other
705
2007
6
2008
Profitability
2008
2007
Real Estate
494
Real Estate
328
Other
762
7
Our Group has achieved its current status by meeting many challenges from the day
it was established in 1956. During this period, trust, mutual support and collective faith
made us strong. Even though our management philosophy of “moving with small but
assured steps” and “avoiding business adventures” seems, from time to time, to slow
us down, it has consistently sheltered us from risk and strengthened our leadership
in our areas of activity.
> Message from the Founding Partners
“It has been proven once again that money easily made can be easily lost.
Responsibility and conscience in the business world are more important
than ambition.”
The rapid diffusion around the world of the financial and economic crisis born in the
most developed countries created severe economic difficulties in 2008. Sudden and
devastating fluctuations in the financial markets translated into a steep drop in global
demand which led to negative growth rates. Globalization allows economic crises to
leap national borders and impact regional and even global developments. Financial
fluctuations triggered by the US mortgage crisis in 2007 brought many major influential
financial institutions in the USA to the verge of bankruptcy, and then swiftly became
a global loan crisis. Stock exchange indices around the globe fell precipitously and one
government after another had to declare rescue plans to halt the crisis and limit the
damage.
The crisis has proved once more that money easily made can easily be lost. Responsibility
and conscience in the business world is more important than ambition.
It is virtually impossible for a company to escape the effects of the crisis. Business goes
through a purification process during economic crises. Tough though the prospect of
company closures is, this process is indispensible for the health of the overall economy.
However, as a company that has always thrived on hard work and has moved forward
with sure steps, Tekfen stands as robust as ever on its firm foundation and by its
essential values. Tekfen will meet the present challenges through mutual understanding
and trust. The importance of a strong financial structure is obvious in times like these
and presents an advantage for Tekfen.
Our employees, free from the anxiety and pessimism that pervades society at times
like these, continue to work creatively, efficiently, and with high levels of motivation
to drive the Group forward. The confidence our shareholders and stakeholders have
shown in Tekfen has been essential in supporting our efforts.
We salute and thank the entire Tekfen family whose dedication, energy and hard work
generated the success we experienced in 2008 and will continue to enjoy in 2009.
Turkey was no exception. The crisis struck deep and revealed itself in almost every
economic indicator. As the crisis unfolded, economic growth, previously stable, slowed
significantly in 2008. The real sector shrank with industrial capacity utilization rates
tumbling and unemployment soaring.
Though these developments were clearly detrimental to our companies regardless of
sector, inhibiting their ability to achieve their financial and profit targets, overall the
damage posed no threat to either Tekfen Holding, which has strong foundations, or to
its companies, which are all leaders in their respective sectors.
Feyyaz Berker
A. Nihat Gökyi¤it
Necati Akça¤l›lar
> FROM LEFT TO RIGHT
8
Feyyaz Berker - A. Nihat Gökyi¤it - Necati Akça¤l›lar
9
> Board of Directors
> Our vision
“To be a leading force for Turkey's growth in our areas
of operation: contracting, agri-industry, real estate
development, and finance.”
Chairman of the Board and Executive Board Member
Feyyaz BERKER
Vice Chairman and Executive Board Member
Ali Nihat GÖKY‹⁄‹T
Vice Chairman and Executive Board Member
Cansevil AKÇA⁄LILAR
Board Member
Dr. M. Ercan KUMCU *
Board Member
Ifl›k Zeynep Defne AKÇA⁄LILAR **
Board Member
Murat G‹G‹N
> Our mission
“While keeping faith with our traditional values, we aim to
focus on our areas of operations, deliver the highest quality
Independent Board Member
Dr. Rüfldü SARAÇO⁄LU
Hasan S. SUBAfiI
fiefika PEK‹N
products and services, become leader of our segments
and, at the same time, generate value for all of our
stakeholders, namely, our customers, suppliers, employees,
shareholders, and society.”
> Audit Board
Auditor
Cengiz YAMAN
Auditor
Mehmet ERKT‹N
Board Members and Auditors were elected for a one-year term during the Ordinary Shareholder's Meeting held on 8 May 2008.
* Mrs. Meltem Berker served as Board Member between 1 January 2008 and 8 May 2008.
** Board Member Ms. A. Leyla Akça¤l›lar passed away on 13 September 2008. Ms. Ifl›k Zeynep Defne Akça¤l›lar was elected to the Board in
line with the provisions of the Article 315 of Turkish Code of Commerce.
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> Message from the President
2008 was a memorable year of historic proportion. The
financial crisis, which even bore comparison to the Great
Depression of 1929 for the damage it has wreaked on the US
economy, hit the global economy like a tsunami.
The main reason for the crisis, which originated in distressed sub-prime mortgage
loans in the U.S., was the serious loss of value of asset-based securities and
complex derivative products. Declining financial markets wiped out wealth
overnight, causing global demand to plummet and forcing governments to
formulate rescue plans for banks and other financial institutions.
Fluctuations in the financial markets swiftly radiated around the world and had
a negative impact on the real sector. Pressure on the real sector set up a second
wave composed of a serious decline in production and employment and, hence,
in global demand, bringing the global economy to the verge of a vicious circle of
economic recession. Another important development at this point was a sharp
decline in commodity prices, mainly in the price of oil.
This global crisis seriously affected the Turkish economy which, after the economic
liberalization measures of the 1980s, integrated with the world economy. Since
a national economic crisis in 2001, the Turkish economy has displayed continuous
growth. However, the 2008 financial crisis curbed GDP growth from 4.7% in
2007 to 1.1% in 2008.
...The global crisis seriously affected the
Turkish economy which, after the economic
liberalization measures of the 1980s, fully
opened and integrated with the world…
The global crisis seriously affected the Turkish economy which, after the economic
liberalization measures of the 1980s, fully opened and integrated with the world.
These developments are highly significant for Tekfen Group, which is active in a
variety of sectors. Our Contracting Group was seriously affected by the sudden
decline in industrial and infrastructure investments abroad; our Agri-Industry
Group felt the effects of the shrinking agriculture market, declining commodity
prices and volatility in foreign exchange markets; our Real Estate Group felt the
recession in the real estate market; our Banking Group had to deal with fluctuations
in financial markets; and our Investment and Services Group coped with instability
in the commercial environment.
...Despite the crisis, Tekfen Group
managed to increase its assets and equity
base and posted both profit and growth
in 2008...
Tekfen Group's performance in the first three quarters of 2008 exceeded
expectations. However, due to the worsening economic climate during the last
quarter, the Group experienced some difficulties in maintaining that performance.
Tekfen Group's revenue in 2008 increased by 32% to TL2,518 million. During this
period, the EBITDA of the company increased by 29% to TL247 million and its
operating profit increased by 26% to TL158 million. Crisis-led foreign exchange
rate increases in the last quarter of 2008 caused the financial expenses of the
company to rise. As a result, the Company's income before tax decreased by 12%
to end at TL133 million and the period's income from continuing operations
decreased by 27%, declining to TL91 million.
Other indicators also weakened in the last quarter of 2008. Turkey's imports and
exports decreased, unemployment increased, and the level of incoming foreign
capital dropped sharply.
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13
Despite the crisis, Tekfen Group managed to increase its assets and equity base.
Accordingly, the total assets of Tekfen Group, which was TL2,421 million at the
end of 2007, increased by 24% to end 2008 at TL2,997 million. During the same
period, the Company's equity increased by 10% to TL1,343 million.
Tekfen Real Estate Development Group continued to invest despite market
uncertainty. The Group, which targets the premium segment and develops projects
based on real customer needs, focuses on investments that create their own
demand and so are relatively insulated from prevailing market conditions.
As a result, even though some profit-related financial parameters of the Company
worsened somewhat, Tekfen Group posted both profit and growth in 2008.
Even though it is still too early to determine at which stage of the crisis Turkey
is in, it would be overly optimistic to expect the global storm to be over in the
short term. It is quite probable that the impact of the crisis will continue into
2009. What matters at this point is to take precautions to minimize the impact
of the crisis on our Group and to prepare plans for 2009 accordingly.
Our Contracting Group, with operations concentrated in the petrochemicals
industry and oil producing countries, was negatively affected by the crisis as
clients deferred projects because of the sharp decline in oil prices and uncertainty
about the duration of the decline. As a result, the Contracting Group failed to
meet its target in terms of number of new projects secured. Projections concerning
projects for which the tender processes could not be completed have been
transferred to the coming period. Even though in the coming term we anticipate
no serious problems in terms of winning new projects, we expect that the global
crisis environment and the resulting difficulty in obtaining loans will slow the
plans of clients.
Our Agri-Industry Group displayed extraordinary performance during the first
nine months of 2008. However, because fertilizer prices decreased sharply during
the last three months of 2008, the Group was obliged to sell products made with
expensive raw materials at far below their cost. Farmers' expectations of further
price decreases made the Group's sales targets unattainable despite selling at
a loss. In the face of all these obstacles, our Agri-Industry Group's sales revenue
increased compared with the previous year, resulting in a net profit.
...Plans for 2009 are based on a strategy
of staying immune to the impact of crisis
as much as possible and protecting our
employees...
14
Plans for 2009 are based on a strategy of remaining immune to the impact of
crisis as much as possible and protecting our employees.
The challenges we face test our ability to grow our business profitably despite
all the possible obstacles 2009 may throw at us. Provided we utilize our existing
resources and opportunities more efficiently in line with our principles of integrity,
hard work, commitment and keeping the Company's interest above our individual
interests, Tekfen Group will emerge from this difficult environment strong,
successful and ready to move forward.
We are grateful to our employees and business partners, who deserve fulsome
praise for their acceptance of the need to walk hand in hand through this challenging
marathon; to our investors who have demonstrated their confidence in Tekfen;
to our customers for rewarding our hard work by consistently choosing Tekfen;
and to our founding partners for establishing the solid foundations that enable
us to keep our heads above water.
Erhan Öner
Tekfen Group of Companies - President and CEO
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> Management
FROM LEFT TO RIGHT
Erhan Öner
Dr. Osman Reha Yolalan
Esin Mete
Ümit Özdemir
Mehmet Erktin
Dr. Ahmet ‹pekçi
16
President & CEO
Vice President / Corporate Affairs
Vice President / Agri-Industry Group
Vice President / Contracting Group
Vice President / Real Estate Development Group
Vice President / Investment and Service Companies Group
17
> Management
Erhan Öner
Dr. Ahmet ‹pekçi
Esin Mete
Ümit Özdemir
Mehmet Erktin
Dr. Reha Yolalan
Tekfen Group - President & CEO
Tekfen Holding - Vice President
Investment and Service Companies Group
Agri-Industry Group
Contracting Group
Corporate Affairs
Education
Education
Education
Education
Education
Istanbul University
Academy of Economics and Trade, B.A. 1968
Bosphorus University, Chemical Engineering,
B.S., 1973
Istanbul Technical University
Faculty of Civil Engineering, BSc, 1973
Education
Middle East Technical University (METU)
Mechanical Engineering, BSc, 1968
University of Texas, USA,
Pipeline Engineering, MSc, 1969
Istanbul University
School of Economics, PhD, 1972
Career
Istanbul University
School of Management, Associate Professor,
1977
Case Western Reserve University Cleveland
USA, Construction Management, MSc, 1988
Bosphorus University, Industrial Engineering,
MSc, 1987
University of Miami, USA,
Mechanical Engineering, Certificate Programme,
1969
Istanbul Technical University
Ground Mechanics and Foundation Engineering
Department, MSc 1975
Career
Université Laval (Canada) Management Science,
PhD, 1990
Career
Career
Erhan Öner started his career at Tekfen
Construction as a Project Engineer in 1969,
gaining promotion to Project Manager in 1976
and then Assistant General Manager in 1979. In
1980, Mr. Öner was appointed General Manager
of Toros Fertilizer. In 1991, Mr. Öner became an
Executive Board Member of Tekfen Group and,
after serving seven years in this position, he
became the General Manager of Tekfen
Construction. From 2000, Mr. Öner has served
as President and CEO of Tekfen Group of
Companies. He also serves as Chairman or Board
Member of some Group companies. Mr. Öner
was elected President of the International
Fertilizer Industry Association in 1993 and served
in this position until 1995. He is also a former
president of the Turkish-Spanish and TurkishPortuguese Business Councils under the Foreign
Economic Relations Board, DE‹K. In 2004, Mr.
Öner was awarded the Royal Order of Merit of
Spain by the King of Spain.
18
Mr. ‹pekçi started his career as an Assistant at
the Academy of Economics and Trade in 1968.
He earned his PhD in 1972 and served as
Assistant Professor between 1977 and 1982. Mr.
‹pekçi joined Tekfen as Tekfen Construction's
Assistant General Manager in charge of Finance
and Administration and served in this post until
1992. In 1992, Mr. ‹pekçi became a Board Member
of Hallesche Mitteldeutsche Bau AG (HMB) and,
in 1994, he became the Finance Coordinator of
Tekfen Holding. Since 2000, Assoc. Prof. ‹pekçi
has served as Tekfen Holding's Vice President
in charge of Investment and Service Companies.
Mr. ‹pekçi is also a Board Member of many Group
companies, with Tekfen Construction, Toros
Tar›m and Eurobank Tekfen being the major
ones.
Esin Mete started her career as a Chemical
Engineer at Tekfen Construction in 1973 and
she worked in this position until 1980, when she
transferred to Toros Fertilizer. Between 1980
and 1984, she served as Assistant General
Manager and between 1985 and 1991 as Senior
Assistant General Manager. In 1991, she was
appointed General Manager of Toros Fertilizer,
now known as Toros Tar›m. In 2000, she was
appointed Tekfen Holding Vice President in
charge of the Agri-Industry Group. Ms. Mete is
Vice Chairman of Toros Tar›m and Hishtil-Toros
and also serves as Chairman of all other AgriIndustry Group Companies. Between 2002 and
2004, Ms. Mete served as the International
Fertilizer Industry Association's (IFA's) Vice
President in charge of the Middle East and, from
2007, she has served as Vice President of the
IFA's Executive Management Group.
Career
Ümit Özdemir started his professional career at
Tekfen Construction in 1975. He served at
construction sites abroad as Project Engineer,
Site Manager, Project Manager and Project
Coordinator. In 1988, he was appointed Assistant
General Manager in charge of operations.
Since 2000, he has served as Tekfen Holding
Vice President in charge of the Contracting Group
and as Tekfen Construction's General Manager.
Mr. Özdemir also serves as President of the
Board of Directors of the Contracting Group
Companies. Ümit Özdemir is a member of the
Supreme Advisory Board of Turkish Contractors'
Association and Board of Trustees of the Istanbul
Technical University Foundation.
Bosphorus University, Department of Civil
Engineering, BSc 1987
Mehmet Erktin started his professional career as
a Field Engineer at Tekfen Construction and, until
1993, he worked as a Planning Engineer and
Planning Manager. Between 1993 and 1994, Mr.
Erktin worked as IT manager at Hallesche
Mitteldeutsche Bau AG (HMB) and as a member
of the Restructuring Team. In 1994, he was
appointed Project Manager at Tekfen
Construction. In 1995, he served as Branch
Manager and Project Manager at HMB. Between
1997 and 2000, Mehmet Erktin served as a Board
Member of Tekfen Engineering. He also served
as Secretary-General at Tekfen Construction
between 1997 and 1998, and as Assistant General
Manager between 1998 and 2002. In 2003, he
served as the Vice Chairman at Tekfen Tourism.
Since 2002, he has served as Tekfen Holding Vice
President in charge of the Real Estate
Development Group and as Tekfen-OZ Chairman
since 2007. Mr. Erktin also serves as a Board
Member of various Group companies.
Istanbul Technical University, Industrial
Engineering, BSc, 1984
Career
Reha Yolalan started his professional career as
a specialist in the Strategic Planning Group of
Yap› ve Kredi Bankas› A.fi. in 1991. Between 2000
and 2004, he served as the Assistant General
Manager in charge of Financial Analysis and
Credit Risk Management and then as Yap› ve
Kredi Bankas› A.fi. General Manager between
2004 and 2005. From 2006, Mr. Yolalan has
served as Tekfen Holding Vice President in charge
of Corporate Affairs. Mr. Yolalan is also a member
of the Board of Eurobank Tekfen.
19
Tekfen Construction and Installation Co., Inc.
Contracting Group
Tekfen Engineering Co., Inc.
Tekfen Manufacturing Co., Inc.
Hallesche Mitteldeutsche Bau- A.G. (HMB)
Azfen J.V.
Cenup Tikinti Servis ASC
GATE Co., Inc.
TGO J.V.
Agri-Industry Group
Real-Estate Development Group
Other Activities
Audit Report
Maritza East-1
Thermal Power Plant Construction
Bulgaria
> Profile
Tekfen Contracting Group, the locomotive and the largest subsidiary of
Tekfen Holding, grew out of a company established by three partners in 1956
under modest circumstances to serve in the construction consultancy and
engineering fields. Today, with around 15,000 employees, operations on
three continents, and sales revenue of TL1.32 billion, it is one of the region’s
leading contracting groups. The Contracting Group’s principal company,
Tekfen Construction, ranks among the world’s top 100 international
construction companies, an important indicator of the progress achieved
over the past 52 years.
Tekfen Contracting Group’s main area of
specialization is the construction of oil and natural
gas infrastructure. It provides customers in Turkey
and abroad with turn-key solutions encompassing
engineering, procurement, and construction (EPC).
The Group’s portfolio includes the construction of
land and sea terminals, sea platforms, tank farms,
pipelines, oil refineries, pumping stations, power
plants, highways, subways, bridge, tunnel
construction and infrastructure projects,
telecommunication systems, production facilities,
commercial and technical building complexes, and
major sports complexes. The scale and quality of
the Group’s experience make it a world-class
company.
Known for timely project completion and operations
that meet all international health, safety, and
environment regulations, Tekfen Contracting Group
has earned the privilege of receiving invitations
from reputable clients to bid for tenders in its areas
of activity. Tekfen Contracting Group carries out
94% of its operations abroad and, as of the end of
2008, the total value of the Group’s projects in
Bulgaria, Azerbaijan, Kazakhstan, Georgia, Kuwait,
Qatar, Saudi Arabia, Oman, Libya and Morocco
was around $1.33 billion.
Tekfen Contracting Group conducts its construction
operations together with Tekfen Engineering,
Tekfen Manufacturing and its specialized steel
fabrication centers, and, with its equipment pool,
qualified labor force, and experience, the Group
successfully accomplishes even the most
challenging projects. Tekfen Contracting Group has
received numerous awards which, coupled with its
zero-accident record of recent years, has
established its reputation in the sector as a whole.
Extensive oilfield expansion project
Khurais Oilfield Development project is Saudi Arabia’s largest
oilfield expansion project. Among other tasks, Tekfen undertook
the prefabrication and installation of the pipe system, pipe
racks, boiler erection, fire water system, turbine erection, hydro
testing, instrumentation, water wells, and gas fuel system.
22
23
Harweel Cluster Pipeline
Oman
> Overview of 2008
> In the world
> In Turkey
After gaining momentum with increasing oil prices
in 2007, the global contracting sector entered a
challenging era as the financial crisis took hold in
the second part of 2008. This crisis, which started
with unstable financial markets and led to a
worldwide decline in demand and hence production,
posed a significant threat for the contracting sector.
In particular, the fall in oil prices (along with many
other commodity prices) in the last quarter of
2008, caused a slowdown in petrochemical
infrastructure investment in oil producing countries
and superstructure investments slowed to a halt.
Turkey, as the world’s 17th largest economy with
a high growth potential, did not remain immune
to the global crisis. The country’s strong
economic growth of the last seven years has
slowed. The recession has decreased Turkey’s
trade in goods and services and the major
fluctuations in the global financial markets put
pressure on Turkey’s financial markets. The
Turkish lira, which had gained value against the
U.S. dollar and euro for the last seven years,
depreciated in the last quarter of the year. As
exchange rates against the lira rose, interest
The crisis also carried with it other problems, such
as low liquidity levels and deferred payments.
rates increased and domestic stock market
indices fell sharply.
In addition to these developments, which disrupted
the finances of contracting companies and
contractors and increased their financing costs,
the sharp decrease in construction material prices
caused clients to re-evaluate proposals that had
been based on higher prices. All these developments
made cost and supply chain management in the
construction sector vital.
The most vulnerable sector in this scenario is the
construction sector. Real estate prices, inflated
over the previous decade, started to decline
sharply, particularly from the last quarter of 2008.
As interest rates increased, demand for housing
loans fell, making the situation worse for the
sector. This was compounded as the expected
growth in public infrastructure investments did
not materialize in 2008. In addition to decreased
liquidity and the increased cost of borrowing,
deferral of big public projects had a detrimental
effect on contracting companies.
Despite recent setbacks, the contracting sector is
optimistic that infrastructure investments,
particularly in oil and gas producing countries such
as Saudi Arabia, UAE, Libya, will continue and that
global energy network projects will be only slightly
affected by the downturn.
Eight Crude Oil Tanks Enhancement of Export Facilities / KUWAIT
A praiseworthy project
High standards and quality at Tekfen Construction’s Petrorabigh
Site in Saudi Arabia won the appreciation of US-based Foster
Wheeler Arabia, one of the world’s leading engineering,
contracting, construction and project management companies.
24
25
SAMIR Refinery
Mohammedia, Morocco
> Activities in 2008
> Tekfen Construction
Tekfen Construction’s activities are mainly focused on pipelines, refineries,
oil and natural gas facility construction and, despite the lack of appetite for
investment due to the drastic fall of oil prices and the economic crisis, the
Company managed to overcome obstacles and maintain its position in 2008.
According to the 2008 Engineering News Record
(ENR) report, Tekfen Construction moved from 69th
the year before to 75th place in the list of the world’s
top 225 contracting companies, We are also proud
that Tekfen is one of only two Turkish construction
companies ranked among the world’s top 100
construction companies, according to Deloitte’s
European Construction Leaders 2008 report.
The increase in material, labor and equipment costs
caused by the project boom in 2007 adversely
affected profitability from the last quarter of 2007.
The Contracting Group increased its EBITDA margin
during the last quarter of 2007 and the first quarter
of 2008 by charging material price differentials to
clients from the last quarter of 2007 onward while
at the same time initiating a successful move to
protect itself against rising material costs in new
projects. With sales revenue of TL1,318,909,000 in
2008, the Contracting Group generated 52% share
Tekfen Holding’s total annual revenue.
During 2008, the company participated in various
tenders to reach its target level of backlog and
worked hard to sign contracts for these projects
during the last quarter of the year. However, as the
emerging economic crisis turned money markets
upside down and oil prices dropped from $150 per
barrel to less than $40 dollars per barrel in five
months, most clients suspended, indefinitely deferred
or completely cancelled projects. While none of the
projects followed up by the Contracting Group has
been cancelled, the trend towards project deferment
caused a decline in successful bids and delays in
contracts. As a result of all these developments,
Tekfen Construction’s active business backlog as of
the end of 2008 was TL1.33 billion.
The negotiations for the sale of 50% of Tekfen
Construction’s shares to Azerbaijan State Oil
Company (SOCAR), valued at $520 million in 2008,
have been deferred to September 2009 due to the
economic crisis, despite a draft agreement initialed
between the companies.
Business development efforts in 2008 established
contacts for the construction of a pipeline in the
United Arab Emirates and a petrochemical plant in
Tatarstan and the bidding processes have started.
However, for reasons already mentioned, these
projects have been deferred to 2009.
To improve its current operation capacity, the
Company purchased machinery and equipment worth
$36.6 million for the Contracting Group’s projects
and partnerships and a further $2 million worth of
new equipment was ordered for projects in Libya
and Qatar.
As in previous years, on-going projects are
concentrated in three main regions: the Caspian, the
Middle East, and North Africa. The Company operated
at 21 sites in 10 countries. In order to continue these
operations non-stop and to maintain Tekfen’s
superior standards, the recruitment of qualified
personnel remained as important as ever in 2008.
The company faced a shortage of qualified personnel
in the first three quarters of the year due to excess
demand in the contracting sector. This was no longer
the case after the sector entered recession during
the last quarter. Workers from Southeast Asia were
recruited, for projects in the Middle East, and North
Africa in 2008 through an employment office the
Company opened in Mumbai.
Values its employees
Tekfen Construction achieved another brilliant zero-accident
performance in 2008 and maintained its staff training on zeroaccident work methods.
26
27
Kashagan Main
Works Project
Kazakhstan
Caspian Region
Azerbaijan is one of Tekfen Construction’s two main markets in the Caspian
Region, where the company has several operations underway. Work at the
Sangachal Terminal in Azerbaijan continued flawlessly in 2008.
The mechanical portion of the additional work packages
introduced to the Phase III operations of the AzeriÇ›rak-Güneflli (ACG) Project was completed by the end
of 2008. Additional works deferred the finalization
date of the entire project to 2009. New phases of this
project will ensure Tekfen’s continued presence in the
region.
As part of efforts to increase the capacity of the BakuTbilisi-Ceyhan (BTC) Crude Oil Pipeline, Azfen
completed renovation of a river crossing in Azerbaijan
in 2008. Work at the Georgian pumping station,
commissioned under the same project in 2008 is
scheduled for completion by April 2009.
Kazakhstan is another important country in the Caspian
Region for the Contracting Group and, despite the
recent increases in labor and material costs, this market
has preserved its strategic importance and potential.
The facilities that Tekfen owns in this country provide
the Company with an important advantage in terms
of upcoming projects. The Kashagan Main Works (KMW)
Project, which began in 2005, reached a new record
of 27 million man-hours of Day Away From Work Case
(DAFWC). KMW will process oil obtained from Kashagan.
It has an overall project value of $465 million and
provides employment for 3,000 people.
Health-Safety-Environment and Zero-Accident Performance in 2008
As part of its Health-Safety-Environment (HSE) policies, Tekfen Contracting Group, places great emphasis on
the occupational safety of its employees and approaches the environmental risks that arise from its operations
with great sensitivity. The Group supports its HSE efforts with a Total Quality System comprised of OHSAS
18001:2007 Occupational Health and Safety, ISO 9001:2000 Quality Management, and ISO 14001:2004
Environmental Management systems.
In 2008, Tekfen Contracting Group carried out operations totaling 55,523,483 man-hours. Of this amount,
43,395,111 man-hours came from operations carried out solely by the Group while the remaining 12,128,372 manhours came from projects carried out with partners. As an indicator of the emphasis the Company places on
training, 660,875 man-hours (1.19 per cent of total man hours of work) were allocated for training.
Zero-Accident Achievement
2008 was another excellent year for Tekfen Construction in terms of zero-accidents without time loss and the
Company received the following awards in recognition of this from its clients:
ACG Terminal Project:
Kashagan Main Works Project:
Samir Refinery Upgrade Project:
UOU and UO1 Projects:
Khurais Project:
Kashagan Industrial Buildings Project:
Maritza Power Plant Project:
Harweel Pipeline Project:
Ma’aden Phosphoric Acid Plant Project:
32 million man-hours without lost time incident
5.5 million man hours without lost time incident
1.7 million man-hours without lost time incident
412,000 man-hours without lost time incident
(Azerbaijan)
(Kazakhstan)
(Morocco)
(Saudi Arabia)
(Saudi Arabia)
(Kazakhstan)
(Bulgaria)
(Oman)
(S. Arabia)
Another success
Tekfen gained significant know-how from the topside of the
C&WP Offshore Platform which was completed in 2007, the
Company’s first project in this field,
28
29
Rabigh Refinery
Saudi Arabia
Middle East
The Middle East and Gulf Region, the heart of global oil and natural gas
production, provides significant business opportunities to contracting companies
such as Tekfen that have expertise in petrochemicals facilities and infrastructure
projects.
Since undertaking its first project abroad in Kuwait
30 years ago, Tekfen Construction has completed
countless projects in the region, gaining a reputation
for quality and expertise that has made it one of the
most sought after contracting company operating
in the region. Thus, Tekfen Construction carries out
a significant portion of its operations in the Middle
East.
Saudi Arabia allocates a greater portion of its national
budget to infrastructure than any other country in
the area. From its first project in Saudi Arabia, a
water storage facility started in 1980, Tekfen
Construction is now one of the few contracting
companies with complete competency in the country.
Phase I and II Mechanical Works of the Khurais Oil
Field Development Project is among the projects
currently underway. Begun in 2007 it is planned for
completion in May 2009, with a value of $136.5
million.
Another important Tekfen Construction project in
Saudi Arabia is the phosphoric acid plant built for
the fertilizer factory for the state-owned Ma’aden
company. Tekfen Construction works in partnership
with the French Litwin company on this project
scheduled for completion in mid-2010.
Utilities and Offsites Package 1(UO1), part of the
Petrorabigh Refinery Development Project, was
started in 2006 and completed successfully by the
end of 2008. Utilities and Offsites Umbrella (UOU)
leg of the project is planned for completion by the
end of the first quarter of 2009. These projects have
also distinguished themselves for achieving zeroaccident operations in 2008.
Qatar also contributes significantly to Tekfen
Construction’s business volume in the region. Qatar
has initiated impressive infrastructure investments
in recent years. The country holds 15% of the world’s
natural gas reserves with proven reserves of 25.7
trillion cubic meters. With average per capita income
of $67,000, Qatar is one of the most affluent
countries in the world. Major urban development
initiatives, in addition to industrial investments, have
attracted global construction companies to the region.
Tekfen Construction’s completion of the 137km-long
ethane gas pipeline in Qatar opened the doors of the
country to the Company. In 2006, Tekfen
Construction started building the 80km-long Umm
Bab-Mesaieed Oil Pipeline Project. Construction of
this pipeline continues smoothly and is expected to
be completed in May 2009.
Additionally, the $597 million highway project Tekfen
Construction contracted with Qatar Highway
Authority, Ashghal, in 2007 has reinforced Tekfen
Construction’s position in this country. The North
Road will connect the Ras Laffan area on the country’s
northern shores with the capital and Tekfen
Construction will complete the 94km section of it.
Thirty bridges and crossroads will be built on this
2x4 lane highway. Taking into account additions
made to this project, it is scheduled for completion
by the end of 2010.
In 2008, Tekfen Construction continued its projects
in other countries. Oil storage tanks started in Kuwait
in 2005 were commissioned by the beginning of
2008. The 234km natural gas and oil pipeline, which
was planned to be completed by mid-2008 in Oman,
was deferred to 2009 due to a delay in the
procurement of pipes.
The Red Sea: A new energy hub
Petrorabigh Facility is within a developing industrial zone 150km
northwest of Jeddah on Red Sea coast.
30
31
Great Man Made River
Al Khufra-Tazerbo
Water Conveyance System
Libya
Eastern Europe
In 2008, Tekfen Construction continued construction of the Maritza East-1
Thermal Power Plant (ME1) in Bulgaria, which was awarded to TGO in 2006.
This thermal power plant will meet a large portion of Bulgaria’s demand for electricity and detailed
engineering work, material and equipment procurement, and construction work was carried out by the
TGO Company, of which Tekfen has a 50% share. The project is planned for completion by the beginning
of 2010.
North Africa
In recent years, North Africa has provided Turkish contracting companies new
business opportunities with notable infrastructure investments taking place
in Libya, Morocco, Tunisia and Algeria.
Modernization of Morocco’s Samir Refinery is one
of these projects. Tekfen completed the majority
of this $640 million project in 2008, while work
continues towards its planned completion in mid2009.
Tekfen continues work on the Al Khufra-Tazerbo
Water Conveyance System, the biggest contracting
project a Turkish company has ever undertaken
in Libya and one of the most comprehensive
engineering projects in the world. When completed,
the project will bring water buried under the Sahara
desert in the last Ice Age through enormous pipes
to cities on the Mediterranean coast. The Great
Man Made River, includes a 380km section awarded
to a Tekfen-TML partnership under Tekfen’s
leadership with a two-thirds share. This section
will help deliver water obtained from wells in
Tazerbo to production sites in Al Khufra. The
project agreement, valued at $500 million, was
signed in 2006 and work started in 2007. The
project is planned for completion by the end of
2011.
Turkey
Tekfen Construction currently carries out almost all of its operations abroad,
though the Company also follows closely preparations for infrastructure
investments expected to be made in the near future in Turkey.
Tekfen Construction successfully completed
construction of the terminals at both ends of the
Baku-Tbilisi-Ceyhan (BTC) Crude Oil Pipeline in 2007
and, recently British Petroleum awarded Tekfen with
a new project to increase the pipeline’s capacity.
This project will increase the capacity of the pipeline
by 20% by means of chemical additives. The first
phase of the project consists of construction of
chemical storage and injection plants at pumping
stations in Posof, Erzurum, Erzincan and Sivas. Work
on this project is carried out at six stations and the
manufacturing of steel structures are underway at
the Ceyhan Steel Factory. The project is planned for
completion by mid 2009, despite challenging physical
conditions.
Work on the motorways connecting Gaziantep-Birecik
and Adana-Pozantı, both parts of the Trans European
Motorway (TEM) continued throughout the year. The
Gaziantep-Birecik section is planned for completion
during 2009 and the Adana-Pozant› section in
December 2010.
Turkey’s biggest viaduct
The TAG Highway is not only the biggest highway construction
project that Tekfen has undertaken, but also the biggest project
carried out with a single contract, valued at $1.8 billion.
32
33
Gaziantep-Birecik Highway
Turkey
> Tekfen Engineering
Since 1984, Tekfen Engineering has provided engineering services, project
inspection and consultancy services for industrial and infrastructure projects,
building on Tekfen’s expertise in these areas.
Today, with over 100 engineers, architects and
city planners and extensive experience, the
Company is capable of managing highly
sophisticated and complex turn-key projects
and is able to provide a wide array of services
to construction projects, mainly for pipelines,
industrial facilities and highways. In recent
years, following the lead of the Tekfen
Construction, Tekfen Engineering has placed
greater emphasis on its operations abroad and,
in 2008, the majority of the Company’s work
was on large scale international projects.
Preliminary engineering work carried out for
the Tatarstan Nizhnekamsk Refinery and the
complete engineering services provided for the
construction of the Tüprafl Izmir Refinery’s
Methanator Plant are key contracts in the
Company’s portfolio of EPC-type projects.
In 2008, Tekfen Engineering successfully
completed the engineering work on the Samir
Refinery Project, Morocco, and the engineering
work on the Maritza Thermal Power Plant,
Bulgaria. Currently underway are the detailed
engineering work for the Ma’aden Phosphoric
Acid Plant (Saudi Arabia) steel structures and
the Great Man Made River (Libya) field work,
expansion work for Toros Tar›m’s Ceyhan
Terminal and the construction of a jetty for the
fertilizer plant in Samsun. Work related to
Istanbul’s transportation system, which included
design and construction inspection works for
the city’s expanding metro for Istanbul’s public
transport authority, ‹ETT, was completed in
2008. Studies for the 51km long Bak›rköyBeylikdüzü, Befliktafl-Tekstilkent-Kirazl› lines
were completed and submitted to the Istanbul
Metropolitan Municipality for tendering
purposes.
Publications
The Scaffolding Safety Handbook was prepared to standardize within occupational safety norms practices related
to the design, erection and dismantling of construction platforms. It was published in 2008 in English and Turkish
and it was distributed to all sites.
Similarly, Introduction to Arc Welding contains basic information about arc welding techniques widely used in
our operations and on various pilot applications. Prepared in Turkish, it was distributed to all sites.
Management System Certificates
Tekfen Contracting Group revised OHSAS 18001:1999 Occupational Health and Safety Management System,
which it implemented across the board, in 2008 to bring it into line with OHSAS 18001:2007 standards. All
operations were inspected and documented in line with the requirements of this later standard.
Unlimited service
Tekfen Manufacturing fabricates various pressurized vessels,
heat exchangers, and spherical tanks and other similar
equipment for Tekfen’s projects, delivering important support
services to Tekfen Construction.
34
35
> Fabrication Yards
Tekfen Manufacturing
Tekfen Manufacturing and Engineering was established in 1970 to manufacture
pressurized vessels, columns, reactors, storage tanks, heat exchangers and
similar items for oil, petrochemical, chemical and fertilizer plants. Today, at its
factory in Derince (Istanbul), the company provides comprehensive manufacturing
and fabrication services that require a high level of know-how in line with the
international standards.
In 2008, Tekfen Manufacturing manufactured
various pressurized vessels, heat exchangers and
spherical tanks for projects in Turkey and abroad
and made business contacts with foreign companies
for projects in 2009. Among the projects completed
during the year are reactor and heat exchanger
works for the Tüprafl Izmit Refinery and a
pressurized vessel and heat exchanger for the Izmir
and K›r›kkale refineries. Additionally, the Company
completed production and assembly of two 5,000m3
propane spherical tanks for the Aygaz Dörtyol Plant
and one 5,000m 3 LPG spherical tank for the
Akpetgaz Samsun Plant. Six autoclaves with a length
of 47m and diameter of 3m for Nuh Yap› and four
oxygen tanks for the Kardemir Plant were delivered
during the first months of 2008.
Among the work completed for projects abroad in
2008 are pressurized vessels for Tunisia and a
spherical tank exported to Senegal. The Company
received new orders for the international market
for 2009 as well and, due to increased business
volume and heavy equipment demand, it has decided
to increase its production capacity. Accordingly,
construction of a production hall with a total indoor
area of 3,500m2 was started at the Derince Plant
in 2008 and the hall will be commissioned in April
2009.
trained welders to Tekfen Construction. Training in
the first six months allowed the School to dispatch
160 welders with international certificates to various
sites.
The total weight of the projects that the plant is
following up in cooperation with Tekfen Construction
is 78,000 tons while its total value amounts to
ğ240 million.
Tekfen Bay›l Steel Fabrication Plant, Baku-Azerbaijan
Cenub Tikinti Servis (CTS) was established to support Tekfen’s operations in
platform topsides in the Caspian Region. It carries out manufacturing and
assembly of all types of steel construction to the highest quality and safety
standards, as required by leading oil companies.
PCWU Topside Platform, which was completed and floated in 2007, is a premier example of the Plant’s
technical competency. In 2009, the Plant will start preparations on projects to manufacture the topside
of a sea platform to be tendered by the AIOC/BP consortium as part of its plans to increase oil capacity
in 2009.
Awards
Tekfen Ceyhan Steel Structure Fabrication Plant
Ceyhan Steel Structure Fabrication Plant was established to manufacture and
provide erection services for steel works Tekfen Construction requires for its
contracting work in Turkey and abroad. The Plant has an annual production
capacity of 25,000 tons.
The plant is equipped with advanced technologies
and, during the last 17 years, it has manufactured
over 141,000 tons of steel works. In 2008, the total
production was 7,128 tons.
Among the projects that the Ceyhan Steel
Fabrication Plant served in 2008 are the Samir
Refinery in Morocco, the Petrorabigh Refinery in
Saudi Arabia, the Sangachal Onshore Terminal in
36
Azerbaijan, the Khurais Oilfield Development Project
in Saudi Arabia, the Maritza East-1 Thermal Power
Plant in Bulgaria, Ma’aden Fertilizer Plant’s
Phosphoric Acid Facility in Saudi Arabia, BTC
pumping stations, and the DRA Storage and Injection
Units and Expansion Project.
The Company’s Welding School allows the Ceyhan
Steel Structure Fabrication Plant to provide qualified,
Superior performance on occupational safety issues garnered Tekfen Construction various
international awards in 2008. In a contest organized by the International Pipeline & Offshore
Contractors Association (IPLOCA) and sponsored by Chevron, the Company was judged
second in the category of Safety. The award was presented to Tekfen Construction at a
ceremony held during the 42nd IPLOCA General Assembly in Athens, 29 September-3 October.
Tekfen Construction received the same award in 2005 and 2007.
Also, in 2008, the ACG (Azeri-Ç›rak-Güneflli) Field Development Project carried out by the
partnership of Tekfen Construction-Azfen in Azerbaijan was awarded the Helios, deemed
to be one of BP’s most prestigious awards. The Project received this award in the Performance
category, which was fiercely competed by 540 projects and 1,337 participants from 51
countries. Tekfen previously received this award for the Sangachal Terminal Upgrade Project
in 2003. This award is BP’s way of thanking people and companies that implement BP’s
brand values in the best way.
Production at Derince continues
The Caspian Sea’s secret power
Tekfen Manufacturing’s Derince Plant has an annual production
capacity of 20,000 tons and encompasses a 9,000m2 indoor area
and a 20,000m2 outdoor area.
PCWU Offshore Platform Topside of 15,000 tons is a Caspian
Sea oil exploration support unit.
37
Tekfen Manufacturing Plant
Derince, Turkey
STRATEGIC DIRECTION
Tekfen Contracting Group consistently works on the following issues in line with
the goals of its Strategic Plan:
Existing and new projects will be undertaken within the framework of the adopted
business principles and health, safety and environment (HSE) policies. Maximizing
work quality and maintaining accident-free operations in line with occupational
safety standards are the main priorities.
The Company will continue to focus on projects that emphasize the EPC
(Engineering-Procurement-Construction) concept and will continue to improve
its competency in this area.
The emphasis will be on increasing business volume in countries where operations
continue. The goal is to secure new projects that at least maintain the current
level of revenue generated from projects in these countries. In addition, the
goal is to increase backlog to $2 - $2.5 billion in the short and mid-term and to
$3.5 billion in the long-term.
Activities geared towards increasing efficiency and profitability will continue.
All requirements to preserve Tekfen’s strong and prestigious brand image in
existing markets will be met.
Ready for production
ISO 9001 standard semi-processed steel pipes are waiting to
enter the assembly line at the Derince Plant.
38
39
Contracting Group
Toros Agricultural Industry & Trade Co., Inc.
Agri-Industry Group
Toros Terminal & Maritime Co., Inc.
TAYSEB - Toros Adana Yumurtalık Free Trade Zone
Founder and Operating Co., Inc.
Toros Ship Agency Services Co., Inc.
TAGAfi-Turkish-Arabian Fertilizer Co. Inc.
Hishtil-Toros Seedling Industry and Trade Co., Inc.
Other Activities
Auditor’s Report
Toros Tar›m
Ceyhan Plant
Adana
> Profile
The Agri-Industry Group originated from the fertilizer production and distribution
activities initiated by Tekfen in 1981. Over the years, under the 'Toros' brand, Tekfen
Agri-Industry Group developed its agricultural input operations, especially the fertilizer
production, and grew into one of Turkey's leading companies.
The main fields of activity of Toros Tar›m are
production and distribution of fertilizers, seed and
seedling, and sapling and seed production using
tissue culture method. In addition to these, the
company is also active in the grain trade, bag
production, marine terminal operations, pilotage,
towing and ship agency services, free trade zone
management, and gas station operations. The AgriIndustry Group carries out all its operations through
its five companies and a partnership. The Group does
not currently benefit from any government incentives.
The Agri-Industry Group is one of the main groups
of the Tekfen Holding, creating a turnover of
TL1,110,777,000 in 2008 and accounting for 44%
of Tekfen Holding's annual turnover.
The Group's largest business volume comes from
fertilizer production, importation and distribution.
With its production plants in Adana-Ceyhan, Mersin
and Samsun, the company controls 38% of Turkey's
installed fertilizer production capacity. In 2008, Toros
Tar›m maintained its leadership of the fertilizer
market with a market share of 34%. The Group
carries out its sales and distribution activities via
797 dealers managed by seven regional offices.
Toros Tar›m's product range covers the full range
of fertilizers that Turkish farmers require and the
Company places great importance on product
development to expand its product range. Toros
Tar›m is the first company in Turkey to produce cropspecific fertilizers. Ammonium Nitrate, DAP and
compound fertilizers are the Company's main
products.
Tekfen Holding believes that productivity and quality
are indispensible for sustainable agricultural growth
in Turkey and, to this end, places great importance
on the activities of Agri-Industry Group. Regarding
the fertilizers, the Group offers farmers a wide range
of fertilizers either produced in its facilities or
imported to meet the demand of farmers. It also
provides high yield disease-resistant potato seeds
produced using tissue culture, other field crop seeds
such as wheat and corn, and several agricultural
inputs like seeds, seedlings and water-soluble
fertilizers. The Group's country-wide farmer training
programs, pilot stations for R&D to adapt new
vegetable seed varieties to regional soil conditions,
and the free soil analysis service all contribute to
the development of Turkish agriculture to its full
potential.
With its modern, well-established, innovative, result
oriented and long-term initiatives, the Agri-Industry
Group not only supports, but leads the development
of Turkey's agriculture industry, which has entered
an era of restructuring as Turkey moves towards EU
membership.
One of the Group's non-agricultural operations is
marine terminal operations taking place in its two
terminals, located in Adana-Ceyhan and Samsun.
Unloading and handling operations of the Group's
own raw material and commodity import operations
are also carried out through these terminals. The
terminals handle about four million tons of goods
only for third parties.
From Toros Gübre to Toros Tar›m
42
Toros Gübre, established in 1981, began its operations by
producing fertilizers in its Adana-Ceyhan facilities. Over the
years, as Toros developed its agricultural expertise and gained
a better understanding of the needs of farmers, the Company
undertook a wider mission of producing and marketing
agricultural inputs such as crop and vegetable seeds, seedlings
and saplings in addition to fertilizers. The Company's name
was changed to Toros Tar›m in 2005 and, with the products
and services it offers Turkish farmers today; it ranks among
Turkey's leading agri-industry companies.
43
Toros Tar›m’s productspecific fertilizers boost
productivity.
> Overview of 2008
> In the world
The financial turmoil of 2008, particularly that of the last quarter shook the
foundations of the global economy, upset balances, and created new realities.
The crisis undermined consumer confidence, depressing demand. Prices of
crude oil, minerals and grain all declined sharply.
After reaching an all time high of $150 a barrel,
and phosphorus fertilizers while potassium fertilizer
crude oil prices came down to $40 a barrel in
prices increased.
December. At the beginning of the year, the US
dollar fell below TL1.15, equivalent to its 2001 level,
During this period, farmers, dealers, wholesalers,
and then it rose rapidly in the last quarter of the
international traders and even producers had
year to close at TL1.52. During this period, global
difficulty in obtaining sufficient loans. This credit
trade slowed and, as a result of the increased fleet
crunch consequently caused consumption to
capacity, freight rates dropped significantly.
decrease while forcing the supply chain stocks to
be kept at minimum levels.
All these developments in the global economy
affected agriculture and, hence, the fertilizer sector.
Fertilizer prices that had increased with strong
Speculative hedge funds, which had caused
demand caused by the rapid growth in the global
commodity prices to soar to all time highs prior to
economy during the first half of 2008, quickly
the crisis, took cash positions at the onset of the
dropped during the last quarter as a result of sudden
crisis, disrupting the equilibrium in the grain markets
fall of demand. All fertilizer producers were caught
and causing prices to fall far below the levels required
with high cost inventories of raw materials and
to sustain the market.
products in their hands and had to stop production
to deplete their inventories. The producers were
Low grain prices and the financial crisis curbed
bound to wait for the prices to increase before
farmers' ability to draw support from the service
starting production again. Ukrainian nitrogen
and finance sector and this led them to use less
fertilizer producers, whose gas supply was cut due
fertilizer, which exerted downward pressure on
to a price disagreement with Russia and the
fertilizer prices.
European ammonia and urea producers who
purchased gas based on the high oil prices of the
Global fertilizer consumption decreased by 1.5% in
third quarter of 2008, had to close their plants.
2008 (Source: IFA, International Fertilizer Producers'
Association). Although nitrogen consumption
In addition to these developments, fertilizer
increased by 1.4%, phosphorus consumption
investment projects, which had gained momentum
decreased by 4.9% and potassium by 6.7%. Fertilizer
in recent years, have come to a halt in 2008 due to
prices returned to their original levels for nitrogen
the rising cost of commercial loans, equipment and
Toros Tar›m Samsun Plant, Samsun
44
45
materials. The production of bio-fuels which for a while has brought dynamism to the fertilizer market,
decreased in line with the decline in oil prices. In case the low oil prices and lack of government incentives
for bio-fuel continue, bio-fuel production will no longer be viable. The drop in freight rates due to decreased
demand and trade in 2008 is expected to continue.
> In Turkey
Turkish agriculture sector, which grew by 2.7% between 2002 and 2006, shrank
by 7% in 2007. In 2008, the sector grew by 4.1%. (Source: TU‹K, Turkish State
Institution for Statistics)
The main factors that affected the fertilizer sector
2008 agricultural production is expected to remain
in 2008 were climatic conditions, crop prices and
at the same level as 2007. wheat production is
high fertilizer prices which were a result of rising
expected to increase by 3.2% to 17.8 million tons
raw material prices worldwide. In 2008, raw material
and corn production by 20.9% to reach 4.3 million
prices soared: phosphoric acid by 267%, ammonia
tons. On the other hand, it is estimated that barley
by 91%, sulfuric acid by 153%, and phosphate rock
production will decrease by 18.9% to 5.9 million
by 405%. Commodity prices also increased:
tons, while unginned cotton production will decrease
ammonium nitrate (AN) by 52%, ammonium sulfate
by 20%, dropping to 1.8 million tons. (Source: TÜ‹K,
(AS) by 83%, and urea by 38%. Consequently the
2008 Forecasts for Agricultural Products).
average sales price of fertilizers to dealers rose
from US$ 305/ton in 2007 to US$ 518/ton in 2008.
Record high fertilizer prices and the drought induced
decrease in farmers' purchasing power shaped the
Drought affected even a larger part of Turkey this
performance of the sector in the fall season. DAP
year; South Eastern Anatolia was particularly hard
(Diammonium phosphate) and compound fertilizer
hit with a decrease in rainfall of 36.4% compared
prices increased by 200% compared to 2007 fall
with the previous year (Source: DS‹, Turkish State
prices. As a result of such an increase, 2008 fall
Water Works). The severe drought in certain
season DAP fertilizer consumption decreased by
provinces of Eastern Anatolia, Central Anatolia, the
64%, NP compound fertilizer by 29% and NP
Aegean and Mediterranean Regions gravely impacted
compound containing zinc by 25%. A 39% decrease
the income and hence, purchasing power of farmers.
in total consumption of these products was recorded
for the whole year.
Contrary to expectations, prices of products that
are the major revenue source for farmers could not
> Our activities in 2008
> Fertilizer
As Turkey's largest fertilizer producer, Toros Tar›m produces in three plants
- Adana-Ceyhan, Mersin and Samsun - and controls 38% of Turkey's annual
installed fertilizer production capacity of 5.3 million tons.
Due to the sharp decrease in demand in Turkey
during the fourth quarter of 2008 as a reflection
of the global economic crisis, our capacity utilization
rates decreased and 1,123 million tons were produced
in 2008 compared to 1.3 million tons in 2007. The
total production achieved by Toros Tar›m in 2008
constitutes about 38% of Turkey's total fertilizer
production. (Source: Republic of Turkey Ministry of
Agriculture and Rural Affairs)
In 2008, fertilizers that cannot be produced at
existing facilities and those that cannot be produced
in sufficient quantities were imported as was done
in the past years. To economize on inland freight
costs and ensure timely distribution, imported
fertilizers were shipped to Tekirda¤, Izmir-Alia¤a
and Antalya ports in addition to Ceyhan and Samsun
terminals and were bagged and then dispatched
from these ports. The Group owns a total storage
capacity of around 550,000 tons in several locations
throughout the country. To prevent bottlenecks in
distribution, warehouses were rented from third
parties and products were stored in advance in
In Turkey, drought induced worsening income levels
of farmers and record high fertilizer prices were
the determining factors in the fertilizer consumption
during 2008. These factors acutely affected the
total fertilizer consumption in Turkey that resulted
in a 20% decrease compared to the previous year,
falling to 4.129 million tons (Source: Republic of
Turkey Ministry of Agriculture and Rural Affairs).
As of 2008 year-end, Toros Tar›m sold 1,402,738
tons of fertilizers in total: 1,288,470 tons to dealers,
88,016 tons mainly to local cooperatives, and 26,252
tons as exports. Though domestic consumption
decreased by 20%, Toros Tar›m's sales to the
domestic market decreased by only 13% as opposed
to 2007, increasing the Company's market share
from 31% in 2007 to 34% in 2008.
Nitrogen fertilizers drove growth in 2008. The
company's market share in this category increased
by 5.8% compared with that of the previous year.
Toros Tar›m’s Plants
PRODUCTION
CAPACITY
(THOUSAND TONS/YEAR)
CAPACITY
UTILIZATION RATE
IN 2007 (%)
CAPACITY
UTILIZATION RATE
IN 2008 (%)
NPK
660
76
61
MERS‹N
AN
594
101
92
SAMSUN
NPK / DAP
527
48
42
1.781
76
66
PLANT
PRODUCT
serious frustration. Because corn crop prices
CEYHAN
remained low in the Mediterranean Region, farmers
were reluctant to plant corn as their second crop.
even maintain their harvest time levels and caused
preparation for the upcoming season.
TOTAL
The farmers' guide
Turkey's largest fertilizer producer
With the goal of improving agricultural yield and product quality
in Turkey, Toros Tar›m regularly organizes training sessions
on agricultural techniques and balanced fertilizer use.
46
Toros Tar›m carries out its production activities at three plants
- in Adana-Ceyhan, Mersin and Samsun - and controls 38% of
Turkey's annual installed fertilizer production capacity.
47
Steel Grain Silos
Torbal›, ‹zmir
Toros Tar›m makes 92% of its sales via dealers,
evidence of the importance the company places on
its dealers. The 797 Toros dealers, operating in
Turkey's 81 provinces, have made a major
contribution to the improvement in the company's
market share.
The ability of Toros Tar›m to preserve its strong
dealer structure differentiates it from the
competition. More than one-third of its dealers have
been Toros dealers for over 10 years, a clear
indicator of Toros Tar›m's stability as well as of its
sales power.
> Specialty fertilizers
Specialty fertilizers are fertilizers that are fully
water-soluble so they can be applied via drip
irrigation systems. The increase in international
fertilizer prices that started during the last months
of 2007 and gained momentum in 2008 was
reflected in domestic prices. The resulting decrease
in demand negatively affected the specialty fertilizer
category. Contrary to developments in recent years
and what was expected in 2008, Turkey's specialty
fertilizer market shrank by 35% in the year.
Toros Tar›m's sales figures for specialty fertilizers
reflect this situation. Sales slid by 33% to 17,029
tons. However, despite the serious decrease in
sales, predictions of price increases in international
markets, and the impact of early purchases before
the price hikes improved operational profitability
by 136% compared with that of the previous year.
In 2008, the company continued to expand its
product line to meet the market demand for the
specialty fertilizers. The 'chelated trace element'
product group, which will significantly improve the
productivity and quality of the products to be
exported, has recently been added to the specialty
fertilizer product portfolio. The chelated plant
nutritional products that can be absorbed by plants
despite high pH levels which prevent absorption of
water and micro-elements in the soil are particularly
vital for agricultural activities in countries where
soil and water have high pH levels and bring
significant output and quality improvement in
agriculture.
Seeds
Seeds have been an indispensable input since the
early stages of agriculture. One of the most
important factors that determine agricultural
productivity is the genetic potential of the seed.
No matter how favorable the conditions are, unless
the seed has the required genetic potential, it is
impossible to achieve high yields. Thus, the seed
and stock seed selection and seed-related activities
are essential for agricultural production. Aware of
the fact that having quality seeds is vital for
improving agricultural productivity, Toros Tar›m
continued to strive to provide Turkish farmers with
high quality and certified seeds in 2008.
Vegetable seeds
Toros Tar›m offers Turkish farmers many types of
standard and hybrid vegetable seeds. In 2008 Toros
continued its activities in this field both via
production and imports. In addition to activities at
its testing facilities in Antalya and Bursa, where
the Company develops high yield, disease-resistant
vegetable seeds with high market value, Toros
Tar›m also continued its R&D activities at its seed
testing stations in Antalya-Çand›r. This facility
carries out research and development activities
for local hybrid vegetable breeds and conducts
adaptation and registration trials of new seed
varieties.
A fruitful partnership
Toros Tar›m started seedling production in the nurseries of
Hishtil-Toros in 1999 and currently produces 20 million disease
resistant, high yield, grafted seedlings every year.
48
49
Toros Tar›m Ceyhan Plants, Adana
Toros Tar›m works in cooperation with ZeraimGedera in this area and the following programs
have been executed in 2008:
• The research and trial activities carried out on
tomato, pepper and cucumber varieties at Toros
Tar›m's seed R&D station in Antalya-Çand›r
gained a new dimension and momentum by
complementary tests carried out under actual
farming conditions in the region.
• Seven programs initiated in the previous years
to determine and develop new varieties
compatible with various planting seasons and
geographical regions, were accelerated to meet
the market demand,
• As part of studies to develop new varieties, the
registration procedures for nine new varieties
of tomato, pepper, radish, rocket and lettuce
were completed in 2008 and the conditions for
the requisite regulations were met for their
commercialization.
Seed sales increased by 2% from 55,926 kilos to
57,123 kilos in 2008 for varieties sold on kilo basis
whereas, for varieties sold on a unit basis, sales
decreased by 19% from 176.9 million to 143.9 million
units. This decrease was partly caused by a shift
in demand towards virus resistant varieties due to
intensified effects of viruses and partly by the fact
that two new varieties developed from R&D efforts
over the year could only be commercialized during
the last months of 2008. The superiority of the
50
new varieties over competing products, both during
trials and with actual market performances,
indicates that the decrease in sales observed in
2008 will be compensated for in 2009.
Adana 99 wheat variety in Turkey. The company
also won the breeder's rights of the “Osmaniyem”
wheat variety for five years that was recently
registered by the Ministry.
Field crop seeds
As part of the partnership with Syngenta in the
field of corn seed production, sales and distribution
of “NK Atria” corn seed variety were carried out
throughout Turkey in 2008 and 9,145 bags ea 15
kilo of corn seed was sold, corresponding to an
As part of the Field Crop Seeds Production activity,
wheat seeds were produced on farms of contracted
farmers under the control and surveillance of our
experts in 2008. As part of the cooperation between
Toros Tar›m and the Ministry of Agriculture's
Çukurova and Anadolu Agricultural Research
Institutes, 9,770 tons of wheat seed were produced
and 10,094 tons were sold.
During this period, due to the drought that
particularly affected the Southern and Central
Anatolia regions, the purchasing power of farmers
diminished and this affected the wheat seed market
adversely. Producers preferred to cut costs by
using the wheat they produced as crop rather than
purchasing certified seeds. Though data from the
General Directorate of Agricultural Establishments
(T‹GEM) indicates that the wheat seed market
shrank by 24% against that of the previous year,
Toros Tar›m made great progress by increasing its
market share from 5.8% in the previous year to
presumably 11.3% (Source: T‹GEM).
During 2008, Toros Tar›m joined a tender organized
by the Ministry of Agriculture and Rural Affairs
Çukurova Agricultural Research Institute and
obtained a “plant breeder's rights” until 2013 as
the sole authorized producer and distributor of the
increase of 47% from 2007.
> Tissue culture
Because Turkish potato production is particularly
vulnerable to economic losses caused by diseases
and pests, the procurement of potato seeds
resistant to diseases has been of upmost
importance. Toros Tar›m continued its production
at its laboratories located in Agripark in Adana in
2008, increasing its potato seed production by
307% against that of 2007 to produce 5.12 million
units of potato minitubers. The potato tubers
imported in collaboration with the Australian
Technico Company were planted in fields available
through the contracted farming, on completion of
land and product controls by the Ministry of
Agriculture and Rural Affairs in various districts of
Konya, Kayseri and Sivas. These efforts yielded
13,415 tons and out of this production 6,154 tons
were sold as seeds.
> Seedling production
Hishtil-Toros Fidecilik is the most prestigious and
reliable brand in the seedling sector. It continued
to grow in 2008, increasing its production area by
60%. The Company produces in greenhouses
equipped with the latest technology and it has
reached its target production level of 120 million
seedlings, increased its grafted seedling production,
as well as its revenue by 46% in 2008.
Hishtil-Toros introduced “RS type” production viols
to the market in 2007 and started to use such viols
for all products in 2008. RS viols are designed for
single use and in addition to their sanitary
advantages, thanks to their special design; these
viols support the kind of root of development that
improves the ability of seedlings to cling to soil. In
Turkey, the industrial design patent of RS viols
belongs to Hishtil-Toros and the process of obtaining
patents for these viols in EU countries is underway.
The Turkish seedling market has been growing
rapidly in the last ten years and there is an
increasing trend towards higher quality and
reliability. Hishtil-Toros pioneers the sector in terms
of technology in a corporate structure and
continues to set the highest product and service
standards.
> Grain and animal feed raw materials
After 2005, Toros Tar1m started to focus on the
trade of grain and animal feed raw materials
produced domestically. The Company’s activities
in this area continued in 2008 and the company
made use of its two 20,000 ton grain silos, one in
Adana-Agripark and the other in Izmir-Torbal›, as
well as grain silos owned by the State Grain Board
in the Thrace, Aegean, and Central Anatolia regions.
Toros Tar›m is the leader in the tomato
segment
Product development at world standards
Toros Tar›m carries out its R&D studies for seed development
at its seed trial station in Antalya-Çand›r. With 30 varieties of
tomato seeds, Toros Tar›m is the market leader in the
indeterminate, determinate and industry tomato seed varieties.
Toros hosts a Seed Quality Laboratory and a Biotechnology
Center founded to produce and prepare high quality and high
productivity seeds, seedlings and saplings free of diseases in
its Agripark facilities in Adana.
51
Toros Terminal
Ceyhan Jetty
Turkey
In addition to the 14,055 tons of wheat and 8,319
tons of corn purchased in 2007 and carried over
to 2008, the 2008 harvest allowed the company
to purchase 92,013 tons of products (51,712 tons
of wheat and 40,301 tons of corn). In 2008, together
with the wheat and corn carried over from previous
years, a total of 44,475 tons of product was sold.
On the other hand, 51,712 tons of wheat and 17,734
tons of corn purchased in 2008 have been carried
over to 2009.
> Marine terminal operations
Port activities in Turkey
After the global financial crisis that started in the
United States took hold of the real sector as of the
second half of 2008, cargo-handling levels at the
ports decreased rapidly in the last quarter. One of
the most obvious consequences of the crisis in
marine trade was that the Baltic Dry Index (BDI),
an indicator of dry bulk freight rates around the
world and which had reached an all time high at
11,793 on 20 May 2008 dropped below 800 points.
It is widely anticipated that the decline will continue
in 2009 and that maritime trade volume will
decrease by 25-30%. Recovery is only expected
after 2011.
These global developments in maritime trade affect
port operations in Turkey, as well. The total cargo
handling, which was 285 million tons in 2007, is
believed to have increased by 9% and reached 310
million tons in 2008 (Source: Under-secretariat for
Maritime Affairs). Analyzing the distribution of total
cargo handled in Turkey, it is noted that Marmara
Region ports are far ahead of the others with a
share of 42%. The shares of the other regions are
as follows; Mediterranean Region 29%, Aegean
Region 21%, and Black Sea region 9%. It is
anticipated that the crisis will create even more
pressure on the real sector in 2009 leading to a
decrease in cargo handling of at least 20%.
Terminal operations
With its high handling and storage capacity, Toros
Ceyhan Terminal is one of the most important deepwater terminals in the Eastern Mediterranean. The
facility is modern and versatile with two independent
jetties offering eight berths, a daily cargo handling
capacity of 17,000 tons and land facilities to provide
storage services to these piers. The terminal is able
to provide discharging, loading and storage services
for many product groups, mainly in the dry bulk
category, ranging from grains to fertilizers, coal to
petro coke, clinker to cement, pumice stone to
chrome.
In 2008, the greatest portion of the cargo handled
by Toros Terminals; excluding Toros’ own cargo,
consisted of coal, minerals and ore, grains and fuel
oil. In 2008, 4,000,383 tons of cargo was handled
in the following product-mix: 2,687,529 tons of
coal, 162,157 tons of mineral and ore, 488,024 tons
of oil and fuel oil products, 421,254 tons of cereal
and grain, and 241,419 tons of other products.
The shrinking of the transit storage market due to
the sudden drop in oil prices adversely affected
the crude oil trade. On the other hand, among the
ports in ‹skenderun Gulf handling dry bulk, Ceyhan
Terminal ranked second with a 17.5% market share
in 2008. (Source: ‹skenderun Chamber of Shipping)
In line with company goals of increasing the capacity
of the terminal and becoming the largest port of
the region it serves, two new cranes were ordered
in 2008 to increase the dry bulk cargo handling
capacity.
Toros Samsun Terminal, commissioned in the
second half of 2006, operates two berths and has
a daily handling capacity of 14,000 tons of dry bulk.
Toros Tar›m on the coast of the Black Sea
Samsun Plant, which produces compound and DAP fertilizer,
was the last plant to be added to the Toros chain of plants.
52
53
The terminal is also equipped with pipelines for
loading and discharging liquid chemical products.
The terminal mainly handled coal during 2008 for
the third parties. The open storage facilities of
terminal were allocated for use to coal companies
in 2008, however due to some administrative
issues, the terminal operations were disrupted and
only 278,276 tons of coal were handled. The trade
volume was also hit by logistical problems in Russia
and sustained coal price increases in 2008. Other
than coal, 82,323 tons of liquid products, clinker
and bagged products were handled at Samsun
Terminal and it provided 360,599 tons of cargo
handling services to third parties. The recession in
the construction sector caused a decline in the
amount of clinker imported via Toros Terminals.
In 2008, TAYSEB’s total business volume increased
by 64% over that of 2007 to exceed $264 million.
The total area of the open land leased reached
1,332,554 sqm. A total of 140 sqm of office space
and 1,360 sqm of storage space were also rented.
The number of companies operating at the free
zone at the end of 2008 was 21 and the number of
operating permits was 33.
Apart from these activities, the Company’s main
focus in 2008 was to obtain certification to operate
the Toros Ceyhan and Samsun Terminals in line
with the Coastal Facilities Operational Regulation
published by the Under-secretariat of Maritime
Affairs, and this process was virtually completed
in 2008. Ceyhan’s development towards becoming
Turkey’s energy hub constitutes great potential
for the Ceyhan Terminal while the increase in
Turkey’s trade with other Black Sea countries offers
great potential for the Samsun Terminal.
Developments in the upcoming term are expected
to create important opportunities for both facilities.
Insufficient vessel maintenance-repair facilities in
the Eastern Mediterranean, despite increased vessel
traffic in the ‹skenderun Gulf, and its vicinity to
Suez Canal, TAYSEB has attracted the attention
of investors considering ship repair and
maintenance yards. In 2008, 1,009,000 sqm open
land was leased for shipyard investment. As a
result, seven shipyards were granted with operating
permits in the Free Trade Zone. In line with the
requirements of their projects, these companies
are preparing environmental impact assessments
(EIA) and they are following procedures to obtain
permits for land reclamation. Shipyard investors
are expected to start construction during the
second half of 2009.
> Free trade zone management
> Plastic bag production
Toros Adana Yumurtal›k Free Trade Zone (TAYSEB),
located at Ceyhan, is attracting the attention of
investors due to its location. Its proximity to Botafl,
the Baku-Tbilisi-Ceyhan (BTC) pipeline, and to the
Energy and Industry Zone (dedicated to energy
investments, principally oil refineries) makes
TAYSEB an attractive option for investors who
prefer to invest using free trade zone incentives.
The bag production factory in Adana, producing
polypropylene and polyethylene bags to cater for
the fertilizer production of Toros Tar›m, could only
produce 26 million units of bags against its 2008
goal of 30.7 million units and had to procure 2.5
million additional units from the market. In 2008,
the plant also sold 3,634 sqm of laminated
greenhouse plastic covers to third parties.
A complete product and service chain
All bags required at Toros Adana-Ceyhan, Samsun and Mersin
facilities are produced at the plastic bag production factory
located near Adana and owned by Toros.
54
Because it is directly connected to Tarsus-AdanaGaziantep highway, TAYSEB provides great
logistical opportunities and is able to provide
investors with whatever infrastructure they may
need.
> Gas stations
Toros Tar›m’s gas station activities are carried out
via BP dealerships for motor and fuel-oil, and via
Mobil and Shell dealerships for motor oil. In 2008,
10.7 million liters of fuel oil were sold as wholesale
and retail. In addition, 590,000 liters of gas oil and
6,622 tons of fuel oil were shipped to Toros Tar›m
production plants.
Fuel-oil sales declined by 6% compared with 2007
due to unfavorable market conditions. Still, the gas
stations run by Toros Tar›m were successful
compared with others and received the Service
Quality Award as part of BP’s secret customer
program and various other awards as part of BP’s
Health-Safety-Environment-Security program.
Toros Tar›m’s Social Responsibility Activities
Toros Tar›m has placed great importance on education since the 1980s. Playing a
leading role in the agricultural sector, the Company organizes Farmer Training
Seminars across the country to improve productivity and quality and thus contribute
to farmers welfare. Toros Tar›m continued to organize such seminars and field days
in 2008 and contributed to educational efforts by supporting sector specific scientific
meetings. Toros Tar›m sponsored the Grain Symposium organized by the Bahri
Da¤dafl Research Institute, known for its contribution to the agriculture sector, and
the Stars of Agriculture contest organized by Izmir Trade Exchange for creative and
innovative farmers.
Toros Tar›m was the main sponsor of the “1 Anthem 12 Compositions” project
organized by the Tekfen Foundation. For this project, 12 pieces composed for the
national anthem composition contest in 1921 were gathered from the dusty pages
of history after 87 years. These were performed by the Tekfen Philharmonic Orchestra
in a concert sponsored by Toros Tar›m.
As part of its social responsibility activities, Toros Tar›m places great importance
on the education of students living in the provinces where the production facilities
are located. The Company founded Toros Tar›m Samsun Education Center at its
Samsun production plant and provided courses for university entrance exam offered
with support from the Foundation of Social Volunteers (TOG). Toros Tar›m also
supported local projects for children organized by the Turkish Foundation of Education
Volunteers (TEGV).
Toros Tar›m supports students
Toros Tar›m supported skill development activities organized
by the Turkish Education Volunteers Foundation (TEGV) in
Samsun.
55
63
Toros Tar›m Ceyhan Jetty, Adana
> Energy
Toros Energy produces electricity for the AgriIndustry Group’s various facilities at Ceyhan and
Mersin co-generation units. Because naphtha prices
continued to remain well above economical levels,
gas turbine generators were not used in 2008 and
only steam turbine generators in Mersin were
employed to generate 28.5 million kWh of electricity.
Toros Energy merged with Toros Tar›m at the end
of June 2008. Under new legislation, companies
generating electricity as part of their operations
will procure electricity from TEDAfi or TE‹Afi (both
State Energy Production and Distribution
Enterprises) on a subscription basis. If the electricity
generation companies supply electricity to the
national grid, a net settlement procedure will be
carried out with TEDAfi and TE‹Afi.
56
> Pilotage, tugboat and shipping
agency services
Toros Shkip Agency provides ship agency services
to all vessels carrying Toros’ cargo at Ceyhan and
Samsun terminals and at Mersin Port as well as to
certain third parties using its terminals. In 2008,
Aygaz and Milangaz plants in Samsun were added
to the terminals for which we provide pilotage and
tugboat services. In 2008, 127 vessels at Ceyhan,
54 vessels at Samsun and 15 vessels at Mersin were
provided with ship agency services. During the same
period, 528 vessels at Ceyhan and 994 vessels at
Samsun were provided with pilotage and tugboat
services.
STRATEGIC DIRECTION
A memorandum of understanding was signed between our company and OCP S.A.,
a Moroccan state enterprise that produces phosphate. Feasibility studies have been
initiated on cooperation in the fertilizer, agricultural industry and construction
sectors. This study will be reviewed at the end of 2009 to determine the scope of
the cooperation.
Tekfen Agri-Industry Group will continue its solution-oriented efforts to strengthen
its leadership of all its areas of operation. In line with its concept of expanding and
diversifying its operations, the Company aims to focus more on marine terminal
operations and to accelerate investments in this direction motivated by the fact that
Ceyhan has been declared an Energy Zone.
Toros Tar›m at Growtech Eurasia 2008 Fair
A sustainable future for Turkish agriculture
Turkey’s largest agriculture fair, organized annually in Antalya,
provided the opportunity for Toros Tar›m to present farmers,
greenhouse operators and producers, with various products,
including water-soluble specialty fertilizers, vegetable seeds,
fruit saplings and potato and wheat seeds produced at Agripark.
Tekfen Agri-Industry Group believes that quality and productivity
improvements in Turkish agriculture are essential for sustainable
development and, with its modern, profound, innovative, results
oriented business approach and long-term initiatives, it supports
and pioneers the development of Turkey’s agriculture.
57
Contracting Group
Agri-Industry Group
Tekfen-OZ Real Estate Development Co., Inc.
Tekfen Real Estate Development
Investment and Trade Co., Inc.
Tekfen Tourism & Facility Management Co., Inc.
Other Activities
Auditor’s Report
Yal›kavak Tekfen Residences
Bodrum
> Profile
Tekfen Real Estate Development Group develops prestigious private living and work
space projects with a unique commitment to quality and superior features. Akmerkez,
Taksim Residences, Tekfen Tower and Yal›kavak Tekfen Residences, all designed,
built and managed by the Group, display this distinctiveness.
Turkey’s dynamic and fast-growing real estate sector
suffers from poorly researched projects based on
uncompetitive concepts. Thus the sector lacks diversity
and distinctiveness. These deficiencies create
opportunities for Tekfen Real Estate Development
Group, which has adopted the principle of developing
a unique style rather than following the herd and has
embraced this notion as a long-term strategy.
During Tekfen Holding’s restructuring in 2000, real
estate development was declared one of the Holding’s
main areas of business. The Group operates the
following companies in various segments of the sector:
Tekfen-OZ Real Estate Development Co. Inc. in the
development, investment and marketing segment;
Tekfen Real Estate Development and Investment Co. Inc.
in the construction segment; and Tekfen Tourism and
Management (Tekfen Services) in the management
segment. The three companies complement each
others areas of operation.
Tekfen-OZ, established in 2007 as a partnership with
a leading American asset management company, Och-
Ziff (OZ), invests in residential and commercial real
estate projects in Istanbul and other parts of Turkey.
Tekfen Real Estate conducts project planning,
consultancy, architectural and engineering operations
and sells its projects to Tekfen-OZ at cost plus a
certain profit margin.
Tekfen Services undertakes real estate management,
repair and maintenance services. The Company’s
main areas of operation include delivery of office
space to clients, the management of parking lots,
conference rooms, private dinner halls and fitness
centers, special cleaning services, and electronic
access card sales.
As part of its philosophy of providing its customers
with high quality, distinctive products, the Group
provides services in all aspects of the real estate
development sector, ranging from design to
management. The client satisfaction the Group’s
projects create place it among the top players in the
Turkish real estate sector.
Tekfen Services
Tekfen Services was established in 2003 with the purpose of applying to real estate management the same
diligence the company maintains in design and construction. The company carries out these operations under
the Tekfen Services brand and, in addition to commercial real estate projects, it manages residential projects
such as Taksim Residences and Yalıkavak Tekfen Residences. The company also manages the Tekfen Tower
conference hall and Energym Fitness Center, as well as S Café in Akmerkez shopping mall.
Ka¤ıthane Office Park is designed in line with the neighbourhood’s characteristic traits
60
61
Kâ¤›thane Office Park Project
Istanbul
> Overview of 2008
The economic crisis that started in the US in 2008 deeply affected the volatile
and market-sensitive real estate sector. The construction sector, which
maintained its momentum in the first half of the year, was also hard hit,
slipping into recession in the third quarter.
During the year, many projects came to a halt or
were cancelled. This situation caused the prevailing
high prices in the real estate sector to plummet. The
annual growth rate of 10% projected at the beginning
of the year turned into a decline of 1.1% over the
first nine months. The number of new building
licenses, one of the main indicators of the level of
investment, decreased by 20% in the second half
of the year when compared with the same period
the previous year.
The recession in the housing market, the locomotive
of the Turkish construction sector, caused by excess
supply in the mid-price segment and by overpriced
projects in the premium segment, was magnified by
the economic crisis. This has resulted in a sharp
decline in the number of residential projects. Housing
loan usage declined in the year and house prices
and rents dropped by as much as 25% from the
second half of 2008. Larger numbers of borrowers
had problems paying their mortgages and
fluctuations in the housing inventory and
construction material prices made the situation
worse.
Developments in the shopping mall segment in 2008
confirmed that this segment has reached the
saturation point. In Istanbul alone there are 250
prospective shopping mall projects. Most projects
remained on paper while only a few were built.
Increase in demand for Class A office buildings and
the resulting rent rises continued in 2008. Many
companies experienced difficulty in finding office
buildings with the features they wanted. Rising rents
of Class A office buildings in central locations
encouraged companies to seek space outside city
centers.
Tekfen Services guarantees success property
management
Taksim Residences’ spacious garden is an oasis in the middle
of the city.
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Levent Office Project
Nominated for LEED Certificate
Istanbul
> Operations in 2008
In 2008, Tekfen Real Estate Development Group has been planning and preparing
for new projects in Istanbul, Konya and Bodrum.
Among the Group’s on-going projects, Yalıkavak
During the project development process and
Tekfen Residences was completed in 2008 and the
depending on market conditions, Tekfen-OZ carries
units have been delivered to their owners. This
out a wide spectrum of activities ranging from
project is managed by Tekfen Services. The boutique
detailed market analyses to purchase of the land,
hotel built as part of this project will be opened
from entering into revenue sharing or payment-by-
during the summer of 2009.
flat agreements with land owners to establishing
project partnerships. In 2008, Tekfen-OZ moved to
The five-year rental periods in Tekfen Tower, Istanbul,
its new office building in Karaköy and, in line with its
which started with the opening of the Tower, expired
increased business volume, strengthened its
at the end of 2008 and new agreements providing
management team.
rent increases of up to 100% were signed with
tenants for the new term.
Most of the following projects completed the
preparations stage in 2008 and will go forward on
Tekfen Real Estate Development Group seeks
a clear schedule:
opportunities in Istanbul and other Turkish cities
with high development potential to create distinctive
• Levent Office (Levent-Istanbul)
projects with good investment terms. Residential
• Bomonti Apartments (fiiflli-Istanbul)
and commercial real estate investments of the Group
• Müflkülüm Farm (Gümüfllük-Bodrum)
have accelerated with the Tekfen-OZ partnership.
• Kâ¤›thane Office Park (Kâ¤›thane-Istanbul)
• Izmir Project (Bayrakl›-Izmir)
According to assessments made by ULI (Urban Land
• Konya Residential Project (Meram-Konya)
Institute) Emerging Trends in Europe 2009, Istanbul
continues to be one of the top three European cities
in terms of potential for investors and real estate
development companies looking for long-term
revenues. This fact proves that projects that are
correct in every aspect will remain in demand despite
the crisis and that companies investing in financially
sound and realistic projects have a chance to turn
crisis into opportunity. Thus, despite the crisis,
Tekfen-OZ has decided to continue its investments
in 2009.
Bodrum’s secret heaven: Müflkülüm Farm
As a project sensitive to the textures of the natural world,
Müflkülüm Farm, set amongst tangerine gardens and covered
in Aegean flora, is for people who prefer a relaxed lifestyle.
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Levent Office (Levent-Istanbul)
Müflkülüm Farm (Gümüfllük-Bodrum)
To create a second Class A office project to follow Tekfen Tower in Levent, the most prestigious business
area of Istanbul, Tekfen-OZ purchased a valuable land in 2008 in partnership with Sayman Kimya company.
Preparations were completed in the first quarter of 2009. Designed by the architect Juan Pablo Molestina,
the project presents various innovations from design to application. Levent Office, planned as an
environmentally-sensitive building and to be constructed in accordance with Leadership in Energy and
Environmental Design (LEED)-Green Building Certification, has extraordinary design features, such as
plantings on the facades and floors, and innovative functional features. The building will consist of
prestigious 800 sqm office suites for local or international companies.
The interest generated by Yal›kavak Tekfen Residences, completed in Bodrum in 2007, motivated the
Group to continue investing in prestigious environmentally friendly projects in the Bodrum peninsula and
surrounding area. Hence, the Müflkülüm Farm project in Gümüfllük, a village on the Bodrum peninsula.
This is a boutique residential project of 18 units on 27,400 sqm land. It is designed for year-round living
and one of the distinguishing features of the project is that the well-established tangerine orchard on
the land will be preserved.
As a result, a unique project for clients seeking a relaxed and comfortable lifestyle in the midst of nature
Bomonti Apartments (fiiflli-Istanbul)
has been created. The architectural design and approval process of the project was completed in 2008
Bomonti has been going through rapid change in recent years. One of Istanbul’s first industrial zones, it
has been cleared of industrial establishments due to its proximity to the city center. Bomonti Apartments
and construction has commenced. It is planned to be completed in 2009.
will be one of the most important agents of this district’s transformation.
Designed by the architect Bünyamin Derman, the approach of this project is to integrate urban textures
and street life through the medium of modern architecture. Bomonti Apartments is designed for those
who prefer to live in the heart of the city and to meet the needs of urban living. It consists of 84 units that
can be used as residential-home office space or commercial space. The project is complemented by a
fitness center, a shopping area, and a parking lot, and construction is scheduled to begin during the second
half of 2009.
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All the colors of life at
Yal›kavak Tekfen Residences
Urban texture meets modern architecture
Yal›kavak Tekfen Residences is now complete and the homes
have been delivered to their owners. Yal›kavak brings a brand
new life under Tekfen Services management.
Bomonti Apartments, designed by Bünyamin Derman, is an
example of urban transformation in Bomonti, one of Istanbul’s
first industrial zones.
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Kâ¤›thane Office Park (Kâ¤›thane-Istanbul)
Ka¤›thane Office Park project is in Istanbul’s Ka¤›thane district, which is slated for urban transformation
in the near future because of a rapidly developing transportation infrastructure and its proximity to the
city center. The project consists of Class A office for multinational companies that prefer proximity to the
city center and who are facing difficulty finding space at a rent they can afford. Ka¤›thane Office Park
concept and architectural project, developed by Emre Arolat, already won an award in the Office Buildings
category at the 2009 MIPIM Architectural Review Future Project Awards, one of the most prestigious
awards in the world of architecture.
The project is for multiple units around a courtyard with a playful layout instead of a single tall office block.
It consists of nine blocks of four to seven stories. The courtyard is planned to serve as a social area with
shops and cafes. Construction is planned to commence by the first half of 2009.
Izmir Project (Bayrakl›-Izmir)
Tekfen-OZ and Rönesans Shopping Malls are cooperating on Izmir’s largest real estate development project.
This complex to be built on 58,800 sqm at the intersection of Karfl›yaka, Konak and Bornova in the Bayrakl›
district of the city, will be a multi-functional living space with residential units, office units, and a shopping
mall.
The project will be designed by US-based 5+ Design and Swanke Hayden Connell Architects (SHCA) and
is Izmir’s first mixed-use real estate project. As such, it will undoubtedly become a popular meeting point
for the people of Izmir. This investment will provide employment for around 2,500 people during and after
construction and it will go a long way towards meeting the city’s need for quality residential and office
units and retailing space. Construction of the project is planned to start by the beginning of 2010.
Konya Housing Project (Meram-Konya)
Konya is one of the most rapidly developing and promising cities in Anatolia. As a result of market analyses
conducted for the city, Tekfen-OZ decided to invest in some of the city’s real estate. Utilizing 244,000
sqm in the city’s Meram-Koza¤aç district, one of the most beautiful and rapidly developing parts of the
city, the land for this project was purchased from the municipality through a tender in 2008. When the
project is completed, people in Konya will have access to a living center of 1,200 exclusive, environmentally
friendly residential units enriched with social facilities. The project is planned to commence in 2010 and
it will be completed in several phases. It will be the most advanced real estate project ever built in the city.
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STRATEGIC DIRECTION
Tekfen Real Estate Development Group believes that, despite uncertainty in the
real estate market, the right location and project will outweigh market drawbacks
and create its own demand. Economic fluctuations will in the long-term allow
reliable companies with sound financial structures, like Tekfen, to rise to the
top.
The decline of the real estate sector is a favorable development given that it
has curbed the hyped-up market prices of recent years. In the mid-term, the
market will reach a new equilibrium and continue to grow. In this process, those
groups that have financially sound structures and develop realistic projections
will lead the sector and turn crisis into opportunity.
Guided by this understanding, the Group conducts its projects according to its
previously set schedule and does not postpone its investments. With its cautious
growth strategy that is selective about projects, the Group will continue to
underwrite distinctive, much admired projects in the future.
Tekfen Real Estate Development Group’s strategy is to conduct its commercial
and residential real estate development operations throughout Turkey. Urban
development projects for the premium segment which provide the opportunity
to create high quality, distinctive spaces will remain the Group’s focus.
Tekfen Services adds value to service
A prestigious project in Bodrum
Tekfen Services manages the conference room and Energym
Fitness Center at Tekfen Tower and the S Café at Akmerkez.
The Company adds further value with building management
and maintenance services to the projects undersigned by
Tekfen Real Estate Development Group.
Yal›kavak Tekfen Residences, delivered to its owners in the
summer of 2008, is Group’s first project in Bodrum.
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Contracting Group
Agri-Industry Group
Eurobank Tekfen Co., Inc.
Other Activities
EFG Leasing Co., Inc.
EFG ‹stanbul Securities Co., Inc.
Tekfen Industry and Trade Co., Inc.
Papfen Joint Stock Company (Uzbekistan)
Tekfen Insurance Brokerage Services Co., Inc.
Antalya Studios Co., Inc.
Akmerkez Real Estate Investment Co., Inc.
Tekfen Culture and Arts Production and
Publishing Industrial and Trade Co., Inc.
Auditor’s Report
New face for
Eurobank Tekfen
> Eurobank Tekfen
> Profile
In view of the new economic realities, Eurobank Tekfen bases its strategies and
business plans on three points: strong capital, strong management, and strong
customers. With 42 branches, internet banking operations, and 744 employees,
Eurobank Tekfen is a specialized bank active in commercial banking, small
business and retail banking, leasing, factoring and investment banking.
Eurobank Tekfen has set change, motivation, and open
communication as its corporate priorities and it focuses
on providing its customers with uninterrupted service
regardless of market conditions. The bank places great
Eurobank Tekfen is a member of Eurobank EFG, an
international banking group with a focus on New Europe.
With strong growth potential in its main business areas,
the Bank’s shareholders decided at their Ordinary
emphasis on quality, efficiency, effectiveness, and
customer satisfaction and, with a high capital adequacy
ratio, it is a model of reliability.
General Meeting, 25 December 2008, to increase the
Bank’s paid-in capital to TL380 million.
> Overview of 2008
The global crisis defined 2008 while governments and
organizations found themselves battling on all fronts
to stay on top of the crisis.
Originating in the finance sector and worsening in the
last quarter of the year, the global crisis caused serious
economic disruption and the growth rate of all
economies to fall. Turkey was not exempt, with secondhalf domestic economic indicators paralleling those in
foreign markets. During the final quarter, when interest
rates and foreign exchange rates increased, domestic
growth dropped to the lowest level in six years.
The affects of the crisis rumble on in Turkey’s real
sector. However, following measures taken after the
domestic financial fluctuations of 2001, the local banking
and finance sector remained strong and largely resistant
to the crisis affects.
In any event, it is essential to minimize the detrimental
effects on loans, exports and local markets. In addition
to measures taken to return the economy to its normal
state by limiting production losses and unemployment,
it is vital that we build the confidence of local consumers
and of foreign investors.
Turkey’s expert broker
EFG Istanbul Securities, a subsidiary of Eurobank Tekfen, is
one of Turkey’s leading brokerage companies. EFG Istanbul
provides stock and futures brokerage, trading operations,
corporate finance, market and macroeconomic research, and
asset management services.
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Despite the extraordinary events of 2008, Eurobank Tekfen performed well overall
and achieved a growth rate of 27%.
With its strong capital structure, competent and
committed human resources, and advanced
technological infrastructure, Eurobank Tekfen has
confidently approached its goals and achieved significant
growth.
Eurobank Tekfen’s assets grew in 2008 to reach TL3.481
billion. Loans to customers across all sectors increased
by 24% to TL1.113 billion and deposits increased by a
significant 56% to TL1.796 billion. The bank closed
2008 with a net profit of TL12.4 million and its
consolidated profit was TL40.1 million.
Eurobank Tekfen’s high capital adequacy ratio, 17.9%,
demonstrates the Bank’s sound financial structure.
> World quality financial services
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Additions to the product and service ranges draw ever
more customers to Eurobank Tekfen.
> Change, motivation and open
communication
> Segmentation efforts
Eurobank Tekfen, which set its corporate priorities as
change, motivation and open communication, supported
these in 2008 with a strong human resources policy.
Eurobank Tekfen has adopted a segmentation strategy
for its services.
For many years, the Bank’s main focus had been on
corporate and commercial banking. However, from
2009, preparations will start to enter the retail banking
sector. Intense work on various areas, ranging from
branch restructuring to products and services, from
human resources to infrastructure, will position
Eurobank Tekfen as the preferred business partner for
small businesses.
Eurobank Tekfen’s vision is to provide world standard
financial services and, in line with this, the Bank
approached commercial, corporate and individual
customers as a solution partner, furthering its aim to
be the bank of preference.
While placing emphasis on small businesses, Eurobank
Tekfen also aims to improve its cooperation with
corporate and commercial customers. To this end, the
Corporate Banking Center was newly established at
Head Office to provide corporate customers with the
best possible service.
The Bank’s strategic priority is to grow its corporate
and commercial banking, small business banking, and
capital markets activities by expanding its branch
network. In 2008, the number of branches was increased
from 36 to 42 despite volatile market conditions while
the Bank also expanded its distribution network as well
as its product and service range.
Eurobank Tekfen also sees retail banking as an important
complementary business area and continues to diversify
its services in this field by developing innovative
products. Eurobank Tekfen aims to win new clients
through concentrating on private banking and to
differentiate itself through its competency in providing
the appropriate services.
This strategy also required that Eurobank Tekfen
strengthen its sales network in 2008 and continue to
win new customers. As of 31 December 2008, 5,694
customers obtained loans while 5,793 held deposit
accounts. These results indicate that the bank has made
great progress towards becoming the bank of preference
of many companies and individuals.
While growing, Eurobank Tekfen remains committed to
the national and international principles, regulations
and ethical values of banking and gives emphasis to
sharing with its stakeholders the added value the Bank
creates.
indispensible for a synergistic structure, dictate the
need to constantly enrich its human resources by
updating competencies to create the talent pool a
growth-oriented organization requires.
The Bank’s motivation and open communication, coupled
with its corporate philosophy that views change as
STRATEGIC DIRECTION
Despite the expected continuation of the challenging economic climate in 2009, Eurobank Tekfen will
continue to grow and generate added value by maintaining its financial structure. Without compromising
its customer-friendly policies, the Bank will stand beside its productive customers in various sectors.
In the corporate and commercial banking fields, where the Bank is particularly strong, Eurobank Tekfen will
continue to provide its clients with innovative services that carry a high level of added value. Retail banking
is a promising field that is expected to grow further in the near future. The Bank will complete its restructuring
for retail banking at various branches and focus even more on this area towards the end of 2009.
Maintaining liquidity and asset quality will continue as one of the Bank’s priorities. Eurobank Tekfen will
continue its strong risk management practices and, by following national and international market
developments closely, it will modify its strategies as necessary.
Eurobank Tekfen believes possessing a strong and healthy financial foundation is as important and valuable
as profitability. By the end of 2009, the Turkish economy will be among those emerging first from the crisis
and this will present important opportunities for everyone. At this point, Eurobank Tekfen, which has
maintained its healthy structure, will continue to create value for everyone and to move up in the industry,
with the aid of its sound financial structure, competent and committed human resources, and advanced
technological infrastructure.
World-standard financial services
EFG Leasing
An international banking group with over 22,000 employees,
Eurobank EFG has operations in Greece, Bulgaria, Romania,
Serbia, Poland, Ukraine, Luxembourg, Cyprus, and the UK, in
addition to Turkey.
EFG Leasing, another subsidiary of Eurobank Tekfen, reaches
its customers via its direct marketing team, in addition to its
branches. The company has for many years been serving various
sectors, such as construction, manufacturing, agriculture and
medicine, and it has remained at the forefront through its
support for technological investments in recent years.
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> Tekfen Industry
> Tekfen Insurance Brokerage
Tekfen Industry’s activities can be gathered under two main topics: Lighting and
chemicals.
Tekfen Insurance Brokerage, an authorized agency for 21 insurance companies,
has one of the highest premium production levels of any agency in Turkey and it
offers insurance in all main branches.
Tekfen Industry operates in the lighting sector by
distributing its own brand of incandescent bulbs produced
in China and Wiselite energy-saving bulbs. Tekfen Industry
is sensitive to technological developments and, thanks
to its two brands, it is one of the strongest players in the
market. With the motivation of greater competition in
the lightbulb sector, the Company maintained its market
share in 2008 by using the latest technology and making
bulbs and carries out various projects to this end. Tekfen
Industry won a Ministry of Energy and Natural Resources
tender in 2008 to distribute 2,800,000 energy-saving
bulbs to primary schools all over the country. This project
is one of the most important social responsibility projects
of the year in terms of the number of people reached.
successful strategic marketing moves.
via a wholesaler network but, in 2008, it started a project
to achieve a similar widespread distribution network
through retailers. To enable this, the Company has made
agreements with national retail chains and switched
emphasis to marketing to end users. As a result, energysaving product sales in 2008 increased by 70% on a
unit basis and 78% on a revenue basis.
Tekfen Industry’s broad product range, consisting of
various types of bulbs, such as sodium vapor, mercury
vapor, and energy-saving bulbs, has been extended
further with the addition of LED lamps, which are
important for new trends in the illumination sector. To
date, Tekfen Industry has launched 99 new products in
ten different categories in the LED product group.
Tekfen Industry supports the Enver (Energy Efficiency)
Project, which aims to increase usage of energy-saving
Tekfen Industry continued to market its Fentox pesticide
under the Fentox Stop, Super Fentox, Water-based New
Fentox, Fentox Liquid and Fentox Mat brands and
preserved its market share in this sector.
and liability, travel and life insurance, can all be
completed online. The platform, also allows online policy
tracking and detailed reporting.
Tekfen Insurance Brokerage uses subsidiary insurance
agencies to supplement its own sales of insurance
products and increase its premium production. Tekfen
Insurance Brokerage uses a fully online system
developed by the Company to provide uninterrupted
services to its direct customers and subsidiary agencies.
This system enables its agencies to offer insurance
products with extensive coverage at reasonable
premiums while keeping operational costs down and
minimizing the operational load, especially for individual
insurance services. Tekfen’s system integrates with
those of the insurance companies and transactions,
such as quotation preparation and policy sales for car
and home insurance, mandatory earthquake insurance,
In 2008, the number of Tekfen Insurance Brokerage
subsidiary agencies increased to 9 while the number of
online products increased to 6 and the number of
insurance companies it works with increased to 21.
> Papfen
> Antalya Studios
Papfen, a Turkish-Uzbek investment 85% owned by Tekfen, has produced cotton
yarn in Uzbekistan since 1997.
Antalya Studios provides domestic and foreign movie
producers with advanced technology and infrastructure
in a 186,000 sqm venue. In line with Tekfen Holding’s
decision in 2000 to concentrate on its core business
Modern production facilities, ISO 9001 Quality
Management System, and a concern for high quality,
make Papfen an exemplary industrial establishment.
The annual production capacity of the Company is
around 4,000 tons, including yarns of various sizes. In
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The Company had distributed its lighting products mainly
In 2008, Tekfen Insurance Brokerage exceeded its goals
by increasing its premium production by 32% and
brokerage revenues by 42%.
2008, the Company worked at full capacity and reached
its tonnage-revenue goal. 58% of the yarn produced in
2008 was sold to foreign markets, such as Turkey,
Russia, Belarus and Kyrgyzstan, and 42% to the local
market, together generating revenue of $9.2 million.
In 2008, the Company was also active in corporate
insurance provision, serving many Tekfen Group
companies and non-Tekfen companies in all insurance
branches. Tekfen Insurance Brokerage has always
emphasized a professional attitude in its operations
and, with its subsidiary agencies individual and corporate
customers, it has further extended its portfolio.
areas, the Holding has decided to sell or lease Antalya
Studios to foreign investors and negotiations continue
on this issue.
Light bulbs on the way
Tekfen in the insurance sector
The first Energy-saving Bulb Tender organized by the Ministry
of Energy and Natural Resources was won by Tekfen Industry
and truckloads of energy-saving Tekfen Wiselite bulbs are on
their way to schools in 23 Turkish provinces.
Tekfen Insurance Brokerage, an authorized agency for 21
insurance companies, has one of the highest premium
production levels of any agency in Turkey and it offers insurance
in all the main branches.
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Contracting Group
Agri-Industry Group
Other Activities
Tekfen Foundation for Education, Health
Culture, Arts and Protection of Natural Habitat
Auditor’s Report
> Social Responsibility
Tekfen has stood for professionalism, quality and honesty since the day it was
founded. The Company has never limited its responsibilities solely to business
activities and, as part of its notion of corporate citizenship, it exercises its
responsibilities with regard to the social and environmental issues of the community
of which it is an integral part.
With this perspective, Tekfen regards supporting social,
cultural and environmental activities as a natural
requirement of its corporate constitution and it has
been developing and managing various initiatives in
these realms for many years. Tekfen has incorporated
the concepts of usefulness, harmony and conservation
into its corporate structure and, in addition to efforts
of the Group Companies, Tekfen Foundation generates
Hasan Uçarsu, the
composer of the
Concerto entitled
“Uninvited Guest”,
and Harpist fiirin
Pancaro¤lu
Topkapı Palace
resources for activities in various fields such as
education, social support, culture, and environmental
protection.
In 2008, the Holding and the Group Companies granted
TL462,069 to various societies, foundations, and
organizations that work for the benefit of society.
> Tekfen Philharmonic Orchestra
Founded in 1992, the Tekfen Philharmonic is one of
Süreyya Opera House in Kadıköy, Istanbul. This was
Tekfen’s most important contributions to Turkey’s
followed by performances at Ankara Bilkent University
cultural life. 2008 was a very busy year for the orchestra
on 11 February and at Trakya University State
with both local and international performances. The
Conservatory on 13 February.
Orchestra gave its first performance abroad, February
6, 2008, in Doha during Turkish President Abdullah
The world premiere of the piece entitled Uninvited
Gül’s visit to Qatari Emir fieyh Hamid Bin Halife El Tani.
Guest: Concerto for Harp and Çeng, composed by Hasan
This was followed by a performance in Barcelona,
Uçarsu, took place in Hagia Eirene, June 24, as part of
October 5, 2008, at the opening ceremony of a
the 36th International Istanbul Music Festival. The piece,
conference of the World Conservation Union-IUCN, the
composed for the çeng, an instrument that had an
world’s most comprehensive environmental
important place in Eastern music from earlier ages, was
organization. The Orchestra performed in Baku, October
performed by the harpist fiirin Pancaro¤lu and the
8, 2008, at an event hosted by Tekfen Vice Chairman
Tekfen Philharmonic Orchestra. This performance, which
Mr. Ali Nihat Gökyi¤it and Turkey’s Ambassador to
brought the çeng to life after 350 years and attracted
Azerbaijan Mr. Hulusi Kılıç.
considerable media attention, was part of a series of
works Tekfen had had composed for early music
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Tekfen Philharmonic Orchestra opened its performances
instruments. The çeng used for the concert was
in Turkey on 10 February 2008 at the newly renovated
reproduced from archived documents.
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> Tekfen Foundation
Tekfen Foundation scholarship
Support for theatre
Every year, the Tekfen Foundation awards scholarships with no repayment to 180 successful high school,
undergraduate and graduate students enrolled at schools in Turkey and in need of financial support. To date, the
Foundation has helped over 1,000 students to graduate. In the 2008-2009 academic year, a record number of
applications, 17,000, was received and from these 180 students were selected on the basis of their academic
performance for scholarships.
In 2008, the Tekfen Foundation sponsored the play Victoria, adapted for the theatre by the famous Canadian
actress Dulcinea Langfelder, who was inspired by a story written by Charles Fariala, a famous playwright who
died in 2004 at the age of 36. The play, performed in January 2009, featured Defne Halman and Engin Hepileri,
and was directed by Turkey’s famous actress Yıldız Kenter, who celebrated the 60th year of her career during
the pre-performance rehearsals.
“Flowers of Anatolia” Documentary
Work on turning the book The Flowers of Anatolia, published in 2007, into a documentary film with support from
the Tekfen Foundation continued in 2008. Completion of the filming for this documentary, prepared by the
photographer and documentary producer Fatih Orbay in six episodes, are expected to be completed by the
beginning of 2010. The documentary will make an important contribution to promoting Turkey’s natural beauty.
“1 Anthem 12 Compositions”
Tekfen Philharmonic Orchestra performed for the 85th anniversary of the Republic of Turkey on 24 October 2008
at the Lütfi Kırdar Convention and Exhibition Center, Istanbul. The Orchestra’s special program consisted of 12
pieces, all rearrangements of submissions in the contest organized during the Turkish War of Independence in
1921 to choose the emerging republic’s national anthem.
The book “Notes of Freedom the Story of National Anthem”, by Mehmet Altun, the creator of this project, was
released simultaneously with the concert. It gives an interesting insight into the heated debates in the National
Assembly before the final selection of the national anthem. The book also relates the recollections of the composers
and is a rich source of critiques and documents, and the stories behind each composition. Work on a CD of the
concert is underway.
”Train of Freedom” Documentary
The Tekfen Foundation is one of the sponsors of a documentary film about the struggles of Behiç Erkin, Turkey’s
Ambassador to Paris, who saved 9,000 Jews from the Holocaust that followed the Nazi invasion of France during
World War II. Produced by Günefl Çelikcan and directed by Cüneyt Karaahmeto¤lu, the film is still in production.
Grant to the Oncology Institute
Television presenter U¤ur Dündar initiated a campaign
through his program, Arena, to upgrade medical
equipment at Istanbul University’s Oncology Institute
and turn the Institute into one of Turkey’s leading cancer
treatment centers. The Tekfen Foundation granted
TL100,000 on behalf of Feyyaz Berker.
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Financial support for Erzurum
Baflçakmak Primary School
Tekfen Foundation responded to a request from the
Principal of Erzurum Baflçakmak Primary School to
install a central heating system at the school for the
health of the school’s 170 students and 13 teachers. The
Foundation’s support ensured that central heating
systems were installed at the school and the nearby
village polyclinic.
> Tekfen Construction
In Damal district of Ardahan, where Tekfen Construction is working on increasing the capacity of the Baku-TbilisiCeyhan Oil Pipeline, the Company provided winter coats and shoes for children in need.
A documentary about the flowers of Anatolia
A warm surprise
The book “Flowers of Anatolia”, published in 2007 with support
from the Tekfen Foundation, is being turned into a six-episode
documentary by photographer and documentary producer
Fatih Orbay. Three years in the making, the documentary is
planned to be completed in 2010.
Children of Damal show their gratitude for their new clothes
and shoes donated by Tekfen before the tough winter set in.
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Illustrated cover of a score for a
“National Anthem” composition
> Tekfen Industry
Tekfen Industry renewed the lighting system at Yaflar Gazio¤lu Primary School in Ünye district of Ordu at the
request of the school’s teachers, who aimed to increase the awareness of the school’s 600 students and their
families about the importance of energy saving. Tekfen Industry equipped the school’s 18 classrooms with energysaving bulbs.
> Toros Tar›m
Supporting students in their preparations for
university
Toros Tarım renovated its Samsun Plant’s old head
office building and turned it into the Toros Tarım
Educational Center. The Center, operated in cooperation
with Community Volunteers Foundation (TOG), will
support students from Samsun’s Tekkeköy village in
their preparations for university entrance examinations.
The Republic’s Notes
Toros Tarım was the main sponsor of the “1 Anthem 12
Compositions” project that, for the first time after many
years, brought together twelve compositions discarded
among the dusty pages of history after they had been
submitted in a contest organized in 1921 to select the
new Turkish Republic’s national anthem.
> Tekfen Holding
Tekfen Holding sponsors the Turkish Industrialists and
Businessmen’s Association’s (TÜS‹AD) promotion and
communication campaign in support of Turkey’s
membership of the European Union. The campaign
focuses on transforming the European public’s
sometimes negative opinion of Turkey’s membership
into a positive one. Twenty-six companies supported
the Foreign Communication Fund that TÜS‹AD
established between 2005 and 2008 to communicate
the mutual benefits of Turkey’s membership of the EU
by establishing close relations with European media.
Tekfen Holding will extend its support to the Fund for
a further five years.
Toros Tarım supports students
With support from the Community Volunteers Foundation and
local young people, Toros Tarım renovated its Samsun Plant’s
old head office building, turning it into the Toros Tarım
Educational Center.
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85
Contracting Group
Agri-Industry Group
Other Activities
Corporate Goveranance Principles Compliance Report
Dividend Policy
Risk Management & Internal Control
Auditor’s Report
> Corporate Governance Principles
Compliance Report
Tekfen Holding, which has a distinguished 52-year history and a strong corporate foundation,
has embraced the Capital Markets Board (CMB) of Turkey's Principles of Corporate Governance.
Within the framework of its management philosophy - which is based on the principles of equality,
transparency, accountability, and responsibility - the Holding, through embracing the Principles
of Corporate Governance, aims to maximize its value by protecting the interests of all its
shareholders and stakeholders.
March 20, 2009
1. Corporate Governance Principles Compliance Statement
Tekfen Holding understands that good corporate governance brings great benefits to the Company. An
important indicator of the emphasis the Company places on Corporate Governance Principles is establishment
of an Investor Relations and Corporate Governance Department at the end of 2007, as outlined in the
following sections. The Holding has also established a Corporate Governance Committee to evaluate its
performance against the Principles and to ensure the highest level of compliance.
Regarding the disclosures that appear in the rest of this report, the Company is fully compliant with the
CMB's Corporate Governance Principles with the following exceptions:
• Since the minority share holders who hold a 5% share in the Company, in accordance with the Turkish
Law of Commerce and the Capital Markets Law, hold the right to demand for a legal auditor to be
arranged, there is no provision in the Company's articles of association for the appointment of a special
auditor.
• The Articles of Association contain no provision for the representation of minority shares in management
or the utilization of the method of cumulative voting.
• No structure has been established to involve stakeholders in the Board of Directors.
• There is no representative appointed to manage relations with the Company employees. The Company's
relations with its employees are actively managed through the human resources and personnel
departments of the Holding's companies.
• To allow board members to take positions in other Group companies, it was decided at the ordinary
Annual General Meeting that its members would not be subject to the prohibitions and limitations
outlined in articles 334 and 335 of the Turkish Law of Commerce. In this regard, board members are
in no way restricted from taking positions outside of the Company for the period covered by the General
Meeting decision.
• A performance-based award system has not been adopted for the determination of remuneration of
board members. However, according to the Company's Articles of Association, in compliance with
regulations and the Articles of Association, dividends not exceeding 2% of the profit after deduction
of legal reserves and distributed profits may be distributed to the board members in accordance with
the amounts and provisions set by the Board.
All work and appraisals necessary for full compliance with the CMB's Principles of Corporate Governance
is currently underway. The Tekfen Board of Directors believes that the present level of non-compliance
does not constitute a basis for significant conflicts of interest.
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> Section I - Shareholders
2. Shareholder Relations Department
2.1 Investor Relations and Corporate Governance Department
In order to ensure that the practice of shareholder rights complies with CMB Corporate Governance Principles
and all relevant legislation and to provide communication between existing and potential shareholders and the
Board of Directors which is active concerning the exercise of shareholders rights, an Investor Relations and
Corporate Governance Department was formed prior to the Company's initial public offering in November 2007.
This department reports to The Corporate Governance Committee and to Dr. Reha Yolalan, Vice-President in
charge of Corporate Affairs.
The Investor Relations and Corporate Governance Department can be contacted as follows:
Investor Relations and Corporate Governance Coordinator: Ça¤lar Gülveren, CFA
Tel
: +90 (212) 359 34 20
Fax
: +90 (212) 257 00 81
E-mail : cgulveren@tekfen.com.tr or investor@tekfen.com.tr
The Investor Relations Department can also be reached via the contact form on the Company's official
website: www.tekfen.com.tr.
Investor Relations and Corporate Governance Coordinator Ça¤lar Gülveren holds all licenses issued by CMB
is responsible for the Company's compliance with all obligations arising from capital market regulations
and coordinating corporate governance applications.
• To supervise and monitor all matters related to public disclosures, including preparing and sending
announcements of material events as required to the Istanbul Stock Exchange;
• To obtain financial and operational data required by analysts for research reports to be prepared by analysts
provided this data has been previously disclosed to the public and does not contain any trade secrets, to
ensure the speedy preparation of research reports from complete, accurate and current data and to examine
and monitor analysts reports prepared in this context;
• To answer by telephone or electronic mail the questions and requests for information of existing and potential
local and foreign investors to the degree that legal regulations allow;
• To organize teleconferences and meetings with the participation of Company senior managers for investors
and analysts following announcements of quarterly Financial Reports to the public;
• To prepare detailed quarterly presentations regarding the activities and financial condition of the Company
with the support of the relevant departments;
• Within the framework of regulations related to public announcements of material events, to prepare lists of
those with insider information and to keep this list up to date;
• To keep up with the information contained in the Registry System held by the Central Registration Agency.
2.3 Activities of the Investor Relations and Coporate Governance
Department in 2008
A large percentage (34.5%) of the publicly traded portion of the Company's capital is owned by foreign
institutional investors. Consequently, many existing and prospective foreign institutional investors and
2.2 Investor Relations and Corporate Governance Department Responsibilities
brokerage companies' analysts who render services to such investors request visits to the Company. The
department strives to meet these requests by facilitating the active participation of the Company's senior
The main regulatory responsibilities of the Investor Relations Department are as follows:
• To keep shareholder records in a sound, current, and secure manner and to respond to written shareholder
requests to the fullest extent possible while not divulging confidential or trade information that should
not be disclosed to the public;
and held 17 teleconferences.
In addition, it participated in the conference organized by Deutsche Bank in Göçek and held talks with
• To ensure that the General Assembly is held in accordance with the current legislation, the articles of
association, and other internal Company regulations;
representatives of 11 foreing institutional investors.
• To prepare, in cooperation with other Company departments, the General Assembly documents for
shareholders;
Two “Investor Meetings” were organized with the participation of all interested investors and analysts in
• To keep records of voting and to send the relevant reports to any shareholders who may request them;
operational results for 2007 and for the first six months of 2008 following the public disclosure of these
• To supervise and monitor all matters related to informing the public, including issues such as legislation
and the disclosure policy of the Company;
the conference hall of Tekfen Tower that belongs to the Company to evaluate and discuss the financial and
results. Senior managers of the Company attended these meetings. The date and time of these meetings
was advertised on the Company website approximately three weeks in advance.
In addition, the Investor Relations Department carries out the following activities:
Additionally, “Investor Presentations” prepared in this regard are posted on the Company website and four
• To supervise and monitor the implantation of obligations arising from capital market regulations;
teleconferences with all interested investors and analysts were held regarding the quarterly activities and
• To monitor and update on a regular basis the contents “Investor Relations” section of the
website;
• To respond to requests for information regarding the Holding and its Group companies from investors
and analysts, to conduct one-on-one talks when necessary or to attend conferences and meeting organized
on this subject;
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management. In this context, in 2008, the Department conducted face to face interviews with 89 investors,
financial results of our Company.
During 2008, in the period following the public offering, the Investor Relations Department replied to
approximately 200 e-mails received from investors and analysts and 300 telephone requests for information.
91
3. The Use of Shareholders' Rights to Obtain Information
3.1 Right to Obtain Information
The shares that represent the issued capital of our Company are all registered bearer shares. The Invitation
to the Ordinary General Assembly is issued in compliance with all regulations and the Company's Articles
of Association within the specified period of time, and together with a sample proxy form and the agenda,
is published in the Turkish Commercial Gazette and one of Turkey's leading national newspapers.
All requests for information from shareholders that reach the Investor Relations Departments are answered
At the General Assembly Meeting, out of a total number of shares of 296,775,000 representing TL296,775,000
without prejudice in a fair and equal way provided that this information has been previously disclosed to
in shareholders' equity, 195,467,942 shares (65.86% participation ratio) were in attendance. Of these
the public and does not contain any trade secrets.
34.29% (67,028,415 shares) were represented in person while 65.71% (128,439,527 shares) were represented
by proxy. The meeting was not attended by the press or other stakeholders other than shareholders.
In 2008, the Investor Relations Department answers 200 e-mail enquiries and 300 telephone calls from
investors and analysts related to quarterly financial results and developments in the sectors in which the
According to Article 24 of our Company's Articles of Association, voting at General Assembly Meetings is
Company's subsidiaries are active.
done by raising hands, with proxies showing the appropriate documents as per the Capital Market Board
directives. However, shareholders owning 10% of the capital represented at the meeting may request secret
In addition, investors can obtain accurate and current information and data from the “Investor Relations”
voting.
section of the Company's website (www.tekfen.com.tr) which appears in both English and Turkish.
At the General Assembly Meeting, there is the opportunity to question the partners. Questions related to
3.2 Right to Request a Special Auditor
matters outside the agenda items are answered by our Company's managers. At the General Assembly
Meeting, no proposals were made by shareholders.
Since the minority shareholders who hold a 5% share in the Company, in accordance with the Turkish Law
of Commerce and the Capital Markets Law, have the right to request the appointment of a statutory auditor,
The agenda of the General Assembly Meeting, together with the register of attendance and meeting notes
there is no provision in the Company's articles of association for the appointment of a special auditor.
may be obtained from Company headquarters or from our website (www.tekfen.com.tr).
No request to make such an appointment was received during this reporting period.
4. Information about the General Assembly
4.1 Annual Ordinary General Assembly
Our financial reports are prepared on a consolidated basis according to International Financial Reporting
Standards since our Company is a publicly traded holding subject to the Capital Market Law.
Consequently, annual financial reports prepared on a consolidated basis according to the Capital Market
Law and the associated independent auditors report are sent within 14 weeks after the end of the accounting
period to CMB and ISE. Taking into consideration the legal period allowed for the partners to examine the
General Assembly invitation and documents related to this invitation, our Company's Annual Ordinary
General Assembly Meeting takes place not within the three months following the accounting period in
compliance with Article 21 of the Turkish Commercial Law and Articles of Association, but in the shortest
possible period of time in compliance with the Capital Market Law.
Accordingly, our Company's Ordinary General Assembly was held on May 8, 2008 at 14:00 in the Conference
Hall of Tekfen Tower located at Büyükdere Cad. No. 209, 4. Levent-‹stanbul.
The date, place, agenda, dividend distribution table and the dividend policy approved by the Board of
Directors was announced to the public on April 4, 2008. At the same time, the meeting's agenda, annual
report, financial tables and reports, dividend distribution recommendations and proxy form were made
available to shareholders on the same date on our Company's website (www.tekfen.com.tr). In addition,
explanatory information regarding the items on the General Assembly Meeting agenda were published on
4.2 Special Decisions
In Article Three, entitled Purpose and Subject, of the Company's Articles of Association, the business and
operations that may be undertaken are outlined. In accordance with this article, the Company can enter
other necessary business areas only with the General Assembly's approval on the proposal of the Board
of Directors. While fulfilling the provisions of Article 3, the Company will also fulfill the public disclosure
requirements of the Capital Markets Law and other relevant legislation.
The latest version of the articles of association is posted on the Company's official website.
5. Voting and Minority Rights
5.1 Voting Rights
Prior to our Company's IPO, privileged rights were removed by an amendment of the articles of association
in compliance with the CMB's Corporate Governance Principles. Currently there are no privileged rights.
As a result, every share carries a single vote; this point is clearly stated in our Company's Articles of
Association.
In line with the CMB's regulations, shareholders may use their voting rights directly or via a duly authorized
proxy.
The Company's capital contains no cross ownership.
our website as “General Assembly Informative Documents.”
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93
5.2 Minority Rights
The Company's Articles of Association contain no provision for the representation of minority shareholders
in the management of the Company or about utilization of the method of cumulative voting.
6. Dividend Policy and Deadline for Dividend Distribution
Company dividend policy is determined according to the Turkish Law of Commerce, Capital Market Law;
Capital Market Board Regulations and Directives, Tax Laws, other relevant legislation, and the Company's
Articles of Association. Our Company's “Dividend Policy” which was approved by the Board of Directors
on April 4, 2008 was presented to our shareholders at the general Assembly Meeting on May 8, 2008. Our
Company's Dividend Policy is as follows:
“Company dividend policy is determined according to the Turkish Law of Commerce, Capital Market Law;
Capital Market Board Regulations and Directives, Tax Laws, other relevant legislation, and the Company's
Articles of Association.
1- Article 28 of the Holding's Articles of Association reads as follows:
Profit will be distributed as outlined below from the net profit stated in the Holding's balance sheet and
reached after deducting the general expenditure of the Holding, various amortization costs, and mandatory
taxes. The relevant provisions of the Capital Markets Law and notifications of the Capital Markets Board
will be followed during the process of profit distribution.
First Level Legal Reserves:
The decision as to how and when the annual profit will be distributed to the shareholders will be decided
by the General Assembly upon the recommendation of the Board and in accordance with the provisions
of the Turkish Tax Laws and the Capital Markets Law. Profit distributed according to the provisions of
the Articles of Association cannot be recovered.
2- The place and date of dividend payments are set in accordance with Capital Market Board Regulations.
3- Within the framework of Article 29 of the Holding's Articles of Association, if the Company General
Assembly so authorizes the Board, interim dividend payments may be made (for that specific year only).
The Capital Markets Law is taken into account during this process.”
Additionally, in compliance with Capital Market regulations, if the financial statements prepared according
to the Turkish Commercial Code and Tax Laws does not show a net distributable profit for the period,
dividends should not be paid, even if the financial statements prepared according to IFRS and Capital Market
regulations do show a “net distributable profit for the period.”
Taking into consideration the legal period of time following the completion of the General Assemblies of
our subsidiaries and partnerships included in the consolidated financial statements, dividend payment
recommendations are announced to the public in accordance with relevant legislation upon the resolution
of the Company's Board of Directors.
The basic principles of profit distribution are announced to investors on the Company's official website
(www.tekfen.com.tr).
a) Legal reserves at a rate of 5% will be allocated.
In this regard, the distribution of profit of the 2007 accounting period was completed by the end of May
2008 within the terms set by the Capital Markets Law and in accordance with the Articles of Association.
First Dividend:
7. Transfer of Shares
b) To the remaining amount, grants delivered during the year, if any, are added, from this total at least
30% first dividends are allocated provided the rate or the amount is not below those set by the Capital
Markets Law.
The Company's Articles of Association place no limitations on the transfer of shares (cf. Article 6) within
the limits set by the Capital Markets Law.
c) A maximum of 3% of the remaining amount will be allocated to the Tekfen Foundation for Education,
Health, Culture, Art and Preservation of Natural Resources
d) After the above mentioned deductions, the General Assembly has the right to decide on an allocation
of dividends that does not exceed 2% of the remaining profit to members of the Board (in line with
the limits and principles set by the Board)
Second Dividend:
e) The General Assembly is entitled to distribute the amount remaining (after the deduction of the items
outlined in a, b, c, and d, above) from the net profit as second dividends or allocate it as extraordinary
legal reserves.
Second Level Legal Reserves:
f) Subject 3 of paragraph 2 of Article 466 of the Turkish Law of Commerce and the provisions of the
paragraph of the same article do not apply to the Holding.
g) Until the reserves required to be set aside as required by law have been so set aside and until the
first dividend is paid to shareholders in cash and/or shares, no decision may be made to set aside
profits for other reserves to transfer profits to the following year, or to distribute dividends to the
founders or dividend right certificate holders, board members or Company officials, workers or
foundations or other similar real/legal entities established for specific purposes.
h) Dividends shall be distributed to all the existing shares at the end of the accounting period without
taking into account the date of issue or acquisition of such shares.
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95
> Section II Public Disclosure and Transparency
10. Official Company Website and Its Content
8. Company Information Disclosure Policy
The official website of the Company is www.tekfen.com.tr.
The Company's Board of Directors developed its disclosure policy in accordance with the CMB's Corporate
The website includes all the information outlined in Article 1.11.5 of Section II of the CMB's Corporate
Governance Principles, other than Board meeting minutes that might affect the value of investment
instruments.
Governance Principles and this policy was first publicly announced in the Company's IPO prospectus. The
disclosure policy holds a permanent place on the Company's official website.
According to the Company's disclosure policy:
Minutes of Board decisions that might affect the values of investment instruments are not presented via
the website in the format of a separate report, as they are disclosed via disclosure of material events.
• In accordance with the CMB's Corporate Governance Principles, the Holding has adopted the concepts
of transparency, equity, integrity, objectivity, consistency, comprehensibility, and punctuality with regard
to disclosing financial and non-financial information about the Holding (excluding commercial secrets
11. Disclosure of Ultimate Controlling Shareholder(s)
and confidential information) to its shareholders and other stakeholders. All announcements and
The ownership structure of the Company is as follows:
explanations made under the jurisdiction of this policy will be timely, complete, accurate, comprehensible,
and analyzable, and should be made at minimum cost.
• In following an active and transparent disclosure policy, the Holding acts in accordance with Capital
SHARESOLDER’S NAME
16,87
7.223.744
2,43
Berker Family - Total
57.290.407
19,30
Necati Akça¤l›lar
50.066.663
16,87
7.223.744
2,43
57.290.407
19,30
Ali Nihat Gökyi¤it
25.883.731
8,72
A.Nihat Gökyi¤it Yat›r›m Holding
25.758.370
8,68
5.648.306
1,90
57.290.407
19,30
3.848.867
1,30
Necdet Bozdo¤an
3.315.207
1,12
Naim Özkazanç
3.379.427
1,14
Feyyaz Berker
framework of the CMB's Corporate Governance Principles.
Alev Berker
writing to all shareholder, stakeholder, financial analysts', and media inquiries and requests for information
and printed material.
Cansevil Akça¤l›lar
Akça¤l›lar Family - Total
Meetings presenting the Company's annual and semi annual operational results with the participation of
senior managers are planned. After the disclosure of the annual and semi annual financial statements, four
conference calls involving senior managers will be organized for investors and the analysts.
A.N.Gökyi¤it E¤.Sa¤l.Kült.San.
Ça¤lar Gülveren, head of the Company's Investor Relations and Corporate Governance Department, is
responsible for supervising and applying the disclosure policy.
9. Disclosure of Material Events
During 2008, as required by CMB regulations, 42 disclosure statements were made. Three of these were
SHARE RATIO (%)
50.066.663
Markets legislation and ISE regulations and implements an effective communications policy within the
• For this purpose, the Holding's Investor Relations and Corporate Governance Department responds in
NUMBER OF SHARES
Gökyi¤it Family - Total
Günay Ünlüsoy
additional disclosures made at the request of ISE and one item was made in response to the request of
Elçin Erktin
846.866
0,29
ISE.
Mehmet Erktin
1.234.173
0,42
Emine Erktin
1.234.173
0,42
3.315.212
1,13
6.424.347
2,16
2.233.919
0,75
8.658.266
2,91
These disclosures were also sent to the Public Information Platform in electronic form.
Erktin Family - Total
Our company is not listed on foreign securities exchanges and therefore is not required to issue any
Erhan Öner
disclosures of material events other than those required by the Capital Markets Board and Istanbul Stock
Öner Yat›r›m ‹ç ve D›fl Tic.A.fi.
Exchange.
Öner - Total
During 2008, no sanctions have been imposed by the Capital Markets Board to the Company for not making
Free Float
102.386.800
34,50
material events disclosures on time.
GROSS TOTAL
296.775.000
100,00
The Investor Relations Departments is responsible for disclosures of material events in our Company and
carries out all processes related to this topic.
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97
12. Disclosure of Individuals Who Have Access to Insider Information
The list of individuals who have access to insider information made public for the first time in our Corporate
Governance Principles Compliance Report for 2007.
> Section III - Stakeholders
13. Informing Stakeholders
There are numerous undisclosed transactions and events which have potential to affect the Company
The Holding informs stakeholders of important Company developments via internal correspondence,
share price. Thus, many Tekfen employees and managers who participate in the decision taking and
meetings, the intranet and internet, press meetings, briefings, and other written and visual media.
reporting processes and as well as the personnel of companies providing services to the Holding have
access to inside information. In this regard, the Company management takes all precautions to prevent
Stakeholders, investors, and analysts can access financial reports, annual reports and other presentations
misuse of such information.
and information regarding the Holding via the official Company website.
The list of senior managers and other employees who, as a result of their positions, have the ability to
Because the Company is a holding company, it is not directly involved in commercial activities. However,
access to the inside information that might affect the share price of the Company is given below:
depending on the business area of the Holding's companies, stakeholders (such as customers who have
affiliation with the Company, franchisees, and suppliers) are informed about issues of interest to them,
via franchise meetings or training sessions.
98
NAME SURNAME
POSITION
Feyyaz Berker
Chairman of the Board
Deputy Chairman of the Board
Deputy Chairman of the Board
Murat Gigin
Board Member
Ifl›k Zeynep Defne Akça¤l›lar
Board Member
Dr. M. Ercan Kumcu
Board Member
Dr. Rüfldü Saraco¤lu
Hasan S. Subafl›
fiefika Pekin
Cengiz Yaman
Auditor
15. Human Resources Policy
Erhan Öner
Group Companies President
The Human Resources Policy of Tekfen Holding and group companies is formulated on the following
Dr. Ahmet ‹pekçi
Vice-president Investment & Service Companies Group
principles:
Ümit Özdemir
Vice-president-Contracting Group
Esin Mete
Vice-president-Agri-industry Group
Mehmet Erktin
Vice-president-Real Estate Development Group, Auditor
Dr. Osman Reha Yolalan
Vice-president-Corporate Affairs
Ali fievket Tursan
Director of Finance & Administrative Affairs
Burçin Kuzgun
Finance Coordinator
Dr. Ahmet Burak Emel
Strategic Planning and Reporting Coordinator
Dorottya Maria Kiss Kalafat
Corporate Communications Coordinator
Ça¤lar Gülveren
Investor Relations & Corporate Governance Coordinator
Hakan Dündar
Audit Manager
Toca Tonya
Chief Accountant
Arzu Dodurga
Finance Manager
Atila Purut
Chief Legal Consultant / Attorney
fiule Özkaner
Legal Consultant / Attorney
Ramazan ‹brahim Eker
Consultant
Employees are informed via various events, periodical meetings with managers, and the intranet. Some
important announcements and messages are communicated to all employees via email. Tekfen Holding
places great emphasis on dialogue between the employees and managers and facilitates such an information
flow.
14. Participation of Shareholders in the Management
No structure for the involvement of stakeholders in the Company's management has been established.
However, managers evaluate requests and recommendations emanating from meetings held with the
employees and other stakeholders and thus, relevant policies and applications are developed.
• Continuous customer and employee satisfaction is a guarantee of the present and future success of a
company.
• To minimize any possibility of damage to employees, third parties, property, or the environment, Tekfen
Holding arranges all its operations according to the following work principles, presented in order:
- Abide by all relevant laws, regulations and directives regarding Health, Safety, the Environment, and
Quality for which all managers and employees are responsible,
- Keep strict adherence to standards and customers' specifications so as to eliminate or minimize
customer complaints, and repeat and maintenance charges,
- Increase the effectiveness of management systems and continuously monitor and improve applications.
99
Tekfen Holding is not only concerned with managing its own human resources policy effectively, but in
investing in Turkey's future. In this regard, social, cultural, and environmental protection activities, as well
as the Company's scholarship program for successful students (which we have undertaken since the
Company's foundation) are among the tasks that are covered by the policy and that carry Turkey to a
brighter future. This management concept is based on a belief in people's unlimited potential to succeed
and an understanding that a brighter future can only be attained through technology and science. Therefore,
investing in human intelligence and skills is essential. The fact that no complaint of discrimination came
from the employees in 2008 indicates the objective attitude of Tekfen Group towards its employees.
Its employees are the Company's most valuable assets and their quality is the most important guarantee
of the quality of out services and products. The Company shows the same diligence for employee development
programs as it does for employee selection. Employee development programs develop the employees'
ability to act in a coordinated fashion, to develop recommendations, and to make rational decisions. The
Human Resources and Personnel Units take active roles in managing relations with employees.
16. Information on Relations with the Clients and Suppliers
Because the Company is a holding company, it is not directly involved in commercial activities. However,
the Holding places great emphasis on relations with and the satisfaction of stakeholders, such as its clients,
franchisees, and suppliers.
The Agri-industry Group takes great care to reply to all emails regardless of whether or not they come
from its customers. All complaints, recommendations, or technical inquiries from customers via email or
17. Social Responsibility
As a responsible member of society, the social, cultural, and environmental activities of Tekfen are an
integral part of the Holding's corporate culture.
In 1999, Tekfen established the Tekfen Foundation for Education, Health, Culture, Art, and Preservation
of Natural Resources, which is known as the Tekfen Foundation, with the aim of increasing Tekfen's
contribution to social and cultural activities and to establish a better future in harmony with the natural
environment.
Tekfen Foundation
The Foundation;
• Provides scholarships every year to 180 successful high school, undergraduate, and graduate school
students in need of financial support. To date, these scholarships have helped more than 1000 students
to graduate.
• Supports a large number of NGOs, including TEMA Foundation (The Turkish Foundation for Combating
Soil Erosion, for Reforestation and the Protection of Natural Habitats), the Family Planning Foundation
of Turkey, the Istanbul Foundation for Culture and the Arts, in addition to developing and maintaining
the Tekfen Philharmonic Orchestra, which was established in 1992.
• Published Flowers of Anatolia by Fatih Orbay, with the aim of preserving Turkey's natural, historical,
and cultural heritage for future generations in addition to supporting various projects and publications
for similar aims.
• Provides social support for various needs.
telephone are replied to as soon as possible and relevant solutions are provided. Periodical dealer meetings
involving senior level managers are organized to provide information to dealers and to manage dealer
relations in the best possible way. There is a mutual sharing of information during these meetings. Solutions
are created for the problems of dealers. Questions that go unanswered at these meetings are evaluated
Tekfen's contribution to society is not limited to the activities of the Foundation. Tekfen Group Companies
continue to work in collaboration with local authorities and the public with regard to issues arising in those
regions and sectors where the companies operate.
later and information is provided to the dealers concerned. In addition to these meetings, senior level
managers and the sales teams from regional offices visit dealers throughout the year to nurture warm
Tekfen Contracting Group
relations. On average 30 training sessions a year are organized to increase the awareness level and
Tekfen Construction is a reliable partner for international contracting companies, with the emphasis it
places on occupational health and safety and the environment, its know-how, experience, project delivery
punctuality, business ethics, and EU-compatible standards.
knowledge of the end users. During these meetings, Company training consultants with academic backgrounds
provide information on various agricultural practices. In addition to these meetings and training sessions,
the official website includes a comprehensive section on recommendations about fertilization practices
for the farmers. The Agri-industry Group has many years of reliable relations with foreign suppliers. There
is a continuous information flow with suppliers with regard to current and future market conditions and
expectations.
To maximize customer satisfaction, the Contracting Group places great emphasis on product, human, and
environmental health. Product quality is guaranteed by the ISO 9001 Quality Management System, the
safety of the employees, property, and third parties is guaranteed by OHSAS 18001 Occupational Health
and Safety Management System, and environmental protection is guaranteed and continuously improved
by the ISO 14001 Environment Management System. Suppliers are also asked to operate in accordance
with these management systems and to improve themselves on a continuous basis.
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Tekfen Construction's business concept has been established and developed over many years in accordance
with the following principles:
• To minimize any possible harm to employees, third parties, property and the environment during
general operations;
• To act with the goal of benefiting society and the environment during all its operations, and to set high
standards with regard to environmental awareness;
• To strive to avoid breaches of environmental rules that might endanger the health and rights of clients
or inhabitants of the areas where the Company operates;
• To act in a way that minimizes the environmental impact of its operations and to take precautions to
eliminate environmental pollution;
• To respect the traditions and cultures of the countries it operates in and to avoid practices that might
adversely affect the social environment;
• To take all precautions necessary to preserve archeological, historical and cultural artifacts, as well
as the natural environment during the course of operations;
• To minimize the consumption of natural resources;
• To determine all environmental issues and their effects, as well as risk levels with regard to all business
practices and projects, and to minimize the determined risk levels with corrective and preventive action.
• Within the framework of its social responsibility obligations, to support education, activities that increase
environmental and social awareness, as well as cultural and social responsibility activities.
101
The core of Tekfen Construction's quality concept is the HSE (Health, Security and Environment) system.
Additionally, Toros Tar›m carries out various educational events for children living in the environs of Ceyhan
With this system, Tekfen undertakes not to harm people, to protect the environment, to use natural
and Samsun. Toros Tar›m initiated the establishment of Toros Primary School and Toros High School, near
resources efficiently, and to develop and maintain the HSE system. With HSE, Tekfen's goal is to win the
the Ceyhan production facility, and continues to meet all the needs of these schools. The training center
trust of its clients, shareholders, and the general public and to contribute to sustainable development.
established in the Sumsun Production Plant offers free university preparation for high school students
living in the area in cooperation with TOG (Foundation for Community Volunteers).
Tekfen Construction gives great importance to on-the-job training. In 2008, out of a total of 55,523,483
man-hours, 660,875 man-hours were used for training. In other words, 1.19% of working time was spent
Toros Tar›m continues to support scientific and cultural activities related to the sector. It sponsors the
on training in 2008.
“Grain Symposium” organized by the Bahri Da¤dafl Research Institute which is well-known for its contribution
to agriculture in Turkey and the “Agricultural Stars” contest held by the ‹zmir Mercantile Exchange for
Tekfen Construction continued to achieve international success. In 2008, it won the International Pipeline
creative and innovative farmers.
and Offshore Contractors Association's (IPLOCA) “IPLOCA Health and Safety Award” for 2007.
Toros Tar›m has two Toros Houses, one in Antalya Kumluca and the other in Mersin Erdemli, where
Tekfen Construction was recognized by its clients for the absence of accident-related lost time incidents
producers are offered technical know-how and support as well as practical information about monitoring
on the following projects;
seed performance. Agricultural engineers attached to the Toros Houses deal with farmers' problems and
provide solutions.
• ACG Terminal Project (Azerbaijan) 32 million accident free man-hours award;
• Kashagan Main Work Project (Kazahkistan) 27 million accident free man-hours award;
Toros Tar›m has developed its quality, environmental, and occupational safety performance in line with
• Samir Rafinery Modernization Project (Morocco) 17 million accident free man-hours award;
international standards and obtained ISO 9001, ISO 14001 and OHSAS 18001 certification, demonstrating
• UOU and UO1 Projects (Saudi Arabia) 10 million accident free man-hours award;
the company's adherence to occupational safety, environmental, and quality standards in all its operations.
• Khurais Project (Saudi Arabia) 5.5 million accident free man-hours award;
• Kashagan Industrial Buildings Project (Kazahkstan) 2 million accident free man-hours award;
Finally, Toros Tar›m sponsored the “1 Anthem, 12 Compositions” project carried out by Tekfen Foundation
• Maritza Power Plant Project (Bulgaria) 2 million accident free man-hours award;
to celebrate the 85th anniversary of the Republic of Turkey and contributed material and moral support
• Harweel Pipeline Project (Jordan) 1.7 million accident free man-hours award;
to the performance by the Tekfen Philharmonic Orchestra of 12 of the compositions which vied in the
• Ma’aden Phosphoric Acid Plant Project (Saudi Arabia) 412,000 accident free man-hours award.
National Anthem competition held in 1921.
In order to standardize applications related to the design, assembly and disassembly of scaffolding on our
Tekfen Real Estate Development Group
projects within work safety norms “Scaffolding Safety Handbook” was published in Turkish and English
Tekfen Real Estate Development is a founding member of the Turkish Green Building Council, which was
and distributed to all projects and worksites. A book entitled “Introduction to Ark Welding” containing
established to construct energy-efficient buildings and inform the sector about the need for energy
basic information and various test procedures regarding ark welding which is widely used in our operations
conservation to combat global warming.
was also prepared in Turkish and English and distributed to all projects and worksites.
With its trained technical and administrative personnel, Tekfen Contracting Group reinforces its reputation
in the national and international contracting sector. The Group has ISO 9001:2000 Quality Management,
OHSAS 18001 Occupational Safety and Health, and ISO 14001 Environment Management System Certificates.
Group employees and the management systems are audited under these certifications by independent
organizations on a continuous basis and improvement programs are implemented.
Toros Tar›m
In addition to its main business activity, Toros Tar›m aims to improve the income and the living standards
of farmers and agricultural sector employees and to contribute to the development of the Turkish agricultural
sector.
To help solve farmers' problems, Toros Tar›m has over several years organized Field Day activities and
regular training seminars for farmers focused on improving agricultural techniques, increasing yields, and
ensuring correct fertilization.
Toros Tar›m also provides farmers with free soil analysis. With the help of this service, farmers can
understand the nature of their soils' and ascertain fertilizers they need to maximize yields and crop health.
102
103
> Section IV - Board of Directors
18. Structure of the Board and its Independent Members
20. The Vision, Mission, and Strategic Goals of the Company
20.1 Our Mission and Vision
The Company's vision and mission statement are published on the official website.
The Company's administration is undertaken by a Board of Directors of nine members chosen by the
General Assembly. The current board members and their positions in the Company are as follows:
NAME SURNAME
POSITION
Feyyaz Berker
President and Managing Director
Deputy Chairman and Managing Director
Deputy Chairman and Managing Director
Ifl›k Zeynep Defne Akça¤l›lar
Member
Murat Gigin
Member
Dr. M. Ercan Kumcu
Member
Dr. Rüfldü Saraco¤lu
Independent Member
Hasan S. Subafl›
Independent Member
fiefika Pekin
Independent Member
Due to the death of Ayfle Leyla Akça¤l›lar on September 13, 2008, who had been appointed as a Member
of the Board of Directors on May 8, 2008 at the Ordinary General Assembly Meeting , Ifl›k Zeynep Defne
Akça¤l›lar was appointed to take her place pending approval at the first General Assembly.
In 2008, three members had executive roles in the Company as managing directors and the remaining
members had non-executive roles.
Tekfen Group's vision is;
To be one of the leading forces of Turkey's growth in our areas of operation, namely, Contracting, AgriIndustry, Real-Estate Development and Finance.
Tekfen Group's mission is;
While remaining committed to our traditional values, we aim to focus on our core operations, deliver the highest
quality products and services, become the leader of our segments, and at the same time, generate value for
all of our stakeholders, namely, our customers, suppliers, employees, shareholders and society.
20.2 Our Values
Tekfen Holding A.fi. operates in accordance with the corporate values it has developed over its 52 years
and which have been fully adopted by its employees. These corporate values, which are also stated on the
Company's official website, are as follows:
• To do what you know best in the best possible way
• To benefit the country
• To stand by the employees
• To talk less and to do more
• To act ethically and fulfill commitments regardless of the circumstances
• To be in harmony with others and not to disillusion anyone to attain your goals
• To prevent greed overtaking wisdom
• To believe in the power of technology and science (as is reflected in the Company's name)
• To conserve nature and protect the Company's employees.
20.3 Strategic Objectives
Among the board members, Rüfldü Saraco¤lu, Hasan S. Subafl› and fiefika Pekin are independent members
in line with the CMB's Corporate Governance Principles and each has made a written statement about his
or her independence.
Up to the end of the period covered by this report, no situation arose that undermined the independent
status of these members.
To allow board members take positions in other Group companies, it was decided in the ordinary Annual
General Meeting that the board members would not be subject to the prohibitions and limitations outlined
in articles 334 and 335 of the Turkish Law of Commerce. In this regard, board members are not limited
in any way from taking positions outside the Company for the period covered by the General Assembly's
decision.
19. Qualifications of Board Members
As a matter of principle, all board members, independent or otherwise, are chosen from among candidates
who have relevant expertise and experience, and a high level of skill and knowledge in their respective
areas. In this regard, the qualifications required of board members match those outlined in Articles 3.1.1,
3.1.2, and 3.1.5 of Section IV of the CMB's Corporate Governance Principles. However, the Company's articles
of association contain no provision about the minimum qualifications for board members.
There has been no need up to now to organize a training and orientation program for board members.
However, if the need should arise, a training and orientation program for the new board members will be
organized in accordance with the principles set out by the Company's Corporate Governance Committee.
104
The Board of Directors holds quarterly evaluation meetings with senior representatives of each business
group where the Board monitors the financial and operational performance of the Group companies against
their budgetary and other objectives. The meetings also develop recommendations with regard to the
Company's core business areas and strategy.
21. Risk Management and Internal Control Mechanism
The Board of Directors is responsible for minimizing imminent and potential risks by establishing risk
management and internal control mechanisms.
As a holding company, the Company's financial statements are consolidated and the financial results and
performance of all the Holding's companies are controlled and followed up at the holding level, as the relevant
legislation requires. In line with the provision of the Capital Markets Law and other relevant legislation, internal
auditing is the responsibility of the Audit Committee and is undertaken by the Financial and Administrative
Tasks Directorate of the Holding, Audit Department and Finance Directorate. Risk management and reporting
tasks related to the Holding's companies are followed up at the vice-presidential level.
The financial results required for public disclosure are presented to the Board after they have gained the
approval of the Audit Committee.
Reports of the companies' operational results, the degree to which they have attained their goals, and the
risks encountered, are assessed at the periodical Board meetings with the participation of the relevant group
vice-presidents.
105
22. Authority and Responsibilities of the Members of the Board and Executives
25. Ethical Rules
According to the Company's Articles of Association, the Board of Directors executes the tasks given to it as a
result of the Turkish Law of Commerce, the articles of association, and the decisions of the Company's General
Assembly. In line with Article 319 of the Turkish Law of Commerce, the Board can delegate some or all of its
authority and responsibilities, including its authority to represent the Company, to a committee made up of its
own members or to managing director(s) or manager(s).
Tekfen Holding gives great importance to ethical rules and commercial conventions and takes care to
ensure that all employees follow these rules in their relations with stakeholders. These rules, which are
incumbent on all Company employees, were printed and presented as part of the requirements of the
CMB's Corporate Governance Principles and they were publicly announced in the Company prospectus
prepared for the initial public offering, after the approval of the Annual General Meeting.
During the first Board meeting held after the ordinary Annual General Meeting, the authority and responsibilities
of the board members are determined and announced and a circular documenting the authority and responsibilities
of the board members is prepared.
Tekfen Holding A.fi.'s ethical rules are published on the Company's official website.
In this regard, the board members Ali Nihat Gökyi¤it, Feyyaz Berker, and Cansevil Akça¤l›lar were appointed
as managing directors at the 2008 Board meeting.
The Board determines and announces the basic management principles of the Company every year.
23. Principles of Activity of the Board of Directors
Issues related to the Board's meeting frequency and quorum are defined in the Company's Articles of Association.
The Board of Directors meets at least once a month or when the need arises. In 2008, Board of Directors made
a total of 32 resolutions at 22 meetings.
The quorum required for a Board meeting to commence is half the membership plus one and all decisions
require a majority. Board decisions may also be made by obtaining the written decision of each member provided
that none of the members demands a discussion of the subject in hand.
The secretariat of the Board of Directors determines the agendas by the taking the proposals of the President
of Tekfen Group Companies and approval of the Chairman of the Board. Supporting documents are prepared
by the secretariat of the Board of Directors and submitted in a single dossier to the members at least ten days
before the meeting date.
All Board decisions in 2008 were passed unanimously, so no dissenting view is recorded in the Resolution Book.
Should it arise, all details of dissenting views would be recorded in the Resolution Book.
In 2008, two meetings were held to discuss the issues outlined in Article 2.17.4 of the CMB's Corporate Governance
Principles and it was ensured that all board members participated in these meetings.
In cases where the Capital Markets legislation so requires, important Board decisions are publicly announced
with a disclosure of material events.
The board members do not have privileges such as controlling a vote or a negative right of veto.
24. Prohibition of Engaging in Transactions and Competing with the Company
To allow board members take positions in other Group companies, it was decided in the ordinary Annual General
Meeting that the board members would not be subject to the prohibitions and limitations outlined in articles
334 and 335 of the Turkish Law of Commerce.
Currently, none of the board members is engaged in any activity that would cause a conflict of interest or would
be deemed as competing in the same business area.
26. The Number, Structure and Autonomy of Committees Formed by the Board of
Directors
During the initial public offering, two committees, namely the Audit Committee and the Corporate Governance
Committee, were formed upon Board decisions dated November 22nd, 2007.
In the present structure of the committees, no member of the Board of Directors serves on more than one
committee.
The Tasks and Operational Principles that outline the general procedures related to the tasks of the
Corporate Governance Committee and the Audit Committee are in effect following the Board of Directors'
approval. The Tasks and Operational Principles of these committees are published on the Company's official
website.
These committees meet at least once every three months and at least four times per year.
26.1 Audit Committee
An independent board member, Dr. Rüfldü Saraco¤lu was selected to head the Audit Commitee, and Dr.
M. Ercan Kumcu, a non-executive board member, was selected as a Committee Member.
In line with Capital Markets Legislation, the Audit Committee is responsible for supporting the Board of
Directors by overseeing the Company's accounting system, the public disclosure of financial information,
the independent auditing, and by monitoring the effectiveness and performance of the internal audit
mechanism, and for reporting on its evaluations to the Board of Directors.
26.2 Corporate Governance Committee
An independent board member, Mr. Hasan S. Subafl›, and Mr. Murat Gigin, a non-executive board member,
were selected to head the Corporate Governance Committee.
In line with Capital Markets Legislation, the Corporate Governance Committee is responsible for monitoring
the Company's compliance with the CMB's Corporate Governance Principles, proposing improvements in
compliance, and making recommendations on compliance issues to the Board of Directors.
27. Remuneration of the Members of the Board of Directors
In line with the Company's articles of association, board members receive an annual or monthly stipend
or a certain fee per meeting, as determined by the General Meeting. At the Annual Ordinary General
Assembly held on May 8, 2008 it was resolved to pay a gross fee of 20,000 TL per month to Board of
Directors Executive Directors and 5,000 TL per month to the other members.
Dividends shall be distributed to board members according to the amounts and provisions set by the Board.
However, they may not exceed 2% of the profit after deduction of legal reserves and the amounts to be
distributed under the Company's articles of association.
Financial benefits are not determined and granted in line with a performance-based system but paying
dividends out of profits can be accepted as a performance based awarding system. No board member or
manager may obtain loans or guarantees, such as letters of guarantee, from the Company.
106
107
> Tekfen Holding A.fi. Dividend Policy
Company dividend policy is determined according to the Turkish Law of Commerce, the CMB's legislation
and its regulations and decisions, the tax laws, other relevant legislation, and the Company's articles of
association.
1- Article 28 of the Holding's Articles of Association reads as follows:
Profit will be distributed as outlined below from the net profit stated in the Holding's balance sheet and
reached after deducting the general expenditure of the Company, various amortization costs, and mandatory
taxes. The relevant provisions of the Capital Markets Law and notifications of the Capital Markets Board
will be followed during the process of profit distribution.
First level legal reserves:
a) Legal reserves at a rate of 5% will be allocated.
First Dividend:
b) To the remaining amount, grants delivered during the year, if any, are added, from this total at least
30% first dividends are allocated provided the rate or the amount is not below those set by the Capital
Markets Law.
c) A maximum of 3% of the remaining amount will be allocated to the Tekfen Foundation for Education,
Health, Culture, Art and Protection of Natural Habitat.
h) Dividends shall be distributed to all the existing shares as the end of the accounting period without
taking into account the date of issue or acquisition of such shares.
The decision as to how and when the annual profit will be distributed to the shareholders will be decided
by the General Assembly upon the recommendation of the Board and in accordance with the provisions
of the Turkish Tax Laws and the Capital Markets Law. Profit distributed according to the provisions of the
Articles of Association cannot be recovered.
2- The place and date of dividend payments are set in accordance with Capital Market Board Regulations.
3- Within the framework of Article 29 of the Company's Articles of Association, if the Company General
Assembly so authorizes the Board, interim dividend payments may be made (for that specific year only).
The Capital Markets Law is taken into account during this process.
> Risk Management and Internal Control
In accordance with laws applicable to Tekfen Holding A.fi., financials tables are prepared on a consolidated
basis.
The main operating groups of Contracting, Agri-Industry and Real Estate Development prepare IFRS based
financial tables on a quarterly basis using their own internal control mechanisms. At the Holding level,
elimination of transactions between groups is done and consolidated financial tables are prepared.
The financial results and performance of all companies included in the consolidation are analyzed by the
operating group to which they belong and included in the consolidated financial reporting.
d) After the above mentioned deductions, the General Assembly has the right to decide on an allocation
of dividends that does not exceed 2% of the remaining profit to members of the Board (in line with the
limits and principles set by the Board).
Second Dividend:
Internal control activities of Tekfen Holding A.fi. are carried out by the Audit Committee in coordination
with the Financial Affairs Directorate as per the relevant legal regulations. The risk management and
financial reporting of the three main operating groups is monitored by the relevant Group Vice-Presidents.
When quarterly financial tables are disclosed to the public; consolidated financial tables are presented to
the Company Board of Directors after being checked and approved by the Audit Committee.
e) The General Assembly is entitled to distribute the amount remaining (after the deduction of the items
outlined in a, b, c, and d, above) from the net profit as second dividends or allocate it as extraordinary
legal reserves.
Second level legal reserves:
f) Subject 3 of paragraph 2 of Article 466 of the Turkish Law of Commerce and the provisions of the
paragraph of the same article do not apply to the Holding.
g) No decision may be made to set aside profits for other reserves to transfer profits to the following
Major financial indicators such as revenues, profit before interest, taxes and depreciation, net income, net
operating capital and net liabilities to bank are reported periodically and analyzed by senior management.
Determination and reporting of operational results of companies, degree of achievement of objectives and
possible risks are evaluated at Board of Directors meeting periodically with the participation of the relevant
Group Vice-Presidents.
The above-mentioned financial tables are audited and reviewed during the operating year.
year, or to distribute dividends to the founders or dividend right certificate holders, board members or
Company officials, workers or foundations or other similar real/legal entities established for specific
purposes, unless the first dividend is paid as provided and unless the reserves required to be set aside
as required by law have been so set aside.
108
109
Directory
• Tekfen Holding Co., Inc.
Kültür Mahallesi, Tekfen Sitesi Ayd›nl›k Sokak,
A Blok, No:7 Ulus-Befliktafl 34340
Istanbul, Turkey
Telephone : (90.212) 359 33 00
Fax
: (90.212) 359 33 05
e-mail
: tekfen@tekfen.com.tr
website
: www.tekfen.com.tr
• Tekfen Foundation for Education, Health, Culture,
Art & Protection of Natural Resources
Istanbul, Turkey
Telephone : (90.212) 359 33 49
Fax
: (90.212) 359 33 05
e-mail
: tekfenvakfi@tekfen.com.tr
website
: www.tekfen.com.tr
CONTRACTING GROUP
• Tekfen Construction & Installation Co., Inc.
B Blok, No:3 Ulus-Befliktafl 34340
Istanbul, Turkey
Telephone : (90.212) 359 35 00
Fax
: (90.212) 359 35 08
e-mail
: business@tekfen.com.tr
website
: www.tekfeninsaat.com
• Tekfen Engineering Co., Inc.
Tekfen Tower, Eski Büyükdere Caddesi, No:209
4.Levent 34394 Istanbul, Turkey
Telephone : (90.212) 357 03 03
Fax
: (90.212) 357 03 09
e-mail
: posta@tekfenmuhendislik.com
website
: www.tekfenmuhendislik.com
• Tekfen Manufacturing & Engineering Co., Inc.
Telephone : (90.212) 357 00 60
Fax
: (90.212) 357 00 61
e-mail
: timas@tekfenim.com
website
: www.tekfenim.com
• Hallesche Mitteldeutsche Bau - A.G. (HMB)
Magdeburger Strasse 27 (06112)
Halle / Saale, Germany
Telephone : (49.345) 511 62 39
Fax
: (49.345) 511 68 13
e-mail
: ausland@hmb-ag.de
website
: www.hmb-ag.de
• Azfen J.V.
Istiglalijat Street 31, Baku, Azerbaijan
Telephone : (99.412) 492 58 35 - 57 25
Fax
: (99.412) 492 57 27
e-mail
: azfen@azfen.com
website
: www.azfen.com
• Cenub Tikinti Services ASC
Sabail Rayonu, Cenub Köprüsü AZ1003
Baku, Azerbaijan
Telephone : (99.412) 491 18 82
Fax
: (99.412) 447 41 28
• GATE Construction & Trade Co., Inc.
Kültür Mahallesi, Tekfen Sitesi Ayd›nl›k Sokak, No:4
Ulus-Besiktas 34340 Istanbul, Turkey
Telephone : (90.212) 359 37 50
Fax
: (90.212) 359 37 52
• TGO Construction Contracting Transport
Trading Industry Co. Ltd
O¤uzlar Mahallesi Ceyhun At›f Kansu Caddesi
45. Sokak No: 13/12 Balgat - Ankara, Turkey
Telephone : (90.312) 286 54 73
(90.312) 286 09 73
Fax
: (90.312) 286 54 96
210
AGRI-INDUSTRY GROUP
REAL ESTATE DEVELOPMENT GROUP
• Toros Agricultural Production &
Marketing Co., Inc.
Telephone : (90.212) 357 02 02
Fax
: (90.212) 357 02 31
e-mail
: toros@toros.com.tr
website
: www.toros.com.tr
• Tekfen-OZ Real Estate Development Co., Inc.
Kemankefl Caddesi, No:81 Kat:4 34420
Karaköy-Beyo¤lu Istanbul, Turkey
Telephone : (90.212) 377 07 77
Fax
: (90.212) 377 07 78
e- mail
: info@tekfenoz.com
website
: www.tekfenoz.com
• Toros Terminal & Maritime Services Co., Inc.
Telephone : (90.212) 357 02 02
Fax
: (90.212) 357 02 31
e-mail
website
: www.toros.com.tr
• Tekfen Real Estate Development Investment
and Trade Co., Inc.
Tekfen Tower, Eski Büyükdere Caddesi, No: 209
Telephone : (90.212) 357 10 10
Fax
: (90.212) 357 10 15
e-mail
: emlak@tekfen.com.tr
website
: www.tekfenemlak.com
• TAYSEB - Toros-Adana-Yumurtal›k Free Trade
Zone Founder and Operating Co., Inc.
P.K.10, 01920 Ceyhan - Adana, Turkey
Telephone : (90.322) 634 20 80
Fax
: (90.322) 634 20 90
e-mail
: tayseb@tayseb.com
website
: www.tayseb.com
• Tekfen Tourism & Facility Management Co., Inc.
Tekfen Tower, Eski Büyükdere Caddesi,
No:209 4.Levent 34394 Istanbul, Turkey
Telephone : (90.212) 357 00 00 (10 lines)
Fax
: (90.212) 357 00 12
e-mail
: info@tekfenservices.com
website
: www.tekfentower.com
• Toros Ship Agency Services Co., Inc
Tekfen Tower, Eski Büyükdere Caddesi No: 209
Telephone : (90.212) 357 02 02
Fax
: (90.212) 357 02 31
e-mail
website
: www.toros.com.tr
INVESTMENT & SERVICE COMPANIES GROUP
• Hishtil-Toros Seedling Industry & Trade Co., Inc.
Tekke Köyü, Pürenli Mevkii, 10.km.
Serik - Antalya, Turkey
Telephone : (90.242) 717 40 45
Fax
: (90.242) 717 41 99
website
: www.toros.com.tr
• TAGAfi - Turkish Arabian Fertilizer Co. Inc.
Telephone : (90.212) 357 02 02
Fax
: (90.212) 357 02 31
e-mail
website
: www.toros.com.tr
BANKING GROUP
• Eurobank Tekfen Co., Inc. (Headquarters)
Telephone : (90.212) 357 07 07
Fax
: (90.212) 357 08 08
e-mail
: info@eurobanktekfen.com
website
: www.eurobanktekfen.com
• EFG Leasing Co., Inc.
Telephone : (90.212) 357 07 07
Fax
: (90.212) 357 08 25
e-mail
: info@eurobanktekfen.com
website
: www.eurobanktekfen.com
• EFG Istanbul Securities Co., Inc.
Büyükdere Caddesi, No:195 Kat:7 Levent 34394
Istanbul, Turkey
Telephone : (90.212) 317 27 27
Fax
: (90.212) 317 27 26
website
: www.efgistanbulsec.com
• Tekfen Industry & Trade Co., Inc.
D Blok, No:2 Ulus-Befliktafl 34340
Istanbul, Turkey
Telephone : (90.212) 359 37 80
Fax
: (90.212) 359 37 90
e-mail
: tekfen@tekfenendustri.com.tr
website
: www.tekfenendustri.com.tr
• Papfen Joint Stock Company
Yakkasarayskiy Rayon Ul: Vasit Vahidov, No:41
Tashkent, Uzbekistan
Telephone : (99.871) 120 40 82
Fax
: (99.871) 120 40 81
e-mail
: papfen@papfen.com
• Tekfen Insurance Brokerage Services Co., Inc.
Kültür Mahallesi, Ayd›nl›k Sok. No:6 Ulus-Besiktas
34340 Istanbul, Turkey
Telephone : (90.212) 359 38 80
Fax
: (90.212) 359 38 81
e-mail : musterihizmetleri@tekfensigorta.com.tr
website
: www.tekfensigorta.com.tr
• Antalya Studios Co., Inc.
Istanbul, Turkey
Telephone : (90.212) 359 33 00
Fax
: (90.212) 359 33 05
e-mail
: info@antalyastudios.com
website
: www.antalyastudios.com

annual report 2008

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