Integrated Annual Report 2016 - Titan Cement

1 Integrated Annual Report 2016 . Integrated Annual Report 2016 . Contents Contents p. CEO Message 3. 1 Annual Report of the Board of Directors 5. Business model Financial review Non-Financial performance review Risks and uncertainties 2 Corporate Governance Statement 18. Deviations from the Corporate Governance Code Composition and modus operandi of the Board and of other bodies and committees Internal audit and risk management systems in relation to the financial statements General Meetings and Shareholders' rights 3 Explanatory Report of the Board of Directors 38.

2 4 Statement of Members of the Board of Directors 41. 5 Independent Auditors' Report 42. 6 Financial Statements 44. Income Statement Statement of Comprehensive Income Statement of Financial Position Statement of Changes in Equity Cash Flow Statement Notes to the Financial Statements 7 Non-financial Performance Indicators 124. Independent Auditor's Assurance Statement Principles and boundaries of non-financial performance review Non-financial Performance Review according to the United Nations Global Compact Criteria WBCSD/CSI Non-financial performance indicators Group memberships and cooperations 2016 .

3 About this Report The 2016 Titan Group Integrated Annual Report has been compiled in accordance with the International Integrated Reporting Council Standards, the UK Corporate Governance Code, the International Financial Reporting Standards and in compliance with the relevant obligations stipulated by Greek Law and the European Directives. This Report is available online at Integrated Annual Report 2016 . CEO Message CEO Message negatively affected, in EUR terms by the Turkish lira devaluation. Investing for organic growth and regional expansion Dear Shareholders and Stakeholders, In line with our objective of geographical Over the past year, marked by mixed but on diversification in selected regions, we extended our balance favorable market developments, Titan .

4 Geographical footprint in South America through the made further progress along its key priorities of acquisition of an equity stake in Cimento Apodi, a balancing profitability and growth, building Brazilian Cement manufacturer. Cimento Apodi operational excellence and nurturing the long term operates an Integrated Cement plant and a grinding sustainability of its business. plant in the state of Ceara in Northeast Brazil, with a Strong results in the US drive organic growth production capacity of over 2 million tons of Cement per year.

5 Current demand for building materials in Titan turnover and profitability continued growing for Brazil is low; however, the fundamentals in terms of a third consecutive year, driven primarily by market urban population growth indicate stronger longer growth in the USA and to a lesser extent operational term prospects. improvements in Egypt. Consolidated turnover increased by 8% to 1,509 million and Earnings before Investments in existing operations stood at 151. Interest, Tax, Depreciation and Amortization (EBITDA) million, primarily in relation to our activities in the US.

6 Increased by to 279 million. Net Profit after and the solid fuel conversion project in Egypt. minority interest and the provision for taxes (NPAT) Investment programs continued in the other regions rose to 127 million, which includes a gain from a as well, mainly linked to sustaining business and deferred tax asset recognition of 90 million in the US, environmental improvements. associated with previously unrecognized carry- On the funding side, Titan was able to raise a 5-year, forward net operating losses generated in previous 300 million bond with a coupon; Standard &.

7 Years. Poor's reconfirmed the company's BB rating, with In the US, demand for building materials continued a positive outlook, highlighting the strong liquidity of to grow within a generally positive economic the Group. environment of low unemployment, consumer Group initiatives towards operational excellence confidence and infrastructure development. Titan , having implemented a 200 million investment We continuously invest in improving our program over the last three years, was able to competitiveness, both through local initiatives led by capitalize on the market growth to increase sales our regional management teams and centrally at volumes, plant utilization and profitability, both in Group level.

8 Current areas of focus include Cement and in its vertically Integrated activities. excellence in operational maintenance, new digital and IT infrastructure, enhanced product and process Egypt enjoyed a growth in demand and benefited innovation capacity, as well as two major Group- significantly from a decline in production costs as it wide initiatives, on procurement and people progressed towards its goal of solid fuel self- development. sufficiency; the last component of the relevant capital expenditure program, the coal mill in Our Group Procurement Transformation program, Alexandria plant, commenced operations in which went through its first phase of implementation December.

9 As a consequence, in spite of the in 2016 , aims to optimize the number of suppliers and devaluation of the Egyptian pound by more than build on long term value-added supplier relationships 50% in the course of the year, our operations with an emphasis on total cost reduction, managed to improve profitability, even in EUR terms, transparency and enhancement of our sustainability albeit from a low comparative basis. impact on the supply chain. In Greece, now in its seventh year of austerity, the The Titan Leadership Platform , a major program construction market remains in deep recession, with addressing our employees announced in 2015, was limited spending on infrastructure projects and a rolled out to all countries, promoting the behaviors virtual halt in private housing construction.

10 Our Greek that drive strong leadership performance, through a operations continued their strong export new personal development process. The program performance in volume terms, but profitability was addresses the most material issues raised by our negatively affected by competitive pressures in the employees in the 2015 survey and provides an international trade destinations. effective conduit through which our core values can be further disseminated. The markets of Southeastern Europe provided a mixed picture, with our operations showing an overall Aligning with the UN Sustainable Development Goals stable performance.