BIRLESIM_MUHENDISLIK 2023 ANNUAL REPORT

BİRLEŞİM MÜHENDİSLİK 2023 ANNUAL REPORT 22 INTRODUCTION MESSAGE FROM THE MANAGEMENT Tight monetary policies aimed at curbing inflation coupled with escalating geopolitical risks were at the top of everyone’s agenda in 2023. These challenges particularly impacted developing countries, leading to exchange rate volatilities, liquidity shortages, and high interest rates, all of which not only hampered growth but also fueled concerns of impending recession. The start of 2024 brought some relief, as inflation showed signs of cooling and the global economy appeared to be headed for a soft landing, thus easing concerns of a recession. Despite facing numerous challenges in 2023, including a global economic slowdown, weakening export markets, and devastating earthquakes in February, the Turkish economy managed to grow by 4.5% last year. This resilience was largely due to robust domestic demand, which provided a crucial counterbalance and propelled the economy forward. With a new economic administration installed at the helm in the wake of elections, Turkey’s central bank changed gears and switched to monetary tightening in the second half of the year. This involved a series of interest rate hikes, gradually increasing the policy rate from 8.5% in June 2023 to 42.5% by year-end. Following an extended period of decline, the construction sector rebounded strongly in 2023, registering a healthy 7.8% rate growth (albeit over an admittedly low base) and making a substantial contribution to GDP. However in the second half-year as interest rate hikes aimed at curbing domestic demand pushed up financing costs coupled with selective-lending policies and credit restrictions, the construction sector began to experience a slowdown that was further exacerbated by an extraordinary surge in the industry’s input costs. Despite high construction costs, soaring house prices, and limited access to credit, the substantial demand for new housing created by the 2023 earthquake (both in the affected region and in provinces that received displaced residents) suggests the potential for a resurgence in the construction industry. While the Construction Confidence Index has been slower to recover than the Manufacturing Confidence Index due mainly to challenges related to cost and demand, it has recently begun showing signs of improvement, driven in part by an increase in new construction orders. We maintain our strong performance no matter what challenges may confront us. In the face of a difficult operating environment in 2023, both Birleşim Mühendislik and Erde Mühendislik delivered solid operational and financial results, confirming their commitment to sustainable growth. Birleşim Mühendislik in particular has been experiencing exceptional growth with its balance sheet expanding almost sixfold since its 2021 IPO. As our company continues to grow, we also remain committed to paying dividends as meaningful demonstration of our unwavering focus on protecting the interests of all stakeholders. In 2023 Birleşim Mühendislik and Erde Mühendislik continued to prioritize engineering excellence, strengthening their reputation as preferred partners on complex projects. By bolstering their capacity to win contracts and collaborate on large-scale endeavors, they secured several major projects resulting in new business worth a total of TL 3.8 billion. We successfully continued and completed all projects in our portfolio as specified and on time. Last year we completed the electromechanical installation works at the Gaziantep municipal hospital in just eight months. With 658,000 m 2 of space and 1,875 beds, this is Turkey’s fourth biggest medical facility. We also completed the mechanical installation works for Amazon’s first logistics base in Turkey and for the Ziraat Bank Headquarters Tower 1 in the İstanbul Financial Center as well as the electromechanical installation works for the Trendyol Ankara logistics transfer center and Vakıfbank’s headquarters. Leveraging our expertise in handling multiple projects concurrently, we presently have ongoing operations at 14 project sites. Among these, the most significant is the EUR 28 million electromechanical installation works project at the Çukurova airport. Once operational, the airport will be the fourth largest in Turkey. One of last year’s projects that was especially meaningful for us was a contract to carry out the electromechanical installation works needed to convert 1,000 containers into livable homes under the Temporary Social Housing project launched in response to the devastating earthquakes that struck Kahramanmaraş and ten neighboring provinces on 6 February 2023. Upon completion, people in desperate need of shelter moved into them. We call this project meaningful because it demonstrates our deep-rooted sense of social responsibility and our unwavering dedication to supporting those in need. Towards new horizons A 70% majority stake in Solar Santral Enerji was acquired in late 2022 to give our company access to the solar-power engineering, procurement & construction (EPC) contracting business line. Birleşim Mühendislik began to reap the benefits of this acquisition in 2023 because it immediately began bringing in new customers interested in setting up solar power installations of their own. In 2023 Solar Santral Enerji entered into turnkey-delivery preliminary agreements to install solar panel arrays for Japanese- based textile company Aisin A.Ş. and for the Dünyagöz Hospitals Group’s ophthalmological hospital in Uşak. A finalized SPP contract was signed early