CEO’s Assessment


Esteemed Stakeholders,

Despite numerous global and national challenges in 2016, Turcas continued to execute its investment plans at full pace continually while achieving new success stories in corporate governance. We completed 2016 with a positive bottom-line thanks to the strong performance of our fuel distribution subsidiary.

As a demonstration of the importance we place on corporate governance, we continued to receive maintained corporate governance rating service in 2016. As of March 2017, our Corporate Governance Rating increased from 9.35 to 9.48, out of 10. Our Company has made great progress in corporate governance as reflected by the uninterrupted increase in our rating score over the past seven years. In 2016, Turcas Petrol ranked ninth among all companies in Turkey, and placed first among energy companies in this key area. I would like to thank Turcas Family for their major role in this accomplishment, and I hope that this success encourages the progress of companies across Turkey in terms of corporate governance.

Our fuel distribution subsidiary Shell and Turcas Petrol A.Ş. (STAŞ) grew faster than the sector in 2016 in terms of sales volume, recording sales revenue of TL 16.8 billion and net profit of TL 242 million. Earnings before interest, tax, depreciation and amortization (EBITDA), one of the most important financial indicators, more than doubled compared to 2015 and reached TL 987 million. Serving more than 1 million people each day with 1,017 fuel stations across Turkey, STAŞ  continued to lead the sector in gasoline and lubricant sales, capturing market shares of 25% and 18%, respectively, in gasoline and diesel sales by year-end 2016. In the same period, STAŞ led the market in terms of “under canopy” gasoline and diesel sales through Vehicle Identification Systems, with a 20.9% market share.

Net sales at our 800 MW Denizli plant – one of Turkey’s most efficient natural gas fired combined cycle power plants owned by our power generation subsidiary RWE & Turcas South Power Generation – climbed to TL 801 million in 2016 thanks to the higher-than-last-year capacity utilization rate. In line with our strategy of diversifying our power generation portfolio with renewable investments, we increased our equity stake at our geothermal energy subsidiary Turcas Kuyucak Geothermal Power Generation, from 46% to 92%, in May 2016 to become the majority shareholder. At our 18 MW geothermal power plant investment in Kuyucak, Aydın, we reached our target geothermal resource and executed eight successful drillings, consisting of six production wells and two reinjection wells. As for the financing of this project with a total investment budget of USD 71 million, we secured a 14-year, USD 57 million project financing loan in 2016 and began to utilize this line of credit. We are working very hard to start commercial operations at our Aydın geothermal power plant in fourth quarter 2017.

Despite the steep loss of value in Turkish Lira, Turcas turned back to profitability once again in 2016, driven by the strong performance of our fuel distribution business, which grew faster than the sector average, and our relatively low financial leverage. Going forward, Turcas aims to create value by diversifying its power generation portfolio with renewable energy resources with a focus on geothermal energy and geographic expansion. This expansion may include new ventures, from acquiring equity stake in overseas energy and technology companies to developing new energy projects.

As I conclude my assessment, I would like to thank you for your confidence in Turcas and your continuous support, and wish us all another year with full of new achievements.

Respectfully yours,

Batu Aksoy
CEO and Board Member