Esteemed Stakeholders and Turcas Family,

2018 was a challenging year due to the sharp devaluation of the Turkish lira, a growing credit and liquidity crunch, rapidly increasing inflation and rising interest rates, particularly in the second half of the year. However, such volatility might bring about opportunities alongside risks. As Turcas, we continue to create value for our shareholders and our country as we have historically done. Adhering to our continuous improvement perspective, we always strive to make the best moves in pursuit of the shared interests of our stakeholders and a company. At Turcas, we are optimistic about 2019 in the face of economic hurdles, cyclical challenges and a constantly changing operating environment. Pursuant to our committed approach, global vision and strategic goals, Turcas closely monitors advances in technology and continues to execute its forward-looking investment plans at the same rapid pace.

In 2018, Shell & Turcas Petrol – our subsidiary in the fuel retail and lubricants sector and the flagship of our investment portfolio – maintained its leadership in fuel sales at the stations with a 19% market share. In addition, Shell & Turcas maintained its market leadership in the lubricants sector for the 12th consecutive year. Shell & Turcas Petrol’s Lubricants and Grease Oil Production Plant in Derince, the largest production facility of its kind in the Mediterranean basin, exported lubricants to 61 countries and once again ranked among Turkey’s top exporters. Shell & Turcas Petrol recorded sales revenue of TL 32.6 billion, maintaining its position as one of Turkey’s largest companies.

RWE & Turcas South Power Generation, our conventional energy subsidiary, utilized a capacity factor of 49% due to
lackluster growth in electricity demand high natural gas prices and low spot power prices. This performance was achieved despite the excellent technical capabilities and efficient operation of our 800MW Denizli natural gas fired combined cycle power plant. During the year, the RWE & Turcas recorded sales revenue of TL 967 million along with the support of the capacity payment mechanism.

We increased our stake in Turcas Kuyucak Geothermal, our subsidiary in the renewable energy sector, to 100% which completed its first full year of commercial operation. We continue to make good progress towards our goal of maximizing the generation capacity of our 18MW Aydın Geothermal Power Plant.

Going forward, an innovative perspective, resilience and agility will be even more important in 2019. As part of our continuously revised business model, we plan to focus on taking Turcas into the future with integrated innovative solutions in areas where we have superior capabilities. During this process, we will work together to improve our quality, step up our efforts related to occupational health and safety and environmental protection and further bolster our financial and operational sustainability.

In addition to financial and operational sustainability, we are keenly aware of our responsibility to future generations and the importance of coming together under shared values. To this end, we put the UN’s Sustainable Development Goals, also known as Global Goals, at the top of our agenda. We plan to continue and add to our initiatives and social responsibility projects in Affordable and Clean Energy, Quality Education and Gender Equality – our focus areas in 2018 as part of our sustainability approach.

As we build the Turcas of tomorrow together, we are moving forward with our vision as “Turkey’s pioneering and respected energy investment company” thanks to our 88 years of corporate governance excellence and the dedicated efforts of our employees. I would like to thank all our shareholders, stakeholders and team members for their trust in us on this journey to sustainable success.

Respectfully yours,

BATU AKSOY
CEO & Board Member