Valued stakeholders,

With improvements taking the form of expanding investment outlays, industrial output, and trade, 2017, whose global growth projections were revised upwards by the International Monetary Fund, inspired hopes that the world's economies were in recovery. Developing countries in particular experienced no serious problems with liquidity last year while financial markets' outlooks remained reasonably positive.

That said however, 2017 was a year in which an increase in geopolitical risks on a global scale was also to be observed. In the US, the Trump administration's anti-globalization bias and unfavourable attitude towards free trade has been disquieting global markets since the very first day. Anxieties about the sustainability of global growth are fueled by tensions in the US's relations with Russia, North Korea, and China as well as by political uncertainties in Europe and worrying developments in the Middle East, the last of which are of particular concern to our own country.

For Turkey, 2017 was a year in which, notwithstanding many political and geopolitical risks, economic growth exceeded expectations. The country's financial markets' attentions were focused all year long on a referendum to amend the constitution, on a referendum in northern Iraq, on a US-Turkey visa crisis, and on developments in the Middle East. Despite this however, the Turkish economy had a successful year in 2017 and outperformed most growth expectations. The double-digit (11.1%) rate of growth in the third quarter of the year was especially hope-inspiring. Three factors in particular contributed the most to this favourable picture: government tax and other incentives, improvements in export performance, and low third-quarter base effects.

One seriously unwelcome development in the Turkish economy in 2017 was unquestionably the surge in inflationary pressures. At 11.92%, the country's consumer price index moved into double-digit territory for the first time in six years.

Despite such difficult conditions and uncertainties both at home and abroad, the Tekfen Group had an extremely successful year in 2017 from the standpoints of total turnover and profitability. On a consolidated basis, the Group registered a turnover of TRL7,487 million, an EBITDA of TRL1,004 million, and a net profit of TRL770.7 million. Similarly as of end-2017, the Tekfen Group's total assets and total equity stood at TRL9,376 million and TRL3,008 million respectively.

The Tekfen Contracting Group, which is the most important representative of the Tekfen brand abroad and which has contributed substantially to the Turkish economy with more than 300 projects undertaken in many of the world's countries, successfully posted a TRL4,861.5 million turnover and a TRL390.6 million net profit in 2017. Active in Azerbaijan, Kazakhstan, Saudi Arabia, and Qatar as well as in its home market, the Group made sizeable additions to its portfolio of ongoing projects in the form of the TurkStream Gas Pipeline & Kıyıköy Gas Reception Terminal Project in Turkey; the Tengiz Oil & Gas Field Future Development and the Tengiz Oil & Gas Field Temporary Construction Units projects in Kazakhstan; and the Eastern Industrial Road and the Al Thumama Stadium projects in Qatar. Focusing on exploring new business lines and markets all year long, the Tekfen Contracting Group completed 2017 with an active projects portfolio worth a total of US$3.4 billion. Tekfen Engineering, in a joint venture with its foreign partner was awarded the engineering consultancy and control contract for the 1915 Çanakkale Bridge and Malkara-Çanakkale Motorway Project in Turkey. This is the biggest agreement of this nature which that company has ever entered into.

The Tekfen Agri-Industry Group, which represents the Tekfen brand in the agri-industrial business line, also had a very successful year in which, despite tough market conditions, it generated a turnover of TRL2,240.5 million and a net profit of TRL346.6 million while also outperforming its 2017 tonnage, turnover, and profitability targets. Toros Tarım, which is active in a sector whose production is largely dependent on imported inputs, quickly and successfully accommodated itself to exchange-rate rises and volatilities that remained persistent all year long by taking a flexible management approach. The impact of changes in the domestic regulatory framework governing sales of nitrate-based fertilizers was alleviated by having recourse to external markets, with the result that the Company registered record-breaking export sales last year. Toros Tarım also had a very productive year from the standpoint of the substantial investments that it undertook and the innovations that it made in the areas of products, plant, R&D, environment, and human resources.

Although the Tekfen Real Estate Development Group fell short of sales and profitability expectations last year owing to a domestic real estate market that has been in the doldrums since the middle of 2016, the company nonetheless continued to explore and develop new projects without interruption while also focusing its attentions on the new Topkapı Housing Project, whose launch is planned to take place in 2018.

The Tekfen Group continued its efforts all year long to make itself organizationally more dynamic and productive by constantly renewing itself and its operations in order to move into new sectors and business lines and by adapting its existing organization according to current needs while never compromising any of the corporate values or principles that are the products of more than six decades of human effort.

The successes that we achieved in 2017 are the outcome first and foremost of the inestimably admirable, diligent, and dedicated work of the people that make up the Tekfen family. It is with that in mind that, personally and on behalf of the Tekfen Group, I offer my thanks to each and every one of them for having had a hand in creating this picture of success. We also owe a debt of gratitude to all of the investors and shareholders who, unsparing of their confidence in our efforts to take Tekfen even higher and steadily raising the bar by which our success is judged, are likewise unfailingly at our side.

As we embark upon yet another operational year with the hope that we shall always be backed by such support, I wish all of my colleagues the very best of success.

Very truly yours,

Osman Birgili
President & CEO
Tekfen Group of Companies