Haci Ömer Sabanci : 2021 Q4 Earnings Release

Sabancı Holding

Q4 2021 Financial Results

Earnings Release

February 24, 2022

Record-High Topline Growth & Exceptional Financial Performance

Sabancı Group left behind a very successful year with all-time high revenue, EBITDA and net income growth. The Group also performed strongly on delivering strategic initiatives as well as improving its ESG scores. This strong performance in 2021 was in line with the Group's mid-term guidance.

Financial performance gained momentum in the last quarter driven by strong contribution from both bank and non-bank businesses despite increased market volatility and input cost pressures.

Sharp improvement in both bank and non-bank ROE carried consolidated ROE to a record- high level of 23%. Despite the fact that the proceeds from divestment of tobacco business were received in early 2022, holding only net cash more than doubled, reaching TL2.5bn at the end of 2021.

Sabancı Holding CEO Cenk Alper's comment: "Despite all the challenging business environment caused by the pandemic, we were able to maintain our solid and continuously strengthening financial performance in 2021. We have increased our cash position with improved earnings quality and return on equity, while reducing net debt to EBITDA ratio to 1.2 times. All these clearly prove both Sabancı Holding's and its Group companies' financial excellence in balance sheet management. This approach, amid all kinds of unfavorable external events and extraordinary market conditions, enables us to look at future opportunities while protecting our solid portfolio. I would like to thank all our employees for enabling us to reach these successful results and shareholders for their support."

FINANCIAL HIGHLIGHTS

• Combined revenue growth accelerated to 77% y-o-y in Q4. Non-bank growth drivers were energy, industrials and building materials. Combined revenue in 2021 exceeded TL150bn, which is up by 45% y-o-y.
• Comparable combined EBITDA increased by 128% y-o-y in Q4 on strong performance from banking, energy and industrials. In 2021, combined EBITDA reached TL33bn, up 61% compared to a year ago.

Note: Combined revenue excludes holding dividend income. Combined EBITDA and consolidated net income excludes non-operational and non-recurring one off items & IFRS16 impact in retail. Operational cash flow and net debt figures exclude banking, financial services and other segment.Consolidated ROE excludes non-operational and non-recurring oneoff items.

1

• Comparable consolidated net income more than quadrupled in Q4, exceeding TL4bn, driven by phenomenal growth both in bank and non-bank segments. Net income growth reached 95% in 2021, totaling TL10bn.
• Consolidated ROE improved further to 23% in 2021 with solid improvement across the board.
• Combined non-bank operational cash flow exceed TL12bn, up by 15% y-o-y. Our holding only net cash position more than doubled in 2021, reaching TL2.5bn.
• Deleveraging continued as non-bank Net Debt/EBITDA dropped to 1.2x by the end of 2021 vs. 1.5x at the end of 2020.

STRATEGIC HIGHLIGHTS

• Exit from tobacco business completed. Sabancı Holding's entire shares in PHILSA and PMSA, the former affiliates of Sabancı Holding with 25% and 24.75% stake respectively, were acquired by Philip Morris in consideration of TL2,747,308,823 on January 5, 2022 post predetermined adjustments at closing. The acquisition price, which will be further adjusted based on the audited 2021 financial results of PHILSA and PMSA, was collected by Sabancı Holding on closing.
  On the other hand, in line with the cash management principles, a variety of derivative instruments are effectively used by Sabancı Holding against fluctuations in FX rates and other market risks, and transaction-specific hedging transactions were engaged in relation to the sale of PHILSA and PMSA shares to offset the risks associated with FX rates. To this end, 88% of total acquisition price from PHILSA and PMSA shares were hedged at the weighted average FX rate of 9.3249 TRY/USD by using forward contracts with various maturities.
• For the purposes of supporting price performance of SAHOL shares in the equity market, and hence reducing the net asset value discount by bringing SAHOL shares closer to its fair value, and providing shareholders with a more attractive long-term investment opportunity, a share buy-back program was initiated on November 9, 2021. Accordingly, up to 10,200,000,000 shares with a nominal value of TL102,000,000 representing approximately 5% of Sabancı Holding's issued share capital are contemplated to be repurchased, and total maximum funds allocated for share buy- back transactions were determined as TL1,750,000,000. As of 31 December 2021, the total nominal value of repurchased shares following the transactions reached TL8,000,000, representing 0.3921% of the share capital.
• In line with the Group's targets of growing with pioneering services beyond tyres and being the pioneer of mobility in Turkey, the acquisition process of Arvento shares representing 88.89% of total share capital by Brisa for a consideration of TL291,469,028 started. The necessary permits for the contemplated transaction have have been granted on January 20, 2022 by the Competition Board, and the deal is expected to be closed by mid-2022 at the latest.

Note: Combined revenue excludes holding dividend income. Combined EBITDA and consolidated net income excludes non-operational and non-recurring one off items & IFRS16 impact in retail. Operational cash flow and net debt figures exclude banking, financial services and other segment.Consolidated ROE excludes non-operational and non-recurring oneoff items.

2

• Enerjisa Müşteri Çözümleri, of which Enerjisa Enerji is 100% shareholder, acquired a minority stake of 14% in Eşarj, Turkey's first and fastest electric vehicle charging station network, operating with 320 charging plugs at 186 public locations as of the end of 2020. Following the transaction, Enerjisa Müşteri Çözümleri's share at Eşarj increased from 80% to 94%. The 14% stake is acquired for a consideration of TL42.4mn. Following this acquisition, the Group aims to strengthen Enerjisa Enerji's innovative and pioneering position in the field of e-mobility and to offer solutions that will contribute to the decarbonization of transportation.
• Following its two notches increase in MSCI on successful execution in all aspects of E, S and G, Sabancı Holding enhanced its CDP Climate Change Score to B (management level) as well as taking its place in the management level category by maintaining B score in CDP Water Program. Moreover, Sabancı Holding were included in 2022 Bloomberg Gender Equality Index (GEI) which recognizes performance of the companies committed to gender equality across five pillars: female leadership and talent pipeline, equal pay and gender pay equity, inclusive culture, anti-sexual harassment policies, and pro-women brand. Thus, Sabancı Holding became first and only conglomerate from Turkey being included in the 2022 Bloomberg Gender-Equality Index.
  .
  SEGMENTS HIGHLIGHTS
• Energy Segment: Strong profitability despite deterioration in liberalized margins and hydrology.
• Industrials Segment: Sharp improvement in earnings quality and deleveraging.
• Building Materials Segment: The quarter was marked by escalated cost pressures.
• Retail Segment: Growth in e-commerce continued.
• Financial Services Segment: Robust growth in premium and profitability.
• Bank: Well-positioned to remain healthy & profitable.

3

SABANCI HOLDING COMBINED SEGMENT RESULTS

4

SABANCI HOLDING CONSOLIDATED SEGMENT RESULTS

5