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Aygaz

SECTOR LEADER THAT ADDS VALUE TO LIFE
The Koç Group's first company to do business in the energy sector, Aygaz introduced Turkey to clean energy in 1961. The first publicly-traded company to be active in the LPG sector, Aygaz has steadily strengthened its pioneering status in the LPG industry, its core business, all through its more than half-century history. Thanks to the policies it has adopted for sustainable and steady growth, Aygaz is Turkey's 10th largest industrial company according to the 2012 rankings of the Istanbul Chamber of Industry, also ranking 22 in the Turkey Fortune 500 listings.
Aygaz, the leading brand in customer satisfaction, derives its competitive strength in the sector from its long established history, a developed corporate culture and its know-how. Aygaz watches consumer needs closely to continuously develop the quality of its products and services in line with its innovative and responsible corporate identity.

A broad distribution network embracing the country

The leader of the LPG sector, Aygaz works with its affiliates in an integrated 
structure of organization. Operating within this structure with the goal of achieving "firsts" in Turkey to meet the country's steadily growing energy needs, Aygaz is the energy sector's most reputable brand. With its dedication to corporate business culture and ethics, Aygaz has created a generic brand that continues to successfully signify safety and reliability. The company seeks to expand Turkey's energy pool with future-oriented activities to bring the country sound and permanent solutions to its energy needs with a vision for producing alternative projects.

Aygaz has become synonymous with offering consumers the best products and services and in this effort, has become an indispensable part of everyday life with its 2240 cylinder gas dealers and 1530 autogas stations in 81 provinces, carrying the Aygaz quality of service to all corners of the country. The broad-based Aygaz distribution network delivers cylinder gas to 80,000 households daily, and more than 1 million vehicles run on the Aygaz autogas product, Aygaz Otogaz.

LPG: Rising star of energy around the world

The consumption of LPG is on a growth trend around the globe. According to the data published by the World LP Gas Association (WLPGA) in 2013, in the last 10 years, global LPG consumption rose by 27%, corresponding to 54 million tons, increasing in 2012 by 1.8% over the previous year, reaching 264 million tons.

When the 1.5 billion people in the world who have not as yet gotten acquainted with LPG are considered, it can be seen that there is a powerful potential for the global market in the next period. Moreover, within the framework of the efforts of the European Union to reduce harmful gas emissions, the goal of increasing the current share of LPG in the energy portfolio to twice its size by 2030 supports the upward trend seen in the markets.

Currently, China, the U.S. and India lead the world in LPG consumption with a 45% share in total consumption. Meanwhile, autogas consumption represents a 9% share of total global consumption, standing at fourth place after petrochemicals and chemistry, with Turkey and Russia dominating the market after South Korea.

On the production side, while general world production of natural gas production increased by 1.9%, LPG production rose by 3.1%, rising to 274 million tons. Today, the US, Saudi Arabia and China are the three countries that have the largest share in the volume of world LPG production. With the addition of the new shale gas resources in the U.S., the U.S.'s contribution to LPG has risen to significant levels. In the period ahead, it is expected that the supply of propane will increase and in connection with this, that there will be a reduction in LPG procurement prices.

Turkey is the world's 15th, Europe's second largest LPG market

With an annual consumption of 3.7 million tons, Turkey is Europe's second largest LPG market after Russia. Turkey is followed by France, Germany and Italy. In 2013, 20% of the total LPG supply in Turkey was procured from domestic production, the remaining 80% from abroad. A major portion of the LPG import volume comprises purchases from Russia, Algeria, Kazakhstan and Norway.

Although the more widespread use of natural gas in Turkey has led to a contraction in the cylinder gas and bulk gas markets, the share of autogas in general consumption has increased steadily, causing the LPG market to maintain its position in the energy sector.

EPDK (Energy Market Regulatory Board) data for 2013 indicate that the share of autogas in total consumption rose from 61% to 74% in the last five years, while the share of the cylinder gas used in 7.5 million households and workplaces stood at a level of 23% as of the end of the year.

A market leader with a 28.7% share

With its cylinder gas and autogas brands being the most preferred brands in Turkey, Aygaz in the only integrated LPG corporation in the domestic market. Besides managing all of the processes in its core business--procurement, storage, filling and distribution-- the company also deals in the production and sales of LPG devices and in the maritime shipping of LPG.

EDPK data for 2013 show that Aygaz, which dominates 28.7% of the LPG market, comprised of 75 enterprises, maintains its clear-cut leadership in the LPG sector. Leaving behind a brilliant year of both operational and financial results, Aygaz holds a share of 42.6% in the cylinder gas market and of 24.3% in the autogas market.

Aygaz consolidated domestic sales of cylinder gas, bulk gas and autogas in 2013 stood at 1,066,000 tons. Together with wholesale, export and transit sales, the total domestic sales volume has reached 1.7 million tons. As of the end of 2013, Aygaz obtained a consolidated turnover of TL 6 billion, together with USD 321 million in exports and transit sales.

Turkey's most powerful LPG logistics network

Meeting LPG needs through Tüpraş and imports, Aygaz delivers the LPG it procures from domestic and international sources to the filling facilities through the pipelines and with its fleet of sea and land tankers.

Meeting 37% of Turkey's LPG imports by itself, Aygaz manages one of the largest LPG logistics operations in Turkey. Its competence in high level logistics is one of the most striking facets of the Aygaz competitive edge in the LPG market. Within the context of its logistics optimization efforts, Aygaz benefits from economies of scale to organize its business according to the number/capacities of its vehicles and its distribution network according to its sales volume, increasing productivity with optimal routing.

Since 1967, Aygaz has been conducting its marine transport operations with its own ships, working with four vessels--Kandilli, Kuleli, Kuzguncuk and Beylerbeyi--at an average age of 14. These four specially equipped and fully pressurized LPG carriers have a total transport capacity of 26,000 m3 and are managed by Anadoluhisarı Tankercilik A.Ş., an affiliate completely owned by Aygaz.

Gebze Facility

Aygaz produces cylinders, valves, small bulk gas tanks, pressure regulators and similar items under the same roof, at its facility located at the Gebze Organized Industrial Zone, on property that encompasses 52,000 m2 of open and 25,000 m2 of closed space. The facility operates with the most advanced technologies and has ISO 9001:2008 Quality Management Systems, ISO 14001 Environment Management Systems, OHSAS 18001 Occupational Health and Safety Managements Systems, and ISO 50001 Energy Management Systems certification. In 2013, despite the political unrest in neighboring geographies, Aygaz increased its exports in the last three years 1.5-fold on a turnover basis, achieving total foreign exchange revenues of USD 35.6 million from the Middle East, Africa and Europe.

Aygaz boasts 5 sea terminals, 9 filling facilities and 8 distribution centers, as well as an additional facility where pressurized containers and accessories are produced, all operated in line with international standards and using the most modern technologies. Aygaz has the largest LPG storage capacity in Turkey, a total of 170,000 m3.

Pürsu

In 2013, Aygaz added a third natural spring water filling facility to those operating in Nazilli and Sapanca. The new facility is located in Bursa Uludağ. With the addition of the new spring, water sales have been carried out in 2013, in 4 regions, 31 cities, through 550 dealers. While carboy water market contracted by 2% in 2013, Pürsu sales increased by 18% and reached daily average of 17.500. This sales figure placed Aygaz among the first 8 brands of the carboy water sector, with 1.7% market share in a market consisting of more than 300 companies and where the market leader has 12% market share following the acquisitions in recent years.

Research & Development

Aygaz carries out its activities in order to offer innovative, safe, and high-quality products to consumers. The Company further strengthens its pioneering position in the sector by virtue of its R&D activities focused on closely following existing technologies as well as developing new technological solutions.

Aygaz carries out its R&D activities in three main categories: new product development, machine and process improvement, and alternative fuels. Maintaining its sector leadership position in R&D thanks to its 57 patents, Aygaz applied to the Turkish Patent Institute for 5 patents in 2013.

Accomplishments

• According to the evaluation made by the Saha Kurumsal Yönetim ve Kredi Derecelendirme Hizmetleri Company (Field Corporate Governance and Credit Rating Services), Aygaz was elevated from a corporate governance rating of 8.96 to 9.27, becoming the company to receive the second highest rating in Turkey.

• Aygaz won recognition at the "TSE Quality Awards" ceremonies held on March 15, World Consumers Day, when it was given a Silver Award for the ISO 9001 Quality Management System Certificate that it has held since 1995.

• Aygaz achieved another "first" when it became the first company to receive a "Customer-Friendly Brand and Customer-Friendly Enterprise" certificate, a brand recognition launched by the Turkish Standards Institute.

• Aygaz wins a prize for being the "Company to Adopt the Principle of Consumer Satisfaction" at the 15th Annual Traditional Consumer Awards organized by the Turkish Customs and Trade Ministry.

2014 and beyond

VISION

To be the leading company providing energy solutions to Turkey and other potential markets, particularly in LPG and natural gas.

MISSION

To offer the best products and services in every field it operates in, particularly LPG, by prioritizing high quality and safety standards with working principles adopted from the corporate values of the Koç Group and by always being responsive to society and the government.

STRATEGIC PRIORITIES

• Maintaining diversification in autogas products as well as an innovative approach

• Increasing market penetration with its new autogas stations and

• Tapping into the growth potential of cylinder gas in rural areas and sustaining leadership in the LPG market

• Spotting new purchasing, merger and investment opportunities

• Capturing opportunities yielding high returns

• Developing and strengthening the current portfolio of affiliates