INTEGRATED ANNUAL REPORT 2017Reporting Council's (IIRC) Guidelines to provide our stakeholders with comprehensive information by giving an overview of our business performance during

INTEGRATED ANNUAL REPORT 2017

B U I L D I N G O U R F U T U R E T O G E T H E R

CONTENTS

03CEO MESSAGE

04STRATEGIC REVIEW

15ECONOMIC PERFORMANCE

53ENVIRONMENTAL PERFORMANCE

71APPENDIX

26SOCIAL PERFORMANCE

64GOVERNANCE

This is TITAN Bulgaria's fourth Integrated Annual Report (IAR 2017). This report uses characteristics of the International Integrated

Reporting Council's (IIRC) Guidelines to provide our stakeholders with comprehensive information by giving an overview of our

business performance during 2017. The Reporting period is January 1st to December 31st, 2017.

This Report presents the financial and non-financial disclosures of all operations of TITAN Group in Bulgaria, referred to as TITAN

Bulgaria, including Zlatna Panega Cement AD (the legal entity for our cement and concrete operations) and all other TITAN Group

subsidiaries in Bulgaria (GSPB EAD, Double W Co EOOD, GAEA EAD). Throughout the Report, TITAN Bulgaria is used wherever we refer

to combined disclosures, except for specific cases where the exact name of the subsidiary is explicitly mentioned for pertinent figures

and other disclosures. The main content of the Report includes an overall presentation of TITAN Bulgaria activities, goals and

achievements, quantitative data and financial information for 2017.

The IAR 2017 is independently verified for non-financial disclosures regarding the consistency to the UN Global Compact

Communication on Progress principles and criteria. The audit expresses a limited assurance conclusion that the published disclosures

and indicators for Health and Safety and Environmental performance have been established in accordance with the respective

sectoral guidelines and protocols of the Cement Sustainability Initiative (CSI), which operates under the framework of the World

Business Council for Sustainable Development (WBCSD).

For contact and additional information: [email protected]

The report in PDF format can be found at: www.integratedreport2017.titan.bg

2017 PERFORMANCE HIGHLIGHTS

TURNOVER

BGN '000 83 779TOTAL ASSETS

BGN '000 175 174

EBITDA

BGN '000 7 657CAPITAL EXPENDITURE

BGN '000 3 454

EMPLOYEES (direct employees as of 31.12.2017)

267

FATAL ACCIDENTS (of direct employees)

0

Adamantios Frantzis

CEO

TITAN Bulgaria

2

Dear Stakeholders,

It gives me great pleasure to share with you the first audited TITAN Bulgaria Integrated Annual Report. By ensuring a higher level of transparency through a third-party assurance, we at TITAN Bulgaria clearly articulate our commitment to give information on the company's overall performance in 2017 to our stakeholders in an honest and comprehensive manner.

In 2017, the company experienced a deterioration in its financial performance. The growth in cement demand in the country led to a 21% rise in our revenues, however, EBITDA was down with 39%, partially affected by increased fuel costs. Although there are several economic indicators showing that Bulgaria has a promising potential for future growth as its standard of living will converge to the EU average, the current cement consumption in the country is estimated to have not even reached half of the pre-crisis consumption levels.

While dealing with the immediate financial challenges we faced, at TITAN Bulgaria we remained dedicated also to our long-term commitment to the UN Sustainable Development Goals (SDGs). In 2017, we conducted a materiality assessment review to update the material issues for the company and to align their new formulation with the relevant SDGs. Structuring a sustainable development strategy on this basis, allows us to enhance our business from financial as well as from environmental, social, and governance perspectives.

Ensuring a healthy and safe working environment is more than a priority for our business – it is an integral part of our values. For this reason, we focus our continuous efforts on preventing serious incidents by persistently revitalizing and strengthening the safety culture within our areas of operation. In 2017, we revised and improved our „Lock out – Tag out – Try out” (LOTOTO) procedure, a fundamental procedure for safety operation on the working site, and provided sufficient training for all our employees and contractors.

Our employees are a keystone for the company's future. We continue to provide them with equal opportunities to grow professionally and personally, fostering workplace diversity as part of our corporate culture. Being an employer of choice, we invest in attracting young employees to complement the valuable expertise of longtime members of the team. In 2017, strengthening its collaborations with academia, the company gave young talented people the opportunity to learn about processes and activities in a real work environment through plant visits and student internships.

Our determination to share value and support the sustainable development of the local communities stays unabated. We continued to strengthen and expand our long-term partnership with the „Teach for All” Bulgaria Foundation, which has improved the elementary education in the villages along the Zlatna Panega River. By the end of 2017, 19 new teachers have been working with over 500 schoolchildren from families with low socio-economic status concentrating on the pupils' motivation, functional literacy and proactivity and achieving exceptional results. In addition, the various initiatives organized by our Environmental department aimed at raising environmental awareness amongst young people is the surest and most sustainable approach to nurture care for the nature and keep the beauty of the region.

In 2017, we continued reducing our environmental footprint, mitigating climate change and protecting water quality along our Group's 2030 sustainability targets. We focused on operational excellence and encouraging environmental leadership in all management positions. Although our results in the utilization of alternative fuels and alternative raw materials did not reach our highest achievements in 2017, we still managed to save in excess of 17 000 tons of CO . To contribute to the circular economy, we have implemented resource efficiency in all strategic objectives of the company and used it as a basis of several new projects for utilizing waste in the clinker production as an alternative to natural raw materials. Realizing that water is essential to life and is a key resource for our industry, we have developed a sustainable approach addressing water efficiency and quality through our water treatment and recycling system based on the best available techniques.

Finally yet importantly, we realize that a company's strength to persevere, endure and inspire regardless of the challenges of time comes with a governance, in which transparency and ethics are strongly embedded. The key components that guide our professional life – respect and fairness, open dialogue, personal responsibility, open-mindedness to change, commitment to work with a focus on health and safety, are set in the Code of Conduct and the Policies of TITAN Group.

We recognize that we are living in a transformation phase where the society and the industry have to respond successfully to environmental, societal and economic changes. We feel confident that all of us, with the support of our partners, will stand up to the challenges and continue to deliver value to all our stakeholders by growing the company in a sustainable way.

CEO MESSAGE

03 CEO MESSAGE

2

STRATEGIC REVIEW

TITAN GROUP

ZLATNA PANEGA CEMENT AD – TITAN BULGARIA

WHO WE ARE, AND WHAT WE DO

OUR STRATEGY FOR SUSTAINABLE DEVELOPMENT

04STRATEGIC REVIEW

01

TITAN GROUP

Founded in 1902 as a family company in the town of Elefsina, Greece, TITAN Cement Company S.A., has built the first

cement plant in Southeastern Europe. At the present time, the TITAN Group is a leading cement manufacturer with more

than 115 years' experience in the industry, holding more than 40 companies and owning 14 cement plants in various

locations – Greece, Southeastern Europe, the USA, South America and the Eastern Mediterranean. In Western Europe,

the company has established cement distribution terminals in Italy, France and the United Kingdom.

05 STRATEGIC REVIEW

Greece

USA

Cement plants

1 Roanoke – Virginia

2 Pennsuco – Florida

Greece

Cement plants

1 Thessaloniki

2 Kamari

3 Patras

USA

Joint venture

Cement plant

1 Quixere

Brazil

2

1

1

1

23

Brazil

06STRATEGIC REVIEW

FYROM

Albania

Kosovo

Serbia

Bulgaria

Southeastern Europe

Cement plants

1 Kosjeric – Serbia

2 Zlatna – Bulgaria

3 Sharr – Kosovo

4 Usje – FYROM

5 Antea – Albania

Turkey

Egypt

Eastern Mediterranean

Cement plants

1 Alexandria

2 Beni Suef

1

1

2

3

4

5

1

2

Joint venture

Cement plant

1 Tokat

Turkey

Egypt

In the region of

Zlatna Panega

village, in a small

family factory

cement was

produced for the first

time in Bulgaria.

ZLATNA PANEGA CEMENT AD

– TITAN BULGARIA

1907

The company is

acquired by the

international

manufacturer TITAN

Cement S.A. and

joined the Group

under the name of

Zlatna Panega

Cement AD.

2004

07 STRATEGIC REVIEW

The small factory was

replaced by a large

plant named „Zlatna

Panega Cement”,

equipped with 5 new

cement production

lines.

1966As a result of the

state privatization

policy Heidelberg

Cement AD

acquired ownership

of the company.

1998

08STRATEGIC REVIEW

WHO WE ARE, AND WHAT WE DO

Zlatna Panega Cement AD is part of the TITAN Group family and is one of the main manufacturers of high quality cement

in Bulgaria. The company is vertically integrated by operating ready-mix concrete plants in 4 big cities and participates

through joint venture activities in 12 gravel and sand pits and crushed stone quarries. We are one of the pioneers in

alternative fuels utilization within TITAN Group. Our success is ensured by the use of the best available production

technology and know-how.

TITAN Bulgaria is the common term that we use to refer to all subsidiaries of TITAN Group in Bulgaria.

Our Production Units

Sofia

Plovdiv

Stara Zagora

Veliko Tarnovo

Cement Plant

Zlatna Panega Cement AD is the

l e g a l e n t i t y f o r o u r c e m e n t

operations. In the cement plant

located in Zlatna Panega village we

crush, grind and feed the raw

material to two clinker kilns to

produce cement clinker, which is

subsequently milled and mixed with

additives in order to produce

cement. In the premises of the plant,

the subsidiary company Green

Alternative Energy Assets (GAEA)

EAD operates an installation for

p r o d u c t i o n o f P r o c e s s e d

Engineered Fuel that we utilize as

alternative fuel in our kilns.

Aggregates Quarries

Gravel and Sand Pits - Bulgaria

(GSPB) EAD, a 100% subsidiary of

Zlatna Panega Cement AD, holds

shares in joint ventures, which

operate 12 quarries for sand, gravel

and crushed stone. GSPB EAD alone

holds concessions for the extraction

of aggregates in the region of

Kremikovtsi - Sofia Municipality and

the Municipality of Slivnitsa. The

c o m p a n y h a s a p e r m i t f o r

extraction of gravel and sand from

the Danube River in the Municipality

of Pirgovo. Double W Co EOOD, a

100% subsidiary of GSPB EAD, owns

and operates a port in Ruse.

Ready-mix Concrete Plants

Zlatna Panega Cement AD –

Concrete Operations Department

(previously Zlatna Panega Beton

EOOD) operates eight ready-mix

concrete production units in Sofia,

Plovdiv, Veliko Tarnovo and Stara

Zagora as well as one project based

RMC unit.

ZlatnaPanega

Ruse

Pazardzhik

CSR Europe is a leading business network, through which the TITAN Group connects

with stakeholders on issues, related to transparency, corporate responsibility, and

sustainable development.

In 2015, TITAN decided to support the achievement of the most important sustainable

development goals of UN 2030 for our business, at Group level and through the

network of local representatives.

sustainabledevelopment.un.org/sdgs

Along with 50 other leading companies, TITAN signed the European Pact for Youth in

order to actively support the European efforts in providing employment opportunities

and overcoming the problem of lack of skills among the youths.

csreurope.org/pactforyouth

Zlatna Panega Cement AD is among the first companies in Bulgaria that has joined the

UN Global Compact, and implemented the 10 universal principles in the areas of

human rights, labor, environment and anti-corruption.

The TITAN Group supports and coordinates events and actions in the context of UN

initiatives on human rights and anti-corruption.

TITAN has been a key member of the Cement Sustainability Initiative (CSI) since its

establishment by the World Business Council for Sustainable Development

(WBCSD) in 2003, and actively participates in the following working groups:

· Climate Change

· Fuel and Raw Materials

· Health and Safety

· Air Emissions

· Biodiversity

· Concrete Sustainability

· Water

· Sustainable Supply Chain

OUR STRATEGY FOR SUSTAINABLE DEVELOPMENT

09 STRATEGIC REVIEW

Detailed information about our collaborations on a global basis can be found in the 2017 Integrated Report of the TITAN Group.

integratedreport2017.titan.gr

Our Stakeholders - Collaborations for Achieving Sustainable Development

The TITAN Group participates regularly in the work programs of the World Business Council for Sustainable Development

(WBCSD) and in CSR Europe projects for evaluation of non-financial performance. It strives to use the set of tools of CSR

Europe in integrating CSR into operational business practice, as well as in dealing with the socio-economic and

environmental challenges that it faces.

While engaging in partnerships and collaborative action at local level to share its know-how, experience and best

practices and promoting solutions to safeguard the sustainable growth of the business, communities and its stakeholders,

TITAN Bulgaria also seeks to contribute meaningfully to global initiatives that the TITAN Group participates in.

10STRATEGIC REVIEW

COLLABORATION WITH STAKEHOLDERS

Collaboration with internal and external stakeholders is a key element in the business model of the TITAN Group, which is

directly connected to the values and key priorities for sustainable development of the company. The achievement of all

this happens through taking responsibility for all the people, who work in the company and/or live in the operating area.

Investors and

analysts

Customers

Business

partners,

contractors and

suppliers

Scientific

community

NGOs

Local and state

authorities

Local

community

Employees

Regulators

Identify key stakeho

lders

and material issue

s

ni se

ey

olp

me

eg

ag

nE

noit

atn

em

elp

mi y

get

arts

Our

Collaboration

Model

Our Stakeholders

DELIVERING VALUE FOR ALL

11 STRATEGIC REVIEW

We strive to deliver value to our stakeholders at every stage of our operations.

1 Products

We serve the need for safe,

durable and sustainable housing

through our products.

2 Alternative fuels

To contribute to the preservation

of natural resources we utilize

alternative fuels and raw materials.

3 Environmental activities

We are also committed to

reducing the environmental

footprint with a particular focus

on CO emissions through process

improvements and investments.

'000 BGN 3 454 in investments for future growth

to local and international suppliers

to employees for salaries, pensions

and social benefi ts, including additional

benefi ts beyond those provided by law

'000 BGN 8 730

'000 BGN 45 406

2

12STRATEGIC REVIEW

4 Our employees

We provide a healthy and safe

environment and promote lifelong

learning through continuous

training.

5 Communities

We make a meaningful contribution to our local

communities by supporting their sustainable

development by building on collaborations and

developing and investing in programs aimed at the

most material issues in our region of operation.

'000 BGN 2 533 on environmental improvements

in taxes to national and local authorities

in donations'000 BGN 217

'000 BGN 3 977

SDGs: 6, 11, 15, 17

SDGs: 3, 17

SDGs: 12, 13, 17

SDGs: 3, 4, 9, 11, 17

Specifi c net direct CO 2 emissions

(kg/t Product )

Specifi c dust particulates(g/t Clinker)

Specifi c NOx emissions(g/t Clinker)

Specifi c SOx emissions(g/t Clinker)

(comp. to 1990 level) (comp. to 2003 level)

20% 53% 43%92%

Specific water consumption

(lt/t Cement )

40%

0Fatalities

Employees, contractors

and third parties

Energy efficiency

%50of the Group’s total

clinker capacity to be covered by ISO 50001

SDGs: 7, 17

All key operations with

Community Engagement Plans related to material

issues and Group priorities

Active wholly owned sites with quarry rehabilitation plans

Active wholly owned sites of biodiversity value with Biodiversity

Management Plans

100%

Biodiversity and land stewardship

To be in the top

%25of WBCSD/CSI members’ performance in Lost Time

Injuries Frequency Rate (LTIFR) for employees

SUSTAINABILITY PERFORMANCE 2020 TARGETS

SUSTAINABILITY PERFORMANCE

13 STRATEGIC REVIEW

As the society's expectations towards businesses increase, focusing on material issues becomes crucial for elaborating a

coherent and comprehensive strategy for sustainable development. An essential step in enabling continuous

improvement of this strategy is the materiality assessment process of TITAN Group's significant operations and their

stakeholders. The following are the nine most material issues identified for the TITAN Group and its key stakeholders:

Financial Liquidity and Access to Funding

Environmental Management

Climate Change

Circular Economy

Health and Safety

People Management and Development

Sustainability of Communities

Social and Political Risks and Instability

TITAN GROUP MATERIAL ISSUES

Governance, Transparency and Ethics

The alignment of the priorities of the company with stakeholders' needs

ensures the implementation of an inclusive and consistent strategy for

the Group's sustainability.

To support the Group's long-term commitment to the UN's 2030 Agenda

for Sustainable Development, TITAN directly links its 2020 sustainability

targets and priorities with the SDGs that have been identified by the

materiality assessment process as the most relevant to the business. This is

presented in the table below.

2

1

3 (comp. to 2003 level)3 (comp. to 2003 level)3

(comp. to 2003 level)3

1990 is the base year for CO2 emissions,

2

2003 is the base year for environmental data other than CO2 emissions.

3

Product equals cementitious product as defined b y WBCSD/CSI.

1

in line with the Kyoto protocol.

Focusing on Material Issues for Our Business and Key Stakeholders

14STRATEGIC REVIEW

ALIGNING OUR STRATEGIC GOALS AND PRIORITIES WITH THE UN SUSTAINABLEDEVELOPMENT GOALS

Following the sustainable development policy of the TITAN Group, we at TITAN Bulgaria evaluated the importance of all

matters, related to our business in terms of their impact on the company and their importance to our key stakeholders.

In 2015, we began reassuring our strategic goals and priorities through conducting a materiality assessment, the

evaluation of factors we deem significant. As a next step we aligned the categorized material issues with the UN

Sustainable Development Goals (SDGs).

The table shows the most material issues for TITAN Bulgaria and its stakeholders, which were updated in the materiality

assessment review process in 2017, and their corresponding UN SDGs.

TITAN Bulgaria considers the identification of specific sustainability

targets based on the Group's 2020 targets as a substantial next step

in the company's sustainability strategy.

The further content of this report is structured along our performance

in the above-mentioned four categories (economic, social,

environmental and governance) and in relation to our progress on

the material issues and the aligned UN SDGs throughout 2017.

RAW MATERIALS / WATER

MATERIAL ISSUE

CUSTOMERS / PRODUCTS

ENERGY / CLIMATE

HEALTH

SAFETY

SUSTAINABILITY OF COMMUNITIES

PEOPLE MANAGEMENT

GOVERNANCE, TRANSPARENCY

AND ETHICS

CATEGORY

ECONOMIC

ENVIRONMENTAL

SOCIAL

GOVERNANCE

RELEVANT UN SDGS

ECONOMIC PERFORMANCE

FINANCIAL PERFORMANCE

OUR PRODUCTS

OUR BUSINESS PARTNERS

15 ECONOMIC PERFORMANCE

02


FINANCIAL PERFORMANCE

Return on invested capital

Index Calculations (Formula) 2016 2017

Profit a�er tax / Average invested capital 0.4%

Return on capital

Ratio net debt / EBITDA

Profit per share

Earnings before interest and taxes / Average equitycapital (Own capital + Net debt)

Net debt / EBITDA

Earnings per share in BGN

0.5%

2.4

0.02

- 4.35%

- 4.2%

3.7

- 0.21

2015

2.6%

2.9%

1.3

0.14

ECONOMIC SITUATION IN BULGARIA IN 2017

In 2017, the actual GDP growth was 3.6% due to the increased export and final consumption in the country. The unemployment

rate in 2017 declined for another consecutive year and reached a record low of 6.6%, while the average salary increased by

10.6% compared to 2016.

By December 2017, the annual inflation rate reached 2.8%. We expect the inflationary trend to continue during 2018. The state

budget implementation for 2017 is characterized by a higher increase in revenue over expenditure due to the GDP growth and

the reduced infrastructure costs. For a second consecutive year, the state budget had a surplus at the amount of BGN 0.8 billion,

as of the end of the year, which was 0.8% of the GDP.

Public debt at the end of 2017 was 25.4% - lower than in 2016 (29.4%).

OVERVIEW OF THE BULGARIAN CEMENT MARKET IN 2017

The cement sales volume on the Bulgarian market in 2017 increased to 2 080 thousand tons, which was about 130 thousand tons

more than the cement sales volume in 2016. Our observations show slight growth in the cement import volumes in Bulgaria in

2017.

To assess our business performance and our progress against our strategic priorities, we use a range of financial and non-

financial indicators. It is important to note that on October 10, 2016, Zlatna Panega Cement AD and Zlatna Panega

Beton EOOD made a merger agreement, under which Zlatna Panega Beton EOOD merged with Zlatna Panega

Cement AD, and ceased to exist as an independent legal entity. Therefore, as of 2017, all financial and non-financial

indicators referring to Zlatna Panega Cement AD include information regarding our Concrete operations department.

PERFORMANCE HIGHLIGHTS


Zlatna Panega Cement AD registered an

increase in cement sales volume. We have sold

a total of 566 thousand tons of cement

(compared to 526 thousand tons in 2016), 35

thousand tons of which have been exported. In

addition, the company has exported 106

thousand tons of clinker.

SALES VOLUME

4602015

Sales volume in '000 tons

480

500

520

540

560

580

600

620622

526

566

640

2016 2017

The sales revenues of Zlatna Panega Cement AD

increased by 21% in 2017 compared to 2016.

SALES REVENUE

02015

Sales revenue BGN '000 000

10

20

30

40

50

60

70

8080.6

69.1

83.8

90

2016 2017


As a result of the merger of Zlatna Panega Beton EOOD with Zlatna Panega Cement AD, the increased fuel costs and the

increased sales of clinker, the company reported a loss of BGN 6 945 thousand in 2017 (compared to BGN 735 thousand

Net profit in 2016).

NET PROFIT

EBITDA also marked a decrease and amounted

to BGN 7 657 thousand (in 2016 it was BGN 12 631

thousand).

EARNINGS BEFORE INTEREST, TAXES,

DEPRECATION AND AMORTIZATION

(EBITDA)

2015

16881

12631

7657

0

2000

4000

6000

8000

1000

1200

1400

1600

1800

2016 2017

NET DEBT

Due to the optimization of working capital and

the reduced investments in 2017, the Net debt of

Zlatna Panega Cement AD dropped to BGN 28

040 thousand (BGN 29 969 thousand in 2016).

On April 27, 2018, additional agreements were signed to extend the concessions of the Zlatna Panega and Koritna

quarries to 15 years.

There were no additional notable events subsequent to December 31, 2017, which require corrections and/or additions

to the company annual financial report.

POST BALANCE SHEET EVENTS

EBITDA in BGN ’000 000

Net debt in BGN ’000 000

35.0

30.0

25.0

20.0

15.0

10.0

5.0

0.0

2015 2016 2017

Zlatna Panega Cement AD is a leading

manufacturer of cement, concrete and

aggregates. The company strives to sustain a

modern, efficient and sustainable production

model combining the creation of economic

value with environmental protection.

As a result of the active promotion and

investment in manufacturing innovation, Zlatna

Panega Cement AD creates products,

enhancing the qual i ty and stabi l i ty of

construction materials, facilitating construction

and reducing the negative impact on the

environment.

OUR PRODUCTS



Normal Early Strength Portland Cement - CEM I 52.5 N

This product is used in the production of high-early strength and pre-stressed concrete, of concrete products and precast

elements, exposed to periodic freezing/thawing, and of reinforced concrete elements with or without thermal

treatment.

GREY CEMENT All cement types, produced by Zlatna Panega Cement AD,

comply with the BDS EN 197-1 Standard.

Available in bulk

High Early Strength Sulfate Resistant Portland Cement - CEM I 42.5 R-SR

Intended for use in aggressive sulfate containing waters, the sulfate resistant Portland cement is recommended for the

production of concrete and reinforced concrete hydraulic structures, exposed to sulfate aggression, systematically

repeated freezing and thawing, or wetting and drying, sulfur-containing gases and seawater. It is also suitable for use in

concrete, intended for pressure and non-pressure installations in soils with varying degrees of filtration and sulfate

aggression. Available in bulk and packed in 25 kg bags

High Early Strength Limestone Portland Cement - CEM II/A-L 42.5 R

Limestone Portland cement is used in the production of small-sized concrete products and components, and such

exposed to periodic freezing and thawing. It is also used in reinforced and unreinforced concrete and industrial

constructions. Available in bulk and packed in 25 kg bags, in 50 kg bags

for the internal market, and in 40 kg bags for export

High Early Strength Limestone Portland Cement - CEM II/B-L 32.5 R

This Limestone Portland cement type contains a higher limestone level (up to 35%) and is suitable for various building

activities – flooring, masonry, plastering works, etc.Available in bulk and palletized in 25 kg and 50 kg bags

Low Heat Slag Cement with Normal Early Strength - CEM III/A 42.5 N-LH

Low heat cement is characterized not only by its low heat of hydration, but also by a slow increase in the early strength

characteristics, high sulfate resistance and reduced frost resistance. It is recommended for the production of large-sized

(solid) concrete and reinforced concrete parts, such as large-sized elements of tall buildings, concrete dams, etc

Available in bulk

Normal Early Strength Pozzolanic Cement - CEM IV/A (P-V) 32. 5 N

Pozzolanic cement is produced by grinding together Portland cement clinker, pozzolans and fly ash. Renowned for its

great water resistance and water repellent performance, pozzolanic cement is one of the basic constituents of

concrete and reinforced concrete elements, used under water or exposed to high humidity

Palletized in 25 kg and 50 kg bags

Normal Early Strength Pozzolanic Cement - CEM IV/A (P-V) 42. 5 N

This Pozzolanic cement type has a lower Portland cement clinker (65 to 89%) and a higher pozzolans and fly ash (11 to

35%) content. It is also used in components, exposed to or constantly under water.

Palletized in 25 kg and 50 kg bags


Micronized Limestone is a finely ground, natural calcium carbonate. This high quality fine filler has a wide range of

applications, such as production of building materials: asphalt, concrete and dry construction mixes. It is also used in

agriculture, for purification of sulphur-containing TPP exhaust gases, in glass production, in production of paper, paint,

plastics, etc.

MICRONIZED LIMESTONE

Available in bulk

Zlatna Panega Cement AD – Concrete Operations Department offers a wide range of products used for reinforced and

non-reinforced constructions. Our ready-mix plants produce the following classes of concrete established and certified

in accordance with the BDS EN 206 and BDS EN 206/NA Standards.

In terms of compressive strength class, our concrete ranges from C8/10 ÷ C50/60 and S1 ÷ S5 classes of slump

(consistence). As to the maximum diameter of the aggregates in concrete, our concrete mixes have Dmax = 11.2 mm

and Dmax = 22.4 mm (the nominal upper aggregate size of the coarsest fraction Dmax is used for classification).

For structures and facilities that have intermittent or permanent contact with water we offer the following water

tightness classes: Cw 0,4 ÷ Cw 1,0. Clients choose the class depending on the thickness of the structure and the

hydrostatic pressure value. The concretes of the frost resistance classes (Cfr75 ÷ Cfr200) are used in structures and

facilities exposed to frequent freezing and thawing.

We produce exposure classes concrete related to environmental actions, intended for constructions exposed to the

following environmental risks: corrosion induced by carbonation (XC1 ÷ XC4), chlorides other than from seawater

(XD1÷ XD3), chlorides from seawater (XS1÷ XS3); freeze/thaw attack with or without de-icing agents (XF1÷ XF4);

chemical attack (XA1÷ XA3).

The company also works with customers' prescriptions.

CONCRETE PRODUCTS

FLOOR SCREED MORTARS

We manufacture floor screed mortars based on cement and in full compliance with the BDS EN 13813.

We offer the following floor screed mortars classes as per compressive strength: C12, C16, C20, C25, C30.

CEMENT BOUND GRANULAR MIXTURE

T h e c e m e n t b o u n d g r a n u l a r m i x t u r e w e p r o d u c e c o m p l i e s w i t h t h e B D S E N 1 4 2 2 7 - 1 .

This product is used for construction and maintenance of roads, airports and other traffic-intensive areas.


In 2017, we have developed the following concretes for

special application in highly demanding projects.

Low Heat Concrete

The Low heat concrete was developed for the special needs

of two highly demanding construction sites in Sofia – Sky Fort

Skyscraper (205 m) and Zlaten Vek Tower (126 m). The big and

deep foundations required concrete with low exothermic

properties, due to the danger of cracks. The new concrete

was produced with a specially developed type of cement

CEM III/A 42, 5 N – LH.

OUR NEW CONCRETE PRODUCTS

Torcrete

C 25/30 (Dmax=8mm) S4 W0.8 Bo3.0 XC2

C 30/37 (Dmax=8mm) S4 W0.6 Bo3.0

Torcrete is developed for the construction of metro tunnels in

Sofia. Due to project time restrictions, this concrete is

produced 24/7.

High strength concrete

Concrete type C 50/60 was developed for the special

needs of the Sky Fort Skyscraper (205 m). The concrete is

designated for vertical elements and the anti-seismic core of

the building. This product is produced with cement CEM I 52,

5 N and polycarboxilate admixture.

Pouring of 3 000 m foundation

of the Zlaten Vek Tower.

Pouring 9 000 m foundation

of the Sky Fort Skyscraper

3

3

CUSTOMERS

In 2017, the cement market showed a slight rise in cement consumption, despite the expectations for a significant

positive change in market trends. The predictions of market growth were supported by the increased demand for

housing in the big cities as well as the advancement of the running EU-funding Programming Period 2014-2020 with

expected considerable investments in the national infrastructure of Bulgaria - construction of highways, railway tracks

and major environmental projects.

Despite the positive trend in market consumption, TITAN Bulgaria carried out its operating activities in the context of

sharpening competition.

Our main priority during the year was again satisfying the needs of all our customers. Sales team representatives

focused on more frequent customer visits to improve service and get feedback. The efforts of the Sales and Logistics

departments were highly successful in maintaining constant contact with all customers to prevent any supply and

quality issues.

We have also managed to sustain the high quality of the products and supply service in the cement bulk consumption.

In this respect, we received commendation from our partners represented by multinational companies in the country

such as Bramac, Semmelrock Stein+Design, Baumit, etc.

In 2017, we attracted as partners companies involved in major infrastructure projects such as the construction of the

Struma Motorway, Sofia Metro, etc.

In the packaged cement market, we continued following our strategy for selling products in different price segments to

satisfy the needs and requirements of customers from different groups.

To guarantee our clients' safety during the service, we have introduced a system for constant monitoring of our cement

delivery vehicles' technical condition.

OUR BUSINESS PARTNERS – CUSTOMERS AND SUPPLIERS



56 written enquiries from companies about cement products purchase

43 of the companies that had made enquiries were attracted as our clients

7 of them have signed long-term contracts for cement purchase with the company

SUMMARY STATISTICS

42 questionnaires filled in by different clients from Sofia and the Southwest, the North and the South region.

34 of them are clients of Zlatna Panega Cement AD for more than 3 years.

53% of the respondents assessed the quality of our cement as VERY GOOD.

About 81% of the respondents evaluated the customer service of our Sales Department as VERY GOOD, while the rest

evaluate it as GOOD.

The efficient and easy communication with all departments, quality and timely service, responsiveness to the clients'

needs, adequate feedback, promptness, good customer relations and accuracy of the staff were pointed as a plus

of the relations with the Sales Department at every level.

The respondents pointed as very appreciated the following advantages of our Logistics Department: fast and quality

deliveries, adequate reactions to questions and issues, good organization of the logistics process of execution of

bulked and packaged cement orders, which leads to reliability of the deliveries and earned trust.

Excellent cement quality is the benefit of our products that our customers value most.

CUSTOMERS' SATISFACTION STUDY

SUPPLIERS

Zlatna Panega Cement AD maintains a very well organized supply chain, in which special attention is given to suppliers.

Methods of selection, control and evaluation of suppliers are governed by the Code of Conduct for Procurement of the

TITAN Group, in which the categories of quality, reliability, adaptability and location of business are the key criteria of

assessment. To ensure selecting and working with suppliers, which are consistent with TITAN's values and standards, we

require our partners in the supply chain to respect our health and safety policy, labor and human rights, and

environmental standards and regulations.

In line with its corporate social responsibility policy to support local communities and local businesses, the company

makes effort to invite all local suppliers that can offer a required product or service to a tender bidding process. In

addition, while selecting the most acceptable bid, we give priority to local suppliers, if their offers are approximate to

the price of a supplier who is not operating in the region of the Zlatna Panega plant.

The company works also with international suppliers providing goods, such as fuels, specialized spare parts, and

cement paper bags. The deliveries of these international suppliers are centralized.


NUMBER OF MAJOR

SUPPLIERS

47 11 23.40% 62

NUMBER OF MAJOR

LOCAL SUPPLIERS

% LOCAL SUPPLIERS TOTAL NUMBER OF

LARGE CONTRACTS

SOCIAL PERFORMANCE

OCCUPATIONAL HEALTH AND SAFETY

PEOPLE MANAGEMENT



03

OCCUPATIONAL HEALTH AND SAFETY

27 SOCIAL PERFORMANCE

Health and safety are material issues that affect the lives of our employees and contractors every day, as well

as their families and communities. TITAN Bulgaria is committed to maintain the best working environment

conducive to developing quality workforce, enhancing efficiency and productivity and ensuring physical

and mental wellbeing. We also urge our contractors and other business partners to adopt similar policies.

28

OUR COMMITMENT TO SAFETY

In order to ensure our commitment to safety at work, we implement effective programs covering a variety of issues that

focus on the working conditions.

We started the positive practice of reporting, investigating and accounting incidents without consequences (near

misses) for the employees, equipment and the environment in 2010. In 2017, 166 near miss and incidents reports have

been submitted by employees and contractors. Each report was reviewed, investigated and the identified

occupational risks were communicated to the employees and eradicated. The monthly rewarding of the participants

in eliminating the hazards has been successfully applied as a motivating method since 2014. The incorporation of the

practice of reporting, investigating and accounting incidents without consequences in the Concrete operations

department of the company is currently in process.

The procedure „Permit to Work” ensures that authorized and well-qualified and trained people have identified the

potential risks and these risks have been minimized through the use of appropriate safety regulations and measures of

control. This procedure was fully revised in 2017. During the year 6 755 permits were issued, incl. 2 071 electrical permits to

work.

The „Lock out – Tag out – Try out” (LOTOTO) procedure ensures the identification of all potentially dangerous sources

of energy for each facility or technological area. During operation all the identified sources are turned off, marked and

locked by the supervisors in charge and by all employees in that particular work station. In 2017, the LOTOTO procedure

was revised, reassessed and improved.

The company also monitors its contractors' compliance to the health and safety procedures. A number of services are

provided on the territory of the plant by a variety of specialized companies. To establish sound cooperation with reliable

companies, we have launched a contractors' database. Apart from the assessment of the services' quality, the

database comprises the level of compliance to our health and safety programs.

In 2017, we continued the practice of safety audits of production areas and processes. 12 teams, including

representatives from different departments and external organizations conduct the audit in 12 areas of the plant. Every

month each team checks the conditions in one of these areas. They complete a report with the identified dangerous

conditions and actions of employees. The reports are being analyzed and measures for eliminating the risks are taken.

To guarantee our direct employees' and contractor employees' safety, we regularly inspect, mark and ensure the

reliability of high-risk facilities in the plant, as well as provide protective equipment and supervise its use by all

employees. Our fire-fighting system is being inspected monthly. Fire-extinguishers are regularly maintained and

reloaded. We have also arranged a 24-hour available team, which is ready to react in the initial stage of fire.

In 2017, there were three lost time injuries (LTIs) in TITAN Bulgaria. The first incident had a lighter impact (ankle injury during

lunch break), whereas the second was a serious fracture in the neck caused by falling from small height during cleaning

of a belt conveyor, and attributed to sudden dizziness. The third was a thigh injury of a direct employee from our

Concrete operations department. This incident occurred during the works on the Hemus highway project. All incidents

were thoroughly investigated and corrective measures were taken to prevent other similar incidents in the future.

SOCIAL PERFORMANCE


Fatality - A death resulting from a work-related accident, with no time limit between the date of the accident and the date of death; fatalities are

reported for direct employees, contractors/subcontractors and third parties as defined by the CSI Health and Safety Measuring and Reporting Guidelines

(ver. 4.0, 2013)

LTI (Lost Time Injury) - Injury at work is any injury due to which an employee is absent from work, for one or more working days, excluding the day of injury as

defined by the CSI Health and Safety Measuring and Reporting Guidelines (ver. 4.0, 2013)

1

2

PERFORMANCE/YEAR 2015 2016 2017

Fatalities

LTI

Safety Audits

Near Misses - Direct Employees

Near Misses - Contractors

Permits to Work

H&S Training Hours

0

1

155

7

0

5 998

7 842

0

0

157

4

6

7 595

9 517

0

3

151

6

4

6 755

9 400

1

2

3

3

Near Misses – Reported incidents with no consequences as defined by the TITAN Guidance in place (numbers for 2015 and 2016 adjusted according to

the updated TITAN Guidance as of 2017)

3

A new Health Policy was announced to the personnel by the management of Zlatna Panega Cement AD in 2016. The

created Health Program became an additional measure for securing a healthy working place and protecting the

health of every employee. In 2017, materials and information boards on a variety of health issues were positioned in the

plant.

Тhe company also provides annual preventive medical check-ups for all its direct employees, adapted to their health

hazard exposure and other specific needs.

During а routine safety walk asbestos containing plates were detected in the cable channels. Because of the health

hazards of asbestos exposure, immediate action was taken. Due to the specific treatment needed for this material, we

hired a certified company. All permissions according to the Bulgarian legislation were prepared before starting. The

asbestos-containing plates were removed, packed and exported from the plant territory.


OUR COMMITMENT TO HEALTH

Health is an integral part of the company's commitment to caring for

its employees' well-being. Apart from considering the health

hazards of the working environment and taking measures to avoid

them, the company has established additional health practices.

In order to safeguard the health of our employees in the Zlatna

Panega plant to the maximum extent, we have built a medical

center on the plant premises, which is fully equipped. A medical

specialist is available 24/7 in the center in case first aid or a

consultation on a health issue is required.

Removing asbestos-containing plates in full

compliance with the safety regulations

CASE STUDY

NEW H&S INITIAL BRIEFING VIDEO

We updated the video materials used in the initial briefing of visitors in the plant to reflect the technical and

organizational changes in the production process. The video materials are bilingual – in Bulgarian and in English. The

materials are designated for visitors as well as newly recruited employees.


HEALTH AND SAFETY – GAEA EAD

Due to the specifics of the alternative fuels (AF) business, the main focus in the field of health and safety is on people

continuous development. Targeted trainings were done based on business, individual and legislation needs not only for

own personnel but also for permanent contractors. In addition, several improvements were done along the PEF line,

such as mechanical LOTOTO, blocking systems, safety covers and fences, access platforms to service the equipment,

etc.

During the year, several external audits were done by VDZ (AF Quality control), TUV (ISO integrated management

system for quality, safety and environment protection), Regional Environment Authorities in Pleven (compliance with

waste legislation), TITAN H&S Dept. All of them proved very good status of GAEA operation, as well as full compliance

with legislation, best practices and procedures.


OCCUPATIONAL HEALTH AND SAFETY TRAINING

The concept that health and safety matters are of vital significance for our progress in life, is a guiding principle in our

business philosophy. Well-trained and informed employees establish a solid foundation for work safety and reduced

accident risks.

In 2017, 9 400 man-hours of health and safety trainings have been conducted for TITAN Bulgaria key managers, heads

of departments and employees, directly employed in the company, whereas 3 032 man-hours of trainings have been

attended by contractors' employees.

Training of key managers and heads of departments

Training for conducting an initial H&S briefing

Discussions on the changes in the H&S legislation

Defensive driving training for the employees

driving company cars

Training of employees

Qualification trainings: li�ing equipment training;

maintaining of natural gas equipment; electrical safety

qualification, etc.

Working with biological agents (in cooperation with

GAEA EAD)

Monthly H&S meetings with all employees on the

following topics: „Safety signs under Bulgarian law”, „Fire

safety and fire extinguishers”, „Personal Protective

Equipment”, „Emergency plans”, „Rules and norms for

manual work with weights”, “LOTOTO”, “Working with

compressed gas cylinders”, „Safety at the office”,

„Crystalline silica”, „How to avoid specific dangers at

work”,

„Training for the prevention of serious accidents” –

the program, commenced in 2016, features a series of

narrative sessions, presenting serious incidents at various

TITAN Group locations over the years, and analysis of the

actions and decisions that have led to these accidents.

In 2017, the program focused on: „Overhead and

underground power l ines”, „Fall ing rocks” and

„Rollovers”

„Protection against falling” training – includes a cycle

of 4 trainings, first of which was conducted in 2017

Weekly training – 54 media-supported discussions,

held for the executive staff, complemented with the best

practices of CEMBUREAU

First-aid training of employees participating in the first-

aid teams

Training on the renewed Permit to Work procedure

Training of contractors

All contractor employees are invited and encouraged

to participate in the monthly health and safety

meetings

Fire-safety training

Training on the renewed Permit to Work and LOTOTO

procedures

In 2017, an average of 14 man-hours of trainings per

employee were organized for the contractors'

employees


WORKPLACE SAFETY

In 2017, an audit on cement carrier trucks and other

company vehicles was conducted. This audit has

become an annual practice to ensure vehicles'

technical reliability and reduce winter driving risks.

The alcohol testers installed at the plant entry point

contribute to dealing with workplace incidents,

absenteeism and reduced productivity caused by

alcohol abuse.

In 2017, the following workplace safety projects were

completed: installation of safety railings and barriers in

the Mills Department; secure service areas and

staircases constructed for the Preheater tower, and in

the Kilns and Raw mills department.


STAKEHOLDER ENGAGEMENT ON HEALTH AND SAFETY

The employees of our Health and Safety Department are members of the Health and Safety Experts club in Pleven,

where they discuss changes in health and safety legislation, and share best practices.

The company is also actively participating in the Health and Safety Association.

A representative of the department is a member of the Bulgarian Chamber of Mining and Geology. This Chamber

works on safety regulations in the mining industry.

In 2017, we conducted again a one-day training for students from the Medical Academy in Pleven, who were

acquainted with the cement production technology, occupational risks - dust, noise, microclimate, and good

practices for preventing risks.

PEOPLE MANAGEMENT


We believe that the employees are a key part of our success, so we strive to build long-term relationships with

them as well as with our contractors and the local community. Care for their development is our priority and we

strive to provide equal opportunities for professional and personal development. We are confident that the

knowledge, skills and competencies that result from the long working experience of the employees in TITAN

Bulgaria, are a pledge for the company's prosperity.

Percentage of employees by years of

employment in TITAN Bulgaria

up to 5 yrs

5 to 10 yrs

10 to 20 yrs

20 to 30 yrs

over 30 yrs

21%

37%

15%

18%

9%


287

22

27.62%

37.14%

84.27%

12 244

289

16

26.99%

35.29%

85.47%

18 359

295

32

27.12%

32.43%

84.75%

18 379

1

PERFORMANCE/YEAR 2015 2016 2017

Average Employment

New Hires

Share of women in employment

Share of women in management

Employees from local community

Training hours

37% of our employees have over 10 years of service in TITAN Bulgaria, 18 % - between 10 and 20 and 9% - over 30 years.

TITAN Bulgaria also seeks to invest in attracting new employees to complement the valuable expertise of longtime

members of the team. Compared to the previous year, in 2017, the proportion of newly recruited employees under 30 is

nearly doubled from 37.5 % to 62.5% of all new hires.


Age distribution of employees newly hired by

TITAN Bulgaria owned companies in 2017

under 30 years

30 to 50 years

over 50 years

6.25%

62.50%

31.25%

We are engaged in the care of local communities - traditionally, our employees live near the location we are

developing our business. In 2017, 84.75% of the employees of TITAN Bulgaria are local residents.

TITAN Bulgaria is committed to providing equal opportunities

for all. Gender and age diversity are recorded in hiring (new

employees) and in management. In 2017, again the highest

percentage of women in management positions was

registered in Serbia (35.71%), Bulgaria (32.43%) and FYROM

(28%). TITAN Bulgaria is second in the Group, where the

average rate for this indicator is 15.69%.

Gender distribution of employees on

managerial positions in TITAN Bulgaria 2017

Women

Men

32.43% 67.57%

Management

Production and Quality

Finance and IT

Administration

Sales

Human Resources

5%

30%

15%

19%

12%

19%


The largest share of female employees in TITAN Bulgaria is employed in the Production and Quality sectors (30%),

Finance and IT and Administration (19%). Compared to 2016, there is an increase of 3% for Production and Quality, 1% for

Finance and IT and 7% for Administration. In 2017, 43.75% of all newly hired direct employees are female, whereas the

total percentage of women in TITAN Bulgaria corresponds to 27.12%.

Percentage of women by department

in TITAN Bulgaria 2017

4006

9400

687

3022

TRAINING AND DEVELOPMENT

As an employer, TITAN is aware that the talent, skills, personal qualities and creativity of the employees have a strong

impact on the Group's performance. The investment in employee development remained a top priority in 2017 - more

than 80% of the Group's employees participated in training programs. The emphasis in the programs is again in the area

of health and safety. An increase of the training in the categories of environmental protection, compliance with the

Code of Conduct and Human Rights Policy is being observed.

Increasing the competence of our teams and the continuous learning are a key indicator for the achievement of our

business goals. In the past 2017 TITAN Bulgaria's investments in trainings amounted to a total of 18 379 man-hours - a

strong trend continuing from 2016, when a total of 18 359 man-hours were invested in trainings.


Total number of man-hours of trainings for direct

employees in TITAN Bulgaria in 2017

Zlatna Panega Cement AD

Concrete operations department

GAEA – Green Alternative Energy Assets EAD

Double W Co EOOD

15603

We continue to develop the technical competence of our employees. In 2017, 4 006 man-hours were generated in this

key business category. At the same time, attention is paid also to non-technical trainings (1 125 man-hours), foreign

languages (3 022 man-hours) and people management (687 man-hours).

Total training hours

per category

Environmental Protection

Technical Trainings

Health and Safety

Management Trainings

Non-technical Trainings

Language Trainings

0

2000

4000

6000

8000

10000

12000

14000

16000

1620 1060

96

1125

139


Compared to 2016, in 2017 there is a drastic increase in the man-hours dedicated to technical training (141.76 %) and

environmental protection (82.89 %).

In average, 62 training hours per employee were invested in 2017. There is also a positive trend towards a higher share of

women who received training – the ratio trained women/trained men increased from 35.15% in 2016 to 40.18% in 2017.

We are committed to train both - our directly hired employees and the employees of our contractors. In 2017, the

contractors' employees received training for 3 139 man-hours, 3 032 of which dedicated to health and safety topics and

107 - to environmental protection.

Total number of man-hours of

training of indirect employees

Health and Safety

Environmental Protection

107

3032

Total hours of Health and Safety

trainings in TITAN Bulgaria

Direct employees

9400

3032

Health and safety trainings remain a key part of TITAN Bulgaria's training program, and in 2017 this category represents

51% of all trainings for direct employees (9 400 man-hours).

Indirect employees

Cmentors Industrial Program

The Cmentors industrial program, launched in December 2016, continued in 2017. 22 staff members of TITAN Bulgaria

spent a total of 2 182 training hours in training. 856 hours were spent in lectures and field work. The remaining 1 326 man

hours were generated by the self-training of participants in the internet-based VDZ program (Verein Deutscher

Zementwerke - Association of German Cement Producers).

The duration of the training was 1 year and covered three main modules on the following topics:

Quarry, crushing and preparation of raw materials

Grinding, homogenization and processing of raw materials and solid fuels

Pre-heater tower, calcination and emissions

Cmentors is a program focused on learning by experience. A pre-formed focus group went through field training at the

end of each module. It included tours of the cement plant, during which the participants mapped out specific steps for

improvement of material quality and facility operations.

At the final stage of each module, the group prepared a report with suggestions for operations improvements.



THE PACT FOR YOUTH

In 2017, TITAN Bulgaria continued to work with young people, giving them the opportunity to learn about processes and

activities in a real work environment. In March, we invited teachers and students from the Technical University of Sofia to

visit the cement plant in the village of Zlatna Panega.

Our guests were acquainted with the projects for the modernization of the electrical equipment at the plant as well as

with the main activities related to the electrical maintenance and automation of the machines. The Head of Quarry

and Crushers Department, the Head of Electrical Maintenance, the Head of Process Automation and the Deputy Head

of Mechanical Maintenance of the Plant introduced the students and the teachers to their activities through their

fascinating presentations.

The Human Resources Department has provided valuable advice to young professionals on how to prepare and

successfully present a job interview, including how to write a resume and a cover letter. The students also learned about

the internship opportunities that the company offers.

The visit ended with an exploratory tour, during which students had the opportunity to see the processes and work at the

factory, as well as ask questions to the colleagues who accompanied them.

INTERNSHIP PROGRAM 2017

In 2017, 15 students took part In the traditional internship program of TITAN Bulgaria. They were trained and developed

applied skills in a real work environment in the following departments:

Electrical maintenance

Investments (Civil Engineers)


Our internship program is aimed at active and ambitious young people - 3rd and 4th years of the following degrees:

Silicate Technologies, Electrical Engineering and Electrical Equipment, Mechanical Engineering and Technology,

Construction of Buildings and Facilities and Finance.

Distribution of interns by

department in 2017

Electrical maintenance

Investments (Civil Engineers)


Environmental

Business projects

Information Technology

4

6

2

1

11

Environmental

Information Technology

Business Projects



Due to the remoteness of the cement plant from big cities, our company has strong interaction with local

communities. Developing and sustaining a working relationship with the communities where we operate is

fundamental to building trust with local stakeholders. Therefore, we have acknowledged the sustainability of

communities as a material issue. To ensure that we have a positive impact on society and the local

communities' sustainable development, we have not only engaged in collaborative projects, but have

developed our own. While taking action at local level, we also seek to contribute meaningfully to global

initiatives such as the European Pact for Youth.


ECOLOGY AND ENVIRONMENTAL PROTECTION PROJECTS

TITAN Bulgaria engages with communities to protect biodiversity and preserve local flora and fauna in the beautiful

region where the cement plant operates. We have established traditions in working with local schools in order to raise

the level of environmental education among youngsters through organizing a variety of projects and initiatives. We

believe that making young people feel closer to nature while exploring its beauty is a sustainable way of enhancing

their ecological culture.

Annual River Cleaning – A new tradition in the region

In spring 2017, we conducted for a fi�h consecutive year the annual river cleaning campaign. Organized for the first

time in 2013, today this initiative has become a tradition, uniting the efforts of a constantly increasing number of

volunteers for a cleaner environment and a better image of the region. Among the participants, removing litter from the

banks and bed of the Zlatna Panega River were employees of TITAN Bulgaria, students and teachers from the local

schools, representatives of fisher clubs and of other partnering organizations and institutions. The volunteers from the

village of Rumyantsevo cleaned not only the banks of the river, but also the school, the kindergarten and the park in

their village.

The participants collected separately combustible and non-combustible waste. At the end, the combustible waste

was transported to the cement plant to be utilized in the kilns.

KARST PROTECTION

Zlatna Panega Cement AD operates in a beautiful karst

region, close to the largest karst spring in Bulgaria - Glava

Panega. Recognizing its responsibility for the protection

of the karst territories, the company joins a variety of

karst protection initiatives. Their main initiator is the

National Institute of Geophysics, Geodesy and

Geography at the Bulgarian Academy of Sciences

(BAS).


Zlatna Panega River Stocking

In May 2017, together with The Old Otters Fishing Club – the largest fishing club in Bulgaria, we ran our third campaign for

restocking the Zlatna Panega River with 10 000 baby fish of the endangered Balkan trout (Salmo trutta fario). The annual

river stocking also contributes to the sustainable development of the villages along the river by attracting tourists fond of

trout fishing.


„Travelling School of Karst“– Our Partnership with BAS

In September 2017, TITAN Bulgaria supported for the second time the initiative „Travelling School of Karst’’ of the National

Institute of Geophysics, Geodesy and Geography (NIGGG) at the Bulgarian Academy of Sciences, as the plant in the

village of Zlatna Panega was included in the project program. During their plant visit the participants were acquainted

with the production cycle and the environmental policy of the company, aimed at keeping the integrity of karst

formations and the protection of biodiversity in karst regions.

The Travelling School of Karst is part of the ProKARSTerra-Edu specialized educational strategy developed by the

Experimental Laboratory of Karstology at NIGGG-BAS in international cooperation and with the support of UNESCO.

Participants in the project are teachers and students with declared interest in karst from Bulgaria and partner countries.

The program of the travelling school includes visits of protected natural and cultural-historical sites where participants

have the opportunity to learn about various karst forms: caves, surface karst complexes, plateaus, karst springs,

marshes, etc. The organized lectures, discussions, work with research facilities, measurements, analyzes, and field

experiments help create rich and lasting knowledge of the origin and nature of the karst, protected karst areas and their

biodiversity.

Student Ecofilm

A direct result of the company's efforts for environmental education of the young people in the region is the film on

ecological topics prepared by pupils from the village of Zlatna Panega. The film is a product of the pupils' participation

in the „School Miracles” project. In this project, the participants choose an issue of importance to the local community

and work to create solutions for this issue. The team of pupils from Zlatna Panega chose to address the issue of the clean

drinking water in their village and the role of each member of the local community in its preservation.

To support the students in their initiative, the company introduced the project organizers with a karst specialist at

NIGGG-BAS. The expert organized a tour tracking the water flow, where he acquainted the participants with the

formation of rocks in their village, told them about the underground tunnels and karst waters and how they are related

to the water they are drinking.

As a result of the training, the students learned that the waste dumped on the ground pollutes the groundwater that

flows into the Glava Panega spring, which is a source of drinking water for the village of Zlatna Panega. They organized

a waste cleaning campaign and, in their educational ecofilm, called for local people to follow their example - to clean

the place where they live and not to contaminate it, because they pollute the water they drink themselves.


ACCESS TO QUALITY EDUCATION

Empowering young people with skills for jobs has been identified as a material issue for our local stakeholders. By

supporting the right of access to quality education for youths, the company contributes to strengthening the local

community and helps tackling issues such as unemployment and a high percentage of people living below the poverty

line in the region of operation of Zlatna Panega Cement AD.


OUR PARTNERSHIP WITH THE “TEACH FOR BULGARIA”

FOUNDATION

In 2013, TITAN Bulgaria involved the „Teach for Bulgaria” Foundation in its initiatives in the region and started its long-term

support for the right of education for every child.

The mission of Teach for Bulgaria is to encourage and prepare capable and ambitious young people to become

inspiring teachers and leaders. Within a two-year program of professional and leadership development, they receive

targeted training and support to work as teachers of pupils from vulnerable communities in schools all over Bulgaria. The

organization believes that every child in the country should learn from teachers who support their students and help

them unleash their full potential.

Zlatna Panega Cement AD supported both financially and through establishing relationships with local principals the

Teach for Bulgaria program in the Lovech region. By the end of 2017, 19 new teachers have been working with over 500

schoolchildren from families with low socio-economic status in four elementary schools in Yablanitsa Municipality in the

villages of Oreshene, Brestnitsa, Zlatna Panega and Dermantsi and one elementary school in the village of Cherni Osam

in the Municipality of Troyan. For five years in a row, the teachers, participating in the program, have been focusing their

efforts on the development of functional literacy, entrepreneurial and communication skills of the students,

providing them with opportunities to learn through interesting and entertaining methods and extracurricular activities.

Many teachers continue to teach or remain active advocates of education in the region a�er the two-year program.

Impact of TITAN Bulgaria and Teach for Bulgaria Foundation partnership

on the education in the Lovech region:

Increase in school attendance through regular interactions with parents, focused on addressing students' motivation

to attend school and see the value of education.

Increasing students' reading literacy through interactive games, extracurricular activities like reading clubs and

competitions, and providing additional a�er school support to students who have fallen behind.

Increasing students' results on subject tests from the diagnostic test taken at the start of the school year to the final

assessment taken at the end. Historically, students' results improve by 10-15% in a school year on average.

Students from the villages continue their education in high-schools in the region, including in language and

professional high-schools. For many of the students, they are the first in their families to continue their studies past grade 7.

Developing local leaders among the students participating in extracurricular activities. These activities also help

students improve their reading literacy, emotional intelligence, team work and resolving complex issues skills.


„Gramotko’’ - a literacy competition

In May 2017, in the Brestnitsa village, the Gramotko competition was held for the first time. Four teams of pupils from three

primary schools in the villages of Zlatna Panega, Brestnitsa and Oreshene competed in three rounds: reading, writing

and mathematics.

The initiator of the competition is a teacher from the „Teach for All” program, working in the Brestnitsa village. She

included her enthusiastic colleagues, who worked in the Zlatna Panega and Oreshene village schools. The pupils (1st –

4th grade), who wanted to participate in the competition, were strongly motivated to work hard during the school year.

The competition encouraged the pupils to develop their team work skills as well as their ability to rise to challenges.

„Gramotko” was exciting for the pupils and for their parents as well, who were proud of their childrens' results and

grateful to their teachers for all the efforts. The contest also motivated the rest of the teachers at the Brestnitsa school

which is a step in the development of the whole school.

Case Study


„School Miracles’’ – Care for my Community

School Miracles is an initiative of Teach for Bulgaria teachers working in the villages of Brestnitsa, Oreshene and

Dermantsi, which started as a series of events for the local schools, but in 2017 it grew into a long-term program for

students' leadership. At present, it includes student leadership teams from 11 villages and towns in the municipalities of

Yablanitsa, Lukovit and Troyan. Most of the students in the program come from poor families and a problematic social

environment. School Miracles aims to develop in them the skills and attitudes to help them analyze and find solutions to

problems in their communities. Within the project the students choose an issue, which is important for their own

community.

Pollution and unregulated landfills, non-compliance and vandalism in school, early marriages – these were some of the

issues the students chose to work on. The pupils chose different means to tackle the issues and create awareness in the

local community – discussions, presentation of the problem through a theatre play, which the participants wrote,

building a fitness site, organizing cleaning campaigns, etc. With the help of volunteer mentors, purposeful trainings,

diverse activities and School Miracles team support the students are encouraged to initiate the change they want to

see in their community and birthplace.

Case Study


STRATEGIC PARTNERSHIP FOR THE BULGARIAN EDUCATION

The experience gathered at local level allows TITAN Bulgaria to share good practices and to extend its support for

education at national level. In 2017, TITAN Bulgaria joined the Education Bulgaria 2030 Association, thus following the

commitment of TITAN Group to the European Pact for Youth that sets as a main goal the improvement of opportunities

for social inclusion and professional development of the European youth. The association unites the efforts of more than

40 organizations from the public, private and social sectors, around a common vision for achieving the desired

improvements in Bulgarian education quality and access through monitoring the evolution of key indicators,

promoting best practices through informing and advocating for relevant policy changes.

TITAN Bulgaria actively participates in the working group for advocacy of educational policies in front of relevant

institutions as well as in strategic meetings for Bulgarian education, organized by Education Bulgaria 2030.

RAISING AWARENESS ON HEALTH AND SAFETY TOPICS

Early starting education on health and safety ensures that it

will become a natural part of children's life and games.

Therefore, we share our experience in the field of health and

safety through initiatives organized in collaboration with

local schools to raise the awareness of the pupils.

In 2017, we conducted a one-day training in the plant for

students in 10th grade from the Vasil Levski secondary

school in Yablanitsa. They were presented the topics

„Safety training for young people” and „H&S Good

practices in Zlatna Panega Cement”. A tour of the plant

was also organized for the students.

Training of the youngest pupils (1-4th grade) on H&S rules

was held in the Vasil Levski School in Yablanitsa.

Representatives from the H&S department of the company

spoke about: „Safe behaviour at school and at home”,

„Safety when surfing the Internet” and „Students Daily

Regimen”. All pupils were given a „Fire Safety Handbook for

Children’’.


DONATIONS

The company supports the sustainable development of local communities also through donations in cash and in kind

for schools and community centers, construction of churches and temples, sports activities etc.

Schools and community centers

2015 2016 2017

Mayoralties and municipalities

Churches

Sports

Others

Total

Donations made by the company in the period of 2015 – 2017, in BGN

As of 2017, the data shows total donations of TITAN Bulgaria, while in 2015 and 2016 data does not include donations by Zlatna Panega Beton EOOD.

110 000

25 000

17 000

15 000

40 000

207 000

21 000

61 000

37 000

32 000

26 000

177 000

80 000

60 000

45 000

10 000

22 000

217 000

1 1 1

1

ENVIRONMENTAL PERFORMANCE

ENERGY AND CLIMATE

WATER

RAW MATERIALS

53 ENVIRONMENTAL PERFORMANCE

04

In regards to environment, 2017 can be characterized as a year of change and adaptation to the new context in which

the organization operates - new emission standards according to the conclusions on best available techniques in

cement production, new organizational structure integrating concrete and cement production, new management of

the company in the face of the new CEO and his new priorities. The focus was on ensuring stable facility operations and

encouraging environmental leadership in all management positions to ensure keeping the low levels of the company's

environmental footprint.

The strategic objectives of the company remain unchanged: increasing the share of alternative fuels, reducing carbon

dioxide emissions in cement production, working with various stakeholders to achieve sustainable development.

Considering the needs and expectations of the stakeholders, TITAN Bulgaria (with the major environmental impact of

the operations being under Zlatna Panega Cement AD) continued to perform the following activities:

Program for raising the ecological engagement of the students in local schools, which includes seasonal water quality

monitoring, biomonitoring, ornithological observations; harvesting seeds from regionally specific plant species to

restore natural habitats; cleaning of the waste along the banks and the bed of the Zlatna Panega river.

Maintaining a mini waste collection system along the Zlatna Panega river;

Restocking the Zlatna Panega river with Balkan trout;

Cooperation with Bulgarian Academy of Science on educational projects.

In 2017, environmental management costs and investment in environmental friendly technologies have an

approximately equal share in the total amount of environmental costs – 44.1% and 43.9% respectively. The first group

includes all the maintenance costs of the treatment facilities, maintenance of the industrial site cleanliness, ecological

monitoring costs, incl. such as calibration of continuous emission monitoring devices, costs of environmental studies,

audits, etc. In terms of investment, in 2017, predominant are those that aim at increasing the amount of alternative fuels

used, maintaining low dust emissions and new analyzers for automatic emissions monitoring in the atmosphere.

2017 ENVIRONMENTAL HIGHLIGHTS


2017

Environmental management costs

Reclamation of plant site costs

Investments in environmental equipment costs

Waste management costs


The focus on ensuring stable operation of the facilities

and the striving for continuous improvement has led to

a significant reduction in emissions of pollutants into the

atmosphere.

Sulfur dioxide emissions are reduced by 66%

compared to 2016. NOx emissions marked a 12%

decline compared to 2016, while Carbon monoxide

emissions dropped by 27%. 300

200

100

0

400

500

600

700

800

2015

2 17

2016

427

SО – kiln No 4, mg/Nm SO - ELV, mg/Nm3 32 2 SО – kiln No 5, mg/Nm32

mg

/Nm

3

600

400

200

0

800

1,000

1,200

mg

/Nm

3

2015

326 338

2016

343295

NOx – kiln No 4, mg/Nm Nox – kiln No 5, mg/Nm3 Nox - ELV, mg/Nm33

2017

143 1

Monitored and reported in accordance with the WBCSD/CSI

Guidelines for Emissions Monitoring and Reporting in the Cement

Industry (ver. 2.0, 2012); Emissions concentrations refer to 273.15 K

temperature, 101.3 kPa pressure, dry gas, 10% 0₂

2017

290 272

Dust - g/t clinker Dust – kiln No 5, mg/Nm3Dust – kiln No 4, mg/Nm3

15

10

5

0

20

25

30

mg

/Nm

3

35

40

2015

0.742.36

2016

0.81 1.19

2017

0.68 0.24

Dust emissions decreased by 53% in 2017 as the average annual dust particulates concentration in the exhaust gases of

the two kilns remained below 1 mg/Nm at an emission limit value of 20 mg/Nm .

44%

8%

4%

44%

3 3

1

1

1

EMISSIONS OF GREENHOUSE GASES AND ENERGY EFFICIENCY

TITAN Bulgaria, and in specific the operation under Zlatna Panega Cement AD, as part of TITAN Group, is actively

working to reduce greenhouse gas emissions and strengthen its resilience to climate change threats. In 2017, the

specific NET CO emissions of the company are 709.90 kgCO /t cementitious product. A share of 60% of these emissions

is resulting from the decarbonization of the raw materials – these are the so-called process emissions and are hardly

reducible. The other 40% are emitted during fuel combustion process and their reduction is a matter of energy efficiency

and low carbon fuel mix. The main tool to minimize the CO emissions from fuels is to replace the fossil fuels with waste

fuels (alternative fuels). At Group level, Zlatna Panega Cement AD is a pioneer in the utilization of alternative fuels and

alternative raw materials. The effective operation of the subsidiary company of TITAN Group, 'GAEA' (Green Alternative

Energy Assets) EAD has established innovative services in waste management, utilization of materials and production of

alternative fuels. GAEA EAD is a good example of how TITAN Group puts the circular economy at the heart of its

operations.

CO emissions:

A�er several consecutive years of steady improvements in alternative fuels (AF) utilization, as well as reaching highest

results in 2016 in terms of substitution rates, the AF thermal substitution rate was decreased in 2017, mainly due to the

limited capacity of the alternative fuels feeding system. Total substitution for the year for both kilns reached 18.0% p.a.,

wherein 8.9% with Processed Engineered Fuel (PEF) and 9.1% with tires. The focus of the engineering staff of the

Production and Maintenance departments in 2017 was to study the possibilities to optimize the processing and feeding

operations and identify areas for improvement.

ENERGY AND CLIMATE


2016 Gross CO emissions (kg CO /t Product ): 2017 Gross CO emissions (kg CO /t Product ):716 739

673 710

12 2

2 12 2

2

2016 Net CO emissions (kg CO /t Product ): 2017 Net CO emissions (kg CO /t Product ):12 2

2 12 2

2

Reported in accordance with the WBCSD/CSI CO and Energy Protocol: CO and Energy Accounting and Reporting Standard for the Cement

Industry (ver. 3.0, 2011)

Product equals cementitious product as defined by WBCSD/CSI

1

2

10.6%

AF (% h.b.)PEF (% h.b.)Tires (% h.b.)

10.1%

10.0% 9.1%

17.0%

8.9%

0

10

20

30

2 2

2

2

2 2


The challenging circumstances required:

significantly decreasing waste supplies without losing

streams or customers, and

optimizing costs wherever possible so that the cement

plant does not incur losses from PEF due to very low

volume.

With all efforts made by Zlatna Panega Cement and

GAEA teams approximately 13 ktons of waste were

rediverted from the landfills and utilized and an average

of 17 ktons of CO emissions were saved, thereby

honoring the company's long-term environmental

engagement. The carbon-neutral biomass constituted

7.2% of the alternative fuel mix in 2017.

А new waste mix was designed in a way to maximize the local supplies, especially pushing for hazardous waste where

the increase was 41% in volume compared to 2016.

Several new projects started in 2017 with test supplies, which would have the potential to substantially increase the local

volumes. The aim is to double the volume of high quality local streams of waste within the next 1-2 years.

Mixed plastics – this stream is a residue from plastics recycling with very high quality

Textile – the stream is a residue from second hand clothes

Other streams – different types of high quality material from waste collection systems and waste management companies

Local RDF – few small sorting facilities with potential volume up to 2 ktons p.a.

Hazardous waste – further increase the volume of sludge mixes up to 2-3 ktons p.a.

The PEF volume for the year 2017 was low, decreasing by more than double compared to 2016. Despite high downtime

and irregular work schedule due to frequent interruptions of PEF consumption, the targets were to align the PEF

production process with kilns consumption and to continue improving the PEF quality with the new waste mix.

In order to increase flexibility for feeding ready-made material and bypass part of the installation, a mobile feeding belt

and bunker were delivered and installed at site. This will allow certain savings from operational costs, ability to feed PEF

during maintenance of the PEF line and avoid losing material with the rejects.

The PEF quality has been steadily improving over the years, where highest results were achieved in 2017. At present, PEF

quality is comparable to coal on a stable basis.

2

ADAPTATION TO CLIMATE CHANGE

In the context of strengthening the capacity to adapt natural ecosystems to climate change, the company

implements projects related to the conservation and restoration of natural habitats. Zlatna Panega Cement AD

maintains its own nursery with forest species that are typical for the area of the cement plant and uses these plants for

reclamation of depleted quarry terrains . For the main quarry of the cement plant – the Zlatna Panega Quarry, a

Biodiversity Management Plan has been developed and executed for the fourth year.


A key part of the fight against climate change and its consequences is the education and awareness of the community.

In 2017, TITAN Bulgaria continued the work with the local schools pupils to increase their environmental commitment,

emphasizing in part of the lectures the impact of climate change on ecosystems and quality of life.

15,000

10,000

5,000

0

20,000

2015

PEF Production (tons)

2016 2017

15731

7223

PEF Volumes and QualityNearly 50% of the company's investments in 2017 were focused on

increasing energy efficiency and using alternative fuels. Amongst the

most important projects is the reconstruction of the raw meal

homogenization and storage complex. The project is expected to be

completed in early 2019 and to lead to a reduction of the specific

electricity consumption for the homogenization of raw meal by 77%.

Electrical energy consumption:

In line with the WBCSD/CSI Guidelines on Quarry Rehabilitation (2011)

Developed in compliance with the WBCSD/CSI Biodiversity Management Plan (BMP) Guidance (2014)

1

2

12624

Pupils voluntarily take part in the planting of

new seeds in the plant's nursery.

1

2

2016

73.05Gwh p.a.

2017

74.91Gwh p.a.

Preservation of water quality and its efficient use are among the main priorities of Zlatna Panega Cement AD. The

company maintains a system for water treatment and recycling of water in production, using the best available

techniques. The quantity of water used is monitored by an electronic system of water meters, which enables an in-

depth and timely analysis of the received data. The specific water consumption for 2017 was 308 l/t cement -

significantly below the target set for ZLatna Panega for 2020 by TITAN Group. In 2017, 59% of the utilized water used for

production was recycled water. Although, this share is smaller than in 2016 and 2015, the tendency of using recycled

water for cooling and cleaning of the production site to save fresh water is generally maintained. A large share of the

fresh water in the cement plant is used for irrigation and maintenance of the green areas. The quality of discharged

wastewater is periodically monitored. In 2017, the limit values of observed parameters were not exceeded. The

appropriate waste water quality is sustained by a three-stage Waste Water Treatment Plant, a flotator for industrial

cooling water and a system of sludge-retainers for rainwater from the production site.

Water quality is sustained by a three-stage Waste Water Treatment Plant, a flotator for industrial cooling water and a

system of sludge-retainers for rainwater from the production site.

Specific water consumption:

WATER


The cement plant operates near the biggest karst spring in Bulgaria – „Glava Panega”. To guarantee the quantity and

quality of the groundwater, specific methods of mining are introduced in the Zlatna Panega quarry, strict rules for work in

the quarry and the cement plant have been established, as well as water quality monitoring. By chemical composition

and properties, the water from the „Glava Panega” spring meets the requirements for drinking water.

The Glava Panega spring – a photo

by Lyubomir Profirov

The Glava Panega lake – a photo

by Lyubomir Profirov

2016

293l/t cement

2017

308l/t cement

The use of natural resources is the basis of the modern economic model, but their increasingly tangible scarcity has

forced the adoption of a number of international programs aimed at sustainable use of natural resources and reducing

the negative impact on the environment caused by their use. The UN Sustainable Development 2030 Agenda sets

specific targets in this respect and the European Commission adopts an action plan for the circular economy, the

implementation of which provides an appropriate regulatory and financial framework to stimulate resource efficiency

and waste minimization. Resource efficiency has been embedded in all strategic objectives of Zlatna Panega

Cement AD and is the basis of a number of specific projects . In 2017, several new alternative additives to clinker were

tested. These additives constitute waste from other industries, which is used to replace significant quantities of natural

raw materials in cement clinker production. During the year, 20 ktons of industrial and hazardous waste were utilized in

the production of cement clinker and about 30 ktons in the cement production. TITAN Bulgaria investment plans for 2018

include the reconstruction of the clinker feeding installation, providing conditions for the use of increased in volume and

variety alternative raw materials.

Biodiversity conservation is directly related to the sustainable use of natural resources for cement products. We have

been executing for four years a Biodiversity Management Plan, which we developed for our main quarry – the Zlatna

Panega quarry.

RAW MATERIALS


In line with the WBCSD/CSI Guidelines for Co-Processing Fuels and Raw Materials in Cement Manufacturing, v.2.0 (2014).1

2

Biomonitoring Activities with Local Schools

In 2015, our project for voluntary monitoring received and successfully utilized grant funding via the

Financial Mechanism of the European Economic Area.

The project was developed in cooperation with the Regional Environmental Center for Central and Eastern Europe –

Branch Bulgaria, Section „Nature” of the Regional Historical Museum in Pleven and the Environment and Public Health

Office Kjos District – Iceland. The main objective of the project is to raise awareness of the environmental status of rivers

located near industrial plants and to include students in voluntary monitoring and conservation activities.

A�er the official end of the project in 2016, Zlatna Panega Cement AD resumed the activities of voluntary biomonitoring

carried out with students from the local schools. In May, June and October 2017, employees of the Environmental

Protection Department and a specialist from Regional Historical Museum, Pleven, conducted educational trips along

the river for groups of local pupils. The children monitored the status of the river ecosystem by using equipment

purchased at the beginning of the project to measure pH, dissolved oxygen content, and water flow speed. They

learned the indicators of a clean aquatic environment while the specialist from the Regional Museum in Pleven held

lectures on the typical plants and herbs in the region, their harvesting, storage and benefit. The lectures ended with a

game in which the pupils applied their knowledge in the discovery and recognition of certain plant species.

Developed in compliance with the WBCSD/CSI Biodiversity Management Plan (BMP) Guidance (2014)2

Case Study

1



Birdwatching with Pupils in the Karlukovo Karst Region

In May 2017, TITAN Bulgaria organized a birdwatching event for the pupils, who participate in the ecological clubs in the

schools of the Zlatna Panega and Rumyantsevo villages. Employees of the Environmental Protection Department of the

company, Mr. Lubomir Profirov, Environmental Consultant „Ornithology and Protected Areas” and Ms. Antonia

Dimovska, representative of the Bulgarian Society for the Protection of Birds also took part in the initiative. Before

heading to the Prohodna cave in Karlukovo, Mr. Profirov introduced the students to the diversity of birds in Bulgaria, as

well as the differences between males and females, through a presentation with rich photo material. For the children

the walk in and around the Prohodna Cave was filled with a lot of excitement because of the beauty and the

extraordinary variety of plant and animal species that this site offers. They had the opportunity to see 14 bird species. Of

these, 8 species are in the Karlukovo karst area, which is a protected area under the Natura 2000 Birds Directive.

Case Study


In 2017, we continued conducting ornithological studies in the company's quarries and in the cement plant site. Birds'

habitats were surveyed between April and September, using the transect method (Bibby et al., 1992). In 2017, 58

species of birds were observed, six of which were listed in the Red Book of the Republic of Bulgaria (2015).

The conditions in the Zlatna Panega quarry are suitable for a variety birds species to nest and hunt. Among these species

is the common raven (Corvus corax), nesting in the Eastern areas of the Zlatna Panega quarry. Its conservation status in

the Red Book is near-threatened.

There is a variety of birds species, which find suitable conditions for breeding, food and the needed tranquility on the

cement plant premises. Among them is the endangered species Falco peregrinus. The rich ornithological variety in the

quarries and cement plant of Zlatna Panega Cement AD is a sign of a clean ecological environment and production

practices that are in line with the protection of the environment.

The Peregrine Falcon Rescue

In the middle of July 2017, a small bird of prey was found on the plant premises in Zlatna Panega. The bird, who later

turned out to be a young male representative of the protected falcon species, was scared, very weak and infected

with parasites. Our Environmental Protection Department employees consulted an ornithologist the same day. A�er

that the falcon was transported to the Wildlife Rescue Center in Stara Zagora, where its condition began to improve at a

fast pace and he was soon released into the nature. According to the rescue center experts, the reason for his fall was

the inexperience of the young male and the excessive exhaustion caused by weakness and parasite infection.

Case Study

GOVERNANCE

64GOVERNANCE

05

65

GOVERNANCE HIGHLIGHTS

Good corporate governance, in which transparency and ethics are strongly embedded, creates long-term

value for our business and stakeholders. We adhere to international and European standards in this area.

GOVERNANCE

66

GOVERNANCE, TRANSPARENCY AND ETHICS

FOCUS ON HUMAN CAPITAL AND

CORPORATE SOCIAL RESPONSIBILITY

POLICY

We are constantly developing and striving for

continuous improvement of our relations with

all stakeholders, based on mutual respect

and understanding. Within TITAN Group we

share our best practices to improve the skills

and efficiency of every Group member in

meeting the strategic priorities.

CONTINUOUS IMPROVEMENT IN

A COMPETITIVE MARKET

TITAN Bulgaria strives to continuously optimize

the technical equipment, structure and

organization of work by investing in assets

and application of new methods and

processes. Our goal is to strengthen the

competitive position of the company on the

Bulgarian market.

CONSTANT DRIVE TOWARDS

SUSTAINABLE DEVELOPMENT

The company believes that the pursuit of

financial stability is bound to sustainable

development. The operation of the cement

plant in Zlatna Panega village contributes to

improving the living standards in the region.

The company supports a number of

environmental, social and

cultural initiatives.

VERTICAL INTEGRATION

OF PRODUCTION

TITAN Bulgaria seeks to expand its activities in

other areas of the cement product chain in a

pursuit of better customer service and access

to new opportunities for revenue generation.

TO REACH THIS

OBJECTIVE

WE FOCUS ON:

OUR COMMON VISION

To be one of the most economically, environmentally and socially

responsible producers of building materials.

OUR GOVERNING OBJECTIVE

The successful combination of entrepreneurial spirit and operational excellence

with respect for people, society and the environment.

GOVERNANCE

STRATEGIC PRIORITIES - OUR GUIDING PRINCIPLES

FOR ACHIEVING GROWTH AND SUCCESS

67

CORPORATE VALUES

GOVERNANCE

Our values are the core of our company, providing the foundations of our success and growth.

In the context of our values, we nurture a culture of collective ambition and cooperation, and encourage personal

responsibility for achieving our common goal. At the same time, we insist on mutual trust and respect.

INTEGRITY

Ethical business practices

Transparency

Open communication

COMMITMENT

TO RESULTS

Shareholder value

Clear objectives

High standards

Enhancement of our

knowledge base

Proficiency in every function

Excellence in core

competencies

COMMITMENT

TO RESULTS

CONTINUOUS

IMPROVEMENT

Learning organization

Willingness to change

Rise to challenges

VALUE TO THE

CUSTOMER

Anticipation of customer needs

Innovative solutions

High quality products and services

CORPORATE

SOCIAL

RESPONSIBILITY

Safety first

Sustainable development

Stakeholder engagement

68

IMPLEMENTATION OF TITAN GROUP'S

POLICIES IN TITAN BULGARIA

GOVERNANCE

To us the good corporate governance is synonymous with ethical business practices, transparency, open

communication, accountability and sustainable development.

Corporate policies are an essential guide to maintaining a healthy business process. To ensure consistency with TITAN

Group's principles, ethics and beliefs, TITAN Bulgaria implements the Group's policies in all its business operations.

The table below shows the level of implementation of each TITAN Group policy in TITAN Bulgaria as of 2017.

Launched by TITAN Bulgaria: The policy has been translated in Bulgarian and communicated through corporate

means (i.e. Intranet, Announcement Boards, or else)

Implemented by TITAN Bulgaria: Policy implementation is supported with induction courses and formal training

sessions directed to managers and employees

Assessed by TITAN Bulgaria: Policy is incorporated in regular audit activities either conducted by third parties or by

corporate experts and results are used for improving performance and sharing best practice throughout the region or

the Group

Group Policy/Level of Implementation

by TITAN Bulgaria

Launched by

TITAN Bulgaria

Implemented by

TITAN Bulgaria

Assessed by

TITAN Bulgaria

Group People Management

Framework

Group Occupational Health and

Safety Policy, and Framework

Group Human Rights Policy (Freedom

of association, child labor)

Group Environmental Policy

Group Climate Mitigation Strategy

Group Anti-Bribery and Corruption Policy

(Compliance, grants, donations and contributions)

Group Sanctions Policy

Group Competition Law Compliance Policy

and Guidelines (compliance, customers and suppliers)

Group CSR Policy

✔

✔

✔

✔

✔

✔

✔

✔

✔

✔

✔

✔

✔

✔

✔

✔✔✔

69

OUR INTEGRATED MANAGEMENT AND REPORTING SYSTEM

GOVERNANCE

In the years following the company's privatization, management systems meeting international standards were

gradually introduced:

ISO 9001 Quality Management System (certified in 2001);

SO 14001 Environmental Management System (certified in 2003);

BS OHSAS 18001 Health and Safety System (certified in 2009).

In 2009, the above three systems - for quality, environment and occupational health and safety, were united in one

integrated system, which was of great help for the application of good practices in the company activities.

In 2015, following TITAN Group's principles for transparency, open communication and reporting, TITAN Bulgaria started

the voluntary publishing of its Integrated Annual Report.

FINANCIAL AND NON-FINANCIAL RISKS

During operations, TITAN Bulgaria inherently faces risks of financial and non-financial nature, which our management

seeks to prevent or mitigate. Effective risk management is essential for achieving the company strategic goals and long-

term sustainable development. The company has developed flexible systems for monitoring and eliminating or

minimizing various potential and significant risks.

IMPORTANCE OF RISK MITIGATING ACTIVITIESTYPE OF RISK

LIQUIDITY RISK

Liquidity management involves use of various credit lines in

order to ensure a bigger share long-term credit lines with a

commitment to the bank. The company closely monitors on

a daily basis the levels of utilization of its credit lines. By the

31st of December, 2017 the company had utilized loans

amounting to BGN 280 million and unused credit lines of

BGN 8 million. 32% of the utilized loans are long-term loans.

CREDIT RISK

The company closely monitors its customers' financial

status and on this basis sets a credit limit for each customer.

Additional collateral from customers is required to secure

payments. Impairment of receivables is applied in the

case of inability of the customers to settle the amounts

owed to the company.

FOREIGN CURRENCY

EXCHANGE

The company faces a currency risk with payments to

foreign suppliers or in case of using foreign currency

credits.

All credit lines of the company are in local currency. Thus,

the receivables from customers are hedged in a natural

way as they are almost entirely in local currency.

Company loans are secured by corporate guarantees

issued by the parent company. The parent company is

registered in an EU country, undergoing economic reforms.

If these reforms fail, the company will face additional

liquidity risk.

The company is not exposed to significant credit risks.

Receivables from customers come from a wide customer

base.

PRODUCTION COSTS

Due to the cyclical development of the industry, fuel prices

also vary cyclically. The fuel, electricity and raw material

costs form the largest segment of the company's

production costs. Price changes in conventional fossil fuels

pose the risk of large variation in production costs

To mitigate this risk, the company will continue investing in

equipment, aiming at the reduction of conventional fuel

utilization and increasing the alternative fuels substitution

rate.

HEALTH AND SAFETYSafety is the key to maintaining the work permits of the

company.

To ensure safe working conditions, the company employs

health and safety professionals, who possess the necessary

experience. The company also provides training programs

for employees and has implemented systems and

procedures for the application of safe working conditions.

The main goal of the company is achieving a level of

performance with zero occupational accidents.

LABOR RIGHTS

The company recognizes the importance of trade unions

and associations of workers in the process of improving

working conditions and protecting labor rights.

The company collaborates efficiently with both trade

unions – the Confederation of Independent Trade Unions in

Bulgaria and Podkrepa. Union representatives are involved

in the committees, dealing with working conditions in the

company, and have the opportunity to express their views

and proposals.

WATER

CONSERVATION

The company is operating on the territory of a karst area

that is supplying the neighboring villages with water.

The company is making exceptional efforts to reduce the

risk of water contamination, and has built facilities for

purification and filtration of wastewater.

Zlatna Panega Cement AD is a trading company with one-tier corporate governance

system. The Board of Directors includes five members and in 2017 it consisted of:

Alexander

Chakmakov

Chаirman of the

Board of directors

Adamantios

Frantzis

Chief Executive

Officer

Christos

Panagopoulos

Regional Director

Bulgaria and Turkey

70GOVERNANCE

BOARD OF DIRECTORS

Lukas

Petkidis

Regional Chief

Financial Officer,

Southeastern Europe and

Eastern Mediterranean

Konstantinos

Derdemezis

Regional Director,

Southeastern Europe

and Eastern

Mediterranean

APPENDIX

FINANCIAL STATEMENTS

MEMBERSHIPS AND PARTNERSHIPS

INDEPENDENT LIMITED ASSURANCE REPORT

71 APPENDIX

06

ENVIRONMENTAL PROTECTION PROGRESS REVIEW

72APPENDIX

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31ST DECEMBER 2017 2017

000 BGN

2016

63,262

5,077

14,389

956

95

83,779

(80,251)

3,528

763

(1,032)

(10,194)

1,316

(5,619)

15

(1,613)

(7,217)

417

(6,800)

(161)

16

Cement sale revenue

Clinker sale revenue

Concrete sale revenue

Rendering of concrete pump services

Others

Revenue

000 BGN

Cost of sales

Gross profit

Other income

Selling and distribution costs

Administrative expenses

Other expenses

Operating (loss)/profit

Finance income

Finance expense

Profit before tax

Income tax expense

Profit for the year

Actuarial (losses)/gains on defined benefit plans

Income tax effect

Other comprehensive income, not to be reclassified to profit or loss in subsequent periods, net of tax

Total comprehensive income for the period

(145)

(6,945)

65,907

3,005

-

-

167

69,079

(58,468)

10,611

1,609

(908)

(8,811)

(1,103)

1,398

242

(728)

912

(122)

790

(61)

6

(55)

735

STATEMENT OF COMPREHENSIVE INCOME

AS OF 31ST DECEMBER 2016 2017 2016

ASSETS

Long-term assets

Property, machinery and equipment

Investment property

Intangible assets

Investments in subsidiaries

Available-for-sale financial assets

Other financial assets

Short-term assets

Inventories

Trade receivables and other receivables

Receivables from related parties

Loans to related parties

Prepayments

Cash and cash equivalents

Non-current assets held for sale

TOTAL ASSETS

EQUITY AND LIABILITIES

Equity

Issued capital

Legal reserve

Retained earnings

Total equity

Non-current liabilities

Interest-bearing loans from banks

Finance lease liabilities

Restoration provision

Retirement benefit liability

Deferred tax liability

Current liabilities

Trade and other payables

Interest-bearing loans

Finance lease liabilities

Payables to related parties

Loans from related parties

Income tax obligations

Total liabilities

TOTAL EQUITY AND LIABILITIES

136,905

1,406

267

1,661

47

300

140,586

22,357

10,963

16

144

50

367

33,897

691

34,588

175,174

55,941

3,217

72,307

131,465

9,265

160

1,817

1,198

894

13,334

9,966

18,982

105

764

558

-

30,375

43,709

175,174

000 BGN 000 BGN

73 APPENDIX

BALANCE SHEET

129,241

1,406

325

16,605

47

219

147,843

21,188

10,274

15,005

9,213

105

202

55,987

-

55,987

203,830

55,941

3,217

96,864

156,022

19,197

-

4,476

812

1,327

25,812

10,248

10,974

-

710

26

38

21,996

47,808

203,830

74APPENDIX

FOR THE YEAR ENDED 31ST DECEMBER 2016 2017 2016

OPERATING CASH FLOW

FOR THE YEAR ENDED 31ST DECEMBER 2017RETAINED

EARNINGSTOTAL

ISSUED

CAPITAL

As of 1st January 2016

Profit for the year

Other comprehensive income for the year

Total comprehensive income for the year

As of 31st December 2016

As of 1st January 2017

Merger effect

Profit for the year

Other comprehensive income for the year

Total comprehensive income for the year

Аs of 31 December 2017

96,129

790

(55)

735

96,864

(17,612)

(6,800)

(145)

(145)

72,307

55,941

-

-

-

3,217

-

-

-

55,941 3,217

-

-

55,941

-

-

3,217

LEGAL

RESERVE

000 BGN 000 BGN

SEPARATE STATEMENT OF CHANGES IN EQUITY

SEPARATE STATEMENT OF CASH FLOW

155,287

790

(55)

735

156,022

(17,612)

(6,800)

(145)

(145)

131,465

912

11,118

117

18

20

540

57

78

-

(242)

272

(5,930)

(2,238)

138

(20)

(600)

(413)

3,827

148

(11,455)

(92)

(8)

-

260

(11,147)

57,073

(49,568)

-

-

(266)

7,239

(81)

-

283

202

Profit before tax

Adjustments for reconciliation of profit before interest and tax to net cash

Non-cash:

Depreciation of property, plant and equipment

Amortisation of intangible assets

(Profit)/Loss on disposal of property, plant and equipment

Impairment loss of investment property

Movement in doubtful debt allowance

Movement in restoration provision

Expenses for employee benefit liability

Impairment of an investment

Interest income

Interest expenses

Working capital adjustments:

(Increase)/Decrease in inventories

(Increase)/Decrease in trade and other receivables

Increase in advances paid

Decrease in other financial assets

Increase/(Decrease) in trade and other payables

Income tax (paid)/received

Net cash flows from operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sale of property, plant and equipment

Purchase of property, plant and equipment

Purchase of intangible assets

Loans to related parties

Proceeds from loans from related parties

Interest received

Net cash flows used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings

Repayment of borrowings

Payments under financial leases

Repayment of loans from related parties

Interest paid

Net cash used in financing activities

Net decrease in cash and cash equivalents

Merger effect

Cash and cash equivalents at 1st January

Cash and cash equivalents at 31st December

(7,217)

13,190

88

(121)

-

618

(2,659)

117

391

(2)

784

(872)

3,260

108

(25)

(1,860)

(38)

5,762

194

(3,450)

(4)

(79)

100

-

(3,239)

68,430

(70,353)

(99)

(193)

(781)

(2,996)

(473)

638

202

367

st

55,941 3,217 96,864 156,022

75 APPENDIX

ENVIRONMENTAL PROTECTION

PROGRESS REVIEW

CATEGORY INDICATOR

Climate Change

Alternative fuels

Additional indicators

Zlatna Panega Cement AD

* Direct CO emissions – emissions related to the decarbonization of the raw materials and burning of fuels in the clinker production process.

*** Indirect CO emissions – emissions released to the atmosphere by the power plants for the production of electricity consumed

at the cement plant. The data for the CO emissions of the power plants is average for the country.

CATEGORY INDICATOR

Natural Resources

Local impacts

* GAEA – Green Alternative Energy Assets EAD data included

2

2

TITAN Bulgaria

2

2015 2016

Raw material consumed

• for cement production, million metric tons (dry)

• for ready-mix, dry mortar and block production, million metric tons (wet)

Total heat consumption, TJ

Total electrical energy consumption, TJ

Total water consumption, million m

Recycled (externally) waste material, metric tons

Active quarry sites with biodiversity issues

Active quarry sites with biodiversity management plans

3

474705

711.96

886.95

20.55

6.97

12.18%

83%

2.43

4.34

612.70

1092.18

13.92

24.81

3190.15

5686.63

25.82

46.03

7.08

12.63

0.50

0.89

0.001

0.001

-

-

-

-

0.011

0.00000002

2140

20429

74.82

46981

179449

287

462871

715.91

871.81

27.2

11.15

5.24%

84%

1.8

3.20

588.57

1045.22

47.30

83.99

2205.92

3917.43

24.24

43.05

1.96

3.48

0.82

1.46

0.002

0.003

0.01

0.02

0.50

0.89

0.003

0.000000005

2104

22739

73.05

44998

156771

293

2017

Total direct CO emissions (gross), million metric tons

Direct* CO emissions (gross), kg/t cementitious**

Energy efficiency, kcal/kg Clinker

Alternative fuel substitution rate, %Thermal basis

Biomass in kiln fuel, % Thermal basis

Alternative raw materials (clinker and cement), %Dry

Clinker to cement ratio

Total dust particulates, metric tons

Dust particulates, g/t clinker

Total NOx, metric tons

NOx, g/t clinker

Total SOx, metric tons

SOx, g/t clinker

Total CO, metric tons

CO, g/t clinker

Total TOC, metric tons

TOC, g/t clinker

HCl, metric tons

HCl, g/t clinker

HF, metric tons

HF, g/t clinker

Hg, metric tons

Hg, g/t clinker

Cd+Tl, metric tons

Cd+Tl, g/t clinker

Total (Sb, As, Pb, Cr, Co, Cu, Mn, Ni, V), metric tons

Total (Sb, As, Pb, Cr, Co, Cu, Mn, Ni, V), g/t clinker

POPs, grams

POPs, g/t clinker

Total heat consumption, TJ

Total alternative fuels, metric tons

Total electrical energy consumption, Gwh

Total indirect*** CO emissions, million metric tons

Total water consumption, million m

Water consumption, lt/t Cement

2

2

2

3

2015 2016 2017

898466

332388

2140

77.18

211289

6767

1

1

885543

286253

2104

76.09

191679

2699

1

1

883834

338 057

2133

77.61

210915

1180

1

1

*

*

474234

739.01

881.45

17.95

7.20

5.06%

86%

0.84

1.49

518.84

921.31

16.12

28.62

1605.45

2850.78

22.25

39.51

2.79

4.96

0.19

0.34

-

-

-

-

-

-

0.016

0.00000003

2132

12878

74.91

46143

172753

308

** Cementitious - as defined by WBCSD/CSI

76APPENDIX

MEMBERSHIPS AND PARTNERSHIPS

TITAN Bulgaria is a member of the following

organizations in Bulgaria:

Bulgarian Association of Cement Industry (since 2007) www.bacibg.org

Bulgarian Association of Aggregates Producers (since 2009) www.bapim.org

American Chamber of Commerce and Industry (since 2010) www.amcham.bg

Hellenic Business Council in Bulgaria (since 2010) www.hbcbg.com

Bulgarian Federation of Industrial Energy Consumers (since 2013) www.bfiec.org

Bulgarian Chamber of Mining and Geology (since 2015) www.bmgk-bg.org

Education Bulgaria 2030 Association (since 2017) www.edu2030.bg

At Group level TITAN cooperates with

international organizations such as:

CSR Europe www.csreurope.org

European Cement Association (CEMBUREAU) www.cembureau.be

European Round Table of Industrialists (ERT) www.ert.eu

UN Global Compact www.unglobalcompact.org

World Business Council for Sustainable Development (WBCSD) www.wbcsd.org

World Economic Forum www.weforum.org

77 APPENDIX

78APPENDIX

ZLATNA PANEGA CEMENT AD

5760 Zlatna Panega

2 Shipka Str.

Phone: + 359 2 882 01 01

Phone: + 359 2 976 00 70

www.titan.bg

Documents

INTEGRATED ANNUAL REPORT 2017Reporting Council's (IIRC) Guidelines to provide our stakeholders with comprehensive information by giving an overview of our business performance during