01.31.2019 – 03.31.2019 INTERIM OPERATING REPORT PREPARED AS PER CAPITAL MARKET BOARD’S COMMUNIQUE SERIAL II, NUMBER 14.2 MAY 7, 2019 TABLE OF CONTENTS CEO Letter...... 3 Corporate Profile...... 4 Operating Areas………………………………………...... 5 Shareholder Structure and Operations……...... 5 Mission, Vision, Strategic Priorities...... 6 Operational Areas...... 7 Evaluation of Operational and Financial Results Polisan Holding...... 8 Poliport...... 10 Polisan Kansai Boya...... 11 Chemical Activities...... 13 Polisan Kimya...... 14 Polisan Hellas...... 15 Polisan Yapı...... 16 Polisan Tarım...... 17 2019 Company Targets...... 18 Board of Directors and Committees...... 19 Senior Management and its Rights………………………………...... 21 Information in regards to R&D, Incentive, Personnel, and Aids...... 22 Contact Offices...... 23 Consolidated Statement of Financial Position...... 24 Consolidated Statement of P/L and Other Comprehensive Income...... 26 Financial Ratios...... 28 Material Disclosure on Subsequent Events………………………………………...... 29
2 POLİSAN HOLDİNG: CEO LETTER
According to the growth figures announced in March, in the last quarter of 2018, Turkey's economy contracted by 3%, and the construction sector, which we mainly supply with input from our product portfolio, by 8.7%. In 2018, Turkey's economy recorded a growth rate of 2.6%, while the construction sector shrank by 1.9%. In the first quarter of the year, the sharp decline in domestic demand was replaced by recession. While the latest economic data released points out that the monetary and fiscal policies implemented were not as effective as desired in eliminating the deterioration in the budget balance, the continuing uncertainty regarding the election also exhibits a challenging outlook for the rest of 2019. In the first quarter of the year when the operations in many sectors almost came to a halt, Polisan Holding’s revenues increased by 2.3% to reach TRY234.1 million despite the sharp contraction in the domestic demand. The biggest factor for us to maintain our revenues at similar was the foreign exchange based revenues of our chemical operations in Turkey generated through exports, as well as dollar-based port operations of Poliport and Euro-based revenues of Polisan Hellas operating in Greece. Our EBITDA margin declined by 4.1 p.p. to 9.0% with decreasing revenues in Turkey and increasing costs in Greece, in our chemical operations. In this quarter, we recorded a net loss of TRY19.1 million mainly due to decreasing operational profitability in chemical operations and the effect of interest, foreign exchange rate difference, and amortization expenses of the €51 million investment of Polisan Kansai Boya, which we account for by the equity pick-up method. As per combined financial results, in which, Polisan Kansai Boya, our 50% partnership with Kansai Paint, is included; our combined revenues decreased by 19.4% to TRY391.8 million due to the base effect stemming from the fact that our paint subsidiary recorded the highest revenue of all time in the first quarter of 2018. Our EBITDA margin also regressed by 5.7 p.p. to 11.0% with falling sales volumes in our paint and chemical operations. We recorded a net loss of TRY25.9 million due to diminishing operational profitability in our chemical operations, and Polisan Kansai Boya’s expenses related to the new facility investment. In our paint operations, we started to bid for the tenders, previously not a possibility, thanks to the capacity flexibility gained through our new facility. In this context, in March, we won the Solvent and Water Based Cold Road Marking Paint tender, consisting of two parts, which total 15,525 tons for TRY102,035,000 excluding VAT. The sales related to this tender will be reflected on our revenues in 2019. In this challenging time, as there is a shift in demand in the market from premium towards more economical paints, our operations continue with the focus of introducing new products in this segment; expanding production on-site through mix machines; and managing working capital requirement in the most efficient way possible, by holding minimum inventory and reducing the number of days receivables. In this period, our revenues declined by 41.7% to TRY138.9 million due to the contraction in domestic demand and the base effect stemming from the fact that we recorded the highest revenue of all time in the first quarter of 2018, while our EBITDA margin decreased by 6.2 p.p. to 13.6%. Based on the data released by the Directorate General of Maritime Commerce as of March 2019, cargo handed at Turkish Ports deteriorated by 1.4% compared to the same period of previous year due to the stagnant economic activities. In the same period, total cargo handled at Kocaeli Ports shrank by 6% despite of the 0.7% limited increase in container cargo. At Poliport, cargo handled in the first quarter shrank by 5.8% compared to the last year. Recording US dollar revenues, Poliport saw a revenue increase of 19.8% compared to 1Q 2018 due to the depreciation of TRY against the US dollar. EBITDA margin remained flat at 43.5%. At Poliport, we continue our investments for capacity increase with a selective manner. In our chemical operations in Turkey, we are keeping working capital requirement under control by shortening the collection period and serving to a corporate clientele Polisan Holding with a selective manner. On the other hand, we are trying to mitigate the effects of the contraction in the domestic market by diversifying the products in our portfolio, focusing on the sales of products with high profitability, and weighing more on exports particularly of formaldehyde resins. Our new underground chemicals developed in previous months for use in subways and tunnels, are currently being used in the ongoing construction of the Ankara Metro. As a result of our such efforts, we limited the CEO decrease in Polisan Kimya’s revenues at 10.2% while kept EBITDA margin at 7.2% with a fall at 3.0 p.p. Polisan Maroc, the construction chemicals production facility we established in Morocco, increases its market awareness and revenues by participating in the tenders in the domestic market. The revenue increase of Polisan Hellas, Erol Mizrahi generating Euro-based revenues in Greece, was realized at 10.0% compared to 1Q 2018 due to the volume and price pressure created by the Chinese originated products in the market. This, together with the halt of production during the maintenance undertaken in the facility resulted in a 5.1 p.p. fall in EBITDA margin to 1.2%. We have revised our strategy to protect our revenues in this competitive environment, where low-priced products are being favored. As for Polisan Tarım, as of April 16, we decided to halt our operations that we have been carrying out for walnut plantation in Balıkesir on our 4.4 million square-meter land, and for olive production on our 2.5 million square-meter land in Karacasu. We will liquidate our land and concentrate on our operations mainly focusing on chemicals. While we selectively continue our investments with the focus of efficiency, we distributed a gross cash dividend of TRY25 million to our shareholders on April 30. We hereby thank our shareholders, our employees, our business partners and our customers for their support. 3 POLİSAN HOLDİNG: CORPORATE PROFILE
Company Name : Polisan Holding A.Ş.
Address (Headquarters) : Dilovası Organize Sanayi Bölgesi 1. Kısım Liman Caddesi No : 7 Dilovası – KOCAELİ
Address (Branch) : İçerenköy Mahallesi, Ali Nihat Tarlan Cad. No : 86 Ataşehir – İSTANBUL
Trade Registry Office and Number : Gebze Ticaret Odası – 5769 / İstanbul Ticaret Odası – 615757
Subjected Legal Regulations : Laws of Republic of Turkey
Telephone and Fax Number : Tel. 00 90 216 578 56 00 ; Fax. 00 90 216 573 77 92
Internet Address : www.polisanholding.com.tr
Capital : TRY758,500,000
Registered Capital Ceiling : TRY1,000,000,000
The Bourse/Market where shares are traded : Bourse İstanbul (BIST) / Star Market
Date of Quotation on the Bourse : May 24, 2012
Ticker Symbol : POLHO
Independent Auditor : Güney Bağımsız Denetim ve SMMM A.Ş.
Independent Auditor’s address : Eski Büyükdere Cad. Orjin Maslak No: 27 Maslak/Sarıyer 34398 İSTANBUL
4 POLİSAN HOLDİNG: GROWS VIA NEW PARTNERSHIPS AND BUSINESS LINES
*
CHEMICAL PORT PAINT REAL ESTATE AGRICULTURE ACTIVITIES OPERATIONS
93% 100% 100% FOREIGN 50% 40% PARTNERSHIP LIQUIDATION
80% IN PROGRESS FOREIGN SUBSIDIARY AS OF 100% APRIL 16, 2019
100% 5 * The ratios in this graphfic show Polisan Holding’s direct and indirect share in the related subsidiary. POLİSAN HOLDİNG: SHAREHOLDER STRUCTURE & OPERATIONS Polisan Holding has been established in 2000 in order to maintain coordination within the group companies, provide management for them, and ensure the group companies operate using advanced techniques in the area of planning, marketing, financial affairs, financing and fund management, legal affairs, human resources, and information technology; and that the Holding continues its operations in this direction. Holding’s Commercial Center is located at Dilovası Organize Sanayi Bölgesi 1.Kısım Liman Cad. No:7 Dilovası – Kocaeli. Holding’s Istanbul Branch is located at İçerenköy Mah. Ali Nihat Tarlan Cad. No:86 Ataşehir-İstanbul. POLİSAN HOLDİNG’S SHAREHOLDER STRUCTURE: Share Amount (TRY) Share Ratio (%) Bitlis Family 634,804,008.85 83.69% Other 20,184,080.65 2.66% Float 103,511,910.50 13.65% Total 758,500,000.00 100.00% POLİSAN HOLDİNG’S OPERATIONS: Polisan Holding’s subsidiaries and Joint Ventures (JVs) are as follows: Subsidiaries: - Polisan Kimya Sanayii A.Ş. - Poliport Kimya Sanayi ve Ticaret A.Ş. - Polisan Tarımsal Üretim Sanayi ve Ticaret A.Ş. - Polisan Yapı İnşaat Taahhüt Turizm Sanayi ve Ticaret A.Ş. - Polisan Hellas SA - Polisan Maroc SA JV: - Polisan Kansai Boya Sanayi ve Ticaret A.Ş. - Rohm and Haas Kimyasal Ürünler Üretim Dağıtım ve Ticaret A.Ş. The Group’s main operations are located in Turkey and it has subsidiaries located in Greece and Morocco. The operations are focused on the: - Production and sales of chemical materials, - Production and sales of final, bi-products supporting the planting and agricultural industries – (AGRICULTURAL ACTIVITIES HAVE BEEN HALTED AS OF APRIL 16, 2019) - Production and sales of paint, - Production and sales of construction chemicals, - Port, storage, and warehousing services, - Construction, building real estates, trading, imports, and commercial activities on this area, - Plastic products; containers for beverage, water, drink, and food; production of Polyethylene Terephthalate (PET) resin and preform with a wide usage spectrum such as synthetic fiber, - Services provided by Polisan Holding to Group companies such as accounting, finance, budgeting, healthcare, repair, maintenance, investment, human resources etc. 6 Note: Information and development on Polisan Holding and its subsidiaries is available on the pages 8-17 of this Report. POLİSAN HOLDİNG: MISSION, VISION & STRATEGIC PRIORITIES
OUR MISSION To have a share in the development of the Turkish society and economy through our superior services, products and create high value to the environment and the sectors in which we operate.
OUR VISSION • To be one of the most respected group companies in Turkey • To be the group of companies, which are most desired to work for by people • To lead the sectors we compete in and be recognized as the leader As a result, ensuring sustainable growth and high return to our customers, employees, and shareholders.
OUR STRATEGIC PRIORITIES Maximizing shareholder value through: • Sustaining profitable growth of existing businesses • Maximizing intra-group synergies • Forming strategic alliances to expand in high margin, new business lines • Utilizing Holding’s other assets in its portfolio • Exploring New Markets and Becoming a Global Brand through Polisan’s Innovative Products, Services and Practices • Professional management dedicated to have a high level of Corporate Governance 7 1Q 2019 EVALUATION: POLİSAN HOLDİNG - CONSOLIDATED
INCREASE IN YOY REVENUES WITH FX RATE SUPPORT DESPITE CONTRACTING VOLUMES TRY million 2017 2018 YoY (%) 1Q 2018 4Q 2018 1Q 2019 YoY (%) QoQ (%) Revenue 749.6 1,163.3 55.2% 228.8 338.1 234.1 2.3% -30.8% EBITDA* 111.4 150.9 35.4% 29.9 11.0 21.1 -29.3% 92.1% EBITDA Margin 14.9% 13.0% -1.9 p.p. 13.1% 3.3% 9.0% -4.1 p.p. 5.7 p.p. Net Income/Loss 101.1 30.3 -70.0% 19.0 -3.7 -19.1 n.m. n.m.
CONSOLIDATED FINANCIAL RESULTS: Despite the fact that the demand in the construction sector, which Polisan Holding mainly supplies with input from its product portfolio, has come to a halt, and volume contracted in all its operations, Polisan Holding’s revenues increased by 2.3% in 1Q 2019 to reach TRY234.1 million. This was as a result of the foreign exchange rate effect stemming from dollar- based port operations of Poliport and Euro-based revenues of Polisan Hellas operating in Greece. EBITDA margin declined by 4.1 p.p. to 9.0% with decreasing revenues in Turkey and increasing costs in Greece, in our chemical operations. In this quarter, a net loss of TRY19.1 million was recorded mainly due to decreasing operational profitability in chemical operations and the effect of interest, foreign exchange rate difference, and amortization expenses of the €51 million investment of Polisan Kansai Boya, which is accounted for by the equity pick-up method (In 1Q 2018, there has been a TRY4.9 million negative impact on net income due to the abandonment of 5,740 m2 land to the Municipality free of charge, required for the grant of the permits for the Pendik Project). Compared to 4Q 2018, while the slowdown in economic activity was being replaced by recession, revenues fell by 30.8% with the effect of the ongoing contraction in volumes of chemical operations in Turkey and declining unit prices in Greece. EBITDA margin, which has been negatively affected by the TRY16.2 million provision recorded in 4Q 2018 related to the sea cleaning activities, surged by 5.7 p.p. in this quarter. Net loss was recorded with increasing financial expenses of Polisan Kimya and with the effect of the operations accounted for by the equity pick up method.
COMBINED FINANCIAL RESULTS: As per combined financial results, in which, Polisan Kansai Boya, our 50% partnership with Kansai Paint, is included; combined revenues decreased by 19.4% to TRY391.8 million in 1Q 2019 due to the diminishing revenues with the sharp decline in paint demand compared to Q1 2018 when Polisan Kansai Boya recorded the highest revenue of all time. EBITDA margin also regressed by 5.7 p.p. to 11.0% with falling sales volumes in our paint and chemical operations. We recorded a net loss of TRY25.9 million due to diminishing operational profitability in our chemical operations, and Polisan Kansai Boya’s expenses related to the new facility investment (In 1Q 2018, there has been a TRY4.9 million negative impact on net income due to the abandonment of land to the Municipality related to the Pendik Project).
ACTUAL RESULTS AND FORWARD LOOKING EXPECTATIONS In anticipation of continued challenging conditions in 2019 in the sectors in which they operate, Polisan Holding Companies aim to exhibit a similar performance to that of 2018. In 2019, Poliport plans to spend US$12 million for the capacity increase. Polisan Kimya is to reevaluate the €5 million formaldehyde facility investment, which has been previously planned for 2018 and related feasibility studies were made, in light of the prevailing economic climate in 2019. 8 * The EBITDA calculation methodology includes Other operating income and expense as of 1Q 2017. 1Q 2019 EVALUATION: POLİSAN HOLDİNG - COMBINED
REVENUE FELL DUE TO DECREASING DEMAND AND BASE EFFECT IN PAINT OPERATION TRY million 2017 2018 YoY (%) 1Q 2018 4Q 2018 1Q 2019 YoY (%) QoQ (%) Revenue 1,500.7 1,934.4 28.9% 485.9 434.4 391.8 -19.4% -9.8% EBITDA* 213.3 261.3 22.5% 80.9 26.4 43.1 -46.7% 63.1% EBITDA Margin 14.2% 13.5% -0.7 p.p. 16.7% 6.1% 11.0% -5.7 p.p. 4.9 p.p. Net Income/Loss 151.4 30.7 -79.8% 32.0 15.4 -25.9 n.m. n.m.
1Q 2019 Combined Revenue Breakdown 1Q 2019 Combined EBITDA Breakdown Chemicals Other 17.1% Other 4.1% 1.1% Chemicals 50.8%
Port Paint 37.8% 35.5%
Port Paint 9.6% 44.0%
9 1Q 2019 EVALUATION: POLİPORT
EBITDA FLUCTUATED DUE TO ACCOUNTING EFFECT OF THE PROVISION TRY million 2017 2018 YoY (%) 1Q 2018 4Q 2018 1Q 2019 YoY (%) QoQ (%) Revenue 139.7 159.7 14.4% 31.3 42.8 37.5 19.8% -12.4% EBITDA* 65.8 70.5 7.1% 13.6 4.8 16.3 19.6% n.m. EBITDA Margin 47.1% 44.1% -3.0 p.p. 43.5% 11.2% 43.5% 0.0 p.p. 32.3 p.p. Net Income/Loss 37.8 45.9 21.6% 6.4 2.4 5.9 -8.7% n.m.
Poliport was founded in 1971 on the land rented from Kocaeli Revenue Office, General Directorate of National Real Estate. With its jetty, pier, embarkment, and warehousing facilities; Poliport is one of the largest ports, which is also the closest to Istanbul on the Anatolian side in Turkey. Kocaeli Port is one of the ten largest ports in the European Union. Located in the industrial zone where ~45% of Turkey’s GDP is generated, Kocaeli Port is the largest port in Turkey and it is ranked in the first place, capturing a 18.4% share in Turkey’s foreign trade and 15.9% share in the total cargo handled in Turkey in 2018. Having spread on a 160,000 m² land, Poliport is one of the limited numbers of independent chemical storage terminals, which do not carry out merchandising activities, but proving storage and handling services for the products of the third parties. It is also among the few liquid storage terminals. Poliport is very close to strategic gateways as it is only 30 minutes away from Istanbul, 25 minutes from Sabiha Gökçen Airport, 400 meters from the new bridge, 1 kilometer from TEM (Trans-Europe) Motorway, 1.8 kilometers from D-100 Highway, and crossed by a railway. Operating on an area with a customs and eligible for import and every kind of transit trade practices, Poliport is the leader terminal of Kocaeli Port. Poliport has 3 main operational activities. Bulk liquid services, capturing 58% share in revenues, have the highest profitability. In 2018, total cargo handled stood at 1.5 million tons, 41% composed of chemicals and 59% petroleum products. Since 1990s, the world’s largest manufacturers such as Dow, BASF, Bayer, and Shell are among the clients of Poliport. The annual handling capacity of the terminal is 2.5 million tons. Dry bulk and general cargo services constitute 27% of Poliport revenues. Dry bulk pier, which handled 2.8 mln tons of cargo in 2018, has an annual handling capacity of 5 million tons and the products mainly handled are coal, aluminum, different types of tin, iron, shaped tube, urea, grains, silica, and forestry products. Warehouse services constitute ~15% of Poliport’s revenues. Through its website, Poliport provides with the opportunity to track the inventory and delivery of the products stored in A Type General Warehouses where it offers storage and logistic services located on a 43,250 square meter area. In 2018, cargo stored in A type warehouses was 418,386 tons. Based on the data released by the Directorate General of Merchant Marine as of March 2019, cargo handed at Turkish Ports deteriorated by 1.4% compared to the same period of previous year due to the stagnant economic activities. In the same period, total cargo handled at Kocaeli Ports shrank by 6% despite of the 0.7% limited increase in container cargo. At Poliport, 509,756 tons (1Q 2018: 588,532 tons) handled at the dry bulk pier and 410,613 tons (1Q 2018: 388,888 tons) handled at the terminal totaled 920,369 tons (1Q 2018: 977,420 tons) representing a 5.8% decrease compared to the cargo handled last year. During the same period, 298,397 tons (9M 2017: 297,869 tons) of cargo were stored in A type warehouses. Based on a ranking of operational profitability, starting with the highest margin, the share of bulk liquid storage, dry bulk, and warehouse services in revenues realized at 65%, 23% and 12%, respectively. While the total cargo handled in 1Q 2019 decreased compared to the previous year, the revenues increased by 19.8% to TRY37.5 million due to the depreciation of TRY against the US dollar. EBITDA margin remained flat at 43.5% despite increasing net other operating expenses. Net income decreased by 8.7% to TRY5.9 million with increasing deferred tax expense. Compared to 4Q 2018, despite of the 21.3% increase in the total cargo handled and depreciation of TRY against the US dollar, revenues regressed by 12.4% due to the decrease in the volume of the cargo stored in the warehouse. EBITDA margin, which has been negatively affected by the TRY16.2 million provision recorded in 4Q 2018 (EBITDA margin excluding one-off in 4Q 2018: 49.1%) related to the sea cleaning activities, surged by 32.3 p.p. in this quarter. Net income increased with higher operational profitability despite of TRY1.0 million deferred tax expense recorded this quarter, compared to the TRY12.3 million deferred tax income in the previous quarter. Kocaeli Port, which has grown at a CAGR of 4.64% between 2009 and 2018, is expected to require a capacity increase over the coming years. Kocaeli Port Administration issues limited permits for the building of new terminals. Poliport has idle land for expansion behind the terminal area. Poliport indexes its terminal service price increases to US CPI, records its revenues in US dollar and its costs in TRY while realizing its capacity increase investments based on the fill rate of tanks. Accordingly, it can offer more competitive prices and grow its customer base. Some terminals handling their own dry bulk cargo at Kocaeli Port provide services at quite low prices in order to utilize their idle capacity. However, as these terminals approach work at full capacity usage rates, the supply-demand balance is expected to deteriorate in favor of Poliport, which, by then would have completed its capacity increase investments. Having spent US$13.5 million in 2018 for the capacity increase to be commissioned in 10 2019, Poliport plans to continue its long-term investment program in 2019 with a selective approach and to invest approximately US$12 million. 1Q 2019 EVALUATION: POLİSAN KANSAİ BOYA
Decorative segment captures a 60% share from the Turkish Paint Industry, which has reached an annual production capacity of 970,000 tons. Carrying out its operations particularly on decorative segment, Polisan Kansai Boya also operates in the area of furniture, marine, industrial groups, and insulation. As its differentiation strategy, Polisan Kansai Boya emphasized the “Polisan does not produce paint, it produces Home Cosmetics” approach, claiming that paint is not all about colors, but that in addition to its functional benefits of maintenance and protection, paint makes an aesthetic contribution to the environment. Within this context, it has registered “Home Cosmetics” concept in 2008 and became the first company introducing “Home Cosmetics” approach to the world. Additionally, it has developed Turkey’s first 7-feature interior, 9-feature exterior paint, water-based oil paint, plastic spray paint, water based road marking paint, wood protector varnish, anti-carbonization featured exterior paint and the World’s first water-based metal paint. Continuously investing in the development of innovative products, the laboratories of Polisan Kansai Boya in Turkey’s 159th R&D Center has obtained International Validity Accreditation Certificate. Polisan Kansai Boya is also the first paint producer in Turkey and one of the three in Europe, which has been granted Environmental Product Declaration (EPD) Certificate for its four products. Besides, Polisan Kansai Boya has been included in the TURQUALITY® Support Program, which was initiated to build up on and solidify the positive image of the Turkish brands in abroad, under the “POLİSAN” brand name along with other Polisan Holding subsidiaries. In addition to the innovative products, Polisan Kansai Boya offers innovative solutions, too. Its insulation insurance is also a global first in the insurance sector. Polisan Kansai Boya positions its sales channel as the production center and ensures effective inventory management through Turkey’s first water-based mix machines providing products at the factory quality from 3,200 points, and with its 11 Logistic Centers spreading to 37,500 square-meter area. Another first by Polisan Kansai Boya; the loyalty program and collection practice using a single POS, ensure a problem free collection process as well as loyalty of 42,000 painters registered in its system. Polisan Kansai Boya serves in more than 2,000 sales points throughout Turkey using "Polisan Shop" concept, which was initiated in 2008 in an attempt to help Polisan Kansai Boya dealers to improve their businesses and plan their future while ensuring comfort for its customers. Polisan Kansai Boya, which also produces for the brands of 3 market chains, serves at 6,000 sales points. 50% of Polisan Boya shares has been transferred to Japanese Kansai Paint, also a global giant in paint, for US$113.5 million as of December 21, 2016. Since then, the Company continues its activities as Polisan Kansai Boya Sanayi ve Ticaret A.Ş. Having strengthened its balance sheet structure, the Company initially commenced new facility investment. Located on its 142,000 square meter land in Gebze Chemical Specialization Organized Industrial Zone (“GEBKIM”) and commenced trial production in June 2018, the annual production capacity of Polisan Kansai Boya’s new paint production and warehouse facility increased to 180,000 tons in one shift from 180,000 tons in three shifts. With this capacity, it can almost meet total need of Turkey’s decorative paint market, which has reached 590,000 tons in 2018. By tending towards foreign markets with its increasing capacity, Polisan Kansai Boya accelerated its efforts to eliminate the effects of the contraction in the domestic market due to the fluctuations experienced in Turkey's economy, through which activities in the construction sector came to a halt. Accordingly, in 2018, the Company identified new target countries, not previously penetrated, evaluated the conditions to enter those countries and also took steps to accelerate growth in the years to come, in the markets already penetrated. Out of 43 countries targeted for the long term, Polisan Kansai Boya entered 3 countries in 2018, receiving international brand registrations and continuing sales, distribution and infrastructure installation studies in those markets. Among the export markets, a distribution agreement has been concluded in France, Israel and Romania, with sales and shipments having begun. While Polisan Kansai Boya continues to set up the system and infrastructure installation in target markets through Polisan Shops and mix machines, the Company developed product tailored for the Israil market. The operations in foreign markets are incentivized by the government within the scope of the Turquality program. In addition to exports, participation in tenders previously not a possibility due to capacity bottlenecks can now be realized, and in the first quarter, Polisan Kansai Boya won the Solvent and Water Based Cold Road Marking Paint tender, consisting of two parts, which total 15,525 tons for TRY102,035,000 excluding VAT. The sales related to this tender will be reflected on revenues in 2019. In this challenging time, there has been a shift in demand in the market from premium towards economical paints, and consequently new products were introduced; the production on-site through mix machines were expanded; and the working capital requirement has been managed in the most efficient way possible by holding minimum inventory and reducing the number of days receivables. In this period, revenues declined by 41.7% to TRY138.9 million due to the contraction in domestic demand and the base effect stemming from the fact that the highest revenue of all time was recorded in the first quarter of 2018, while EBITDA margin decreased by 6.2 p.p. to 13.6%. Kansai Paint, currently one of the world's top 10 and the leading paint manufacturer in Japan, has been working to position Polisan Kansai Boya as its regional production hub thanks to the new facility. Operational costs at the new facility are expected to be halved as a result of the savings it provides in areas such as raw material procurement, labor and packaging. The €51 million facility investment will be able to finance itself over the coming decade through savings to be obtained due to falling labor and production costs, and corporate tax exemption within the scope of a 35% investment11 incentive. Polisan Kansai Boya does not have a large-scale investment plan in the near future. 1Q 2019 EVALUATION: CHEMICAL ACTIVITIES
FOREIGN INTERNATIONAL TURKEY PARTNERSHIP INVESTMENT
POLİSAN ROHM & HAAS POLİSAN POLİSAN KİMYA (DOW) MAROC HELLAS (Chemicals) (Construction Chemicals)
§ Polisan Kimya - a subsidiary § International investment in § Operational in Greece § Formaldehyde, of Polisan Holding – is Morocco § The sole Polyethylene § Urea Formaldehyde st Turkey’s 1 emulsion § 80% owned by Polisan Kimya Terephthalate (PET) Resin, polymer producer and 20% by private entity resin and preform § Urea Formaldehyde § In 2004, a JV was formed § Production and sales of producer in Greece and Concentrate, with Rohm & Haas. concrete and cement the Balkans § Phenol Formaldehyde § Partnership continues with admixtures Resin, Dow Chemicals since Rohm § Facility commenced trial § Concrete, cement & Haas’ acquisition in 2009. production in November 2017 additives and § Selling and marketing of and began generating revenue underground chemicals emulsion polymers and in 1Q 2018. § Aus-32/AdBlue© their raw input
12 1Q 2019 EVALUATION: POLİSAN KİMYA
NET LOSS RECORDED ON THE BACK OF FX BASED FINANCIAL LIABILITIES TRY million 2017 2018 YoY (%) 1Q 2018 4Q 2018 1Q 2019 YoY (%) QoQ (%) Revenue 300.1 417.8 39.2% 92.8 102.8 83.3 -10.2% -19.0% EBITDA* 28.6 38.9 36.2% 9.5 4.4 6.0 -36.6% 35.2% EBITDA Margin 9.5% 9.3% -0.2 p.p. 10.2% 4.3% 7.2% -3.0 p.p. 2.9 p.p. Net Income/Loss -6.6 -79.8 n.m. -8.8 22.2 -12.1 n.m. n.m.
The operating activity of Polisan Kimya is the production and sales of formaldehyde and formaldehyde resins, construction chemicals (concrete, cement and underground chemicals), and AUS 32-AdBlue©. Polisan Kimya is Turkey’s first producer of formaldehyde resin, which can be used in the production of chip board, paper impregnation, MDF, and plywood. Turkey is the 5. largest consumer in the World’s Board Industry, in which Formaldehyde Resin is used. Polisan Kimya is ranked in the 1. place in resin production, with a 40% market share. The concrete additives market in Europe has a volume of approximately 1.2 million tons/year. With 480,000 tons/year, Turkey represents 40% of this market. In the ready mixed concrete market, Turkey ranks 1st in Europe and the 3rd in the world with 110 million cubic meters of ready mixed concrete production volume per annum. Besides, it is the 4th largest cement producer in the world with an annual production capacity of 66 million tons following, India and the United States. With an approximately 20% market share, Polisan Kimya became one of the three leading companies in the construction chemicals market, which has 7 foreign and close to 20 domestic companies. Additionally, Polisan Kimya is Turkey’s first AdBlue© manufacturer for the global giants such as Lukoil, BP, OMV, and Total. AdBlue© contributes to the environmental cleaning by decreasing NOx exhaust gas emission by 80%. Polisan Kimya estimates that it is the market leader with a 16% share in the AdBlue© market, which is projected to have reached 125,000 tons in 2017. The business lines of Polisan Kimya, formaldehyde resins and AUS32 have been adversely affected by increasing competition, and the construction chemicals product group by the economic turmoil that brought construction sector activities in Turkey to a halt. While the company strives to manage its working capital requirement at the optimum efficiency by reducing the collection period in the contracting domestic market, it focuses on getting over this tough period by weighing on exports particularly in the formaldehyde resins group. Polisan Kimya partially eliminated the negative effects of the contraction in the domestic market by increasing the weight of value added products sales in Formaldehyde and resins, which accounted for 52% of its 2018 revenues and by developing new products in the field of underground chemicals in construction chemicals, having a 34% share in revenues. The revenues of Adblue, which constitutes 4% of total revenues and the Company continues to keep this product in its portfolio, in the most optimal manner, in the interests of sustaining brand awareness, since competition in the Turkish Adblue market has become irrational, remained flat. As for other revenues capturing a 10% share in Polisan Kimya’s total revenues in 2018, rose on the back of increasing raw material sales. All in all, in 1Q 2019; Polisan Kimya's revenues decreased by 10.2% compared to the previous year and were realized as TRY83.3 million as a result of declining sales volumes. Despite the contribution of increasing net other operating income, EBITDA margin fell by 3.0 p.p. to 7.2%. In parallel, TRY8.8 million net loss in 1Q 2018, increased to TRY12.1 million in this period. Compared to 4Q 2018, the decline in sales volumes led to a 19.0% decline in revenues. However, EBITDA margin was up 2.9 p.p., due to the decrease in production costs along with the classification of the service costs, and decreasing other operating expenses due to lower fx rate difference expenses. The Company recorded a net financial expense of TRY15.0 million during this period, as opposed to a TRY20.8 million net financial income recorded in 4Q 2018 due to the fx rate difference income stemming from foreign currency denominated financial liabilities. As a result, net loss was recorded in this period compared to the TRY22.2 million net profit recorded in the previous period. As part of the measures taken to increase revenues and profitability in chemicals operations, Polisan Yapı Kimyasalları A.Ş. has been transferred to Polisan Kimya A.Ş. as of March 31, 2017. The new construction chemicals have been established in Adana and Samsun in Turkey, and Morocco in abroad (Polisan Maroc SA) with the aim of a more effective process in the sales and marketing of concrete and cement admixtures, domestically and internationally. Polisan Maroc established its Sales, Production and R&D teams and started to raise awareness in the market by winning the concrete chemicals additives tenders of large cement factories such as Votorantim Cimentos, Ciment Du Maroc and HeilderbergCEMENT Group. Additionally, the Company started to produce specific concrete additives used in underground railways, tunnels, and mines; developed by Polisan Kimya‘s R&D Center, which was certified in June 2017. According to the Regulation on the Protection of Buildings from Fire, issued by the Council of Ministers, exterior facades should be made of hard combustive materials in buildings with a height of more than 28.5 meters and made from the least flammable material in other buildings. Phenol resin is used in rock wool, which has a "fireproof" feature in the A1 fire category, and increasing rock wool demand is expected to result in a surge in phenol resin demand. Polisan Kimya focuses on maintaining its operational efficiency through higher margin product groups and effective management of exports and collection periods in spite of the contraction of demand 13 in the domestic market. 1Q 2019 EVALUATION: POLİSAN HELLAS
VOLUME AND PROFITABILITY REGRESSED DUE TO PRICE PRESSURE TRY million 2017 2018 YoY (%) 1Q 2018 4Q 2018 1Q 2019 YoY (%) QoQ (%) Revenue 317.9 527.8 66.0% 105.2 132.6 115.7 10.0% -12.7% EBITDA* 15.7 42.7 171.3% 6.7 4.0 1.4 -79.7% -66.1% EBITDA Margin 4.9% 8.1% 3.2 p.p. 6.3% 3.0% 1.2% -5.1 p.p. -1.8 p.p. Net Income/Loss 13.5 26.4 95.8% 5.2 -4.7 -3.8 n.m. n.m.
Polisan Hellas SA, which is owned by Polisan Holding, has purchased 100% of the assets owned by Spanish Artenius Hellas; the sole Polyethylene Terephthalate (PET) resin producer in Greece and Balkan region, in September 2013 for €8,675,000 including taxes, all fees and other expenses. Polisan Hellas is located on a 15 hectare closed area and 75 hectare land in total and its facility is approximately worth of €70 million. Polisan Hellas has all the certificates such as ISO 9001, ISO 14001, OHSAS 18001, and ISO 22000 required by the major beverage companies. The Company completed all the periodic maintenance of the integrated facility and processed with advanced technology manufacturing modules right after the transaction. The facility with an annual production capacity of 80,000 tons has been rapidly integrated with Polisan Holding for the production of Polyethylene Terephthalate (PET) granule and preform, which has a wide range of usage area such as soft drink, water, food and beverage bottles, and synthetic fiber. After the completion of the necessary certification processes, the client portfolio has been set up and the Company started to record meaningful revenues by April 2014. Polisan Hellas’ land is eligible to use for different investment purposes and the Company is to provide synergies for Polisan Holding Companies by using Polisan Kimya’s technologic know-how and marketing capabilities in the area of polymerization, Polisan Boya’s sales network, and Poliport’s logistic and storage advantages in raw material procurement. The PET resin manufactured is marketed to carbonated and non-carbonated beverage manufacturers engaged in production on a global scale; drinking water sector; preform producers; entire Balkans including Greece and Italy. Polisan Holding started to consolidate Polisan Hellas into its financials by the end of 2013.
Having operated in full capacity throughout 2018, the revenues of Polisan Hellas came in at TRY115.7 million with a rise limited at 10.0% in 1Q 2019 compared to last year despite the positive exchange rate effect. This stemmed from the decline in sales volume due to the Chinese originated, low-priced products, that were favored in the market. In this period, exports captured a 20% share in Polisan Hellas' total revenues. The Company's EBITDA margin decreased by 5.1 p.p. to 1.2% on the back of increasing price pressure and the halt of production during the maintenance undertaken in the facility. The Company posted a net loss of TRY3.8 million due to the net financial expense of TRY2.6 million and deferred tax expense of TRY1.9 million.
Compared to 4Q 2018, sales revenues regressed by 12.7% on the back of declining sales prices, while EBITDA margin fell by 1.8 p.p., in parallel. The net loss of TRY4.7 million in 4Q 2018 decreased to TRY3.8 million due to the fall in net financial expenses and deferred tax expense compared to the previous quarter.
In 2018, unit prices increased due to the rise in oil prices and contraction in raw material supply. The easing of oil prices in November, with the US granting an exemption to 8 countries for oil imports from Iran, is expected to be reflected in unit prices in 2019. Polisan Hellas initiated work at the facility in order to process recycled PET bottles. In line with these studies, in 2019, the ratio of R-PET (recycled plastic) used in production will increase, contributing to environmental protection.
14 1Q 2019 EVALUATION: POLİSAN YAPI
The primary activities of Polisan Yapı İnşaat Taahhüt Turizm San. ve Tic. A.Ş. THERE ARE REAL ESTATES IN POLİSAN HOLDİNG’S PORTFOLIO TO (“Polisan Yapı”) are to engineer buildings and plants; to construct water BE UTILIZED FOR DIFFERENT PURPOSES. channels, roads, bridges, dams, sewers and infrastructure facilities; to KAGITHANE Z OFFICE produce, market and trade construction and installation materials; to KURTKOY PROJECT BUSINESS CENTER organize all kinds of domestic and international trips, and professional meetings for touristic, professional, and training purposes. The total expertize and market value of all real estates under Holding operations, except for the leased land, which is not owned by Poliport, is approximately TRY686* million. KAĞITHANE "Z OFFICE" BUSINESS CENTER PROJECT: Situated on a total gross area of 10,683 m², Z Office Project is 42% owned by Polisan Yapı and 58% by DAP Yapı. Polisan Yapi received the ownership deeds for 126 offices and 28 shops that it owns in June 2014. TURYAP Holding A.Ş. continue activities to sell and lease these offices and shops. As of May 2019, there are 26 shops and 73 offices available for sale at the Z § Polisan Yapı had realized a flat for § Polisan Yapı signed an agreement on Office Project. land basis project with DAP Yapı on March 5, 2015 with DOP Yapı-DAP KURTKOY PROJECT: its land in Kağıthane, which is Yapı Joint Venture, for a project to be DAP Yapı-DOP Yapı Joint Venture will own 66% of the land in Kurtköy, İstanbul’s 6. most densely populated built on the land in Kurtköy. The land however will not pay any cash. But instead, it will build on a turnkey basis district, going through a rapid spreads on an approximately and deliver 34% of the independent units to Polisan Yapı in exchange for urbanization process. The expertize 180,000 m2 area and it is very close payment. The pace of growth resulting from the increase in Sabiha Gökçen value of 73 offices and 26 shops to the TEM Motorway, E-5 Highway, Airport’s traffic and easy access to be provided by the planned Kartal – remaining from sales as of 2018 year Sabiha Gökçen Airport, and Ankara- Pendik – Kurtköy metro route is expected to increase the demand for the end is ~TRY53 million. İstanbul high-speed railway route. houses and the commercial estates in the region. Other business and tourism focused projects such as a fair, congress center, and techno-park § Except for the Kağıthane and Pendik projects and are also expected to be on the agenda. The appraisal value of the land as of OTHER including the agricultural land in liquidation process, the 2017 year end is approximately TRY202 million. Regarding the ASSETS value of the other assets that can be used for investment abandonment required to be made to the municipality for the grant of the 2 is ~TRY160 million. permits of this project, 5,740 m of land was abandoned to the Municipality free of charge, and TRY4.9 million has been recorded as a negative on 1Q 2018 financials. DAP Yapı continues its studies to receive necessary permits for the project. 15 * Detailed information in regards to the expertise dates and market valuation of real estates owned by Polisan Yapı is available in 2018 Annual Report. 1Q 2019 EVALUATION: POLİSAN TARIM
WALNUT OLIVE STEVIA ü Cooperation with Atatürk ü On 4.4 million square ü On 2.5 million square University, Faculty of meter land in Balıkesir meter land in Karacasu Agriculture
ü Development of 100% native variety including highly useful glycoside
AGRICULTURAL ACTIVITIES HAVE BEEN HALTED AS OF APRIL 16, 2019
16 POLİSAN HOLDİNG: BOARD OF DIRECTORS & COMMITTEES
Holding’s business and administration is being conducted by the Board of Directors consisting of nine members that were elected by the General Assembly and there are two independent members at the Board. Holding Board of Directors, perform and observe the duties that were assigned to them by the Turkish Commercial Code, Holding’s Articles of Association, and the decisions taken on the Holding’s General Assembly on these matters. As per the Holding’s Articles of Association and pursuant to the related articles of the Turkish Commercial Code, the Board of Directors may partially transfer its duties, authorities, and power of attorney to a committee to be formed among its members or to an executive director or directors or to a manager or managers. The members of the Board of Directors and their duties were assigned during the Ordinary General Assembly dated May 15, 2018 for 3 years; except for Esra Yazıcı whose appointment as the Independent Board Member has been approved during General Assembly dated April 25, 2019, in place of resigned Board Member Ali Fırat Yemeniciler.
Name - Surname Duty Mehmet Emin Bitlis Chairman Ahmet Ertuğrul Bitlis Vice Chairman Ahmet Faik Bitlis Member Fatma Nilgün Kasrat Member Erol Mizrahi Member Zafer Kurtul Member Şeref Taşkın Independent Member Arif Başer Independent Member Esra Yazıcı Independent Member
AUDIT COMMITTEE Based on the Holding BoD’s resolution dated June 22, 2018 regarding the change in independent board members; the duties of the Audit Committee, established as per BoD decision dated May 4, 2012, were reassigned.
Name - Surname Duty Essence of the Board Membership Şeref Taşkın Audit Committee Chairman Independent Board Member Arif Başer Audit Committee Member Independent Board Member Zafer Kurtul Audit Committee Member Independent Board Member
17 POLİSAN HOLDİNG: BOARD OF DIRECTORS & COMMITTEES
CORPORATE GOVERNANCE COMMITTEE Based on the Holding BoD’s resolution dated June 22, 2018 regarding the change in independent board members; the duties of the Corporate Governance Committee, established as per BoD decision dated May 4, 2012, were reassigned.
Name - Surname Duty Essence of the Board Membership Arif Başer Corporate Governance Committee Chairman Independent Board Member Mehmet Emin Bitlis Corporate Governance Committee Member Chairman of Polisan Holding BoD Varol Ürel Corporate Governance Committee Member Accounting Manager / Investor Relations Manager
EARLY DETECTION OF RISKS COMMITTEE Based on the Holding BoD’s resolution dated June 22, 2018 regarding the change in independent board members; the duties of the Early Detection of Risks Committee, established as per BoD decision dated May 4, 2012, were reassigned.
Name - Surname Duty Essence of the Board Membership Şeref Taşkın Early Detection of Risks Committee Chairman Independent Board Member Mehmet Emin Bitlis Early Detection of Risks Committee Member Chairman of Polisan Holding BoD Burhan Kurt Early Detection of Risks Committee Member Investor Relations Officer
CANDIDATE NOMINATION COMMITTEE AND COMPENSATION COMMITTEE
On June 22, 2018; the Holding reiterated its decision dated June 24, 2014, not to establish a Candidate Nomination Committee and Compensation Committee; and to carry out the duties of the aforementioned committees through the Corporate Governance Committee.
18 POLİSAN HOLDİNG: SENIOR MANAGEMENT
Polisan Holding’s Executive Committee is as follows:
Name - Surname Duty Erol Mizrahi Polisan Holding CEO, Executive Committee Member Ali Fırat Yemeniciler Poliport General Manager, Executive Committee Member Necati Hakoğlu Polisan Kimya and Polisan Hellas General Manager, Executive Committee Member Ahmet Türkselçi Polisan Holding Human Resources Director, Executive Committee Member Gözde Gürbüz Audit President
The total amount of salaries and side benefits paid to the Senior Management is TRY1,885,500 for the period between January 1 – March 31, 2019. Of this, TRY984,600 is salary and TRY900,900 is bonus (January 1 – March 31, 2018: TRY1,551,666). Holding defines Board Members, General Managers and Deputy General Managers as Senior Management.
19 POLİSAN HOLDİNG: R&D, INCENTIVE, PERSONNEL, DONATIONS
Research and Development Activities Polisan Kansai Boya received R&D Center Certification and status as of June 4,2014. As Turkey’s 159th R&D Center, the incentives and exemptions utilized by Polisan Kansai Boya amounted to TRY8.0 million out of the TRY10.3 million R&D spending realized in 2018. The R&D Center conducts a TEYDEB 1505 Project with Sabancı University and cooperates with İstanbul University on a project developed for the Ministry of Industry and Technology, through the Nano technology Cluster in which it is active. While two TEYDEB 1501 projects continue successfully, applications have been submitted for a further two. Championing scientific endeavor in its R&D activities, Polisan Kansai Boya R&D Center published two international oral statements, and two poster presentations, one national in focus and one international, in 2018. Within the framework of compliance with National Standards, TSE Certificates were received for a total of 19 products, including new products and those already available on the market, in 2018. In addition, the license for antibacterial paint was received from the Ministry of Health for a newly-developed water- based epoxy paint product, while an application has been submitted for a new interior product. Work on the new R&D Center Building valued at approximately €2 million has commenced, with plans for relocation to it in 2019. In October 2016, Polisan Kansai Boya’s Main Research Laboratories, which have been conducting chemical tests and quality measurements for 30 years, obtained International Validity Accreditation Certification from TURKAK. TURKAK has a Mutual Recognition Agreement with the International Laboratory Accreditation Association (ILAC). Raising the number of tests accredited each year, the Main Research Laboratory increased the total number of tests from 20 to 26, in 2018. Polisan Holding’s subsidiary Polisan Kimya, has received Turkey’s 507th R&D Center Certification and status as of June 6, 2017. The Certificate has been granted by the Ministry of Science, Industry and Technology following inspections, which concluded that the R&D Department had met the necessary qualifications, ability and criteria. The R&D Center realized five TEYDEB projects, applied for one TEYDEB project, and conducted five university and industry cooperation projects in 2018. The Polisan Kimya R&D Center developed 8 new products in the resin product group, 3 in the polymer product group, 14 in the underground product group and 60 in the construction chemicals product group in during the year. In underground chemicals, a new product group has been created for chemicals used with tunnel boring machines. Investments and Investment Incentive Utilized for Investments The projects within the scope of R&D Center at Polisan Kansai Boya continue. Polisan Holding subsidiaries Polisan Kansai Boya, Polisan Hellas, Polisan Kimya Sanayi, and Polisan Yapı Kimyasalları have been included in the TURQUALITY Support Program as of June 19, 2014 under the “POLİSAN” brand name. Additionally, the incentive certificates received for the ongoing renovation work within the Holding are as follows: Company Incentive Incentive No Incentive Amount (TRY) Incentive Expensed (as of March 31, 2019 - TRY) Incentive Certificate Date (Including replacements) Poliport* Crane B/104761 15,092,285 15,092,285 29/03/2013 Poliport* Tank B/112076 148,770,416 148,770,416 17/08/2016 Poliport Tank B/137652 130,000,000 58,195,053 20/06/2018 Polisan Kansai Boya Gebkim Facility D/122296 218,678,372 172,047,366 06/12/2017 Polisan Kimya Adana Facility A/127763 3,100,000 2,516,127 03/02/2017 Polisan Kimya Samsun Facility A/131376 2,140,000 2,030,178 21/07/2017 Polisan Kimya* Oxide Facility D/112337 16,259,209 16,259,209 21/07/2016 Employee and Worker Flow Polisan Holding’s and its Companies’ total number of employees, including Polisan Hellas was realized at 1,311 as of March 31, 2019 as opposed to 1,556 employees in March 31, 2018. The number of employees of Polisan Kansai Boya was taken fully, not pro rata, based on Polisan Group’s share in the Company. The Holding pays 12 month salary, private health insurance, personal accident insurance, bus service, lunch to the permanent staff. Additionally, in line with the regulations, personnel of particular titles (such as General Manager, Director, Manager) are allocated vehicles and the vehicles’ gas and maintenance expenses are paid. Donations Realized During the Period Total donations and aids realized by Polisan Holding as of January 1 – March 31, 2019 was TRY138,036 (March 31, 2018: TRY486,650). The aforementioned amount is mainly composed of the donations20 given to the educational institutions and the institutions carrying out education supporting activities. * Related incentives are closed. POLİSAN HOLDİNG: CONTACT OFFICES
The address of Holding’s Headquarters and production facilities is Dilovası Organize Sanayi Bölgesi, 1. Kısım, Liman Caddesi, No: 7 Dilovası-KOCAELİ. Branches other than the Headquarters and their addresses are as follows:
The name of the Branch Address Polisan Holding A.Ş. (İstanbul Branch) Ali Nihat Tarlan Cad. No:86 İçerenköy, Ataşehir/İSTANBUL Polisan Kimya Sanayii A.Ş. (Adana Branch) Adana Hacı Sabancı OSB, Acıdere OSB Mah. Atatürk Blv. No:13 SARIÇAM/ADANA Polisan Kimya Sanayii A.Ş. (Samsun Branch) 19 Mayıs OSB Mah. Yaşardoğu Cad. No:9/1 TEKKEKÖY/SAMSUN Polisan Kansai Boya San. ve Tic.A.Ş. (İstanbul Branch) Ali Nihat Tarlan Cad. No:86 İçerenköy, Ataşehir/İSTANBUL Polisan Kansai Boya San. ve Tic.A.Ş. (Gebkim Branch) Demircilerosb Mahallesi Refik Baydur Cad. Fabrika Binası Apt. No: 7 /3/_ Dilovası/Kocaeli Polisan Kansai Boya San. ve Tic.A.Ş. (İstanbul Esenyurt Branch) Osmangazi Mahallesi, Ziya Gökalp Caddesi, No: 1 Kat: 6/7 Kıraç Esenyurt/İSTANBUL Polisan Kansai Boya San. ve Tic.A.Ş. (Adana Branch) Yeni Mah. İncirlik Blv. No:163/B, B1, B2, B3, B4 Sarıçam/ADANA Polisan Kansai Boya San. ve Tic.A.Ş. (Afyonkarahisar Branch) Veysel Karani Mah. Mareşal Fevzi Çakmak Blv. No:109/A Merkez /AFYONKARAHİSAR Polisan Kansai Boya San. ve Tic.A.Ş. (Ankara Branch) Saray Mahallesi 66 Cad. No: 20 Kahramankazan/ANKARA Polisan Kansai Boya San. ve Tic.A.Ş. (Antalya Branch) AOSB Birinci Kısım Mah. Atatürk Bulvarı No: 49 Döşemealtı/ANTALYA Polisan Kansai Boya San. ve Tic.A.Ş. (Bursa Branch) Yalova yolu 14. km, Ovaakça Çeşmebaşı mh. 1. Karasu cd. No:27 Osmangazi/BURSA Polisan Kansai Boya San. ve Tic.A.Ş. (Denizli Branch) İlbade Mah. İzmir Blv. No:135/2 Merkezefendi/DENİZLİ Topraktaş Mah. Topraktaş Küme Evleri Küçük Sanayi Sitesi Yapı Kooperatifi Sitesi A Blok Polisan Kansai Boya San. ve Tic.A.Ş. (Diyarbakır Branch) 74A/1,2,3,4,5,6,7,8,9,10 - B Blok 74B/1,2,7,8 Bağlar/DİYARBAKIR Polisan Kansai Boya San. ve Tic.A.Ş. (Gaziantep Branch) İncilipınar Mah. Nişantaşı Sk. Tekerekoğlu İş Merkezi No:2/87 Şehitkamil/GAZİANTEP Polisan Kansai Boya San. ve Tic.A.Ş. (İstanbul 2 Branch) İçerenköy Mah. Değirmenyolu Cad. Gür İş Merkezi No:31 /10-11 Ataşehir/İSTANBUL Polisan Kansai Boya San. ve Tic.A.Ş. (İzmir Branch) Cumhuriyet Mah. Çanakkale Asfaltı Cad. No: 80/A Menemen/İZMİR Polisan Kansai Boya San. ve Tic.A.Ş. (Kayseri Branch) Hacı Saki Mah. Alpay Sk. Lifos Tower İş Merkezi No:15/18 Kocasinan/KAYSERİ Polisan Kansai Boya San. ve Tic.A.Ş. (Konya Branch) Şükran Mah. Furgandede Cad. Lalezar Apt. No:33/2 Meram/KONYA Polisan Kansai Boya San. ve Tic.A.Ş. (Muğla Branch) Salihpaşalar Mah. Köyiçi Sok. No:242-1 /9 Menteşe/MUĞLA Polisan Kansai Boya San. ve Tic.A.Ş. (Samsun Branch) Toybelen Mah. 1197 Sok. No:6/1 İlkadım/SAMSUN Polisan Kansai Boya San. ve Tic.A.Ş. (Tekirdağ Branch) Eskicami-Ortacami Mah. Sabri Çıtak Sk. Prestij Plaza No:2/ 5-6 Süleymanpaşa/TEKİRDAĞ
21 POLİSAN HOLDİNG: CONSOLIDATED STATEMENT OF FINANCIAL POSITION
The accompanying consolidated financial statements of the Group have been prepared in accordance with Turkish Accounting Standards / Turkish Financial Reporting Standards (“TAS/TFRS”) promulgated by the Public Oversight Accounting and Auditing Standards Authority of Turkey (“POA”) that are set out in the 5th article of the communiqué numbered II-14.1 “Communiqué on the Principles of Financial Reporting In Capital Markets” (“the Communiqué”) announced by the Capital Markets Board (“CMB”) on 13 June 2013 and published in Official Gazette numbered 28676.
The Balance Sheet and Income Statement are as follows:
Unaudited Unaudited Unaudited Unaudited
ASSETS 31 March 2019 31 March 2018 Non-current assets 1.580.164.126 1.538.921.246
Current assets 630.264.665 680.043.054 Other receivables 425.539 411.969
- Other receivables from third parties 425.539 411.969 Cash and cash equivalents 123.625.887 153.828.929 Financial investments 100.000 100.000 Investments accounted using the equity method 406.317.145 420.478.092 Trade receivables 252.911.933 279.959.310 Investment properties 261.096.907 262.425.908 - Trade receivables from related parties 6.902.980 11.798.830 - Trade receivables from third parties 246.008.953 268.160.480 Tangible assets 809.816.241 794.684.400 Other receivables 75.244.336 77.747.308 Right of use assets 43.346.684 - - Other receivables from related parties 17.924.236 78.892 Intangible assets 2.945.321 3.135.076 - Other receivables from third parties 57.320.100 77.668.416 Prepaid expenses 40.838.023 40.845.845 Inventories 152.576.413 148.642.367 Deferred tax assets 14.623.498 16.276.504 Prepaid expenses 14.926.319 11.690.051 Other non current assets 754.768 663.452 Current income tax assets 2.248.243 5.013.151 Other current assets 8.631.534 3.061.938 Total assets 2.210.428.791 2.218.964.300
22 POLİSAN HOLDİNG: CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Unaudited Unaudited
LIABILITIES 31 March 2019 31 March 2018 Equity 1.469.610.802 1.493.222.418
Current liabilities 562.936.410 570.386.837 Equity holders of the parent 1.440.321.112 1.464.117.336 Paid-in share capital 758.500.000 370.000.000 Short term borrowings 119.032.326 114.316.676 Adjustment to share capital 1.467.266 1.467.266 Short term portion of long term borrowings 194.250.693 209.830.191 Share premium/discounts 23.130.220 23.130.220 Trade payables 225.661.930 214.714.877 Other comprehensive income/expense not to be - Trade payables to related parties 7.533 389.856 307.196.750 310.362.796 - Trade payables to third parties 225.654.397 214.325.021 reclassified to profit or loss Employee benefit obligations 6.905.284 5.099.642 Other payables 4.768.276 2.205.206 - Revaluation and measurement gain / loss 307.196.750 310.362.796 - Other payables to related parties - 230.314 Defined benefit plans re-measurement gain / - Other payables to third parties 4.768.276 1.974.892 (15.125.651) (11.959.605) (loss) Deferred income 2.590.216 2.455.115 Short term provisions 3.844.123 16.826.308 Tangible assets revaluation 322.322.401 322.322.401 - Other short term provisions 3.844.123 16.826.308 Other current liabilities 5.883.562 4.938.822 Other comprehensive income or expense to be (25.539.461) (24.296.329) reclassified to profit/(loss) Non-current liabilities 177.881.579 155.355.045 - Currency translation differences (25.539.461) (24.296.329) Restricted reserves 42.221.733 42.221.733 Long term borrowings 80.855.795 60.730.085 Other reserves (208.727.832) (208.727.832) Trade payables 34.106 - Retained earnings 561.459.482 922.130.032 - Trade payables to third parties 34.106 - Profit for the period (19.387.046) 27.829.450 Long term provisions 12.345.664 12.054.512 - Provisions for employee termination 12.345.664 12.054.512 Non-controlling interests 29.289.690 29.105.082 benefits Investments accounted using equity method 2.361.462 - Deferred tax liabilities 82.284.552 82.570.448 Total liabilities and equity 2.210.428.791 2.218.964.300
23 POLİSAN HOLDİNG: CONSOLIDATED STATEMENT of P/L
Unaudited Profit and loss January 1 – March 31, 2019 January 1 – March 31, 2018 Revenue 234.074.201 228.838.376 Cost of sales (-) (196.361.654) (194.020.307)
Gross profit from commercial activities 37.712.547 34.818.069
General administrative expenses (-) (22.830.064) (6.763.216) Marketing expenses (-) (2.907.473) (10.380.968) Research and development expenses (-) (1.158.432) (574.713) Other operating income 5.451.187 3.976.203 Other operating expenses (-) (7.828.733) (2.416.455) Profit/Loss from investments accounted using the equity method (16.224.577) 8.388.360
Operating profit (7.785.545) 27.047.280
Income from investment activities 362.595 722.607 Expense from investment activities (-) (449.912) (5.642.839)
Operating profit before financial income/expense (7.872.862) 22.127.048
Financial income 6.233.966 5.317.161 Financial expenses (-) (12.078.779) (6.639.746)
Profit before tax from continuing operations (13.717.675) 20.804.463
Continuing operations tax income/expense - Current tax expense (2.957.556) (4.374.260) - Deferred tax income/expense (2.405.549) 2.595.007
Profit for the period from continuing operations (19.080.780) 19.025.210
Profit for the period (19.080.780) 19.025.210
Attributable to: Non-controlling interests 306.266 298.634 Equity holders of the parent (19.387.046) 18.726.576
Earnings per share (0,026) 0,051 -Earnings per share from continuing operations24 (0,026) 0,051 POLİSAN HOLDİNG: CONSOLIDATED STATEMENT of P/L
Unaudited January 1 – March January 1 – March 31, 2018 31, 2019
Profit for the period (19.080.780) 19.025.210
Other comprehensive income:
Items not to be reclassified to profit or loss (3.252.467) (588.102)
- Defined benefit plans re-measurement gain / (loss) (3.646.288) (504.758) - Defined benefit plans re-measurement gain / (loss), tax effect 729.258 100.952 - Defined benefit plans re- measurement gain /(loss) of investment accounted by equity (419.296) (230.369) method - Shares not to be classified in profit or loss from other comprehensive income of investments 83.859 46.073 accounted by equity method, tax effect
Items to be reclassified to profit or loss (1.278.369) (2.711.012)
- Gain/(losses) from currency translation differences (1.315.974) (2.711.012) - Gain/(losses) from currency translation differences of investment accounted by equity 37.605 - method Other comprehensive income (4.530.836) (3.299.114)
Total comprehensive income (23.611.616) 15.726.096
Attributable to: Non-controlling interest 184.608 356.161 Equity holders of the parent (23.796.224) 15.369.935
25 POLİSAN HOLDİNG: FINANCIAL RATIOS
The profitability and financial ratios, calculated based on the 1Q 2019 TFRS financial tables are as follow:
(TRY million) 31 March 2018 31 March 2019 Net Sales 228,838,376 234,074,201 Gross Profit 34,818,070 37,712,548 Gross Profit Margin (%) 15.2% 16.1% Income Before Interest and Tax (EBIT) 18,658,921 8,438,949 EBIT Margin (%) 8.2% 3.6% Income Before Interest, Tax, Depreciation and Amortization (EBITDA) 29,886,643 21,120,887 EBITDA Margin 13.1% 9.0% Net Income 19,025,210 -19,080,776 Net Income Margin (%) 8.3% -8.2%
31 March 2018 31 March 2019 Current Ratio 1.641 1.120 Liquidity Ratio 1.333 0.849 Net Income/Total Equity 0.013 -0.013 Net Income/Total Assets 0.009 -0.009
26 POLİSAN HOLDİNG: MATERIAL DISCLOSURES
Material disclosures in regards to the important developments that took place after the 2018 financial result announcement dated February 28, 2019 are as follows:
For other information, please see 2018 Annual Report
27 POLİSAN HOLDİNG: RESULT OF THE ROAD MARKING PAINT TENDER – 15.03.2019
Is This an Update Announcement? Yes Is This an Amendment Announcement? No
Is This a Postponed Announcement? No
Summary Information Result of the Road Marking Paint Tender
ADDITIONAL EXPLANATION:
On our disclosure dated February 27, 2019, it was announced that Polisan Kansai Boya Sanayi ve Ticaret A.Ş., a 50% subsidiary of Polisan Holding A.Ş., won the General Directorate of Highways’ tender, which totals 15,525 tons of Solvent and Water Based Cold Road Marking Paint, consisting of two parts, and that the tender would enter into force upon the approval of the Highways Tender Commission. The aforementioned tender has been approved by the Highways Tender Commission on March 14, 2019 and became effective.
28 POLİSAN HOLDİNG: CMB APPROVAL FOR THE AMENDMENT IN AoA– 15.03.2019
Is This an Update Announcement? Yes Is This an Amendment Announcement? No Is This a Postponed Announcement? No Summary Information CMB Approval for the Amendment in Articles of Association
Resolution Date of the BoD 08.01.2019 Registered Capital Ceiling (TRY) 1,000,000,000 Existing Capital Ceiling (TRY) 370,000,000 New Registered Capital Ceiling (TRY) 758,500,000
Amount of Bonus Amount of Bonus Amount of Bonus Amount of Bonus Share Existing share from share from share from Share share from Share to be Group Capital Reserves Reserves Dividend Group Form Dividend Issued Information (TRY) (TRY) (%) (TRY) Issued (%)
POLHO, 370,000,000 388,500,000 105 0 TREPOHO00012
Amount of Bonus share Amount of Bonus share Amount of Bonus share Existing Amount of Bonus share from Reserves from Reserves from Dividend Capital from Dividend (TRY) (%) (TRY) (TRY) (%)
TOTAL 370,000,000 388,500,000.00 105
29 POLİSAN HOLDİNG: CMB APPROVAL FOR THE AMENDMENT IN AoA– 15.03.2019
Detail of the Reserves: Gain on sale of affiliate and property (TRY) 85,273,015.26 Accumulated Earnings (TRY) 171,094,955.56 Other Income Reserves (TRY) 132,132,029.18
Other Subjects that have to be Disclosed: Number of Articles of Association to be Amended Article 7 Date of the CMB Application Regarding for the Amendment of the Article of 24.01.2019 the Articles of Association Titled Capital Result of the CMB Application Regarding for the Amendment of the Article Approval of the Articles of Association Titled Capital Date of the CMB Approval Regarding for the Amendment of the Article of 14.03.2019 the Articles of Association Titled Capital Date of Application to the CMB 16.01.2019 Result of the Application to the CMB Approval Date of the CMB Approval 14.03.2019
ADDITIONAL EXPLANATION:
The Capital Markets Board approved the Bonus Capital Increase Issuance Certificate and the Draft Amendment in Article 7 of the Articles of Association regarding Capital.
30 POLİSAN HOLDİNG: REGISTRATION OF THE AMENDMENT IN AoA– 19.03.2019
Is This an Update Announcement? Yes Is This an Amendment Announcement? No Is This a Postponed Announcement? No Summary Information Registration of the Amendment in Articles of Association
Resolution Date of the BoD 08.01.2019 Registered Capital Ceiling (TRY) 1,000,000,000 Existing Capital Ceiling (TRY) 370,000,000 New Registered Capital Ceiling (TRY) 758,500,000
Amount of Bonus Amount of Bonus Amount of Bonus Amount of Bonus Share Existing share from share from share from Share share from Share to be Group Capital Reserves Reserves Dividend Group Form Dividend Issued Information (TRY) (TRY) (%) (TRY) Issued (%) POLHO, POLHO, 370,000,000 388,500,000 105 0 Bearer TREPOHO00012 TREPOHO00012
Existing Amount of Bonus share Amount of Bonus share Amount of Bonus share Amount of Bonus share Capital from Reserves from Reserves from Dividend from Dividend (TRY) (TRY) (%) (TRY) (%)
TOTAL 370,000,000 388,500,000.00 105
Effective Date for the Use of Right of Bonus Share Participation 20.03.2019 31 POLİSAN HOLDİNG: REGISTRATION OF THE AMENDMENT IN AoA– 19.03.2019
Detail of the Reserves: Gain on sale of affiliate and property (TRY) 85,273,015.26 Accumulated Earnings (TRY) 171,094,955.56 Other Income Reserves (TRY) 132,132,029.18
Other Subjects that have to be Disclosed: Number of Articles of Association to be Amended Article 7 Date of the CMB Application Regarding for the Amendment of the Article of the Articles of Association Titled Capital 24.01.2019 Result of the CMB Application Regarding for the Amendment of the Article of the Articles of Association Titled Capital Approval Date of the CMB Approval Regarding for the Amendment of the Article of the Articles of Association Titled Capital 14.03.2019 Date of Application to the CMB 16.01.2019 Result of the Application to the CMB Approval Date of the CMB Approval 14.03.2019 Payment Date (The date on which the new shares shall be included into the accounts of the shareholders If there is a capital increase 22.03.2019 or deducted from their accounts if there is any capital decrease for the shares traded on the stock exchange) Record Date (The date on which the holders of the rights of the shares traded on the stock exchange are determined) 21.03.2019 Date of Capital Registration 19.03.2019
ADDITIONAL EXPLANATION: The amendment in the Articles of Association approved by the Capital Markets Board was registered on March 19, 2019 by the Gebze Trade Registry.
The effective date for the use of right of bonus share participation is determined as March 20, 2019.
32 POLİSAN HOLDİNG: SELECTION OF THE INDEPENDENT AUDIT COMPANY – 29.03.2018
Is this a postponed announcement? No Summary Information Selection of Independent Audit Company
ADDITIONAL EXPLANATION:
Our Company’s Board of Directors decided the independent audit services as per the regulations of Turkish Commercial Code and Capital Markets Law to be provided from Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. in 2019 and this subject to be submitted for the approval of the General Assembly.
33 POLİSAN HOLDİNG: INVITATION TO AGM – 29.03.2019
Invitation to AGM INVITATION FROM POLİSAN HOLDİNG BOARD OF DIRECTORS TO THE ORDINARY GENERAL ASSEMBLY MEETING DATED APRIL 25, 2019
Is this a postponed announcement? No In line with our Board of Directors’ decision dated March 29, 2019, numbered 2019/06; the 2018 Ordinary General Assembly Meeting of our Company will be held to discuss and settle the following agenda at the Is this an update announcement? No Company headquarters, addressed Dilovası Organize Sanayi Bölgesi, 1. Kısım, Liman Caddesi, No: 7, Dilovası- The date, place and time of the 2018 KOCAELİ on April 25, 2019, Tuesday at 14:00 p.m. Summary Information General Assembly Meeting Our shareholders, who have the right to participate to the General Assembly Meetings, can attend the meeting to be held in the address indicated above, in person or through their representatives. Or, if they wish, they can use their secure electronic signatures and attend the meeting in person or through their representatives on the Electronic General Assembly System (“EGAS”) provided by the Central Securities Depository (“CSD”). The shareholders can authorize their representatives either by using EGAS or with the proxy form provided at Date of the decision 29.03.2019 the Company Headquarters or Company website at www.polisanholding.com.tr within the provisions of the Capital Markets Board’s (“CMB”) Communique II-30.1. The shareholders can have themselves represented by Type of the General Assembly Ordinary filling out the proxies and having their signatures notarized; or by attaching the authorized signatory list The beginning of the fiscal year 01.01.2018 approved by the notary to the proxy form, which has their signature on it. The ending of the fiscal year 31.12.2018 Natural person shareholders shall submit their Identity Cards; Legal person shareholders shall submit the identity cards along with the authorization certificates of the Date and Time 15.05.2018 14:00 people who are authorized to represent and bind the legal person; Deadline for Having Shares to Participate in The representatives of natural persons and legal persons shall submit their identity cards and authorization 25.04.2019 the General Assembly certificates; The representatives authorized by the EGAS shall submit their identity cards; Dilovası Organize San.Bölgesi, 1. Kısım, Address and sign the list of participants to physically attend the General Assembly Meeting. Liman Cad. No:7 Dilovası-KOCAELİ The shareholders who will attend the General Assembly on the electronic platform through EGAS can obtain Is there any amendment to the Articles of information from www.mkk.com.tr, which is the internet address of the CSD, in regards to the procedures and Association in regards to the Trade Mark No principles of participation, appointing representatives, suggesting proposal, explaining conviction, and use of among the decisions taken? vote. Is there any amendment to the Articles of The shareholders or their representatives who wish to attend the meeting on the electronic platform shall comply with the provisions of the “Regulation in regards to the General Assemblies of the Corporations to be Association in regards to the Business No held on the electronic platform” published on the Official Gazette dated August 28, 2012, numbered 28395 Activities among the decisions taken? and the for the General Assemblies of the Corporations” published on the Official Gazette dated August 29, Is there any amendment to the Articles of 2012, numbered 28396. Association in regards to the Headquarters of No Our Company’s Annual Report and Independent Auditor Report including Financial Tables pertaining to the the Company among the decisions taken? fiscal year 2018, Board of Directors’ Dividend distribution proposal, and General Assembly information document will be readily made available for our shareholders’ review at least 21 days prior to the meeting under the Investor Relations heading of www.polisanholding.com.tr, which is the link to our Company’s website available on the EGAS page of CDS’ website. Besides, the Annual Report will be published on the Public Disclosure Platform. We kindly invite our shareholders to participate to the meeting at the place, date, and time stated above. For the information of our esteemed shareholders, 34 Board of Directors POLİSAN HOLDİNG: INVITATION TO AGM – 29.03.2019
ATTACHMENT 2: ATTACHMENT 3:
POLİSAN HOLDİNG POWER OF ATTORNEY AGENDA OF THE 2018 ORDINARY GENERAL ASSEMBLY DATED APRIL 25, 2019 POLİSAN HOLDİNG
1. Opening and appointment of the Presidential Board for the meeting, I hereby appoint ………………………………………………………………….. as attorney introduced in detail 2. Granting authorization to the Presidential Board for the signing of the meeting minutes, below in order to represent me, to vote, to make proposal, and to sign the required 3. Review, discussion, and approval of the Annual Report of the Board of Directors and documents in line with the views that I indicated below, at the Ordinary/Extra Ordinary summary statement of the Independent Audit Report for the fiscal year 2018, General Assembly Meeting of Polisan Holding A.Ş. to be held on April 25, 2019, Thursday, at 4. Review, discussion, and approval of the Financial Statements for the fiscal year 2018, 14:00 p.m. at Dilovası Organize Sanayi Bölgesi, 1. Kısım, Liman Caddesi, No:7, Dilovası-KOCAELİ. 5. Release of the Board of Directors from their activities for the year 2018, 6. Informing shareholders in regards to the “Dividend Policy” of the Company for 2018 and The Attorney’s (*): upcoming years as per the regulations of the Capital Markets Board, Name Surname/ Trade Name: 7. Discussion of the use of 2018 profit, the profit subject to distribution, and earning share TR ID Number/ Tax ID Number, Trade Registry and Number and MERSIS (Central Registration ratios, System) Number: 8. Approval of the Independent External Audit Company nominated by the Board of (*) Foreign attorneys should submit the equivalent information, if any, mentioned above. Directors in accordance with Capital Markets Board’s Communique Serial: X No:22 on the Standards of Independent Audit on the Capital Market and Article 399 of the Turkish A) SCOPE OF REPRESENTATIVE POWER Commercial Code, The scope of representative power should be defined by choosing one of the options (a), (b) or 9. Approval of the Independent Board Member appointment to be made within the (c) in the following sections numbered 1 and 2. framework of the provision of Article 4.3.4 of Corporate Governance Principles of the Capital Markets Board’s Corporate Governance Communiqué (II-17.1). 1. About the agenda items of General Assembly: 10.Determination of the wages of the members of the Board of Directors, Independent a) The attorney is authorized to vote according to his/her opinion. Board Members and Committee Members, b) The attorney is authorized to vote on proposals of the Company’s management. 11.Providing information in regards to the remuneration policy for the members of the c) The attorney is authorized to vote in accordance with the following instructions stated in the Board of Directors and the senior management, table. 12.Informing shareholders in regards to the “Related Party Transactions” realized in 2018 as per the Capital Market Board regulations, Instructions: 13.Informing shareholders in regards to the donations and aids, which were provided by the In the event that the shareholder chooses the (c) option, the shareholder should mark one of Company to the funds and organizations in 2018 as part of the social responsibility and the options next to the agenda item (namely; “Accept” or “Reject”) and if the shareholder determining an upper limit for the donations to be provided in 2019 as per the marks the “Reject” box, then he/she should state the dissenting opinion that is requested to be regulations of the Capital Markets Board, noted down on the general assembly minutes, if any. 14.Granting permission to the Chairman and the Members of the Board on the fulfillment of . the written transactions pursuant to Article 395 and 396 of the Turkish Commercial Code, 15.Giving information to the shareholders regarding pledges, collaterals, and mortgages provided by the Company in favor of the 3. Parties, 16.Wishes and closing.
35 POLİSAN HOLDİNG: INVITATION TO AGM – 29.03.2019
No Agenda Items Accept Reject Dissenting 2. Special instruction related to other issues that may come up during the General Assembly Opinion meeting and particularly in regards to the use of minority rights: 1 Opening and appointment of the Presidential Board for the meeting, 2 Granting authorization to the Presidential Board for the signing of the meeting minutes, a) The attorney is authorized to vote according to his/her opinion. 3 Review, discussion, and approval of the Annual Report of the Board b) The attorney is not authorized to represent in these matters. of Directors and summary statement of the Independent Audit c) The attorney is authorized to vote in accordance with the following special instructions: Report for the fiscal year 2018, 4 Review, discussion, and approval of the Financial Statements for the SPECIAL INSTRUCTIONS; The special instructions (if any) to be given by the shareholder to the fiscal year 2018, attorney are stated herein. 5 Release of the Board of Directors from their activities for the year 2018, B) The shareholder specifies the shares to be represented by the attorney by choosing one of 6 Informing shareholders in regards to the “Dividend Policy” of the Company for 2018 and upcoming years as per the regulations of the the following. Capital Markets Board, 1. I hereby confirm that the attorney represents the shares specified in detail as follows: 7 Discussion of the use of 2018 profit, the profit subject to distribution, a) Order and Serial: * and earning share ratios, b) Number / Group: ** 8 Approval of the Independent External Audit Company nominated by c) Amount-Nominal Value: the Board of Directors in accordance with Capital Markets Board’s ç) Whether or not the votes are privileged: Communique Serial: X No:22 on the Standards of Independent Audit d) Bearer-Registered: * on the Capital Market and Article 399 of the Turkish Commercial e) Ratio of voting rights of the shareholder to the total shares that the shareholder has: Code, 9 Approval of the Independent Board Member appointment to be made within the framework of the provision of Article 4.3.4 of *Such information is not required for the shares which are followed up electronically. Corporate Governance Principles of the Capital Markets Board’s **For the shares which are followed up electronically, information related to the group will Corporate Governance Communiqué (II-17.1). be given instead of number. 10 Determination of the wages of the members of the Board of Directors, Independent Board Members and Committee Members, 2. I hereby confirm that the attorney represents all my shares on the list, which is prepared 11 Providing information in regards to the remuneration policy for the by CSD, the day before the General Assembly, concerning the shareholders who could attend members of the Board of Directors and the senior management, the General Assembly Meeting. 12 Informing shareholders in regards to the “Related Party Transactions” realized in 2018 as per the Capital Market Board regulations, NAME SURNAME OR TITLE OF THE SHAREHOLDER (*) 13 Informing shareholders in regards to the donations and aids, which were provided by the Company to the funds and organizations in 2018 as part of the social responsibility and determining an upper TR ID Number/ Tax ID Number, Trade Registry and Number and MERSIS (Central Registration limit for the donations to be provided in 2019 as per the regulations System) Number: of the Capital Markets Board, 14 Granting permission to the Chairman and the Members of the Board Address: on the fulfillment of the written transactions pursuant to Article 395 and 396 of the Turkish Commercial Code, (*) Foreign attorneys should submit the equivalent information, if any, mentioned above. 15 Giving information to the shareholders regarding pledges, collaterals, and mortgages provided by the Company in favor of the 3. Parties, SIGNATURE 16 Wishes and closing. 36 POLİSAN HOLDİNG: ADDITIONAL INFORMATION – 29.03.2019
ADDITIONAL INFORMATION AS PER CMB REGULATIONS
The additional information as per the Corporate Governance Principle Numbered 1.3.1, which takes place in the CMB’s Corporate Governance Communique Numbered II-17.1 is as follows:
1). Shareholder structure and voting rights:
There is no privileged share and voting right in the Polisan Holding’s shareholder capital. The shareholder structure as of the date of this disclosure is as follows:
Name and Last Name of the Shareholder Capital Share (TRY) Capital Share (%) Mehmet Emin Bitlis 176,854,217.50 23.32 Ahmet Ertuğrul Bitlis 175,788,215.45 23.18 Ahmet Faik Bitlis 85,733,185.55 11.30 Fatma Nilgün Kasrat 74,326,269.85 9.80 Ayşe Melike Bitlis 64,916,769.85 8.56 Other 180,881,341.80 23.85 TOTAL 758,500,000.00 100.00
2). Was there any change in the management and operations of the Company and its affiliates in the previous fiscal year or is there any plan of change for the future fiscal years that will affect the Company’s operations materially and the reasons of such changes:
n.a.
37 POLİSAN HOLDİNG: ADDITIONAL INFORMATION – 29.03.2019
3). Members of the Board of Directors: Election of the members of the Board of Directors is among the agenda items of the General Assembly meeting and that the information in regards to the nominees of the members of the Board of Directors is as follows: Mehmet Emin Bitlis: He was born on August 22, 1958. Between 1972 and 1984, he attended high school and completed his undergraduate degree in Austria. He speaks English and German. Having started his professional career in 1985, Mehmet Emin Bitlis is currently the Chairman of the Board of Polisan Holding, Polisan Kimya, Poliport, Polisan Yapı and Şark Mensucat. He is also the Vice Chairman of the Board of Polisan Hellas and Rohm and Haas. He is also a Board Member of Polisan Tarım. Additionally, Mehmet Emin Bitlis is a member of the Board of the Turkish Industry and Business Association, Turkish Chemical Manufacturers Association, Kocaeli Chamber of Industry, Gebze Chamber of Commerce, Dilovası Organized Industrial Zone, Istanbul Rotary Club and Malatya Education Fund. Ahmet Ertuğrul Bitlis: He was born on May 31, 1961 in İstanbul. He graduated from Boston University, Production Engineering (BSc) in 1983 and he had a master’s degree from the same university in 1984 on Mechanical Engineering. He started his professional career in 1986. Ahmet Ertuğrul Bitlis is currently the Chairman of the Board of Polisan Tarım. He is also the Vice Chairman of the Board of Polisan Holding, Polisan Kimya, Poliport, Polisan Yapı. Additionally, he is a Board Member of Şark Mensucat. Ahmet Faik Bitlis: He was born on August 29, 1962 in İstanbul. He graduated from Deutsche High School in İstanbul in 1981 and Boğaziçi University, in Industrial Engineering (BSc) in 1986. He received a master’s degree from the İstanbul University International Management Program in 1990 and completed the Harvard Business School Owners and Presidents Certificate Program in 2004. He started his professional career in 1986. Ahmet Faik Bitlis is currently a Board Member of Polisan Holding, Polisan Kimya, Poliport, Polisan Tarım, Polisan Yapı, Șark Mensucat and Rohm and Haas. Additionally, he is the member of the İstanbul Minerals and Metals Exporters’ Association (IKMIB), Malatya Education Fund, and Deutsche High School Culture and Education Fund. Fatma Nilgün Kasrat: She was born on April 1, 1964 in İstanbul. She graduated from Notre Dame de Sion French Girls High School in 1983 and İstanbul Technical University (ITU), in Chemical Engineering (BSc) in 1987. She started her professional career that year. Fatma Nilgün Kasrat is currently the Board Member of Polisan Holding, Polisan Kimya, Poliport, Polisan Tarım, Polisan Yapı and Șark Mensucat. Erol Mizrahi: He was born on September 2, 1954 in Edirne. He graduated from the University of İstanbul, Faculty of Law in 1977. Having held several positions within Polisan Holding since 1976, he was appointed General Coordinator of the Holding and General Manager of Polisan Kansai Boya in the second half of 1998. Serving as Polisan Holding’s CEO since 2005, Erol Mizrahi is currently the Executive Committee member of Polisan Holding. He is also the Chairman of the Board of Polisan Maroc and Polisan Hellas, the Vice Chairman of the Board of Polisan Kansai Boya and Polisan Tarım. Additionally, he is a Board Member of Polisan Holding, Polisan Kimya, Poliport, Polisan Yapı, Șark Mensucat, Rohm and Haas. He is also a Board Member of the Paint Industry Association (BOSAD). Ali Fırat Yemeniciler: He was born in 1956 in İstanbul. He graduated from Saint Joseph High School in 1975. Having graduated from University of İstanbul, in Chemical Engineering (BSc) in 1981, he received a master’s degree from University of Brussels in Petrochemicals (MSc). Between 1985 and 1995, Mr. Yemeniciler worked at Societe General de Surveillance as Petrochemicals Unit Manager and at Union Carbide as Turkey General Manager. He joined Polisan Holding in 1995. Ali Fırat Yemeniciler is currently the General Manager of Poliport and the Executive Committee Member of Polisan Holding. He is also the Board Member of Polisan Holding, Polisan Kansai Boya, Polisan Hellas, Poliport and Polisan Maroc. Zafer Kurtul: Zafer Kurtul, CFA, received his undergraduate degree from İstanbul University, Faculty of Business Administration in Finance and obtained his MBA degree from the University of Wisconsin-Madison, also in Finance. He held managerial positions at Citibank, BNP-Ak-Dresden Bank and Societe Generale prior to his appointment to Akbank in 1998 as the Assistant General Manager. Zafer Kurtul served as General Manager in Akbank between 2000-2009, and as the Vice Chairman of the Board between 2009-2010. He assumed the position of CEO of Sabancı Holding between 2010-2017 and acted as Chairman of the Boards of various subsidiaries of Sabancı Holding during this period. Zafer Kurtul has been the Chairman of the Board of ZKurtul Management Consulting company since 2017. Additionally, he is a Board Member of Polisan Holding, Alternatifbank and Mersin International Port. Şeref Taşkın: He graduated from Ankara University Faculty of Political Sciences in 1988. Şeref Taşkın joined the Account Experts Board in 1989. After having worked as an Account Expert until 1998, he left the Accounts Experts Board. Mr. Taşkın worked as a Financial Group Coordinator for a group of companies between 1998-2001 and served as board member at several group companies. In 2002, he joined Arkan & Ergin YMM A.Ş. as a Partner and Certified Public Accountant. Şeref Taşkın has been providing with audit and consultancy services for over 17 years to several companies operating in industry, trade and service sectors on issues such tax consultancy, transfer, merger, spin-o restructuring, stock exchange, due diligence, audit consultancy and tax litigation. He continues his professional career as a Certified Public Accountant. Arif Başer: He was born in 1967 in Trabzon. After graduating from A.Ü. Faculty of Political Sciences, Department of Finance in 1988, Arif Başer worked as an o cer for the General Directorate of National Estate for 1 year. He was successful in the entrance exam of the Ministry of Finance Account Experts Board in 1989 and worked as an Account Expert until 2004. Mr. Başer has been appointed to conduct research on the functioning of the American Tax Administration (IRS) and spent one year in that country for this purpose in 1999. Between 2000-2004, Mr. Başer worked as the Marmara Corporate Tax O ce Director, Foreign Trade Tax O ce Director and İstanbul Vice Provincial Treasury, respectively. He resigned from public service in November 2004 and has been working as a Certified Public Accountant since then. 4). The requests of the shareholders to add an agenda item: There is no request from shareholders to add an item to the agenda of the Ordinary General Assembly Meeting, where 2018 fiscal year’s operations will be discussed. 38 POLİSAN HOLDİNG: DIVIDEND DISTRIBUTION PROPOSAL – 03.04.2019
BoD Resolution in Regards to Dividend Distribution POLİSAN HOLDİNG 2018 PROFIT DISTRIBUTION TABLE (TRY) 1. Paid in Capital 758,500,000.00 Is this an update announcement? No 2. Total legal reserves (as per legal records) 18,367,993.24 Information concerning the privileged shares in profit distribution, if any, Is this a postponed announcement? No - as per the Articles of Association Summary Information 2018 Dividend Distribution Proposal CMB Financials TR GAAP Date of the BoD Decision 03.04.2019 Financials Date of the General Assembly when the decision will be evaluted 25.05.2019 3. Profit for Period 46,663,726.00 104,668,275.03 4. Taxes (-) 16,361,526.00 23,087,029.80 Type of the cash dividend payment In advance 5. Net Profit (=) 30,302,200.00 81,581,245.23 6. Prior years' losses (-) - - Cash Dividend to be Paid Cash Dividend to be Paid 7. First series of legal reserves (-) 5,233,413.75 5,233,413.75 Share Group Information for Each Share with TRY1 for Each Share with TRY1 8. Net Dıstrıbutable Profıt for the Perıod (=) 25,068,786.25 76,347,831.48 Nominal Value Gross (TRY) Nominal Value Net (TRY) 9. Donations made during the year (+) 837,919.00 POLHO(Old), TREPOHO00012 0.0329597 3.29597 10. Net distributable profit including donations 25,906,705.25 The Date of the Proposed Cash Dividend Payment 30.04.2019 11. First Dividend to shareholders - Cash 25,000,000.00 The Amount of - Bonus - The Amount of Proposed Share Group Information Proposed Share - Total 25,000,000.00 Share Dividend (TRY) Dividend (%) 12. Dividends distributed to privileged shareholders - Dividends distributed to BoD members, officers - POLHO(Old), TREPOHO00012 0.000 0.000 13. etc. INFORMATION IN REGARDS TO THE DIVIDEND TO BE DISTRIBUTED Dividends distributed to the owners of dividend - 14. INFORMATION IN REGARDS TO THE DIVIDEND PER SHARE shares GROUP TOTAL DIVIDEND DIVIDEND PER SHARE WITH TRY1 15. Second dividend to shareholders - (TRY) NOMINAL VALUE 16. Second series of legal reserves - AMOUNT (TRY) SHARE (%) 17. Status Reserves - GROSS 25,000,000.00 0.0329597 3.29597 18. Special Reserves - NET 21,250,000.00 0.0280157 2.80157 19. ExtraordInary Reserves 68,786.25 51,347,831.48 20. Other sources planned for distribution - - - Prior years’ profit - - - Extraordinary Reserves - - 39 - Other distributable reserves as per the - - Regulations and Articles of Association POLİSAN HOLDİNG: COMPANY OPERATIONS – 16.04.2019
Is This an Update Announcement? No Is This an Amendment Announcement? No Is This a Postponed Announcement? No Date of the Previous Disclosure on the Subject Matter - Summary Information Company Operations
ADDITIONAL EXPLANATION:
Polisan Holding decided to halt agricultural activities that it has been carrying out within its subsidiaries in order to concentrate on its core business lines. Thus, the land purchased in Aydın, Manisa and Balıkesir provinces, to engage in agriculture, has been put up for sale.
40 POLİSAN HOLDİNG: CHANGE IN BOD MEMBER – 16.04.2019
Is This an Update Announcement? No Is This an Amendment Announcement? No Is This a Postponed Announcement? No Date of the Previous Disclosure on the Subject Matter - Summary Information Change in BoD Member
ADDITIONAL EXPLANATION:
Our Board of Directors approved the resignation of Ali Fırat Yemeniciler from his post as the board member and assigned Esra Yazıcı, who is a non-shareholder, as the Independent Board Member. The aforementioned resolution has been registered by Gebze Registry of Commerce on April 16, 2019.
41 POLİSAN HOLDİNG: RESULT OF THE AGM – 25.04.2019
Is this an update announcement? Yes Is this an amendment announcement? No Is this a postponed announcement? No Summary Information The result of the 2018 General Assembly Meeting
Has the General Assembly taken place? Yes 1. It was decided to appoint Varol Ürel as the Chairman of the General Assembly. Chairman appointed Burhan Kurt as the writer of the minutes and the collector of the votes. 2. It was decided to authorize the Chairman of the General Assembly for the signing of the meeting minutes. 3. The Annual Report of the Board of Directors and Independent Audit Report were discussed. 4. The Balance Sheet and Income Statement were approved. 5. Members of the Board were released. 6. The shareholders were informed in regards to the Dividend Policy. 7. It was decided to distribute TRY25,000,000 (twenty five million Turkish Liras) gross dividend. 8. 2019 independent audit services were decided to be rendered by Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi. 9. The appointment made to the Board of Directors was approved. 10. It was decided to pay a monthly gross attendance fee of TRY6,000 (six thousand Turkish Liras) for each of the independent The decisions taken members of the Board, a monthly gross attendance fee of TRY11,000 (eleven thousand Turkish Liras) for each of the other Board members, and not to pay any salaries to the committee members. 11. Shareholders were informed in regards to the Remuneration Policy of the members of the Board of Directors and the senior management. 12. Shareholders were informed in regards to the Related Party Transactions realized in 2018. 13. Shareholders were informed in regards to the donations in-kind and cash provided to the organizations and funds, which are considered beneficial to the public, during the year. The upper limit for the donations to be provided in 2019 was decided to be TRY5,000,000 (five million Turkish Liras). 14. The Chairman and the members of the Board were decided to be granted the permission to realize transactions written in Articles 395 and 396 of the Turkish Commercial Code. 15. The shareholders were informed about the pledges, collaterals, and mortgages provided by the Company in favor of the 3. parties. 16. Closing. Decisions taken in regards to the use of rights Dividend Distribution42 Discussed POLİSAN HOLDİNG: AGM MINUTES – 25.04.2019
MINUTES OF THE ORDINARY GENERAL ASSEMBLY MEETING OF The following decisions were taken as a result of the discussions carried out required by the POLISAN HOLDING DATED APRIL 25, 2019 agenda. The 2018 Ordinary General Assembly Meeting of Polisan Holding was held at the Company headquarters, addressed Dilovası Organize Sanayi Bölgesi, 1. Kısım, Liman Caddesi, No:7, 1 - Opening and the Appointment of the Chairman for the meeting Dilovası-Kocaeli on April 25, 2019, at 14:00 p.m., under the supervision of Ministry The shareholder Mehmet Emin Bitlis’ proposal for the Chairman of the meeting was read. The Representative Mr Veysi Uzunkaya who is assigned to the post in accordance with the proposal was submitted to vote. It was unanimously decided to appoint Varol Ürel with the TR Directorate of Commerce of Kocaeli Province’s official letter dated April 17, 2019; numbered ID number of 65416104490 as the Chairman of the General Assembly Meeting. The Chairman 43613396. appointed Burhan Kurt as the writer of the minutes and the collector of the votes. The meeting invitation, containing the agenda as stipulated in the law and the Articles of 2 - Granting authorization to the Chairman of the Meeting for the signing of the meeting Association was published on the Turkish Trade Registry Gazette dated April 3, 2019, minutes numbered: 9801 as well as on the Kocaeli Gazette dated April 3, 2019. The invitation was also It was unanimously decided to authorize the Chairman of the Meeting for the signing of the sent to the bearer shareholders who declared their addresses by submitting ordinary shares in minutes of the General Assembly Meeting. advance with a registered letter having a return receipt; it was disclosed on the Public Disclosure Platform and on the Company’s website at www.polisanholding.com.tr as well as on 3 - Review, discussion, and approval of the Annual Report of the Board of Directors and the Central Securities Depository’s e-General Assembly (Electronic General Assembly System) summary statement of the Independent Audit Report for the fiscal year 2018 System within the timeframe set forth for the announcement of the meeting date and agenda. Due to the fact that the Board of Directors’ Annual Report and the Independent Audit Report It was ascertained from the list of attendants that of the 758,500,000 shares, each with a TRY1 were previously presented on the Public Disclosure Platform, Company website and the nominal value and representing the Company’s TRY758,500,000 total capital; 518,752,520.10 Central Securities Depository’s Electronic General Assembly System for the shareholders’ shares representing total TRY518,752,520.10 nominal value were represented in the meeting. review; the shareholder Ahmet Ertuğrul Bitlis proposed to discuss the reports without reading Of the 518,752,520.10 shares; 482,787,144.70 shares representing TRY482,787,144.70 of the them. The Chairman of the Meeting read Ahmet Ertuğrul Bitlis’ proposal and submitted it to capital were present in person, 6,031,842 shares representing TRY6,031,842 of the capital vote. The discussion of the Annual Report of the Board of Directors and Independent Audit were present through deposited representatives, and 29,933,533.40 shares representing Report without reading was unanimously accepted. The reports were opened to discussion. TRY29,933,533.40 of the capital were present through other representatives. Accordingly, the Nobody commented. minimum quorum requirement as set forth by the legislation and Articles of Association is met. 4 - Review, discussion, and approval of the Financial Statements for the fiscal year 2018 It was ascertained as per the Clause five and six of the Article 1527 of the Turkish Commercial As the Company’s 2018 Consolidated Balance Sheet and the Income statement, prepared as Code that the Company’s preparations for the electronic general assembly were performed in per the CMB’s Communique with Serial-II, No: 14.1 on the Guidelines relating to the Financial line with the regulations. Burhan Kurt, who has the Central Securities Depository’s Electronic Reporting in the Capital Markets, were previously made available to and reviewed by the General Assembly Certificate Expertise was assigned by the CEO Erol Mizrahi to use the shareholders, it was accepted by majority of votes (512,762,163.10 votes in favor as opposed Electronic General Assembly System. The meeting was opened simultaneously on the physical to 5,990,357 votes against) to discuss them without reading during the meeting. The Balance and the electronic platform and continued with the discussion of the agenda. Sheet and Income Statement were opened to discussion. Nobody commented. The Balance Varol Ürel informed shareholders about the form of voting. He stated that the execution of the Sheet and the Income statement for the fiscal year 2018 were submitted to vote and approved electronic poll would remain anonymous. He also told that shareholders who physically (512,762,163.10 votes in favor as opposed to 5,990,357 votes against). participate to the meeting shall vote open by showing of hands and shareholders who vote 5 - Release of each member of the Board of Directors from their activities for the year 2018 against favor shall declare their rejection orally. During the voting, the Board members did not use their voting rights, stemming from the shares they own, for the release of their own Board membership. Instead, they were released by the votes belonging to the other shareholders who participated to the meeting (72,235,519.65 votes in favor as opposed to 6,031,842 votes against). 43
. POLİSAN HOLDİNG: AGM MINUTES – 25.04.2019
6 - Informing shareholders in regards to the “Dividend Policy” of the Company for 2018 and deducted and 1/10 of the remainder is allocated as Second Legal Reserve Fund as per the upcoming years as per the regulations of the Capital Markets Board Turkish Commercial Code’s Article 466, Paragraph 2, Clause 3. Polisan Holding realizes dividend distribution within the framework of the provisions of the Unless all reserves required by law are set aside and the first dividend determined for the Turkish Commercial Code, Capital Market regulations, Tax legislations and other related shareholders and cash and/or share dividends determined for the owners of the non-voting legislations and the article of the Company’s Articles of Association regarding the dividend shares are distributed as per the Articles of Association; it cannot be resolved to set aside other distribution. Polisan Holding’s Dividend Policy is subject to the conditions in the national, global reserve funds, to transfer profit to the next year and to distribute profit to the privileged economy, and capital markets; and long term strategies, capital requirements, cash and shareholders, owners of the participating, founding, and dividend shares, members of the profitability expectations as well as investment and financing policies of the Holding’s Board of Directors, officers and other employees, foundations of various purposes and similar subsidiaries and affiliates in regards to their operations. The Board of Directors takes a decision persons and/or entities. Additionally, in case second dividend is distributed from the profit, the for dividend distribution each year to submit for the approval of the General Assembly. non-voting shares have the equal rights as the other shares and that they benefit in the Polisan Holding may distribute cash dividend and/or bonus shares while evaluating share buy amount of their capital shares. back under the above conditions and within the context of the related regulations to create Dividends are distributed to all of the existing shares, without per diem deduction, as of the more value for its shareholders. date of distribution regardless of their dates of issue and time of acquisition. As arranged under the Article 30 of the Polisan Holding’s Articles of Associations, the Method and timing of the distribution of the profit, which is resolved to be distributed, will be determination and distribution of the dividend is as follows: decided by the General Assembly upon the proposal of the Board of Directors on that matter. The net profit shown on the annual balance sheet, which is the remaining balance from the net The profit, which is distributed in accordance with the provisions of this Articles of Association sales as of the end of the fiscal year less general expenses and various depreciation mandatory cannot be revoked. to be paid and amounts to be set aside by the Company, and all taxes payable by the It may be resolved to pay dividend advances to the shareholders in compliance with the Company’s legal entity, will be allocated and distributed as respectively shown below once provisions of the Article 15 of the Capital Market Law. deducted from the previous year’s losses (if any): How and when the annual profit will be distributed to shareholders will be decided by the First Legal Reserve Fund General Assembly upon the Board of Directors’ proposal, which takes into consideration the a) 5% is set aside as legal reserve fund. regulations of the Capital Markets Board on that matter. The General Assembly may authorize First Dividend Board of Directors to decide on the timing of the profit distribution. b) Any donation granted during the relevant fiscal year is added to the remaining balance and 7 - Discussion of the use of 2018 profit, the profit subject to distribution and earning share the first dividend is calculated in accordance with the ratios and amounts that were defined by ratios the Capital Markets Board. The Board of Directors’ decision relating to dividend distribution, dated April 3, 2019 and c) After the deduction of these specified above, the General Assembly is entitled to decide the previously disclosed to the public in the Attachment 1; was approved. It was unanimously distribution of the dividends to the members of the Board of Directors, officers and other decided to distribute TRY25,000,000 (twenty five million Turkish Lira) gross dividends on April employees, owners of the dividend/founding dividend shares, privileged shareholders, 30, 2019. foundations of various purposes and similar persons and/or entities. 8 - Approval of the Independent Audit Company nominated by the Board of Directors in Second Dividend: accordance with Capital Markets Board’s Communique Serial: X No:22 on the Standards of d) The General Assembly is authorized to fully or partially distribute the remaining amount Independent Audit in the Capital Markets and Article 399 of the Turkish Commercial Code after the deduction of the amounts referred to in sub-paragraphs (a), (b), (c) as second The Board of Directors’ decision dated March 29, 2019 as per the Turkish Commercial Code dividend or to set aside as reserve funds. Article 399, in regards to the rendering of independent audit services in 2019 from Güney Second Legal Reserve Fund: Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi was unanimously e) Of the total amount that was decided to be distributed to shareholders and other accepted. participating persons, a dividend share in the amount of 5% of the paid in capital is 44 POLİSAN HOLDİNG: AGM MINUTES – 25.04.2019
9 - Approval of the Independent Board Member appointment made to the Board of Directors as The transactions realized with Rohm and Haas Kimyasal Ürün Üretim Dağıtım ve Ticaret A.Ş. per the provision of the Article 4.3.4 of the CMB’s Corporate Governance Communique (II-17.1) were primarily for the raw material purchases and with Polisan Kansai Boya Sanayi ve Ticaret The appointment of Esra Yazıcı (ID No: 29426066612) as an Independent Board to complete the A.Ş. and Şark Mensucat Fabrikası A.Ş. were for the services. In 2018, purchases from Rohm and remaining term of the Board Member Ali Fırat Yemeniciler (ID No: 44587411958) after his Haas totalled TRY494,634, TRY381,761 of which was the raw material purchases. Purchases resignation from the Board of Directors, has been approved (518,505,863.1 votes in favor as from Polisan Kansai Boya totaled TRY3,500,470, of which TRY2,151,253 were services and opposed to 246,657 votes against). TRY1,341,102 were raw materials and finished goods. In 2018, of the TRY14,576,120 sales realized to Rohm and Haas, TRY14,572,642 were the services. Total of TRY29,827,355 sales 10 - Determining the wages of the members of the Board of Directors, Independent Board (TRY2,763,806 of goods, and TRY26,379,860 of services) were realized to Polisan Kansai Boya. Members and Committee Members Besides, the services sold to Şark Mensucat stood at TRY4,903,960, TRY4,415,217 being the The shareholder Mehmet Emin Bitlis’ proposal in regards to the attendance fee to be paid to the late interest. Board of Directors and the Committee members was read by the Chairman of the Meeting. The 13 - Informing shareholders in regards to the donations and aids, which were provided by proposal was submitted to vote. It was decided to pay a monthly gross attendance fee of the Company to the funds and organizations in 2018 as part of the social responsibility and TRY6,000 (six thousand Turkish Liras) for each of the independent members of the Board, a determining an upper limit for the donations to be provided in 2019 as per the regulations of monthly gross attendance fee of TRY11,000 (eleven thousand Turkish Liras) for each of the other the Capital Markets Board Board members, and not to pay any salaries to the committee members (512,925,850.10 votes in favor as opposed to 5,826,670 votes against). During the year donations in-kind and cash provided to the organizations and funds, which are considered beneficial to the public, totaled TRY618,944. The shareholder Erol Mizrahi’s 11 - Informing shareholders in regards to the “Remuneration Policy” for the members of the proposal for the upper limit of the donations that will be granted in 2019 to be TRY5,000,000 Board of Directors and the senior management. (five million Turkish Liras) was read by the Chairman of the Meeting. The proposal was As per Holding’s Articles of Association, Board members receive a certain remuneration decided discussed and accepted (512,720,678.10 votes in favor as opposed 6,031,842 votes against). by the General Assembly on a monthly, annually or per meeting basis. The remuneration of the 14 - Granting permission to the Chairman and the Members of the Board on the fulfillment Board, including independent members; the General Managers and Deputy General Managers of the written transactions pursuant to Article 395 and 396 of the Turkish Commercial Code are based on the Capital Markets Board’s Corporate Governance Principles and other applicable law. It was decided to give permission to the shareholders (518,547,348.10 votes in favor as opposed to 205,172 votes against) who have the management control, to the Board members, The Holding executives are being paid a base salary, performance based bonus, and side benefits to the senior management and their partners as well as relatives up to second degree by (private health insurance, life insurance, vehicle, corporate mobile phone and line). The expenses marriage and blood to engage in transactions, which may cause conflict of interest with the realized within the duties of the executives are being paid by the Holding. Company or its affiliates; compete; realize transactions with the Company on behalf of There are no transactions that might lead to conflict of interest such as lending money to an themselves or other parties; engage personally or on someone else’s behalf in businesses, executive; providing loan facilities; have them use credits through third parties under the name of which are in the scope of the Company’s operations; partner with companies, which are in the personal loan; and providing collateral for their benefit. similar businesses with a qualification of a partner having unlimited responsibility; and carry The salaries of the executives are decided each year taking Holding’s targets into consideration out other businesses within the framework of Articles 395 and 396 of the Turkish Commercial while the remuneration of the Board members is decided each year by the General Assembly. Code. Holding discloses the Remuneration Policy on its website; and total salaries and benefits alike 15 - Giving information to the shareholders regarding pledges, collaterals, and mortgages granted to the Board members and senior management through its Annual Report. provided by the Company in favor of the 3. Parties 12 - Informing shareholders in regards to the “Related Party Transactions” realized in 2018 as The shareholders were informed that there were no pledges, collaterals, and mortgages per the Capital Market Board regulations provided by the Company in favor of the 3. Parties. As per the detailed disclosure on the Related Party Transactions (Note: 28) of the Consolidated Financial Statements and independent Auditors' Report of Polisan Holding A.Ş. for the period between 1 January45 -31 December 2018; POLİSAN HOLDİNG: AGM MINUTES – 25.04.2019
16 - Wishes and closing As there were no other items to discuss, the attendees were thanked for their participation along with the wishes and hopes to achieve success for 2019 operations. The Ministry’s Representative took the floor and asked if there is any rejection to the participants of the General Assembly, whether in person or by proxy as well as to the decisions taken. As there was no rejection, the meeting was adjourned at 14:45 by the Chairman of the Meeting.
Ministry Representative VEYSİ UZUNKAYA 65590037072
Chairman of the General Assembly VAROL ÜREL 65416104490
Writer of Minutes/Collector of Votes BURHAN KURT 52552046302
46 POLİSAN HOLDİNG: LIST OF PARTICIPANTS – 25.04.2019
47 POLİSAN HOLDİNG: 2018 DIVIDEND PAYMENT – 25.04.2019
Approval of the 2018 Dividend Payment
Is this an update announcement? Yes Is this an amendment announcement? No Is this a postponed announcement? No Summary Information Approval of the 2018 Dividend Payment
The date of the decision of the Board of Directors 03.04.2019 The date of the General Assembly where the subject is an agenda item 25.04.2019 Was the Dividend Distribution discussed? Discussed The type of the cash dividend payment In advance Currency TRY Payment in shares None Cash Dividend Payment Amount and Ratios
Cash Dividend to be Cash Dividend to be Cash Dividend to be Cash Dividend to be Paid for Each Share Paid for Each Share Witholding Paid for Each Share Paid for Each Share Share Group Information Payment with TRY1 Nominal with TRY1 Nominal Ratio (%) with TRY1 Nominal with TRY1 Nominal Value Gross (TRY) Value Gross (%) Value Net (TRY) Value Net (%) POLHO(Old), TREPOHO00012 In Advance 0.0329597 3.29597 15 0.0280157 2.80157
Dates of Cash Dividend Payment
The Proposed Date of Use of Cash The Actual Date of Use of Cash Dividend Payment Payment Date (3) Record Date (4) Dividend (1) (2) In Advance 30.04.2019 30.04.2019 03.05.2019 02.05.2019
48 POLİSAN HOLDİNG: DIVIDEND DISTRIBUTION TABLE – 25.04.2019
POLİSAN HOLDİNG 2018 PROFIT DISTRIBUTION TABLE (TRY) INFORMATION IN REGARDS TO THE DIVIDEND TO BE DISTRIBUTED 1. Paid in Capital 758,500,000.00 INFORMATION IN REGARDS TO THE DIVIDEND PER SHARE 2. Total legal reserves (as per legal records) 18,367,993.24 GROUP TOTAL DIVIDEND DIVIDEND PER SHARE WITH TRY1 Information concerning the privileged shares in profit distribution, if any, (TRY) NOMINAL VALUE - as per the Articles of Association AMOUNT (TRY) SHARE (%) CMB TR GAAP GROSS 25,000,000.00 0.0329598 3.2959789 Financials Financials NET 21,250,000.00 0.0280158 2.8015821 3. Profit for Period 46,663,726.00 104,668,275.03 4. Taxes (-) 16,361,526.00 23,087,029.80 5. Net Profit (=) 30,302,200.00 81,581,245.23 6. Prior years' losses (-) - - 7. First series of legal reserves (-) 5,233,413.75 5,233,413.75 8. Net Dıstrıbutable Profıt for the Perıod (=) 25,068,786.25 76,347,831.48 9. Donations made during the year (+) 837,919.00 10. Net distributable profit including donations 25,906,705.25 11. First Dividend to shareholders - Cash 25,000,000.00 - Bonus - - Total 25,000,000.00 12. Dividends distributed to privileged shareholders - Dividends distributed to BoD members, officers - 13. etc. Dividends distributed to the owners of dividend - 14. shares 15. Second dividend to shareholders - 16. Second series of legal reserves - 17. Status Reserves - 18. Special Reserves - 19. ExtraordInary Reserves 68,786.25 51,347,831.48 20. Other sources planned for distribution - - - Prior years’ profit - - - Extraordinary Reserves - - 49 - Other distributable reserves as per the - - Regulations and Articles of Association POLİSAN HOLDİNG: REGISTRATION OF THE AGM – 26.04.2019
Registration of the General Assembly Decisions
Is this a postponed announcement? No Is this an update announcement? No Summary Information The registration of the 2018 Ordinary General Assembly Meeting’s decision
Have the decisions of the General Assembly Been Registered? Yes Registry Date 26.04.2019
ADDITIONAL EXPLANATION:
The decisions taken during our Company’s 2018 Ordinary General Assembly Meeting dated April 25, 2019, have been registered by Gebze Registry of Commerce on April 26, 2019.
50 THANK YOU
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