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CEO Message

Dear Stakeholders,

2020 will be remembered as an important year in terms of overcoming the challenges we faced due to the pandemic, as well as in terms of global cooperation and solidarity. In such trying times, at Ülker Bisküvi, we completely fulfilled our responsibilities across all our processes, in production and in access to consumers. We kept our production processes going, supporting the economy. As the strategic sector during the period,we continued serving our country. We implemented our pandemic measures dynamically by closely following the developments. We adopted revisions in our business processes in line with the evolving circumstances, thanks to our flexible and agile business model. And we maintained our contribution to our country’s economy through our production, exportation and recruitment processes. Our priority has always been human health and we intensified our efforts when the pandemic began. We implemented the 14 rules advised by the Ministry of Health in all our work areas, including our factories, to protect the health of our employees,as well as their families. In the meantime, we took additional measures which we called “14+14.” With our responsibility to meet the requirements of consumers, particularly during the pandemic, we put all our efforts towards uninterrupted production at all business units and transferring the goods produced to 190 thousand retail locations – to our consumers – nationwide, through our strong distribution network.

We increased our revenue by 20.5%

In 2020, we significantly increased our profitability while achieving sustainable growth in the areas where we operate. We increased our consolidated revenue by 20.5% to TL 9.4 billion as well as our Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) by 24.4% to 17.2% EBITDA margin. We have continued our undisputed leadership in the overall confectionary market in Turkey. We lead our country in becoming a production and exportation base while increasing retail and profitability. We achieved a growth of 18.6% and 23.4% in our domestic and international operations respectively. We reinforced our market leadership in the biscuits market in Saudi Arabia (KSA), where we operate two factories, while we strengthened our position in the MENA and Central Asia markets. We also achieved stable growth in our retail figures in Kazakhstan, our gateway to Central Asia. In addition to these achievements, we successfully completed 2020 with a very strong balance sheet and net debt ratios. We contribute to our country’s economy through our exportation operations to more than 100 countries worldwide, through more than 9 thousand employees, and through our production operations at 10 factories, six in Turkey and four overseas.As our efficiency initiatives in Turkey lead to cost advantages, our new products strengthen our leading position in the related categories. In 2020, we signed a loan agreement of USD 455 million and issued Eurobond amounting to USD 650 million. In the first half of the year, Ülker Bisküvi signed a USD 455 million loan agreement with the European Bank for Reconstruction and Development (EBRD) and seven international banks. In the second half of the year,Ülker Bisküvi concluded its first Eurobond issuance of USD 650 million with an overflow of subscription of USD 1.8 billion from over 130 international investors in 28 countries. Despite the challenging global economic conditions, the provision of longterm financing to our Company by international investors was an indication of trust in Turkey and our Company. Ülker Bisküvi will sustain its growth through an investment-oriented mentality based on a concrete financing model.

Innovation: A driving force in growth

As a result of our R&D activities, we present innovative products to our consumers for their satisfaction. We develop new products in line with the demand and requirements, while also realizing projects to improve and increase the variety of existing products. In 2020, we invested in our production facilities and launched and re-launched several innovative products under the Ülker Çikolata, Dido, Ülker Çikolatalı Gofret, Hanımeller, Albeni, O’lala, Biskrem, Ülker Kremalı and Çizi brands, in particular. In the 2019-2020, we launched more than 70 new products in the chocolate, biscuit and cake categories. In the past three years, we significantly increased the ratio of new products in retail figures, demonstrating that innovation is a driving force in our Company’s growth.

Digitalization agenda at the forefront

Digitalization has long been part of our agenda. Thanks to this vision and our investments into digitalization, we swiftly adapted to the new conditions. We increased efficiency through initiatives on transforming labor, production and supply management. We extended merchandising activities and site visits to the digital environment through our “Merchandising” and “Goya Assistant” projects, respectively. The time of taking notes by hand at the site and e-mailing the related contact has ended. We integrated “Image Processing” technology into our business processes; we now use “Robotic Process Automation” to avoid manual and repetitive processes with no added value. Through the “IOT Instant Production Tracking Project,” we can instantly monitor the production performance of lines via sensors installed on the production lines. We moved human resources recruitment and orientation processes to digital formats and simplified them for swifter management. While paying the utmost attention to the health of our employees – without interrupting production – our digital transformation methods reflected very positively on revenue and exportation figures.

A philosophy of growing together with ourstakeholders

Sustainability is of critical significance for the future of our world and humanity. The pandemic confirmed the value of steps taken so far in terms of sustainability. Adopting a “no-waste company” model since our establishment, we continue our operations with an approach that is focused onour stakeholders. We develop various projects on water and energy preservation, human resources and production quality; these efforts are based on the United Nations 2030 Sustainable Development Goals in order to monitor and audit them in line with a certain strategy. We place sustainability efforts at the core of our way of business: these efforts are shaped from the ground up and include producers, suppliers, stakeholders, business partners and consumers. At Ülker Bisküvi, we believe that we make a greater contribution to the future of our country, as well as the world, when we protect and participate in this cycle. Our goal is to achieve sustainable growth without wasting resources – not only during production and supply phases, but in every step of our activities. As such, we prioritize local suppliers during the supply process. By supporting local producers, we enable the development of sustainable agricultural practices. We are highly aware of the significance of steps taken regarding supply security in the food industry and the supports provided to local producers in terms of the sustainable development goals of our country. Thus, we focus on projects that contribute in the “Security of Food Supply” area. Turkey’s first local and national biscuit wheat: Aliağa We conduct research particularly on wheat and oat together with the agriculture research institutes of the Turkish Ministry of Agriculture and Forestry; and we strive to contribute to the future of agriculture in Turkey. We collaborated with Bahri Dağdaş International Agricultural Research Institute and, after long years of study, we developed local and national Aliağa Biscuit Wheat. This wheat is resistant to drought, diseases and climate change; it is highyielding, high-quality, and a first of its kind in Turkey. The first harvest of the wheat took place in July 2020 and we were glad to see that the wheat was greatly appreciated by our farmers, the heart of our production. We were pleased and proud that the project was granted the “Carrying Agriculture to the Future” award by Bekir Pakdemirli, the Turkish Minister of Agriculture and Forestry. In terms of protecting the environment, we believe that a significant mission is to populate our lands with saplings – a contribution to a habitable future. We planted a total of 31 thousand saplings: 11 thousand saplings were planted in Hatay, Karaman and Ankara for the “A Breath for the Future” campaign of the Ministry of Agriculture and Forestry; and 20 thousand saplings were planted in Elazığ and Eskişehir through the TEMA Foundation. While carrying out our sustainability activities in line with long-term goals, we prepared a series of videos under the title of “My Beautiful Country, Nature is In Our Care.” These videos covered issues such as protecting natural resources, water preservation, energy efficiency, waste management, mitigating the carbon footprint, and preventing food waste. We began sharing the videos on our social media accounts during the last quarter of 2020, with the goal to raise awareness on sustainability, as well as highlighting what we can accomplish individually and what we have accomplished as a company.

We crowned our success with national and international awards

According to the results of the Good Life Brands Survey 2020, conducted with the collaboration of Nielsen and Sustainable Brands Istanbul, we were granted the Good Life Brand title for the third time in a row. At the Edie Sustainability Leaders Awards, one of the most prestigious business awards, we were proud to be the only Turkish company shortlisted in four categories: “Water Management,” “Waste and Resource Management,” “Team of the Year,” and “Employee Participation and Cultural Transformation Leadership.” We were also granted two Golden Awards in the BOC International Brilliance Awards in the categories of “Brilliance in Employee Engagement” and “Brilliance in Use of Technology in IC.” At the Global 100 Awards organized by Platin Magazine in 2020 under the digitalization theme, we were pleased to be recognized as one of the top 10 companies standing out with investments in digitalization, and the number one company in the food industry. In 2021, we, at Ülker Bisküvi, will maintain our growth performance. With a particular focus on our employees, consumers and stakeholders, we will pick up the pace in digital transformation and support the development goals of our country with new investments and strong innovation. We will continue to gain strength in the global marketplace, maintain our strong position in the existing markets, and sustain our leadership. I would like to thank all the stakeholders who support us on our path as we continue production, recruitment, exportation activities, as well as investments for our country.

Sincerely,
Mehmet TÜTÜNCÜ
CEO