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2014 ACTIVITIES

For all of our stakeholders…

IN 2014, DYO BOYA:

INCREASED ITS SALES BY 20.5% YEAR-ON. INCREASED ITS MARKET SHARE. JUMPED 16 PLACES IN THE TURKEY’S TOP 500 INDUSTRIAL ENTERPRISES ANNUAL RANKING TO 157TH POSITION.

SHOT UP 13 PLACES AND RANKED IN 223RD PLACE BASED ON ITS REPORTED NET SALES IN THE 2013 “FORTUNE 500 TURKEY” LIST. THE INDUSTRIAL COATINGS PRODUCT LINE HAS BEEN EXPANDED BY THE START OF PRODUCTION AT THE POWDER COATINGS PLANT. IN KEEPING WITH ITS MARKETDRIVING INNOVATIVE AND PIONEERING APPROACH, DYO BOYA CONTINUED TO CONSTANTLY IMPROVE PRODUCT QUALITY.

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DYO BOYA COMPLETED 2014 HAVING POSTED SUCCESSFUL FINANCIAL RESULTS.

31.2%

NET SALES (TL MILLION)

IN 2014, GROSS PROFIT MARGIN WAS 31.2%.

686.1

SHAREHOLDERS’ EQUITY (TL MILLION)

117.6

95.6 569.4 62.6

486.3

2012

2013

2014

2012

2013

DYO BOYA’S NET SALES IN 2014 WERE UP BY 20.5% YEAR-ON.

DYO BOYA’S SHAREHOLDERS’ EQUITY ROSE BY 23.0% TO TL 117.6 MILLION.

TOTAL ASSETS (TL MILLION)

NET PROFIT (TL MILLION)

667.7

2014

17.6

17.5

626.1

555.9

2012

11.3

2013

2014

DYO BOYA’S TOTAL ASSETS INCREASED BY 6.6% YEAR-ON IN 2014 AND STOOD AT TL 667.7 MILLION.

2012

2013

2014

DYO BOYA’S NET PROFIT INCREASED BY 55.5% YEAR-ON IN 2014 AND REACHED TL 17.6 MILLION.

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17.6

20.5% GROWTH IN NET SALES

AS A RESULT OF ITS SUCCESSFUL PERFORMANCE IN 2014, DYO BOYA POSTED A NET PROFIT OF TL 17.6 MILLION.

In the twelve months to end-2014, Dyo Boya’s total assets increased by 6.6% and reached TL 667.7 million. Standing at TL 117.6 million as of year-end, Dyo Boya’s shareholders’ equity increased by 23.0% in 2014.

Ratios Gross Profit Margin Net Profit Margin Current Ratio Acid Test Ratio Financial Leverage Ratio Debt/Equity

2013 34.5% 2.0% 1.3 1.0 0.8 5.6

2014 31.2% 2.6% 1.2 0.9 0.8 4.7

Net sales were up by 20.5% as compared with those of 2013 and reached TL 686.1 million in value. Sales both of Casatibranded products and of road marking paint appear to have contributed to this growth. Dyo Boya’s gross profit was up by 8.9% year-on in 2014 while its gross profit margin was 31.2%. Although raw material costs were lower than expectations in 2013, they surged in 2014 owing at least in part to attrition in the value of the Turkish lira. The increase ended up being reflected in prices to a substantial degree. The change in the Company’s gross profit margin stems largely from changes in its product mix. Dyo Boya posted a net profit of TL 17.6 million as a result of its strong performance in 2014.

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STRONG SALES MADE IT POSSIBLE FOR DYO BOYA TO ACHIEVE ITS 2014 GROWTH TARGETS AND TO BOOST ITS MARKET STRENGTH IN ALL SEGMENTS.

4.1% IN 2014 DYO BOYA’S EXPORTS INCREASED BY 4.1% ON A USD BASIS.

STRONGLY POSITIONED IN ALL MARKET SEGMENTS

HIGHER İSO 500 AND FORTUNE 500 RANKINGS

Strong sales made it possible for Dyo Boya to achieve its 2014 growth targets and to boost its market strength in all segments.

In Turkey’s Top 500 Industrial Enterprises, an annual ranking of the country’s 500 biggest industrial concerns that is published by the İstanbul Chamber of Industry (İSO), Dyo Boya jumped 16 places to 157th position between 2013 and 2014. In the “Fortune 500 Turkey” list published by Fortune, a prestigious business and economics monthly, Dyo shot up 12 places to 223rd based on its net sales reported in 2013.

Besides fulfilling its growth targets, the Company also continued its efforts to further strengthen its distribution network, to provide its customers with even betterquality and more innovative products, and to enhance customer satisfaction and loyalty. Dyo Boya sought to boost sales and market share by targeting new customers and markets. It also created new technical service teams, whose members were tasked with providing customers with more effective productivity and problem-solving solutions.

TARGETING NEW EXPORT MARKETS Dyo Boya’s exports increased by 4.1% on a USD basis and accounted for 6% of its total sales in 2014. In 2014 Dyo Boya exported goods to a total of forty European, Central Asian, Middle Eastern, and African countries. Last year the Company continued to grow in its existing foreign markets while also gaining a presence in some new ones. The latter is in line with Dyo Boya’s goal of targeting new export markets in order to increase their number and to expand the total volume of its international sales in the period ahead.

INVESTMENTS Total investments in 2014 amounted to TL 25,028 thousand. The biggest contributors to the “Fixtures” category were color charts and the signage given to dealers. TL 535 thousand was spent on buildings, infrastructure, and land improvements, TL 3,102 thousand on plants and machinery, TL 9,965 thousand on fixtures, and TL 289 thousand on rights. At year-end 2014 Dyo Boya had a total of TL 11,137 thousand worth of investments currently in progress.

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For our customers and consumers… DYO BOYA PRODUCT PORTFOLIO

CONSTRUCTION COATINGS

INDUSTRIAL COATINGS

FURNITURE COATINGS

• Water-based interior topcoats • Water-based exterior topcoats and claddings • Road surface striping paints and thinners • Synthetic-based topcoats • Dr Dyo Problem-Solvers • Wood finishes and varnishes • Water-based and synthetic primers • Putties • Thinners • Applicators (brushes, rollers, auxiliary supplies) • Color chart bases and colorants • Klimatherm heat-insulation systems

• Solvent-based and water-based topcoats and primers • High-additive, solvent-based topcoats and primers • Solvent-based varnishes • Solvent-free topcoats • Polyester-based putties • UV-cured varnishes • Auxiliary products • Coil coatings • Powder coatings • General industrial mixing systems • Anticorrosive products group • Fire-retardant topcoats

• Water-based varnishes, topcoats, primers, putties, and finishes • Solvent-based varnishes, topcoats, and primers • Solvent-based coloring agents • Auxiliary products • UV-cured systems • Polyurethane-based multicoat varnish and paint system * • Acrylic-based multicoat varnish and paint system * • Mixing systems

* Only product capable of being used as both an under and top coat

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THE YAŞAR GROUP COATINGS DIVISION, IN WHICH DYO BOYA IS THE FLAGSHIP COMPANY, SUPPLIES CONSUMERS WITH 1,200 PRODUCTS IN 3,500 FORMS OF PACKAGING AND 60,000 SHADES OF COLOR UNDER THE DYO, DEWILUX, AND CASATI LABELS

SYNTHETIC RESINS

AUTOMOTIVE REPAIR COATINGS

MARINE COATINGS

• Saturated polyester resins • Thermosetting unsaturated polyester resins for the composite systems sector • Short-, medium-, and long-oil alkyd systems • Modified alkyd systems • Thermoplastic acrylic resins • Thermosetting acrylic resins • Acrylic polyols • Epoxy esters • Melamine formaldehyde and urea formaldehyde resins • Solgel-inorganic resins, nanocomposites • Polyurethane resins • UV-curable systems • Putty resins • Styrene-acrylic copolymers • Pure acrylic copolymers • Vinyl-acrylics • Terpolymers

• Solvent-based topcoats, varnishes, primers, and putties • High-additive topcoats and primers • Polyester-based putties • Auxiliary products • 2K water-based topcoat • Resin-based underfloor coating • Mixing systems for automotive repair coatings

• Solvent-based topcoats, varnishes, primers, and putties • Auxiliary products

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15.7% THE ONLY COMPANY TO REGISTER REAL GROWTH IN 2014, DYO BOYA BOOSTED ITS CONSTRUCTION COATINGS TURNOVER BY 15.7% LAST YEAR.

2014 DEVELOPMENTS BY SEGMENT Construction Coatings The only company to register real growth in 2014, Dyo Boya boosted its construction coatings turnover by 15.7% last year. In the construction coatings business line, Dyo Boya’s customer base consists of three main segments: dealers, end-users (households), and professional users. Dyo Boya creates emotional bonds with its customers so as to maximize the benefit with which it provides them. Adherence to this principle is one reason why the Company enjoyed a 97% customer satisfaction rate in the construction coatings segment in 2014. Dyo Boya’s customer loyalty model seeks to maximize the effectiveness of serviceand quality-related practices capable of enhancing customer satisfaction and customer loyalty. In 2014: • Expansion in the Dyo Renk Pınarı colormixing system’s equipment park made it possible to provide customers with faster and better service while also minimizing the number of different colors needing to be kept in stock at points of sale.

• Additional improvements in dealership agreement terms further increased the market availability of Dyo Boya products. • Social media continued to be used effectively in order to engage in a closer and more intimate dialogue with consumers and thereby get a better grasp of market trends and demands. • The www.birbilenesorun.com.tr website continued to serve consumers as a platform for obtaining information and advice about color and decoration ideas. • Dyo Boya introduced its “Victory Road” program, which provides retail dealers and their employees with training on a host of subjects ranging from personal development to salesmanship and from customer relationship management to leadership. The program also seeks to transform the retail dealership channel’s traditional business methods and to improve its operational results. • In order to quantify and amplify the business-results impact of the training program that was introduced in 2013 to boost wholesale dealership personnel’s sales and customer-interaction competencies, a new incentive/bonus system for the wholesale channel was introduced. Called “Victory Stars”, the system is based on the “Management by Objectives” approach. As a company with a full-fledged R&D center of its own, Dyo Boya regards developing new products compatible with market expectations, optimizing existing products, and assessing its own products’ performance by comparing them with those

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IN 2014 DYO BOYA IDENTIFIED THE DOMESTIC AND INTERNATIONAL MARKETS’ CONSTRUCTION COATINGS NEEDS AND DEVELOPED NEW PRODUCTS TO ADDRESS THEM.

97% DYO BOYA ENJOYED A 97% CUSTOMER SATISFACTION RATE IN THE CONSTRUCTION COATINGS SEGMENT IN 2014.

THE CASATI COLORLINE COLORMIXING SYSTEM, SIMILAR TO THE ONE USED FOR DYO PRODUCTS, WAS DEVELOPED FOR THE LINE OF CASATI-BRANDED PRODUCTS.

of domestic and international competitors as elements of its core mission. In 2014 Dyo Boya identified the domestic and international markets’ construction coatings needs and developed new products to address them. For the Turkish market: • Massiveline series water- and oil-based deck varnishes for wooden walkways • Dr Dyo series Dyoflex Elyaflı, a waterproofing coating intended for roofs that is more resistant to mechanical shock owing to its fibrous content • Dyoplast Silicone Interior Wall Paint, which contains an acrylic binder and a silicone resin • Hidrolux, a high-gloss water-based paint • Dyoplast Matte Silicone Interior Wall Paint for the interior topcoat group • Dinamik Grenli for use in exterior cladding • Akromax, semi-matte pure acrylic exterior paint • Casati-brand interior wall putty • Casati-brand exterior wall putty • Casati-brand ceiling paint • Overline conversion primer • Vivaline Viva primer Made in our Russian plant for the Russian market: • Iceberg, a high-opacity white interior wall paint • Akrostar Texture, a cost-effective texturized silicone-based paint

The Casati Colorline Color-Mixing System, similar to the one used for Dyo products, was developed for the line of Casatibranded products. In 2014 Dyo Boya continued to effectively deploy its dealership channel in order to engage in the end-user targeted marketing of its products. Efforts were made to boost such sales by means of store, shelf, signage, POP, gift-pack & travel campaigns (linkage campaigns), special deals & offers, and similar practices. A project is currently being carried out to increase brand-visibility by redesigning logos and other indications (store signs, shelving etc) of the Company’s corporate identity at points of sale. Dyo Boya continued image-focused marketing activities targeting its end-users, which is to say households, in 2014. This involved: • Mass-media campaigns • TV program and other forms of sponsorship • Trade fairs • Websites • Mobile applications • E-mailing • Facebook and Twitter campaigns • Outdoor activities, including contests. • www.birbilenesorun.com.tr website

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14.3% IN 2014 DYO BOYA REGISTERED A RISE OF 14.3% IN ITS FURNITURE COATINGS SEGMENT TURNOVER.

16.6% DYO BOYA REGISTERED A 16.6% RISE IN ITS TURNOVER IN THE AUTOMOTIVE REPAIR COATINGS SEGMENT IN 2014.

These are some of the main conduits through which Dyo Boya accesses its endusers. Another way in which end-users are reached is through DIY outlet activities that are conducted mainly on weekends. Dyo Boya makes use of the DYOLOG Loyalty System, promotional materials, and DYO AKADEMİ in the conduct of its professionaluser targeted marketing activities. The Company also organizes regional seminars that target local professionals and practitioners. In keeping with its role as a pioneer of the paints & coatings industry, Dyo Boya achieved yet another first in 2014 by making it possible for over 35,000 practicing painters all over Turkey to obtain professional certification. Having received TS-EN ISO/IEC 17024 Standard accreditation from the Turkish Accreditation Agency and being authorized by the Vocational Qualifications Authority, the Dyo Boya Academy Certification Department last year began accepting applications from candidates wishing to obtain national certification as qualified painters in the construction industry. 145 candidates were tested in 2014.

Industrial Coatings Dyo Boya’s 15.5% rate of growth in the industrial coatings segment outperformed the market average in 2014. In the industrial coatings segment, the following products were developed in 2014. • Water-based plastic paint for profiles, frames, collectors, and white goods • 2K solvent-based paint for pipes and profiles • 2K solvent-based epoxy primer for galvanized surfaces; a shop primer for transformer drainage systems • 2K high-solid acrylic varnish, high-solid flame-resistant acrylic topcoat, acrylic 2K plastic primer, primer and topcoat, automotive bumper paint • 2K polyester topcoat • 2K anticorrosive topcoat • 2K solvent-free drinking water pipe lining, self-leveling floor coating, floor varnish, chemical-resistant phenolic coating • Acrylic aerosol paint • Mixing systems for industrial, anticorrosive, and gearbox applications

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A NEW, 13,000-TON ANNUAL-PRODUCTION-CAPACITY COIL COATINGS MANUFACTURING UNIT THAT DYO BOYA SET UP TO BETTER ADDRESS STEADILY GROWING CUSTOMER DEMAND IN THIS SEGMENT COMMENCED OPERATION IN JANUARY 2014.

Furniture Coatings In 2014 Dyo Boya registered a rise of 14.3% in its furniture coatings segment turnover. The biggest factor contributing to Dyo Boya’s performance in an otherwise shrinking market was the Company’s concerted efforts to take on new customers. As a result of such efforts, new, high-potential dealerships were granted, products were sold to a large number of industrial customers who previously had been inaccessible, and Dyo Boya continued to be some manufacturers’ main supplier. In the furniture coatings segment, the following products were developed in 2014. • Glossy polyurethane topcoat that can be polished 24 hours after being applied • UV-cured pigmented matte topcoat and UV-cured glossy varnish for laser roller applications • UV-cured white primer for use on MDF sections • Water-based patina designed especially to give panel doors the appearance of wood veneer • Water-based UV-cured metallic topcoat • Water-based colored varnish system developed for exterior door and window frames • 2+1 scratch-resistant polyurethane varnish set capable of competing with other manufacturers’ products on cost and quality • Acrylic coating that can be applied half an hour after the application of a cellulose paint and can be polished 24 hours later In 2014 a total of 1,404 hours of training was provided to 468 finishers working in the furniture coatings segment.

Automotive Repair Coatings Dyo Boya registered a 16.6% rise in its turnover in the automotive repair coatings segment in 2014. The number of mixing machines installed on the premises of dealers, subdealers, and bespoke service outlets located all over Turkey reached 181. Serving the automotive repairs market, Dyo MetalMix further strengthens customer loyalty thanks to its ability to be combined with other products in different systems. In 2014 the number of installed mixing machines reached 108. In the automotive repair coatings segment, the following products were developed in 2014. • Cost-effective varnish and hardener • Metallic plastic surface primer • Metallic polyester putty • Texture automotive bumper paint • Abrasives • White acrylic primer • Water-based topcoat • HighTech-series MixLine primer, varnish, and hardener 41 new colors were added to the canned paints product line and 36 were added to the MixLine series. 173 of the existing canned paint colors were updated. The rapid-drying topcoat in the metal market group was introduced in one-gallon packaging. Synthetic Resins Dyo Boya manufactures its own resins itself. This not only gives it a significant cost

advantage but also reduces its dependence on imported inputs. Highly automated and equipped with state-of-the-art technology, the Company turns out a wide range of different types of resins as well as resins specially created for coating and cladding products that are capable of satisfying customer and market requirements. Leading the market with multifunctional and aesthetically pleasing resins, Dyo Boya’s strong R&D competencies enable it to be mindful of environmental and human health even as it designs products that respond to customers’ needs. Coil Coatings Recognizing that the practice of coating galvanized steel and aluminum coils prior to their use is become increasingly more widespread, especially in the construction and white goods sectors, in 2011 Dyo Boya expanded its R&D center and began supplying the market with products intended for the coil coatings segment. A new, 13,000-ton annual-productioncapacity coil coatings manufacturing unit that Dyo Boya set up to better address steadily growing customer demand in this segment commenced operation in January 2014. In the coil coatings segment, the following products were developed in 2014. • Polyester topcoats • Polyester primers • Epoxy polyester backcoats • Epoxy backcoats • Water-based coil coatings • PDVF systems

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THE “QUALITY COATINGS” IMAGE THAT DYO BOYA ENJOYS AMONG BOTH CONSUMERS AND PROFESSIONALS IS ROOTED IN THE QUALITY AND EXCELLENCE THAT ARE ESSENTIAL TO ITS CORPORATE CULTURE.

Powder Coatings In the six decades since they first appeared in the early 1950s, powder coatings technology products have grown with extraordinary speed and today make up a market estimated to be worth USD 6 billion globally. While powder coatings account for a 6.6% share of the overall global coatings market, in Europe the figure is 12%. Total powder coatings production in Turkey as of end-2013 amounted to 75 thousand tons, ranking the country third in Europe after Italy and Germany. According to some national and international industry pundits, Turkey is likely to advance to first place before the end of 2017. Seeking to tap into this potential, Dyo Boya decided to enter the powder coatings sector and undertook a new plant investment in Manisa’s Turgutlu township. Occupying 10,000 m2 of grounds, the new factory commenced production in 2014 with an initial production capacity of 6,000 a year. The total investment cost of this fiveyear project should reach TL 25 million by the time it is completed in 2017. Dyo Boya powder coatings are used in the manufacture of: • Radiators • White goods • Furniture metal parts • Automotive components • Production machinery • LPG tanks and bottles • Transformers • Metal goods

In the powder coatings segment, the following products were developed in 2014. • A series of products that can be cured in 10 minutes at 150º C, for use in radiator manufacturing • An ultra-thin (35 micron) film product for use in radiator manufacturing • A series of perforation-resistant polyester topcoats that can be applied on metalized zinc surfaces without a primer, for use in LPG bottle manufacturing • A series of polyester topcoats with a salt fog resistance rating of 1,000 hours on its own • An eco-friendly, zinc and heavy-metal free epoxy primer with a salt fog resistance rating of 1,440 hours Dyo Boya powder coatings products have been independently tested for compliance with QUALICOAT Class 1 standards, the basic reference standard in European architectural finishing technology. A formal application has been submitted for certification. Eco-friendly products • Water- instead of solvent-based systems • Low volatile organic compound (VOC), high-solid systems • Solvent-free systems

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SEEKING TO TAP INTO THE POTENTIAL IN THE POWDER COATINGS SEGMENT DYO BOYA FINISHED ITS INVESTMENT POWDER COATINGS INVESTMENT IN MANISA’S TURGUTLU TOWNSHIP AND COMMENCED PRODUCTION IN 2014.

MILESTONES IN DYO BOYA’S QUALITY JOURNEY 1993 ISO 9003 Quality Management System certification 1994 ISO 9001:2004 Quality Management System certification 2000 TS EN ISO 9001:2000 Quality Management System certification received and process-based systems management designed 2008 ISO/TS 16949:2002 certification 2010 TS EN ISO 9001:2008 Quality Management System certification

SUPERIOR TECHNOLOGICAL INFRASTRUCTURE Dyo Boya conducts its manufacturing operations at three plants, one located in İzmir-Çiğli, one in Gebze-Dilovası and the other in Manisa-Turgutlu. The Gebze plant, in which construction coatings are manufactured, is a modern and highlyautomated production facility occupying an area of 65 thousand m². Occupying an area of 67 thousand m², the Çiğli plant is the biggest facility of its kind in the Turkish coatings industry. An example of a manufacturing operation whose advanced technology and extensive production capacity make it a model for the entire sector, the Çiğli plant turns out furniture paints and varnishes, industrial coatings, automotive repair coatings,

2010 TS EN ISO 14001:2004 Environmental Management System certification 2010 TSE 18001:2008 Occupational Health and Safety Management System certification 2010 The first paints & coatings company to be awarded TSE ISO 10002:2006 Customer Satisfaction Management System certification 2010 ISO/TS 16949:2009 quality management system certification marine coatings, polyesters, and alkyds. Production of powder coatings has begun at Dyo Boya’s new factory occupying 9 thousand m2 of grounds in Turgutlu.

THE TOUGH RELIABILITY THAT COMES WITH QUALITY With over 60 years of involvement in the Turkish coatings industry, Dyo Boya owes its deep-rooted experience and reputation for reliability to its commitment to putting quality at the heart of every product and service supplied under the “Dyo” name. The “quality coatings” image that Dyo Boya enjoys among both consumers and professionals is rooted in the quality and excellence that are essential to its corporate culture.

2012 TS EN ISO 50001 Energy Management System certification 2013 Dyo Boya joins the National Quality Movement 2013 Dyo Boya is awarded “5 Star Competency Certification” 2014 TS EN ISO/IEC 17024 Conformity Assessment accreditation 2014 Aegean Regional Award For Excellence Grand Prize in the Private Sector

In keeping with its customer-focused approach, Dyo Boya analyzes users’ needs, expectations, and demands, shapes its products and services accordingly, and in this way demonstrates and maintains the innovative strengths of its brand. Constantly improving standards as well as rising consumer expectations make it essential to keep developing and offering better-quality products and services.

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2014 ACTIVITIES

DYO BOYA WON THE AEGEAN REGIONAL AWARD FOR EXCELLENCE GRAND PRIZE AT THE 15TH QUEST FOR EXCELLENCE SYMPOSIUM ON 5 JUNE 2014.

Striving constantly to do better in line with this approach, Dyo Boya ensures that its services conform to the EFQM Excellence Model, whose underlying goal is to create organizations that never cease to search for something better than what currently exists. Having committed itself to this model and in line with accelerated quality-related activities in 2013, Dyo Boya joined KalDer’s National Quality Movement in February and then signed that movement’s “Statement of Good Faith”. Subsequent to this, Dyo Boya conducted EFQM Excellence Model training for a year. As a result of all these efforts, Dyo Boya performed well in the “Turkey Excellence Awards” program and was awarded “5 Star Competency Certification” at a ceremony held on 13 November 2013. Dyo Boya’s next objective is to bring home the “European Quality Award”.

AEGEAN REGIONAL AWARD FOR EXCELLENCE GRAND PRIZE IN THE PRIVATE SECTOR

Dyo Boya won the Aegean Regional Award for Excellence Grand Prize at the 15th Quest for Excellence Symposium conducted by the İzmir branch of the Turkish Quality Association (KalDer) on 5 June 2014. This was especially noteworthy as it was the first time that the award has been given to an Aegean-headquartered firm in eight years.

TURGUTLU POWDER COATINGS PLANT QUALITY CERTIFICATION Projects have been initiated to install quality management systems at Dyo Boya’s Turgutlu Powder Coatings Plant, where production commenced in March 2014. The factory is scheduled to undergo auditing for ISO 9001, ISO/TS 16949, ISO 10002, ISO 14001, TS 18001, and ISO 50001 certification in 2015.

DYO BOYA R&D CENTER Although Dyo Boya’s R&D center opened in 2009, its roots reach back as far as 1967. As the author of many firsts in its sector, Dyo Boya is also a leader in its approach to product innovation. Dyo Boya has its own R&D center whose strengths, when combined with the Company’s ability to read markets insightfully, enable it to develop products that set sector-wide trends. Dyo Boya R&D Center’s mission is informed by the principles of: • making superior-quality products whose added value is high, • keeping a close watch on new technologies, • innovating, • being the first in the market, • setting market and customer trends, • creating new markets and areas of use.

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DYO BOYA HAS ITS OWN R&D CENTER WHOSE STRENGTHS, WHEN COMBINED WITH THE COMPANY’S ABILITY TO READ MARKETS INSIGHTFULLY, ENABLE IT TO DEVELOP PRODUCTS THAT SET SECTOR-WIDE TRENDS.

Dyo Boya allocates a specific percentage of its turnover every year for R&D activities which will enrich the scope of its R&D efforts, increase the number of researchers and improve their abilities, and generate new knowledge. Besides entering new sectors, the Company plans to undertake projects related to innovative products in the business lines in which it is already active. It will be doing this both independently and in collaboration with universities. As part of its R&D activities, Dyo Boya sends representatives to international fairs and seminars, keeps a close watch on coatings market developments worldwide, and collaborates with international institutes and research centers. In 2014 Dyo Boya continued to increase the number of its R&D personnel while also enhancing their competencies and qualifications. Besides strengthening Dyo Boya’s innovative vision in the course of its first five years, the Dyo Boya R&D Center has also been concentrating more and more of its attentions on projects that will expand its portfolio through the addition of new products and the incorporation of new technologies from around the world. On 4 March 2014, Dyo Boya accepted from the Minister of Science, Industry and Technology Fikri Işık an award recognizing the Company’s R&D center as the most successful in the chemicals industry based on the findings of a TTO Workshop study and the results of the R&D Center Performance

Index published for the first time by the ministry. At the 3rd Private Sector R&D Centers Summit held on 10 December 2014, Dyo Boya’s R&D center was recognized for the second time by achieving an even higher performance index rating that ranked it among the top ten R&D centers in a field that now numbers more than 160 in Turkey. In its May 2014 issue, the magazine Capital ranked Dyo Boya 13th in its list of Turkey’s “22 Leading Companies in R&D” based on the 2% share of its total turnover that the Company devotes to R&D work. On account of its contributions to an EU project seeking to reduce the volatile organic compound (VOC) content of paints and coatings (a high-priority subject on the Dyo Boya R&D Center’s agenda), Dyo Boya received a certificate of appreciation from the Ministry of Environment and Urban Planning. When the Dyo Boya R&D Center opened in 2009 it had a full-time staff of 51 people. Last year the Company increased the full-time staffing of its Çiğli R&D Center to 72. In 2013 the position of “Project Research Officer” was added to the center’s existing research staff personnel. This resulted in a significant increase in the number of doctoral-degree and doctoral-candidate personnel recruited by the center. The center continued to adhere to the same approach in 2014. The Dyo Boya R&D Center continues to focus its attentions on projects that involve

university-industry collaborations. In that respect 2014 was a successful year in terms both of one-on-one contacts with university faculty members and of participation in activities and platforms whose aim is to increase such collaboration. One result of this approach is that it has begun to bear fruit in the form of increasingly more public sector-supported R&D projects. Dyo Boya also demonstrates its R&D prowess by gaining acceptance for increasingly more projects that it undertakes under such publicly-supported R&D programs as those of TÜBİTAKTEYDEB and San-Tez. The Dyo Boya R&D Center successfully completed eleven such projects in 2014 alone. It is also actively working on a large number of other projects that are currently either at the project development or formal application stage. As the process of harmonizing Turkey’s legal and regulatory framework with EU practices continues, an important component of the Dyo Boya R&D Center’s work involves reviewing the existing product portfolio, checking it for compliance with EU requirements and restrictions, and making such changes as are necessary. The amounts of volatile organic compounds (VOC) in the Company’s products have already been reduced as required by the European Union’s 2004/42/EC directive and all of its water-based interior and exterior coating products are now VOC-directive compliant. The process of bringing the remaining solvent-based products into the same compliance was completed in 2013.

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essentially by asking individuals to report problems related to their own functions, soliciting ideas to deal with the problems, and implementing solutions that are approved by management. The OCI system is supported by a program of rewards for those whose projects are successful.

CONTINUOUS INVESTMENT TECHNOLOGY

Recognizing the vital importance of technology to everything that it does, Dyo Boya continued to invest in information systems in 2014 as well.

EFFECTIVE SOLUTIONS THROUGH TECHNICAL SERVICE

Dyo Boya employs its technical service teams to provide customers with effective solutions in their efforts to set up new production lines, to expand existing ones, and to deal with problems that may arise. The Company also plans to further strengthen its technical service competencies in the period ahead. During 2014 the Company provided 2,800 hours of customer training to 750 people consisting of the managers and technical personnel of leading industrial concerns in many different sectors. The qualifications and competence of technical staff are improved through NACE (National Association of Corrosion Engineers) certification processes.

IMPROVEMENTS IN OPERATIONAL EFFICIENCY The “Best Practices & Production Efficiency Improvement Projects” which Dyo Boya inaugurated in the 1990s have been continuing as part of the Yaşar Holding’s Operational Cost Improvement (OCI) Program since 2005. The goal of OCI is to reduce costs. This is achieved

In 2014: • Work was completed on system infrastructure and software customization projects at the Dyo Boya Turgutlu Powder Coatings Plant. The systems have now been commissioned. • The project that was initiated in 2013 to transfer sales projections to the production planning function by means of the SAP SCM-SNP supply network planning module in order to formulate weekly production plans was completed. • A new version of DYOLOG was released. Work also continued on developing it for the Android platform. • Worked continued on the Gebze Plant Production Tracking project, for which support has also been obtained from the Scientific and Technological Research Council of Turkey under its Technology and Innovation Grant Program. • The SanayiMix project was developed. This will allow industrial coatings dealerships to create formulas of their own with Dyo components and also to track their use. • • The online employee opinion survey was completed.

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ORIGINALLY LAUNCHED IN 2009 AS A PLATFORM BRINGING TOGETHER PRACTITIONERS AND SALES PERSONNEL WHO ARE PROFESSIONALLY INVOLVED IN THE COATINGS SECTOR, THE DYOLOG LOYALTY SYSTEM CONTINUES TO GROW WITH THE ADDITION OF NEW MEMBERS.

• Work was carried out on the DYO ADR form tracking system, which is now up and running at the Çiğli and Gebze plants. • Work continued on updating the content and improving the security of the Dyo and DYOLOG websites. Two webbased applications were developed: Dyo Boyama Keyfi, which allows users to paint and decorate a virtual room of their choice, and one to check raw material prices in real time. • The data links of all Dyo Boya web locations were changed over to fiber optic connections within the Multiprotocol Label Switching mechanism. • The security infrastructure was beefed up with the commissioning of newgeneration security wall and denial-ofservice attack-prevention systems. • Investments and improvements at the Company’s data headquarters were concerned with renovating the file storage unit and SAP ERP system so as to create a more sustainable file structure. Improvements were made in the data backup systems that are to be used for disaster recovery.

DYOLOG LOYALTY SYSTEM

Originally launched in 2009 as a platform bringing together practitioners and sales personnel who are professionally involved in the coatings sector, the DYOLOG Loyalty System continues to grow with the addition of new members. At end-2014, DYOLOG’s membership numbered 43,980 (39,749 professional users and 4,231 sales personnel). Members continued to earn points, based on their sales and purchases, which they may exchange for cash or for gifts in the DYOLOG catalogue.

Another aspect of the DYOLOG system is the ongoing conduct of contests and other activities whose aim is to strengthen Dyo brand loyalty. The now traditional DYOLOG Father’s Day Contest was held in social media in 2014, with valuable prizes being handed out to the participants.

OTODYOLOG LOYALTY SYSTEM

OtoDyolog, a loyalty system for automotive repair professionals who use Dyo products, was launched in 2014. The number of its registered users has reached 1,383. Dyo Boya provides training aimed at strengthening the competencies of technical service personnel. During 2014 the Company provided 495 hours of field training to members of the OtoDyolog Loyalty System and 800 hours of training at its Automotive Repair Coatings Training & Application Center.

CASATI’M LOYALTY SYSTEM

The Casati’m Loyalty System, preliminary work on which was completed in 2013, became operational and had 1,722 registered users (1,400 professional painters and 322 sales personnel) as of end-2014. The system’s users earn loyalty points that can be converted into rebates or gifts selected from the Casati’m catalogue.

DYO BOYA’S INTERNATIONAL OPERATIONS Kemipex Joint-Stock Co (Russian Federation) ZAO Kemipex was set up in the province of Krasnodar in Russia in 1996. Kemipex is a wholly-owned subsidiary of Dyo Boya. Employing a staff of 50 people, the Company carries out its operations at a complex consisting of a head office, a

construction coatings plant, a printing inks plant, and a distribution warehouse. In 2010 Kemipex began manufacturing coatings for the construction industry. The Company currently has an installed annual production capacity of 3,120 tons of construction coatings and 1,800 tons of printing inks. Having initially begun manufacturing with just three lines of products, the number reached 23 in 2014. With policy focusing on territorial expansion in 2012-2014, the total number of dealers topped 20. The Company took precautions and engaged in efforts to defend its position in the face of the adverse impact that the devaluation of the ruble had on the Russian economy. Kemipex booked net sales amounting to USD 7.3 million in value in 2014. In 2015 the plan is to increase brand recognition by opening Monoshops and by giving greater attention to vehicle livery, billboard, and media advertising in all provinces in which dealers have a presence, with particular attention being given to those where the brand is not yet well known. Products compatible with the Russian market in all segments such as industrial coatings, furniture coatings, and road marking paint will be manufactured as developments in the Russian economy warrant. Work will also continue on projects to have such products imported into Turkey and marketed there.

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2014 ACTIVITIES

abroad DYO BOYA HAS SUBSIDIARIES BASED IN RUSSIA, ROMANIA, AND EGYPT.

S.C. Dyo Balkan SRL, Romania Dyo Balkan SRL was set up in Romania in 2003. The Company performs marketing and sales of construction coatings manufactured with the Dyo technology through its own regional warehouses throughout Romania. In 2009, special products were developed at Dyo Boya’s R&D laboratories to meet the particular needs of the local market and a new lineup of products was prepared for Romania, which is a member of the European Union. Technological operations are conducted for the heat insulation and cladding materials markets. Dyo Balkan SRL holds both ISO 9001 and ISO 14001 quality management certifications. Focusing on achieving compliance with REACH, VOC, and labeling information requirements as per EU norms, the Company made the necessary improvements in 2010.

Mediterranean Trade for Paints Co. (MTP Co.), Egypt Founded in 2004 and headquartered in Cairo, Mediterranean Trade for Paints Co (MTP Co) is a joint venture of Dyo Boya and the Sipes Group, a leading manufacturer of construction coatings in Egypt and much of the Middle East. MTP Co, to which Dyo Boya contributes its production technologies, makes, markets, and sells automotive repair and furniture paints & coatings. Having joined the sector’s leading players in Egypt, the Company is now focusing on building on that success by expanding into the markets of other African countries as well. MTP Co was awarded TS EN ISO 9001:2008 Quality Management System certification in 2009. Dyo Africa Paints and Varnishes (Egypt) Founded in 2014, Dyo Africa is headquartered in Cairo. The Company will be making, selling, and marketing automotive repair, furniture, and industrial coatings when it becomes operational. Dyo-labeled products appearing before consumers in Middle Eastern and African countries will contribute towards raising our brand visibility in those markets.

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For our employees… DYO BOYA’S EMPLOYEES ARE SKILLED IN STRATEGIC MANAGEMENT AND IN ACTING COLLABORATIVELY WITH CONSUMERS AND CUSTOMERS, HAVE A KNACK FOR INNOVATION, AND POSSESS THE ABILITY TO MAKE ONGOING IMPROVEMENTS IN TECHNOLOGY.

1,043 IN 2013 DYO BOYA HAD AN AVERAGE OF 928 PEOPLE/MONTH ON ITS PAYROLL. IN 2014 THIS NUMBER INCREASED TO 1,043.

Dyo Boya conducts personnel training programs whose aim is to ensure that its employees are skilled in strategic management and in acting collaboratively with consumers and customers, have a knack for innovation, and possess the ability to make ongoing improvements in technology. In 2014 Dyo Boya provided all its employees with training to improve their: • Personal skills • Managerial skills • Professional/occupational skills • Technical skills. Average training time per person was 28 hours last year.

Programs such as the “Yaşar’s Stars” competition, whose aim is to promote and internalize Yaşar corporate values among group companies, and the “Efficiency Contest”, which recognizes those who are the most successful in achieving operational excellence, continue to be conducted. On 8 May 2013 the Company signed a workplace collective bargaining agreement with the Petrol İş labor union. The contract covers the two-year period beginning on 1 January 2013 and ending on 31 December 2014. In 2013 Dyo Boya had an average of 928 people/month on its payroll. In 2014 this number increased to 1,043.

 

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For the environment and the community...

36 A RECORD-BREAKING 992 ARTISTS SUBMITTED 1,574 WORKS FOR INCLUSION IN THE 36TH DYO ART COMPETITION IN 2014.

SUSTAINABILITY-RELATED ISSUES & ACTIVITIES Since the day it was founded, Dyo Boya has always behaved as a responsible manufacturer in its dealings with its customers, its community, and the environment. Holding both TS EN ISO 14001:2004 Environmental Management System and TS 18001:2008 Occupational Health and Safety Management System certifications, Dyo Boya seeks to create and maintain a working environment conforming to the highest standards of safety and efficiency for its employees, Dyo Boya is also committed to making every possible effort necessary to minimize the environmental impact of its operations. Dyo Boya has had waste collection points and rainwater runoff and industrial discharge sewer maps prepared for all of its facilities. Emission control confirmation measurements are also made at regular intervals and work has begun on assessing the Company’s carbon footprint as one of the sustainability projects being undertaken by Yaşar Holding. Dyo Boya completed its TS ISO 50001:2011 Energy Management System auditing in 2012 and was awarded certification that December. A number of energy-efficiency project investments that were undertaken

in the run-up to this certification are now operational. The Dyo Boya R&D center’s certification was renewed by the Ministry of Industry and Commerce pursuant to Statute 5746, a law concerning support for research and development activities. The Company continues to benefit from the investment and tax incentives provided for under that law.

36TH DYO ART COMPETITION

Originally inaugurated in 1967 to draw public attention to the socially beneficial aspects of the Company as an economic actor, the Dyo Art Competition is recognized as having made important contributions to the advancement of the pictorial arts in Turkey. Held biennially by the Yaşar Education and Culture Foundation since 1993, the competition itself takes place in evennumbered years and in the odd-numbered year immediately following, the prizewinning and honorable-mention works go on tour and are shown off to art lovers in exhibitions that are held in cities all around the country. A record-breaking 992 artists submitted 1,574 works for inclusion in the 36th Dyo Art Competition in 2014. Consisting of Yalçın Gökçebağ, Prof Zahit Büyükişleyen, Dr Ümit Gezgin, Prof Şeniz Aksoy, Prof Mümtaz Sağlam, Assoc Prof Hasan Kıran, Prof

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IN ADDITION TO ITS SUCCESSES AS A MANUFACTURER, DYO BOYA ALSO INVOLVES ITSELF IN IMPORTANT PROJECTS IN THE AREA OF SOCIAL RESPONSIBILITY.

Zafer Gençaydın, Prof Cuma Ocaklı, and Prof Aydın Ayan, the contest’s jury judged the submissions during sessions held in İstanbul, Ankara, Adana, and İzmir. The four top entrants in the painting category were Ayşe Bilir, Gülveli Kaya, Erdal Kocabey. and Belit Sak; in the original prints category they were Seyit Mehmet Buçukoğlu and Necla Tosmur. In 2015 the contest’s prizewinning and honorable-mention works will be shown off to art lovers all over the country. Recognized as one of the private sector’s most enduring contributions to the arts in Turkey, the Dyo Art Competition has hosted 21,715 works submitted by 12,886 artists in the course of its 47 years. During this period, there were a total of 196 prizewinners while another 2,733 were deemed to be exhibitionworthy. Thousands of art lovers have viewed these works in 127 shows mounted in 25 cities over the years. Numbers like these are concrete expressions of the Dyo Art Competition’s benefit to the arts.

CONTRIBUTING TO SOCIETY

In addition to its successes as a manufacturer, Dyo Boya also involves itself in important projects in the area of social responsibility, in the conduct of which it focuses especially on the issue of sustainability. Constantly seeking to increase the value that it adds to society through activities capable of contributing towards national development, Dyo Boya formulates its corporate social responsibility projects and approaches within the framework of its principle of “Give something back to the community”.

In the conduct of its social responsibility projects in 2014, Dyo Boya supplied paints and other materials to: • Kütahya Chamber of Commerce & Industry Technical and Industrial Vocational High School • Şırnak-İdil Akdağ Primary & Middle School • Foundation for Children with Leukemia Bolu Provincial Office • Dilovası Public Health Center • Community Volunteers Foundation School-Painting Project • TCMB Derince Anadolu Lycee

SPONSORSHIPS

• 15th Quest for Excellence Symposium • Karadeniz Provinces Women’s Platform Association • Toys Library (toys) • 5th Highways Department Traffic Safety Symposium • Ödemiş Vocational School for the Mentally Disabled • Samsun ABS Art Theater (paints & supplies) • Red Crescent North Marmara Regional Directorate of Disaster Recovery • Nezahat Gökyiğit Botanical Gardens (paints & supplies, activities) • Fethiye Tennis and Mountaineering Club (project sponsor) • Bursa Motor Sports Association (activity sponsor) • 23rd Quality Congress • ARKIMEET - Architects Meet In Istanbul • Color Sky • Kayseri Chamber of Architects • Yalan Dünya (Kanal D TV soap opera) • Virtual banners and crawls during Lig TV sports broadcasts • Beyaz Show (Kanal D TV variety show) • Altay Sports Club (name sponsor) • Balıkesir Stadium (behind-the-goal logo) • Kertenkele (ATV TV drama) • Reaksiyon (Star TV drama) • Quality Congress (event sponsor)

• ARKIMEET 2014 (gold-level sponsor) • International Summit on Quality in Construction (silver-level sponsor) • Tiyatro Martı performances of Hoş geldin Boyacı, play • Color Sky 5K İzmir (event sponsor) • Nezahat Gökyiğit Botanical Gardens (painting sponsor) • Süper FM (weather report Dyo campaign sponsor) • Best FM (hourly time Dyo campaign sponsor) • Best FM (hourly Klimatherm brand sponsor) • Alem FM (weather report Klimatherm brand sponsor) • Show RaDyo Nihat Sırdar (Klimatherm sponsor) • NTV RaDyo (Klimatherm sponsor) • Dyo Alsancak (name sponsor)

FAIRS & EXHIBITIONS

• “Yugbuild”, Krasnodar, 26 February - 1 March) • “Rebuild Libya”, Benghazi, 16-19 March • “Mosbuild”, Moscow, 1-4 April • “Basra International Buildexpo”, 12-15 April • “Yapı İstanbul”, 6-10 May • “Building Fair”, Erbil,, 14-17 May • “Turkish-Arab Building & Construction Fair”, İzmir, 30 May - 1 June • “SANTEK’14 2nd East Marmara Industry and Technology Fair”, 25-28 September • “Intermob”, 27 September - 1 October • “PaintIstanbul”, 23-25 October • “Batum Build Expo”, 28-30 November