Translation from Bulgarian BULGARIAN ASSOCIATION OF THE CEMENT INDUSTRY REPORT ON THE ACTIVITY for the year 2007 Bulgarian Association of the cement industry is a non-profit organization registered in July 2002 in order to promote the widest possible use of cement in various fields and to develop technologies and methods of production that most protect the environment. Members of BACI are the five Bulgarian cement plants: 1. DEVNYA CEMENT AD 2. ZLATNA PANEGA CEMENT AD 3. HOLCIM BULGARIA AD 4. PLEVEN CEMENT AD 5. VULCAN AD Majority shareholders in the companies that are members of BACI are the world's largest manufacturers of cement. DEVNYA CEMENT AD and VULKAN AD are part of the Italcementi Group, HOLCIM BULGARIA AD and PLEVEN CEMENT AD are part of the Swiss group Holcim Group, owner of ZLATNA PANEGA CEMENT AD is the Greek company Titan Cement. Chairperson of the Management Board of Bulgarian Association of the Cement Industry is Mr. Alexander Nakov Chakmakov who represents the association. At a General Meeting of the Association held on December 10, 2007, was elected a Management Board with following members: 1. Alexander Nakov Chakmakov; 2. Todor Donchev Kostov; 3. Ivan Asenov Atanasov; 4. Thomas Giyo; 5. Alexander Charles Car. 1
REPORT BUDGET OF THE BULGARIAN ASSOCIATION OF THE CEMENT INDUSTRY FOR 2007 budget 2007 received I.INCOME 1.1. Expected transitional balance from 2006 250,000.00 253,608.18 incl. From interest income 4,000.00 1.2.Monthly contributions (12 months x 3000lv. from 5 members) 180,000.00 194,000.00 * 1.3. Income from interest 2,000.00 5,309.05 Total INCOME 2007 432,000.00 452,917.23 budget 2007 Spent economy/o verexpendit ure ІІ.TOTAL EXPENSES 2007 413,600.00 371,771.02 41,828.98 including 1. For fixed assets 25,000.00 75,144.20-50,144.20 incl. furniture 62,594.71 incl. Computers and peripherals 4,728.87 incl. car payments 7,820.62 2.Material costs 273,000.00 223,920.37 49,079.63 2.1.Rental and office expenses (electricity, water, maintenance) 36,000.00 20,954.64 15,045.36 2.2.Telephone costs, Internet and stationery 8,000.00 3,411.20 4,588.80 2.3.Entertainment allowances and PR costs (cocktails, press conference journalists, publications) 60,000.00 0.00 60,000.00 2.4.Expenses for business trips 10,000.00 12,653.58-2,653.58 2.5.Website hosting and translations of documents 8,000.00 76.50 7,923.50 2.6.Publications and promotional materials 10,000.00 0.00 10,000.00 2.7.Membership in other organizations, incl. CEMBUREAU 140,000.00 186,082.75-46,082.75 2.8.Bank costs 1,000.00 741.70 258.30 3.Remunerations and social insurance contributions 10,5600.00 48,929.03 56,670.97 3.1.Executive Director (12m x 3000 lv., incl. social security) 36,000.00 17,260.70 18,739.30 3.2.Legal service - hourly payment 5,000.00 5,990.58-990.58 3.3.Expert developments and expert committees 40,000.00 0.00 40,000.00 3.4.Organizer (12 m x 1200lv., incl. social security) 14,400.00 14,397.75 2.25 3.5.Accounting services (12m x 600lv)** 7,200.00 8,280.00-1,080.00 3.6.Certified public accountant 3,000.00 3,000.00 0.00 4.Reserves for incidental expenses*** 10,000.00 23,777.42-13,777.42 *** Consultancy services for selection of Exec. Director 23,469.96 **** Technical Assistant 307.46 III. Transitional balance for 2008 18,400.00 18,400.00 BALANCE for 2008 BGN 81,146.21 Note * incl. 20,000 levs membership fee from 2006 from Vulcan AD and Devnya Cement AD ** overexpenditure due to registration under the VAT Act as of April 2007 *** Consultancy services for selection of Exec. Director **** Technical Assistant 2
Here are the main financial results in brief: Source for funding the activities of BACI in 2007 is the membership fee paid by the founders. BGN 172 000 have been paid out of the BGN 180 000 that have been voted under the Articles of Association. Other income is derived from interest on deposited free cash amounting to BGN 5,309.50 Costs incurred in connection with the activities of the Association are as follows: 1. For membership in CEMBUREAU - BGN 186,082.75 2. For office furniture - BGN 62,594.71 3. Office expenses - BGN 24,365.84 4. For consultancy services for electing a secretary - BGN 23,469.96 5. For remunerations and social insurance contributions for a secretary - BGN 17,260.70 6. For remunerations and social insurance contributions for an organizer- BGN 14,397.75 7. Business trips - BGN 12,653.58 8. For Fixed Tangible Assets-computers and car payments - BGN 7,820.62 9. Other expenses - BGN 23,125.11 Unused funds from 2007 remain as a transitional balance for 2008 amounting to BGN 81,146.21 In 2007 BACI performed the following main activities to protect the common interests of its members. The Management Board of BACI continued with the decisive actions on challenging the legality of the announced by EMEPA public procurement with subject "Collection and recycling of unfit for use pneumatic tires, in which the participation of cement plants was not allowed. A letter was sent to the Executive Director of the Public Procurement Agency, which reasonably disputes the statement of the Executive Director that BACI has signaled him after the expiry of the statutory period and therefore he has not approached the Commission for Protection of Competition. As a result of these active actions ultimately the cement plants were given the opportunity to participate in the contract. In accordance with the decision of the General Assembly of BACI of 11.12.2006 and Decision No.5/18.01.2007 taken in relation to it by Sofia City Court an application was submitted in the Registry Agency and Alexander Nakov Chakmakov as President was registered as Chairperson of the BACI. 3
The active participation of representatives of BACI was continued in the interdepartmental working group to develop a national plan for allocation of greenhouse gas emissions allowances pursuant to Directive 2003/87EC. BACI Association applied and was accepted as a member of the European Cement Association CEMBUREAU with its decision taken by the General Assembly held of CEMBUREAU held on 12.06.2007 in Luxembourg. As a member of CEMBUREAU BACI was actively involved with its own representatives in the meetings of the working groups and bodies of management of CEMBUREAU. In connection with the substantial amount of the membership fee in this organization, on a General Meeting of the Association held on 10.12.2007 it was decided to increase the membership fee up to BGN 12,000 per month. Through a direct selection and after holding competitions in BACI were appointed with employment agreements, respectively an executive secretary and a new technical assistant. A new office of BACI was rented and furnished at 73 Todor Aleksandrov Blvd., where the place of business and registered office of the association were moved. The Management Board continued its actions against the intentions of Tsemeko OOD to build on the territory of Kremikovtzi AD an "Installation for the production of cement from blast slag" in breach of the law and with the apparent support of RIEW Sofia. The association continued its activities in connection with proceedings in the Supreme Administrative Court on a complaint by Tsemeko OOD against Decision 152/21.10.2005 of the Minister of Environment and Waters, which revoked a decision, issued by RIEW Sofia, approving the investment proposal as illegal and improper. The intentions of the Management Board of BACI of most important future activities include the continuation in 2008 of the active participation in the working groups and management bodies CEMBUREAU. BACI will also be actively involved in the preparation of a national and pan-european report on the implementation of the obligations of the management of cement plants under the European Agreement on Social Dialogue on health protection of workers from diseases associated with using fine quartz dust (silicosis). In this connection representatives of BACI will provide and implement an European automated reporting system - NEPSI. 4
BACI and its members will actively participate in the so-called National Day of open doors in the cement plants within the European Week of the open doors in the cement plant, which is planned from 10th to 18th of May 2008 with main guidelines as follows. Nature of the initiative: In the specified week the cement plants throughout Europe open for one day their doors to its neighbors and other stakeholders, listen to their questions and give answers to them. Objectives: To raise awareness of the cement industry among the public and management at different levels in Europe; To build positive, but accurate image of the cement industry as a transparent one. The most common messages to the local community/neighbors: "we are good neighbors", "we have nothing to hide". Details about the organization of the event are left to the local organizer, but the following has to be considered: To stresses that the local event is part of a wide European initiative to cause a greater interest in the local press, with which to establish contact on the matter As many workers as possible to be included in the presentation (only the presentation of some of the specific messages and the relations with the municipalities to be undertaken by the management) Specific messages: Use of alternative fuels is safe Financial benefits to the local community Global reduction of CO2 emissions Safe and flexible solutions for waste management Successful cases of career rehabilitation Our products help to meet the challenges of the 21st century: Reduce emissions of CO 2 through energy efficiency in concrete buildings Fire safety Adapting to climate change Recycling 5
Target group according to the context: Representatives of various levels of government agencies relating to the production and marketing of cement Customers Workers and their families Other Three levels of activity: Local level: Organized by the members and their local factories Target group: local community, members of the European Parliament with an interest in the region, local government, local and regional press Format: each member will be responsible to organize their own information activities at site and decide on the specific messages. National level: Organized by the members Target group: national authorities, national media and the public in the country Format: possible partnerships with organizations such as national associations of architects and/or engineers, national chambers of commerce, business associations and environmental movements to ensure maximum national impact European level: Organized by CEMBUREAU Target group: selected European leaders, representatives of European institutions and stakeholders Format: stakeholders meeting/round table in Brussels to discuss related issues Together with and in the context of the key messages that will be defined at European level, each member of BACI/plant will develop and put emphasis on specific messages that are most appropriate for the particular plant. In summary, while safeguarding the common interests of its members, BACI will seek to achieve its objectives by informing the competent state authorities of the problems in the production of cement and to improve the working conditions in this industry, for strict compliance with quality requirements and the rules of trade. BACI will endeavor to develop 6
and expand the production and the financing of research, training, consultation and information exchange related to production and marketing of cement. /signed ill/ /seal of Baci/ Sofia, 2008 CHAIRPERSON OF THE MANAGEMENT BOARD: (ALEXANDER CHAKMAKOV) I, the undersigned Boris Hristov Stoychev, hereby certify the authenticity of the translation performed by me from Bulgarian to English of the attached document. The translation consists of 7 pages. Translator: /Boris Stoychev/ 7