Mehmet Kutman

2017 has been a year of "success" and "record", designating itself as an inflection point for Global Investment Holdings and its subsidiaries.

In 2018, we will continue to strengthen, and expand our investments into new countries.

I begin this letter with a sense of accomplishment and pride about Global Investment Holdings ("GIH") that has successfully managed to expand its mark on the world in the year 2017. During a time of political and economic uncertainty in both Turkey and around the globe, we were able to undertake some of the most impactful decisions in our history, achieve record-highs, and establish our market leadership in certain sectors, all the while improving our overall debt position. In many ways, the year 2017 will serve as a future benchmark for the performance of our company: it is the result of decades worth strategizing and revaluation of ideas and practices, ensuring the continuing success of GIH in the long term.

In the year 2017, GIH realized significant investments in all sectors it operates in; namely, Port Management, Energy, Finance, and Real Estate. We have managed to stand out again as one of Turkey's foremost holding companies, delivering on our promises in another tough year for Turkey, maintaining our success both in our home markets and abroad. Indeed, year by year, we effectively continue to further cement GIH as a global brand of international prestige, strengthening and expanding our investments into new countries. For that, I owe my utmost gratitude to our diverse and experienced team, who allows GIH to move forward with boldness and wisdom in each step we take.

Devoid of sectoral and geographical limitations, we have proven ourselves to be capable of becoming a leader in the international arena, further increasing our reach every year.

Global Investment Holdings' flagship company, Global Ports Holding PLC, ("GPH") the largest independent Cruise port operator in the world, has realized its initial public offering (IPO) on the London Stock Exchange in May 2017, in line with its growth strategy. GPH received gross proceeds of £58mn (USD75mn), which will be used to develop and expand the cruise business. Having established itself with ports across the Mediterranean, Atlantic, and Asia-Pacific region, Global Ports Holding is now targeting the Caribbean and Asia as it continues to expand and diversify geographically.

The landmark event of the Global Ports Holding IPO was a moment to reflect on how we have progressed since our beginnings as a single cruise port in Kuşadası in 2005, and how we went on to pioneer a concept missing in the world's cruise industry at that time: a centralized organization that combined common standards and shared learning with the irreplaceable knowledge of local teams. The IPO was also notable for the quality of the investor base it attracted. Strong, long-term investors appreciated the exceptional inorganic growth potential stretches in front of us in the cruise sector, as well as the strength of our container and bulk cargo business.

As the largest cruise port operator in the world, our ports group is perfectly placed to serve this growth. "World's largest cruise port operator" is not a title we take lightly: it has been hardwon and we take a lot of pride in it. We know that running a cruise port is not a numbers game; it brings with it a duty of care to the neighbouring citizens, local business, infrastructure, and environment. We have proven that we are capable of rising to this challenge of running ports effectively and responsibly, and furthermore, we're honoured that our success as a business also translates to the world's increased exposure to Turkey. As I have said before, "every port is essentially a Turkish embassy."

Our growth will also come with new territories. In particular, we believe our vision and skills are highly transferrable to the Caribbean, where passenger numbers (one of our key sources of revenue) are considerably higher. In the Med, only our Barcelona port sees the levels of passengers that routinely pass through the core ports of the Caribbean, and this region is our principal focus for business development in 2018.

Closer to home, we are looking to continue our expansion through inorganic growth in the Med, and as I write we are in negotiations with 12 potential ports. Typically, port infrastructure is owned by government agencies in one form or another, and negotiations are complex, but we hope to welcome perhaps 2-3 new destinations into the GPH portfolio during 2018.

What is clear to all our stakeholders is that the cruise industry, and therefore the allied industries such as ours that serve it, has vast scope for growth, as new ideas, fresh fleets and a younger passenger demographic alter the face of the industry completely. Already running at 100% occupancy, the Cruise lines are investing to add 50% capacity over the next four years alone. And they are growing the market: brands such as Virgin and Disney are enticing aboard a new generation and character of passenger, who, previously would never have considered cruising. Every facet of the cruise experience is also being reimagined. Can you Picture the full drama of a Cirque du Soleil performance aboard a cruise ship? It's already happening, along with a new generation of Technologies to make every experience unforgettable.

Against this backdrop, we see double digit growth over the next ten years, evidenced by the cruise lines' orders for new ships: the major yards around the world already have contracts to build over 90 new cruise liners, and only a lack of capacity prevents them accepting more. These ships are larger, providing fabulous accommodation, hospitality and entertainment for 6500 passengers. In turn, economies of scale will drive lower costs, widening the market still further. We are also seeing new target audiences emerging, such as increasingly wealthy citizens of China who can fly in and enjoy six Mediterranean countries in seven days.

Our ports group is not the only part of our company that enjoyed a successful year: in our energy group, in October 2017, Global Investment Holdings started power generation from biomass resources in its Aydın and Şanlıurfa power plants with a 17.2 MW total installed capacity. These two biomass power plants will be subject to Renewable Energy Resources Support Mechanism (YEKDEM), selling electricity at an incentivized 13.3 dollar-cent/ kWh level. Global Investment Holdings aims to continue acting as an industry pioneer, spearheading the development of biomass projects in various locations across Turkey to achieve a substantial installed capacity, reaching 125MW with an investment of c.USD- 250mn within the next three years.

GIH's Tres Energy subsidiary provides cogeneration and trigeneration solutions in energy production and energy management to end-users, allowing for higher energy efficiency and diversity, as well as greater savings. Our total energy supply is 58.3MW, of which 50MW is actively being used as of December 2017. Meanwhile, we also have 2 solar energy investment projects totalling 14MW, which we are aiming to increase to 100MW in unlicensed production capacity. We're also pursuing plans to bid on large scale government tenders, as may be announced in the near future.

Furthermore, Naturelgaz, of which GIH owns 94.4%, is performing parallel to our expectations, if not exceeding them. In January of 2018, sales of CNG were above, and operating costs were below initial projections, signalling a favourable trajectory for the rest of the fiscal year. Currently, Naturelgaz operates the largest distribution network of CNG in Turkey, as well as the largest reserve infrastructure. CNG is an economically viable, safe, and clean fuel that we distribute to places where there is a lack of pipelines for natural gas and its use cases range from large industrial operations, to small businesses, even villas and apartments, answering natural gas needs. We are especially proud of our accomplishments in the transportation sector: auto-CNG as a fuel is gaining adoption by the leading vehicle manufacturers of Turkey, as converting to CNG has proven to be not only environmentally stable, but a lot cheaper as well, savings from converting to the cost efficient fuel reaching upwards of 40%. With our 13 CNG stations across Turkey, we retain our lead in the sales and distribution markets of this cleaner, quieter, and cheaper source of energy, focusing on large and mid-sized vehicles and vehicle fleets used for commercial and logistical purposes. As the world's petrol reserves diminish, alternative energy sources such as natural gas will likely become more viable to use – a trend that we can definitely see even today. Thankfully, Turkey is geographically situated at the epicentre of the world's largest gas reserves from Russia to Iraq, which provides a bountiful opportunity to establish vast networks of this clean, alternative fuel.

As for real estate, I am personally very proud to see our investments come into fruition. We are finally able to witness our Van Shopping Mall filled to the brim with customers, and the "Lifestyle Centre" concept of the mall seems to have struck a cord with the local community. For the first time, there are children in Van who can go to the movies, and I could not be happier it is our mall that is bringing these new experiences to the beautiful city. We have already held numerous events that have garnered positive responses, from concerts of popular Turkish musicians, to exhibitions of works by disabled artists, and public reception seems to be at an all-time high. Similarly, Sümerpark mall in Denizli also seems to have become somewhat of a staple in the southwestern city, one of many projects in the area that are contributing to its economic development. It is truly a satisfying experience to see first hand, and to know that one's work is contributing to the changing fabric of a society, for the better.

As for our finance group, in June 2017, Global Investment Holdings successfully completed a capital increase process where Centricus (F.A.B Partners LP) subscribed and acquired a 30.7% stake in the company. The strategic partnership with Centricus, an asset management advisory firm backed by large global investors, is expected to further accelerate Global Investment Holdings growth in Turkey as well the rest of the world. In this context, the Group will focus on its new strategy to develop regional and global enterprise only in selected core businesses, which are infrastructure (ports), clean energy, and asset management.

Actus Asset Management, of which GIH owns 90%, is also proving to be a very wise investment, synergizing well with our overall investment strategies: we like to invest long-term, and in a similar vein, we think there is a lot to be gained from investing in infrastructure. Currently, we are predicting Actus to become the largest independent portfolio management company in Turkey, aiming at a $1 billion investment portfolio over the course of the next 12 months, largely made up of long-term infrastructure projects. Initial targets include opportunities such as toll roads, bridges, hospitals – the likes of which the Turkish government has been heavily supporting for the past few years.

Following the successful IPO of the port business, coupled with the cash commitment from Centricus, the group enjoyed a significant improvement in our debt position. Consolidated Net Debt has decreased from TL 1,991 million at 2016-year end to TL 1,431million in 2017. Likewise, holding stand-alone Net Debt position of TL 499 million decreased almost entirely to TL 89 million, which will significantly reduce net interest expenses going forward. JCR Eurasia Rating, in its periodic review, also upgraded GIH and its Cash Flows of Bond Issues to BBB+ on the Long Term National Local Scale, and to A-2 on the Short Term National Local Scale.

Some years are particularly memorable, and 2017 has been such a year for Global Investment Holding. A year of multiple records and successes, 2017 serves as an inflection point for Global Investment Holdings and its subsidiaries, while share price more than doubled in USD terms. We are at a stage where we know what we want to do, and how to do it, and are constantly evaluating the markets to make our next move - when conditions both in our country, and around the world, allow for it. Our true measure of success is the value we create in the long term, and the strength of our market leadership. In that effort, we are grateful to our shareholders for their support and encouragement and to each other for our hard work.

MEHMET KUTMAN
CHAIRMAN

PORTS

Cruise and commercial port operating activities

INDUSTRIAL

Clean and renewable energy production, compressed natural gas sales and distribution, energy efficiency and mining

REAL ESTATE

Developing and operating commercial real estate projects

FINANCE

Non-banking financial services such as brokerage, advisory and asset management

Rıhtım Cad. No: 51 Karaköy İstanbul      (212) 244 6000      investor@global.com.tr