Dear stakeholders,

In 2021, which was recorded as the year of recovery during the pandemic, Turkey grew by 11% compared to the previous year, when economic activities were deeply affected. With the start of interest rate cuts in the last quarter of the year and the implementation of the new economic model, export-led growth was targeted by creating a competitive currency, increasing production and employment. Thus, although a current account surplus was predicted thanks to the record export levels reached during the year, the expected decline in the current account deficit did not materialize due to the commodity price increases which also inflated imports. On the other hand, the December inflation rate came out as 36%, the highest level since 2002. Globally, signs of recovery were observed in economic activities due to the rapid spike in demand, which was postponed in the previous year, especially as of the second half of the year. However, it was observed that this rapid recovery on the demand side could not be met due to the deterioration in the global supply chain and the supply-side bottleneck.

Despite the counter winds created by the adverse economic conditions in our country and in the world, at Akkök Holding, one of the most rooted industrial organizations of our country with its 70 years of experience, we are taking firm steps forward in line with our goal of catching up with global competition conditions and reaching world standards with all our companies. While we grow with the understanding of sustainable development in all the sectors in which we operate, we continue to add strength to Turkey’s strength in areas such as production, employment, exports and innovation.

As in previous years, we focused on investments in line with our long-term goals and completed acquisitions and projects in line with our core business lines in 2021. In this context, we purchased 51% of Epsilon Kompozit, which produces high-tech composite parts for various sectors, especially the aerospace and defense industry, and exports to world giants such as Airbus, Bell and KAI. With Epsilon, which exports 90 percent of its sales, we aim to reduce foreign dependency in composites and to support Turkey’s employment and development. We have determined our future target in this field as growing in the international arena.

Akkim Kimya, one of our group companies, bought and incorporated USK Kimya, one of the world’s largest carboxymethyl cellulose producers. Similar to 2021, we will continue to evaluate organic and inorganic growth opportunities both at home and abroad in 2022. Our investments will continue in all areas, especially in the chemical and energy sectors. In addition, our target in 2022 will be to focus on innovative products and technologies that can create a competitive advantage in challenging macro conditions.

While our chemical group companies continued their organic and inorganic investments in 2021, as in previous periods, they considered sustainability and circular economy among their priority issues. Our companies also displayed a strong financial performance despite the volatile economic environment throughout the year. The world’s leader and Turkey’s only acrylic fiber producer, Aksa Akrilik, expanded its EBITDA profit by 85% and completed 2021 with financial success. In line with its primary targets in 2021, the company reached high sales volumes in brands such as Acrycycle, Acrysole, Acrylusion, Armora and Acrybella to ensure that Aksa brands reach end users. It also commissioned the first phase of a new yarn facility investment worth USD 27.5 million bearing the Aksafil brand. DowAksa, a 50% subsidiary of Aksa and one of the first and only carbon fiber producers in Turkey and one of the few in the world, successfully managed 2021 and closed the year with a growth of 30%. DowAksa entered 2022 by putting on its agenda the investments that will significantly expand its production capacity in order to meet the rising demand.

One of Turkey’s largest chemical manufacturers, Akkim Kimya, after completing the acquisition of USK Kimya at the beginning of 2021, established Akkim Silicon Kimya company for the production of high-tech silicone polymers in line with its sustainable growth targets and put it into operation at the end of the year. In addition, Akkim plans to start a large facility investment this year that will reduce the current account deficit of our country.

Akcoat, one of Akkim’s subsidiaries, produces in 5 different categories: enamel, ceramic, glass, non-stick - decorative coatings and pigments. In order to develop value-added products in the field of chemical coatings and to strengthen the creativity of its employees with teamwork, Akcoat established a new R&D Center on an area of 10,000 m². Last year, 86 projects were worked on at Akcoat R&D Center within the scope of the TÜBİTAK University-Industry Cooperation Support program. Patent applications were made for 25 products that emerged as a result of these projects.

Distinguished from its competitors in the real estate sector with its qualified and diversified portfolio structure, Akiş REIT reached occupancy rates of 97% in Akbatı and 95% in Akasya in 2021. The company completed the construction process of the Erenköy Apartment project and leased it to a prominent retail group in Turkey, as part of its high street retail investments, which it started to diversify and raise its rental income. Investing in innovative startups in line with the changing world order, Akiş REIT stepped into the crypto world with the production of utility-based tokens at the beginning of 2022. The company has also earned the right to be the only REIT to be included in the Borsa Istanbul Sustainability Index this year, with its sustainability efforts in 2021.

Akmerkez Shopping Mall, one of the distinguished meeting points of Istanbul, continued to develop projects that will raise its brand value while maintaining its dividend performance in 2021. The local agriculture project “Agriculture on the Terrace”, in line with the sustainable world theme, reached a large customer base in 2021 thanks to the cooperation of the gastronomy departments of universities and volunteers.

Akenerji, one of the most established companies in Turkey with its 33 years of experience in the energy sector, continued to operate its existing power plants optimally according to market prices and to develop new projects that will create added value in 2021 as well. Akenerji succeeded in becoming the first Turkish company to be registered in the European Energy Exchange, the largest energy exchange in Europe. The transaction volume of the company in electricity trade reached approximately 5.4 TWh by the end of 2021, expanding some 10 times compared to the previous year.

Electricity distribution and retail companies SEDAŞ and Sepaş Enerji implemented initiatives that will make their current business models efficient and support innovative projects in 2021. Sepaş Enerji strengthened its digital infrastructure and developed online payment channels, so that half of its customers are now able to transact with online payment channels. Focusing on values such as innovation and agility, the company has also implemented the in-house entrepreneurship project called “Sepas X Young Entrepreneurship”. SEDAŞ, on the other hand, started to take the first steps towards the goal of making TL 3 billion of investments in 5 years by getting approval from official institutions in order to increase its investments 3 times in the 2021-2025 new tariff period in energy. Continuing its work in the fields of digitalization, sustainability and infrastructure, the company also continues to offer professional internship opportunities to young talents in its service region with the “Stargate” project, created in order to strengthen the employer brand and with the aim of raising employment.

In 2021, at Akkök Holding, we grew our combined turnover to TL 28 billion. In addition, we increased the share of our exports in total turnover by 3% and reached a total export figure of TL 5.6 billion. Working on innovative projects that will contribute to Turkey and create added value will always be among our priorities. I would like to extend my sincere thanks to all our stakeholders, employees, business partners and shareholders who have supported us.

Sincerely,

Ahmet C. Dördüncü

Chairman of the Executive Board

and Member of the Board of Directors