Honored shareholders,

Welcome to Migros’ Annual General Meeting in 2015. I would like to express how delighted I am that you have joined us today.

Economic and Sector Review

Esteemed Migros shareholders, when we turn our attention to the economy, we find that uncertainty remained throughout the past year with both positive and negative developments at home and abroad. While the long term efforts to reinvigorate the economy in the USA had started to pay off, the FED is ready to initiate interest rate hikes. On the other hand, expansionary monetary policies were still maintained and negative interest rates implemented in Japan and the EU. The prices of commodities, especially oil, declined during the year, giving rise to volatility in many developing countries.

The Turkish economy, conversely, benefited from the decline in oil prices and the current deficit narrowed significantly. The Turkish economy posted 2.9% growth in 2014, but this rate had slowed to 3.4% in the first 9 months of 2015, and inflation followed a rising trend to be realized at 8.8%. However, I would place significance on the fact that inflation has remained in single digits during the last 4 years, and has since started to follow a decreasing trend.

Although the increase in the national minimum wage this year will cause significant cost pressure, it is likely to have a positive impact in the medium term by stimulating growth that had been slowing as a result of flagging consumption. I hope that increasing society’s disposable income will inject growth momentum to all sectors, including the food retail.

Strategies and Operational Performance

Valued shareholders, Migros continues to grow as I expressed in the previous years. Migros maintains its investments in the retail sector and continues to generate employment in both good and bad times. On the other hand, our strategy is not to grow for the sake of growth; rather we target growth that allow us to gain market share and is healthy and sustainable. In 2015, we opened 257 new stores compared to the 199 new stores we opened in 2014, including stores located outside Turkey. The Company’s had a total of 1,410 stores at the end of 2015. At Migros, we provide an exclusive quality of service where we care about and value our customers. Without compromising the trademark Migros quality, every year we consistently reach an ever wider customer audience with more competitive prices.

Migros posted consolidated sales of TL9,390 million in 2015, an increase of 15.6% compared to the previous year. Its gross profit amounted to TL2,526 million with a gross profit margin of 26.9%. The Company’s consolidated EBITDA (earnings before interest, tax, depreciation and amortization) amounted to TL602 million with an EBITDA margin of 6.4%. Finally, although the Company generated a significant operating profit from its operations in 2015, it reported a net loss of TL370 million due to losses related to adverse movement of the exchange rate and non-recurring expenses. I would emphasize here that these financial expenses do not involve any cash outflow.

Expectations for the Future

Honored shareholders, we are proud to express that Migros has been serving its customers in this country for more than sixty years, and I can attest to that it has a transparent and accountable management approach with its corporate culture, while being mindful of its social responsibility. How is Migros seen from outside in terms of corporate governance? I would like to say here that an independent review conducted at the end of 2015 reinforced the importance that we attach to the Migros culture. Migros was assessed by an institution carrying out independent grading in the field of Corporate Governance. Migros achieved one of the highest grades given to date in this field in Turkey. Eventually, Migros was admitted to the Corporate Governance Index by Borsa İstanbul.

Esteemed Migros shareholders, there was an important change in our shareholding structure last year. Anadolu Endüstri Holding, one of the most respectable groups in Turkey, acquired a 40.25% stake in Migros and obtained equal rights to govern. The group also has the right to increase its stake in Migros to 50%. Anadolu Group needs no introduction; it is a corporate and visionary group with an in-depth knowledge of Turkey, the food retail sector, customers and their shopping habits, as well as sector trends and is able to foresee forward looking expectations with its sector experience. Therefore, Migros now has a balanced management structure with Anadolu Group which works in harmony with BC Partners, which commands immense international experience and knowledge. I would hereby like to express that my belief in Migros’s future is once again reinforced.

I believe that Migros will maintain its successes with a strong management and partnership structure and developed company culture in the years to come.

Yours respectfully,

F. Bülent Özaydınlı
Chairman of the Board of Directors
Migros Ticaret AŞ
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