Migros 2015 Annual Report Contents

MİGROS 2015 ANNUAL REPORT CONTENTS

ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

2 Our Formats 15 Migros Operations in 2015 72 2015 Ordinary General 108 Convenience Translation 4 Corporate Profile 15 Investments Assembly Meeting Into English of 5 Vision-Mission- 22 International Subsidiaries Agenda Consolidated Financial Strategies- 23 Product Management 73 Board Of Directors Statements and Values-Principles 25 Private Labels Report Independent Auditor’s 6 2015 At a Glance 28 Money Club and CRM 77 Corporate Governance Report for the Year ended 8 Key Highlights 30 Migros Virtual Market Principles Compliance 31 December 2015 10 Timeline 33 Customer Service Line Report 12 Chairman’s Message 36 Quality Management 107 Independent Auditor’s 40 Quality Management Report on the Systems Management’s Annual 42 Good Agricultural Report Practices 44 Distribution Center & Logistics Management 46 Information Technologies 47 Human Resources & Training 52 Health & Safety 56 Our Outlook on Sustainability 60 Corporate Social Responsibility MİGROS HAS MAINTAINED ITS LEADING POSITION IN THE SECTOR THROUGH ITS EFFICIENCY, INCREASING PENETRATION, SUPERIOR SHOPPING EXPERIENCE AND ITS GROWTH STRATEGY IN A BLEND OF ATTRIBUTES THAT HAS BROUGHT THE PERFECT synergy, WHICH HAS SET MİGROS APART FOR 61 years. THE COMPANY INCREASED ITS REVENUE BY 16% TO tl 9.4 BILLION IN 2015. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

OUR FORMATS 1.327 36 STORES STORES 71 5 PROVINCES PROVINCES

MİGROS “Will Do You Good” MACROCENTER “Worth The leader in the retail sector, Migros Celebrating” offers an enjoyable shopping experience, Macrocenter is a distinguished innovation and quality with stores in 71 supermarket chain with its exclusive of the country’s provinces and across product portfolio, high standard of seven geographical regions. With its customer service and special store “Better Future” motto, Migros provides design. Macrocenter, that also provides customers with good produce, good tastes specific to Anatolia along with meat, and the best quality products at the post popular food from Europe and the best available prices with the widest the world and caters to its customers’ range of varieties, all offered with a lifestyles and preferences, works with a smile as part of our cheerful service passion which surpasses expectations in approach. By taking the standards of the all of its customer services. developing retailing sector into account, Migros has adopted a philosophy of continual innovation as a principle. The company provides its customers with a different shopping experience through its practices, which set industry standards. MİGROS 2015 ANNUAL REPORT

102 47 STORES STORES 24 2 PROVINCES COUNTRIES

MİGROS VIRTUAL MARKET RAMSTORE “Taking Pleasure “Internet, Mobile & Tablet from Shopping around the Accessibility” World” The Migros Virtual Market, that has been As Turkey’s leading retailer, Migros in service since 1997, is Turkey’s largest currently serves customers through and most extensive online food shopping Ramstores at 47 locations outside Turkey, site. The Migros Virtual Market provides including two shopping centers, one the opportunity for online shopping in in Kazakhstan and one in Macedonia. 24 provinces (Adana, Afyon, Ankara, Ramstore also exports the concept Antalya, Aydın, Balıkesir, Bursa, Denizli, of enjoyable shopping abroad while Diyarbakır, Edirne, Eskişehir, Gaziantep, promoting Turkish products. It plans both Hatay, İstanbul, İzmir, Kayseri, Kocaeli, to extend its reach in existing markets Malatya, Mersin, Muğla, Sakarya, Samsun, and to venture into new ones as well. Tekirdağ and Trabzon) and delivers products to customers at their doors. Migros allows customers to order from the internet, their mobile phones or tablet PCs through the Virtual Market. It also facilitates shopping and brings an element of fun to the experience, with its “Buy when Passing” and “Deliver to Work” applications. The Migros Virtual Market is also an important address for food retail in the domain of e-business. www.sanalmarket.com.tr www.migroselektronik.com MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

CORPORATE PROFILE MİGROS IS THE PIONEER OF ORGANIZED RETAILING IN TURKEY.

The pioneer of organized retailing in Turkey, Migros today offers spacious stores in a wide range of formats and locations whose vast selection of cosmetics, stationery, glass and kitchenware, electronic appliances, book, textiles, and other items along with groceries and other necessities give it the ability to satisfy the shopping needs of its customers. Striving to give customers the benefit of technological developments while Focusing on customer confidently continuing to serve them with expectations since the day it its trusted human resources, the attention was founded, Migros is known which the Migros gives to information technology and the investments which it for its innovation and progress undertakes always keep it at the forefront in retailing. of the retailing sector. Focusing on customer expectations since the day it was founded, Migros is known for its innovation and progress in retailing. MİGROS 2015 ANNUAL REPORT

VISION-MISSION-STRATEGIES-VALUES-PRINCIPLES MİGROS’ MOST FUNDAMENTAL STRATEGY IS TO PROVIDE THE MOST MODERN, A RELIABLE, AN ECONOMICAL, AND A HIGH-QUALITY SERVICE.

Vision Values As one outcome of its corporate governance approach, the company To be an organized retailer who remains Migros’ corporate values, which everyone achieves full compliance with all corporate the closest to customers by serving them adheres to and which are fashioned governance principles published by the in a variety of formats through a strategy through the participation of all employees, Capital Markets Board and it engages of pursuing expansion both in its own are as follows; in an ongoing effort to apply those and in neighboring national markets and • Customer Focus principles even more effectively. Migros always exceeding customer expectations. • Trust publishes a corporate governance • Sensitivity Mission principles compliance report every year • Leadership to inform its stakeholders of its progress To play a leading role in improving the • Efficiency in this area while its corporate website quality of life at home and abroad with • Innovation is updated on a daily basis in order a business structure that is as innovative Principles to provide stakeholders with detailed and productive as it is customer-focused, information about the company. trusted, and mindful of people, the Believing in the importance of having a community, and the environment; to strong corporate governance structure, generate long-term, satisfying returns Migros makes corporate governance for its employees, business partners, and principles its guide during every stage shareholders; to maintain its sectoral of every activity. Migros’ actions are leadership in growth and operational also informed by an awareness that profitability. not just the company but also all of its stakeholders and the country as a Strategies whole benefit from compliance with the Migros defines its strategies in line with its corporate governance principles. mission and so as to achieve sustainable Migros has adopted all four basic tenets of quality, respect, and sectoral leadership corporate governance: through an approach to customer • Fairness satisfaction that rises the bar of retailing • Transparency standards in the countries in which it • Responsibility operates. • Accountability. Migros’ most fundamental strategy is to provide the most modern, a reliable, an economical, and a high-quality service. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

2015 AT A GLANCE THE SOURCE OF MİGROS’ STRONG GROWTH IS BOTH NEWLY OPENED STORES AND INCREASED PERFORMANCE IN EXISTING STORES.

Customers are provided with personal recommendations based on their past shopping habits through “TAM BANA GÖRE (MEANT FOR ME)” application that was implemented in 2015.

Migros maintained its leading position acquisition will bring momentum to the in the sector through its efficiency, Company’s middle and long term growth increasingly penetration, superior and new investments. shopping experience and its growth strategy. The perfect synergy of this The source of the company’s strong quartet is underlying all the factors that growth is both newly opened stores first differentiate Migros in 61 years. The and increased performance in existing Migros was the first and only retailer to be company increased its revenue to 9.4 stores. Besides, one of the most admitted to the BIST Sustainability Index. billion TL by growing 16% in 2015. important factors that contribute to the company’s growth has been the Anadolu Endüstri Holding A.Ş. acquired operational efficiency increase. Some of 40.25% of Migros shares indirectly by the more than 250 stores newly opened purchasing 80.5% of MH Perakendecilik in 2015 were opened with the resources ve T.A.Ş.’s capital in July 2015. This generated by efficiency increase. MİGROS 2015 ANNUAL REPORT

12 th time Migros received “The Most Admired Company of Retail Sector” for a 12th time in a row in the survey of “Turkey’s most admired companies” again in 2015.

Aiming to offer the best prices in the The company serves its customers “At In 2015, Migros opened more than 250 market and able to compete on price the right place and the right time” with its stores and maintained its mission of without compromising the trademark different types of stores from Migros Jet to ‘contributing to employment’ with its Migros quality in staple products needed MMMs and the 5M type stores. Moreover, 4,500 new employees. The company by households, in 2015 Migros pressed Migros introduced the Virtual Market, targets to add new 5,500 employees to its ahead with its investments in Migros Mobile Market and Multi Channel concepts existing 21,762 personnel in 2016 by adding branded products, in which the company to Turkish retailing. At the same time, new stores to its existing ones that are attaches great importance. Undertaking the wholesale service was provided to centers of employment. significant investments in the field of businesses that buy in bulk, such as hotels, freshness, for which it is the leader, for restaurants and cafes. Migros aims to Migros was the first and only retailer to good quality meat and poultry products as bring a shopping experiences that creates be admitted to the BIST Sustainability well as best agricultural practices, Migros a difference and to respond to customer Index that was set up by examining the provides fresh produce to its customers needs rapidly by reaching its customers companies in BIST 50 Index by Borsa by bringing them from the field to the through different channels according to İstanbul, in two consecutive years. Migros shelf in just 30 hours. The company also their lifestyles. qualified for admission to the BIST owns Turkey’s largest integrated meat Sustainability Index after being measured processing plant. All production processes In addition to the above, Migros has against independent criteria among 29 carried out in the plant are certified by also been creating a difference in the companies that were in the BIST 50 in the Turkish Standards Institute (TSI). This sector through its innovative practices. 2015 and whose corporate sustainability system, implemented for red meat, has CRM applications, through which data performance were at the highest level been also a very important reference for is processed rapidly and transformed subjected to review. Migros also qualified Turkish farmers. into valuable information due to the for admission to the Borsa İstanbul implemented integrated systems, B2B Corporate Governance Index as a result of Another strategy adopted by Migros, (Business to Business), Virtual Market, independent grading. which appeals to the hearts and minds of Mobile Shopping, Jet Cashier, Mobile the 1.75 million customers who visit the Reporting and Date Warehouse projects The bridge of trust that Migros built Company’s stores in 71 provinces every day are among the innovation studies where between the Company and its customers is the diversification of retail at every point Migros leads the sector. Customers are is its biggest reward. These successes are it accesses. Aiming to design its stores provided with personal recommendations endorsed by the awards given to Migros according to its customers needs and not based on their past shopping habits by national and international authorities. vice versa, is increasing its penetration and through “TAM BANA GÖRE (MEANT FOR Migros received “The Most Admired access power through its store structure, ME)” application that was implemented in Company of Retail Sector” for a 12th time which can be transformed according to 2015. Migros was the first and only retailing in a row in the survey of “Turkey’s most customer demand. company able to carry out this application. admired companies” again in 2015, was chosen as a “Lovemark” for an 8th time in a row in the “Supermarket” category in the survey of “Turkey’s Lovemarks”. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

KEY HIGHLIGHTS IN 2015, MİGROS REGISTERED CONSOLIDATED SALES GROWTH OF 15.6%. THE COMPANY’S SALES AMOUNTED TO TL9,390 MILLION IN 2015.

Total Assets (TL million) Net Sales (TL million) Gross Profit (TL million)

15 14 15 14 15 14

5,581 8,123 2,163 +3.2% 5,761 +15.6% 9,390 +16.7% 2,526

Operating Profit (TL million)

15 14

232 +13.5% 264 MİGROS 2015 ANNUAL REPORT

15.6% In 2015, Migros’ sales amounted to TL9,390 million with an increase of 15.6%.

Summary Consolidated Balance Sheet

(TL thousand) 2015 2014 Change (%) Assets Current Assets 2,035,523 1,723,289 18.1 Non-Current Assets 3,725,194 3,857,298 -3.4 Total Assets 5,760,717 5,580,587 3.2

Liabilities Current Liabilities 2,725,671 2,779,768 -1.9 Non-current Liabilities 2,519,060 1,891,980 33.1 Non-controlling Interests 644 554 16.2 Attributable to Equity Holders of the Parent 515,342 908,285 -43.3 Total Liabilities and Equity 5,760,717 5,580,587 3.2

Summary Consolidated Statement of Income (TL thousand) 2015 2014 Change (%) Net Sales 9,389,829 8,122,667 15.6 Gross Profit 2,525,649 2,163,391 16.7 Operating Profit 263,632 232,370 13.5 Net Income -370,453 96,191 -485.1 13.8% In 2015 EBITDA reached TL 602 million, up EBITDA 602,136 529,112 13.8 13.8% versus 2014. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

TIMELINE

40TH ANNIVERSARY 1994 38 M TH TH TH 10 ANNIVERSARY 20 ANNIVERSARY 30 ANNIVERSARY 11 MM 7 MMM 1954 1964 1974 1984 TOTAL 45 SHOPPING CARTS 1 STORE 3 STORES 25 STORES 56 STORES

10 1954 1995 ESTABLISHED 1975 1988 Koç Group acquires Migros ventures Migros launches Migros is established a majority stake in outside İstanbul ŞOK, Turkey’s as a joint venture Migros. for the first time by first food retailing of the Swiss-based opening four stores discount brand and Migros Cooperatives in İzmir. format. Society and Migros-branded the İstanbul private label municipality. 1990 products appear

on the shelves of Large-scale Migros stores. retailing begins with the Migros starts sales introduction of the with credit cards in “MM” and “MMM” the retailing sector. formats. Migros introduces part-time 1996 1957 employment practices to Migros ventures First Migros store Turkey’s food abroad with its first opens in the İstanbul retailing sector. store in another Beyoğlu fish market. Migroskop begins country. publication. First electronic shelf Turkey’s first tags go into use. computerized automatic- weighing cash registers are 1997 introduced at Migros stores. Migros launches Migros Virtual Market, Turkey’s first 1991 online food retailer. Migros opens its first Migros goes public. shopping mall in the Beylikdüzü district of İstanbul. MİGROS 2015 ANNUAL REPORT

60TH ANNIVERSARY 61ST ANNIVERSARY 50TH ANNIVERSARY 2014 2015 DOMESTIC DOMESTIC 2004 212 TANSAŞ 22 TANSAŞ DOMESTIC 28 MACROCENTER 36 MACROCENTER 283 ŞOK 273 MİGROS JET 464 MİGROS JET 72 M 319 M 469 M 72 MM 213 MM 255 MM 33 MMM 79 MMM 94 MMM 3 5M 24 5M 23 5M INTERNATIONAL INTERNATIONAL INTERNATIONAL 44 RAMSTORE 42 RAMSTORE 47 RAMSTORE TOTAL TOTAL TOTAL 507 STORES 1,190 STORES 1,410 STORES

11 1998 2007 2011 2015

Migros introduces The “deep- The Migros Jet Anadolu Endüstri Migros Club Card, discount” convenience store Holding A.Ş. the first loyalty card 5M format of format is launched. acquired 40.25% system in Turkey’s hypermarkets is of Migros shares food retailing launched. indirectly by industry. purchasing 80.5% of MH Perakendecilik 2014 ve T.A.Ş.’s capital in July 2015. Migros celebrates its 1999 60th anniversary.

Migros’ first Ramstore is opened, in Kazakhstan. 2009

Turkey’s–and Following the Europe’s–first self- transfer of the checkout customer Koç Group’s stake activated terminal in 2008, MH goes into service. Perakendecilik ve Ticaret A,Ş. becomes Migros’ major shareholder.

2005 Migros introduces the first “express Migros acquires checkout lane“ to Tansaş, a leading shoppers in Turkey. regional food retailer in Aegean Turkey.

The Macrocenter format is launched.

Migros opens its first Ramstore in Macedonia. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

CHAIRMAN’S MESSAGE WITHOUT COMPROMISING THE TRADEMARK MİGROS QUALITY, EVERY YEAR WE CONSISTENTLY REACH AN EVER WIDER CUSTOMER AUDIENCE WITH MORE COMPETITIVE PRICES.

Our strategy is not to grow Honored shareholders, would place significance on the fact that inflation has remained in single digits for the sake of growth; rather Welcome to Migros’ Annual General during the last 4 years, and has since Meeting in 2015. I would like to express we target growth that allow started to follow a decreasing trend. us to gain market share and is how delighted I am that you have joined us today. Although the increase in the national healthy and sustainable. minimum wage this year will cause Economic and Sector Review significant cost pressure, it is likely to have Esteemed Migros shareholders, when a positive impact in the medium term by we turn our attention to the economy, stimulating growth that had been slowing we find that uncertainty remained as a result of flagging consumption. I throughout the past year with both hope that increasing society’s disposable positive and negative developments at income will inject growth momentum to home and abroad. While the long term all sectors, including the food retail. efforts to reinvigorate the economy in Strategies and Operational Performance the USA had started to pay off, the FED is ready to initiate interest rate hikes. On Valued shareholders, Migros continues to the other hand, expansionary monetary grow as I expressed in the previous years. policies were still maintained and negative Migros maintains its investments in the interest rates implemented in Japan retail sector and continues to generate and the EU. The prices of commodities, employment in both good and bad especially oil, declined during the year, times. On the other hand, our strategy giving rise to volatility in many developing is not to grow for the sake of growth; countries. The Turkish economy, rather we target growth that allow us conversely, benefited from the decline in to gain market share and is healthy and 8.8% oil prices and the current deficit narrowed sustainable. In 2015, we opened 257 new Inflation followed a rising trend to be realized significantly. The Turkish economy posted stores compared to the 199 new stores we at 8.8%. However, I would place significance on 2.9% growth in 2014, but this rate had opened in 2014, including stores located the fact that inflation has remained in single slowed to 3.4% in the first 9 months outside Turkey. The Company’s had a digits during the last 4 years, and has since started to follow a decreasing trend. of 2015, and inflation followed a rising total of 1,410 stores at the end of 2015. At trend to be realized at 8.8%. However, I Migros, we provide an exclusive quality MİGROS 2015 ANNUAL REPORT

40.25% Anadolu Endüstri Holding, one of the most respectable groups in Turkey, acquired a 40.25% stake in Migros and obtained equal rights to govern.

13 of service where we care about and value culture, while being mindful of its social our customers. Without compromising responsibility. How is Migros seen from the trademark Migros quality, every year outside in terms of corporate governance? we consistently reach an ever wider I would like to say here that an customer audience with more competitive independent review conducted at the end prices. of 2015 reinforced the importance that we attach to the Migros culture. Migros Migros posted consolidated sales of was assessed by an institution carrying TL9,390 million in 2015, an increase of out independent grading in the field of Group which works in harmony with BC 15.6% compared to the previous year. Its Corporate Governance. Migros achieved Partners, which commands immense gross profit amounted to TL2,526 million one of the highest grades given to date in international experience and knowledge. with a gross profit margin of 26.9%. this field in Turkey. Eventually, Migros was I would hereby like to express that my The Company’s consolidated EBITDA admitted to the Corporate Governance belief in Migros’s future is once again (earnings before interest, tax, depreciation Index by Borsa İstanbul. reinforced. and amortization) amounted to TL602 million with an EBITDA margin of 6.4%. Esteemed Migros shareholders, there was I believe that Migros will maintain its Finally, although the Company generated an important change in our shareholding successes with a strong management a significant operating profit from its structure last year. Anadolu Endüstri and partnership structure and developed operations in 2015, it reported a net loss Holding, one of the most respectable company culture in the years to come. of TL370 million due to losses related groups in Turkey, acquired a 40.25% Yours respectfully, to adverse movement of the exchange stake in Migros and obtained equal rights rate and non-recurring expenses. I would to govern. The group also has the right emphasize here that these financial to increase its stake in Migros to 50%. expenses do not involve any cash outflow. Anadolu Group needs no introduction; it is a corporate and visionary group with Expectations for the Future an in-depth knowledge of Turkey, the Honored shareholders, we are proud to food retail sector, customers and their F. Bülent Özaydınlı express that Migros has been serving shopping habits, as well as sector trends Chairman of the Board of Directors its customers in this country for more and is able to foresee forward looking than sixty years, and I can attest to that expectations with its sector experience. Migros Ticaret A.Ş. it has a transparent and accountable Therefore, Migros now has a balanced management approach with its corporate management structure with Anadolu MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

FINANCIAL REVIEW DESPITE MOUNTING COMPETITION IN THE SECTOR, THE COMPANY MAINTAINED ITS OPERATIONAL GROSS PROFITS AND GENERATED STRONG SALES GROWTH WHILE WORKING WITH STRONG NEGATIVE WORKING CAPITAL.

In 2015, Migros registered consolidated Finally, despite the success achieved in its sales growth of 15.6%. The Company’s sales operations, Migros wrote heavy financial amounted to TL9,390 million in 2015, with expenses on its Euro denominated financial its rate of growth in domestic sales rising debt, due to the appreciation of the Euro from 10.2% in 2013 to 16.6% in 2015. against the TL. Also, a non-recurring impairment of TL202,175 was registered 2016 Its consolidated gross profit amounted to Migros aims to open between 150 and 200 as a result of the transformation of Tansaş TL2,526 million in 2015, marking an increase stores with double digit consolidated sales stores into the Migros format, which growth in 2016. of 16.7%. Despite mounting competition was accounted for under expenses from in the sector, the company maintained its investment activities. For these reasons, the operational gross profits and generated company announced a TL370 million net strong sales growth while working with loss in 2015. As of 31 December 2015, the strong negative working capital. company’s equity stood at TL516 million.

Migros wrote TL602 million of EBITDA The company met its targets in terms of (earnings before interest, taxes, depreciation store openings (257 realized compared and amortization) in 2015, representing an to the expectation of at least 225), sales increase of 13.8%, and an EBITDA margin growth and EBITDA in 2015. Its annual of 6.4% (2014: 6.5%), which was within the consolidated sales growth stood at 15.6% 6.0-6.5% target that the Company had set with an EBITDA margin of 6.4%. Migros aims out for the full year. EBITDA before rental to open between 150 and 200 stores with expenses increased by 16.2% in 2015 when double digit consolidated sales growth in compared to the previous year, while its 2016. EBITDA margin stood at 11.5% (2014: 11.5%). MİGROS 2015 ANNUAL REPORT

MİGROS OPERATIONS IN 2015 IN 2015, 249 NEW STORES IN TURKEY AND 8 NEW STORES IN ABROAD WERE OPENED, TOTALING 257.

INVESTMENTS As of year-end 2015, the Company’s portfolio held a total of 1,410 stores The Company serves its customers in consisting of 457 M, 255 MM, 94 MMM, seven different formats: Migros, Tansaş, 464 Migros Jet, 23 5M, 22 Tansaş and Macrocenter, Ramstore, 5M, Virtual 36 Macrocenter stores in Turkey and 47 Market, and Wholesale. Ramstores (27 in Kazakhstan and 20 in Macedonia) abroad. As of end-2015, the During 2015 new openings in Turkey company had operations in 71 of Turkey’s consisted of 83 Migros (56 M, 20 MM, provinces. and 7 MMM), 154 Migros Jet, 4 Tansaş and 7 Macrocenter and 1 5M stores The Company manages three shopping while 3 Ramstores went into service in centers in Turkey and another two (one Kazakhstan and 5 in Macedonia. As a each in Kazakhstan and Macedonia) result of these developments, 257 new abroad. As of end-2015, the Company’s stores were added to the overall portfolio combined (domestic and international) last year. Also, work on renovating net sales space amounted to 1 million m2, existing stores continued throughout the which corresponds to a year-on rise of year. 6.7%.

Supermarket operations make up the Company’s principal business activity. The Ramstore brand, which is managed through the Company’s subsidiaries in Kazakhstan and Macedonia, continues to expand profitably abroad.

As of end-2015, the Company’s combined (domestic and international) net sales space amounted to 1 million m2, which corresponds to 6.7% yearly increase. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

16 MİGROS 2015 ANNUAL REPORT

BECAUSE WE ARE ALWAYS CLOSEST TO YOU. Penetration and capability to reach out wider population is increasing with flexible store structures designed according to customer expectations, and could be transformed in accordance with customer demand. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

MİGROS OPERATIONS IN 2015

AT YEAR-END 2015, THE TOTAL NUMBER OF MİGROS STORES REACHED 1,140 WITH 1,363 STORES IN TURKEY AND 47 STORES ABROAD.

Total Number of Stores (unit) Total Net Sales Area 18% (thousand m2) Total number Migros stores rose by 18% in 2015 and reached 1,410.

15 14 15 14

1,190 953 +18% 1,410 +7% 1.016

Total Net Sales (TL million)

15 14

8,123 +15.6% 9,390 MİGROS 2015 ANNUAL REPORT

71 47 As of year-end 2015 Migros operates in 71 of Abroad, Migros provides services with 47 stores the country’s provinces. in total (20 stores in Kazakhstan and 27 stores in Macedonia).

Number of Stores of Domestic Net Sales Area of Domestic Net Sales of Domestic Operations (unit) Stores (thousand m2) Operations (TL million)

15 14 15 14 15 14

1,148 889 7,684 +19% 1,363 +7% 953 +17% 8,962

Number of Stores of Net Sales Area of International Net Sales of International International Operations (unit) Stores (thousand m2) Operations (TL million)

15 14 15 14 15 14

42 64,1 438 12% 47 -1% 63,6 -2% 428 MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

MİGROS OPERATIONS IN 2015

MİGROS CONTINUES ITS GROWTH WITH NEW STORE OPENINGS.

Breakdown of Net Sales Area by Brands (%)

3% 91% Macrocenter Migros

6% Ramstore MİGROS 2015 ANNUAL REPORT

Kazakhstan

Macedonia

Turkey

Breakdown of Sales (%) Breakdown of Net Sales Area by Store Formats (%) 5% 95% 6% 94% International Domestic International Domestic MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

MİGROS OPERATIONS IN 2015

KAZAKHSTAN AND MACEDONIA OFFER IMPORTANT GROWTH POTENTIAL PROSPECTS FOR ORGANIZED RETAILERS.

Migros continued its operations in Kazakhstan and Macedonia in 2015, opening new stores in these countries through its international subsidiaries.

INTERNATIONAL Ramstore Macedonia opened five new SUBSIDIARIES stores in Skopje, Struga and Kicevo and increased its total number of its stores Migros continued its operations in to 20 and total sales area to 16.861 m2. Kazakhstan and Macedonia in 2015, Ramstore Macedonia served over 6.4 47 opening new stores in these countries million customers in 2015. through its international subsidiaries. International subsidiaries, operating through a International subsidiaries, operating total of 47 stores, were active on a total 63,599 Like other developing countries, through a total of 47 stores, were active m2 sales area at the end of 2015. Kazakhstan’s economy experienced on a total 63,599 m2 sales area at the end difficulty in 2015. As an exporter of oil and of 2015. gas, the decline in oil and gas prices took a heavy toll on the country’s economy. International subsidiaries’ total sales Kazakhstan’s currency had to be devalued amounted to TL428 million in 2015. The against foreign currencies more than once EBITDA of international subsidiaries in the year. (earnings before interest, taxes, depreciation and amortization) stood Macedonia’s economy continued to at TL9.5 million with an EBITDA margin grow in 2015, demonstrating a better amounting to 2.2% of total sales. performance than other economies. Kazakhstan and Macedonia offer Ramstore Kazakhstan opened three new important growth potential prospectively stores in Almaty and Aktau in 2015 and for organized retailers. continued to operate a total of 27 stores with more than 46,738 m2 of sales area. Ramstore Kazakhstan provided served 17.2 million customers in 2015. MİGROS 2015 ANNUAL REPORT

MİGROS APPEALS TO ITS CUSTOMERS WITH RELEVANT, RICH AND COMPETITIVELY-PRICED PRODUCT PORTFOLIO.

23 61 st Year Campaigns were carried out with the “Goodness theme” together with “Migros Will Do You Good” slogan under the main roof of “61 years Only in Migros”.

PRODUCT MANAGEMENT Themed catalogues, weekend discounts, and “Seeing is Believing” campaigns Migros distinguishes itself from its continued to be carried out throughout competitors in the sector through the year. Discounts to mark special days effective marketing strategies that also like Mothers Day, Women’s Day, the 23rd incorporate themed campaigns while April, World Animal Day have long been simultaneously appealing to its customers times of traditional promotions, with with relevant, rich and competitively- awareness also raised of new special days priced product portfolio. such as World Milk Day.

To mark the 61st anniversary of Migros’s Effective promotional efforts during the foundation, campaigns were carried out year concentrated on price competition with the “Goodness theme” together and on serving customers in the best with “Migros Will Do You Good” slogan way possible by offering the highest- under the main roof of “61 years Only in quality products at the best prices. Migros”. Products especially produced Special attention was also given to stock for these campaigns were offered to management both before and after such customers. Also, seasonal campaigns, promotions. such as Ramadan and back-to-school were conducted. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

MİGROS OPERATIONS IN 2015

Locally-sourced produces continued revenues and profitability and checking not only to enhance product variety for the unit distributions. customers but also to provide suppliers with opportunities to develop their own Portfolio and product management works distribution channels. Migros continues to specific to service-station (PO Migros expand both its import operations and its Jet) and traditional retailing continued. organic products portfolio so as to better Suitable and optimum variety is offered to respond to consumers’ price, quality, and the consumers through the works carried variety priorities. out in these fields.

The “Good Poultry” practice, which is the Focus was directed at effective culmination of work carried out together management of order and stocks in fruit- with suppliers and government agencies vegetable and red meat product groups, various infrastructure works were carried Service scope of M Oven following the “Good Meat” and “Good Farming” practices, was expanded. The out and new systems were commissioned. departments were expanded, number of poultry suppliers carrying the In non-food product groups, space which were developed to serve “Good Poultry” logo was increased and management system was begun to be various campaigns were carried out for fresher bakery products that implemented and stock, variety and space the products with the logo to be provided form the basis of daily shopping efficiency were achieved in the related to the customers more throughout the product groups. to the customers by baking year. Significant progress was achieved them inside the store in suitable in terms of explaining the project to the New working ways were identified stores. customers by using visual media means. to carry out the logistics of fresh delicatessen products to far regions Service scope of M Oven departments more effectively and the systems were were expanded, which were developed integrated. to serve fresher bakery products that form the basis of daily shopping to the Developments of B2B screens, where customers by baking them inside the cooperation is strengthened by store in suitable stores. developing reporting and support capabilities in line with the suppliers’ Within the framework of existing and new expectations, were continued to carry out. strategies, renovations were made to the Necessary developments for the suppliers layout plans and portfolio revisions were to carry out new product listing processes made in accordance with these layouts. more effectively and efficiently through Necessary arrangements were carried out B2B were completed. by taking into account of the categories’ MİGROS 2015 ANNUAL REPORT

AS IN THE PAST YEARS, THE REVENUE GROWTH OF PRIVATE-LABEL PRODUCTS WAS HIGHER THAN THAT OF THE COMPANY IN 2015.

PRIVATE LABELS sommeliers in an international competition seeds in all regions of Turkey, the company organized by International Taste & Quality aims to pass Anatolia’s cultural richness on The Company offers three different Institute (iTQi). to future generations by embracing it and product groups under its “Only At Migros” therefore contributing to Migros’s image. program: fresh produce, private-label Private-Label Products: As of end-2015, products, and branded products that are Migros was serving customers with close In 2015 the Company continued the sold only by Migros. to a thousand stock-keeping unit (SKU) strategic approach it introduced in 2011 private-label products. Migros-branded in its private-label product groups. In line Fresh Produce: Strong logistical network products consist of basic necessities that with this strategy, prices of private-label support gives Migros a tremendous possess the superior quality standards that products were kept down while studies competitive advantage in ensuring the are expected of Migros while being more to raise their quality further continued quality and freshness of its fresh produce. economical than comparable products throughout the year. All of the company’s meat is sourced from currently available on the market. its own meat processing facility, which As in the past years, the revenue growth of was relocated to n newly-built, modern “M Life” is the brand of products that private-label products was higher than that site in 2013. For red meat, Migros obtains support healthy life style and offer of the company in 2015. live animals only from producers whose products in different sub-categories such operations it inspects itself, processes the as organic, low calorie, diabetic. In 2014, M Branded products that are sold only by meat itself, and has it freshly delivered Life Organic nuts and dried fruits received Migros: More than a thousand SKUs which to all of its stores on a daily basis. the “2014 Best New Product” award in are not to be found anywhere except at Ready-to-eat and composite products, the “Healthy Snacks” category in a survey Migros and/or Tansaş consist of well- which are marketed under Migros’ own of 13,000 Turkish consumers conducted known and much sought-after regional “Expert Butcher” label, are prepared and by BrandSpark. Additionally, there are specialties, products with proven success packaged without manual intervention. private-label products such as Viva, Q-Max, outside Turkey but which have not yet The company’s commitment to good Home Basix, Touch Me in non-food product entered the country, and new-concept agricultural practices (GAP) in fresh fruits categories such as paper, home textile, products with which Turkish consumers and vegetables further strengthens the glassware, small household appliances, and are not yet very familiar. The company confidence that customers have in the heaters. diversifies itself by offering a wide variety Migros brand. Under the “From Field to their customers through these products. To Shelf Project”, all fresh produce is Meanwhile, the Anatolia Tastes products Within the scope of sustainability studies, harvested, shipped to stores, and placed – the pilot study for which began at the new products were added to the range of on shelves within thirty hours in average. end of 2014 and was opened in a wider store portfolio in 2015 - are products branded products that support a healthy In 2015, Sauced Tandoori Lamb and distinguished with their regional or cultural diet and lifestyle, and the number of Pastrami Burger products under the features, produced by traditional methods products whose packaging includes the 7 label of “Expert Butcher” were deemed and all of which have their own story. As key nutrition items were increased. worthy of 2015 Superior Taste Award by this project was implemented as a result a judge comprised of Michelin chefs and of scanning special tastes and endemic MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

26 MİGROS 2015 ANNUAL REPORT

BECAUSE WE OFFER THE WIDEST VARIETY AT THE BEST PRICE Aiming to offer the best prices in the market and able to compete on price without compromising the Migros quality for staple household products, Migros continued to invest in and place great importance in Migros branded products in 2015. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

MİGROS OPERATIONS IN 2015

THE CAMPAIGNS AND ACTIVITIES CONDUCTED BY MONEY CLUB IN 2015 SUCCESSFULLY MAINTAINED THE CLUB’S STANDING AS TURKEY’S BIGGEST AND MOST VALUABLE CUSTOMER LOYALTY PROGRAM.

Money Club continues to lead the way in the sector through its uniquely original approach to customer communication practices and innovations. In 2015, the private proposal period was launched for every customer who shops, tailored to their shopping habits and specific to them. These proposals, named “Meant for Me” were designed by taking into account data such as the categories from which customers shop, their basket size, the frequency of their visits to the store and their spending potential.

Customer-related shopping data are analyzed and lists of favorite/most- frequently-purchased goods are created for each customer. Whenever one of these products goes on sale or is included in a campaign, a personalized message is sent Customers gained access to MONEY CLUB AND CRM to the customer. Mechanisms have been the “Meant for Me” campaigns set in place to ensure the continuity of The campaigns and activities conducted such communication. The Migros Mobile through the mobile application by Money Club in 2015 successfully and all the transactions made application was renewed within the year maintained the club’s standing as Turkey’s and was downloaded 550,000 times in by Money Club Card and all biggest and most valuable customer the space of just two months. Customers gains accumulated in the cards loyalty program. The number of the gained access to the “Meant for Me” became easily trackable. program’s active members reached 8.7 campaigns through the mobile application million in 2015. and all the transactions made by Money Club Card and all gains accumulated in the cards became easily trackable. MİGROS 2015 ANNUAL REPORT

Turkey’s leading chain of fuel stations. Under the Migros-PO agreement, Money Club members earn loyalty points on purchases that they make at PO stations using their Money Club cards. These points can be used to pay for purchases both of fuel and of goods from stations’ convenience stores. By joining forces with PO, Migros creates added value for customers in two of their most important retail-purchasing experiences: food and fuel.

In 2015, the “Double Win” campaigns In addition to personalized digital- 29 channel communication based on that embrace both Petrol Ofisi (PO) frequently-purchased products, customer and Money Club customers were communication is also informed by the implemented. This campaign won the regional consumption and shopping praise of many Money Club customers 8.7 mn habits of people living in the area where a and gains at different points raised the store is located. value perception of Money Club. The number of Money Club’s active members reached 8.7 million in 2015. The Money Club, which carried out the Within the scope of the HOPİ program, sector’s most unusual and unprecedented that is one of Turkey’s most extensive campaigns, repeated its “Don’t Open mobile networks, Money Club gained & Win” campaign in 2015, which it had a foothold in this mobile network by launched for the first time in 2014. In carrying out campaigns for customers this campaign, customers are given a who use mobile phones. sealed envelope for every TL 50 they 2015 was again a year in which CRM spend. Every envelope contains a free campaigns with suppliers proved to be coupon worth up to TL 50 for use against very productive. Efforts on the part of their future purchases. In order to use suppliers to know their own customers the coupon however, they must come increased the turnaround productivity back to the store at least one day later of CRM campaigns by 40% compared to and open the envelope in the presence 2014. of a cashier, who loudly announces the amount. The curiosity provoked by the Money Club delivered personalized sealed envelope, the excitement at the advantage to 6.3 million customers in the cash register, and the sociable dialogue course of 2015. As was done 2014, in a poll ensuing between cashiers and customers of consumers conducted by MediaCat in continued to make it one of the most 2015, a corporate- and customer-research singular and attention-getting marketing and communication agency, Money Club campaigns of 2015. Card was the first loyalty card to be concurrently cited in all samples of all age Seeking to create value for customers in groups in the “Best-known loyalty card in other sectors in which they frequently any sector”, “Most-recommended loyalty make retail purchases, in 2014 Money card in its own sector”, and “If you had to Club entered into a strategic business pick just one program, which would it be partnership with Petrol Ofisi (PO), in any sector?” categories. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

MİGROS OPERATIONS IN 2015

THE MİGROS VIRTUAL MARKET (MVM) CONTINUED TO GROW RAPIDLY IN 2015 THANKS TO THE ADDITION OF SMART PHONE AND TABLET APPS TO ITS EXISTING INTERNET AND TELEPHONE SERVICE CHANNELS.

areas. The Migros Virtual Market, which has been demonstrating a steady growth trend over the last 5 years, continues its activities with an increasing service quality.

In a bid to expand the customer base, the Virtual Market launched the “Recommend-Win” recommendation mechanism during 2015. In addition, steps were also taken to attract new members through cooperation projects conducted together with companies from the retail and banking sectors. Segment studies were conducted with the aim of increasing order frequency and to recommend products to customers MİGROS VIRTUAL MARKET who may be interested in them, while www.sanalmarket.com.tr personalized content was presented in communication channels. Serving online customers in Turkey since 1997, the Migros Virtual Market (MVM) The “Mobile Market” application, a first in 40% continued to grow rapidly in 2015 thanks Turkey, accounted for 40% of total online The “Mobile Market” application, a first in to the addition of smart phone and orders in 2015. Customers may also order Turkey, accounted for 40% of total online tablet apps to its existing internet and simply by scanning the barcode on the orders in 2015. telephone service channels. Conducting product’s packaging with their mobile its distribution operations year-round phone cameras, through the Mobile through 102 stores in 24 cities, the Market application. Announcements of number of MVM distribution points rises any promotions are also sent instantly to 110 during the summer season with the through the mobile application. addition of Turkey’s most popular resort MİGROS 2015 ANNUAL REPORT

31 The Virtual Market, which aims to be At the same time, electric bicycles are accessible from all channels, developed also used for service in mass housing different delivery channels zones and seasonal stores. • by taking into account of different needs such as “Let It Come to Your The Migros Virtual Market continued Work” application for working people, to actively use social media to increase • the “Buy When Passing” application brand recognition and reach new that allows order delivery from Migros customers in 2015. Customers can Jet stores in Petrol Ofisi petrol stations follow the most recent campaigns for those who do not have time for and developments instantly through shopping, social media channels and are able • “Unlimited Shopping Kiosk” for those to communicate, and can also take who like visiting stores but do not like advantage of special campaign carrying, advantages. • “Delivery from the Store” application Migros Elektronik, a virtual store that for those who do not want to wait for specializes in the online sale of all of the the order. electronics, computers, home appliances, Electric cars started to be used in delivery and white goods offered for sale at operations with the aim of enhancing Migros stores, continued to serve and energy efficiency. make sales to customers calling at www. migroselektronik.com during 2015. Electric cars, all of which are in Istanbul, were included in the distribution channel. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

MİGROS OPERATIONS IN 2015

Also in 2015, “Macroonline” (online. macrocenter.com.tr), the online portal of the Macrocenter format that sets itself apart with the standard of its service standard and product exclusivity continued to provide service in Istanbul, whereas “Macrophone” that is a phone order line continued to provide services with its widening distribution network in Ankara, İzmir, Muğla and Antalya.

In 2015, the Migros Virtual Market carried out communication activities to raise awareness of how the Virtual Market can help its users and leave them with some free time that would have been spent shopping with slogans such as “Don’t Miss Turkey’s biggest online operation for the In the Migros Virtual Market, out on Living” and “You Ask, We Bring”. Festival of the Sacrifices, where deliveries whose processes are designed It was pointed out through the motto, can be completed to the address, is “From the Internet, Mobile or Tablet”, to be customer centered and conducted by the Virtual Market. During pointing out that orders can be made over suitable for practical use, the Festival of the Sacrifice, sacrificed many platforms. ordering can be initiated animals purchased from animal breeders over one platform before throughout the country and chosen by In the Migros Virtual Market, whose being completed on another Migros’s veterinary doctors with care and processes are designed to be customer platform. cut according to Islamic principles are centered and suitable for practical delivered to the customers, already cut use, ordering can be initiated over one and packed. platform before being completed on another platform. MİGROS 2015 ANNUAL REPORT

BECAUSE IT REGARDS CUSTOMER FEEDBACK AS HIGHLY VALUABLE INPUT WHEN SHAPING COMPANY STRATEGIES, FAST AND EFFECTIVE COMMUNICATION IS AN IMPORTANT GOAL FOR MİGROS AT ALL TIMES.

CUSTOMER SERVICE LINE Migros operations have been awarded 444 10 44 TSE ISO 10002 Customer Satisfaction Management System certification. Results During 2015, the Migros Call Center of all communications received and communicated directly with 950 responded to through all communication thousand customers. Because it regards channels, are reported with the aim of customer feedback as highly valuable continuous improvement. input when shaping company strategies, fast and effective communication is an Reports whose findings are based on important goal for Migros at all times. detailed examinations of feedback are treated as input for improvements which Feedback concerning Migros, Macrocenter will contribute to the company’s growth and Migros Virtual Market products and and development and which are seen as services that is submitted by anyone guideposts pointing to opportunities for dialing 444 10 44 from anywhere in making corrective changes. Regarding Turkey is responded to by call center units customers’ opinions as a focal point of located in İstanbul and Samsun. Incoming attention at all times, the Migros Call calls are categorized according to topic, Center constantly strives to enhance its 950 K examined, listed in accordance with service approach of being “close to the priority and responded to within 48 hours customer”. During 2015, the Migros Call Center communicated directly with 950 thousand at the latest. customers. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

34 MİGROS 2015 ANNUAL REPORT

BECAUSE 35 WE ARE WORKING TO BRING THE BEST CUSTOMER EXPERIENCE. Migros distinguishes itself from its competitors in the sector through effective marketing strategies that also incorporate themed campaigns while simultaneously appealing to its customers with relevant, rich and competitively-priced product portfolio offerings. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

MİGROS OPERATIONS IN 2015

MİGROS PRODUCTS ARE METICULOUSLY CHECKED AT ALL PHASES FROM THEIR PURCHASE UNTIL THE POINT THEY REACH THE CONSUMER.

Migros aims to obtain the TS EN ISO 14001 Environmental Management System certificate in 2016 by streamlining its environmental management and sustainability activities with quality management systems.

QUALITY MANAGEMENT The Company aims to obtain the TS EN ISO 14001 Environmental Management In line with its strategies and mission, System certificate in 2016 by streamlining Migros consistently offers its customers its environmental management and a modern, reliable, economical and high sustainability activities with quality first quality service to ensure sustainable management systems. In addition to these Migros was the first food retailer to obtain four quality and sector leadership. Migros certificates, Migros - which also attaches quality management certificates awarded by was the first food retailer to obtain four importance to product certificates - holds the Turkish Standards Institute. quality management certificates; TS EN the Organic Entrepreneur Certificate for ISO 9001:2008 Quality Management its fruit and vegetable warehouses in Izmir System, TS EN ISO 22000 Food Safety and Bursa, and 7 GAP (good agricultural Management System, TS ISO 10002 practices) group certificates in 18 fruit and Customer Satisfaction Management vegetable products. System and OHSAS 18001 Occupational Health and Safety Management System, which are certified by the Turkish Standards Institute. MİGROS 2015 ANNUAL REPORT

A total of 685 supplier audits were carried out in 2015, which included both food and non-food product suppliers. Corrective/preventive action was initiated whenever the results of such inspections were unacceptable with follow-up inspections being performed subsequently. Agreements with suppliers who failed to pass follow-up inspections were terminated.

New Product Checks

All new products that are planned to be put onto market by the Marketing 37 Department were checked for compliance with the relevant laws and regulations Ensuring Product Quality by the Quality Department and only approved products were put onto the Guided by global standards in terms of market. During 2015, a total of 10,232 new product safety, Migros is able to provide products were included in the system its customers with healthy products after being checked. in healthy conditions to perpetuate its customers’ unconditional safety. In line Product Verification Analyses with this goal, products are meticulously checked at all phases from their purchase Verification analyses were conducted in until the point they reach the consumer. the private laboratories of specialized accredited independent external bodies Extending the Scope of Supplier Audits to monitor and verify whether all food and non-food products sold in Migros Attaching great importance to supplier complied with the Turkish Food Code and selection, Migros follows suppliers’ relevant legislation. A total of 21,647 quality practices, assisting and providing parameters of 5,311 food products and guidance to suppliers with the aim of 3,582 quality parameters of 277 non-food increasing their performance. products were subjected to verification Migros has been implementing a specific analyses in relation to product safety during 685 audit program for its suppliers since 2015. The product analyses ensured that the products offered to customers were A total of 685 supplier audits were carried out 2008. Its suppliers’ production facilities in 2015, which included both food and non- are audited in accordance with Migros legally compliant, safe and healthy as well food product suppliers. protocol prepared by independent as value added, as backed by scientific data external bodies, especially for Migros. was created by continually improving the Migros discontinues product purchases products of producing companies. from suppliers which have failed to obtain adequate marks in the audits. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

MİGROS OPERATIONS IN 2015

Private-Label Product Controls Convenience Food Product Specifications Manual Work also continued in 2015 to continually increase the product quality in private- The Migros product specifications manual label product groups. Audits of all facilities was created and sent to all stores which of the producers of private-label products have a convenience food section, along were carried out. Periodic analyses of with the relevant suppliers, in order to the private-label products produced by ensure a quality standard for the products these producers are carried out by both sold in the Convenience Food sections independent accredited external bodies in the stores from different suppliers. and the quality control laboratories in the Therefore, while Migros raised its own company’s distribution centers. As a result quality standards, while also creating of these analyses, products are checked added value for its suppliers. for compliance with the legislation and specified specifications and their quality Quality Controls for Distribution Centers performance is monitored by comparing All products delivered by suppliers them with equivalent products. including the fruit and vegetable Products are checked for Production of electricity and electronic warehouses and meat distribution compliance with the legislation private-labeled products sourced centers are checked during the product and specified specifications domestically was stepped up; the acceptance process in the quality control and their quality performance monitoring and inspection process laboratories located in the Migros is monitored by comparing applied to imported products started to Distribution Centers. be implemented domestically as well. them with equivalent products. In 2015, 145,625 products were checked by In this process, Products were checked quality specialists, 1,661,454 products were for compliance with legislation and checked by acceptance specialists, so that Migros’ specifications by an independent a total of 1,807,079 products were checked accredited external body, and the for quality. products which were approved were put onto market. Such monitoring and inspection activities are planned to be extended to other product groups during 2016. MİGROS 2015 ANNUAL REPORT

The Company focused on effective Effective Reporting with Uninformed resource management targets in 2015, Mobile Store Audits in accordance with the company’s strategies. Product acceptance control Migros, that follows globally recognized data of products in the same lot are standards as its guide controls the shared instantly with other distribution processes from four quality management centers through “Lot Number Based system certificates that it possesses in Quality Control Project”, thus contributing its stores by its own quality team and significantly to work power and resource accredited independent external body efficiency. through uninformed audits.

A total of 264 verification audits were In these audits, Migros checklists that carried out by quality specialists in the encompass the requirements of all the distribution centers, the fruit and vegetable standards specific to each section are used. 39 warehouses and wholesale warehouses The audits started to be carried out in 2015 to check the quality and food safety with tablet PCs as a mobile application. In management systems’ processes. In 2016, this way, effective reporting was achieved the scope of the audit was extended and the results were shared with store and occupational health and safety managers instantly and the necessary management processes were also included actions were taken. in the checklists. A total of 954 uninformed audits were Test activities continued to be carried out conducted by store quality specialists and 1.8 mn with “time temperature indicator” (TTI) 1,233 uninformed audits were carried out by an independent external body; in total, In 2015, a total of 1.8 million products were labels in transportation vehicles for cold checked for quality. chain control. 2,187 uninformed audits were carried out. In these audits, 23,288 hygiene analyses One of the most important aims of the were carried out by an independent relevant audits and tests is to ensure laboratory to check personnel hygiene, the uninterrupted continuity of the cold equipment surfaces and domestic water. chain, that is of critical importance in terms of food safety, from the point Bearing customer expectations and where the products are first accepted in satisfaction in mind, store quality the distribution centers and the storage specialists continued to carry out audits processes, through to the delivery and of the fresh produce section in 2015, unloading processes and finally to focused on product freshness and food when the products are presented to the safety criteria. For this purpose, in total customers. 4,103 audits were carried out in the meat, delicatessen, fruit and vegetable and bakery products sections.

In 2015, quality and food safety audits of the Virtual Market’s operational processes continued to be carried out. The findings of a total of 248 similar unannounced inspections conducted last year were analyzed, compiled, and used as input for initiating corrective/preventive measures. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

MİGROS OPERATIONS IN 2015

IN 2015, MİGROS RECEIVED THE OHSAS 18001 OCCUPATIONAL HEALTH AND SAFETY MANAGEMENT SYSTEM CERTIFICATE.

Quality Training

Within the scope of Integrated Management Systems (ISO 9001 - ISO 14001 - OHSAS 18001), 11 classroom based training programs in 5 different regions (Istanbul, Ankara, Adana, Antalya and Izmir), each of a 3 day duration, were carried out together with the TSI and 301 personnel received a total of 7,224 hours of Internal Auditor education.

Training aimed at white collar and blue collar personnel related to four Quality Management Systems (ISO 9001 Quality, ISO 22000 Food Safety, ISO 10002 Customer Satisfaction and OHSAS 18001 Occupational Health and Safety Management Systems) were defined, In 2015, a different training QUALITY MANAGEMENT over Akademig, which is the company’s model was developed together SYSTEMS corporate development platform, and training programs were carried out across with the suppliers of the Besides the required monitoring and Company’s bakery products. the company. In addition, 491 Virtual measuring activities for the continuity Market personnel were given Quality of existing certificates - principally the Management System training by store recording of procedures and risk analyses quality specialists. in all stores and emergency action plans - all documentation within the scope of 468 different training programs were the Integrated Management Systems organized for 5,231 personnel in the was completed to obtain the OHSAS distribution centers and fruit and 18001 Occupational Health and Safety vegetable regional warehouses to develop certificate. Quality Management Systems practices and to inform new recruits about the subject. MİGROS 2015 ANNUAL REPORT

41 468 468 different training programs were organized for 5,231 personnel in the distribution centers and fruit and vegetable regional warehouses to develop Quality Management Systems practices and to inform new recruits about the subject.

Trainings aimed at personnel carrying was raised, ensuring that personnel are OHSAS 18001 Occupational Health and out transit product acceptance quality able to communicate with customers Safety Management System Certificate control processes in the stores were effectively and in the right manner. organized by quality control specialists, Audits carried out by the Turkish Standards which enhanced the personnel’s levels of Quality Management Systems Internal Institute (TSI) in a corporate framework knowledge. Audits were carried out in Migros stores and distribution centers in different provinces. Adding Value to its Business Partners Within the scope of Integrated As a result of the audits, the decision was Management Systems, internal audits taken by the TSI that the TS EN ISO 9001 In 2015, a different training model was were carried out with the participation Quality Management System and TS EN ISO developed together with the suppliers of 1,007 stores, 11 distribution centers, 5 22000 Food Safety Management System of the Company’s bakery products. After fruit and vegetable regional warehouses certificates were to be renewed, the TS ISO 3 days of applied and classroom based and 10 departments in the head office 10002 Customer Satisfaction Management training given to new recruits and existing between 5 May and 30 June 2015, with an System certificate would be continued and bakery product personnel, the personnel’s average 90.2% success rate achieved as a the OHSAS 18001 Occupational Health and knowledge level with regard to Quality result of the audits. Safety Management System certificate Management Systems and food safety would be issued to the company. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

MİGROS OPERATIONS IN 2015

AS OF END OF 2015, PRODUCTS WERE BEING SUPPLIED FROM 882 PRODUCERS WHO HELD 245 GPA CERTIFICATES RELATED TO 117 KINDS OF PRODUCTS PRODUCED IN ACCORDANCE WITH GPA PROCEDURES AND PRINCIPLES. 42 18 Migros continued the success of previous years by being awarded the Good Agricultural Practices (GPA) Group Certificate for a 7th time for 18 different kinds of fruit and vegetable products.

GOOD AGRICULTURAL activities, 30 producers were entitled to PRACTICES government support provided within the scope of GPA. Good Agricultural Practices: Crop Production As of end of 2015, products were being supplied from 882 producers who held Migros continued the success of previous 245 GPA certificates related to 117 kinds years by being awarded the Good of products produced in accordance with Agricultural Practices (GPA) Group GPA procedures and principles. Certificate for a 7th time for 18 different kinds of fruit and vegetable products, In accordance with the 2015 training after having undergone production and schedule, GPA training was organized operational area audits carried out by for the personnel of the Fruit-Vegetable a control certification body authorized Procurement Regional Directorate and by the Ministry of Food, Agriculture and steps were taken to ensure that the Livestock. As a result of the certification relevant personnel were kept informed. MİGROS 2015 ANNUAL REPORT 882 As of end of 2015, products produced in accordance with GPA procedures and principles were being supplied from 882 producers.

A total of 30 training sessions were organized in 2015 with the aim of informing store personnel about GPA procedures and principles by the Blue Collar Training Development Department, and the competency of store personnel was increased accordingly.

Good Agricultural Practices: Animal Husbandry (Poultry Farming)

Conscientious consumers nowadays want to know about all the production stages of the foods that they eat and this is one reason why the problem of the traceability and sustainability of food production has become a very important aspect of food safety. Such demands, which are not without their justification and first made their appearance in the Migros implemented the “Good number of companies awarded the GPA livestock industry years ago, led to the Agricultural Practices in Animal in poultry farming certificate increased. introduction of the concept of “good Husbandry” project after analyzing the In 2015, 11 suppliers obtained their GPA husbandry practices” (GHP). effects of issues such as animal products’ certificates by including 419 poultry traceability and sustainability, and food farms into the certification process, while safety on consumer demand in 2013. two suppliers were awarded the GPA Since the launch of the project, the certificate in egg production. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

MİGROS OPERATIONS IN 2015

SERVICE QUALITY AND EFFICIENCY WERE AMONG THE MOST IMPORTANT ISSUES TACKLED AT MİGROS’ DISTRIBUTION CENTERS IN 2015.

The distribution of fresh foods through distribution centers (instead of direct delivery by the suppliers), a procedure that was initiated in 2010, continues to be conducted effectively in all regions. This method ensures that fresh foods remain in the cold chain at every stage of distribution and that they reach consumers at the highest possible quality.

In order to better manage and optimize stores’ stock levels, the practice of shipping some product groups on an item-count (rather than whole-lot) basis was extended. This system allows stores to place orders for the exact number of It is ensured that fresh foods DISTRIBUTION CENTER & products they want, the effect of which is remain in the cold chain at LOGISTICS MANAGEMENT to reduce unproductive inventory costs. every stage of distribution and Foremost among the issues to which IFCO-standard reusable plastic containers that they reach consumers at attention was given at Migros’ distribution (RPC) are used to distribute fruit and the highest possible quality. centers in 2015 were those of service vegetable and red meat product groups quality and efficiency. Thanks to effective to ensure product freshness, improve cost management, the company’s food safety and reduce logistics expenses. domestic distribution center and logistical By using IFCO containers which are services expenditures last year were less completely safe when in contact with than those of 2014. food and compliant with ISO 22000 Food Safety requirements and washed in As of end of 2015, there were a total of professional machines, Migros maintained 21 distribution centers including fruit and the highest freshness and quality vegetable and meat distribution centers. standards; the process of transporting the emptied containers was significantly improved while reductions were also achieved in the cost of buying containers and cardboard casing. MİGROS 2015 ANNUAL REPORT

21 As of end of 2015, there were a total of 21 distribution centers including fruit and vegetable and meat distribution centers.

Effective use of technology makes it possible to keep track of vehicles’ locations and onboard temperatures while goods are in transit. Such information is fully integrated into Migros’ stock- management systems. Using a mapping app on a tablet computer, a store’s managers can see exactly where a vehicle on its way to deliver goods to them is located and they can also estimate its arrival time. This allows for better workforce deployment and stock planning at the store.

After preparatory work in 2014, a scrum team was formed in 2015 based The project that was initiated to make combined, thereby achieving substantial on Agile methodology. This added a shipments at night between stores’ improvements in efficiency and shipping real time address based stock module opening and closing hours has been costs. and the module of cashier based extended and nearly 180 stores are • Fresh food group products were sent collection by scanning the barcodes currently taking part in it. Besides to the Erzurum Distribution Center in of fruit and vegetable products into shortening the time between order- combined vehicles on the basis of full the warehouse management system placement and delivery, this procedure occupancy. Therefore, inefficiencies in the which was developed from Migros’s improves shipping efficiency and allows intermediate goods supply processes in internal resources. Thanks to the Agile incoming goods to be handled at business partners was eliminated. methodology, these developments were stores before the doors are opened to • Technological improvements were commissioned efficiently and rapidly. customers. initiated in the Gebze Distribution Center, The methodology also brought real the first phase of which took place in time communication of the records of Also in 2015; 2014, where a 565m long conveyor belt, quality checks conducted in distribution • The number of product groups handled stretching from the product entrance to centers with all distribution centers. Thus, at both the Bayrampaşa (İstanbul) the dispatch area, was commissioned. duplicate operations were eliminated by and the Kemalpaşa (İzmir) distribution The design, layout plans and contract enabling the examination of laboratory centers was increased. In territories where works were completed for the second records of products that bear the same lot there is a particularly heavy distribution phase. number as in other distribution centers. of fresh foods and red meats, the shipments of these two groups have been MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

MİGROS OPERATIONS IN 2015

THE ME-MOBILE APPLICATION, THAT ENABLES THE RUNNING OF BUSINESS PROCESSES WITH THE SUPPLIERS, WAS COMMISSIONED IN 2015.

INFORMATION TECHNOLOGY Migros Mobile Application: The Migros mobile application, which provides e-Archive: The e-Archive application preferential shopping opportunities, includes the creation, storage, offers an array of features and keeps presentation and reporting of invoices users informed of all campaigns specific in electronic media in accordance with to the user’s shopping habits, as well as the standards set out by the Revenue their Money Club points and follow-up Administration Department. The work campaigns online without needing to go was completed within the framework to the supermarket. The design, content of a project and the application was and infrastructure of the application were commissioned. completely renewed and a new version was commissioned. iBeacon Applications: iBeacon technology allows users to transmit data over short Customer WiFi (MiFi) service and Fiber- distances based on their location. The optic Configuration: The transition into first applications of this technology a secure network configuration that will were launched in Migros stores in 2015 provide free internet access to customers and customers are also presented with in 200 stores and high speed, secure campaign recommendations through this fiber-optic infrastructure was completed. channel. This enabled the more rapid operation of The Migros mobile application, store applications without interruption.

which provides preferential PIM (Personal Information Application): Also, isolated infrastructure was set up, This application enables suppliers to where store personnel and customers shopping opportunities, promote their products, including all offers an array of features may access the internet without the of their features, over the portal. The use of store applications from their own and keeps users informed of application enables the compilation of devices being compromised. all campaigns specific to the product features completely and correctly user’s shopping habits, as well and helps increase efficiency. as their Money Club points and Me-Mobile: The mobile version of the B2B follow-up campaigns online application, that enables the running of without needing to go to the business processes with the suppliers, supermarket. was commissioned in 2015. Accordingly, requirements such as order approval and critical queries can be carried out instantly, independent of location. MİGROS 2015 ANNUAL REPORT

MİGROS IS A YOUNG AND ENERGETIC FAMILY, 72% OF WHOSE EMPLOYEES ARE FROM GENERATION Y, WITH ITS STAFF HAVING AN AVERAGE AGE OF 31.

HUMAN RESOURCES & were created during the year. The internal TRAINING application system was applied for a number of open positions during 2015, Migros Human Resources’ objective with 244 positions filled from internal is to have human resources who will resources. In 2015, 67% of the candidates support the Company’s efforts to employed for head office departments defend its leading position in a highly were women. competitive industry by their being knowledgeable, customer- and process- In 2015, Migros enabled those who want focused, resourceful, and dynamic. In to work in the retail sector to build a line with this approach, the Company’s career by providing them with workplace human resources policy is rooted in the training through the workplace training philosophy of “Creating employees who program, with was implemented in will create competitive advantages”. partnership with İŞ-KUR. Within the scope of the training program organized At end-2015, the Migros family consisted together with İŞ-KUR throughout Turkey of 21,762 people of whom 20,171 were during the year, a total of 1,003 people employed in Turkey and 1,591 abroad. joined Migros.

The candidate pool was expanded during Assessment Center practices to assist the 2015 through the effective application personal and professional development of 21,762 system management and 409,000 store managers also continued this year. At end-2015, the Migros family consisted of candidate applications were received. A total of 168 store managers and deputy 21,762 people of whom 20,171 were employed in Turkey and 1,591 abroad. An average of 130 candidates in the managers participated in these practices candidate pool were assessed each and received detailed feedback regarding working day and 4,500 new positions their career development during 2015. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

MİGROS OPERATIONS IN 2015

Migros continued to manage its career In 2015, health insurance renewal A “Working Life Assessment planning and promotion processes by processes were completed for employees. Survey” is conducted every means of its Store Career Paths Program. year in order to measure and This program, which allows employees Aimed at reinforcing the perception of in all stores and departments to manage Migros as an employer brand and to boost further improve the level of their own career systematically, fairly, and loyalty, the “Good Job Good Future” employee loyalty and job objectively, received the “Most Successful employer brand promise was created satisfaction at Migros. Human Resource Practices” citation in within 2014 and branding activities were the “2012 Retailing Sun Awards”. In line strengthened through various projects. with the Store Career Paths Program that The Migros LinkedIn page started to be was revised in 2015 no fewer than 98% actively used in 2015, while the Migros of Migros’ store management personnel Career Facebook page was also opened in were recruited from the Company’s own 2013, a first in food retail sector, attracting human resources. In parallel with the rapid more than 65,000 followers as of the end growth in store numbers, almost 3,500 of 2015. 65K A first in food retail sector, the Migros Career people were included in the appointment/ Migros Career Facebook, a first in the Facebook page reached more than 65,000 promotion processes within the scope of food retail sector, won the “Superior followers as of the end of 2015. the Migros Career Definitions. Achievement” award in the human Migros is a young and energetic family, resources category in the “Interactive 72% of whose employees are from Media Awards (IMA)”, an international generation Y (born between 1980 and web design and innovation competition 2000), with its staff having an average organized in New York. age of 31. Its white collar employees have Within the scope of work assessment an average seniority of more than 9.2 activities in 2015, departmental and years. organizational designs were carried out in parallel with the company’s expanding structure.

In 2015 Migros Career Facebook, won the “Superior Achievement” award in the human resources category in the IMA Awards. MİGROS 2015 ANNUAL REPORT

23K The Migros “Hotline Forum”, responded to more than 23,000 calls in 2015. The average number of calls dealt with was 1,917 a month.

A “Working Life Assessment Survey” is Specifically designed to be fair, consistent, Another and more comprehensive conducted every year in order to measure and transparent, Migros’ human resources performance evaluation is embodied and further improve the level of employee evaluation systems make use of the in the Store Personnel Performance loyalty and job satisfaction at Migros. The most advanced technology and the most Management process that is conducted goal of this survey is to identify issues effective methods. at six-month intervals. Under this that are in need of improvement and to program, close to 14,500 store personnel prioritize them accordingly. The objectives of the Migros Performance on average are evaluated twice a year Management System are to: by service quality and job performance Within the scope of a survey carried out • Make certain that the Company’s managers, who rate employees on in partnership with an independent survey strategies and goals are disseminated the basis of eight basic competencies organization, the survey results direct among and shared by employees identified as being essential in the practices that will be carried out, as they • Manage and evaluate employees’ retailing industry and who also quantify allow analysis regarding perpetuating performance fairly, transparently, their professional skills. The results of employee motivation and loyalty. and objectively within the framework these performance evaluations play a of communally-recognized Migros determinative role in employees’ career In addition, within the scope of principles and progression plans. sustainability, a “recruitment assessment • Provide guidance for career survey” is conducted to measure the development and backup, total Additionally, headquarters and store effectiveness of orientation training compensation package, and personal management personnel are subjected for new recruits and to learn about development policies that are based on to so-called “360º evaluations” in which the experiences of new recruits to the actual data their strengths and potentials are Migros family in the Migros recruitment • Identify and motivate employees identified so that development plans processes. The Human Resources whose performance contributes to the may be formulated. Such evaluations department use these results to improve achievement of company goals and were performed for more than 2,300 processes and create activities aimed at retain the best-quality people employees in 2015. enhancing employee satisfaction. • Recognize and reward, in a timely fashion, employees who perform as The “Rhythm” Manpower Management The Migros “Hotline Forum”, whose aim good as or better than what is expected System was implemented in 2014 in to is to increase employee satisfaction and of them. encompass till operators in all stores to address personnel-related problems and increase customer satisfaction and in the quickest way possible, responded In the conduct of administrative unit and to develop fair, transparent and flexible to more than 23,000 calls in 2015. The store white collar personnel performance working order for the employees. average number of calls dealt with was management processes, close to 5,750 Also, to increase transparency in the 1,917 a month. evaluations are made every year. workplace, the infrastructure of “RitmİK” (“RhythmHR”) personnel work continuity tracking system in which personnel’s arrival and departure times of work MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

MİGROS OPERATIONS IN 2015

MRA’s curriculum consists of can be easily seen was installed in all Migros Retailing Academy (MRA), a 298 classroom courses, 170 stores. Work proceeds rapidly with the program that is conducted in order help of technology to ensure customer to contribute towards employees’ e-learning programs, and a and employee satisfaction in the most development and to raise qualified labor recommended-reading list of appropriate and consistent manner at all force, seeks to develop human resources 212 magazine articles and 193 times. in line with the Company’s corporate books. priorities and with individual and sectoral The Migros Reward System serves needs so as to achieve the Company’s employees by recognizing and strategic objectives. MRA is structured so rewarding performance in seven main as to create an environment which makes categories referred to as the “Migros continuous development an component Reward Tree”. Under the Migros Reward of Migros’ corporate culture and which System, employees are rewarded for gives employees a say in their own career demonstrating superior performance, development processes starting from for coming up with innovative practices their very first day at the Company by that improve teamwork, for thinking up providing them with a choice of models, creative ideas, for contributing to the methods, and means that will be the most Company’s growth strategy by suggesting effective in planning their own career locations for new stores, and for having a paths. hand in Migros’ success in the course of many years. MRA consists of six divisions: • Vocational High School of Other efforts that have been initiated to Merchandising strengthen communication, cooperation, • Store Management Faculty and solidarity among employees and • Fresh Foods Faculty to encourage them to make sports and • Administrative Units Faculty to gain healthy life habits also continue • Leadership Faculty without letup. In 2015, the seventh in • Complementary Programs the series of Migros Sports Festivals was held in which employees from all over MRA’s curriculum consists of 298 7 Turkey take part. During the course of classroom courses, 170 e-learning In 2015, the seventh in the series of Migros the festival’s events, 300 employees programs, and a recommended-reading Sports Festivals was held. competed with one another in football, list of 212 magazine articles and 193 basketball, volleyball, tennis, table tennis, books. “Virtual classroom” methods and chess. Awards and recognitions were allow instructors and trainees to interact handed out to successful contestants. without having to be physically present in MİGROS 2015 ANNUAL REPORT

the same space. An in-house mentoring with the opportunity to learn as well system provides developmental support as enjoy themselves when competing. at the individual level by creating Migros employees can access training at opportunities to exchange knowledge any time and from any location from the and experience that goes beyond formal www.akademig.com website, which is training. Migros’ e-learning platform.

Migros employees were provided with an Migros employees may follow current average of 19 days of training in 2015. affairs regarding sustainability from the sustainability page that has been added Developed in collaboration with to Migros’s Corporate Communication Anadolu University, the Migros Retailing magazine Turuncu (Orange). Program gives highschool graduates a chance to earn a university-equivalent The Migros Retailing Academy was degree in just two and a half years and admitted to the “Training Top 125” 51 thus overcome their lack of academic list published by Training Magazine, credentials. Another program conducted a publication read by training and in collaboration with Georgia State development professionals whose awards University gives store managers a recognize the world’s most successful 19 chance to learn about new trends and learning and development programs. The developments in retailing that are taking American Society for Training (ASTD), Migros employees were provided with an average of 19 days of training in 2015. place around the world and also to visit a non-profit association for workplace some of the world’s biggest retailers in learning and performance professionals, the United States. A pre-MBA program bestowed its “Award For Excellence” developed jointly with Koç University on the Anadolu University-Migros gives Migros managers a chance to Associate/Undergraduate Degree in expand their management vision and Retailing Program. CorpU, a training and skills. The Koç University Migros Retailing development organization that runs one Forum, another collaboration with that of the most prestigious award programs institution, organizes retailing conferences in the field of corporate learning, which are attended by leading Turkish bestowed its “Excellence & Creativity and international academicians and Award in Learning” in the “Collaboration” professionals and which serve as category on the Anadolu University- platforms for the exchange of knowledge Migros Associate/Undergraduate Degree and experience. in Retailing Program. The Migros Retail Academy To meet the need for qualified employees The Migros Retail Academy crowned crowned its success by winning in the sector, the partnerships that the its success by winning 11 awards in Company entered into with Ege University competitions in which corporate 11 awards in competitions in in 2013 and Karadeniz Technical University academies and the training departments which corporate academies and Anadolu University in 2014 also from companies all around the world have and the training departments continued in 2015. been finalists in the last few years. from companies all around the In 2015, a dramatized training that “Migros Social” is a social learning world have been finalists in the consists of 4 stages collectively entitled and communication platform where last few years. a “Sustainability Marathon” was prepared experience and accumulated knowledge to spread the concept of sustainability can be shared rapidly and where among all Migros employees. The training employees can share their memories, informs employees of sustainability and inspirational experiences and successes. It enables them to be informed of Migros’s was opened for the use of all employees approach and projects regarding this in 2015. issue. This program provided employees MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

MİGROS OPERATIONS IN 2015

MİGROS BELIEVES THAT THE PRESENT AND FUTURE SUSTAINABILITY OF THE WORKPLACE ENVIRONMENT IS DEPENDENT ON ITS BEING HEALTHY AND SAFE.

As the most senior management unit responsible for occupational health & safety (OHS) issues throughout Migros, this committee directed the taking of corrective measures based on risk-assessment reports and engaged in an ongoing effort to make improvements during 2015. In this context, risk analysis activities were conducted in the stores, the head office and branches, distribution centers and the fruit and vegetable warehouses.

In 2015, in total 22,474 hours of OHS services were requested from 43 occupational safety specialists, 41 workplace doctors and five other health personnel from companies authorized to serve in occupational health and safety for stores employing 50 or fewer staff in the low risk category, as well as in HEALTH & SAFETY the HQ, the branches, distribution centers Migros provides OHS training and the fruit and vegetable warehouses operating in the high risk category. to its employees before they Migros believes that the present and future sustainability of the workplace environment OHS Committee Meetings were held start work and then periodically is dependent on its being healthy and safe. thereafter. regularly in all units for which OHS services In line with this belief, the company engages were provided. in an ongoing effort to promote a safety Migros provides OHS training to its culture shared by both employees and employees before they start work and then customers alike and to contribute towards periodically thereafter. On the job training making safe behavior a habit throughout and periodical OHS training are provided society. It was to this end that in 2013 the face to face in classroom for new recruits company set up an Occupational Health where OHS services are provided. Employee & Safety Committee whose membership training is also supported by distance consists of top-level managers and which learning in all locations. A total of 39,013 reports directly to the Chief Executive hours of face to face on-the-job training Officer. MİGROS 2015 ANNUAL REPORT

8K A total of 39,013 hours of face to face on-the- job training was provided to employees by occupational safety specialists and workplace doctors.

53 was provided to employees by occupational Management Authority), while fire Migros was awarded the TS 18001 safety specialists and workplace doctors. fighting department, specialist companies OHSAS Occupational Health and Safety In addition, “OHS foundation” training was and occupational safety operations and Management System certificate that will provided to more than 8,000 employees drills were carried out. add value to the OHS activities carried through distance learning. A total of 781 out in 2015, increase participation and employees completed the first aid training Visits in relation to OHS processes were motivation, ensure continual improvement programs in the head office, the branches, conducted to the stores, distribution of the system and diffusion of the stores, distribution centers and fruit centers and the fruit and vegetable activities systematically. and vegetable warehouses, while 1,336 warehouses, while visits by independent employees completed vocational training in consultants and relevant managers and OHS procedures, instructions, forms, work distribution centers and fruit and vegetable continual improvement activities still packages and work permit forms were warehouses. Around 12,000 employees continue. revised and integrated into the Quality were provided with hygiene training in the Management Systems documentation Because the company’s operations are head office, branches, stores, distribution structure. Steps were taken to ensure that dispersed and encompass many different centers and fruit and vegetable warehouses. OHS documentation was created in all locations, software has been developed units. Ambient measurements (lighting, noise, to permit systematic, centralized dust, vibration, thermal comfort, gas) oversight and reporting of all OHS-related As a board member of the Consumer were conducted in the head office, processes and activities. The functions Goods Forum (CGF), Migros is a branches, stores, distribution centers and of this system include such things as participant of the Employee Health and fruit and vegetable warehouses during recording and investigating work-related Welfare Working Group, which steers the 2015. Work equipment was periodically accidents and compiling work-related global sector with the best practices. CGF checked by authorized companies to accident statistics; checking employee members are committed to implement ensure that work equipment used by health both at recruitment and at regular employee health and welfare programs. the employees complied with OHS intervals; organizing and monitoring The program includes healthy practices requirements. The employees were personnel training; polyclinic activities; with regard to providing employee provided with health services as well as ordering and monitoring corrective & welfare, activity and feeding programs, health examinations for new recruits, and preventive measures; organizing and encouraging employees to take conscious periodical health checks were conducted conducting emergency action plans and choices and become more physically by workplace doctors. drills; issuing and maintaining equipment maintenance records and periodical active, supporting general physical and Within the scope of the prepared inspection reports; formulating annual mental health Emergency Action Plan, fire fighting, employee work, training, and evaluation search and rescue and evacuation plans; and maintaining OHS Committee training were provided by the AFAD meeting records. (Prime Ministry Disaster and Emergency MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

54 MİGROS 2015 ANNUAL REPORT

BECAUSE WE CARE ABOUT OUR FUTURE. With the “Good Future” motto, Migros aims to enhance the health and wellbeing of its employees and customers. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

OUR OUTLOOK ON SUSTAINABILITY FOR MİGROS, SUSTAINABILITY IS NOT ONLY A FUNDAMENTAL APPROACH IN CONDUCTING BUSINESS BUT ALSO IS THE EVIDENCE OF THE CARE IT GIVES TO ITS CUSTOMERS, SUPPLIERS AND THE EARTH.

Migros handles its sustainability habits and consumer awareness through management approach at the board level the many innovative practices that it has and manages it through the Sustainability launched. Committee. The Migros Sustainability Dialogue with Shareholders… Committee, which brings together the Meeting shareholders expectations at the leaders of different units of the company highest level is assured by implementing assesses legal, physical, environmental, practices aimed at integration of operational, socio-economic risk and sustainability practices into the Migros opportunities with regard to sustainability. organization and the development of The issue of sustainability is positioned as sustainability performance the mutual responsibility of all employees The Work Ethic and Tackling Bribery... within the company. The Migros Work Ethic principles that A Healthy Company include issues such as tackling bribery and corruption was set up by the Migros Governance… Ethical Committee, that gathers four The Board of Directors at Migros is times each year. The Migros Work Ethic responsible for defining strategic principles are published on the corporate approach towards sustainability issues website and in the annual reports, and can such as climate change, environment, be accessed by all stakeholders. The issue of sustainability biodiversity, human rights, health and is positioned as the mutual safety, governance and work ethics, Human Rights… responsible business practices and social Migros adheres to universal human responsibility of all employees development. rights in line with the United Nations within the company. Guiding Principles on Business Life and Migros continued to carry out its duty in Human Rights and The ILO Declaration the board of directors of Consumer Goods on Fundamental Principles and Rights Forum (CGF), that has been one of the at Work. Since 1972, Migros has offered most prominent organizations of the retail a workplace where the right to establish sector in the world since 2013. a trade union is respected since 1972. Since 1954, Migros has paid attention to Constructive dialogue between the the protection of the natural environment trade union and Migros includes issues and the rights and health of its employees such as ending forced labor and child and customers. Migros directs sector labor, complying with all local law ad standards by encouraging good shopping regulations, being impartial and fair and MİGROS 2015 ANNUAL REPORT

many other similar issues. In 2014, Migros In addition to these certificates, Migros to support a healthier lifestyle among signed a collective bargaining agreement – which also attaches importance to employees. This figure was raised to 13 with the Tez-Koop trade union, which product certificates – holds the Organic programs and 2,786 employees in 2015. covers the period between 1 May 2014 and Entrepreneur Certificate and Good Employee Development… 30 April 2017. Agricultural Practices (GAP) group By the end of 2015, Migros had succeeded certificates. Migros subjects its suppliers Migros participates in the Employee in providing an average of 19 days to high standards and constantly audits Health and Wellness working group as a of training to each of its employees, them in order to protect product and board member of the Consumer Goods surpassing its annual average training day service quality. Forum. target of 17 days. These training programs Since the beginning of the GPA process are aimed at supporting the personal Customer Confidentiality and Data in Migros in 2009, the total quantity of development of Migros employees as well Security... products supplied with the GPA certificate as their adaptation to novelty and change. Migros attaches great importance to has amounted to 379,567.75 tons. customer confidentiality. It aims to help its Employee Equality… 57 customers understand why, how and what In line with its sustainability strategies, Migros takes a firm stance against kinds of data it collects from customers, Migros audits its suppliers in accordance discrimination on the basis of ethnicity, what it does with this data and how it with the ISO 9001, ISO 22000, ISO 14001, race and sex without any exception. As of ensures the security of the data through OHSAS 18001 and SA 8000 standards, end of 2015, Migros employed 20,171 staff the Confidentiality and Data Security in addition to its suppliers’ production in Turkey, of which 7,777 were women. Policy that it publishes on its corporate of “quality and safe product”, in order to As an indicator of the importance Migros website and annual reports improve its performances pertaining to attaches to gender equality, 67% of new Healthy Products employee rights, occupational health and recruits for the head office were women safety, work ethic, environmental impacts in 2015. Migros also demonstrates the Migros believes that good nutrition and and safe production. In line with this, highest sensitivity in ensuring that there responsible supply is the essence of 685 supplier audits were carried out in is no child labor in its stores or in the human development, life and productivity 2015, which included food and non-food workforce of its suppliers. and shares this view through all relevant supplier companies. Society… platforms. Healthy People Migros always considers the wellbeing Good Nutrition… and quality of life of society and Migros aims to improve the health and Migros makes the products that support contributes to its development through wellbeing of its employees and customers a healthy life more affordable day by the projects that it undertakes and the in all geographical areas where it provides day in Turkey through its constantly actions that it takes with regard to these services and to achieve a “good life” for increasing store numbers and food range issues. everyone. A wide array of activities are that it offers for sale. In 2015, Migros put carried out by Migros to identify the Within the scope of “Removing Obstacles in total 793 products, 177 of which are needs of a community in the region where in Shopping” program, there were a total Migros private-labeled products, on its it operates and contribute to its existing of 251 wheelchairs in 223 stores in 2015. shelves. As of end of 2015, a total of 144 status. Migros private-labeled products had the 7 nutrition indicators on their packaging. Employee Health and Wellness… Migros brand, “M Life”, designed for those In 2015, Migros obtained the OHSAS who want to protect their health as well 18001 Occupational Health and Safety as those with health issues, is a product Management System certificate to assure range that consists of organic, low-calorie its health and wellbeing of its employees. and diabetic products. The certificate includes all of its stores and distribution centers. 793 Responsible Supply… In 2015, Migros put in total 793 products, 177 of Seven projects were executed by 1,613 Migros was the first food retailer to obtain which are Migros private-labeled products, on employees in 2014, which included the its shelves. four quality management certificates smoke-free workplace initiative and from the Turkish Standards Institute. employee health programs, in order MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

OUR OUTLOOK ON SUSTAINABILITY

The “Let Us Carry for You” project is Children’s Theatre, which celebrated its intended for people aged 65 or older, 10th anniversary in 2015. where store personnel accompany elderly Through the “Children’s Clothes Donation shoppers and carry their purchases as Campaign” that Migros has been they return home. conducting jointly with Ariel (Procter & In 2015, walking courses for healthy life Gamble) and has become a regular event, were set up in the Sakarya and Erzincan a total of 220,000 children have been provinces within the scope of a project donated clothes over the last 5 years. under the motto of “Get Moving!”, which Migros donated some of the revenues enables customers to win awards as they obtained from the sales of products walk. The project was launched in 2014. in the Mother-Baby Catalogue to the Migros’s “Special Support for Special Turkey Foundation for Children in Need Athletes” campaign, that has been of Protection and supported children’s ongoing for more than ten years, is a education. social responsibility project in sport. Migros donates products that have Almost 5,000 young people with special passed their sell-by date from more needs are encouraged to play a more than 200 stores to the Animal Rights active role in society through the sports Federation (HAYTAP) in support of its support given to them. In 2015, Migros obtained the efforts to feed stray animals. OHSAS 18001 Occupational Migros employees collected rubbish along the Caddebostan seaside in an Healthy World Health and Safety Management event organized twice in 2015 with the Migros works to establish an operational System certificate to assure “Environment is Ours, the Seaside is structure that is environmentally friendly its health and wellbeing of Ours” motto, where everyone was invited and reliable across the entire value chain its employees. The certificate to demonstrate sensitivity about the from procurement to after sales services. environment. includes all of its stores and The Company’s Environmental Policy aims distribution centers. In its collaborations with the State Theater to carry out activities aimed at raising over 21 years, Migros has so far enabled environmental awareness, protecting the more than 800,000 children to enjoy environment and prioritizing the needs of theatrical performances free of charge future generations to leave them a cleaner in Turkey’s many provinces on the 23rd environment by acting together with April Theater Festival and in the Migros Migros’s stakeholders. MİGROS 2015 ANNUAL REPORT

Migros aims to obtain TS EN ISO 14001 the development of biodiversity value, Environmental Management System forming collaborations with suppliers to certificate alongside its sustainability manage the impacts across the value activities in 2016. chain and executing various projects and campaigns to increase public awareness. Climate Change… Migros calculates greenhouse gas Migros takes a stance against emissions every year and aims to reduce deforestation primarily in Turkey by emissions when compared to the previous considering the climate and nature. In period. The Company’s Corporate 2015, Migros planted 17,200 saplings Greenhouse Gas Emissions resulting from in conjunction with the Aegean Forest all of its operations amounted to 326,818 Foundation and a total of 529,450 tons of carbon dioxide equivalents in saplings had been planted at the end 2014. of 8 years. At the same time, Migros attaches importance to the certificates 59 As part of its policy to tackle climate that prove that palm and soy oils used in change, Migros aims to reduce its carbon some of suppliers’ products do not cause emission per square meter by 20% by deforestation. 2025, when compared to its 2015 levels. Usage of Resources… Migros carries out activities to conserve Migros cares about using the resources water in all operations to protect natural at source and recycling. A total of 5,727 resources as part of the sensitivity it tons of organic waste from food products demonstrates to the environment. The whose shelf life expired, measured within company’s working principles include the scope of Food Loss & Waste (FLW) preventing the environmental impact of standard of CGF (Consumer Goods waste water resulting from its operations Forum), were sent to the biogas plant and executing its legal duties. in 2015 and biogas and compost were Migros always considers the Climatization and refrigeration systems produced from these wastes. wellbeing and quality of life are the most significant source of energy Within the scope of work to collect of society and contributes to use and emissions in stores. In order to electronic waste, in 2015, Migros collected its development through the control energy use in these processes, 115 tons electric and electronic equipment projects that it undertakes and the refrigeration automation system was waste generated by the customers and launched in more than 1,100 stores. the actions that it takes with Migros, with the collection of e-waste regard to these issues. Migros has launched a trial process for recycling practice saving 1,076.5 tons of a transition to using natural coolers, and CO2 emissions. the company will devise an action plan 1.24 tons of batteries were collected according to the results. through the battery waste collection Biodiversity... boxes placed in stores. One of the main objectives of the 8.3 million batteries were recycled Company’s operations is to protect through Migros’s recycling collection environmental sustainability. The kiosks. environmental management vision encompasses constant management of environmental impacts, working on MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

CORPORATE SOCIAL RESPONSIBILITY MİGROS TAKES CONCRETE STEPS TO RAISE SOCIAL AWARENESS IN THE FIELD OF SOCIAL RESPONSIBILITY AND EXECUTES PIONEERING PRACTICES IN THE SECTOR.

Corporate Social Sustainability is the reference point for Responsibility all of the projects that Migros carries out. There is an in-house “Sustainability In line with its 61 year history and Committee” over which senior managers sustainability vision, Migros, which has preside to coordinate sustainability work such strong ties of affection with its processes from a single point. Under the consumers, takes concrete steps to raise leadership of this committee, work is social awareness in the field of social carried out which takes into consideration responsibility and executes pioneering a wide range of criteria such as global practices in the sector. warming, biodiversity, efficient use of Many activities are carried out to raise natural resources, reduction of water awareness of social responsibility, to resources, the supply chain and corporate leave a healthier and habitable planet to governance. future generations and to promote the Balanced Diet + Activity = A Good Life efficient use of resources. Migros bases its activities on the principle of being Developing important projects aimed at responsible for people, nature and future improving public health, Migros works generations. Migros devises various to ensure that a healthy life becomes a projects by identifying the areas needed lifestyle through its “balanced diet” and for social development. It carries out “Activity” projects carried out under the activities in which suppliers, customers “Good Living” motto. Migros plays an and employees are participants spread important role in developing the health these projects at the grassroots level and wellbeing of its customers and the by collaborating with foundations, general public, for which it provides associations and non-governmental services. The positive effect of the work organizations. being carried out for its consumers to access a healthy and good diet and to Social needs such as education, the arts, support an active and healthy life for all sport, the environment and a healthy and is rapidly increasing. Communication good life are at the heart of Migros’s work and education programs are employed on social responsibility. Migros devises to help raise consumer awareness of the all of its projects around values such as energy balance that directs a healthy life, innovation, customer focus, leadership, a balanced diet and healthy lifestyle. sensitivity, efficiency and trust, which Migros adopts wholeheartedly. MİGROS 2015 ANNUAL REPORT

The “Good Agricultural Practices” (GAP) who adopt these standards with Migros project launched by Migros in conjunction and find upward world trends on Migros’s with the Ministry of Food, Agriculture shelves. and Livestock in 2010 is a project which Migros also owns Turkey’s largest aims to ensure that Turkish consumers integrated meat processing plant in the consume the best agricultural products food retail sector. Meats processed here with confidence, that future generations are brought from the farm to the table eat a healthy diet, and to bring about after being checked. All production more efficient and productive use of processes carried out in the plant are agricultural land in Turkey through certified by the Turkish Standards Institute environmental practices. Through the (TSI). The plant houses laboratories where practice, Migros was the first retail products are analyzed in terms of their company to apply a control system compliance with the standards. based on reliable criteria regarding 61 pesticide analysis, traceable products and The products, marketed with the “Expert a farming model that protects human, Butcher” label, and which are ready for animal and environment health with consumption and can be prepared without the highest quality fruit and vegetables manual intervention, won the “Remarkable” through the GAP. Accordingly, every and “Good Taste” awards in the “Superior stage of production is recorded any many Taste Awards”. This system implemented criteria such as the selection of seeds for red meat has also served as a very that will sewn into fields, the possible important reference for Turkish farmers. environmental impact of land farming, The “Good Poultry” project carried out standards of prescribed medicine and within the scope of good agricultural fertilizers which take account of the practices by the Ministry of Food, health of farm workers are taken into The products, marketed Agriculture and Livestock was again consideration and relevant requirements launched under the leadership of Migros with the “Expert Butcher” are complied with. in the sector and is an important project label, and which are ready Any potential environmental hazards in all which promotes the consumption of for consumption and can be practices that will be carried out during healthy products. White meat suppliers prepared without manual the production stage of products with participating in the project carry out intervention, won the the GAP standard that are put on Migros their production processes by taking “Remarkable” and “Good Taste” shelves are examined, and any practice into account of human health, the which could harm the environment is environment and animal health and awards in the “Superior Taste prevented. Migros prefers to procure its welfare, and the production processes Awards”. products from suppliers who adopt GAP are carried out in accordance with in support of ecologic biodiversity as an criteria set out in the relevant standards agricultural product retailer. and demonstrate compliance with such criteria through laboratory tests. Chickens Migros also provides consultancy and with the GAP certificate are put into clean training to producers to encourage and disinfected hencoops are grown farming with GAP. Since the GAP process with food and water, and are periodically started to be implemented at Migros in analyzed and under controls by veterinary 2009, the total quantity of products which doctors. They are also inspected by were GAP certificated has amounted to control and certification bodies authorized 379,567.75 tons. Migros has also included by the Ministry of Food, Agriculture and practices developed for poultry and beef Livestock. A total of 11 suppliers and 419 and lamb products into its “Good Life” poultry farms were included into the standards. These practices, that target certification process. freshness, are important for consumers MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

CORPORATE SOCIAL RESPONSIBILITY

Migros, which considers being active Migros, which creates a difference with one of the essential elements of a the projects it develops in the field of healthy life, offers the Migros My Store corporate social responsibility, supported (Mağazam) application which can be the “Big Picture” project executed by the accessed simply by clicking on the “Get Turkey Handicapped Sports, Education Moving” tab and choosing the city where and Assistance Foundation (THSEAF- they live from their smart phones. The TESYEV) with the objective of meeting application, introduced in 2014, offers the needs of disabled people. Migros users the chance to win as they walk put THSEAF’s 15th Anniversary “Big within the scope of a project offering Picture” CDs on sale in its stores, thereby competitions. The objective of the project mediating in the revenue to be gained was to develop “a walking course for a from the sales of CDs to contribute to the healthy life”, and it attracted a great deal education and health needs of disabled Migros works to ensure that a of interest from sporting fans in most people. healthy life becomes a lifestyle provinces. In 2015, “Migros life walking The “Young Uniforms Training Program” courses” were set up in the Adapazarı through its “balanced diet” and project was executed between 2008 and Serdivan and Erzincan provinces that won “Activity” projects carried out 2014 with the objective of encouraging the competition within the scope of a children to take up sports and for them under the “Good Living” motto. project. to gain a sense of fair play through Also in 2015, public awareness events the Turkey Educational Volunteers regarding healthy living and sport were Foundation. This project reached children organized through the Vodafone People from all around Turkey, that was awarded Walk. A total of 300 personnel from the Grassroots Charter star the third Migros who walked from Asia to Europe time in 2014 within the scope of UEFA’s said “Get Moving”. In addition, Migros “Football for Everyone” program. The distributed Private Label healthy snacks Young Uniforms project also was deemed to around 10,000 participants, who are worthy of the honors prize in the “sportive committed to healthy living and in search promotion” category in the “2013 Fair of a healthy life, while also promoted Play Awards” organized by the Turkey good agriculture, good poultry and good Olympiad Committee. In the project that meat products at events organized within ended in February 2014, a total of 4,997 the scope of the ‘Global Wellness Day’ children received education and 245 celebrated in 52 countries on the same volunteers participated in the project. day. It also invited people to the events through announcements in its stores. MİGROS 2015 ANNUAL REPORT

Migros seeks to instill the spirit of fair Migros’s “Special Support for Special play in children, who are the guarantors Athletes” campaign is a social of our future. Migros added another responsibility project in sports. new event to the range of activities it Some of the revenues obtained from offers in order to contribute to raising Procter&Gamble products sold in Migros individuals who will listen to and try to are donated to the Turkey Special understand each other. It contributed to Olympiads Committee. Almost 5,000 the activities carried out within the scope mentally disabled young people were of “Future Young Athletes Growing Sports encouraged to play a more active role Festival”. In the “Future Young Athletes in society through the support to sport Growing Sports Festival” organized this extended to them by 7.3 million Migros year for the first time with the support customers since 2004. of the İzmir Karşıyaka Governorship, In another project in Izmir, Migros held the Karşıyaka Municipality, the District weekly bicycle tours under the “Sundays Education Directorate and Bostanlıspor, 63 with a Bicycle” slogan, which draws bikers Migros conveyed to young people the together. Expanding the support for importance of team play and helping each this sport, the “3rd High Schools Cycling other through sports, helping them to Competition” was organized in 2014, develop a sense of competition within the where 2,500 high school pupils enjoyed framework of rules. In 2015, “Migros life walking the competition and 800 pupils learned courses” were set up in the Launched in 2011 within the scope of to ride a bicycle. Cycling tours under the Adapazarı Serdivan and “Removing the Obstacles in Shopping” “Sundays with a Bicycle” motto were program, store employees are appointed organized in 2015, with a total of 3,000 Erzincan provinces that won to escort customers with disabilities and people participated in the tours. the competition within the assist them while shopping. With the “Let Contribution to Education scope of a project. Us Carry for You” project intended for people aged 65 and over, store personnel In 2015, support was provided to raise accompany elderly shoppers and carry awareness about preschool education their shopping as they return home. In this through UNICEF stands positioned in context, the project started in 204 stores Metrocity, Ortaköy, Istinye, Anadoluhisar with 229 wheelchairs in 2014. The number and ACR Loft Migros stores. of wheelchairs was increased to 251 in 223 stores in 2015. Accordingly, all stores Support was provided to school education with the Migros Jet cash counter type for children with limited opportunities by and Jet cash counters were adapted for sending stationery sets to the “Children wheelchair access. are Ours Teaching and Learning Support Association”. Migros and Paşabahçe launched a project to support the Turkey Breast Foundation Two Notebooks were donated to Kartal (MEVA); a certain percentage of the Vocational Training Centre. revenue earned from the cups especially Through collaboration with the Ministry designed for Migros by Paşabahçe was of Energy and Natural Resources, the donated to the Breast Foundation. Ministry of Family and Social Policies, the The “Morning Sports” project was also Energy Efficiency Association (ENVER) carried out in 2015. In this context, a and Migros, support was extended to total of 4,000 people (in Güzelyalı, the inform families of energy conservation Bostanlı coast and Bornova) exercised by displaying banners that include small six mornings a week, accompanied by a measures that can be taken to reduce sports coach. energy consumption in all Migros stores. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

CORPORATE SOCIAL RESPONSIBILITY

In the field of education, within the scope to the Turkey Educational Volunteers of the collaboration carried out with Foundation, thus ensuring support for “Book for Everyone Foundation”, in total the Education Mobilization Campaign. 45,300 books that had been left in “Book Besides, during the week of the 23rd for Everyone Foundation Packages” by April National Sovereignty and Children’s Migros customers have been delivered Day celebrations, Migros customers may to those waiting. Also, Migros donated send toys, stationery and children’s books some of the revenues obtained from bought from Migros to children through the sales of products in Mother-Baby the Turkey Educational Volunteers Catalogue that covers October-November Foundation. period between 2014 and 2015 to Turkey Life Education through Theater... Foundation for Children in Need of Protection and supported the children’s The Migros Children’s Theater is Turkey’s education. most enduring social responsibility project concerned with the theatrical Thousands of children have been helped arts. Conducted with the slogan “Hand through the “Children’s Clothes Donation And Hand Into Tomorrow”, the Migros Campaign” that Migros has been Children’s Theater has given 323,100 conducting jointly with Ariel (Proctor children in 60 provinces a chance to enjoy & Gamble) and which has become a theatrical performances in the course of traditional event. During the campaign, a decade. Celebrating its 11th anniversary which enjoyed strong support from with the 2015-2016 season, the Migros customers, clothes collected in Migros Children’s Theater travels and mounts stores were first cleaned with Ariel performances all over the country. Written 323 K detergent before being delivered to and directed by Enis Fosforoğlu, “The The Migros Children’s Theater has given children by the Community Volunteers Crafty Candyman” focuses on the essential 323,100 children in 60 provinces a chance to Foundation as if in brand new and in clean enjoy theatrical performances in the course of importance of good nutrition and activity condition. Through the campaign, more a decade. to good living... The play toured Turkey’s than 500,000 clothes have been donated 31 provinces and reached 23,100 children. to 220,000 children over a period of 5 The Migros Children’s Theatre will celebrate years. its 11th anniversary through the plays in In an another activity in the field of Istanbul and Mersin provinces in 2016; education, which is the foundation 11,000 children will be informed of the of a sustainable future, some of the foundations of a good life. Additionally, revenues obtained from the sale of Migros has also been collaborating with the private label products are donated Turkish State Theater for 20 years in the MİGROS 2015 ANNUAL REPORT

8.3 mn With the “Environmental Kiosks”, which were launched for the first time in 2010, a total of 8.3 million items of packaging waste has been recycled to date.

65 staging of plays for children for two weeks Migros planted 529,450 saplings in Packaging wastes of private label every spring as part of Children’s Day forest nurseries over eight years to products were collected and recycled by celebrations. To date, about half a million replace trees that have been burned and the ÇEVKO Foundation, which Migros children have attended such performances destroyed in the Aegean region through is a member of. There is a “Green Point” free of charge thanks to Migros’ support. Aegean Forest Foundation in Dikili, label on all private label products. A Torbalı, Şirince, Çeşme, Seferihisar and total of 3,632 tons of packaging waste Examples of “green” retailing Urla namely Customer Forest, Personnel was collected on behalf of Migros and Prevention of rapid consumption of Grove, Partners Forest. For Customer recycled. Forests, olives grown by Aegean Forest natural resources and waste management Additionally, Migros encourages its Foundation were put onto shelves in strategies that aim to transform customers to separate household paper, Migros and the revenues obtained from generated wastes into inputs for economy plastic, metal and glass wastes and them are used for creating new forest and removing them from being a threat to leave them in separate recycling bins areas. The forested areas, that allow environmental and human health, forms (“Environmental Kiosks”), which were the survival of many different species, the basis for sustainable development launched for the first time in 2010. A demonstrate the importance that Migros approach adopted increasingly as a total of 8.3 million items of packaging attaches to biodiversity. In 2015, Migros priority policy objective all over the world. waste has been recycled to date. By began to monitor its suppliers’ usage bringing waste to the recycling points Migros strives to ensure the formation of certified soy and palm oil regarding Environmentally conscious customers of an operational structure that is deforestation. The objective of this have the opportunity to win a cloth bag, environmentally friendly and reliable monitoring is to create awareness among adopt a sea turtle (which are rapidly throughout the entire value chain from suppliers when it comes to sustainable becoming extinct) or donate a sapling to procurement to after sales services. In line farming practices. with this objective, the Company develops the Migros Customer Forest. The project an environmental management system, In partnership with ÇEVKO, Migros of adopting rapidly becoming extinct places importance on biodiversity and also launched a training program for sea turtles is aimed at protection of undertakes activities aimed at tackling consumers, aimed at raising awareness biodiversity, which was launched with the climate change. With its pioneering of meeting social and economic needs of WWF (The World Wide Fund for Nature) vision, Migros aims to achieve operational future generations and creating a future in 2012. In this manner, Migros provides excellence, increase social awareness where people and nature can coexist financial support for the protection of and participation when it comes to in productive harmony. The focus of green turtles project, which are in the environmental protection. According to its the training practice is the necessity of IUCN Red List of Threatened Species. separation and collection of packaging environmental policy, Migros adopts the Besides, in partnership with Unilever, wastes from household wastes. principles of the ISO 14001 Environmental customers contributed to recycling by Management System standard. leaving cosmetic and detergent group plastic product packages at recycling MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

CORPORATE SOCIAL RESPONSIBILITY

attractive for employees, necessary training was provided for all employees and cleaning personnel regarding the waste separation project. Thus, within the last 4 months of 2015, 18 tons of packaging waste and half a tonne of glass waste was collected in the head office, with this waste then recycled by licensed companies. Migros took part in an important social responsibility project for World Environmental Day to raise awareness of environmental cleanliness, where Migros staged a clean-up of the Caddebostan seaside, on the Asian side of Istanbul and also a clean-up of the Bakırköy seaside on the European side, with the voluntary points within the framework of the participation of its employees. Migros recycling project launched by Migros in employees, who set out with the motto 2014. Customers earned a 25% discount of “Our Environment, Our Coast” in the for detergent and personal care products event organized for the second time in of Unilever by leaving their packaging 2015, encouraged everyone to be sensitive waste in the relevant sections in the about environment by collecting rubbish recycling points. A 20.2% increase was along the seaside. A waste exhibition achieved in the recycling rate when of Exitcom Electronic that supports this compared to the previous year within the environmental movement initiated by project. Migros employees was displayed in the Migros also implemented the waste Caddebostan Migros store. After being separation project in the head office, placed in the Caddebostan Migros store, where wastes were separated at their the DEHA Vegetable Oil Collection 53 source as packaging, paper, glass and Information Desk was placed in the In 2015, “waste oil collection bins” were organic waste and therefore helped Galeria Migros store on 5th June. The positioned in 300 Migros stores in 53 provinces ensure that this waste supported the “Our Environment, Our Coast” project, for the collection of waste vegetable oil from country’s economy. Also, to make the implemented first in 2014, emerged as a customers. project more understandable and project that makes a difference in terms of MİGROS 2015 ANNUAL REPORT

22.5 In 2015, a total of 22.45 tons of waste vegetable oils were delivered to licensed companies. The project is planned to be disseminated in 2016.

67 compliance with the ISO 14001 standard, of waste vegetable oils have been Waste) standard published by the CGF and the Migros Environmental Cleanup transferred to the Clean Sea Foundation- (Consumer Goods Forum) was initiated. Committee was set up during this process. TURMEPA, thereby contributing to the The amount of food loss and waste The “Our Environment, Our Coast” project clean-up of the seas. In 2015, a total of categorized according to the standard became a first in the “Corporate Projects 22.45 tons of waste vegetable oils were were calculated and analysis was started Distinguished with Success” category in delivered to licensed companies. The in order to manage the results. 2014. project is planned to be disseminated in Within the framework of work to reduce 2016. In 2015, “waste oil collection bins” were the use of printed materials, measures positioned in 300 Migros stores in 53 In 2011, Migros structured its integrated were introduced regarding paper provinces for the collection of waste waste management system based on dimensions and design. Besides, analysis vegetable oil from customers. Due to this a “zero” waste target by collaborating programs were transferred into hand-held project, waste vegetable oils brought by with Boğaziçi University. The objective of computers, as a result, 32.5 tons of paper environmentally sensitive customers and this system is to separate waste at their have been saved annually. also generated by Migros were delivered sources and to dispose them through the As the first retailer in the sector to pioneer to a licensed company authorized by most suitable methods and contribute to the practice of environmentally friendly the Ministry of the Environment and the economy. In line with this objective, bags, Migros achieved a remarkable Urbanization. Earnings from the collection training aimed at increasing awareness success in reducing the consumption of waste vegetable oils have been has been organized for store employees. of plastic bags; after reducing plastic transferred to the Clean Sea Foundation- In 2015, organic wastes were separated at bag use by 9% in 2011, it achieved a 4% TURMEPA, thereby contributing to the their source in certain number of stores reduction in 2012 and 1.6% reduction in clean-up of the seas. In 2015, a total of and 5,727.68 tons organic waste were 2013 by establishing more communication 22.45 tons of waste vegetable oils were sent to biogas plants. 3,326 tons compost with customers. Migros created a new delivered to licensed companies. The and 572,800 m3 biogas were obtained set of key performance indicators (KPI) project is planned to be disseminated in from these wastes. Secondary packaging for plastic bag use. In this context, the 2016. materials can also be a certain source of use of plastic bags is monitored by In 2015, “waste oil collection bins” were waste. In order to prevent the generation measuring the number of products per positioned in 300 Migros stores in 53 of these wastes, foldable and reusable plastic bag. In this respect, informative provinces for the collection of waste plastic casing was begun to be used for training was provided to cashiers in the vegetable oil from customers. Due to this fruit, vegetable and red meat and plastic stores aimed at reducing the use of plastic project, waste vegetable oils brought by and cardboard use was markedly reduced. bags. The results of the work carried environmentally sensitive customers and out were reported to the Ministry of the Within the scope of environmental also generated by Migros were delivered Environment and Urbanization. sustainability, Migros included the to a licensed company authorized by reduction of food loss and waste into Moreover, Migros encourages its the Ministry of the Environment and its strategies. On 20 May 2015, work customers to use mobile cards instead of Urbanization. Earnings from the collection to comply with the FLW (Food Loss & plastic cards to reduce the environmental MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

CORPORATE SOCIAL RESPONSIBILITY

impacts even further. Usage of the Mobile this transformation, 26 tons electronic Money Club Card increased from 7.9% waste was recycled. in 2014 to 25% in 2015. The same usage Migros carries out activities to achieve rate amounted to 10.66% in all shopping water efficiency in all operations to transactions, surpassing the 2015 target protect the country’s natural resources, of 9%. to prevent the environmental impacts Migros is in collaboration with the caused by waste water produced from its Portable Battery Manufacturers and operations and to execute its legal duties, Importers Association (TAP) for the as the Company’s working principles. collection of used waste batteries. In this For this objective, the volume of water context, waste battery collection boxes consumed in the stores, service sections have been placed in the stores. Around and production facilities are monitored 200kg of waste batteries were collected and reported monthly. Migros consumed in 2012; this increased to 2.89 tons in 2013, 535,900 m3 of water during its operations 0.917 tons in 2014 and 1.24 tons in 2015. in 2014. Most of the water used in the These waste batteries were sent to the operations is supplied from Municipal TAP Association for recycling. water networks. Water consumption from ground water resources is minimal. The EEE (Electricity and Electronic goods) 115.1 Waste water generated in the stores is waste collection project launched in The quantity of electricity and electronic discharged into Municipality sewage Macrocenter, 5M Migros, MMM Migros equipment waste collected amounted to 115.1 system. The waste water generated and MM Migros formats in 2013 continued tons in 2015. in Gebze and Kemalpaşa Distribution in 2015. Electricity and Electronic Centers, which have treatment plants, equipment waste brought into the is discharged into sewage system after stores by customers and also the waste being reduced to pollution load level generated by Migros was sent to licensed that is in compliance with legal limits. companies authorized by the Ministry Thus, Migros assures that no significant of Environment and Urbanization. The environmental impact occurs on water quantity of electricity and electronic resources’ biodiversity qualities as a result equipment waste collected amounted to of its operations. 72.23 tons in 2014 and 115.1 tons in 2015. This waste was sent for recycling. Migros Even though the Turkish retail sector also rapidly switched old type PCs with is not currently obliged to release flat screen computers in the company, greenhouse emission reports, Migros saving 2,500 MWh of electricity. During calculates greenhouse emissions MİGROS 2015 ANNUAL REPORT

Migros aims to reduce its greenhouse emissions resulting from its operations compared with previous years by calculating greenhouse emissions every year.

69 generated in all stores, distribution 528 stores with the illumination system. to the results of such analysis. Electric centers, fresh produce warehouses, Migros prefers environmentally friendly vehicles are currently used in delivery and goods vehicles, regional units and the refrigeration systems to reduce energy distribution operations to increase energy MİGET meat processing plant voluntarily. consumption and greenhouse emissions efficiency. The Company’s Corporate Greenhouse in all of its new and renovated stores. Operating in 71 provinces throughout Gas Emissions resulting from all of its Migros uses paint which reflects the sun’s Turkey, Migros also seeks to reduce operations in 2013 amounted to 269,387 rays on the roofs of the stores, preventing greenhouse gas emissions during tons of carbon dioxide equivalents. the formation of heat islands on roofs. job interviews. Migros uses video Migros’s scope 1, scope 2 and scope 3 Migros also purchases energy efficient conferencing to conduct job interviews greenhouse emissions amounted to T5 fluorescent accessories in its stores; in cities where a human resources 148,663 tons, 178,156 tons and 44,471 it uses day light illumination systems in department is available. Accordingly, the tons of carbon dioxide equivalents in suitable stores therefore utilizing sunlight human resource personnel do not need to 2014, respectively. Consequently, the to the maximum level. Migros also carries use a vehicle for transportation, thereby Company’s Greenhouse Gas Emissions out campaigns for its customers with the significantly reducing carbon emissions. A resulting from all operations in 2014 aim of reducing energy consumption and total of 1,276 interviews were conducted amounted to 326,818 tons of carbon greenhouse emissions in its stores. In this through the teleconference medium. dioxide equivalent. Migros aims to reduce context, 350,000 conventional electricity its greenhouse emissions resulting bulbs brought in by the customers were Migros encourages its employees, with from its operations compared with changed with LED bulbs, resulting in 50% monetary and non-monetary incentives, previous years by calculating greenhouse energy efficiency and bringing 2.1 million to improve performance by developing emissions every year. watts of energy savings. environmentally friendly practices. By taking into account the general average Migros installed refrigeration automation Within the framework of the central of quality audits’ results conducted in the systems in 2009, before installing distribution strategy, Migros delivers company and outside the company every the automation system that controls 80% of its products in fully laden goods year in order to achieve efficiency targets, climatization and illumination systems vehicles to its stores, thus achieving stores with the highest marks across from the center to reduce energy efficiency and energy consumption and Turkey are rewarded as members of the consumption and emission rates at its reducing greenhouse emissions. There “Stars Team that Creates a Difference”. stores. With the help of these systems, in are night-time deliveries to around 180 These stores were handed “The Store with 2014, processes pertaining to refrigeration of its stores, thus reducing the amount of the Most Successful Quality Management in 938 stores, climatization in 619 stores time vehicles spend in traffic. This saves System” award between 2014 and 2015. and illumination in 398 stores became time and energy, as well as improving instantly monitored and controlled from road safety. Every year, routes between Total quantities pertaining to the 2015 afar. In 2015, this had expanded to 1,113 the distribution centers and the stores are resulting from Migros’s green retail stores for the refrigeration system, 757 measured and routes are optimized. New practices are as follows. stores with the climatization system and distribution centers are opened according MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

CORPORATE SOCIAL RESPONSIBILITY

• • 5,727.68 tons of organic waste were recycled with 572,800 m3 of biogas obtained. This amount of biogas can provide enough energy to run a 100 Watt bulb for 12,028,800 hours. • 18 tons of biodiesel were obtained from 22.45 tons of vegetable waste oil. Green Store: Maya Migros Store - Bodrum

One of the prominent examples of sustainable green retail work is the Bodrum Maya Migros store. The store, which was designed to be fully environmentally friendly, was the first store in the Turkish retail sector to be granted the LEED GOLD certificate. This project fulfilled the requirements of green The Bodrum Maya Migros store, • By recycling 2,462.95 tons of paper, retail, achieving sustainability of energy which was designed to be fully 41,871 adult trees were saved from and natural resources. The store was built environmentally friendly, was felling, trees that produce the daily with more than 20% recycled material and oxygen need for 3,014,712 people. By the first store in the Turkish more than 50% of the waste produced recycling 137 tons of glass waste, 13,700 retail sector to be granted the during the construction were recycled liters of oil was saved. LEED GOLD certificate. in the same way. Due to the installed • 569.43 tons of plastic waste and 2142.11 photovoltaic panels, some of energy tons of metal waste were recycled. consumed by the store is supplied from units that generate renewable energy. • 1.24 tons of waste batteries were Sunlight channels reduce the amount of recycled, thereby preventing what energy used for lighting by 90% during would have been permanent damage to work hours, by making the use of an the environment. illumination system unnecessary in the • 115.1 tons of electronic waste were store between 9 o’clock in the morning recycled. and 5 o’clock in the evening, apart form the service sections. Energy systems MİGROS 2015 ANNUAL REPORT

30% Energy systems installed in the store have enabled the Maya Migros store to be 30% more energy efficient than ASHRAE Standards for an energy efficient store.

71 installed in the store have enabled the Support is our duty! Maya Migros store to be 30% more energy efficient than ASHRAE Standards for an Within the framework of a protocol energy efficient store. As well as reducing entered into between Migros and HAYTAP greenhouse gas emissions with the (the Animal Rights Federation), Migros installed systems, environmentally friendly donates products approaching their use- cooling gases used in refrigeration units by date to HAYTAP, where responsible in the store contribute to the reduction individuals support the feeding of forest, of environmentally hazardous emissions. stray and sheltered pets and animals. The systems that provide water efficiency The project, which was launched with and allow rain water to be collected and 65 stores in 2014, was expanded to 205 used provide opportunity to use water Migros stores in 24 provinces in 2015. 45% more efficiently in accordance Social Support with EPA standards. In order to support customers to develop responsible In 2015, social support was provided to consumer behavior, a special parking area various institutions and organizations by was separated for hybrid and low-carbon Migros. emission cars in the Maya Migros store. • Ramadan parcels were donated to The Bodrum Maya Migros store, which is the Red Crescent (Kızılay) and the a pioneering project in the retail sector, Foundation of Training and Protection received awards in the Environment and of Mentally Handicapped Children. Sustainability category by Soysal Retail • Migros made donations totaling The project undertaken by Sun in 2013. This was followed by the Migros and HAYTAP in order to Izmir Alaçatı Macrocenter store, which TL 355,975.15 to socially beneficial obtained the LEED Gold certification in agencies and organizations in 2015. support the feeding of forest, Operation and Maintenance category. stray and sheltered pets and animals was expanded to 205 Migros stores in 24 provinces in 2015. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

2015 ORDINARY GENERAL ASSEMBLY MEETING AGENDA

MİGROS TİCARET A.Ş. 8. As required by Capital Markets Board 14. As required by Capital Markets Board regulations and by Corporate Governance regulations and Corporate Governance Date: 23 March 2016 Principles, providing information about Principles, providing information about Time: 14:00 the Company’s dividend payment policy the Company’s “Donation Policy” Venue: Atatürk Mahallesi Turgut Özal for 2016 and the years that follow, regarding the socially beneficial donations Bulvarı No: 7 34758 Ataşehir - İstanbul and aid to be granted by the Company to 9. Election and replacement of the foundations and associations, independent Board members and other 1. Opening the meeting and electing the members of the Board of Directors 15. Voting on the Board of Directors’ presiding committee; authorizing the nominated by the Corporate Governance selection, upon the recommendation of presiding committee to sign the minutes Committee, and determination of their the Audit Committee, of the Company’s 72 of the annual general assembly meeting, terms of office, independent auditors as required by Communique on capital market 2. Reading, deliberating, and voting on 10. As required by Capital Markets Board independent auditing standards published the summary of the independent auditor’s regulations and Corporate Governance by the Capital Markets Board and by the report submitted by the independent Principles, providing information about Turkish Commercial Code, auditors Başaran Nas Bağımsız Denetim and voting on the Company’s Board ve Serbest Muhasebeci Mali Müşavirlik A.Ş. of Directors and senior managers 16. As required by Capital Markets Board (a member of PricewaterhouseCoopers), “Remuneration Policy” as well as regulations, providing information about concerning the Company’s 2015 activities payments which have been made collateral, pledges, and mortgages and accounts, pursuant to that policy, granted by the Company in favor of third parties in 2015, 3. Reading, deliberating, and voting on the 11. Determining the gross monthly financial statements for 2015, fees and any kind of financial benefits 17. Authorizing any shareholders who including bonus, premium, attendance may be in control of the Company’s 4. Reading, deliberating, and voting fee, etc. to be paid to the Board members, management, Board of directors and on the Board of Directors’ report and senior managers – as well as their spouses the annual report, both concerning the 12. As required by Capital Markets Board and their relatives, whether by blood Company’s 2015 activities and accounts, regulations and Corporate Governance or marriage unto the third degree – to Principles, providing information about engage in business and transactions 5. Approving the appointments of new the Company’s “Disclosure Policy”, subject to the provisions of articles 395 Board members to the Board of Directors and 396 of the Turkish Commercial Code in accordance with Article 363 of the 13. Providing information about the and of Capital Markets Board regulations; Turkish Commercial Code, socially beneficial donations and providing shareholders information assistance granted by the Company to about such transactions made by these 6. Individually acquitting each of the foundations and associations in 2015; aforementioned persons and related members of the Company’s board of determining an upper limit on donations parties in 2015, directors of their fiduciary responsibilities and assistance to be granted in 2016 for the Company’s activities in 2015, as required by Capital Markets Board 18. Closing remarks. regulations and the Company’s Articles of 7. Discussing, approving, amending and Association, approving, or rejecting the Board of Directors’ proposal concerning dividend distribution, MİGROS 2015 ANNUAL REPORT

BOARD OF DIRECTORS REPORT

Board of Directors

Fevzi Bülent Özaydınlı Chairman Tuncay Özilhan Vice-Chairman Nikolaos Stathopoulos Vice-Chairman Stefano Ferraresi Member Khalid Hilal Hamood Al Yahmadi Member Mehmet Hurşit Zorlu Member Salih Metin Ecevit Member Can Çaka Member 73 Jacob Cornelio Adriano de Jonge Independent Member Tayfun Bayazıt Independent Member Hakkı Hasan Yılmaz Independent Member Aziz Bulgu Independent Member

Audit Committee Hakkı Hasan Yılmaz Committee Chairman Jacob Cornelio Adriano de Jonge Committee Member

Corporate Governance Committee Jacob Cornelio Adriano de Jonge Committee Chairman Nikolaos Stathopoulos Committee Member Mehmet Hurşit Zorlu Committee Member Can Çaka Committee Member

Early Detection of Risk Committee Tayfun Bayazıt Committee Chairman Jacob Cornelio Adriano de Jonge Committee Member Salih Metin Ecevit Committee Member Mehmet Hurşit Zorlu Committee Member Erkin Yılmaz Committee Member

Senior Management Ömer Özgür Tort General Manager Ahmet Fuat Yanar Assistant General Manager (Retail Operations) Erkin Yılmaz Assistant General Manager (Finance) Demir Aytaç Assistant General Manager (Human Resources and Industrial Relations) Cem Lütfi Rodoslu Assistant General Manager (Marketing) Hakan Şevki Tuncer Assistant General Manager (Investment Development) Tarık Karlıdağ Assistant General Manager (Construction) Mustafa Murat Bartın Assistant General Manager (International Operations, Online and Wholesales) MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

BOARD OF DIRECTORS REPORT

Board of Directors to pay independent board members a • Jacob Cornelio Adriano de Jonge, fee of TL 20,000 (gross) for each board Nikolaos Stathopoulos, Mehmet Hurşit The Migros Board of Directors consisted meeting they attend and not to pay any Zorlu and Can Çaka were elected to of twelve members in 2015: Fevzi Bülent attendance fees to other board members. seats on the Corporate Governance Özaydınlı (Chairman), Tuncay Özilhan and Committee, with Jacob Cornelio Nikolaos Stathopoulos (Vice-Chairman), The Board of Directors is authorized to Adriano de Jonge being chosen to Stefano Ferraresi, Khalid Hilal Hamood take decisions about all matters except serve as a committee chairman. Al Yahmadi, Mehmet Hurşit Zorlu, Salih those which are reserved to the general Metin Ecevit, Can Çaka (members), assembly under the Turkish Commercial • Tayfun Bayazıt, Jacob Cornelio Adriano Hasan Yılmaz, Aziz Bulgu (independent Code or by the Company’s articles of de Jonge, Salih Metin Ecevit, Mehmet association. Hurşit Zorlu and Erkin Yılmaz were 74 members) elected to seats on the Early Detection At the Company’s annual general Under article 17 of the articles of of Risk Committee, with Tayfun Bayazıt assembly meeting on 9 April 2015, Fevzi association, board members serve for being chosen to serve as a committee Bülent Özaydınlı, Nikolaos Stathopoulos, three-year terms unless a shorter term of chairman. Stefano Ferraresi, Giovanni Maria Cavallini, office is specified at the general assembly Khalid Hilal Hamood Al Yahmadi, Marco meeting at which they are elected. A Senior Management Castelli, Ömer Özgür Tort, and Evren Rıfkı board member whose term of office Ünver were elected to seats on the Board expires may be reelected. Shareholders Migros Senior Management consists of of Directors as board members while assembled in a general assembly meeting Ömer Özgür Tort (general manager) and Hakkı Hasan Yılmaz, Tayfun Beyazıt, Jacob may, for just cause and at any time that of Ahmet Fuat Yanar, Erkin Yılmaz, Demir Cornelio Adriano de Jonge, Aziz Bulgu they deem such action to be necessary, Aytaç, Cem Lütfi Rodoslu, Hakan Şevki were elected to serve as independent dismiss any board member whether Tuncer, Tarık Karlıdağ, and Mustafa Murat board members. or not such an item is on the meeting Bartın (assistant general managers). agenda. As stated in the Company’s material Under Migros’ articles of association, event disclosure of 15 July 2015 published In compliance with CMB regulations senior executives are chosen and on the Public Disclosure Platform (KAP), and the new provisions of the Turkish appointed by the Board of Directors. Tuncay Özilhan, Mehmet Hurşit Zorlu, Commercial Code, an audit committee, Independent Auditing Salih Metin Ecevit and Can Çaka were a corporate governance committee, and appointed to fill the seats vacated by an early detection of risk committee have At a meeting of the Board of Directors on the resignations of Board of Directors been set up at the Company. The duties 18 March 2015, the board, acting upon the members Giovanni Maria Cavallini (Term of a nominating committee and of a recommendation of the Audit Committee of Office: 09 April 2015 - 15 July 2015), remuneration committee are performed and in compliance with the requirements Marco Castelli (Term of Office: 09 April by the Migros Corporate Governance of CMB Communique on capital market 2015 - 15 July 2015), Ömer Özgür Tort Committee. independent auditing standards and of (Term of Office: 09 April 2015 - 15 July the Turkish Commercial Code, decided to At a meeting of the Migros Board of 2015) and Evren Rıfkı Ünver (Term of select Başaran Nas Bağımsız Denetim ve Directors held on 15 July 2015: Office: 09 April 2015 - 15 July 2015). Serbest Muhasebeci Mali Müşavirlik A.Ş. According to the Board of Directors • It was decided that the Audit (a member of PricewaterhouseCoopers) decision passed on 15 July 2015, Fevzi Committee will consist of two to be the Company’s independent Bülent Özaydınlı was elected as the independent directors. Hakkı Hasan auditor for 2015 fiscal year subject to Chairman of the Board and Tuncay Yılmaz and Jacob Cornelio Adriano de the provisions of capital market laws Özilhan and Nikolaos Stathopoulos as Jonge were elected to fill these seats, and regulations and of the Turkish Vice-Chairmen. with Hakkı Hasan Yılmaz being chosen Commercial Code. This decision was approved at the general assembly of At a general assembly meeting held to serve as a committee chairman. shareholders on 09 April 2015. on 09 April 2015, shareholders voted MİGROS 2015 ANNUAL REPORT

Audit Committee Board passed a decision to approve the by Moonlight Capital S.A. to Anadolu suggested amendments (“Suggested Endüstri Holding A.Ş. took place on the Jacob Cornelio Adriano de Jonge Amendments”) to: same date. and Hakkı Hasan Yılmaz were elected members of the Audit Committee as • “Article 16 – Board of Directors”, As a result of this transaction, total statutorily mandated by Capital Markets interest that Moonlight Capital S.A. Board Communique X:22 and by the • “Article 17 – Term of Office and Duties holds in our Company’s capital directly CMB’s communique on the establishment of the Board of Directors”, and and indirectly decreased to 40.25% as and implementation of corporate at 15 July 2015, while Anadolu Endüstri • “Article 19 – Meeting and Resolution governance principles. Holding A.Ş. indirectly holds 40.25% Quorums of the Board of Directors” of interest in our Company’s capital. Having completed its auditing work and the articles of association. 75 its study of the independent auditors’ Moonlight Capital S.A. notified that it As stated in the relevant material event report as of 31 December 2015, the has collected TL 1,061,957,852 and EUR disclosures dated 27 February 2015 and Audit Committee informed the Board 297,041,599 in total from AEH for the 04 March 2015 posted on the Public of Directors of its opinion that the disposal of 80.50% of MH Perakendecilik Disclosure Platform (KAP), the necessary consolidated financial statements ve T.A.Ş. shares that correspond to permissions have been obtained from prepared in accordance with the 40.25% of the shares in our Company. the CMB and the T.R. Ministry of Customs CMB-published accounting principles and Trade, respectively. The said changes pursuant to the provisions of the CMB Indirectly, the said sales price per to the articles of association were Communiqué no. II-14.1 on Principles of Migros share with a nominal value of TL presented for the approval of, and were Financial Reporting in the Capital Market 1 corresponded to TL 26.86 based on ratified by, the shareholders at a general presented a true and fair view of the Central Bank of the Republic of Turkey assembly convened on 09 April 2015. financial position of the Company as of EUR/TL FX buying rate, which is the The minutes of the said general assembly 31 December 2014 and of its operating benchmark rate, determined at 15:30 and changes to the articles of association results on the date. hours on 14 July 2015. were registered on 16 April 2015. The Audit Committee convenes four Nonetheless, Moonlight Capital has “the The new versions of the said articles of times a year and submits written reports right to sell” and AEH has “the right to the Company’s articles of association of its activities directly to the Board of buy” 19.5% of the shares in Moonlight are accessible in the Company’s Directors. Capital held by MH Perakendecilik 24 material event disclosures published on months after the share transfer, but in Changes in the Articles of Association the Public Disclosure Platform (KAP) any case by no later than the end of the and our corporate website at www. 30th month thereafter. The Company’s material event disclosure migroskurumsal.com of 29 January 2015 published on the As stated in our material event disclosure Public Disclosure Platform (KAP) Changes in Paid-in Capital during the dated 27 January 2016, Moonlight provided information regarding the Reporting Period Capital S.A. (“Moonlight”), one of the Board of Directors’ decision to amend shareholders in our Company, notified No changes occurred in the paid-in the articles of association. The draft to our Company that it has transferred capital during the reporting period. amendments to the articles of association the shares it holds in our Company with were finalized in line with the relevant As stated in the material event disclosure a total nominal value of TL 26,937,336, feedback and comments from the dated 15 July 2015, the disposal of including all the rights, obligations Capital Markets Board of Turkey (CMB). the shares representing 80.5% of MH and encumbrances thereto, to Kenan Hence, at a meeting of the Board of Perakendecilik ve Ticaret A.Ş. that Investments S.A., which owns all of the Directors held on 26 February 2015, the held 50% of our Company’s shares shares in Moonlight, within the frame of MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

BOARD OF DIRECTORS REPORT

Capital Structure Name Share (%) Share Amount (TL)

MH Perakendecilik ve Ticaret A.Ş. 50.00 89,015,000 Moonlight Capital S.A. 15.37 27,371,000 Kenan Investments S.A. 15.13 26,937,336 Other 19.49 34,706,664 Total 100.00 178,030,000 intragroup share transfer for a price of TL Financial Standing, Dividend Distribution After posting a pretax loss of TL 181 million 26.00 per share. With this transaction, Proposal, Conclusion and a net profit of TL 96 million in 2014, 76 the shareholding interest of Moonlight Migros booked a pretax loss of TL 346 in the capital of our Company became Financial Standing million and a net loss of TL 370 million in 15.37% as at the date of the share Migros’ operational results are compiled in 2015. transfer, and the shareholding interest of accordance with CMB Financial Reporting Kenan Investments S.A. in the capital of Standards, which are themselves based on Total liabilities correspond to 91% of total our Company exceeded the 15% limit and TMS/TFRS. liabilities and equity (2014: 86%). 35% became 15.13% as at the date of the share of the Company’s total assets consist In 2015, Migros increased its consolidated transfer. of current assets (2014: 31%) with non- sales to TL 9,390 million, translating into current assets making up the remaining Migros’ Position in the Sector and a 15.6% increase as compared with the 65% (2014: 69%). Investments in 2015 2014 figure of TL 8,123 million. With this performance, the Company fulfilled its Profit Distribution Proposal & Conclusion Migros Ticaret A.Ş. operates in the foods target of achieving double-digit growth Within the framework of (1) principles set and consumer products sector. The last year. Consolidated gross profit was forth in the Capital Markets Board (CMB) Company is both a retailer that sells up by 16.7% year-on and reached TL Communiqué II-19.1 on Dividends, (2) of such products directly to consumers 2,526 million in 2015. In order both to the relevant provisions of our Company’s and a wholesaler that sells them to other strengthen its competitive position in articles of association, and (3) of our retailers. The Company also operates the sector and to boost its market share, Company’s publicly disclosed profit shopping malls in Turkey and in other Migros continued to invest in prices– distribution policy, our consolidated countries through its foreign subsidiaries. particularly in the private label and fresh financial statements for 2015, which foods groups–all year long. In the four have been prepared in accordance with As of end-2015, the Company had 1,410 years beginning with 2010, the Company’s the Turkish Commercial Code (TCC) and stores consisting of 469 M, 255 MM, 94 annual consolidated gross profit margin CMB regulations, show a net current loss. MMM, 464 Migros Jet, 23 5M,, 22 Tansaş, improved steadily from 25.7%, to 26.0%, For that reason, it has been decided to and 36 Macrocenter stores located in all to 26.3%, 26.6% and to 26.6%. This trend recommend to the general assembly of seven of Turkey’s geographical regions continued in 2015 with the consolidated shareholders at the 2015 annual meeting and, through its international subsidiaries, gross profit margin reaching 26.9%. that no dividend be paid for the year. 27 Ramstores in Kazakhstan and 20 Migros’ consolidated operating profit was Dear Our Shareholders, Ramstores in Macedonia. TL 263.6 million while its profit margin This concludes our report of our weighed in at 2.8%. In 2015, new openings consisted of 83 Company’s 2015 activities and results. Migros (56 M, 20 MM, and 7 MMM), 154 In 2014, Migros booked an earnings We hereby submit for your consideration Migros Jet, 3 Mini Tansaş, 1 Maxi Tansaş, 1 before interest, taxes depreciation, and and approval our Company’s 5M hypermarket, and 7 Macrocenter stores amortization (EBITDA) figure of TL 529 consolidated balance sheet and income in Turkey; in its international operations, million. In the twelve months to end-2015, statement dated 31 December 2015. 3 Ramstores opened in Kazakhstan and this increased by 13.8% and reached TL Very truly yours, another 5 opened in Macedonia. Thus a 602 million, a figure that corresponds to Board of Directors total of 257 new store investments went 6.4% of sales. into service last year. MİGROS 2015 ANNUAL REPORT

CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT

Migros Ticaret A.Ş. (“Migros”, “the Company”, “our Company”) Address Atatürk Mah. Turgut Özal Bulvarı No: 7 34758 Ataşehir / İstanbul Trade Registry No. 659896 Mersis (Central Registration System) No. 0622052951300016 Phone 0216 579 30 00 Customer Care Line 444 10 44

On 20 October 2015, a two-year In the report issued following the rating The individual scores assigned for each agreement was executed with process, our Company was assigned a heading to our Company are presented

SAHA Kurumsal Yönetim ve Kredi Corporate Governance Rating score of below: 77 Derecelendirme Hizmetleri A.Ş., which 9.46 (94.55%) as at 30 December 2015. holds an operating license to be engaged Based on the Corporate Governance in performing ratings in accordance The report includes the following remark: Rating of 9.46 (94.55%) assigned to our with the CMB’s Corporate Governance “Migros’s corporate governance rating Company, the Company qualified to be Principles, for the rating of our has shaped up as above in consideration included in the Borsa İstanbul Corporate Company’s compliance with corporate with the Company’s determination to Governance Index as of 06 January 2016. governance principles. apply corporate governance principles, its willingness to manage this process continuously and dynamically and improvements which had been initiated in this direction.”

Headings Weight Assigned Score (%) Shareholders 25% 95.44 Public Disclosure and Transparency 25% 97.39 Stakeholders 15% 99.48 Board of Directors 35% 89.78 Average 100% 94.55 MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT

1. STATEMENT OF A corporate governance committee As required by the Capital Markets COMPLIANCE WITH was formed within the Board of Law’s communique’s stipulation that CORPORATE GOVERNANCE Directors in 2007 and charge with announcements about general assembly PRINCIPLES overseeing corporate governance meetings must be made at least three matters throughout the Company and weeks before the meeting date, our Migros Ticaret A.Ş. attaches great with supervising the Investor Relations Company’s general assembly meeting importance to the implementation of Department. Capital market laws and was duly announced three weeks in corporate governance principles as regulations mandate that a corporate advance of the date on which it was prescribed by capital market laws and governance committee be set up and to be convened. A general assembly regulations, the Turkish Commercial that its head be chosen from among the meeting information document Code, and other regulatory requirements. Company’s independent board members. containing information about such 78 Migros is aware of the benefits that In a board resolution passed on 15 July issues as board members’ CVs, the the implementation of these principles 2015, Jacob Cornelio Adriano de Jonge, Company’s dividend policy, the Board will have for the Company, for its Nikolaos Stathopoulos, Mehmet Hurşit of Directors’ profit distribution proposal shareholders, and ultimately for the Zorlu and Can Çaka were elected to seats and schedule, reasons for proposal country as a whole. Our corporate on the corporate governance committee against profit distribution if applicable, governance practices are constantly and independent board member Jacob changes in the articles of association being reviewed and improvements Cornelio Adriano de Jonge, was made with old and new texts presented for are made in them where necessary committee chairman. purposes of comparison, the Company’s both so that we may be in compliance remuneration policy, internal guidelines with Corporate Governance Principles Our corporate website (www. for General Assembly meetings, Communiqué II-17.1 and so that we migroskurumsal.com) is updated daily disclosure policy, and donation policy may be an exemplary company on in order to provide more extensive is also made available to shareholders such issues. Our corporate governance information on the Company to our on the corporate website at www. principles compliance report is prepared shareholders. In addition, dedicated migroskurumsal.com. as indicated in Capital Markets Board websites are available on each of our Bulletin 2014/02 dated 27 January 2014 Company’s formats for the information of In compliance with the Turkish and in the format specified in that board’s the general public and our shareholders. Commercial Code, with capital market resolution 2/35 of the same date. In addition to forming a part of its annual laws and regulations, and with corporate report, Migros’ corporate governance governance principles communiques, the Our Company has adopted the main principles compliance report may also be Board of Directors has set up an Early principles of Corporate Governance found in the “Investor Relations” section Detection of Risk Committee. Tayfun which are: of its corporate website located at www. Bayazıt, Jacob Cornelio Adriano de a) Fairness migroskurumsal.com. Jonge, Salih Metin Ecevit, Mehmet Hurşit b) Transparency Zorlu, and Erkin Yılmaz were elected to Within the scope of the efforts to achieve c) Responsibility be the members of the Early Detection alignment with Corporate Governance d) Accountability. of Risk Committee. As required by CMB Principles in 2015; regulations, Tayfun Bayazıt was elected to its head. The most recent version of the Company’s articles of association that Our Company has become a member are in conformity with the Turkish of the Investor Relations Association Commercial Code and the Capital Market (TÜYİD) in 2012. Law are posted on the corporate website (www.migroskurumsal.com). MİGROS 2015 ANNUAL REPORT

PART I - SHAREHOLDERS • Represent the Company before such 2. 1 Investor Relations agencies as the Capital Markets Board (CMB), Borsa Istanbul, the Central • Provide investment banks/brokerage The Investor Relations Department Registry Agency (CRA), and ISE analysts, fund managers, shareholders, was set up under the responsibility Settlement and Custody Bank Inc. and and other stakeholders with of the assistant general manager for liaise with them; information about the Company; financial affairs. The Investor Relations • Propose changes to keep the articles of Department acts in compliance with • Maintain records pertaining to the association in compliance with current the requirements of Turkish Commercial Board of Directors, to committees set laws and regulations; Code, capital market laws and up within the board, and to general assembly meetings; regulations and with CMB regulations, • Maintain regular and up-to-date 79 communiques, and principles in the • Provide the Public Disclosure Platform records of all communication with conduct of its activities. The Investor with information about material events investors; Relations Department is actively involved as required by the Public Disclosure in making it easy for shareholders • Keep abreast of and analyze Communique (VII-128.6), the Material to protect and exercise their rights, information about competitors and the Events Communique (II-15.1), and other including but not limited to, their rights sector; pertinent regulatory requirements; to obtain information and to examine the • Respond to shareholders’ queries and Company’s records. • Keep track of all matters related to requests for information to the extent public disclosures covered by the • Manage general assembly meeting- allowed by the Company’s disclosure Company’s public disclosure policy; related matters in compliance with the policy; requirements of laws and regulations • Prepare documents that may be useful • Have shareholders’ paper-form and of the Company’s articles of to shareholders at general assembly securities dematerialized; association; meetings and ensure that shareholders have easy access to these documents; • Coordinate the initiatives and efforts • Conduct matters related to share regarding sustainability. capital increases; • Keep track of the requirements of laws and regulations and of CMB legislation; The Investor Relations Department • Conduct matters related to dividend prepares and submits to the Board of payments; • Inform senior management of matters Directors a report of its most recent and issues with which the Company • Handle shareholder requests and activities monthly. must be in compliance; procedures related to general assembly All shareholders who wish to obtain meetings, share capital increases, and • Prepare the Company’s quarterly and information about the Company may dividend payments; annual reports; submit their requests by email to • Represent the Company; • Coordinate efforts and activities [email protected] and/or by related to Corporate Governance calling 444 10 44 Customer Service Line. in harmony with the Corporate All other channels of communication are Governance Committee; also available to shareholders.

• Prepare quarterly and annual informational presentations and bulletins; MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT

Assistant General Manager for Finance: The dematerialization of securities is 2.2 Shareholders’ Rights to Information Erkin Yılmaz undertaken by Yapı Kredi Securities. Address: Atatürk Mahallesi Turgut Özal During the reporting period, Disclosure Bulvarı No: 7 34758 Ataşehir / İSTANBUL retroactive action was taken at the The Investor Relations Department Email: [email protected] Company’s headquarters concerning endeavors to respond to requests for Migros Türk T.A.Ş. shareholders and information about the Company that Finance Director: Ferit Cem Doğan Tansaş Perakende Mağazacılık T.A.Ş. it receives as quickly as possible and Email: [email protected] shareholders who had not taken part without making any distinctions among in stock options, or had not received shareholders. Mindful of shareholders’ Investor Relations Group Manager dividends to which they were entitled, right to be informed and of their right to Dr. Affan Nomak or who applied to have their paper- have simultaneous, convenient access to 80 Email: [email protected] form shares dematerialized. In addition, information, all announcements about Capital Market Activities Level 3 License shareholders who called the 444 10 44 the Company are also published on the No: 204627 Customer Services Line were provided Company’s corporate website. Corporate Governance Rating Specialist with information and also directed to License No: 700482 Immediately after each announcement go to any Yapı Kredi Bank branch in of the Company’s quarterly results, order to exercise their rights. More Investor Relations Associate: teleconferences concerning the than 200 shareholders contacted the Ahmet Hüsamettin Özkök investor presentation published on our Investor Relations Department to obtain Email: [email protected] website were conducted. During these information on a variety of issues. They Capital Market Activities Level 3 License teleconferences, detailed information was were informed in compliance with the No: 209815 provided about the presentation. Corporate Governance Rating Specialist requirements of corporate governance License No: 702068 principles. The shareholders’ right to receive and review information as stipulated by The activities of the Company in 2015 are the law is not eliminated or restricted itemized below. neither by any provision contained in the • Teleconferences conducted during the Company’s articles of association, nor year: 4 by any practice based on the Company management’s decision. • Investor presentations concerning the Company’s financial results: 4 Auditing At the meeting of the Board of Directors • Financial press releases concerning the of Migros, held on 18 March 2015, it Company’s financial results: 4 was decided according to the proposal • Material event disclosures sent to the by our Audit Committee that Başaran Public Disclosure Platform: 43 Nas Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. (a • Board of Directors resolutions passed: member of PricewaterhouseCoopers) 30 be elected as the independent audit • Domestic and international company for the 2015 fiscal year. This conferences and roadshows taken part decision will be submitted to the General in: 15 Assembly for approval, according to the Board’s resolution. • Analysts and fund managers met with during the year: 324 MİGROS 2015 ANNUAL REPORT

The Migros general assembly of 2.3 General Assembly Meetings The Company’s donation policy is shareholders voted to approve, as the disclosed to shareholders by means of a Company’s independent auditor for Attention is given to covering all issues general assembly meeting information 2015, the firm of Başaran Nas Bağımsız whose discussion is statutorily mandated document that is made available Denetim ve Serbest Muhasebeci when determining items for the agendas before general assembly meetings Mali Müşavirlik A.Ş. (a member of of general assembly meetings. General at the Company’s headquarters, PricewaterhouseCoopers), which had assembly meeting announcements on its corporate website at www. been selected by the Board of Directors are published in Türkiye Ticaret Sicili migroskurumsal.com, and at the upon the recommendation of the Audit Gazetesi, at the Central Registry electronic general assembly portal. A Committee. Agency’s electronic general assembly separate item concerning charitable portal, and on the Company’s corporate donations provided to foundations 81 A two-member Audit Committee has website within the statutorily prescribed and associations is included in been formed by the Board of Directors of periods of time. All shareholders are general assembly meeting agendas Migros. Under article 4.5.3 of the CMB’s given convenient access to these and shareholders are provided with “Communique concerning corporate announcements. Additionally, a general information about them. governance principles (II-17.1)”, all of the assembly meeting information document members of the Audit Committee must containing detailed information about Annual General Assembly Meeting be selected from among the Company’s agenda items that are to be discussed The annual general assembly meeting independent board members. At a at the meeting is also published on the at which Migros’s 2014 activities and meeting of the Board of Directors on Company’s corporate website at www. accounts were examined took place on 15 July 2015, a resolution was passed migroskurumsal.com, on the electronic 9 April 2015 at 12:00 at the Company’s to reconstitute the Audit Committee as General Meeting System (e-GEM) and head office building located at the a two-person body whose members e-Company portal. address of Atatürk Mahallesi, Turgut Özal are both independent board members Bulvarı No: 7, 34758 Ataşehir, İstanbul for and Hakkı Hasan Yılmaz and Jacob the convenience of those attending and Cornelio Adriano de Jonge were elected it was also simultaneously conducted General assembly meetings are held to fill these seats. As also required by electronically through the CRA’s e-GEM. physically at the Company’s headquarters Capital Markets Board regulations, Hakkı The meeting was observed by ministry (Atatürk Mahallesi, Turgut Özal Bulvarı Hasan Yılmaz was designated as the representative Rahmi Yüce, who had No: 7, 34758 Ataşehir, İstanbul) and are committee’s chairman. been charged with this duty by the simultaneously conducted electronically Ministry of Customs and Trade İstanbul through the electronic general assembly The Company’s articles of association Directorate letter 7128217dated 7 April system. General assembly meetings are contain no provisions that complicate the 2015. conduct of a special audit. The Company open to all stakeholders and are attended management avoids undertaking any by media representatives. The 2014 balance sheet and income transaction that would complicate the statement, the Board of Directors Company officers responsible for the execution of a special audit. No requests annual report, the independent preparation of financial statements and for the conduct of a special audit at auditors’ report, and proposal for the a representative of the independent the Company were received from distribution of the year’s dividends were auditor attended the general assembly shareholders during the reporting period. made available for the examination meeting so as to provide such of shareholders at the Company’s information as might be needed and to The internal audit activities of the headquarters, on its corporate website respond to any questions. Company are discussed in the relevant at www.migroskurumsal.com, and at the sections of the Corporate Governance electronic general assembly portal during Principles Compliance Report. the three weeks preceding the meeting. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT

An examination of the attendants list or its subsidiaries’ or affiliates’ object and in an electronic environment. Once showed that 14,932,950,146.8 shares scope; nor did they act as a partner with voting has been completed, the results out of a possible 17,803,000,000 unlimited liability in another company of physically cast and electronically cast corresponding to TL 149,329,501.468 of engaged in the same kind of business. votes are consolidated in the e-GEM. the Company’s TL 178,030,000 in capital were represented at the meeting. 2.4 Voting Rights and Minority Rights 2.5 Dividend Rights

Immediately after the meeting, its As is stipulated in Migros’ articles of There are no privileges regarding minutes and attendants list were association, there are no special voting participation in the Company’s profit. reported to the Public Disclosure rights at the Company. All votes are of Profits are distributed within statutorily equal weight. Every shareholder at a prescribed periods of time and as soon 82 Platform and were also published under the “Information about general assembly general assembly meeting is entitled as possible after a general assembly meetings” heading of its corporate to cast as many votes as the number meeting has taken place. The actual website at www.migroskurumsal. of shares that they hold. There are no payment dates are determined by the com and at the e-company portal. shareholders with cross-shareholding general assembly. Additionally, the general assembly interests. The articles of association Payment of dividends has always been meeting’s minutes were also announced provide for no special privileges an important matter for Migros, which in issue 8806 of Türkiye Ticaret Sicili and/or similar rights with respect to always aimed to protect the interests of Gazetesi on 22 April 2015. Prior to the representation on the Board of Directors. its shareholders. The utmost attention meeting, no shareholders submitted any Four of the twelve members of the Board is given to the fine balance between proposals for items to be included in the of Directors are independent members. the growth strategy and dividend meeting’s agenda. The Company avoids engaging in any payment policy. A copy of the “Dividend Shareholders at the Company’s annual and all manner of practices that might Distribution Policy” formulated by the general assembly meeting were informed obstruct the exercise of shareholders’ Board of Directors is sent to the Public about the donations and assistance voting rights. Disclosure Platform system along with provided by the Company during the material event disclosures pertaining Those who are entitled to cast votes at year. The Company made donations to dividend payments. The same general assembly meetings may exercise totaling TL 333,945.97 consisting of information is provided to shareholders those rights personally and they may TL 189,000 to the Marmaris Municipality, at general assembly meetings and is also designate a proxy, who may or may TL 50,000 to Koç University, and published on the Company’s corporate not be a shareholder themselves, to do TL 94,945.97 to other associations and website. so on their behalf. A specimen of the foundations. proxy statement for shareholders not Dividend Policy In 2014 no company shareholder with a personally attending a meeting is posted Taking the Company’s long-term controlling stake, nor any board member, at the Company’s headquarters, on its strategies, investments, financing plans, nor any manager with administrative corporate website (www.migroskurumsal. and profitability as well as compliance responsibilities nor any spouse or relative com), and at the CRA’s e-GEM portal and with CMB communiqués and regulations (whether by blood or marriage unto is also published in the Türkiye Ticaret into account, the Board of Directors may the second degree) of any of these has Sicili Gazetesi along with the general submit, for the approval of the general engaged in any transaction with the assembly meeting summons. assembly, a proposal that a portion–such Company or with any of its subsidiaries or as may be determined by the board–of Voting on agenda items at general affiliates that might be deemed to involve current-year profit be paid out as cash, assembly meetings is by an open show of a conflict of interest; nor did any of them or as bonus shares, or as a specific mix hands by shareholders who are physically perform, on their own behalf or on behalf of these two or else that it be retained present; electronic voting is provided for of another, any transaction of a business within the Company. shareholders who are attending meetings nature falling within the Company’s own MİGROS 2015 ANNUAL REPORT

When a general assembly decides to At an annual general assembly meeting 2.6 Transfer of Shares distribute profits it may itself determine of Migros held on 09 April 2015, it when the dividends are to be paid was announced that the Company’s The Company’s articles of association and similarly it may also authorize the consolidated financial statements for contain no provisions restricting the Board of Directors to make such a 2014, which were drawn up in accordance transfer of its shares. According to the determination. In all cases, the payment with the CMB requirements, showed a net charter, a general assembly may decide of dividends must begin no later than the profit for the period of TL 98,506,629.20. to issue shares at a nominally determined end of the fiscal year in which was held It was informed that it was proposed value. the general assembly meeting at which against distributing profit for this year Transfers of the Company’s shares are the decision to pay them was taken. for the purposes of further strengthening subject to the provisions of the Turkish Matters related to dividend payments the Company’s existing balance sheet Commercial Code and of capital market 83 specified in the Capital Markets Law structure and enabling healthier laws and regulations. and in CMB communiqués must also be management of the coming years’ cash complied with. flows; that the profit for the period Subject to the satisfaction of specific is planned to be put to use towards conditions, the Company may acquire its There are no shares in the Company that covering the Company’s operating capital own shares and accept them as collateral. are entitled to special dividend rights; requirements and towards financing neither is there anyone who is entitled to the new investment activities to be On 13 November 2014, MH Perakendecilik a share of company profits who is not a undertaken. The General Assembly ve Ticaret A.Ş. (“MH”), a shareholder of shareholder. passed resolutions to that effect. the Company, informed our Company that it has transferred its shares in the This is the Company’s policy for the Company’s capital with a total nominal next three years. Any changes to this value of TL 27,371,000 at a price of TL 26 policy will also be shared with the public per share to Moonlight Capital S.A., the separately. sole and principal shareholder of MH.

The shareholding structure of Migros after this transaction is presented below:

Capital Structure Shareholder Share Ratio (%) Share Amount (TL) MH Perakendecilik ve Ticaret A.Ş. 65.13 115,952,336 Moonlight Capital S.A. 15.37 27,371,000 Other 19.49 34,706,664 Total 100.00 178,030,000 MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT

On 31 December 2014, MH, one of the Company’s shareholders, notified to the Company that it has transferred the shares it held in the Company’s capital with a total nominal value of TL 26,937,336 to Moonlight, the sole and principal shareholder of MH, for a per share price of TL 26 for the purpose of intragroup restructuring of the shareholding interests of MH and Moonlight in the Company.

As a result of this transaction, the shareholding structure of Migros as at 31 December 2014 and 31 December 2015 is presented below:

Capital Structure Shareholder Share Ratio (%) Share Amount (TL) MH Perakendecilik ve Ticaret A.Ş. 50.00 89,015,000 Moonlight Capital S.A. 30.51 54,308,336 84 Other 19.49 34,706,664 Total 100.00 178,030,000

As stated in the Company’s material Moonlight notified that it has collected As stated in the Company’s material event disclosure dated 15 July 2015, TL 1,061,957,852 and EUR 297,041,599 in event disclosure dated 27 January 2016, disposal of the shares representing total from AEH for the disposal of 80.50% Moonlight, one of the shareholders in the 80.5% of MH Perakendecilik ve Ticaret of MH shares that correspond to 40.25% Company, notified to our Company that it A.Ş. (“MH”) that holds 50% of our shares in the Company. has transferred the shares it holds in the Company’s shares by Moonlight Capital Company’s capital with a total nominal S.A. (“Moonlight”) to Anadolu Endüstri Indirectly, the said sales price per Migros value of TL 26,937,336, including all the Holding A.Ş. (“AEH”) took place on the share with a nominal value of TL 1 rights, obligations and encumbrances same date. corresponded to TL 26.86 based on the thereto, to Kenan Investments S.A., Central Bank of the Republic of Turkey which owns all of the shares in Moonlight, As a result of this transaction, total EUR/TL FX buying rate, which is the within the frame of intragroup share interest Moonlight holds, directly and benchmark rate, determined at 15:30 transfer for a price of TL 26.00 per share. indirectly, in the Company’s capital hours on 14 July 2015. With this transaction, the shareholding decreased to 40.25% as of 15 July 2015, interest of Moonlight in the capital of Nonetheless, Moonlight Capital has “the and AEH’s indirect shareholding in the our Company is 15.37% as at the date of right to sell” and AEH has “the right to Company’s capital corresponded to the share transfer, and the shareholding buy” 19.5% of the shares in Moonlight 40.25%. interest of Kenan Investments S.A. in the Capital held by MH Perakendecilik 24 Company’s capital exceeded the 15% limit months after the share transfer, but in and became 15.13% as at the date of the any case by no later than the end of the share transfer. 30th month thereafter.

The shareholding structure of Migros as at 27 January 2016 following these transactions is presented below:

Capital Structure Shareholder Share Ratio (%) Share Amount (TL) MH Perakendecilik ve Ticaret A.Ş. 50.00 89,015,000 Moonlight Capital S.A. 15.37 27,371,000 Kenan Investments S.A. 15.13 26,937,336 Other 19.49 34,706,664 Total 100.00 178,030,000 MİGROS 2015 ANNUAL REPORT

PART III: PUBLIC DISCLOSURE Company Capital and Distribution of The following information is provided AND TRANSPARENCY Dividends”, “Information on General under the “Board of Directors” heading 3.1 The corporate website and its content Assembly Meetings of Shareholders”, of the corporate governance principles “Material Disclosures”, “Announcements compliance report section of the The Company’s corporate website is to Shareholders”, “Frequently Asked annual report: statements pertaining to located at www.migroskurumsal.com. Questions”, and “Contact Us”. Our information about members of the Board It has been serving shareholders and all investors can find more detailed of Directors, to duties that executives other interested parties since its launch information about Migros in the undertake outside the Company, and in 1997. subsections under these main headings. to the independence of independent Our “Investor Relations” page is updated members; information pertaining to Any and all manner of information and as circumstances warrant and as required committees set up within the Board of 85 announcements that might have an by law. Every effort is made to make Directors that includes their working impact on the exercise of shareholders’ such information easily accessible to principles, members, frequency of rights is made available to shareholders stakeholders. meetings, and performance along on an up-to-date basis via the corporate with the board’s assessments of the website. The website addresses all The corporate website also contains committees’ effectiveness; information of the matters set forth in Corporate trade registry information and the pertaining to the number of Board of Governance Principles. shareholding structure in Turkish and Directors meetings held during the year English as required by law. and members’ attendance at them. The content of the corporate website (www.migroskurumsal.com) was In addition, the Company’s “Privacy and The corporate governance principles enriched during the reporting period. Data Security Policy” has been added to compliance report also contains, in There is also a separate website for our corporate website during 2015. The appropriate sections, information about: each of the Company’s store formats Policy is intended to clarify the types of changes in the legal framework that and these websites are available for data we collect, the reasons and methods may significantly affect the Company’s our shareholders to use. Our corporate of data collection, the purposes such activities; significant lawsuits filed website contains the following sections data are used for, and the steps taken to against the Company and their potential and their associated sub-sections: ensure their security. consequences; conflicts of interest between the Company and those from • About Us 3.2 Annual Report which it obtains investment advisory, • Our Brands & Stores rating, and similar services along with • Corporate Social Responsibility The annual report is prepared in such measures taken by the Company • Migros Quality a way as to contain all of the matters to preclude such conflicts; cross- • Investor Relations specified in the Turkish Commercial shareholding interests that involve more • Migros Career Code, in “Regulations concerning the determination of minimum content in than a 5% capital stake; information Besides addressing the matters companies’ annual reports” (published about corporate social responsibility set forth in section 2.1 (“Corporate in issue 28395 of Official Gazette on issues including employee rights, Website”) of CMB Corporate Governance 28 August 2012), and in the corporate professional/occupational training, and Communique II-17.1, the Migros corporate governance principles set forth in the other company activities that have social website also contains information about appendix to CMB Corporate Governance and/or environmental consequences. many other subjects. Communique II-17.1. As so required, the Board of Directors has an annual report The Investor Relations section of our prepared that provides the public with corporate website covers topics such complete and truthful information about as “Sustainability”, “Migros Corporate”, the Company’s activities. “Financial Reports”, “The Increase of MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT

PART IV: STAKEHOLDERS The Company keeps shareholders and Social responsibilities of Migros 4.1 Informing Stakeholders other interested parties informed through 1. Migros strives to upgrade its service such means as press releases and standards in order to satisfy the Migros corporate governance practices investor presentations. expectations of its customers. ensure that stakeholders’ rights as embodied in laws and regulations and The section of the Migros Code of 2. Migros seeks to set an example for the in its contractual agreements are duly Conduct concerning employees is community by fulfilling all of its tax and safeguarded. The Company keeps presented under the title of “Rules of other obligations in a complete and stakeholders informed about issues Ethics” and other principles are presented timely manner. that may be of concern to them through below:: 3. Migros does not make any derogatory, a variety of communication channels 86 The responsibilities of Migros towards derisive or offensive statements about including, but not limited to, its corporate other companies other companies, organizations, website at www.migroskurumsal.com. 1. Migros abides by the law in all of its products or individuals. Company employees, shareholders, and activities. other individuals and entities with which 4. Migros takes the utmost care in the Company has a shareholding and/ 2. Migros does not derive any unlawful all its activities to preserve nature or business relationship may submit benefit from any person or entity and historic integrity while acting suggestions and complaints about such under any circumstances. Procurement in accordance with customs and issues directly to company executives. decisions regarding goods and services traditions of the community and All such submissions are considered and are made based on well-established observing legal rules and regulations. responded to as circumstances required. and publicly disclosed criteria. 5. Migros stands for business ethics Migros publishes the names and 3. It is important for Migros that its in its industry and strives for the contact information of the department business partners do not damage its establishment, dissemination and heads of the Company on its corporate image and reputation and that they adoption of these principles. website thus making it possible for respect the accepted business values stakeholders to directly contact the of the Company. The responsibilities of Migros employees manager overseeing a particular issue towards the Company and direct their questions and opinions 4. Migros checks and monitors the 11. Migros employees categorically reject to the relevant person firsthand. The services it obtains on an ongoing basis any pecuniary or non-pecuniary objective of this model is to allow for from other organizations to ensure incentives which may come from the establishment of a more transparent that they are provided in full legal any third parties within their areas of and effective communications compliance. responsibility. model between the Company and its 2. Migros employees inform their stakeholders. 5. Migros does not share the confidential information of its suppliers with any immediate superiors whenever they Stakeholders are provided with clear and third party without permission. enter into a direct business relationship explicit information about the Corporate with a company in which a close Governance Committee, the Audit relative is employed or he/she is a Committee, and the members of both so minority or majority partner. that they may contact these committees 3. Migros employees take utmost directly in order to report any violations attention and care in their duties and of laws and regulations by the Company they make every effort to ensure that and any involvement by the Company in the work they perform is higher in dealings that may be unethical. quality, faster and more efficient. MİGROS 2015 ANNUAL REPORT

4. Migros employees are obliged to 9. Migros employees do not divulge any 4.2 Stakeholders’ Participation in the refrain from endangering the health confidential or private information Company Management and safety of themselves and of other which they might be privy to due to employees who are affected by their their position or the work they perform The Article No. 7 of “The Company’s actions and their jobs in line with the outside the Company and they do not Responsibilities toward its Employees” occupational health and safety training give interviews or make statements section of the Migros Code of Conduct they received and with the employer’s of any kind to any media organization states: “In matters that are related to relevant instructions. without the prior consent of the employees, Migros seeks to include the Company management. opinions of its employees as much as 5. Migros employees are obliged to possible in any decision concerning the future of the Company.” operate the machinery, equipment, The responsibilities of Migros employees 87 devices, tools, dangerous materials, towards other employees transportation equipment and other Migros employees do not share the The Management of Migros gives a production machinery in the workplace private information regarding their co- great deal of attention towards the in accordance with their respective workers they might be privy to with other achievement of this goal. As a part of guidelines, to properly use protective third parties outside the Company. Our the business style of the Company, equipment, not to remove and change Company is against any and all sorts of Migros employees participate in the such protective equipment arbitrarily, behavior that will tarnish its employees’ decision-making processes concerning and to cooperate with the employer reputation and honor, or that constitutes their respective areas of work. Migros and employee representatives to infringement of its employees’ personal employees have the opportunity to assure occupational health and and employment rights; and any and communicate their new ideas, proposals safety in his/her respective job area, all sorts of harassment (psychological and demands to the senior management in accordance with the employer- harassment, mobbing, sexual of the Company and Members of the provided training and instructions. harassment) that disturbs physical, Board of Directors directly or by e-mail. psychological and social health and 4.3 Human Resources Policy 6. Migros employees refrain engaging in negatively affects the working life of any action or behavior which would our employees and our Company, and The Human Resources Department of damage the image and reputation aims to develop and maintain a fair and Migros, in executing the Company’s of the Company and during work respectful working environment for all strategies, aims to develop systems hours they comply with the generally employees. which will ensure the continuous accepted code of conduct and the improvement, motivation and dress policy of the Company. Migros employees are obliged not management of the human resources to endanger the health and safety of staff and implement these systems in 7 Migros employees do not remain themselves and of other employees who line with the corporate principles of the indifferent or silent in any situation are affected by their actions and their Company. Our human resources are our which runs counter to the interests jobs in line with the occupational health most important asset. The quality of our of the Company and shall notify the and safety training they received and products and services reflects the quality concerned business units. with the employer’s relevant instructions. of our employees. In our endeavor to 8. Migros employees avoid waste by General responsibilities create a Company spanning generations, putting all the fixtures, tools and “The Migros Business Ethics Committee” we choose attracting and employing the equipment owned by the Company to is responsible for dealing with issues that best and most competent people; taking use for their intended purposes. The are not addressed by the principles set maximum advantage of our people’s employees do not use the resources forth above. abilities, strengths and creativity; and facilities of the Company for their increasing their individual productivity; own private benefit. providing them opportunities to develop themselves; and creating a workplace in which teamwork and solidarity flourish. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT

Information about company employees’ Occupational Safety: Human Resources Management: job descriptions and accountabilities and Migros assures its employees that it will The management of human resources about performance and reward criteria fulfill all of its obligations towards them, processes and relations with employees is provided for employees’ information including those at all of its subsidiaries, at our Company, in line with established through the Migros Human Resources in compliance with the relevant laws and human resources policies and principles, Portal. regulations. is the responsibility of the Assistant General Manager for Human Resources Our Principles The Company, in order to ensure the and Industrial Relations; this function is safety of its employees in the workplace, clearly defined and undertaken within the Strategic Use of Human Resources: complies not only with all legal regulations and business ethics principles The Human Resources Department of requirements and regulations stipulated 88 of the Company. Migros places the human element on a by the Labor and Occupational Safety high pedestal by giving it great strategic Law but also with the industry standards Participation and Transparency: importance and creates awareness of on ergonomics and improvement of Managers and employees at Migros’s its strategic value in all of domestic the working environment. Civil defense domestic and overseas subsidiaries are and overseas units of Migros. Human activities, which are of great importance the integral parts of human resources resources strategies are designed to for our country, and theoretical and practices at Migros. Employees are create and develop a reliable, fast and practical training are also provided in updated on their roles and responsibilities proactive organizational structure to cooperation with the concerned public regarding human resources policies and sustain the industrial leadership of Migros institutions. provided with guidance in fulfilling those in a competitive business environment. responsibilities. Employees are considered a strategic Equal Opportunities: resource for it is believed that their Migros provides services to its customers Human resources policies and processes experience and creativity would be the both in Turkey and overseas through are shared with employees on a regular driving forces in the adaptation of the an employee workforce comprising basis by means of the communications Company to fast-changing competitive of individuals coming from many resources (intranet, e-mail, distance environment and new markets. different linguistic, religious and ethnic learning and meetings) of the Company. backgrounds. All human resource- Employees have access to employee Superior Business Ethics and Integrity: related decisions from recruitment evaluations and are able to receive In all dealings with employees, the and placement to compensation are training and information on the practices Company accepts as a fundamental governed by job position profiles and can monitor their individual results. principle to act fairly, in good faith and in defined in detail. Through the human an understanding manner abiding by the resource staff evaluation systems, Assemblies are also conducted as rules of law and ethics. Migros objectively monitors and necessary to inform and discuss with assesses the competencies, skills and employees issues of concern to them performances of its employees by such as the Company’s financial standing, common principles applied to all. Migros compensation, career paths, training, and provides equal training, promotion, and health. career development and compensation Competitiveness: opportunities to each of its employees Migros plans and manages the based on the evaluation results through professional development of its the Integrated Human Resource systems employees to help them sustain their deployed by the Company. competitiveness not only within the Company itself but also on a professional level so as to allow the contribution of positive values to the economy, environment and community. MİGROS 2015 ANNUAL REPORT

Commitment to Shared Values: 4.4 Code of Ethics and Social The responsibilities of Migros towards its Our Corporate Culture is based on our Responsibility employees: shared values. These values are: 1. Migros is in full compliance of its The Principles of Business Ethics of legal obligations to its employees; in 1. Reliability Migros are grouped under the following situations where the requirements of 2. Leadership headings: law are ambiguous, Migros consults 3. Empathy professionals who are experts in the • The responsibilities of the Company 4. Customer-orientation relevant fields. 5. Productivity towards its employees 2. Migros protects the rights of its 6. Innovativeness. • The responsibilities of employees employees within the framework of its towards the Company Actions of employees contradicting the business ethics rules in situations where 89 Company’s shared values are dealt with • The responsibilities of Migros towards laws do not sufficiently address to. appropriately and impartially through other companies 3. Candidates for employment, promotion the warning system and disciplinary • Responsibilities of the Company and appointment are evaluated based committee procedures. Conducting towards the society on their qualifications; all employees relations with employees at Migros is are provided equal opportunity. the primary function of the Industrial • General responsibilities. Relations Department. The objectives 4. Migros does not get involved in the The responsibilities of the Company of this Department are to ensure that all personal affairs or private lives of its towards its employees and the laws and regulations are fully complied employees and holds all of the private information about the other categories with by the Company, oversee the legal information about its employees in of business ethics principles have and contractual rights of the employees strict confidence. been described in the various and manage employee rights so as to sections of this Corporate Governance 5. Migros helps its employees to develop maintain labor peace and fulfill all legal Compliance Report. The Migros Code professionally and personally by obligations. of Ethics may be accessed from the providing them training. Our employees who have completed Company’s corporate website at www. 6. Migros does not discriminate on the basis one working year with our Company migroskurumsal.com. of sex, age, ethnic origin or religion. receive indemnity payment in cases set The Company considers its employees out by the law, and necessary financial 7. In matters that are related to as one of its most valuable assets in provisions are set aside for this purpose, employees, Migros seeks to include today’s tough market conditions. One which are publicly disclosed in our their opinions as much as possible in of our Company’s greatest competitive financial statements. any decisions that are related to the advantages is its experience in the future of the Company. industry and qualities possessed and 8. Migros provides hygienic and safe continuously improved by its employees. working conditions as dictated by the requirements of law and circumstances, and seeks to improve them to the best of its ability. 9. Migros holds private information about its employees that it may receive through various means in strict confidentiality and does not divulge any of it (e.g. medical records, shopping habits, economic data, and the like). MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

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Within the framework of its ethical As required by its sense of corporate PART V: BOARD OF DIRECTORS guidelines, Migros defines its social responsibility, Migros operates in 5.1 Structure and Composition of the responsibilities to society as follows. compliance with laws, the rules of ethics, Board of Directors and respect for human rights in the 1. Migros strives to satisfy the service conduct of all consumer-related services; All of the members of the Migros Board quality standards that its customers fulfills the responsibilities incumbent of Directors possess the qualifications expect of it. upon it in the furtherance of registered- required of them in article 4.3 of CMB Corporate Governance Communique 2. Migros seeks to fulfill its tax and other economy activities that give back to II-17.1. All of them are professionals legally prescribed obligations in a society by enriching national resources; distinguished by virtue of their exemplary complete and timely manner and to contributes to formal employment business knowledge, experience, and 90 conduct itself in an exemplary manner through its upholding of statutorily- background. in the public eye. mandated employee rights. The Company also shares its sense of social The Migros Board of Directors consists of 3. Migros makes no statements that could responsibility with its social stakeholders twelve members, all of whom are elected be deemed to be condescending, - employees, suppliers, subsidiaries, by shareholders at a general assembly sarcastic or offensive concerning other investors and customers and with the meeting. The board’s membership companies or organizations, goods, or public at large. Great importance is given consists of non-executive board individuals. to supporting and spreading of such members. Among the board members pioneering and value-adding practices 4. Migros takes pains in the conduct of are independent members who have the for the improvement of the society. its activities to protect the natural ability to act with absolute impartiality in environment, to avoid harm to the Migros is aware a good reputation can the conduct of their duties historical heritage, and to act in be ruined in a single blunder. Migros keeping with customs, habits, and According to article 4.3.4 of CMB acts ethically and with integrity in every traditions. Migros complies with the Corporate Governance Communiqué practice it engages in. The Company requirements of law on all such issues. II-17.1, the number of independent is well aware that trust cannot be won board members must not be fewer 5. Migros stands for business ethics easily, and that it is a bond that grows than one-third of a board’s total in its industry and strives for the and develops slowly over a long period membership. When determining how establishment, dissemination and of time between a company and its many independent board members a adoption of these principles. customers and that once broken, cannot board must have, fractions are rounded be saved by quick fixes. Migros has The corporate culture Migros has up to the nearest whole number but in been protecting the good health and developed for more than sixty years, no case may the number of independent rights of its customers since 1954. Many includes its concern for public health board members be fewer than two. In innovative practices introduced by and hygiene, sensitivity toward compliance with this rule, four of the Migros encourage good shopping habits identifying and satisfying societal needs, twelve members of the Migros Board of and foster consumer awareness. These organization of and participation in Directors are independent members. practices subsequently became industry exemplary educational, cultural, athletic standards and some have even been Under the articles of association, board and social activities essential for social made into law. members serve for three-year terms development as well as its corporate at most unless a shorter term of office identity as an “Honest Retailer” sensitive Detailed information about the is specified at the general assembly to the environment. Company’s social responsibility activities meeting at which they are elected. A is provided in appropriate sections of the board member whose term of office annual report. expires may be reelected. Shareholders assembled in a general assembly meeting may, for just cause and at any time that they deem such action to be necessary, MİGROS 2015 ANNUAL REPORT

dismiss any board member whether or not As stated in the Company’s material event Resumes of the Board Members such an item is on the meeting agenda. disclosure of 15 July 2015 published on the Public Disclosure Platform (KAP), Tuncay Fevzi Bülent Özaydınlı The Corporate Governance Committee, Özilhan, Mehmet Hurşit Zorlu, Salih Metin Born in 1949, F. Bülent Özaydınlı received which performs the duties of a nomination Ecevit and Can Çaka were appointed to his bachelor’s degree from the American committee at Migros, has created a pool of fill the seats vacated by the resignations University of Beirut. He started his career prospective independent board members of Board of Directors members Giovanni at OYAK in 1972 where he held various during 2015. Maria Cavallini (Term of Office: 09 April senior management positions until 1987. 2015 - 15 July 2015), Marco Castelli (Term Before leaving OYAK, Özaydınlı had There are no binding rules governing of Office: 09 April 2015 - 15 July 2015), served as Assistant General Manager of board members undertaking duties Ömer Özgür Tort (Term of Office: 09 Associates for 8 years and held seats outside the Company. Any duties that they 91 April 2015 - 15 July 2015) and Evren Rıfkı on the boards of directors of numerous do perform however are indicated in their Ünver (Term of Office: 09 April 2015 - 15 companies. He joined the Koç Group in CVs. July 2015). Based on the distribution of 1987. duties among the Board of Directors While women members served on the After serving as Maret Assistant General members, Fevzi Bülent Özaydınlı serves Board of Directors in previous years, Manager, F. Bülent Özaydınlı was the as the Chairman of the Board and Tuncay there are no woman members on the General Manager of Migros Türk T.A.Ş. Özilhan and Nikolaos Stathopoulos as current Board of Directors. The Corporate for 10 years. He was appointed as the Vice-Chairmen. Governance Committee has made a President of Koç Fiat (Tofaş) Division in recommendation to the Board of Directors The Board of Directors identifies strategic 2000; in addition to that position, he was that, in the years ahead, the Board be objectives taking into account both the named the Deputy CEO of the Koç Group formed so as to include woman members requirements of laws and regulations and in 2001. again. As a matter of principle there are no the Company’s articles of association and barriers to or limitations on women serving Having held the position of Koç Holding internal directives. The board formulates as members of the Board of Directors CEO from 2002 until May 2007, Özaydınlı the most appropriate balance among except that the number of female board served on the boards of directors of Koç between growth and the issues of risk members must not be fewer than 25% of Holding, Arçelik, Tofaş, Ford Otosan, Koç vs return in line with these objectives the total membership. All members of the Finansal Hizmetler, Migros, Tüpraş and and, mindful of the Company’s long- board–male and female–are considered Türk Traktör companies, as well as Vehbi term interests, administers the Company and evaluated entirely on the basis of their Koç Foundation. transparently, accountably, justly, and professional and sectoral experience and responsibly. their academic qualifications.

Board of Directors Position Effective Date Term of Office Fevzi Bülent Özaydınlı Chairman (Non-executive) 09.04.2015 3 Years Tuncay Özilhan Vice-Chairman (Non-executive) 15.07.2015 3 Years Nikolaos Stathopoulos Vice-Chairman (Non-executive) 09.04.2015 3 Years Stefano Ferraresi Member (Non-executive) 09.04.2015 3 Years Khalid Hilal Hamood Al Yahmadi Member (Non-executive) 09.04.2015 3 Years Mehmet Hurşit Zorlu Member (Non-executive) 15.07.2015 3 Years Salih Metin Ecevit Member (Non-executive) 15.07.2015 3 Years Can Çaka Member (Non-executive) 15.07.2015 3 Years Jacob Cornelio Adriano de Jonge Independent Member (Non-executive) 09.04.2015 3 Years Tayfun Bayazıt Independent Member (Non-executive) 09.04.2015 3 Years Hakkı Hasan Yılmaz Independent Member (Non-executive) 09.04.2015 3 Years Aziz Bulgu Independent Member (Non-executive) 09.04.2015 3 Years MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

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F. Bülent Özaydınlı has been working as Nikolaos Stathopoulos Outside positions held the Chairman of the Board at Migros since Nikolaos Stathopoulos is a Managing Stefano Ferraresi serves as a member of May 2008. Partner and a member of the Investment the Board of Directors at OVS SpA. Committee at BC Partners, which he External positions held joined in 2005. He has over 17 years of Khalid Hilal Hamood Al Yahmadi Fevzi Bülent Özaydınlı, the Chairman experience in private equity having led Born in 1980 in Oman, Khalid Hilal of the Board at Migros, serves as the a variety of private equity investments Hamood Al Yahmadi serves as the CEO Chairman of the Board at Baracuda Su globally. Mr. Stathopoulos serves as the of Muscat National Development and Ürünleri Sanayi ve Ticaret Anonim Şirketi. chairman of the boards of directors of Investment Company (S.A.O.C). He has OVS SpA, Gruppo Coin and Mergermarket been a member of the Board of Directors Tuncay Özilhan Group, and board member at Com Hem at Migros since 09 April 2015. 92 Born in 1947 in Kayseri, Tuncay Özilhan and Migros. graduated from Saint Joseph High School Mehmet Hurşit Zorlu in İstanbul, and İstanbul University, Before joining BC Partners, Mr. Born in 1959, Mehmet Hurşit Zorlu Faculty of Economics, before obtaining Stathopoulos was a Partner at Apax received a degree from İstanbul his MBA from the Long Island University, Partners in London where he spent University, Faculty of Economics. After USA. He started his career as the seven years working on large buy-out holding various positions at Toz Metal General Manager of Erciyas Biracılık transactions. Prior to Apax, he worked and Turkish Airlines, Mr. Zorlu joined Efes in 1977. Mr. Özilhan became the Beer as a management consultant with the Beverage Group under Anadolu Group as Group Coordinator and then General Boston Consulting Group in London. Mr. a marketing specialist in 1984. Throughout Coordinator at Anadolu Endüstri Holding, Stathopoulos holds an MBA from Harvard his career with Efes Beverage Group, before finally being appointed as Anadolu Business School and a degree in business he functioned as Marketing Supervisor, Group Executive Chairman in 1984. Mr. administration from the Athens University Assistant Project Development Manager, Özilhan rose to the position of Chairman of Economics and Business. Project Development Manager and of the Board of Directors of the Group Business Development & Investor in May 2007, in which post currently Outside positions held Relations Director. Mr. Zorlu then served serves. In tandem, he sits as the Chairman He is a member of the Harvard Business as Financial Affairs and Investor Relations on the boards of directors of Anadolu School European Leadership Board, Director at Efes Beverage Group from Foundation and various Anadolu Group Athens University of Economics and 2000 to 2008, and Chief Financial Officer Companies. Business Advisory Council, Impetus of Anadolu Group from 2008 to 2013. Private Equity Foundation Board of Outside positions held Trustees and a fellow of the Royal Society Outside positions held After serving as the Chairman of of Arts. He is also the Chairman of BC Appointed as Anadolu Group Deputy TÜSİAD (Turkish Industry and Business Partners Foundation. CEO in January 2013, Mr. Zorlu holds seats Association) from 2001 to 2003, he as a member on the boards of directors currently functions as the Vice President Stefano Ferraresi of various Anadolu Group companies. He of TÜSİAD High Advisory Council, Born in 1972, Stefano Ferraresi received also serves as a member of the board of Member of the Board of Directors at DEİK his undergraduate degree in business directors in associations including TÜYİD (Foreign Economic Relations Board), administration from Bocconi University (Turkish Investor Relations Society) and Chairman of the Turkish–Russian Business in Italy. TEİD (Ethics and Reputation Society). Council of DEİK, Estonian Honorary Mr. Zorlu is also the Chairman of the Consul in İstanbul, and President of the Having started his business life at Corporate Governance Association of Anadolu Efes Sports Club. Barclay’s Capital, Mr. Ferraresi worked in Turkey. the Finance Department at Merrill Lynch London office from 2000 to 2002. Having joined BC Partners in 2002, he has been a member of the Board of Directors at Migros since May 2008. MİGROS 2015 ANNUAL REPORT

Salih Metin Ecevit as Finance and Administrative Affairs Outside positions held Born in 1946, Salih Metin Ecevit graduated Manager at the Efes Ukraine Brewery, After serving as the CEO of V&D BV, from the Faculty of Political Sciences in Strategy and Business Development Jacob Cornelio Adriano de Jonge serves 1967 and received his master’s degree in Manager at Efes Beer Group, and as as a member of the Audit Committee of economics from the Syracuse University Strategy and Business Development the same company. in 1976. From 1967 to 1980, he worked as a Director at Efes Beer Group between May Government Auditor and served as Deputy 2005 and March 2008. Having served as Tayfun Bayazıt General Manager of General Directorate of Financial Affairs and Investor Relations Born in 1957, Tayfun Bayazıt got Revenues at the Ministry of Finance. Director of Anadolu Efes since April 2008, his bachelor’s degree in mechanical Mr. Çaka was appointed to the position of engineering from the Southern Illinois University, followed by a master’s degree Mr. Ecevit joined Anadolu Group in 1980 Chief Financial Officer (CFO) of Anadolu 93 and worked in various roles, serving as Endüstri Holding (Anadolu Group) in (MBA) from Columbia University. General Manager, Managing Director, January 2013, a post he currently holds. and Chairman of the Board of Directors Having started his career at Citibank in in automotive companies of the Anadolu Independent Board Members 1983, Bayazıt assumed Executive Vice Group. He retired in 2006, while he President and Senior Executive Vice was serving as the Automotive Group Jacob Cornelio Adriano de Jonge President positions at Yapı Kredi Bank President, as per the retirement age limit Born in 1953 in Sao Paulo, Brazil, Jacob from 1986 until 1995. He was President regulations of the Group. Cornelio Adriano de Jonge received a and CEO at Interbank from 1995 to 1996, degree in philosophy from the United and at Banque de Commerce et de Outside positions held States International University of San Placements from 1996 to 1999. Having He served as Board Member and Diego, USA. He began his career at Makro served as Vice Chairman at Dogan Chairman of the Association of Imported Brazil in 1977, and worked for SHV Makro Holding from 1999 until 2001, Bayazıt Car Distributors in Turkey from 1992 to for 23 years in various positions (CEO of was later appointed as CEO and Board 2004. He is a board member in many Makro Venezuela, Korea, Thailand). With member at Dısbank (2001-2005), Fortis Anadolu Group companies and serves as SHV Makro, he served as CEO of Makro Bank (2005-2007), and Yapı Kredi Bank the Chairman of the Board of Directors at Asia. (2007-2009), where he consequently Yazıcılar Holding. served as Chairman from 2009 to 2011. He Having worked with Walmart for two has been working as a consultant since Can Çaka years, de Jonge joined Maxeda, as CEO of 2011. Can Çaka received a BSc in electrical De Bijenkorf from 2007 until 2012. Maxeda and electronics engineering from the was the largest non-food retailer in the Tayfun Bayazıt possesses the Faculty of Engineering at the Middle East Benelux, taken off the stock exchange by qualifications of an independent board Technical University and his master’s KKR, Permira, Cinven & Alpinvest. member as per the CMB’s Corporate degree from the Administrative Sciences Governance Principles. He is not related in Department of the same university. Jacob Cornelio Adriano de Jonge whatsoever manner to Migros and/or its He started his career as a business possesses the qualifications of an related parties. analyst and systems engineer at Texas independent board member as per the Instruments Software Ltd. in 1994. He CMB’s Corporate Governance Principles. joined Anadolu Efes in 1997 as a Finance He is not related in whatsoever manner Specialist. Between 1997 and 2005, to Migros Ticaret A.S. and/or its related he worked in various positions such parties. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

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Outside positions held He assumed various positions at Unilever Outside positions held Tayfun Bayazıt is the founding partner Turkey between 1984 until 1995, acting as Hakkı Hasan Yılmaz holds a seat on the of Bayazıt Consultancy Services. He brand manager, marketing manager, sales advisory board of Mudo A.S. He is also a is an independent member on the manager and was assigned as chairman/ faculty member at Koc University. boards of directors of Dogan Sirketler CEO of Lever A.S. in 1991. He left the Grubu Holding A.S., TAV Havalimanları company while serving in the position of Aziz Bulgu Holding A.S., Boyner Perakende ve Regional Leader responsible for East Asia Born in İstanbul in 1950, Aziz Bulgu Tekstil Yatırımları A.S. and Boyner Buyuk detergent business located at London received his degree in economics from Magazacılık A.S. He is also a board Unilever Head Office. He served as the İstanbul University and his MBA in member at SAF REIT. Chairman of MB Chairman and CEO of Uzay Gıda (Pepsi International Business (English) from the İstanbul University School of Business. He 94 Advisory Kurumsal Danısmanlık Hizmetleri Foods/Frito Lay) from 1995 to 1996. He A.S. (subsidiary of Mediobanca), Primist was called back as the Chairman and began his career in 1975 in the Marketing Gayrimenkul Gelistirme ve Yatırım A.S. CEO of all nine entities in Turkey, in which Department of Migros. After having and Taaleri Portfoy Yonetimi A.S., he Unilever was the majority shareholder, worked in various positions at Migros, he serves as the Country Corporate Officer from 1996 to 2000. was appointed to the position of General at Marsh & McLennan Group, Turkey. Mr. Manager of Ramenka LLC, the Company’s Bayazıt also holds seats on the boards of He started lecturing at Koc University subsidiary in Russia. directors of Marsh Sigorta ve Reasurans as faculty member in 2000. In 2002, he He returned to Turkey in 2000 as the Brokerligi A.S., Marsh Italia SpA, Besiktas joined Koc Holding as President of Food, Assistant General Manager of Marketing Gayrimenkul Gelistirme San. ve Tic. Ltd. Retailing and Tourism, responsible for of Migros. After approximately 4 years in Sti., Bomonti Gayrimenkul Pazarlama more than 20 companies, one of which this position, he was appointed as General Insaat ve San. Tic. A.S. and Embarq, was Migros. He was a member of the Manager of Migros in 2004. In 2007 he Turkey (non-governmental organization), Board of Directors of Migros from April retired from Migros. Aziz Bulgu is still a and he is on the advisory board of 2002 until April 2006. He acted as the member of the Consultancy Committee of Taaleritehdas Asset Management Ltd., CEO of Hürriyet Gazetecilik ve Matbaacılık the Federation of Shopping Centers and Finland. He is also a faculty member at A.S between 2010 and 2012 and he was a Retailers. In addition, he was a member of Koc University. board member of this company between 2008 and 2013. In 2013, he was appointed the board of directors of the international Hakkı Hasan Yılmaz as the CEO of Fenerbahçe Sports Club GS1 organization as the committee Born in 1957, Hakkı Hasan Yılmaz got and Fenerbahçe Futbol A.S. member representing Turkey in GS1 on his bachelor’s degree in industrial behalf of the Union of Chambers and engineering from the Middle East Hakkı Hasan Yılmaz possesses the Commodity Exchanges of Turkey (TOBB). Technical University. qualifications of an independent board Mr. Bulgu actively worked in the Turkish member as per the CMB’s Corporate retail sector for 32 years and still remains He began his business life at Presiz Metal Governance Principles. He is not related in a part of projects giving direction to the Imalat Sanayi as an industrial engineer whatsoever manner to Migros Ticaret A.S. sector. and then worked as a market analyst at and/or its related parties. TAKSAN Takım Tezgahları A.S. and as Aziz Bulgu possesses the qualifications of a capital goods specialist at DPT (State an independent board member as per the Planning Organization) from 1981 to 1984. CMB’s Corporate Governance Principles. He is not related in whatsoever manner to Migros Ticaret A.S. and/or its related parties. MİGROS 2015 ANNUAL REPORT

Independent Board Members’ Affidavit hold management control over shall not be for the duration of my To the Board of Directors of Migros the Company or have significant term of office; Ticaret Anonim Şirketi (“the Company”): influence over the Company, or with legal entities controlled by these e) That I am a resident of Turkey as Owing to my having been proposed as a shareholders, defined in the Income Tax Law; candidate for a seat as an independent board member on your Company’s Board b) That within the most recent five f) That I am possessed of ethical of Directors at your Company’s general years, I have not been a shareholder standards and of professional repute assembly meeting for the year 2014 to (5% and more), not worked in an and experience sufficient to enable be held on 9 April 2015, I hereby declare administrative capacity undertaking me to make a positive contribution significant duties and responsibilities to the Company’s affairs, to maintain and wish it to be known by all Company 95 organs, shareholders, and other or not served as a member of the my impartiality in any disputes that interested parties that I am a candidate to board of directors in any company, may arise among the Company’s serve as an independent board member particularly companies involved in shareholders, and to come to at the Company within the framework of the Company’s auditing (including decisions freely on the basis of all the Company’s articles of association and tax audit, statutory audit, internal stakeholders’ interests; the criteria of the Capital Markets Board’s audit), rating, or consulting functions g) That I will be able to devote to the Corporate Governance Principles and that the Company purchases or sells Company’s affairs an amount of my that I possess the qualifications to do so a substantial amount of goods or time sufficient to keep track of the and furthermore: services within the framework of the conduct of the Company’s activities contracts executed, during the period and to fully satisfy the requirements a) That neither I, nor my spouse, nor any of such sale or purchase, relative of mine whether by blood or of the duties I will be undertaking by marriage unto the second degree, c) That, as may be seen from my h) I have not served as a member on have, within the most recent five resume, I am possessed of the the Company’s board of directors for years, entered into any employment professional training, knowledge, and more than six years within the last ten relationship in an administrative experience necessary to duly fulfill years, capacity involving significant duties the duties I shall undertake as an and responsibilities, owned more independent member of the Board of i) I have not served as an independent than 5% of the capital or voting rights Directors; board member in more than three or privileged shares either jointly or companies over which the Company d) That, as of the date on which my individually, or have established a or the controlling shareholders of candidacy for board membership significant commercial relation with the Company hold management was proposed and this affidavit the Company, or with corporations control and in more than five listed is submitted, I am not a full-time over which the Company holds companies in total. management control or significant employee of any public agency or influence or with shareholders who organization and that, if elected, I

Jacob Cornelio Adriano de Jonge Tayfun Bayazıt Hakkı Hasan Yılmaz Aziz Bulgu MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

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5.2 Operating Principles of the Board of invitations indicate the meeting date, suffer a loss on account of misjudgment Directors time, place, and agenda. Whenever the and errors in the performance of their board is convened, it may agree upon duties. Liability insurance policies in the As specified in corporate governance a schedule for the regular conduct of amount of USD 50 million have been principles, the Board of Directors meetings during the year. taken out on board members and senior conducts its activities in line with the executives in 2015. corporate governance principles of A secretariat is charged with organizing transparency, accountability, fairness, and conducting meeting-related matters Members of the Board of Directors and responsibility. Taking the opinions both before and after meetings are held. are not allowed to vote in the issue of its internal committees into account, This secretariat is also responsible for of acquitting board members of their the regular maintenance of meeting- fiduciary responsibilities at general 96 the Board of Directors devises internal control systems that incorporate related records, for making entries in the assembly meetings. risk management and information Board of Directors Book of Resolutions, mechanisms and processes capable of and for making this register accessible 5.3 Number, Structure, and minimizing the adverse impact of risks to board members for their inspection. Independence of Committees that might affect company stakeholders. Any and all manner of views may be Established within the Board of The effectiveness of risk management expressed during board meetings. If Directors and internal control systems is reviewed any dissenting votes are cast against a An audit committee, a corporate at least once a year. Information about particular resolution, information about governance committee and an early the functionality and effectiveness of the this is included in the minutes along with detection of risk committee have internal control system is provided in the the justifications for such dissent. No been set up both in compliance with annual report. dissenting opinions were entered into the the requirements of CMB Corporate minutes of any board meetings that took Governance Communique II-17.1 and As required by CMB Corporate place during 2015. Any questions that in order to help the Board of Directors Governance Communique II-17.1, the may be raised by board members and the better fulfill its duties and responsibilities. Board of Directors plays a proactive role answers given to them are also entered Owing to the structure of the board, in ensuring effective communication into the minutes. Issues pertaining to neither a nominating committee nor a between the Company and its board meetings and decision quorums remuneration committee has been set stakeholders and in addressing and are governed by the Turkish Commercial up: the functions of such committees are resolving any disputes that may arise. Code. To accomplish this, it cooperates performed by the Corporate Governance closely with the Corporate Governance The agendas for board meetings are Committee. These committees’ areas of Committee and with the Investor determined in line with the suggestions responsibility, their working principles, Relations Department. and guidance of board members and and their memberships are determined senior executives. Even if no other and publicly disclosed by the Board of During 2015 the Migros Board of item has been placed on a meeting’s Directors. Directors passed thirty resolutions on agenda, the Company’s monthly financial Under CMB Corporate Governance a variety of subjects. Majority of the statements and investment program are Communique II-17.1, all audit committee full membership were present at every discussed. meeting in which these decisions were members and the heads of other taken and the decisions were passed by Each member of the Migros Board of committees must be selected from a majority of those in attendance. Under Directors is entitled to one vote. No among a board’s independent members. the articles of association, invitations to members have been granted weighted Care is taken to avoid having any single board meetings may be sent out by the voting or veto rights. board member serving on more than chairman (or his deputy) at least three one committee. However because the days in advance of the meeting date Members of the Migros Board of heads of the three committees must by means of fax, letter, or email. These Directors are covered by insurance be independent board members and against the risk that the Company may because all of the members of an audit MİGROS 2015 ANNUAL REPORT

committee must also be independent The Audit Committee determines b. Corporate Governance Committee board members, the members of the methods and criteria that are to be The Migros Board of Directors has set up Migros Audit Committee necessarily applicable when examining and finalizing a corporate governance committee to serve on more than one committee. any complaints the Company receives oversee corporate governance practices No executive board member or about its accounting and internal control at the Company and to coordinate general manager may serve on these system or its independent auditing and the activities of the Investor Relations committees. when company personnel are given Department. At its meeting on 9 October access to confidential reports about 2012, the board decided to elect Jacob The activities of the board’s Audit in-house accounting and independent Cornelio Adriano de Jonge, Nikolaos, Committee, Corporate Governance auditing matters. Stathopoulos, and Mehmet Hurşit Zorlu Committee, and Early Detection of Risk and Can Çaka as the members of the 97 Committee for 2015 have been reviewed Every year, the Audit Committee submits Corporate Governance Committee. In and assessed by the board. It was its proposal for the designation of the compliance with CMB regulations, the ascertained that in the conduct of their Company’s independent audit firm for board also decided to appoint Jacob operations these committees had been the fiscal year from 1 January until 31 Cornelio Adriano de Jonge to head the mindful of the requirements of laws and December. committee. regulations and that their activities had a beneficial impact on the Company’s Prior to the public disclosure of annual It was decided that the Corporate practices. and interim financial statements and Governance Committee should also having consulted and obtained the fulfill the duties of both a nominating a. Audit Committee opinions of the Company officers committee and a remuneration At a meeting of the Board of Directors concerned and of the independent committee as is allowed by CMB held on 15 July 2015, it was decided that auditors, the Audit Committee Corporate Governance Communique the Audit Committee should consist provides the Board of Directors with II-17.1. Accordingly and in the fulfillment of two independent board members a written declaration concerning its of its duties as a nominating committee, and that Hakkı Hasan Yılmaz and Jacob own assessment of the statements’ the Corporate Governance Committee Cornelio Adriano de Jonge were elected compatibility with respect to the is responsible for creating a transparent to fill these seats. In compliance with Company’s approved accounting system capable of identifying, vetting, CMB regulations, Hakkı Hasan Yılmaz was principles and of their truthfulness and and training suitable candidates to fill chosen to serve as committee chairman. accuracy. seats on the Board of Directors and to undertake management positions that Besides auditing the Company’s The Audit Committee convenes at least have administrative responsibilities accounting system and its publicly four times a year. The results of these and to develop policies and strategies disclosed financial statements, the Audit meetings are set down in minutes that for dealing with such issues. The Committee also oversees the operation are submitted to the Board of Directors Corporate Governance Committee and effectiveness of independent along with any decisions that are taken. also makes regular assessments of the auditing and of the Company’s internal Information about the Audit Committee’s structure and efficiency of the Board of control and internal audit systems. As operations and meeting results is Directors and submits to the board its required by Corporate Governance included in the Company’s annual report. recommendations for possible changes in Principles, the selection of independent such matters. auditors, the preparation of independent The Audit Committee immediately auditing contracts and the initiation notifies the Board of Directors in writing of independent auditing processes, of any findings it makes concerning its and every stage of the activities of the duties and areas of responsibility and of independent auditors are subject to the its assessments and recommendations oversight of the Audit Committee. concerning such matters. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

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In the fulfillment of its duties as a compliance with the requirements of • Development of necessary action plans remuneration committee, the Corporate Turkish commercial law, capital market for mitigating and/or eliminating the Governance Committee determines laws and regulations, and corporate risks in question, and oversees principles, criteria, and governance principles. As also required • Description of the targeted risk practices which are to be used in the by Capital Markets Board regulations, management framework, and remuneration of members of the Board Tayfun Bayazıt was designated as the of Directors and of managers with committee’s head. • Integration of established aspects administrative responsibilities and which within the Enterprise Risk Management take the Company’s long-term goals into As defined by the Board of Directors in system. account. The committee submits to the accordance with the Turkish Commercial Code and capital market laws and In the conduct and performance of its 98 Board of Directors its recommendations concerning the remuneration that is regulations, the activities of the Early financial and operational reviews, the to be paid to members of the Board Detection of Risk Committee consist Internal Audit Department adheres to the of Directors and to managers with of identifying, at an early stage, risks following principles. administrative responsibilities subject to that might endanger the Company’s existence, well-being, and continuity; • Effective and efficient utilization of the the degree to which the recipients have resources of the Company, satisfied remuneration-related criteria. of taking measures needed to deal with such risks; and of managing risk. • Effectiveness of the internal control As defined by the Board of Directors in The Early Detection of Risk Committee mechanisms on operations and accordance with the same communique performs a review of risk management activities, and other pertinent laws, regulations, and systems at least once a year. The • Reliability of financial statements, administrative provisions, the principal committee convenes six times a year. activities of this committee consist of • Confirmation of Company assets determining whether or not corporate 5.4 Risk Management and Internal • Efficiency and effectiveness of governance principles are being Control Mechanisms business operations, complied with and, if they are not being In 2015, the Company started a new complied with, of identifying the reasons • Compliance of employees with the initiative for readdressing the Enterprise why and also any conflicts of interest quality management documentation Risk Management activities based on a arising from less than full compliance; and administrative instructions holistic perspective and for restructuring of making recommendations to the approved by the management, the enterprise risk processes. Within Board of Directors to improve corporate this context, the Company started governance practices; and of overseeing The fundamental duties of the receiving consultancy service from Marsh the activities of the Investor Relations Internal Audit Department consist, Insurance and Reinsurance Brokerage Department. The goal of these efforts is among other things, of investigating/ company in order to evaluate existing risk to continuously improve the Company’s examining activities and transactions management and to manage risks more corporate governance practices. The which previously had been determined effectively. committee consists of four members and and reported as having elements of risk in order to ascertain the degree meets four times a year. Enterprise Risk Management to which such risks have been restructuring process entails the main c. Early Detection of Risk Committee eliminated or brought under control headings of: At a meeting of the Board of Directors in line with management-approved held on 15 July 2015, it was decided to • Defining risk criteria, recommendations; performing follow-up elect Tayfun Bayazıt, Jacob Cornelio reviews in situations where more detailed • Creation of risk assessment (impact Adriano de Jonge, Salih Metin Ecevit, investigations and examinations are and likelihood) scales, Mehmet Hurşit Zorlu, and Erkin Yılmaz necessary. to seats on an early detection of risk • Preparation of consolidated risk committee which had been set up in inventory, MİGROS 2015 ANNUAL REPORT

Any irregularities that may be discovered structure that is as innovative and meetings at which the Company’s during the course of review activities productive as it is customer-focused, business results are presented and the are investigated in detail with the aim trusted, and mindful of people, the board’s feedback is solicited. Detailed of allowing measures to be taken as community, and the environment; to monthly reports are also submitted to necessary while recommendations are generate long-term, satisfying returns the board for its information. In this also made concerning what action should for its employees, business partners, and way, all of the members of the Board of be taken to deal with any losses which shareholders; to maintain its sectoral Directors are able to track the Company’s the Company is ascertained to have leadership in growth and operational ongoing efforts to fulfill its targets and suffered. In all of these efforts, altering profitability. to immediately intervene and provide processes in such a way as to prevent guidance when necessary. In line with this mission, Migros structures recurrences of similar incidents is an issue 99 of fundamental concern. its strategies to achieve sustainable 5.6 Financial Rights Provided to quality and earn respect as the industry Board Members and to Managers with In line with risk analyses and the leader through an approach to customer Administrative Responsibilities year’s internal control plan, in 2015 the satisfaction which raises the standards Internal Audit Department conducted of retailing in the countries in which it is The financial rights to be provided to financial and operational reviews of active. members of the Board of Directors are various departments and processes. discussed as a separate agenda item Assessments and recommendations The senior management of the Company at general assembly meetings. At the based on review results are submitted develops strategies to achieve these Migros extraordinary general assembly to company senior management along objectives in accordance with the vision meeting held on 9 April 2015, it was with the reports in which matters where defined by the Board of Directors. decided to pay independent board improvements may be made in keeping Accordingly, our main strategy is members an attendance fee of TL 20,000 with the philosophy of continuous to provide our customers with high (gross) for each board meeting that they development are also pointed out. quality, modern, reliable services at attend and not to pay a monthly fee or Besides financial and operational reviews, affordable prices. Targets set to achieve honorarium to the other members. The the Internal Audit Department also these strategies are shared with all the remuneration of independent board conducts follow-up reviews on issues organizational units and supported members involves neither company stock about which senior management was by business plans. The Corporate options nor company performance- previously informed and it was agreed Performance Management System based compensation plans. All of the that measures needed to be taken. in place facilitates monitoring and benefits provided to senior executives are evaluation of these targets and business declared in the footnotes to the financial 5.5 Mission, Vision and Strategic Goals results as well as their assessment and statements. The Group has identified of the Company revision whenever necessary. its senior executives as the chairman and members of the board of directors, The Company’s vision is to be in tune Annual, quarterly and monthly reporting general manager and assistant general with each and every consumer by structures have been created to enable managers. providing a service in different formats in the Board of Directors to carry out its line with the strategy of expanding in the basic administrative functions such as The Remuneration Policy applicable to retail industry in Turkey and neighboring planning, organizing and supervising. members of the Board of Directors and countries and always being ahead of senior executives was submitted for the consumer expectations. Members are kept informed by means attention of shareholders at the annual of annual meetings at which the most general assembly meeting of 9 April The Company’s mission is to play a recent five-year plan is presented to the 2015, and published on the corporate leading role in improving the quality of Board of Directors, by annual budget website at www.migroskurumsal.com. life at home and abroad with a business and review meetings, and by monthly MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT

Benefits Provided to Senior Executives During the Reporting Period “Senior management” is defined as consisting of the chairman and members of the Company’s Board of Directors, general manager and assistant general managers.

Details concerning benefits provided to senior executives during the two most recent reporting periods are presented below.

(TL thousand) 1 Jan - 31 Dec 2015 1 Jan - 31 Dec 2014 Short-term benefits provided to employees 14,284 12,445 Total 14,284 12,445

100 The benefits provided to senior assesses the potential consequences and • Informational and presentation executives consist of salaries, bonuses, financial impact of such litigation and, documents published for stakeholders, pension contributions, company-leased based on its best judgment, provisions automobiles, and employer’s share of are set aside to cover likely losses or • Prospectuses, circulars, notices and social security premiums. gains. Detailed information about such other documentation issued pursuant matters is provided in the footnote 15 of to capital market laws and regulations, Migros makes no loans and extends no the consolidated financial statements. • Printed and visual media press credit to any senior executive. Neither The Company is not a party to any releases, does it extend any form of personal mutual cross-shareholding. credit to senior executives through third • Notices and announcements published parties or otherwise provide senior Other issues related to corporate in Türkiye Ticaret Sicili Gazetesi and in executives with any form of surety. governance principles are presented daily newspapers. below. OTHER ISSUES In order to ensure that shareholders Recent changes in both the Turkish a) Company Disclosure Policy and other stakeholders have convenient Commercial Code and the Capital Material events are publicly disclosed in a access to public disclosures such as Markets Law will contribute to the growth truthful and timely manner as prescribed presentations, press releases, and press and development of capital markets. by CMB Communique II-15.1 concerning conferences, such materials are also During 2015 many changes were made such matters. In addition, any and all published on the Company’s corporate in capital market laws and regulations manner of significant information that website at www.migroskurumsal.com. and a substantial number of government might influence shareholders’ and other Information publicly disclosed through communiques and regulations were stakeholders’ decisions is also publicly the Public Disclosure Platform is also sent published. disclosed. In the public disclosure of to financial data providers and to printed such information, the following channels and visual media. No administrative or criminal proceedings are used depending on the nature and of a significant nature have been initiated particulars of the announcement: Statements about issues that may have against the Company or any of its board an impact on the Company’s future members on account of any violation of • Material event disclosures sent to the prospects are also publicly disclosed laws or regulations. Public Disclosure Platform, through the channels indicated above A number of lawsuits that have been • Financial reports sent to the Public depending on their nature and as filed against or in favor of the Company Disclosure Platform, required by laws and regulations. are currently being litigated. These suits are concerned primarily with receivable-, • Annual and interim reports, rent-, or business-related issues. At • The corporate website at www. the end of each reporting period, the migroskurumsal.com, Company’s management reviews and MİGROS 2015 ANNUAL REPORT

The identities of individuals who may The Migros Disclosure Policy requires that b) Material Event Disclosures have access to confidential company any and all manner of information must During 2015 the Company submitted 43 information before the public disclosure be provided upon request unless such material event disclosures to the Public of material events are publicly disclosed. information is in the nature of a trade Disclosure Platform. Whenever the Public The names of the Company’s board secret or, if divulged, would give other Disclosure Platform demanded further members and senior executives are individuals or organizations a competitive information about such announcements published in the annual report along advantage over Migros or would have or the Company’s response to news with that of the independent auditors. an adverse impact on the Company’s appearing in the media, the Company Information about any changes activities. responded to such requests urgently. taking place in the Company’s senior Like its public disclosure policy, the Periodic financial statements, notes, management during the reporting period 101 was provided in the annual report. Migros Dividend Policy is also formulated annual reports and interim annual reports by the Board of Directors and publicly are shared with the public to provide In situations where CMB regulations disclosed by being included in the an accurate and complete view of the require a public announcement Company’s annual report, published Company’s financial position. Financial concerning news, statements, and/ on the Company’s corporate website statements are prepared in compliance or rumors about the Company which at www.migroskurumsal.com, and with national/international accounting appear in the press, in other media, or presented to shareholders convened in a standards in consolidated format in on websites and of which the Company general assembly. compliance with communiques issued becomes aware, such disclosures by the CMB. The accounting policies of are made, depending on the nature, When identifying individuals who will the Company are referred to in the notes through Public Disclosure Platform have administrative responsibility at the to financial statements. The Company’s announcements, data providers, and/ Company, the requirements and criteria annual reports are prepared in sufficient or written and visual media; similarly stipulated in the Turkish Commercial detail to allow all concerned parties to and in order to ensure that shareholders Code (Statute 6102), the Capital Markets obtain the necessary information and are and other stakeholders have convenient Law (Statute 6362), CMB communiques, updated every fiscal year in line with the access to such disclosures they are also and other applicable laws, regulations, applicable legislation/needs. published on the Company’s corporate and administrative provisions are taken website at www.migroskurumsal.com. into account. After every public disclosure of the Company’s quarterly financial statements The Migros Disclosure Policy is in 2015, presentations and bulletins formulated by the Board of Directors concerning them were published on and updated as circumstances and the Company’s corporate website at regulations dictate. This policy is www.migroskurumsal.com to inform presented to shareholders convened in shareholders. The same information was a general assembly and then published simultaneously communicated to the on the Company’s corporate website Public Disclosure Platform. at www.migroskurumsal.com. The Investor Relations Department strives to The Company designates an independent respond to questions that shareholders audit firm each year and requires this ask the Company truthfully, completely, independent audit firm to rotate after a equitably, and within the framework of given period. Consultancy services are this disclosure policy. not obtained from the firm designated as an independent auditor. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT

c) Disclosure of Ultimate Controlling Individual(s) Shareholder(s) The shareholding structure of Migros is presented below.

Shareholder Structure Shareholder Share (%) Amount (TL) MH Perakendecilik ve Ticaret A.Ş. 50.00 89,015,000 Moonlight Capital S.A. 15.37 27,371,000 Kenan Investments S.A. 15.13 26,937,336 Other 19.49 34,706,664 Total 100.00 178,030,000

102 Legal and Real Persons Indirectly Holding an Interest in the Capital as per the Latest Situation Shareholder Amount (TL) Share (%) BC Partners 57,077,984,77 32.06 S. Kamil Yazıcı 16,630,674,63 9.34 DeA Capital 12,260,889,28 6.89 Tülay Aksoy 8,598,981,09 4.83 Tuncay Özilhan 8,404,291,18 4.72 Heirs to İzzet Özilhan 5,732,654,76 3.22 Turkish Private Equity Fund II 2,322,793,95 1.30 S. Vehbi Yazıcı 2,279,013,99 1.28 Anadolu Endüstri Holding A.Ş. Other 30,016,052,35 16.86 Total 143,323,336,00 80.51 There are no preferred shares.

Information about changes in the Under Material Events Communique II- Names of the members of the Board of Company’s capital structure taking 15.1, material event disclosures must be Directors and auditors of our Company place during the year was publicly made by any company chairman, board and of those in senior management disclosed immediately through the member, general manager, or assistant positions as well as any changes to the Public Disclosure Platform system. Such general managers, by any individual senior management during the year changes are also announced in the with significant decision-making are presented in the Annual Report. pertinent sections of the Company’s 2015 responsibilities and authorities, by any Individuals who have access to insider annual report. shareholder who directly or indirectly information about the Company are controls more than 5% of the Company’s identified below. capital or voting rights, and by anyone acting in concert with any of these whenever they purchase or sell shares in Migros. No such dealings of this nature occurred during the reporting period. MİGROS 2015 ANNUAL REPORT

d) Public Disclosure of Individuals Who Are In a Position to Access Inside Information

Names of the members of the Board of Directors and auditors of our Company and of those in senior management positions as well as any changes to the senior management during the year are presented in the Annual Report. Individuals who have access to insider information about the Company are identified below.

Board of Directors Fevzi Bülent Özaydınlı Chairman Tuncay Özilhan Vice-Chairman Nikolaos Stathopoulos Vice-Chairman Stefano Ferraresi Member 103 Khalid Hilal Hamood Al Yahmadi Member Mehmet Hurşit Zorlu Member Salih Metin Ecevit Member Can Çaka Member Jacob Cornelio Adriano de Jonge Independent Member Tayfun Bayazıt Independent Member Hakkı Hasan Yılmaz Independent Member Aziz Bulgu Independent Member

Ömer Özgür Tort General Manager Ahmet Fuat Yanar Assistant General Manager Erkin Yılmaz Assistant General Manager Demir Aytaç Assistant General Manager Cem Lütfi Rodoslu Assistant General Manager Hakan Şevki Tuncer Assistant General Manager Tarık Karlıdağ Assistant General Manager Mustafa Murat Bartın Assistant General Manager

As a consequence of its auditing The Board of Directors consists of e) Silent Period functions, the Company’s independent twelve members: Fevzi Bülent Özaydınlı The Chief Executive Officer, Chief auditors Başaran Nas Bağımsız (chairman), Tuncay Özilhan and Nikolaos Financial Officer, Finance Director, Denetim ve Serbest Muhasebeci Stathopoulos (vice-chairman), Stefano Corporate Communications Director, Mali Müşavirlik A.Ş. (a member of Ferraresi, Khalid Hilal Hamood Al Investor Relations Group Head, and the PricewaterhouseCoopers) also has access Yahmadi, Mehmet Hurşit Zorlu, Salih Chairman and members of the Board of to insider information. Metin Ecevit, Can Çaka, Jacob Cornelio Directors and other Company executives Adriano de Jonge, Tayfun Bayazıt, Hakkı designated by the Corporate Governance Hasan Yılmaz and Aziz Bulgu. Committee are assigned to act as spokespeople to represent our Company Detailed information about the members in all contacts with shareholders, of the Migros Board of Directors is investors, brokerage analysts and other provided in the relevant section of the stakeholders through any communication annual report. channel, including the printed press, within the frame of the Company’s disclosure policy. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT

Individuals designated as Company f) BIST Sustainability Index of Borsa In the retail industry where any product spokespeople are obliged to abide by the İstanbul seen in any store can be imitated quickly, Silent Period practice, which starts one Being one of the 15 companies included Migros’ experience and deep-rooted week before the disclosure of quarterly in the BIST Sustainability Index and innovation embedded in its corporate financial results and lasts until the date of the only retail company in the index culture, as well as investments in such disclosure. in the November 2014 – October 2015 supporting technology, together create period, Migros continues to take place a competitive advantage that cannot be The beginning and ending dates of the in the index in the November 2015 – easily replicated. Silent Period practice are published on October 2016 period, which includes 29 the corporate website, under the heading companies in this period. The Company’s In the 1990s, Migros became the first retail company to introduce the barcode 104 Financial Calendar once the disclosure sustainability activities can be reached dates of financial statements are fixed. under the Investor Relations tab in the system and electronic cash registers The disclosure dates of financial results corporate website. which reduced waiting times at the and the corresponding Silent Periods checkout counters and decreased the are fixed before financial statements are g) Relations with Customers and Company’s operating costs dramatically. disclosed, and announced by way of the Suppliers Thanks to the B2B system which has Financial Calendar. Getting to know its customers and been set up jointly with suppliers, all the markets by monitoring and acting parties involved benefit from savings During the course of the Silent proactively on them and pioneering in both logistics and costs. This system Period, Company spokespeople may change are among the crucial factors benefits all the stakeholders, and not make comments regarding the behind the innovative business style especially the Company’s customers. Company’s financial position, except of Migros. For this reason, a number of for the information publicly disclosed “firsts” such as consumer rights took Migros has conducted a Customer in the name of the Company. In this hold in the retail industry only after they Satisfaction Survey regularly since 1994. period, analysts’, investors’ and similar were introduced by Migros as early as In 2014 survey, 4,052 of our customers individuals’ questions about the financial in the 1960s and 1970s. By introducing who shop at our stores were asked position are left unanswered. Yet, people the Migros Club system for the first about their opinion. The analyses authorized to make public disclosures time in Turkey, in 1998, Migros had an undertaken on the survey results help about the Company may participate in opportunity to become better acquainted us to have an idea about the current and conferences, panels and similar events with its customers and provide them future expectations of our customers. and deliver speeches during the Silent with differentiated service. And through Occasional surveys conducted at Period, strictly provided that they this system, the Company gained the kiosks inside the stores on specific observe the confidentiality of inside opportunity to approach its customers matters provide the Company with the information. not only collectively but also individually chance to hear the customers and their by conducting customer data analyses. expectations. Migros aims to fulfill the expectations of Customer Relationship Management its customers as satisfactorily as possible (CRM) analysis of Migros Club data and through the stores it operates in different the mystery shopper surveys which are formats. aimed at improving the service levels are quality-based performance tools specific to Migros. MİGROS 2015 ANNUAL REPORT

Some of the other activities undertaken • Migros obtained OHSAS 18001 • Under Migros’ Supplier Performance to achieve customer satisfaction include: Occupational Health and Safety System, the production premises of Management System certification in all food suppliers are systematically • Migros was awarded ISO 9001 Quality July 2015 and thus became the first inspected and monitored through food Management System certification in food retailer holding four certificates safety management systems. Products August 2005 granted by the TSE (Turkish Standards are randomly sampled and subjected Institution) within the scope of Quality to quality control analyses at regular • Migros was awarded TS EN ISO 22000 Management Systems. intervals. Food Safety Management System certification by the Turkish Standards • Migros has espoused “Good • Every new product to be put on sale Institution (TSI) in December 2006. Agricultural Practices” expressed by at the Company’s stores undergoes 105 This certification covers retail, the motto “GOOD AGRICULTURE preliminary quality control performed wholesale and online sales services = GOOD FUTURE”, which is one of by quality experts. as well as design and provision of the Company’s social responsibility organizational and logistic support initiatives in the area of “health”, and • Before they enter the Company’s services. an agricultural model that is designed warehouses, goods received from to be socially viable, economically suppliers are subjected to detailed • Migros selects each of its suppliers productive, while protecting human, organoleptic, chemical, and physical after conducting appropriate due animal and environmental health. analysis based on 104 quality control diligence. Suppliers are audited by parameters defined for each product reputable independent organizations • On 17 November 2009, Migros became by quality control experts. Goods that and products are subjected to periodic the first retailer in Turkey to be do not meet these stringent quality quality audits. awarded GAP group certification. The standards are rejected. Company has continued to abide by • In November 2014, the perspective GAP principles and its certification has • Cold chain assurance, one of the most of the Company’s integrated quality been renewed every year since then. essential criteria in achieving food management system was expanded safety, is constantly monitored online with the inclusion of ISO 10002 • Having made internationally at every stage from distribution center Customer Satisfaction Management recognized food safety standards and storage, during shipment, and until System certification. the touchstone of its practices and it reaches the final consumer. operations, Migros has adopted the • Since the day it was founded, Migros mission of supplying wholesome • Every food product that is put on has striven to surpass its customers’ products under safe conditions in Migros’ shelves is randomly sampled expectations and to respond order to guarantee the unreserved and subjected to quality control immediately to their requests. ISO confidence of its customers. In line analyses at regular intervals by 10002 certification is evidence of with this goal, food products are accredited independent laboratories the Company’s commitment to the carefully and constantly monitored and to ensure compliance with the Turkish principle of customer satisfaction. The controlled from initial procurement Food Codex and with applicable system makes improvements in service until they reach the consumer. laws, regulations, and administrative quality possible based on internal and provisions. external customer feedback. MİGROS 2015 ANNUAL REPORT ABOUT MİGROS IN 2015 CORPORATE GOVERNANCE FINANCIAL INFORMATION

CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT

• Non-food imported products such • In the promotional program of the The Migros Board of Directors is as toys, stationery, textiles etc. are Company we call “Aksiyon”, products empowered to take decisions on all subjected to strict controls. Prior to are offered for sale at discount prices matters pertaining to whatever kinds their importation, the Company has for a period of 15 days of business and/or transactions are these goods analyzed at accredited necessary for the Company to achieve independent laboratories to ensure • All customer suggestions received its object and scope save for those that that they are safe and contain no at the stores or the Call Center are exclusively reserved to the general harmful substances such as phthalate are evaluated and the results are assembly of shareholders by laws and plasticizers or azo compounds. communicated to customers as soon regulations or by the Company’s charter. as possible. Customers can forward their complaints quickly and easily to Managers’ authorities and responsibilities 106 • Migros-labeled food and non-food items are subjected to even stricter company store managers via a toll-free are defined in their power of signature controls. Such goods are not put customer line and by e-mail which can statements. on sale until and unless their places be sent to managers at all levels. of production, labeling, and other I) Prohibition on Doing Business with or applicable parameters have been • In keeping with its objective of being Competing against the Company checked and their compliance with a technological leader and making life No member engaged in any business laws and regulations has been easier through innovations, Migros has transaction involving the Company or established. Even after they appear on in place “self-checkout” solution “Jet took part in any activity that could be the shelves, Migros reviews product kasa” in a large number of its stores. deemed to be in competition with the safety by means of analyses performed Customers who prefer to use “Jet kasa” Company. at regular intervals. avoid waiting in line and can check-out by themselves in three easy steps. As • Products on shelves are regularly the number of customers using ‘Jet checked by a team of store quality kasa’ increases by the day, so does the specialists. During such checks, number of stores featuring this facility. attention is given not just to cold chain continuity, labeling, and expiration Efforts to ensure full customer dates but also to compliance with food satisfaction are presented in the relevant safety system requirements. section of the Annual Report.

• Personnel employed at all the stores h) Authorities and Responsibilities of attend training programs on hygiene in Board Members and Managers order to ensure quality safety. The duties and authorities of board members and managers are explicitly • The Company’s stores are subjected to defined in the Company’s articles of unannounced inspections performed association, which may be found on the by accredited independent agencies Company’s corporate website at www. within the scope of integrated quality migroskurumsal.com. management systems, so as to ensure the safety of products sold to customers. INDEPENDENT AUDITOR’S REPORT ON THE MANAGEMENT’S ANNUAL REPORT

MİGROS 2015 ANNUAL REPORT

CONVENIENCE TRANSLATION INTO ENGLISH OF INDEPENDENT AUDITOR’S REPORT ON THE BOARD OF DIRECTORS’ ANNUAL REPORT ORIGINALLY ISSUED IN TURKISH To the Board of Directors of Migros Ticaret A.Ş. Report on the Audit of Management’s Annual Report in accordance with Independent Auditing Standards 1. We have audited the annual report of Migros Ticaret A.Ş. (“the Company”) and its subsidiaries (collectively referred to as “the Group”) for the period ended 31 December 2014. Board of Directors’ responsibility for the Annual Report 2.The Group’s management is responsible for the fair preparation of the annual report and its consistency with the consolidated financial statements in accordance with the Article 514 of the Turkish Commercial Code (“TCC”) No. 6102 and Capital Markets Board (“CMB”) “Communiqué Serial II No: 14.1 “Principles of Financial Reporting in Capital Markets” (“the Communiqué”), and for such internal control as management determines is necessary to enable the preparation of the annual report. 107 Independent Auditor’s Responsibility 3. Our responsibility is to express an opinion on the Group’s annual report based on the independent audit conducted pursuant to the Article 397 of TCC and the Communiqué, whether or not the financial information included in this annual report is consistent with the Group’s consolidated financial statements that are subject to independent auditor’s report dated 1 March 2016 and presented fairly.. Our independent audit was conducted in accordance with Independent Auditing Standards that are a part of the Turkish Standards on Auditing issued by the Public Oversight Accounting and Auditing Standards Authority. Those standards require that ethical requirements are complied with and that the independent audit is planned and performed to obtain reasonable assurance whether the financial information in the annual report is fairly presented and consistent with the consolidated financial statements. An independent audit requires applying audit procedures to obtain audit evidence on the historical financial information. The procedures selected depend on the professional judgment of the independent auditor. We believe that the independent audit evidences we have obtained during our independent audit are sufficient and appropriate to provide a basis for our opinion. Opinion 4. Based on our opinion, the financial information in the annual report of the Board of Directors of Migros Ticaret A.Ş. is consistent with the audited consolidated financial statements and presented fairly, in all material respects.. Other Responsibilities Arising from Regulatory Requirements 5. Pursuant to subparagraph 3 of the Article 402 of the TCC, No.6102, within the context of ISA 570 “Going Concerns”, we have not encountered any significant issue which we are required to be reported with regard to the inability of Migros Ticaret A.Ş. to continue its operations for the foreseeable future.

Başaran Nas Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. a member of PricewaterhouseCoopers

Burak Özpoyraz, SMMM Partner

İstanbul, 1 March 2016 MİGROS TİCARET A.Ş. HEAD OFFICE

Address: Atatürk Mah. Turgut Özal Bulvarı No: 7 34758 Ataşehir / İstanbul Tel: +90 216 579 30 00 www.migroskurumsal.com