AG Anadolu Group Holding Annual Report 2018 Contents Overview In 2018 Corporate Governance 2 Anadolu Group in Brief 30 Operational Assessment 84 Corporate Governance Principles 4 Milestones 30 Beer Compliance Report 2018 6 Capital and Shareholding Structure 34 Soft Drinks Financial Information 8 Our Principal Business Lines 38 Migros 9 International Business Partners 42 Automotive 98 Financial Review 10 Key Financial Indicators 52 Retail 110 Dividend Distribution Table 12 Chairman’s Message 60 Other Companies 111 Statement of Responsibility 14 CEO’s Assessment 70 Anadolu Group and Social Responsibility 112 Independent Auditor’s Report on the 18 Board of Directors 76 Sustainability at Anadolu Group Management’s Annual Report 23 Organization Chart 82 Human Resources at Anadolu Group 114 Consolidated Financial Statements together with Independent Auditor’s 24 Senior Management Report for the Period January 1 - December 31, 2018 Other Informations 221 Declaration of Independence by Independent Board Member Candidates 226 Legal and Other Information About Activities Overview // In 2018 // Corporate Governance // Financial Information // Other Informations Anadolu Group The star that links Anatolia to the world and the world to Anatolia AG Anadolu Group Holding Annual Report 2018 1 Overview // In 2018 // Corporate Governance // Financial Information // Other Informations Anadolu Group in Brief Undertaking strategic investments in beer, soft drinks, retail, and agriculture, Anadolu Group’s operations embrace a broad range of sectors that also include automotive, stationery, quick-service restaurants, real estate, and energy. A global player “The star that links Anatolia to the world and the world to Anatolia” 1950 19 9 Founded Countries Sectors Established by Yazıcı and Özilhan families Turkey, Germany, Azerbaijan, Belarus, Beer, soft drink, retail, agriculture, Georgia, Netherlands, Iraq, Kazakhstan, automotive, stationery, quick-service Kyrgyzstan, Turkish Republic of Northern restaurants, real estate, energy Cyprus, Macedonia, Moldova, Pakistan, Russia, Syria, Tajikistan, Turkmenistan, Ukraine, Jordan ~80,000 66 80+ Production facilities Countries exported to Employees 2 AG Anadolu Group Holding Annual Report 2018 Overview // In 2018 // Corporate Governance // Financial Information // Other Informations Originally established in 1950 by the Yazıcı developing branded consumer products. and Özilhan families and advancing into Undertaking strategic investments in the future with its vision of being “the star the areas of beer, soft drinks, retail, and that links Anatolia to the world and the agriculture, Anadolu Group conducts its world to Anatolia”, Anadolu Group provides operations across a broad range of sectors employment to around 80 thousand people embracing automotive, stationery, quick- in nearly 80 companies and 66 production service restaurants, real estate, and energy. facilities located in 19 countries. With assets Mindful too of its social responsibilities, worth TRL 56.0 billion in value in 2018, the it also contributes to the wellbeing of the group booked a total turnover of TRL 42.1 community in the areas of education, health, billion on its operations. and sports through Anadolu Foundation, Anadolu Medical Center, and Anadolu Efes Anadolu Group nourishes rapid and Sports Club. healthy growth by creating added value for Turkey in line with its goals of globalizing internationally as a regional player, entering into partnerships with the world’s biggest companies in keeping with its commitment to a partnership culture, and As of year-end 2018 A global player with Partnership culture strong local presence with global brands TRL 42.1 billion Turnover Including the proforma consolidation of Migros Strong ownership Expertise in branded ties coupled with high consumer products corporate governance 6 standards Companies Quoted on Borsa İstanbul (BIST) AG Anadolu Group Holding Annual Report 2018 3 Overview // In 2018 // Corporate Governance // Financial Information // Other Informations Milestones Anadolu Group was set up in 1950 by the Yazıcı and Özilhan families. 1950 1976 1969 Anadolu Efes 1969 Adel Kalemcilik established. 1965 Anadolu Efes established. 1960 Anadolu Motor established. Çelik Motor established. established. 2009 2008 Anatolian Caucasia Energy AES Electricity Wholesale established. 2008 established. 2007 AEH Insurance Agency 2005 Stake acquired in established. McDonald’s licensing Aslancık Electricity. agreement was received. 4 AG Anadolu Group Holding Annual Report 2018 Overview // In 2018 // Corporate Governance // Financial Information // Other Informations 2005 1995 Anadolu Medical Center established. 1984 Coca-Cola production and distribution Efestur established. 1983 operations commenced Licensing agreement 1979 in Kazakhstan. Anadolu Foundation entered into with ISUZU established. Motors. 2017 2017 Anadolu Group holding 2015 Anadolu Landini companies merged Migros stake acquired. under one roof. 2011 established. 2009 AND Gayrimenkul Anadolu Etap established. established. 2018 AG Anadolu Group Holding Annual Report 2018 5 Overview // In 2018 // Corporate Governance // Financial Information // Other Informations Capital and Shareholding Structure 14.16% 48.65% 7.71% 9.98% 19.50% AG Sınai Yatırım ve Yönetim A.Ş. Other Yazıcı Family Individuals Özilhan Family Süleyman Kamil Yazıcı and Family Free Float BIST code: AGHOL.IS End-2018 market cap: USD 472 million AG Anadolu Group Holding Shareholding Structure Capital share Capital share Voting rights Voting rights (31 December 2018) (TRL 1,000) (%) (TRL 1,000) (%) AG Sınai Yatırım ve Yönetim A.Ş. (*) 118,474 48.65 118,474 48.65 Other Yazıcı Family Individuals (*) 47,505 19.50 47,505 19.50 Özilhan Family (*) 24,293 9.98 24,293 9.98 Süleyman Kamil Yazıcı and Family (*) (***) 18,782 7.71 18,782 7.71 Free Float (**) 34,480 14.16 34,480 14.16 Others 1 0.00 1 0.00 Total Capital 243,535 100.00 243,535 100.00 Class # shares % shareholding Board candidate designation rights A (bearer) 194,827,614 80.00 - B (registered) 48,706,904 20.00 6 243,534,518 100.0 (*) As of 31 December 2018, 28.65% of AG Sınai Yatırım ve Yönetim A.Ş. shares amounting TRL 69,767. All of the shares of the Other Yazıcı Family Members, Özilhan Family, Süleyman Kamil Yazıcı and his Family and others are publicly floating and of these shares the portion of 10.32% shares amounting TRL 24,105 publicly floating. With the decision of the Board of Directors dated 7 March 2018 AG Sınai Yönetim A.Ş. and AEP Anadolu Etap Penkon Pazarlama Ltd. Şti. merged on 29 March 2018. (**) The shares only consist of the shares traded on the stock exchange which do not belong to family members. (***) TRL 218 of TRL 18,988 belongs to Anadolu Ecopack Üretim ve Pazarlama A.Ş. Anadolu Ecopack Üretim ve Pazarlama A.Ş.’s 100% shares belong to Süleyman Kamil Yazıcı and his Family Members. 6 AG Anadolu Group Holding Annual Report 2018 Overview // In 2018 // Corporate Governance // Financial Information // Other Informations Following the merger in 2017, AG Anadolu Group Holding completed its first full year operations in 2018, during which it continued to contribute to the social wellbeing of and create value to its country and its business partners in all of the territories in which it is operating. AGHOL’s common shares are divided into AG Sınai Yatırım ve Yönetim A.Ş. is a two classes as A and B with each class management company in which İzzet Türkan of shares having equal voting rights on all Özilhan Yönetim ve Danışmanlık A.Ş. and matters except for the privilege to nominate 6 Kamil Yazıcı Yönetim ve Danışma A.Ş. each of the 12 members of the Board of Directors control 50% stakes. It was set up to manage recognized for Class B. Class B consists the owners’ interests in AGHOL and its of registered shares and are owned by subsidiaries. AG Sınai Yatırım ve Yönetim AG Sınai Yatırım ve Yönetim A.Ş. Class A A.Ş. is indirectly managed by S. Kamil shares are all bearer type shares and consist Yazıcı family and İzzet Özilhan family on the of (1) the shares that belong to AG Sınai basis of equal representation and equal Yatırım ve Yönetim A.Ş., (2) the shares that management principle. belong to the Yazıcı families and the Özilhan family, and (3) the shares that make up the company’s free float. AG Anadolu Group Holding Annual Report 2018 7 Overview // In 2018 // Corporate Governance // Financial Information // Other Informations Our Principal Business Lines Beer Soft Drink Migros Anadolu Efes Coca Cola İçecek Migros Automotive Retail Others Anadolu Isuzu Adel Kalemcilik Anadolu Etap Çelik Motor Anadolu Restoran Energy (Aslancık Electricity, Anatolian Caucasia Anadolu Motor Efestur Turizm İşletmeleri Energy, AES Electricity Wholesale) Anadolu Landini Real Estate (AND Anadolu Gayrimenkul, AND Kartal Gayrimenkul, AND Ankara Gayrimenkul) Insurance (AEH Insurance Agency) Social Organizations Anadolu Foundation Anadolu Medical Center Anadolu Efes Sports Club 8 AG Anadolu Group Holding Annual Report 2018 Overview // In 2018 // Corporate Governance // Financial Information // Other Informations International business partners Anadolu Group continues to create value in all of the territories in which it has operations through its partnerships with leading global brands and its joint ventures with multinational companies. AG Anadolu Group Holding Annual Report 2018 9 Overview // In 2018 // Corporate Governance // Financial Information // Other Informations Key Financial Indicators 2018 YEAR-END PROFORMA SUMMARY: Total sales TRL 42.1