Creating Your Own Ocean for Sustainable Success…

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Creating Your Own Ocean for Sustainable Success… AKFEN HOLDİNG A.Ş. Headquarters Koza Sok. No: 22 Gaziosmanpaşa 06700 Ankara/TURKEY Phone: +90 312 408 10 00 Fax: +90 312 441 07 82 2013 Annual Report Istanbul Office Levent Loft, Büyükdere Cad. No: 201, Kat: 11 Levent 34394 Istanbul/TURKEY Phone: +90 212 319 87 00 Fax: +90 212 227 23 91 akfen.com.tr [email protected] Akfen Holding 2013 Annual Report Akfen Creating your own ocean for sustainable success… What is Blue Ocean Strategy? Today, companies face fierce competition in a cut-throat business environment in order to grow profitably, gain competitive advantage and increase market share. This brutal competition takes place in a red and bloody ocean where profitability is extremely low and enterprises worry about the future. With their Blue Ocean Strategy created as a result of long term research on 150 strategic moves spanning 30 industries, Chan Kim and Renee Mauborgne, lecturers at the international business school INSEAD, set forth a new method for companies to have permanent success and high profitability: Do not focus on winning the competition. Focus on making the competition irrelevant by creating a leap in value for both the company and its customers. As a result of this process of value innovation you will have an ocean where you make the rules. A high and sustainable level of profitability will be waiting for you in this blue ocean. In the process of identifying new potential fields of operations, Akfen Holding has focused on the uncontested markets and thus minimized risk while creating demand and opportunity to grow profitably. Akfen Holding: Red Fish in the Blue Ocean… At Akfen Holding we believe that a sustainable future and consistent high profitability is only achievable if you are the one who makes the rules. This is only possible by creating your own blue ocean. Contents GENERAL OVERVIEW OF AKFEN The Leading Investment Holding of Turkey: Akfen 02 HOLDING Shareholding Structure 03 Fields of Activity 04 Global Footprint of Akfen Holding 05 Corporate Values and Future Outlook 11 Operational Performance 2013 12 The Story of the Red Fish in the Blue Ocean 14 MANAGEMENT Message from the Chairman 16 Message from the CEO 18 Board of Directors 20 Senior Management 22 Subsidiaries and Affiliates 25 AKFEN HOLDING AND GROUP Financial Results in 2013 26 COMPANIES IN 2013 2013 Operations 32 Human Resources 80 Corporate Social Responsibility 82 Awards in 2013 86 CORPORATE GOVERNANCE Global Compact 87 Code of Ethics 88 Public Disclosure Policy 90 Dividend Distribution Policy 94 2013 Corporate Governance Principles Compliance Report 95 Akfen Holding Articles of Association 112 FINANCIAL TABLES Convenience Translation to English of Consolidated Financial Statements as at and for the Year Ended 121 31 December 2013 Operational Performance 2013 Akfen Holding maintains operational efficiency and profitability with its large-scale investment projects. 12 Message from the Message from the Chairman CEO Thanks to sound financial policies, The projects completed by Akfen the Turkish economy was least Construction in the last 20 years affected by economic fluctuations amount to approximately US$ and maintained its growth during 1.9 billion. In 2013, the Company 2013. made significant progress on two major projects. 16 18 Mersin International Port Operations Conventional tonnage at Mersin International Port (MIP) increased by 7.1% from 7.1 million tons in 2012 to 7.6 million tons in 2013. Meanwhile, the volume of container-handling increased 9.1% year-over-year/annually. 48 AkfenHEPP Akfen REIT Investments As of year-end 2013, total In accordance with its business electricity generation at the power model, Akfen REIT specializes in plants (including Karasular) developing and contracting out increased 8.9% over the previous the construction of three to four- year to 451.4 GWh. star contemporary city hotels. 56 64 2 AKFEN HOLDİNG 2013 ANNUAL REPORT Turkey’s Leading Investment Holding Driven by a Unique Business Model: Akfen Founded in 1976, Akfen Holding (Akfen, Group, the Company, Holding) today serves as a model for steady, sustainable growth together with all the companies under its roof. By making the right investment decisions in sectors with high potential for growth both in Turkey and other countries, Akfen has positioned itself as the business development expert of the global economy. Integrating 37 years of experience with contemporary management strategy, the Holding places a great deal of importance on human capital on the road to leadership. Since its establishment, Akfen has maintained a robust financial structure and strong foundation and continues to grow through successful strategic partnerships with leading companies in the sector. Akfen Holding operates across a wide range of industries including airport management and operations, construction, port operations, marine transportation, water distribution and wastewater treatment, energy and real estate. The Company reflects an innovative and dynamic approach in all areas of its business and provides vision to the sectors in which it operates with its unique, high-quality projects. The main elements which help Akfen Holding to lead the pack are its entrepreneurial spirit coupled with an ability to map out risks and opportunities, and create new sectors. The Holding’s main business strategy has always been to avoid competition in the red ocean of overcrowded industries, and to create its own blue ocean in new and promising sectors. This is the strategic perspective that underlies our investments into new industries such as maritime transport and port operation, airport operation, urban hotels, water concessions and energy, which all harbor great growth potential for the country. A GENERAL OVERVIEW OF AKFEN HOLDING AKFEN HOLDİNG 2013 ANNUAL REPORT 3 The Leading Investment Holding of Turkey: Akfen Shareholding Structure Fields of Activity Global Footprint of Akfen Holding Corporate Values and Future Outlook Operational Performance 2013 The Story of the Red Fish in the Blue Ocean Shareholding Structure SHAREHOLDER NAME SHARE CAPITAL (TL) Hamdi Akın* 198,499,750 Akfen İnşaat Turizm ve Ticaret A.Ş.** 7,989,806 Akınısı Makine Sanayi ve Ticaret A.Ş. 1,058,000 Akfen Turizm Yatırımları ve İşletmecilik A.Ş. 1,058,000 Other 162,224 Free-float*** 82,232,220 TOTAL 291,000,000 * Hamdi Akın holds 109,074 free-floating shares (corresponding to 0.04% of paid-in capital). ** Free-floating. *** Akfen İnşaat ve Turizm A.Ş. holds 6,992,099 free-floating shares (corresponding to 2.4% of paid-in capital). Under the Share Buyback Program, Akfen Holding repurchased 13,230,488 shares (corresponding to 4.5% of paid-in capital). Share capital consists of Class A (registered) and Class B (bearer) shares. Class A shares have an aggregate nominal value of TL 57,458,736, representing 19.75% of paid-in capital. Class A shares are not traded on the stock exchange. Class A shareholders have three votes for one share at General Assembly meetings. Class A shares are privileged shares that come with voting rights. Class B shares have an aggregate nominal value of TL 233,541,264, representing 80.25% of paid- in capital. Some 82,232,220 of Class B shares are traded on the National Market of Borsa Istanbul A.Ş. (BIAŞ). Class B shares have no privileges. As of December 31, 2013, Akfen Holding holds a direct stake in five subsidiaries and controls six others via joint ventures. The Company’s consolidated financial statements as of December 31, 2013 include Akfen Holding and its subsidiaries, as well as shares in affiliates and joint ventures. Akfen Holding controls all the direct or indirect subsidiaries under the umbrella of the Group. Share Ratio (%) Hamdi Akın 68.21% Free Float 28.26% Akfen İnşaat Turizm ve Ticaret A.Ş. 2.75% Akınısı Makine Sanayi ve Ticaret A.Ş. 0.36% Akfen Turizm Yatırımları ve İşletmecilik A.Ş. 0.36% Other 0.06% Fields of Activity Having 37 years of in-depth experience as well as a visionary and innovative approach, Akfen Holding continued to make investments with high growth potential in 2013, thereby adding value to the Turkish economy and other countries where it operates. Airport Concessions Construction • TAV Havalimanları Holding A.Ş. (TAV Airports) • Akfen İnşaat Turizm ve Ticaret • TAV Yatırım Holding A.Ş. (TAV Share 8.12% A.Ş. (Akfen Construction) Investment) Revenue (TL Thousand) 293,228 Share 99.85% Share 21.68% Adjusted EBITDA (TL Thousand) 81,469 Revenue (TL Thousand) 122,994 Revenue (TL Thousand) 351,179 Total Assets (TL Thousand) 539,199 Adjusted EBITDA Adjusted EBITDA Number of Employees 24,014 (TL Thousand) 2,658 (TL Thousand) 25,641 Partner ADP, Tepe İnşaat, Sera Total Assets Total Assets (TL Thousand) 519,468 (TL Thousand) 464,912 Number of Employees 141 Number of Employees 3,446 Partner ADP, Tepe İnşaat, Sera Water Concessions Real Estate Investments • Akfen Çevre ve Su Yatırım Yapım İşletme A.Ş. (Akfen Water) • Akfen Gayrimenkul Yatırım Ortaklığı A.Ş. (Akfen REIT) Share 50.00% Share 56.81% Revenue (TL Thousand) 5,424 Revenue (TL Thousand) 41,262 Adjusted EBITDA (TL Thousand) 3,011 Adjusted EBITDA (TL Thousand) 28,998 Total Assets (TL Thousand) 35,801 Total Assets (TL Thousand) 1,518,526 Number of Employees 42 Number of Employees 31 Partner Kardan Global Footprint of Akfen Holding Unique Sectors In addition to pioneering new infrastructure investments in Turkey and other countries where it operates, Akfen Holding also develops new sectors by creating completely new lines of business in areas such as airport management, drinking water and waste water concessions and
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