Park Elektrik Üretim Madencilik Sanayi ve Ticaret A.Ş. December 2010

Park Elektrik Üretim Madencilik Sanayi ve Ticaret A.Ş.

December 2010

Park Elektrik December 2010 2

Contents

I. Introduction 3II. Ciner Group in Brief 7III. Operations 10IV. Planned Investments 23V. Financial Structure 25VI. Evaluation of The Latest Financial Tables 40VII. Recent Developments 47VIII. Future Prospects 50IX. Market Data 53


I.Introduction


The Company

Established in 1994. Initially offered to public in 1997. Changed its commercial title in 2000. Commenced copper operations in late 2006. Gathered electricity production license in 2008 for

establishment of a hydro electricity power plant. Merged with ISE-listed Group company, Ceytas, in May

2009. Currently operating a copper and an asphaltite mine and

plans to establish an HPP.


Ownership Structure

Others, 32.00%

Park Holding A.S., 39.63%

Turgay Ciner, 6.76%

Park Enerji Ekipmanları

A.S. , 21.60%


Participations, Park Termik

Park Elektrik has a 10% participation in Park Termik Elektrik San. ve Tic. A.S., a Ciner Group company which is involved in thermal power generation in Ankara province.

Park Termik operates Cayirhan Thermal Power Plant which has a total production capacity of 630 MW in four units.

Cayirhan TPP is the first thermal power plant that was privatized by the Turkish government. Right after the privatization, the CUR in the plant was increased from 48% to 81%, while also the coal production amount of the related coal fields was increased from 500 tons to 7,000 tons level.

The plant is an integrated power generator which procures coal through its own lignite mines.


II. Ciner Group in Brief


Ciner Group, Introduction Park Holding is controlled by Ciner Group, which is solely owned by Mr. Turgay Ciner. Ciner Group’s history goes back to 1978 when it was founded.

Ranking among the largest Groups of Turkey, Ciner Group diversified its operations from the energy and mining sectors to tourism, media and broadcasting sectors.

Ciner Group is a pioneering actor in energy and mining sector given its new and initial steps since early 1990s. In line with accelerated privatization efforts in 1990s, the Group successfully involved in mining and energy sectors which are the underlying sectors of the Group’s high-speed growth.

As of 1H10, The Group has a total asset size of US$3.2 bn, shareholder’s equity of US$1.6 bn, consolidated revenues of US$490 mn and consolidated EBITDA of US$133 mn with a sound EBITDA margin of 27%.


Ciner Group, Main Line of Businesses

Energy & Mining Group

Ciner Group

MediaGroup

Commerce, Industry &

Services Group

Major CompaniesPark Elektrik

Park TermikPark Teknik

Eti SodaSilopi Elektrik

Park Enerji Ekipmanları

Major Companies & Brands

Ciner Yayın HoldingHaberturk NewspaperHaberturk TV, Radio,Haberturk Web Site

Bloomberg HT, FHM, Marie Claire, Newsweek

Major CompaniesPark Construction

Park MarinePark Aviation

Lares Park HotelsPark Insurance

Park Foreign TradeDenmar Logistics


III. Operations


Park Elektrik’s Existing & Planned Facilities

(Cu)(As)

Park Elektrik & Ciner Group Headquarters

(HPP)

(Nat. Gas PP)


I) Madenköy Copper Zone

Total Beginning Reserves in Madenköy Zone 13,600,000 tons of ore

Max. Annual Ore Extraction Capacity 1,000,000 tons of ore

Max. Annual Copper Concentrate Capacity (10% of ore) 100,000 tons of copper concentrate

Max. Annual Copper Content (20-24% of concentrate) 20,000-24,000 tons of copper content


I) Madenköy Copper Zone

License of copper mine in Madenköy zone was acquired from Eti Holding, a state-owned company, for YTL9.4 mn in January 2000.

The company sells concentrated copper that includes 20-24% copper content.

Selling price is determined based on the spot price at the day of transaction in London Metal Exchange.


II) Silopi Asphaltite Zone Park Elektrik has the operational rights of an asphaltite mine in Silopi

until the end of 2033. Asphaltite is a petroleum-origin hydrocarbon with higher thermal value. Calorie of asphaltite varies between 5,500 and 5,800 kcal/kg.

The mine will be open-pit for the first years of operation. Later on, underground mining will be applied by the method of “Cut and Fill Block Caving”.

According to Turkish Coal Enterprise (TKI) reports, estimated asphaltite reserve in Silopi is around 25 mn tons.

Operations in the asphaltite zone started in June 2009. The company provides asphaltite to Silopi Elektrik Üretim A.Ş., a group company which is involved in electricity production in Silopi with fluidized bed technology and a starting capacity of 135 MW.

Annual production amount in Silopi zone is 400,000 tons and sale price of asphaltite per ton is determined as TL 40.5 for 2009 and 2010.


IV. Planned Investments


Diyarbakır HPP

Installed capacity will be 50.5 MW.

Production license is valid for 49 years.

Estimated investment amount is US$ 60 mn.

Estimated start-up for the investments is early 2011.

The plant is estimated to be operational by the end of

2013.


Ceyhan Natural Gas CCPP

Installed capacity will be 423 MW.

Production license will be valid for 49 years.

Estimated investment amount is around 250 mn Euros.

Decision was taken to make application to Energy Market

Regulatory Authority.


V. Financial Structure


Quarterly Copper Sales Since The Beginning (dmt)

0

5,7

08

11,2

72

12,8

05

14,7

58

14,6

98

16,9

02

17,3

36

17,4

82

12,7

44

17,2

12

12,7

78

13,3

35

10,6

43

6,8

18

6,2

17

3,0

54

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2006/3Q 4Q 2007/1Q 2Q 3Q 4Q 2008/1Q 2Q 3Q 4Q 2009/1Q 2Q 3Q 4Q 2010/1Q 2Q 3Q

Commencement of operations in 2006

First year of full operations in 2007

High demand and high copper prices in 1st half 2008

Global crisis hit commodity markets in 2009. But recovery started in late 2009.

Despite recovering copper demand & prices, sales were hit by the halt in production in 2010


Annual Copper Sales (dmt)

9,271

60,931 59,163

16980

4635847,417

2006 2007 2008 2009 9M09 9M10


Total Sales Revenues* (TL)

* Ignores other sales & discounts.

49

,64

4,3

47

31

,87

1,8

08

80

,04

0,6

45

11

0,7

13

,83

3

71

,55

6,2

09

8,844,275

5,474,587

14,086,792

2007 2008 2009 9M09 9M10

copper asphaltite


Main Determinant; LME Price

1,359

766

1,3851,315

41%

52%56%

28%

0

200

400

600

800

1,000

1,200

1,400

1,600

2007 2008 2009 20101H

0%

10%

20%

30%

40%

50%

60%

Average Selling Price ($) EBITDA Margin


Average Product Price

Export Revenues Sales Amount Average Product Price*

($) (dmt) ($)

2007 62,351,372 47,417 1,315

2008 84,359,407 60,931 1,385

2009 45,345,802 59,163 766

20101H 23,083,333 16,980 1,359

* The company sells copper concentrate which includes on average 1/5 of copper content.


COGS, as of YE09

Raw Materials24%

Energy12%

Direct Labor Costs28%

Others10%

Indirect Labor Costs

8%

Depreciation18%


Per Unit Cash Costs For Con. Copper (TL/dmt)

475

439

502496

2006 2007 2008 2009


Net Earnings (TL mn)

19.8 19.4

11.2

18.6

74.8

2007 2008 2009 9M09 9M10


Margins

(TL mn) 2007 2008 2009 9M09 9M10

Sales 80 111 79 55 46

Gross Profits 47 73 32 23 22

Gross Margin 58% 66% 41% 41% 48%

EBITDA 42 62 22 15 15

EBITDA Margin 52% 56% 28% 27% 33%

Net Earnings 20 75 19 11 19

Net Margin 25% 68% 25% 20% 40%


Sales, EBITDA (TL mn) & EBITDA Margin

80

111

79

55

46

15

42

62

2215

33%

52%

56%

28%27%

0

20

40

60

80

100

120

2007 2008 2009 9M09 9M10

0%

10%

20%

30%

40%

50%

60%

Sales Revenues EBITDA EBITDA Margin


Margins

0%

10%

20%

30%

40%

50%

60%

70%

80%

2007 2008 2009 9M09 9M10

Gross Margin EBITDA Margin Net Margin


Sources of Financing (TL mn)

88 100 130 143

223

302 320

14

66 53

60

3016

8

2004 2005 2006 2007 2008 2009 9M10

Shareholders' Equity Total Debt


Working Capital (TL)

2009YE

18,451,051

6,859,968 7,152,396

18,158,623

Trade Receivables Inventory Trade Payables Net Working Capital


VI. Evaluation of 3Q10 Financial Results


Evaluation of 3Q10 Results

Despite no copper concentrate sales due to strike in copper zone in the third quarter, the company’s sales and margins did not deteriorate thanks to higher copper prices throughout the year 2010, compared to same period of last year.

Due to the strike in the copper concentrate facility, the Company suffered operational loss in 3Q.

Although no copper concentrate sales was made in 3Q10, total sales revenues reflected only 17% decrease, y-o-y, in 3Q10 thanks to the higher copper prices and increased asphaltite sales.

Asphaltite sales also reflected a record rise due to base term effect. Recall that the company had initiated its asphaltite sales in June 2009.

Benefiting from higher copper prices, the company’s margins also increased despite lower copper sales.

The company also benefited from financial income on its interest bearing huge cash lent to parent Park Holding A.S.

The company recorded TL18.6mn of net income in 9M10, with a strong 67% increase, y-o-y.


Sales Amount

9M09 9M10 %

Concentrated Copper (dmt) 46,358 16,980 -63%

Asphaltite (ton) 136,856 347,822 154%

1H09 1H10 %Concentrated Copper (dmt) 31,600 16,980 -46%Asphaltite (ton) 46,245 217,593 371%


Sales Breakdown (TL) & Gross Margin by Products

9M09 9M10 %

Concentrated Copper Sales 49.644.347 31.871.808 -35,8%

Gross Margin of Copper 42,4% 54,6%

Asphaltite Sales 5.474.587 14.086.792 157,3%

Gross Margin of Asphaltite 29,1% 32,6%

Other Sales 355.043 87.087 -75,5%

Total Sales Revenues 55.473.977 46.045.687 -17,0%

Overall Gross Margin 40,9% 47,8%


Income Statement (TL)

9M09 9M10 %

Sales 55.473.977 46.045.687 -17,0%

COGS -32.761.416 -24.019.824 -26,7%

Gross Profit 22.712.561 22.025.863 -3,0%

Gross Margin 40,9% 47,8%

Operational Expenses -14.264.637 -13.964.653 -2,1%

Operational Profit 8.447.924 8.061.210 -4,6%

Operating Margin 15,2% 17,5%

Net Fin. Income/Exp. 4.977.997 14.930.160 199,9%

Tax -2.239.738 -4.369.107 95,1%

Net Profit 11.186.183 18.622.263 66,5%

Net Margin 20,2% 40,4%


Margins

9M09 9M10

Gross Profit Margin 41 48

Operational Profit Margin 15 18

EBITDA Margin 27 33

Net Profit Margin 20 40


Summary Balance Sheets (TL)

YE2009 9M10 %

Current Assets 235,938,117 242,569,583 2,7

Fixed Assets 95,825,468 94,045,475 -2

Short Term Liabilities 25,745,005 12,374,048 -52

Long Term Liabilities 4,228,132 3,828,374 -9

Shareholders Equity 301,790,448 320,412,639 6


VII. Recent Developments


Recent Developments, Corporate Governance Rating Park Elektrik was rated with 8.65 as a

result of the Corporate Governance study done by SAHA Kurumsal Rating Agency. According to report done by SAHA, the rating means that the company performs very good in terms of Capital Markets Board’s corporate governance principles. It has, to varying degrees, identified and actively managed all significant corporate governance risks through comprehensive internal controls and management systems. The company’s performance is considered to represent best practice, and it had no deficiencies in any of the areas rated.


Recent Developments, Strike

On May 15, Park Elektrik’s copper production was halted temporarily following the dispute between the Workers’ Union in Siirt Copper Mine and the company over salary increase issues.

The production started again on September 15th, following the agreement with the Workers Union and the company.

However, the company’s 3Q10 financial results have not reflected tremendous revenue decrease thanks to higher product prices and also due to higher asphaltite revenues.


VIII. Future Prospects


Future Prospects

In the very near future, Park Elektrik is going to start construction of its HPP. The company will call for a tender for the construction of the HPP in the coming months. It is estimated that HPP will become operational by the end of 2013 or in 2014, at the latest.

Being cash rich, Park Elektrik looks for new investment opportunities. Electricity production tenders which are expected to be opened in 2011, are among the target areas of the company.

The company continues its exploratory drilling in this copper rich area, targeting to increase its proven copper reserves above its initial level of 13.6 mn tons up until the probable reserves of 23 mn tons level. These studies are estimated to increase Park Elektrik’s life period considerably. The company also aims to increase its tenor rate through these drillings.

As Silopi Elektrik’s capacity will be tripled by 2014, at the latest, Park Elektrik’s asphaltite sales will be also tripled after 2014 which means our production volume will increase to 1.2-1.3 mn tons.


IX. Market Data


Market Data

Price DataTicker PRKTE.IS

Paid In Capital (TL) 148,867,243

Current Price (TL, Oct. 28, 10) 2.66

52-Week Range (TL) 2.34-3.26

MCap (US$mn) 266

Net Cash (US$mn, 3Q10) 153

Shareholders’ Eq. (US$mn, 3Q10)

222

3M Av. Tr. Vol. (US$mn) 4.6

Price Performance

1M 3M YTD

US$ -15%

12%

-6%

ISE Rel. -4% -1% -25%


T H A N K Y O U.

Please e-mail us at [email protected] for any additional questions you might have.

You can also visit our company’s web site www.parkelektrik.com.tr and Ciner Group’s web site www.cinergroup.com.tr .

Documents

Park Elektrik Üretim Madencilik Sanayi ve Ticaret A.Ş. December 2010