Honesty, integrity, and superior business ethics are the foundations of our business conduct. We conduct our business based on good intentions, mutual benefit, and fair treatment in all our relationships. We are committed to conforming at all times to the highest ethical and legal standards. We are a leader in serving our society and safeguarding the interests of future generations. Protection of the environment and promotion of a higher level of environmental awareness are our duty to both our country and our planet. Vehbi Koç 01 Arçelik Group's vision of “Respects The Globe, Respected Globally” aims to achieve profitable and sustainable growth; to increase market share in its target market; the globe; to reach more consumers in a fast-changing world with innovative products and services; to safeguard the future with corporate responsibility; and to integrate and optimize the components of the global organization while becoming a global group. 02 Contents 2014 ANNUAL REPORT Vision 02 Almanac 2014 04 Report of the Board of Directors and Message from the Chairman 06 Message from the General Manager 08 Auditor’s Report on Annual Report 11 Financial Statement Summary 2014 12 Financial Indicators 13 Five-Year Consolidated Financial Review 14 Shareholders 15 Dividends Paid 16 Sustainable Growth Share Performance 17 Risk Management 18 The Target Market; the Globe Brands 22 Global Operational Network 23 International Markets 24 • White Goods 25 Innovation • Consumer Electronics 25 Turkish Market 31 • White Goods 31 Corporate Responsibility • Consumer Electronics 31 Plants 35 Global Organization Innovative and Superior Technology 36 Innovative Products 42 Innovative Applications 45 Consolidated Financial Statements Corporate Governance Principles Compliance Report 50 and Independent Auditors’ Report Statement of Compliance with Corporate Governance Principles 50 Environmental Approach to Products and Production 71 Environment-Friendly Products 76 Environment-Friendly Applications 80 Social Responsibility 81 Awards and Achievements in 2014 90 Global Organization 92 Business Excellence 96 International Compliance Certificates 97 Board of Directors 2014 98 Management 2014 100 Agenda 102 Profit Distribution Proposal 103 Independency Statements of Candidates for Independent Members of Board of Directors 104 Dependent Company Report 106 Independent Auditor’s Report 107 Consolidated Financial Statements 109 03 Almanac 2014 2014 ANNUAL REPORT JANUARY FEBRUARY MARCH APRIL MAY JUNE • Arçelik A.fi. attended International Consumer Electronics • Second BMS (Backlight - Module-Set) panel production Show-CES organized in Las Vegas with the Grundig line launched in Beylikdüzü Electronics Plant. brand. • Blomberg attended 2014 Architectural Digest Home Design • Arçelik A.fi. received a total of seven awards including Show held in New York. three first place awards and four second place awards • Beko attended Eurocucina International Kitchen Furniture in “IMMIB Stars of Export 2013” awards. Exhibition held in Milan, Italy. • Arçelik A.fi. Çerkezköy Electric Motors Plant • World premiere of Cast by Patricia Urquiola collection manufactured the 1 millionth Turkish Coffee Machine. designed by Patricia Urquiola took place in Eurocucina • Arctic Romania Refrigerator Plant received the “TPM International Kitchen Furniture Exhibition held in Milan. Special Award”. • Eskiflehir Compressor Plant manufactured the 50 millionth • Solidarity Cooking Marathon Project carried out by Beko compressor. in Spain received three awards in “Global Mercury • Arçelik A.fi. is entitled to “CIPS Corporate Certification”, a Excellence Awards”, one of the most famous corporate global accreditation issued to around 130 companies communications awards of the world. globally in order to ensure excellence in purchase • Seven different products of Arçelik A.fi. were given management. awards within the scope of “IF Design”, one of the most • Arçelik Authorized Dealers Assembly is held in Antalya prestigious design awards of the world. with the participation of authorized dealers from all over • Arçelik A.fi. entitled to "Authorized Economic Operator Turkey. Certificate" by The Ministry of Customs and Trade. • Beko and FC Barcelona entered into a four-year partnership • Leisure Patricia Urquiola collection designed by the that brought two global brands together. The new logo of globally-renowned designer Patricia Urquiola is Beko is affixed on the new team jersey and training kit of premiered in Istanbul. Barcelona. • Beko introduced its products to Thailand market within • Beko introduced its products to consumers in an event the scope of HomeWorks Expo, organized in Bangkok, held in Bangladesh. capital city of Thailand. • Arçelik A.fi. awarded 386 inventor engineers that • Beko exhibited its products in the 47th Cairo International undersigned important projects in the field of building Fair. technology and developing innovative products within the scope of the “16th Invention Day”. • Elektrabregenz is entitled to the “Green Brand” award for the second time in Austria. 04 Almanac 2014 2014 ANNUAL REPORT JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER • Arçelik A.fi. is entitled to five design awards within the • Arçelik A.fi. is entitled to 5 awards within the scope of the scope of “Red Dot”, one of the most prestigious design “26th Crystal Apple 2014 Turkey Advertising Awards” with contests of the world. Arçelik and Beko brands. • China Washing Machine Plant, Russia Refrigerator and • Arçelik became the co-sponsor of the 2nd Istanbul Design Washing Machine Plant and Romania Refrigerator Plant Biennial. are entitled to ISO 50001 Energy Management • Arçelik A.fi. became one of the 15 companies listed under certifications. "BIST Sustainability Index", which is based on environmental, • 2014 FIBA Basketball World Cup is held in Madrid, Spain social and corporate governance performances of under “Presenting Sponsorship” of Beko. companies. • Grundig signed a sponsorship agreement with Norwegian • Defy opened its New Side by Side Refrigerator line at East Handball Federation (NHF) and gave its name to both London Plant. women's and men's leagues. • Arçelik is selected as "The Most Popular Brand" in both • Beko and Grundig exhibited their innovative, stylish, high- white goods and consumer electronics fields and a tech products at IFA, one of the world's biggest electronics category-independent survey, which is conducted for the and electrical household appliances. first time, within the scope of “Turkey's Lovemarks” research. • 13 products of Arçelik A.fi. are entitled to awards within the scope of "Good Design Awards" presented by Chicago Athenaeum Museum of Architecture and Design and Metropolitan Arts Press Ltd. Museum. • Arçelik A.fi. is given “R&D Leadership” and “Leadership in Technology Development” awards within the scope of the Third Turkey Innovation Week organized by Turkish Exporters' Association. • Arçelik A.fi. became the winner in “Innovation Strategy” category of InovaLIG Innovation Leaders Awards within the scope of Turkey Innovation Week. • 2013 Sustainability Report of Arçelik A.fi. is issued in accordance with the new G4 reporting guidelines of GRI - Global Reporting Initiative. 05 Report of the Board of Directors and Message from the Chairman 2014 ANNUAL REPORT Arçelik continued its steady and strong growth in 2014, increasing its sales by 13% which reached a consolidated turnover of TL 12.5 billion and after-tax profit of TL 638 million. Esteemed Shareholders, I sincerely welcome you and hope we have a productive In addition to these developments, the global agenda of meeting where we will review the results of the last year. the last year featured political tensions amongst Turkey’s neighbors in the region and a global fight against In 2014, we continued to feel the impacts of long-lasting epidemics. global economic stagnation. In spite of the positive developments in the US housing and employment markets, One of the most important things to be closely monitored global growth expectations continue to remain limited due by the financial markets in 2015 will certainly be the interest to stagnation in the Eurozone and Japan and to economic rate hike process of the US Federal Reserve Bank. We slowdown in China and India, the two main drivers of might also see a regression in Russia’s economy due to growth. Last year we witnessed a strengthening US dollar decreasing oil prices along with strident measures to be in financial markets and regression in the prices of goods taken to protect against such a scenario. When the possible and services, particularly oil. This had a positive impact impacts of these developments on the global economy on importing countries, including Turkey, but imposed are taken into account, we can reasonably expect to pressures on developing countries such as Brazil, Russia experience an optimistic yet cautious recovery process and South Africa which export finished products and raw in 2015 as compared to the previous year. materials. 06 2014 ANNUAL REPORT Estimates indicate that Turkey’s economy grew by 3% on Our steady growth coupled with maximized profitability an export basis in 2014. The country’s current deficit help us to operate with the aim of paying taxes to the state, recovered as a result of the positive impacts of the decrease distributing dividends to our shareholders, supporting in oil prices, but the rate of inflation increased significantly. research and development activities, making investments, The inflation rate was reported as 8.2% in