Esteemed Tekfen stakeholders,

2018 will forever be remembered as a year that witnessed a number of developments that were historically momentous for both the world and our own country. From the standpoint of the global economy, the events that first come to mind were escalating protectionist sentiments championed first and foremost by the United States and the US' preference for decisions capable of stifling international trade (and indeed the very process of globalization) at the expense not just of China but of its traditional European allies as well and the adverse impact of capital whose flow into developing countries was diverted by a succession of US Federal Reserve Bank interest rate hikes. One of the most important items on Europe's agenda was the process of formulating and negotiating the terms of the UK's departure from the European Union.

Here in Turkey, two events of the utmost importance were the conduct of the first elections under the presidential system of national government whose adoption through a constitutional amendment marked a sea change in the history of the Turkish Republic on the one hand and, on the other, the far-ranging military action launched in northern Syria to combat terrorist activity originating from that region.

Having to contend with the macro-level implications of such a national and international context, the Turkish economy had a difficult time indeed in 2018. This was particularly true in the second half of the year, when economic growth slowed (and may even have gone negative in the last quarter), unemployment began to rise again, consumer and (especially) producer price inflation reached the highest levels witnessed in the decade and half after the 2001 economic crisis, interest rates soared, and exchange rates probed historically new heights. All these developments posed serious risks for Turkish businesses and impacted on their financial performance to a significant degree. Nevertheless, the Tekfen Group completed 2018 showing financial results that were very successful with historically high levels of both turnover and profitability.

Message from the PresidentIn 2018, the Tekfen Group registered a consolidated turnover of TRY12,147 million, an EBITDA profit of TRY1,501 million, and a net profit of TRY1,402 million. As of end-2018, the Tekfen Group had total assets worth TRY12,036 million and total equity amounting to TRY4,424 million.

Our contracting division, which has always played the biggest role in making Tekfen an international brand by successfully carrying out hundreds of projects in numerous Asian, African, and European countries as well as in Turkey, once again contributed the biggest share of the Tekfen Group's consolidated revenues. In 2018, the Tekfen Contracting Group achieved brilliant results showing a turnover of TRY9,006 million and a net profit of TRY741 million. Tekfen Construction, the Tekfen Contracting Group's flagship company, was carrying out project operations in Azerbaijan, Saudi Arabia, Qatar, Iraq, Kazakhstan, and Georgia as well as in Turkey at 2018. As of the same date, Tekfen Construction's order backlog was worth around USD2,747 million in value.

The second biggest contributor to the Tekfen Group's consolidated revenues is its agri-industry division, which in 2018 succeeded in showing a turnover of TRY2,965 million and a net profit of TRY464 million in what was a very tough year indeed. Owing to the nature of Turkey's fertilizer industry, Toros Tarım, the largest member of the Tekfen Agri-Industry Group is obliged to import a substantial volume of its inputs; consequently its ability to report successful financial results in 2018, a year in which exchange rates rose rapidly, is an important achievement indeed. It is also worth noting at this juncture that, as measured by weight, Toros Tarım exported more goods in 2018 than in any previous year of its history.

The Tekfen Group's real estate division's business line is the one that probably suffered the most from the economic conditions which prevailed in 2018 as was detailed above. Tekfen Real Estate Group close its 2018 books showing a net loss of TRY25 million.

In recent years, the Tekfen Group has been giving importance to its strategy of diversifying by investing in new business lines, especially those associated with its existing ones, and integrating them into its operations. A specific example of this strategy is to be seen in the Tekfen Group's acquisition of a 90% stake in two firms-Alanar Meyve ve Gıda Üretim Pazarlama Sanayi ve Ticaret AŞ and Alara Fidan Üretim ve Pazarlama Sanayi ve Ticaret AŞ. We expect that these companies, which produce and handle agricultural produce, will create new synergies for our agri-industry division.

Advancing confidently and steadfastly along the path on which it embarked in 1956, the Tekfen Group has continued to grow ever since. So in closing, allow me to take this opportunity to offer my appreciation to all of our shareholders, employees, customers, and business partners who have accompanied us on that journey and whose support we have never felt a lack of. I also extend my best wishes that 2019 will be a prosperous year for ourselves and for our country as a whole.

Very truly yours,

Cahit Oklap
President, Tekfen Group Companies