MESSAGE FROM THE CEO

Alternate TextDear Stakeholders and Employees,

Here at Zorlu Group, we begin a new operating year, proud of our growth during the prior period, which has successfully met our lofty goals. With our sights set on double digit growth every year, I am confident that our group shall hit the strong growth targets, as set forth in our strategic plans, also in 2016.

During 2015, our investments have matured, resulting in solid gains. In textiles, which is a core business for our group, we have continued to supply fabrics to leading global brands, while working as an innovative partner alongside global household names. We continue our success as the largest integrated polyester yarn manufacturer of Europe and the Middle East, the leading exporter of textiles in Turkey, while staying at the cutting edge of micro-yarn technologies on a global scale. We are proud of our brand ‘Made by Zorlu’ which is enjoying worldwide recognition thanks to our self-cleaning, breathing, exceptionally durable, nano or antimicrobial fabrics and our 100% organic line ‘Dry Touch’ home textile line, enabling moisture management. In 2015, our Textile Group has made significant progress towards establishing an R&D center, with the R&D center certificate granted to us by the Science, Industry and Technology Ministry. Going forward, we will continue to be the national textile sector’s door to the globe with our innovations in the fields of yarn, fabric, home textiles and continued investment in technical textiles.

We have also played a leading role in the digitalization process of Turkey in 2015 with Turkey’s leading technology brand, Vestel. Our “Smart City” concept, displayed by Vestel in Europe’s largest electronics fair IFA, showcases our capabilities. The new model of Venus, V3, which is Turkey’s first locally manufactured smart phone, marks a further milestone in the country’s digital transformation. Hereafter, we will continue to play a crucial role in bringing smart living products and services to the forefront in Turkey. We continue to grow in the domestic market, while retaining strong exports. Our joint project with Spanish-based Telefonica to manufacture internet based TV is in full progress. We also retain our number one spot in the Turkish LED lighting market, with a share of 21 percent. In the area of defense, we are developing and manufacturing unmanned aerial vehicles (UAV) that meet NATO standards, which are undergoing testing at the moment. Our plan is to export these vehicles after 2017, becoming a major global player in the field.

Our Energy Group, which obtains a full 61% of its installed capacity in Turkey from renewable sources, has improved its efficiency and profitability following the completion of our projects in 2015. The first phase of Alaşehir Geothermal Power Plant, the fruit of a 153 million dollar investment and with a total capacity of 45 MW, was commissioned and connected to the national grid. We aim to ramp it up to full capacity to soon. During the first half of 2016, we are also planning to begin constructing the 100 MW Kızıldere III Geothermal Power Plant in Aydın. The 80.3 MW Osmaniye Sarıtepe Demirciler Wind Energy Power plant is targeted to be commissioned in June 2016. Recently, we have also commissioned our Ashod and Ramat Negev Co-generation Plants, following the completion of the Dorad Power plant in Israel. This brings the total output capacity of Zorlu Energy Group’s energy partnerships in Israel to 1,015 MW, giving us the capability to supply 7 percent of Israel’s electricity demand for the next 25 years. With our work in this field, we aim to help the establishment of a clean energy ecosystem in Turkey as well, With the help of Zorlu Center, our real estate group has begun to reap the fruits of its investments. All functions exhibit satisfactory performance, making us highly proud. Mall traffic continues to advance steadily, while the Performing Arts Center made strides towards achieving its target of placing in the top five globally in the field, by bringing some of the world’s most respected artwork to Turkey. During the coming period, we will continue to invest in research and development into new projects, while striving to enhance the profitability and performance of our existing real estate holdings.

In the areas of mining and metallurgy, we have achieved a significant landmark; test production in Gördes Meta Nikel Metallurgy facility began in the last quarter of 2014, has, after eight months, turned into commercial production, resulting in our first export. With the additional investments planned for the next two years, we will have invested a total of 700 million dollars for this facility, bringing our total capacity to 20,000 tons.

In the new operating period, we will continue to propel Turkey towards it dreams and full capabilities, as we have proudly done over the last 63 years. While we strive to be a global leader, our strength stems from our unlimited imagination, courage, as well as our entrepreneurial and innovative spirit. I would like to take this opportunity to express our gratitude to our employees, business partners and customers, who have contributed to our success with their confidence, hard work and dedication.

Sincerely,

Ömer Yüngül

CEO