Dogus Group Annual Report 2009

Annual Report 2009

www.dogusgrubu.com.tr

Doğuş Holding A.Ş.Ayazağa Mah. Eski Büyükdere Cad.No: 15 Oycan Plaza Kat: 3-4-534398 Maslak, İstanbul - TurkeyPhone: +90 (212) 335 32 32Fax: +90 (212) 335 30 90

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Contents

Introduction

02 The Doğuş Group at a Glance The Doğuş Group Structure Operational Map 06 Financial and Operational Highlights Consolidated Financial Information by Segments 09 The Doğuş Group in Brief Corporate Profile Doğuş Holding and its Functions Corporate Risk Management and Internal Audit The Doğuş Group’s Approach Toward its Stakeholders Credit Ratings

Management

16 Message from the Chairman 18 Members of the Board of Directors 20 Committees Subject to the Board of Directors 21 Message from the CEO

Activities of 2009

24 Financial Services 50 Automotive 60 Construction 70 Media 84 Tourism and Services 96 Real Estate 104 Energy

Corporate Citizenship

108 Corporate Social Responsibility 122 Corporate Sponsorships

Financial Statements

129 Consolidated Financial Statements

For almost 60 years, the Doğuş Group has taken its place among the leading business conglomerates of Turkey and is a corporate leader in the region. With a steadfast commitment to move forward while contributing to social and economic development, the Group is determined to maintain this stance in the period ahead for long-term sustainability.

The Doğuş Group Structure

SectorS of the Doğuş Group

AuTomoTive ConsTruCTionBAnkinG AnD FinAnCiAl serviCes

corporate citizenShip

SubSiDiarieS anD branDS

Tourism AnD serviCes reAl esTATe enerGymeDiA

D-Tes electricityWhole sale Co.

DOĞUŞ GROUP ANNUAL REPORT 20094

Operational Map

Turkey

Turkish Republic of Northern Cyprus

Ukraine

Romania

BulgariaCroatia

Malta

Switzerland

Luxembourg

Morocco

Germany

The Netherlands

United Kingdom

Libya

Russia

Garanti Bank-Representative Office

GarantiBank Moscow-Headquarters

Kazakhstan

GarantiBank International (GBI)-Representative Office

Doğuş Construction & Trade Inc.

China


Ukraine

GBI-Representative Office



Garanti Bank-Branch

Libya


Malta

Garanti Bank-Branch

Morocco


Switzerland

GBI-Representative Office

D-Auto Suisse SA-Lausanne

Doğuş SA-Geneva

Luxembourg

Garanti Bank-Branch

Germany

Garanti Bank-Dusseldorf Representative Office

GBI Branch

United Kingdom


Doğuş Int.

The Netherlands

GBI-Headquarters

Bulgaria


Romania

GBI-51 Branches

SC Motoractive Credit SA

Ralfi IFN SA

Domenia Credit SA

Croatia

Doğuş Marina Mandalina d.o.o.

5

Russia

Kazakhstan

China

Turkey

Ukraine

Bulgaria


Key Financial Indicators (TL thousand) 2006 2007 2008 2009

Total Assets 18,559,867 27,891,620 37,894,960 42,923,044

Total Shareholders' Equity 3,805,857 4,899,484 5,556,161 6,728,866

Revenues 5,283,298 5,682,177 6,950,442 7,819,616

Net Profit for the Year 470,003 623,097 437,145 782,888

Gross Profit 1,430,815 1,632,083 1,982,175 2,667,310

EBITDA 773,948 907,493 1,177,523 1,329,409

Principal Performance Ratios (%) 2006 2007 2008 2009

Gross Profitability 27 29 29 34

Net Profitability 9 11 6 10

EBITDA Margin 15 16 17 17

ROA - Return on Assets 3 2 1 2

ROE - Return on Group Equity 12 13 8 12

Others 7%

Media 1%

Tourism and Services 3%

Tourism and Services 2%

Financial Services 83%

Construction 3%

Automotive 3%

2009 Total Assets by Segments (%)

Automotive 30% Financial Services 53%

2009 Total Revenues by Segments (%)

Others 4%

Media 2%

Construction 9%

Financial and Operational Highlights With the financial results that it achieved in 2009, the Doğuş Group added another link to the unbroken chain of sustainable growth that is the result of its focused business strategies. The Group’s core business segments contributed to the development of revenues, business volume, number of customers and profitability.

7

2009

2009

Total Assets (TL thousand)

Total Revenues (TL thousand)

Total Shareholders’ Equity (TL thousand)

Net Profit for the Year (TL thousand)

2007

2006

5,682,177

5,283,298

2008

2008

2007 27,891,620

2006 18,559,867

37,894,960

6,950,442

42,923,044

7,819,616

2009

2007

2006

4,899,484

3,805,857

2008 5,556,161

6,728,866

2009

2007

2006

623,097

470,003

2008 437,145

782,888

| The Doğuş Group at a Glance | Financial and Operational Highlights | The Doğuş Group in Brief

INTRODUCTION MANAGEMENT ACTIVITIES OF 2009 CORPORATE CITIZENSHIP

• In all of its lines of business, the Group’s consolidated revenues reached TL 7,820 million in value while its operating profit amounted to TL 1,133 million.

• The Group’s total assets rose by 13% to 42,923 million in 2009.• The Group’s consolidated shareholders’ equity in 2009 reached TL 6,729 million,

up from the previous year’s level of TL 5,556 million.


(TL thousand) 2006 2007 2008 2009

Financial Services

Segment Assets 14,441,672 23,173,947 30,315,689 35,448,062

Total Interest and Commission Income 2,188,962 2,506,258 3,799,009 4,159,785

Automotive

Segment Assets 936,110 1,214,689 1,706,271 1,357,552

Revenue 2,525,633 2,552,882 2,203,512 2,367,988

Construction

Segment Assets 527,103 374,272 917,068 1,320,570

Revenue 272,376 303,460 582,410 673,314

Tourism and Services**

Segment Assets 762,403 844,445 1,152,612 1,219,824

Revenue 121,378 115,703 151,247 162,038

Media

Segment Assets 110,815 122,040 397,535 417,591

Revenue 166,182 181,093 172,356 173,601

Others

Segment Assets 1,781,764 2,162,227 3,405,785 3,159,444

Revenue 8,767 22,781 41,908 282,890

Consolidated Financial Information by Segments*The consolidated segment results presented on this page may differ from the solo segment results presented in the following chapters. This is mainly because of the requirements of IFRS segment reporting in the consolidated financial statements.According to requirements of consolidation, intra-segment balances and transactions with subsidiaries are eliminated and jointly controlled entities are accounted proportionally over the Group’s “proportionate share of the enterprise.”

* Financial information is provided from Doğuş Holding IFRS Report segment note, due to comparability purposes reclassifications have been made in 2006 and 2007. ** D-Gym is represented in tourism and services segment for annual report purposes, in DH Consolidated IFRS Report, D-Gym is represented in other segment.

9


Corporate Profile

The Doğuş Group consistently offers services based upon its philosophy to satisfy its customers while building their trust. With 111 companies and over 28,000 employees, the Doğuş Group has created strong customer loyalty while building brand value with its high-tech infrastructure.

A model management style and corporate citizenship

The Doğuş Group utilizes a management style that is both

customer-focused and productivity-centered. It is not only

formed through material gains, but also embodies a strong

corporate citizenship approach that benefits the entire

society. The Doğuş Group implements social responsibility

projects, especially in the area of education, with a particular

focus on children and our future.

The Doğuş Group Values

Group companies share a set of core values based on

integrity, understanding, excellence, creativity, unity and

responsibility. These values, a part of the Group’s beliefs and

convictions since the very beginning, continue to guide and

drive business decisions made by each company within the

Doğuş Group.

A regional focus

The Doğuş Group continues contributing to Turkey’s

ongoing process of transformation and innovation. Utilizing

its global perspective, world-class brands and noteworthy

partnerships, the Group’s vision, particularly with regard to

services, is a valuable asset to Turkey.

The Group is able to maximize the value of its brands by

utilizing the highest quality human resources and the most

advanced technology to maintain the high standards that

have made it a regional leader in the service sector.

111 companies, over 28,000 employees

For almost 60 years, the Doğuş Group has taken its place

among the leading business conglomerates of Turkey and is

a corporate leader in the region.

The Doğuş Group is active in seven core businesses:

• financial services • automotive • construction • media

• tourism and services • real estate • energy

With 111 companies and over 28,000 employees, the Doğuş

Group has created strong customer loyalty while building

brand value with its high-tech infrastructure.

A key actor in the Turkish economy with

strong global recognition

The Doğuş Group consistently offers services based upon its

philosophy to satisfy its customers while building their trust.

As a result, the Group has created reputable brands at global

standards, attracting international investors as it serves as an

excellent ambassador for Turkey. The Group has contributed

to this process by the synergy formed with global giants

that include: General Electric for finance and real estate,

Volkswagen AG and TÜVSÜD for automotive, Alstom and

Marubeni for construction, MSNBC, CNBC and Condé Nast

in the media and Hyatt International Ltd., Starwood Hotels

& Resorts, Worldwide Inc., HMS International Hotel GmbH

(Maritim) and Aldiana GmbH in the tourism sector.

The Doğuş Group plays a significant role in the Turkish

economy with the high level of employment it creates, the

taxes it pays and the total business volume it generates

within the country.



Doğuş Holding

It is the mission of Doğuş Holding to fulfill steering,

coordination, control and audit functions, as well as to

generate value for the Group and its companies, monitor

activities of the Group companies on behalf of the

shareholders, and perform the financial audit and administer

control systems. Doğuş Holding aims to create competitive

companies that put regional growth at the focal point of their

operations.

In the management of its subsidiaries, Doğuş Holding is

committed to fulfilling the following responsibilities:

• Updating the Group’s strategy along with the changing

investment climate and steering the Group companies in

line with the predetermined strategy,

• Ensuring generation of sufficient financial resources to

realize the Group’s long-term vision, and their optimum

utilization,

• Formulating and managing corporate initiatives so as to

enable the Group to adapt in the quickest manner possible

to the developing and evolving business environment,

• Leading the creation and management of strategic

alliances and corporate partnerships,

• Providing communication among the Group companies

and identifying opportunities that will result in synergy,

• Coordinating and consolidating the financial and corporate

reporting of the Group companies,

• Ensuring optimum use of technology, knowledge and

human resources across the Group,

• Formulating and maintaining corporate values and

communicating them within and outside the Group,

• Instilling an awareness of social responsibility and

corporate citizenship,

• Implementing the ERM-Enterprise Risk Management

approach to assure that the business risks undertaken

by the Group companies are in compliance with the

shareholders’ risk appetite.

Holding Functions

Doğuş Corporate Communications

Doğuş Corporate Communications is responsible for

the Doğuş Group’s reputation management through the

means of strategic communications tools, media relations,

social responsibility projects and sponsorship activities.

The Department is also responsible for the coordination

of the internal communications among the Doğuş Group

companies and the preparation of the Group’s external

communication tools including the annual report, corporate

citizenship report and the Group’s website.

Doğuş investments

Doğuş Investments is responsible for undertaking business

opportunities in new sectors and in sectors the Doğuş Group

operates. It figures out domestic and regional investment

opportunities that are in line with the Group’s strategy and

changes in the global economy. Department responsibilities

include providing thorough analysis of business opportunities

and closing deals for the projects approved by the Doğuş

Holding Board. The Department is also responsible for

monitoring the projects after the successful initiation,

to ensure timely and efficient return for each business

development project.

Doğuş strategy

Doğuş Strategy is responsible for determining short,

medium and long-term business strategies in line with

the Doğuş Group’s vision. The department oversees the

strategic planning efforts by spearheading tools, processes

and systems that can be used by the Group companies.

It manages business development projects and seeks

investment opportunities to create competitive advantage for

the Group. It administers research and constantly analyzes

global and domestic changes to sharpen the Group’s

strategic action capability. The Department also establishes

and coordinates Group-wide initiatives to enhance corporate

development and synergy across companies within the

Group.

11

Finance

The Finance Department is responsible for relations with

local and foreign financial institutions, parallel to the financing

needs of Doğuş Holding and other Group companies

(excluding the finance sector), cash flow and asset

management, coordination of market risks as well as rating

process management, and project finance requirements of

non-financial segment of the Doğuş Group.

Financial Affairs and iT

The Financial Affairs and IT Department is responsible

for assistance and support services under information

technologies and financial transactions for the Doğuş Group,

its tax liabilities, as well as the subsidiary relations and its

financial activity compliance.

Human resources

The Human Resources Department is responsible for the

management of Doğuş Holding human resources processes

in line with corporate values and strategies. The basic

activities of Human Resources Department are; search

and selection, training and development, organizational

development, employee relations, compensation and

benefits administration, performance management and

improvement systems. The Department is also responsible

for establishing the communication platform among the other

Doğuş Group companies and providing human resources

consultancy services for non-Garanti branded companies of

the Doğuş Group.

internal Audit and Financial reporting

The Internal Audit unit of the Department is responsible for

the performance of financial, operational and IT audits at the

Doğuş Group companies in accordance with its annual risk-

based audit plan. The Financial Reporting unit on the other

hand, is responsible for the preparation of the consolidated

financial statements, management reports and projections in

accordance with International Financial Reporting Standards,

and monitoring and reporting of deviations from business line

budgets.

lean management

Lean Management is responsible for coordinating the lean

transformation within the Doğuş Group. Through a series of

activities such as training, value stream mapping studies,

action workouts and kaizen projects, the division helps

the management and the employees to understand lean

management principles and invigorate business performance

of the entire Group. It leads and reports the results of

process optimization studies that help the Group increase

its competitive advantage and profitability through increased

efficiency, quality and customer satisfaction.

legal Affairs

The Legal Affairs is responsible for the legal representation

of Doğuş Holding and other Group companies under its

responsibility, and for ensuring that all kinds of contracts and

legal processes are handled in line with the company’s best

interests and with no legal risk.




Tax Affairs

The Tax Affairs Department is responsible for assistance

and support services for the Doğuş Group as well as its

subsidiaries regarding tax laws and procedures such as

tax disputes, incentives, M&A, transfer pricing, training and

tax planning and structuring to avoid international double

taxation. Tax Department also joins to the meetings of the

Tax Council and the other related associations to support tax

legislation process.

office of the Chairman

Office of the Chairman is in charge of the tasks that

are related to the Chairman’s business activities. The

responsibilities of the department include economic

research, protocol services, event management and media

relations of the Chairman as well as the coordination of

internal and external affairs with third parties, including

economic and financial institutions, business partners,

universities, NGOs, official institutions and the governmental

authorities.

risk management

Risk Management Department’s primary function is to

assure that the risks and opportunities of the Doğuş Group

are managed successfully so that the shareholder values

are protected. Risks monitored by the Department include

financial, strategic, legal risks and operational risks. The

Department works closely with the Group companies

to obtain accurate information to assess the risks and

evaluate the risk taking process. In accordance with the

predetermined risk management guidelines, the Department

regularly prepares risk reports and makes recommendations

to the CEO, Risk Committee and the Board of Directors.

13


Corporate Risk Management and Internal Audit

The Doğuş Group, with diverse business operations in different regions and countries, has already been cognizant of the fact that it has to monitor and make provisions for various risks including interest, currency, counterparty and commodity risks.

The Risk Committee, which functions under the Board of

Directors, is also responsible for assessing the risk appetite

of the shareholders. Additionally, the Committee provides

guidance to adjust risk levels where needed.

Furthermore, audits performed by the Doğuş Holding Internal

Audit Department are also implemented on a risk-based

perspective, since the effects of the crisis had a large

impact on cash flow, especially on expenses and inventory

management. At the beginning of every year, the Internal

Audit Department prepares a risk-based business plan in line

with the developments and changes in risk appetite and their

effects around the world and in Turkey. The business plan is

revised on a regular basis to cover the upcoming three-year

term.

The Department utilizes internally generated IT tools for the

Follow-up System which was designed for monitoring the

results of the audit activities, their latest status and backing

up the audit and risk studies performed by the Department.

Additionally, Group companies can follow-up and update

action plans of these results related to their company from

the system and the sector performance for finalizing a plan of

action are followed through the system. The latest updates

on the findings are presented to the Audit Committee and

the Board of Directors every two months.

A major outcome of the financial crisis was a great loss of

confidence which, in turn, increased risk awareness among

businesses, investors and consumers. As a consequence,

alternative ways of financing business investments and

operations gained significance. Both foreign exchange

and commodity markets which had been more predictable

before the crisis suddenly became volatile. Following the

crisis, world economies faced a deep global recession

against which governments, central banks and other

supervisory authorities across the globe took action by

increasing and tightening monetary regulations. As a result

of such developments, the importance of an advanced

risk management and corporate governance system has

increased in the world as well as in Turkey.

In an environment as sensitive as this, the Doğuş Group,

with diverse business operations in different regions and

countries, has already been cognizant of the fact that it has

to monitor and make provisions for various risks including

interest, currency, counterparty and commodity risks.

The Doğuş Holding Risk Management Department

established the Enterprise Risk Management (ERM) system

in 2006 in line with the aforesaid approach and now works

even more closely with the Group companies to obtain

accurate information to assess and evaluate the risk taking

processes.

ERM is applied in all Group companies so that all risks are

managed effectively within the Group in accordance with the

predetermined risk management strategy, framework and

the risk model. ERM is implemented based on an internal

framework employing internationally accepted standards

and best practices from around the world. This framework

is customized according to the needs and structure of the

Group’s businesses.



The Doğuş Group’s Approach Toward its Stakeholders

much attention is paid by the Doğuş Group to the disclosure of its financial and non-financial information to its shareholders, employees, customers, national and international business partners, suppliers, existing and potential investors of its publicly-floated companies and the public at large.

All the Doğuş Group affiliated companies listed on the

İstanbul Stock Exchange (ISE) have their individual Investor

Relations departments that are able to effectively manage

the flow of information to their stakeholders in line with

national regulations. The fields of activity and performance

of the Group’s publicly-floated companies are disclosed in

conformity with principles of their respective companies by

the Capital Markets Board of Turkey (CMB). In terms of public

disclosure requirements, the ISE Material Event disclosures

are the responsibility of the Holding’s Finance Department.

Ethical Principles

Strict compliance with the Code of Conduct and Standards

is a key principle for the Doğuş Group. As such, actions

that violate the Company’s Code of Conduct are subject to

disciplinary measures. As a participant to the United Nations

Global Compact since April 2007, the Group has reaffirmed

its commitment to fight corruption both internally and in other

areas that might fall within its sphere of influence.

Ethical principles are spelled out and documented in

procedures under the following headings:

• time and resource utilization at the companies,

• relations with customers, subcontractors, suppliers of

goods and other companies and individuals with whom the

company has commercial interactions,

• the acceptance of gifts, invites, aids and donations,

• relations with the media,

• actions that can result in conflict of interest,

• safeguarding of information pertaining to the companies,

personal information, professional misconduct, security and

harassment.

Transparency and Accountability

The Doğuş Group adheres to strict business ethics that

include transparency and accountability in an environment

where all players, from large corporations to individual

customers and from employees to society in general are

affected by each other’s actions. In all of its operations and

business activities, the Doğuş Group has fully integrated

globally-accepted principles of responsible business conduct.

The stakeholders have been informed of these actions.

Upholding these principals and high ethical standards is not

limited to its own business dealings; the Group also requires

that the same approach is followed by all stakeholders, both

national and international. The Doğuş Group embraces the

principle of “not being involved” with any party that acts

contrary to globally-accepted standards and that cannot

provide reliable disclosures with regards to its actions.

Much attention is paid by the Doğuş Group to the

disclosure of its financial and non-financial information

to its shareholders, employees, customers, national and

international business partners, suppliers, existing and

potential investors of its publicly-floated companies and the

public at large.

The Group makes all relevant information available on its

website, www.dogusgrubu.com.tr and informs the public

about its corporate strategy, activities and new fields of

investment via Annual Reports and periodic press releases

and conferences.

The Group’s financials are drawn up quarterly in accordance

with International Financial Reporting Standards (IFRS).

Independent semi-annual and year-end audit reports are

shared with the public.

15

Credit Ratings

Doğuş Holding has become the first corporate in Turkey to be rated by the three major international rating agencies: standard & Poor’s, Fitch and moody’s.

Doğuş Holding can be instantly recognized based on the

ratings given by international rating agencies. The Group has

become well known for both its quality of management and

the global principles of corporate governance it supports.

Transparency and accountability are the two key components

of the Doğuş Group’s management approach. Consequently,

Doğuş Holding has become the first corporate in Turkey to

be rated by the three major international rating agencies:

Standard & Poor’s, Fitch and Moody’s. The Holding has been

rated by Standard & Poor’s and Fitch since 2000, and by

Moody’s since 2006.

Doğuş Holding A.Ş.’s Credit Ratings

Standard & Poor’s Rating Outlook Latest Report

Long-term Counterparty Credit Rating BB-Positive January 14, 2010

Short-term Counterparty Credit Rating B

Moody’s

Corporate Family Rating - Domestic Currency Ba3Stable August 26, 2009

Probability of Default Rating Ba3

Fitch Ratings

Long-term Foreign Currency Issuer Default Rating BB-Negative April 7, 2009

Long-term Local Currency Issuer Default Rating BB-


Doğuş Holding Ratings as of March 31, 2010 is as follows;



The Doğuş Group, with diverse business operations in different countries and regions, is cognizant of the fact that it has to monitor and get prepared for the risks ahead.

Dear Stakeholders,

We left behind a difficult year in which the steepest drop in

global economic activity and trade since World War II was

recorded. Large financial institutions collapsed and many

advanced countries faced serious economic and financial

challenges, mobilizing public resources on an unprecedented

scale to support their economies. The good news is that

recovery has already been underway. The world output is

expected to increase significantly in 2010.

Having been highly integrated with the world economy

through different channels including trade, finance and

direct investments, Turkish economy was not immune from

the global turmoil. However, the decline in the output was

smaller than expected in 2009. Turkey was among the

emerging markets that have weathered the crisis relatively

well thanks to the comprehensive financial sector reform

accompanied by fiscal structural reforms and sizable fiscal

adjustment following the 2001 crisis. The performance of the

economy in the global crisis was also approved by the major

credit rating agencies with successive rating upgrades.

Although both the global economy and the Turkish economy

are expected to show a robust recovery in 2010, there

are still non-negligible risks ahead. The recovery is taking

place at varying speeds and in many countries economic

activity remains dependent on policy support. Moreover,

some countries are facing particular challenges, which, if

not addressed in a timely manner, may pose risks to their

surrounding region and also to the global economy. I believe

that the resilience of the Turkish economy to such external

risks will be further increased with additional policy steps

including the implementation of the fiscal rule.

In such an environment, the Doğuş Group, with diverse

business operations in different countries and regions,

is cognizant of the fact that it has to monitor and get

prepared for the risks ahead. 2010 is expected to be a

year with positive growth expectations for the corporate

sector, including the Doğuş Group, with new investment

opportunities going forward as the markets normalize.

Message from the Chairman

17

Despite the global crisis, 2009 was overall a successful

year for the Doğuş Group. Garanti Bank continued its

outstanding performance, supporting the real economy as

the largest lender in Turkey with its innovative, flexible and

customer-oriented approach. Operating in every stage of

the automotive value chain and representing leading global

brands, Doğuş Otomotiv left behind a successful year in

terms of the number of vehicle sales despite the global

economic turmoil. Doğuş Construction has been further

expanding and diversifying its portfolio building on its notable

national and international experience in the sector. The

Doğuş Media Group continued to broaden its operations

with the addition of new brands including the world’s

leading fashion magazine, Vogue. The Doğuş Tourism Group

expanded its tourism investments with the establishment of

D-Gym, Select Maris, Göcek and Croatia Marina projects

with the vision to become a regional leader in the sector. In

the real estate sector, Doğuş-GE REIT successfully finalized

dispositions of Levent, Etiler and Taksim properties in line

with its mission to enhance the value of its investment

portfolio through stable growth. Doğuş Energy has been

expanding its presence in hydroelectric energy production

as a renewable and clean energy source in line with its

environmentally friendly focus.

Looking ahead, we are planning to further improve our

position in all of these sectors. In the medium to long-term,

we are targeting to expand more on regional basis. In this

regard, the Doğuş Group will continue to evaluate and utilize

potential investment opportunities.

The Doğuş Group has been contributing to Turkey’s ongoing

process of transformation and innovation. Utilizing its

global perspective, world-class brands and noteworthy

partnerships, the Group’s vision, particularly with regard

to services, is a valuable asset for Turkey. We are able to

maximize the value of our brands by utilizing the highest

quality human resources and the most advanced technology

in order to maintain the high standards that have made us a

regional leader in the services sector.

The Doğuş Group has been contributing to the Turkish

economy also with its expanding business volume and

employment generation. Our customer-oriented and

productivity-focused management style pays off in terms of

growth. It thus also gives us the opportunity to allocate more

resources to our social responsibility projects.

Our business approach embodies a strong corporate

citizenship approach that benefits the entire society. The set

of core values based on integrity, understanding, excellence,

creativity, unity and responsibility that the Group companies

share continue to guide and drive our business decisions.

On behalf of our Board of Directors, I would like to thank our

valuable employees for their keen, attentive and dedicated

efforts and contributions to the Group’s success, and to all

our customers, economic and social stakeholders, and to

our national and global esteemed partners for their support

and confidence.

Ferit F. ŞAHENK

Chairman of the Board of Directors

The Doğuş Group

INTRODUCTION MANAGEMENT

| Message from the Chairman | Members of the Board of Directors | Committees Subject to the Board of Directors | Message from the CEO

ACTIVITIES OF 2009 CORPORATE CITIZENSHIP


Members of the Board of Directors

The Doğuş Group’s Board of Directors consists of twelve members including its Chairman and convenes as the Group’s business requires but at least six times a year.

Ferit Faik Şahenk-Chairman of the Board of Directors

Ferit Şahenk is the Chairman of the Doğuş Group, the third largest

business conglomerate in Turkey. In addition, Mr. Şahenk is the

Chairman of the Turkish-German Business Council and the board

member of Turkish-United Arab Emirates Business Council. He is

also on the Regional Executive Board for Massachusetts Institute of

Technology (MIT) Sloan School of Management for Europe, Middle

East, South Asia and Africa and an active member of the Alliance of

Civilizations Initiative.

Previously, Mr. Şahenk served as the Founder and Vice President

of Garanti Securities, CEO of Doğuş Holding, Chairman of Doğuş

Automotive and the Chairman of Turkish-American Business

Council of the Foreign Economic Relations Board (DEİK). He

also served as the Vice President of the Turkish Industrialists’

and Businessmen’s Association (TÜSİAD) and the President of

Economic and Financial Affairs Commission of TÜSİAD from 2007

to 2009.

Mr. Şahenk holds a Bachelor’s degree in Marketing and Human

Resources from Boston College and is a graduate of the “Owner/

President” Management Program at Harvard Business School.

Süleyman Sözen-Deputy Chairman of the Board of Directors

Süleyman Sözen is a graduate of Ankara University, Faculty

of Political Sciences. Mr. Sözen has held various positions of

responsibility in the Ministry of Finance and the private sector. He

joined the Doğuş Group in 1997. He is a Deputy Chairman for

the Board of Directors for Garanti Bank and Doğuş Holding. Mr.

Sözen also serves as the Chairman for the Board of Directors for

GarantiBank International and GarantiBank Moscow.

Hüsnü Akhan-member of the Board of Directors and

Ceo of Doğuş Holding

Hüsnü Akhan is a graduate of Middle East Technical University,

Ankara, where he has completed his Undergraduate degree in

Management. Akhan earned his Masters degree in Economics

from University of Miami, USA. He served at different positions

of the Central Bank of the Republic of Turkey. He served as

Representative of the Central Bank of Turkey at London Office and

Assistant General Manager at the Foreign Relations Department

of the same institution. Akhan joined the Doğuş Group in 1994

and served as Executive VP in charge of Treasury, Operations

and International Relations at T. Garanti Bankası A.Ş. before

being promoted to President & CEOship of Körfezbank A.Ş. He

held the positions of member of the BOD and CFO for Doğuş

Holding between 2001-2005. He currently serves as the member

of the BOD for the Doğuş Group and the CEO of Doğuş Holding,

Chairman for Körfez Aviation, Doğuş Real Estate Co., Doğuş

Turgutreis Marina Co., Doğuş Didim Marina Co., Doğuş Energy

Co., and member of the BOD for TÜVTURK, Doğuş Construction,

GarantiBank Moscow, GarantiBank Netherlands.

Aclan Acar-member of the Board of Directors

Aclan Acar is a graduate of Ankara University, Faculty of Economics

and Commercial Sciences with postgraduate education on banking

and insurance in the same university. Mr. Acar has a postgraduate

degree from Vanderbilt University, USA in Economics. He joined the

Doğuş Group in 1990 and has held various managerial positions

in finance, retail and automotive sectors. He has served as the

Chairman of Garanti Insurance and the Garanti Pension Company.

Since January 2006, he serves as the Chairman of the Board of

Directors for Doğuş Otomotiv. He is a member of Board of Directors

of Doğuş Holding.

19INTRODUCTION MANAGEMENT


Ahmet Kurutluoğlu-member of the Board of Directors

Ahmet Kurutluoğlu obtained his undergraduate degree from Faculty

of Law, his MBA degree from the Business Administration Faculty

and his Masters degree in Labour Legislation from the Faculty of

Law, İstanbul University. He joined the Doğuş Group in 1981 and

has served as a Legal Consultant for the Doğuş Holding and Doğuş

Construction. He currently serves as a member of the Board of

Directors for Doğuş Holding and as the Chief Legal Consultant of

the Group.

Doğan Günay-member of the Board of Directors

Doğan Günay is a graduate of Bosphorus University, Faculty of

Administrative Sciences where he completed both graduate and

undergraduate degrees in Business Administration. He joined the

Doğuş Group in 1991. Since 1995, he has been a member of the

Board for the Doğuş Tourism Group companies. In 2006, he became

the President of the Doğuş Tourism Group. Furthermore, currently he

serves as a member of the Board of Directors of Doğuş Holding.

Erman Yerdelen-member of the Board of Directors

Erman Yerdelen visited Münster University, Germany, where he

attended the School of Business Administration. In 1966, he

graduated from the Finance and Business Administration Faculty of

İstanbul School of Economy and Commerce. He has received his

“master degree” in 1996 from Marmara University, İstanbul. After

various managerial posts in the private sector, in 1992, he became

the CEO of Turkish Airlines. He participated in the founding of NTV

News Channel in 1996 and has been acting as its Chairman of the

Board since 1996. He is also a member of Doğuş Holding Board

of Directors representing the Doğuş Media Group. Mr. Yerdelen

speaks both English and German.

Gönül Talu-member of the Board of Directors

Gönül Talu is a graduate of İstanbul Technical University with a

master of sciences degree in civil engineering. He joined the Doğuş

Group in 1969 and has held various managerial positions in Doğuş

Construction. Since 1991, he serves as the CEO and the Chairman

of the Board of Directors for Doğuş Construction. He is also a

member of the Board of Directors for Doğuş Holding.

Muhsin Mengütürk-member of the Board of Directors

Muhsin Mengütürk is a graduate of Robert College, İstanbul where

he completed his undergraduate degree in Mechanical Engineering

and Duke University, USA for his masters and PhD degree, again

in Mechanical Engineering. Prior to 1990, Professor Mengütürk

taught at Bosphorus University and İstanbul Technical University. In

the 1990s, he held various managerial posts in the private sector

and between 1997-2000, he served as the Chairman of the Capital

Markets Board of Turkey. Between 2001-2006, he held executive

roles in the finance sector. Currently, he is a member of the Board of

Directors of Doğuş Holding.

Sadi Göğdün-member of the Board of Directors

Sadi Göğdün is a graduate of Academy of Economics and

Commerce, İstanbul and obtained his PhD in economics and

commerce in 1971. He joined the Doğuş Group in 1976 and has

held various managerial positions in the finance and construction

in the Group. Further, he served as the member of the Board for

Garanti Bank. Currently, he serves as a member of the Board of

Directors of Doğuş Holding and Doğuş Construction.

Şadan Gürtaş-member of the Board of Directors

Şadan Gürtaş is a graduate of Anadolu University, Faculty of

Economic and Commercial Sciences. He has joined the Doğuş

Group in 1968 and currently serves as a member of the Board of

Directors of Doğuş Holding.

Yücel Çelik-member of the Board of Directors

Yücel Çelik is a graduate of Ankara University, Faculty of Political

Sciences. He had served in the finance sector prior to joining the

Doğuş Group in 1974 with Garanti Bank. Between 1983-2006, he

was a member of the Board of Directors for the Garanti Bank and

its subsidiaries. Currently, he serves as a member of the Board of

Directors for Doğuş Holding.



Three oversight committees support the work of the Doğuş Group

Board of Directors: Audit Committee, Risk Management Committee

and Human Resources Committee.

In addition, the Group has a Legal Advisory Council.

The Legal Advisory Council

• Evaluates law-related issues pertinent to the Doğuş Group,

• Identifies important matters within these issues and

• Specifies the legal processes to be followed and the measures to

be taken in all such matters.

The Audit Committee

The Audit Committee was established to assist and advise the

Board of Directors in matters related to internal and external audit,

the internal control system and the financial reporting practices of all

the Doğuş Group companies.

The Committee is made up of three members elected by the Board

of Directors upon the Chairman’s recommendation. The Audit

Committee convenes at least four times a year according to a

meeting schedule established by the Board of Directors.

Responsibilities of the Committee include:

• Overseeing the efficacy of actions taken by Group companies in

response to the results of financial, operational, and information

technology audits performed by the Doğuş Holding Internal Audit

Department,

• Evaluating the efficacy of the internal control processes of Group

companies and advising on ways to improve the internal control

environment,

• Overseeing the efficacy of financial control and internal audit

activities within the Group,

• Overseeing the security, efficiency and effectiveness of the

information systems used by the Doğuş Group companies and

reviewing and approving their contingency plans and

• Assisting the Board of Directors to ensure that the business

activities of Group companies are in compliance with the

requirements of applicable laws and regulations.

The Risk Management Committee

Risk Management Committee oversees the general direction that

the Group takes toward effective risk management. Established

to assist and advise the Board of Directors, the Risk Management

Committee supports the Board by ensuring that a predetermined

risk management strategy and framework are in place and

operative.

The Committee consists of three Board members elected by the

Board; it meets regularly a week prior to Board meetings.

The Committee’s major responsibilities are:

• Ensuring that a functional risk monitoring system transmits

important issues to the Board,

• Reviewing regular information flow from Group companies and

evaluating risk assumed in Group strategies, business plans,

budgets and investments. It also evaluates managerial actions to

address risk along with the general risk management processes

within each company,

• Review of Group risk levels to ensure that they are in line with

predetermined levels of shareholder risk preferences and,

• Advising the Board of Directors in determining risk plans and

actions taken with regard to risk management within the Group.

The Human Resources Coordination Committee

The Human Resources Coordination Committee was established to

assist the Board of Directors with human resources management

practices at the Doğuş Group companies.

The Committee is made up of Human Resources Managers from

the Doğuş Group companies and convenes a minimum of four

times a year as agreed upon in advance by the Board of Directors.

The major responsibilities of the Committee include:

• Carrying out human resource practices within Group companies

and know-how sharing,

• Arranging work groups relevant to the planned issues,

• Sharing information about potential candidates within the Group

and possible vacant positions and

• Developing common projects to increase employee commitment.

Committees Subject to the Board of Directors

21



The Doğuş Group, with a steadfast commitment to move forward while contributing to social and economic development, is determined to maintain this stance during 2010 for a long-term sustainability.

Dear Stakeholders,

Adverse effects of the global crisis that began in the last quarter of

2008, shook the foundation of the international financial system and

quickly spread to the real sector. The Turkish economy nevertheless

manifested a better than expected crisis management performance

and was one of the most noteworthy countries in this respect.

In 2009, our Group once again proved that by adopting the right

strategy, a conglomerate can become resistant to even the worst

conditions. By being able to foresee the risk facing the world in

2008 and taking the necessary precautions, the Doğuş Group not

only mitigated the effects of the crisis, but also managed to grow by

20% by the year-end 2009.

The underlining component of the Group’s success during the

crisis period was its firm commitment to customer satisfaction and

excellent service quality. In order to maintain customer trust and

loyalty created and preserved over the years, the Doğuş Group

did not make any concessions to this commitment and continued

to invest in its human resources and high level technological

infrastructure despite the financial situation affecting the entire globe.

In the financial services sector, Garanti Bank closed the year with

exceptional results befitting its reputation as a universal bank. The

Bank’s total asset size reached US$ 78 billion by the end of the

2009 as it catered to the financial needs of its 9 million customers

served by 17,000 employees. In line with the Bank’s performance,

its 9 subsidiaries also experienced a fruitful year.

Celebrating its 15th anniversary, Doğuş Otomotiv experienced

a successful year with a total sales of 50,789 new vehicles and

10,746 used cars. Serving around 800,000 customers in 2009, the

Company also established D-Auto Suisse SA, a Porsche Authorized

Dealer and Service Center, in Lausanne, Switzerland to carry its

operations abroad.

Doğuş Construction which ranks among the most reputable

construction companies since its establishment in 1950, is currently

undertaking a total of 12 projects. The total contract value of these

projects is US$ 5 billion; the Company’s share amounts to US$ 3.2

billion. The diversified portfolio of the Company includes projects in

Turkey as well as in Morocco, Bulgaria, Ukraine and Libya.

Message from the CEO



In 2009, the Doğuş Media Group attained results above the sector

average by increasing its market share to 9.7%. Our Media Group

maintained its upward trend by acquiring the publishing and

broadcasting rights of Radio Voyage, NTV Tarih, NTV Bilim, NTV

Spor Radio, oley.com and license rights of magazines under Condé

Nast Group such as Vogue, GQ magazine etc.

In 2009, our Group pushed ahead with renovations of existing

touristic establishments and its development-focused investments.

In 2009, the Group signed a pre-agreement concerning the Select

Maris Hotel, which will start its operations under the Doğuş Tourism

Group in April 2010.

The Doğuş Group made major investments in the marinas during

the past year. The second marina of the Group, D-Marin Didim was

opened in May 2009 and has so far served a total of 1,500 yachts.

D-Marin Marinas Group also assumed sole responsibility for the

management of the Mandalina-Sibenik Marina in Croatia in 2009. In

addition, an agreement concerning Port Göcek Marina was signed.

Another marina project of the Doğuş Group, D-Marin Dalaman

Marina is also in the pipeline and will continue in 2010.

Last but not least, the Doğuş Group also entered the sports and

fitness industry by opening D-Gym in Maslak, İstanbul, in October

2009. D-Gym is a sports complex offering high-quality service to its

members with its skilled and experienced trainers and latest fitness

equipment.

Supported by the synergy of its shareholder structure, Doğuş-

GE REIT’s like-for-like net rental growth was 24.5% in 2009.

Doğuş Real Estate Investment and Management Company has

undertaken several projects to provide customers with high quality

contemporary standards of living in 2009. One of the major projects

of the Company, the Gebze Shopping Center Project will be opened

in September 2010. The Company will continue its real estate and

office development projects in the upcoming year.

In the energy sector, in 2009, our Group continued to work on

profitable projects with a focus on clean and renewable energy. The

Boyabat HEPP is currently under construction and is expected to

start operating by the end of 2012. The Aslancık HEPP on the other

hand, is currently in the pre-construction phase.

The Doğuş Group completed 2009 with much success and without

compromising its responsibilities as a corporate citizen. Our second

Corporate Citizenship Report has been recently published and we

are delighted to have fulfilled this portion of our commitment as a

participant in the UN Global Compact since 2007.

In 2009, we maintained our corporate citizenship approach which

is based on ethical business conduct and a commitment for

value generation for all of our stakeholders through our corporate

and non-corporate practices. Extending beyond our field of

operations, we focused our corporate responsibility endeavors on

two main areas in 2009: i) education and development of younger

generations through corporate social responsibility projects and,

ii) development of arts&culture and sports in our country through

corporate sponsorship projects.

The Doğuş Group, with a steadfast commitment to move forward

while contributing to social and economic development, is

determined to maintain this stance during 2010 for a long-term

sustainability.

On behalf of the Doğuş Group, I would like to thank our dedicated

employees, our cherished shareholders and competent business

partners for their unyielding support and confidence and last, but

not least, our customers for giving us the opportunity to serve them

in the best way possible.

Hüsnü AKHAN

Member of the Board of Directors and CEO

Doğuş Holding A.Ş.

activities of 2009

financial Services


Financial Highlights (TL thousand)

Financial Services 2006 2007 2008 2009

Segment Assets 56,914,230 75,324,720 98,188,338 115,607,637

Net Interest Income 2,203,276 3,099,156 3,508,057 5,433,151

Net Fees and Commission Income 1,035,385 1,288,573 1,500,989 1,725,657

Gross Profit Margin (%) 44.9 45.2 39.6 49.0

Income from Operations* 1,601,683 2,961,173 2,542,065 4,125,711

Income from Operations Margin (%) 22.2 30.5 20.1 28.2

* Depreciation expense is excluded.Source: Figures are based on Garanti Bank IFRS consolidated financial statements.

Financial Highlights

As the flagship of the Doğuş Group in financial services, Garanti continues to outperform the sector based on its efficient, profitable and sustainable growth strategy; customer-centric service approach, innovative products and services offered with strict adherence to quality, extensive branch network and effective alternative delivery channels.

Segment Assets

Net Interest Income

2009

2008

2007 75,324,720

2006 56,914,230

98,188,338

115,607,637

2009

2008

2007 3,099,156

2006 2,203,276

3,508,057

5,433,151

Financial Services

27

Strong and extensive distribution network

Garanti Bank serves its customers through a strong and

extensive distribution network comprising 792 branches,

nearly 3,000 ATMs, an award-winning Call Center, and

mobile and online banking facilities built on cutting-

edge technological infrastructure. Supporting its branch

network with centralized operation management, superior

data warehousing, management reporting systems and

effective alternative delivery channels, Garanti enhances

its operational efficiency and profitability by continuously

investing in alternative delivery channels, and maintains its

leadership in this field.

Turkey’s largest lender

With new and innovative products, Garanti accomplished

many firsts not only in Turkey but also in the worldwide

banking sector. With its dynamic business approach and the

importance attached to technological innovation, Garanti

continues to make a difference and facilitates the lives of

its customers standing by them under any circumstance.

Custom-tailored solutions and the wide product variety play

a key role in Garanti’s leadership as the largest lender in

Turkey with more than US$ 47 billion in cash and non-cash

loans. The high asset quality attained through advanced

risk management systems and established risk culture

differentiates Garanti from its peers.

Garanti Bank, with 63 years of established history, is Turkey’s

second largest private bank with total asset size of US$

78 billion. Garanti continues to increase its market share

in all business lines by relying on the proven strategy of

efficient, profitable and sustainable growth it has pursued

since inception. Its competent and dynamic human

resource capable of making a difference, its customer-

centric approach, its innovative products and services

offered without compromising on quality carry Garanti to a

pioneering and leading position in the Turkish banking sector.

Garanti’s successful, solid and consistent performance

makes it a “universal bank” well recognized around the

globe.

Integrated financial services

Garanti Bank caters any financial need of its 9 million

customers with close to 17,000 employees. Having a

presence in all business lines including corporate, private,

commercial, SME, retail and investment banking, Garanti

operates as an integrated financial services company with its

9 subsidiaries offering service in payment systems, pension,

leasing, factoring, brokerage and asset management.

| Financial Services | Automotive | Construction | Media | Tourism and Services | Real Estate | Energy


Garanti Bank

Garanti Bank caters any financial need of its 9 million customers with close to 17,000 employees. Garanti operates as an integrated financial services company with its 9 subsidiaries offering service in payment systems, pension, leasing, factoring, brokerage and asset management.



Competent and robust management

Jointly owned by the Doğuş Holding and GE Capital, Garanti

Bank is publicly traded with a free float of 49%. Committed

to best practices in corporate governance, Garanti stands

out as a strong and prestigious brand with its competent

management and prudent risk management approach.

Supporting the development of the society

Refraining from limiting its contribution to the sector and the

national economy through its banking services alone, Garanti

is dedicated to continuously and significantly improve the

value it creates for society. Within this context, Garanti’s

long-term support in the areas of education, arts, culture,

sports, environment, and corporate volunteering reflects its

commitment to its corporate mission, as well as its sensitivity

to sustainability.

Activities in 2009

In 2009, when the global financial crisis turned into a global

economic recession, Turkish banking sector displayed

a solid stance based on the experience derived on past

crisis. During this period, Garanti stood out once again for

its dynamic balance sheet management and successful

business model.

Garanti had foreseen the coming crisis beforehand and has

taken necessary measures starting from 2007 and 2008.

During the crisis, the Bank strengthened its relationship with

its customers while maintaining the commercial focus. It

accurately evaluated the rapidly changing market conditions

and displayed a remarkable performance in 2009 positioning

its balance sheet by taking the right steps at the right times.

Garanti’s total assets surpassed TL 100 billion level at year-

end 2009 and reached TL 115,607,637,000 with a 18%

increase on a yearly basis.

29

Garanti’s performance, its business model, its products and

services continued to be well recognized on national and

international platforms during 2009. World Finance awarded

Garanti as “The Best Banking Group in Turkey.” More

importantly, Euromoney honored Garanti with the award

of “Best Managed Company in CEE (Central and Eastern

Europe).” Thanks to its competent human resources, the

true owners of this success, Garanti was rewarded with the

“Silver” statute by the only HR quality standard designed

by Investors in People (IIP), for which only 0.36% of 35,000

companies around the world are worthy of.

Future Plans

Current signs suggest that the global economy is again

entering a growth path with the effects of announced

support packages.The gradual recovery in macroeconomic

indicators is encouraging for 2010. Turkey is the only country

whose rating was upgraded by two notches by international

rating agencies with the positive contribution of solid national

banking sector, and is expected to step into a new period of

growth. Leveraging on its strong capital, liquid balance sheet

and customer-focused approach, Garanti is ready to provide

the necessary support to the growth of the economy.

As always, in 2010 as well, Garanti shall do its best for a

profitable and sustainable growth, by correctly defining its

risks and managing them accordingly. It will continue to take

solid steps and move ahead even more strongly together

with all of its stakeholders.

Having provided uninterrupted support to the economy,

even through the drastic times of the global crisis, Garanti

has reinforced its position as Turkey’s largest lender with TL

70 billion in cash and non-cash loans. Further enhancing its

focus on relationship banking in 2009, Garanti recorded 19%

increase in its deposits.

In 2009, Garanti further strengthened its capital base and

reached a lower financial leverage in its operations. Garanti’s

free equity grew by 43% on an annual basis, enabling the

Bank to finance nearly 1/4 of its interest earning assets

through free funds.

Despite volatilities in the economy, Garanti further enhanced

its capacity to generate sustainable income in 2009 and

continued to generate the highest ordinary banking income

among peers. Garanti’s ordinary banking income increased

by 42% to TL 6.8 billion in 2009. The Bank managed to grow

its net fees and commissions and was able to diversify the

sources of such revenues as well. During 2009, one out of

every four new participants to the pension system preferred

Garanti. The Bank solidified its sustainable banking income

generation through its leadership position in bancassurance

and increased market share to 7% in equity and derivatives

markets.

As of year-end 2009, the Bank’s consolidated capital

adequacy ratio stood at 19.2%. Garanti distinguished itself

from its peers with its proactive and dynamic balance sheet

management and attained a return on average equity of

26.2% and a return on average assets of 2.9% in 2009.




Structured Finance Division works in synergy with the other

departments of GBI and provides services in project finance,

Islamic finance and shipping finance globally. Established in

2009, Corporate and Commercial Banking Division operates

to fulfill all banking requirements of the target companies in

its segment assuring utmost quality of service.

GBI has a Long Term Deposits Rating of Baa1 from Moody’s.

This rating, being five notches higher than the Turkish

sovereign rating, reflects GBI’s role as a niche player in the

competitive segment of international trade and commodity

finance, its strong financial fundamentals and asset quality,

historical low credit losses, its reliable funding profile and

solid profitability.

Activities in 2009

In spite of the global financial crisis, GBI achieved a very

good performance in 2009 compared to its peers as well

as the large banks in Europe, and maintained its high

profitability. Following a strategy that focuses on low-risk

fundamental banking activities such as trade finance and

private banking, GBI preserved its high asset quality against

the backdrop of persistently deteriorating credit markets,

with a very low non-performing loans ratio. All business

lines of the Bank performed well, despite adverse market

conditions.

GarantiBank International (GBI), a wholly-owned subsidiary

of Garanti Bank, was established in 1990. Headquartered

in Amsterdam, the Netherlands, GBI also has operations in

Germany, Romania, Turkey, Switzerland and Ukraine via its

branches and representative offices. As a “global boutique

bank,” GBI furnishes fast, accurate, customized, innovative

and country-specific financial solutions to its customers

worldwide in the areas of trade finance, private banking,

structured finance, and commercial and corporate banking.

Commodity finance, structured finance and trade finance

products such as syndicated loans and forfaiting are offered

by the Trade Finance Division, which acquires customers for

GBI in the international arena among SMEs and corporate

companies as well as financial institutions.

GBI stands out with its high-quality services and the

added value created in international trade. GBI’s upscale

and sophisticated global products and services in Private

Banking offered to high net worth private and corporate

customers are categorized into two segments as advisory

and intermediary services.

GarantiBank International

GBi stands out with its high-quality services and the added value created in international trade. GBi’s upscale and sophisticated global products and services in Private Banking offered to high net worth private and corporate customers are categorized into two segments as advisory and intermediary services.

31

2009 Activities in Romania

Adding seven new branches to its network, GBI Romania

increased the number of its branches in the country to 51,

21 of which are in Bucharest. Total assets doubled to € 800

million particularly due to the increase in loans, which grew

45% compared to 2008 (Corporate and SME by 30%, Retail

by 60%). The bond portfolio of € 125 million, had 16% share

in total assets.

On the liabilities side, deposits from other banks and

customers increased 3.5 times in comparison to last year.

Within this item, growth in time deposits and demand

deposits were 3 times and 5 times, respectively, while

deposits from other banks increased by 30%.

The number of customers increased from 43,000 in 2008

to 135,000 in 2009, 95% being retail clients while the rest

consist of SMEs and large corporate customers. A total of

more than 75,000 Bonus credit cards have been issued,

almost two-thirds thereof during 2009, since its launch two

years ago.

Future Plans

In 2010, GarantiBank International will aim to create added

value for its customers focusing on inherently low-risk

activities of trade finance, private banking and structured

finance. GBI will generate a steady return on equity in the

years ahead, in line with its prudent and sustainable growth

strategy.




on US$ purchases. Though the national reserves, which

had fallen down to US$ 376 billion at the worst times of the

crisis, have not reached the pre-crisis levels yet, they rose to

US$ 450 billion.

In addition to interest rate cuts made in an effort to revive the

real economy, the Central Bank injected significant amounts

of liquidity to the banking system. The Government strived

to alleviate the negative effects of the crisis through various

countermeasure packages, succeeding to a significant

extent. In conjunction with the recovery in global markets

and increased raw material prices, the economy moved on to

positive growth, though at a slow pace, from the second half

of 2009. The economy is anticipated to attain 4-5% growth

in 2010. However, the growth rate and overall performance

of the Russian economy in the coming year will depend on

the global economic developments, owing particularly to its

dependence on raw material prices and integration with the

worldwide financial system.

Activities in 2009

Garanti quickly adapted to the crisis conditions started to be

felt in August 2008 in Russia, and pursued a risk-focused

and conservative management approach, thus successfully

living through the said period.

GBM reviewed its conservative lending policy during the

crisis period, maintaining its long-term customer relationship

principle. GBM concentrated in the real sector on companies

that have strong shareholding structures, relatively low

leverage, strong cash generation capability, relatively low

short-term financing needs, strict financial discipline and

a sound management. The Bank’s lending priorities were

revised toward increasing liquidity and strengthening the

collateral requirements of its loans.

GarantiBank Moscow (GBM), which began operations in

1996, is one of the 81 foreign banks operating in Russia.

Holding a full-scale banking license, GBM operates with 81

employees in one branch and two satellite branches.

Having defined its core businesses as corporate and

commercial banking, GBM serves a clientele of Russian firms

from various sectors and major Turkish companies active in

the Russian market. GBM also offers service to large-scale

Turkish tourism establishments in Russia. Of the nearly 600

commercial customers in its portfolio, 84% is constituted by

resident companies and 16% by non-residents.

Economic Developments

The Russian economy has been one of the economies to

suffer most severely from the 2008-2009 global economic

crisis. Having registered 5-7% growth from 2004 until 2008,

the Russian economy contracted by 8% in 2009. However,

the inflation that averaged above 10% or more for years

has dropped to 9% in 2009, mainly due to the significant

contraction in domestic demand. Decreased inflation allowed

for interest rate cuts by the Russian Central Bank, resulting

in slashing the interests by 400 basis points during 2009.

The anticipation that this trend would live on in 2010 has

been confirmed by the Central Bank, which declared that

interest rate cuts will be continued.

The ruble lost value by approximately 35% from November

2008 until January 2009, leading to a capital outflow of US$

130 billion in the same period. The rise particularly in raw

material prices such as oil and gas that came later in the

year reversed the loss of value ruble suffered, and helped

make up for nearly half of the losses. In this period when

ruble started regaining value, the Russian Central Bank took

GarantiBank Moscow

As a result of the precaution taken in the crisis period and a slowdown in lending activity, GBm’s lending portfolio and total assets shrank rapidly, closing 2008 and 2009 with us$ 314 and us$ 285 million in total asset size respectively.

33

While the number of large and medium-sized credit

customers rose to 125 in 2009, more than 90% of the total

loan portfolio was made up of loans extended to Russian

companies.

Under the market conditions that started turning in the

positive direction from the second half of 2009, GBM

proceeded cautiously as always, and targeted to attain

a balance sheet with high asset quality and sustainable

profitability.

In the corporate bond market that stopped functioning

normally since August 2008, the prices, particularly those

of ruble denominated bonds, dropped down to levels that

no longer reflected the borrowers’ credit quality. On the

other hand, number of companies defaulting on their bond

payments on the option or maturity dates increased sharply.

In this environment, GBM made a decision to redeem the

bonds in its portfolio on the option dates, and downsized

its corporate bond portfolio significantly. From mid-2009,

corporate bond market started opening up gradually,

initially on the basis of companies with high credibility. New

purchases came in this period in corporate bonds offering

attractive returns and enjoying high credibility. Furthermore,

owing to the attractive returns that recently formed in the

market, investments started in the Ruble denominated

Russian Sovereign bonds, which had failed to attract

investors before due to their low returns. The bond prices

saw significant increases and investment opportunities were

capitalized on in the market, particularly due to the interest

rate cuts of the Central Bank and decreased funding costs.

Based on the expectation that interest rate reductions will

continue in 2010, opportunities to materialize will be taken

benefit of as far as possible.

As a result of the precaution taken in the crisis period and

a slowdown in lending activity, GBM’s lending portfolio and

total assets shrank rapidly, closing 2008 and 2009 with US$

314 and US$ 285 million in total asset size respectively.

Despite these difficult conditions, pre-tax profit for 2009

is anticipated to be in the region of US$ 10 million. In

2009, GBM also purchased a head office building, taking

advantage of the decreased property prices as a result of the

crisis.

The process provided GBM with the opportunity to test itself

under highly adverse conditions and to adapt to challenging

conditions. Relations with existing customers were put to

crisis-test and further improved, while providing opportunities

for establishing new relations with its potential customers.

The unbroken principle of GBM is “always being close to its

customers.” Aware that this principle is even more significant

in the current environment, GBM espouses a proactive

approach on the basis of which the Bank closely monitors its

customers and also conveys the message that it is there for

them through difficult times.

Future Plans

GarantiBank Moscow has always stood out with its service

quality and ability to rapidly adapt to changes. In 2010, GBM

targets controlled growth, a balance sheet of high asset

quality, and sustainable profitability.




Brokerage services

Garanti Securities provides equity market brokerage

services to domestic and foreign customers. The Company’s

cutting-edge technological infrastructure enables retail and

corporate clients to easily execute their transactions. Garanti

Securities captured a market share of 6% in 2009 with an

average daily trading volume of TL 231 million, thus securing

itself a place among the top three companies trading on the

ISE. Garanti Securities served 290,000 clients in 2009, with

total trading volume reaching TL 58 billion.

research

Reports drawn up by Garanti Securities’ experienced

research team are delivered to the extensive client base,

investment centers and international corporate investors

across the world. The team’s portfolio recommendations

consistently outperform the index returns every year. The

equity portfolio constituted based on the research team’s

recommendations in 2009 outperformed the ISE-100 index

by 54%.

The team includes 11 qualified analysts who provide

extensive coverage of ISE-listed companies, as well as

produce research coverage on macro economics and

fixed income securities. Their current scope of coverage

encompasses Turkey’s leading industries, including banking,

telecoms, automotive, commodities and conglomerates. The

research team provides periodical and daily updates with

fundamental and technical analysis for stocks in its coverage

to its domestic retail and institutional international clients.

Garanti Securities provides corporate finance, research

and capital markets brokerage services to its domestic

and foreign clients. A subsidiary of Garanti Bank, Garanti

Securities, stands out as the sector’s leading institution

in brokerage activities and also in consultancy services

offered in mergers and acquisitions, public offerings and

privatizations.

Activities in 2009

Corporate Finance

The volume of corporate finance transactions advised by

Garanti Securities, to date, totaled US$ 12.5 billion. In

2009, the Company handled the bond issue of Bank Pozitif

amounted to TL 50 million. With the effects of the global

financial crisis still lingering, there were no new public

offerings in Turkey in 2009; yet even in this environment,

the tender put out by the Privatization Administration for the

advisory services for the privatization of Başkent Doğalgaz

was won by Garanti Securities in a consortium with Nomura.

The tender is expected to take place in the first half of this

year.

Garanti Securities carries out the merger or stake sale

transactions of customers engaged in various industries

including energy, ports, iron & steel and real estate, which

were initiated in the last quarter of 2008 and continued in

2009, with an estimated total transaction size over US$ 1.5

billion.

Garanti Securities

Garanti securities captured a market share of 6% in 2009 with an average daily trading volume of Tl 231 million, thus securing itself a place among the top three companies trading on the ise. Garanti securities served 290,000 clients in 2009, with total trading volume reaching Tl 58 billion.

35

institutional sales

The Institutional Sales Department offers research and

execution services to foreign institutional investors in

accordance with their needs with a customer-oriented

approach. With a solid team of four experienced sales staff

and three traders, the Department serves corporate investors

in Continental Europe, the USA and the UK. The global

financial crisis, which hit international markets in 2009, bore

a negative impact on foreign investors trading on the ISE, as

well. As a consequence, the share of trading volume created

by foreign investors of the total ISE trading volume dropped

from 27% in 2008 to 14% in 2009. Obviously, trading

volume and commission income of the Institutional Sales

Department suffered in such an environment. Nevertheless,

in 2009, the Department finalized the infrastructure enabling

service delivery for domestic and international clients in

international markets, as well as the ISE and TurkDEX; it

started winning customers for these markets as well, starting

from September. Apart from the regular client visits abroad,

the “Turkey Investment Conference” was held in November,

which attracted an audience of more than 100 investors and

featured senior executives of the leading ISE companies

and the Vice President of the Privatization Administration as

speakers.

Private equity

Garanti Securities continues to press ahead with its

activities to engage in the private equity segment, which has

especially gained momentum and prevalence as a funding

tool adopted by Turkish companies, particularly after 2006.

Garanti Securities continues to offer research and reviews

on companies suitable for investment, for those seeking

to actively start private equity investments in anticipation

that appropriate price levels will be established in relevant

markets, depending particularly on the post-global crisis

conjuncture. As part of these activities, the Company aims

to utilize Garanti Bank’s extensive branch network and its

customer portfolio to reach small and medium-sized Turkish

enterprises in particular need of such capital leverage, to

create funding, to contribute reaching their targeted growth,

and as such, to create value in the private equity investment

portfolio.

Future Plans

In 2010, Garanti Securities intends to remain Turkey’s most

popular brand in corporate finance and brokerage business

by producing customer-oriented solutions. The Company

aims to maximize the shareholder value and consequently

increase its market share by exploiting opportunities

provided by the economic recovery. One of the main

objectives of Garanti Securities in 2010 will be to attract

foreign direct investments and portfolio flows to Turkey and

thus contribute to the national economy.




mutual Funds

The mutual funds market, which had exhibited a healthy

growth for the past several years, shrank in 2008 with the

effect of the global economic crisis. Though the impact of

the crisis lingered on in 2009, it also revealed the importance

of the mutual funds sector. The need of investors to seek

alternative returns grew, as the interest rates and inflation

dropped to single-digits and margins contracted. While

assets under management in the mutual funds sector

increased from TL 24,119 million to TL 30,081 million during

this period, Garanti Asset Management raised its assets

under management from TL 3,528 million to TL 4,491 million.

Pension Funds

Pension funds proved to be one of the fastest growing

investment products in Turkey. The constant growth of the

sector increases the importance of pension funds from the

standpoint of market share. The share of pension funds in

total assets under management continues to increase day by

day, giving rise to the conviction that, in the very near future,

this business line will be the financial lever for the Turkish

economy in general.

Garanti Asset Management continued to work in cooperation

with its sister company, Garanti Pension and Life. During

2009, Garanti Asset Management offered management

services for 11 different types of pension funds of Garanti

Pension and Life. As such, the Company reached a volume

of TL 1,303 million, and increased its market share to

14.31%.

The first asset management company in Turkey, Garanti

Asset Management has been providing individual and

corporate investors with mutual fund, pension fund and

discretionary portfolio management as well as alternative

investment solutions since 1997. With a corporate

investment and management philosophy based on analytical

thought, competent human resources and an advanced

technological infrastructure, Garanti Asset Management

remains the pioneer in the sector.

Activities in 2009

The most distinctive strength enjoyed by Garanti Asset

Management is its proactive business strategy coupled with

the synergy and effective cooperation with Garanti Bank and

its branches that represent its primary delivery channels.

The organizational structure that covers Compliance,

Strategy & Research, and Risk Monitoring Divisions is the

key feature that sets Garanti Asset Management apart from

other companies operating in the sector. In 2009, Garanti

Asset Management managed 17 mutual funds of Garanti

Bank, 3 mutual funds of Garanti Securities, 11 pension

funds belonging to Garanti Pension and Life, Garanti

Bank’s Istanbull Hedge Fund, and the Garanti Investment

Trust portfolio. As of end-December 2009, total mutual

and pension funds under Garanti Asset Management’s

management were worth TL 5,866 million.

Garanti Asset Management

While assets under management in the mutual funds sector increased from Tl 24,119 million to Tl 30,081 million during this period, Garanti Asset management raised its assets under management from Tl 3,528 million to Tl 4,491 million.

37

Discretionary Portfolio management

The 2008 crisis transformed investment understanding and

investor culture, and highlighted the need for professional

management. According to December figures published by

the Capital Markets Board of Turkey, the overall discretionary

portfolio management market has assets under management

of TL 2,932 million, whereas Garanti Asset Management has

assets under management of TL 456 million in this segment,

corresponding to 15.56% market share. Garanti Asset

Management will be the company to benefit the most from

the changing market conditions, drawing on the superiority

bestowed upon it by its pioneering position in the sector and

the competitive and high-quality service approach of Garanti

Bank.

Alternative investment Products

Alternative Investment Products Division started managing

3 new principal protected mutual funds, after the 2 mutual

funds that expired in 2009. With the relevant work finalized

in 2008, the Hedge Fund has been offered to the investors in

June 2009; due to the global economic crisis, however, the

road show planned therefore has been postponed to the first

half of 2010.

In 2009, Garanti Asset Management continued to provide

information flow to Garanti Bank employees on its products

through visits and training sessions, which allowed more

active and better-informed marketing efforts for these

products.

Future Plans

Committed to remain the choice of investors and display

a performance that suits the Garanti brand also in 2010,

Garanti Asset Management aims to increase its market share

and further strengthen its position through efficient delivery

channels and new products to be added to its portfolio in

this period.




Garanti Leasing was able to increase its market share

without compromising from profitability in a year of

contraction at the sector level through optimum usage of

direct contact and its extensive vendor-based sales network,

as well as its primary sales outlet, Garanti Bank branches.

Future Plans

The new leasing law pending for enactment at the Parliament

is expected to broaden the uses of the leasing product

and to bring it to a greater number of clients. Products

such as operational leasing, sale-and-lease-back and

software leasing that leasing companies will be allowed to

market upon enforcement of the law will, in the long run,

drive the leasing penetration of 2.5% in Turkey toward the

European average of 15-20%. In this context, the leasing

sector is anticipated to recapture an upward trend in 2010,

contributed also by the new law, after a break taken during

the crisis period from its growth performance over the last

decade.

Vendor-based leasing and relations with vendors have always

signified top priorities for Garanti Leasing. Strengthening

this business line and increasing relations with vendors will

result in a deeper insight into the customers, thus enabling

the Company to offer the most appropriate product and

therefore, add to the success.

The only Turkish leasing company rated by two different

rating agencies, Garanti Leasing pursues activities as the

pioneer of the leasing sector. Following the upgrade of

Turkey’s sovereign rating by Fitch Ratings in December 2009,

Turkish lira and foreign currency ratings of Garanti Leasing

was upgraded to the investment-grade, BBB-, which is also

one notch above the Turkey ratings, In addition, the Bank’s

national credit rating was also upgraded to AAA, the highest

possible rating. The other agency, Standard & Poor’s, issued

a BB- rating for Garanti Leasing.

Activities in 2009

In November, Garanti Leasing successfully rolled over its

two-year non-cash syndication of € 100 million, and once

again proved its ability to sustain its presence both in

national and international money markets even through crisis

periods.

While the Company increased the variety of the products

offered to fulfill the different needs of its customers, mostly

SMEs, based on its innovative approach, it is differentiated

from its peers with a customer-centric approach. As such,

Garanti Leasing further solidified its long-going stance as the

leader in the sector in 2009.

Total assets of Garanti Leasing reached TL 1.9 billion as of

year-end 2009, while its after-tax net profit registered as

TL 54.4 million. Having signed 1,176 new contracts during

the course of the year, the Company created a total business

volume of US$ 338 million.

Garanti Leasing

Total assets of Garanti leasing reached Tl 1.9 billion as of year-end 2009, while its after-tax net profit registered as Tl 54.4 million. Having signed 1,176 new contracts during the course of the year, the Company created a total business volume of us$ 338 million.

39

Activities in 2009

In 2009, the Company reached a fleet size of more than

5,000 vehicles with the 1,804 new additions during the year,

and a balance sheet size of over US$ 90 million.

Future Plans

The Company aims to increase its presence in the fleet

management market by underscoring customer satisfaction

and its service quality. Intending to reach its customers with

more diversified products in 2010 with the expanded uses

of operational leasing in Turkey, Garanti Fleet Management

will initiate new product implementations that will address

different groups of equipment. Pilot projects will also be

put in place for renting luxury vehicles to higher income

individuals, in addition to fleet rentals to companies.

Garanti Fleet Management (Garanti Filo Yönetimi A.Ş.)

was incorporated in 2007 as a wholly-owned subsidiary of

Garanti Leasing to operate in fleet management, one of the

main operational leasing areas.

The new leasing law pending for enactment at the Parliament

will pave the way for operational leasing. Operational leasing

will be a totally different financial product for Turkey, which

differs from financial leasing in that the leased equipment

can be returned to the leasing company when the contract

expires, and all maintenance, repairs, etc. in relation to the

equipment are handled by the leasing company during the

contract term. Companies using this product will enhance

their productivities and contribute added value to national

economy. Upon introduction of the new law, Garanti Leasing,

in conjunction with Garanti Fleet Management, will be

unchallenged in operational leasing segment in view of the

present market conditions.

Garanti Fleet Management

in 2009, the Company reached a fleet size of more than 5,000 vehicles with the 1,804 new additions during the year, and a balance sheet size of over us$ 90 million.




Activities in 2009

Garanti Factoring reached a transaction volume of US$

5.8 billion in 2009 with a growth rate of 61% while the

sector expanded only by 6%. As a result, Garanti Factoring

increased its market share from 17.7% in 2008 to 22% in

2009, and became the second largest company in Turkey in

terms of factoring turnover.

Garanti Factoring increased its profit by 41% year-on-year to

TL 10 million in 2009, and its net assets by 52% to over TL

1 billion. Despite the ongoing crisis, the Company continued

to grow its market share and the number of its customers

owing to the monitoring and early warning systems

developed, and kept its NPL ratio limited to 1.6%.

In addition to the standard banking products, the need for

receivable-based financing methods continuously increases

as the export and import financing rapidly develops in Turkey.

Garanti Factoring delivers fast and effective solutions for its

customers’ needs, using export factoring, and international

supplier financing structures.

Having started operations in 1990 as one of the first

factoring companies in Turkey, Garanti Factoring offers

products for businesses controlling an extensive dealer or

supplier network, export and import oriented companies, and

SMEs. In addition to traditional factoring products, Garanti

Factoring diversifies its services through products tailored

to the relevant sector’s or customer’s features and operates

as Turkey’s leading factoring company with its innovative,

dynamic and customer-oriented approach.

Garanti Factoring provides, in a single package, the

financing, guarantee and collection management products

required by both the domestic and international trade, with

a particular focus on trade finance and receivable-based

financing. 34.82% of the Company’s shares are traded on

the ISE National Market.

Garanti Factoring

Garanti Factoring reached a transaction volume of us$ 5.8 billion in 2009 with a growth rate of 61% while the sector expanded only by 6%. As a result, Garanti Factoring increased its market share from 17.7% in 2008 to 22% in 2009.

41

The demand for export factoring products is expected to

increase rapidly with the export volume of Turkey reentering

into a growth period in 2010 following a significant

contraction in 2009 due to the global crisis. Having

expanded its overseas correspondent network on the

back of the new relationships established in 2009, Garanti

Factoring is now in a position to easily respond to the

business volume that will gain pace in 2010.

Future Plans

Garanti Factoring will keep improving its existing cooperation

with Garanti Bank in 2010. Along this line, the Company

plans to build on the existing collaboration with branches

and business lines, contribute to customer satisfaction

by offering the complementary products of factoring, and

carry out factoring transaction at every Garanti branch

serving corporate, commercial and SME customers. Garanti

Factoring works with the objective of further improving its

performance in 2010 and deepening the roots of its leading

position in the sector.

A set of services, launched under the heading Commercial

Collections Management in 2008, which allowed for the

handling and reporting of corporate clients’ collections

by the call center of Garanti Factoring, continued to

grow rapidly also in 2009. With the new reporting system

designed, corporate clients were provided with a much

broader assessment on the status of their collections.

Structures that will give CRM support to customers using

this product are slated for introduction in 2010.

The cooperation between Garanti Bank and Garanti

Factoring reached its peak in 2009, with factoring

transactions performed at nearly 350 Garanti Bank branches

every month. Further enhancing its concentration on the

SMEs, Garanti Factoring initiated the online application

system in 2009. While the applications filed using the system

were responded within 24 hours, the foundations were laid

also for a significant delivery channel. In 2010, it is targeted

to build on this important alternative delivery channel

that speeds up new customer acquisition and enhances

customer satisfaction, and to introduce major projects that

will provide e-factoring solutions.

The IT project, which was launched in 2008 to increase

operational efficiency, minimize the fixed costs within

operating expenses and help the Company to capture

technological leadership in the sector, has been brought to

completion to a large extent, and introduced in 2009. In the

year coming, increased productivity to be derived on new

systems will reflect on the Company’s performance.




The Company grew its direct premium production by

47%, three times as fast as the sector. Having gained 2.2

percentage points market share, Garanti Pension escalated

to third place with a 10.2% share in the market. One of the

key drivers behind this rapid growth was the life insurance

policies providing unemployment cover, which were started

to be sold for the first time in the industry by Garanti

Pension. The Company generated TL 72 million in premiums

on this product with a total of 627,000 policies.

The first pension company to introduce pension income

plans and to pay pensions to its participants within the frame

of a scheduled repayment system, Garanti attained a year-

on-year increase of 18% in its after-tax net profit, bringing

the figure to TL 75 million in 2009.

Future Plans

Garanti Pension sets its main objectives for 2010 as

continued market share gain both in life insurance and

pensions through effective use of alternative delivery

channels and bancassurance.

Combining its innovative insurance products with vigorous

sales force of Garanti Bank, Garanti Pension aims to

increase its premium production in life insurance and gain

market share. Garanti Pension also intends to increase

the portion of life insurance premium produced by the

alternative distribution channels. The Company aims to

maintain its leadership in acquiring new business in the

pension sector while increasing its market share in pension

funds by diversifying its product mix. Garanti Pension will

further enhance its projects aimed at improving customer

satisfaction, while targeting increased profitability along with

sustainable growth.

Founded in 1992, Garanti Pension and Life acquired a

pension company license in 2002 and added pension

activities to its efforts in life insurance. Garanti Pension

continues to lead the sector thanks to its exemplary

bancassurance practice. The Company’s goal is to provide

outstanding services to customers drawing on the joint vision

and cooperation created with Garanti Bank, a partnership

of the Doğuş Group and General Electric, and Eureko B.V.,

one of the leading insurance companies in Europe. With

its experience in bancassurance, Garanti Pension is the

exemplar in the sector.

Highly recognized and trusted Garanti brand as well

as Garanti’s extensive distribution channels, its strong

shareholders, technological infrastructure, customer-

focused innovative approach, highly-qualified human

resources and leadership in the sectors in which it operates

with new products, its ability to lead the sector in profitability

by acquiring additional market share each year bestow upon

Garanti Pension a significant competitive edge in this highly

aggressive sector. Garanti Pension has 597 employees, 354

of whom are employed in regional offices.

Activities in 2009

Garanti Pension acquired the largest market share both in

the number of participants and contributions in 2009 in the

pension sector. Achieving the highest increase in the number

of participants with 19% growth, Garanti Pension reached

400,000 participants. With 64,000 new participants, Garanti

Pension gained a 26.2% market share among 13 companies

and took the lead of the sector. Having raised its market share

in contributions to 14.8%, Garanti Pension has been the

company to increase its market share the most with 0.9%, and

reached TL 1 billion 310 million in funds under management,

increasing its share in the market from 14.1% to 14.5%.

Garanti Pension and Life

Garanti Pension acquired the largest market share both in the number of participants and contributions in 2009 in the pension sector. Achieving the highest increase in the number of participants with 19% growth, Garanti Pension reached 400,000 participants.

43

Activities in 2009

The actions taken in the process are summarized below:

• Departments are constituted, specializing in Developer

Financing, Sales Coordination, Marketing, and Product and

Business Development.

• Garanti Bank stood out with its “Garanti, the Mortgage

Expert” identity and became the first bank recalled in relation

to mortgages when it is relatively new to the Turkish market.

• All relevant branch personnel were included in the Financial

Mathematics and Property Law trainings, to become

Mortgage Experts.

• Thanks to its effective delivery channels and mortgage

expertise, Garanti reached a market share of 13.4% in 2009

and sustained its market leadership position it has been

preserving since 2007.

• Garanti has launched Turkey’s first mortgage call center 444

EVIM (HOME). Enabling customers to take mortgage advice

and place applications on the phone through 20 Mortgage

Experts and thus eliminating the need to visit a branch, 444

EVIM call center constituted the 7% of the mortgage loans

provided in 2009.

As the Turkish banking sector’s first entity focusing on the

subject and one of the most crucial components of the global

financial system, Garanti Mortgage (Garanti Konut Finansmanı

Danışmanlık Hizmetleri AŞ) was established in October 2007,

with the vision in accordance with the growth potential of

mortgages in Turkey.

Purchasing a house takes the lead among the long-term and

the most important investment decisions for consumers.

Garanti recognizes that purchasing a house with a mortgage

loan requires expertise, and thus sets out with an expert team

that closely monitors the developments and needs in Turkey

and across the world, and thereby designs suitable solutions.

Garanti Mortgage continues its operations with a team of 70

individuals with expertise in the field.

Garanti Mortgage

Garanti recognizes that purchasing a house with a mortgage loan requires expertise, and thus sets out with an expert team that closely monitors the developments and needs in Turkey and across the world, and thereby designs suitable solutions. Garanti mortgage continues its operations with a team of 70 individuals with expertise in the field.




Future Plans

Garanti Mortgage aims to constantly enhance its service

quality and to offer its expertise to a more extensive base of

customers, while continuing to outperform the sector’s growth

and maintaining its market leadership.

Delivery channels will continue to be the main focus for Garanti

Mortgage in 2010. With a view of maintaining its leadership and

expertise, Garanti Mortgage aims to continue providing certified

mortgage trainings of branch personnel and to strengthen

relationships with real estate agencies and developer financing

activities. Additionally, Garanti Mortgage aims to broaden the

services offered via alternative delivery channels and to add

information and application features to the call center and

online banking services.

• www.garantimortgage.com is launched, providing consumers

with access to information on both mortgages and real

estate, and was honored with two major international awards

in 2009.

• The online WebChat advisory system is launched in January

2009, providing mortgage expertise to customers over the

Internet, in addition to branch and telephone channels.

• Garanti Mortgage sponsored Reidin Real Estate Index,

leading to the creation of Turkey’s housing index, an

important necessity of the Turkish real estate sector.

• A dedicated team was formed to manage the relations

between real estate agencies and Garanti Bank so as to

make periodic field visits for better relationship management.

• Developer financing activities continued to establish new

collaborative relations with more than 300 construction firms

and projects around Turkey.

• 23 products have been launched, addressing different

product and payment method needs of consumers. Among

these, Fixed Rate Mortgage and Discounted Mortgage

products attracted the highest demand.

• Other products include Decreasing Rate Mortgage, Interim

Payment Mortgage and Variable Mortgage, which were new

and innovative products to the market.

• In addition, products addressing different segments were

offered such as the Non-Resident Mortgage and Mortgage

for Foreigners.

45

Managing a massive payment systems infrastructure

consisting of more than 13.2 million debit and credit cards,

Garanti Payment Systems continues to grow thanks to

creative, innovative and competitive features, and steers

the industry with its projects. Rendering chip-based, multi-

branded and co-branded card programs, commercial cards,

virtual cards, merchant relations and e-commerce services

as the fastest and most efficient product developer in the

credit card market, Garanti constantly enriches its products

and services. With an innovative and visionary structure

and marketing-oriented team, Garanti pioneers numerous

innovations in payment systems, in and out of Turkey.

According great importance to customer analyses in order to

manage portfolio returns optimally, Garanti Payment Systems

integrates technology into Customer Relations Management

(CRM) efforts and undertakes exemplary and pioneering

projects in risk measurement, as well as in customer

profitability and loyalty.

Covering Bonus, Money, Flexi, Shop&Miles, American

Express, commercial credit cards, prepaid cards and debit

cards in its product range, Garanti Payment Systems aims

to reach its customers with the most appropriate cards that

cater to their different needs. To this end, Garanti stands

out as the bank with the highest number of credit cards that

stands at 7.9 million credit cards. Bearing much importance

in terms of generating non-interest income, credit cards

account for 34% of the Bank’s commission income.

Activities in 2009

With a market share of 20.8% in 2009, Garanti has been

the bank to increase the number of credit cards issued

at the highest rate, reaching 7.9 million cards. While the

number of credit cards increased by 998.6 thousand in the

overall market during the year, Garanti was single-handedly

responsible for 355,000 of this figure.

Standing in fifth place in terms of the number of debit cards,

Garanti was the leader in terms of retail volume turnover.

In 2009, the Bank was the leader once again with 41.82%

share in overseas retail volume, securing a margin of 16.89%

with its closest rival. Garanti registered 32.5% growth in

retail volume thanks to innovative projects in debit cards,

with average spending per card reaching TL 199. Garanti

Payment Systems captured 21.74% share in the market with

a retail volume that triples the market average.

Garanti, having the largest portfolio in the market with eight

unique commercial products, launched prepaid cards in

2009 for a number of companies seeking to reward their

employees, motivate their sales channels or secure customer

loyalty. In this way, the Bank increased income derived on

commercial cards, while further growing this new channel

it has created to expand its place in payment systems.

Accountable for 8% of the total turnover in 2009 with

161,000 plastic cards, commercial cards achieved 22.87%

growth in turnover as compared with 2008.

Garanti Payment Systems completed 2009 as the leader

on the basis of the following criteria: the number of total

and plastic credit cards, domestic and international

acquiring volume, international retail and total card volume,

international debit card retail and cash withdrawal volume,

and domestic debit card retail volume.

Garanti Payment Systems

With a market share of 20.8% in 2009, Garanti has been the bank to increase the number of credit cards issued at the highest rate, reaching 7.9 million cards.




cards and continued to set an example. Throughout the

reporting period that was characterized by a large number of

lost customers and greater difficulty in new sales, 460,000

cards were recovered for the portfolio by solving customer

problems and ensuring customer satisfaction.

Based on the thought of sharing a successful brand like

Bonus with the customers of other banks instead of limiting

its use exclusively to its own, Garanti Payment Systems

introduced a first in Turkey and reached an agreement with

DenizBank in 2002, thereby introducing the card platform to

Turkey. Initially expanded with the inclusion of Türk Ekonomi

Bankası (TEB), the platform was further broadened with the

incorporation of Garanti International in Romania in 2007,

Şekerbank and ING Bank in 2008, and TFKB and Eurobank

Tekfen in 2009. Continuing to increase its market share with

every passing month, the Bonus Card Platform finished the

year as the market leader with a share of 26.3% in terms of

turnover. Issued by eight different banks including Garanti,

Bonus Card keeps growing as “Bonus Card Platform,” in

other words Turkey’s largest card platform, with almost 10

million cards.

Rapidly remodeling the shopping culture as the first and

only chip-based credit card in Romania, as in Turkey, Bonus

Card authored international achievements, reaching 5,000

POS terminals and 80,000 cards in Romania. Romania’s

and also Europe’s first credit card with the contactless

payment feature, Bonus Card is preferred more and more by

Romanian consumers in terms of active use and number of

users.

Future Plans

Single-handedly generating 34% of the Bank’s commission

income in 2009, Garanti Payment Systems targets to achieve

On the basis of all products, Garanti continued to attain

growth in transaction volume, and numbers of users,

member merchants and POS terminals. Serving through

360,000 POS terminals and 306,000 member merchants,

Garanti remains the leader with respective market shares

of 22.1% and 22.3% in acquiring volume and retail volume.

With 9% expansion in the number of POS terminals

compared to 2008, Garanti increased its acquiring volume by

8%.

Also furnishing Kolay Vezne (EasyTeller), Ödeme Noktası

(Payment Point) and Card Application Point services to

merchants, Garanti Payment Systems fully meets the

payment needs of all businesses. It also provides e-tailing

services via e-commerce and www.garantialisveris.com,

and offers various payment solutions including dial-up POS,

ADSL POS, Mobile POS and Virtual POS.

Committed to use the Internet channel in the most

effective manner and realizing numerous projects along

this line, Garanti achieved 20% growth in the number of

member merchants and 24% in volume within the frame of

e-commerce. Garanti exceeded the 100,000 mark in joint

POS use, an initiative the Bank had pioneered, claiming

presence in 50% of the market and setting an example in

this area for the industry, as in many others.

Always giving top priority to customer satisfaction, Garanti

Payment Systems achieved 40% response rate in the

customized campaigns for cardholders in 2009, and raised

the ratio of active customers to 83%.

A role model with its environmentalist stance, Garanti

increased the rate of e-statements to 33% in overall credit

47

Other 2010 objectives of Garanti Payment Systems include

increasing the use and number of commercial cards, which

are accountable for 8% of the total turnover on cards, and

expanding the portfolio with new products. Launching

Europe’s first virtual card, Garanti aims to diversify its virtual

card products in view of the fact that online shopping

increases by the day, and to further increase the share it

commands in this field.

On the customer management part, Garanti Payment

Systems plans to carry on with Early Engagement, created

to activate existing customers from the very first day, and

Attrition Alert designed for customer attrition. Allowing to

develop projects that cater to segments formed on the

customers’ various properties such as ownership and activity

of bank products, credit card ownership, credit card limit,

and card usage habits, Customer Segmentation is intended

to be continued in an expanded scope in the year coming.

Bonus Card Platform, Turkey’s first and broadest-based

card platform, is planned to be enlarged in 2010 with the

incorporation of new banks that will create a productive

synergy and add to brand equity.

2010 objectives also include activities to bring the number

of Bonus Cards issued in Romania to 100,000 in the first

half of the year. The large number of visitors expected to

come to İstanbul, a.k.a. 2010 European Capital of Culture,

is anticipated to use Garanti POS terminals and Paramatiks

for their transactions, given the fact that Garanti is the first

and only bank in Turkey that welcomes all cards in the world

at its POS and ATM machines, while increased turnover is

targeted thanks to DCC.

increased market share in all products and services and

attain profitable growth in 2010.

Just as in the past, so too in 2010, Garanti Payment

Systems intends to increase its market share in all of its

products and services in 2010 that will pave the way for an

effective growth. The primary targets set for 2010 by Garanti

in its payment systems are presented below.

In 2010, Garanti Payment Systems is targeting growth in

all products in terms of the number of cards, spending per

card and total turnover. In addition, the Bank is planning to

acquire new customers on the back of American Express

and the renewed Shop&Miles, in particular, geared toward

the upper income segment.

Turkey’s first chip-based and multi-brand credit card and

the name that changed shopping habits in Turkey, Bonus

Card will celebrate its 10th anniversary in 2010. A variety

of campaigns and intense communication activities to be

conducted throughout the year are intended to serve to

increase the number of Bonus Cards and active use of the

card.

Activities are planned to fulfill specific needs of businesses

through new product developments and additional features

in debit and prepaid cards, thereby incorporating the

spendings of individuals unable to use credit cards within

the payment systems network. An additional target is

achieving growth in commercial prepaid cards. Targeting to

top 1 million in the number of cards in contactless payment,

Garanti Payment Systems plans to undertake transportation

projects in additional provinces and incorporate virgin

areas into its payment systems based on cooperation to be

entered into with municipalities.




Activities in 2009

In 2009, GT focused on mobile applications and the use of

new technologies. The following results were obtained in this

context:

• The award-winning Internet branch applications can now

be accessed from mobile phones and mobile platforms

so as to enhance customer satisfaction, make their lives

easier, and enrich their experience with Garanti Bank.

• Customers are presented with the privilege of making

Western Union payments online from Internet branch

application, a first in the world, in an effort to increase the

diversity of online products and services.

• TurkDEX transactions can now be performed via the call

center.

• Garanti Bank has become the first bank in Turkey to offer

banking services with the Russian currency, ruble.

• A brand-new credit card, Money, has been developed in

collaboration with Migros. With this card, gift cheques have

been incorporated into the loyalty program.

• Visual communication of financial data to customers using

3G technologies represents another major novelty.

• Banking systems have been securely integrated with the

ERP software by LOGO, an established brand name both

in Turkey and abroad; in this way, LOGO product users can

easily perform the transactions they carry out via Garanti

Bank, and get the results instantly.

• The Dealer Online Project, which will enable quick

application for auto loans via dealers, has been completed

and launched.

A provider of services in information technology, Garanti

Technology (GT) delivers technology infrastructure, software

development, Internet applications, integration, systems

management, security management, project management

and office application services as well as consultancy

services primarily for companies in the banking and financial

services, automotive, construction, media and tourism

industries. Garanti Technology operates via its team of 806

competent individuals possessing the skill to offer creative

technological solutions on any platform.

Operating as a full-scale IT Center, GT has a technological

architecture providing real-time, uninterrupted system

resources, an infrastructure executing millions of on-line

transactions, and an operational control system ensuring

perfect operability of the system 24/7. With a strong

communications backbone, infrastructure-based video and

data communications services, and design and engineering

activities at global standards, GT manages all of the

hardware and communication software of its clients. GT also

provides field support services at more than 3,000 points via

its countrywide locations.

GT develops IT strategies for the organizations it serves,

transforms customized solutions into value-added services,

creates, manages and maintains change and quality. GT’s

corporate governance is based on the ITIL process model

and built on Design-Operate-Support principle. Every single

project is developed in accordance with quality standards

including COBIT and ISO to ensure the most appropriate

solutions that meet the requirements of the organizations

served.

Garanti Technology

operating as a full-scale iT Center, GT has a technological architecture providing real-time, uninterrupted system resources, an infrastructure executing millions of on-line transactions, and an operational control system ensuring perfect operability of the system 24/7.

49

Future Plans

Garanti Technology will pursue its activities in 2010 based

on an awareness of its identity as an organization that has

developed all the firsts in its industry and on the mission

of keeping Garanti Bank, its subsidiaries, and other Doğuş

Group companies one step ahead at all times. GT will

maintain its technological leadership in the year coming by

constantly investing in current technology, uninterrupted

processing capability, infrastructure security, and others that

will ensure energy saving and reduce overall IT management

costs.

• Early warning systems were developed in an effort to

decrease the ratio of non-performing loans. In addition,

integration with law firms was established to ensure

collection of these receivables, and recovery of non-

performing loans by the Bank is accelerated.

• Various anti-fraud applications were combined under the

Worldcheck application.

• Momentum was given to integration of Garanti Bank

with public institutions with a view to increasing internal

productivity, decreasing costs, and enhancing quality.

Paper and archive need was reduced thanks to e-signature

used in the integration with public institutions, in particular.

• The call center infrastructure, which had been in use

at Garanti Bank for more than ten years, has been

upgraded with IP-based systems and converted into a

contact center. This upgrade enabled call center back-up,

enhanced service quality, and creation of new employment

opportunities in different cities across Turkey with the call

center opened in Sivas.

• Telephone infrastructures of branches have been replaced

with IP-based systems; effectiveness of call management

has been enhanced across branches and the overall

organization.

• Video-backed application has been developed

for supporting the sales of the mortgage product;

videophones have been allocated in support of sales.

• Efforts for system-server consolidation, which was started

in previous years, continued; reductions were attained in

cost items such as electricity, layout, cooling etc.

• New arrangements have been introduced to IT

management processes to achieve alignment with the

rules and processes of the BRSA and other agencies.

New monitoring and management systems have been

developed and ensured to run effectively.



automotive


Automotive


Automotive 2006 2007 2008 2009

Total Assets 1,133,823 1,160,188 1,443,678 1,219,008

Revenue 2,527,865 2,552,084 2,144,139 2,129,485

Cost (2,237,739) (2,199,519) (1,853,052) (1,827,658)


EBITDA 77,510 109,916 38,366 96,087

EBITDA Margin (%) 3.1 4.3 1.8 4.5


Celebrating its 15th anniversary in 2009, Doğuş otomotiv continues to invest in the future while pursuing its goal to have “a productive and profitable presence in every stage of the automotive value chain.”

Total Assets

Revenue

2008

2007 1,160,188

2009

2006 1,133,823

1,443,678

1,219,008

2009

2008

2007 2,552,084

2006 2,527,865

2,144,139

2,129,485

53

These actions have once again proven Doğuş Otomotiv’s

leadership in the Turkish automotive sector during 2009, by

virtue of:

• 50,789 vehicle sales

• Representative of the world’s strongest 15 automotive

brands

• 80 different models offered customers in a wide choice of

products

• 10,746 used car sales

• More than 1,700 employees

• More than 500 customer contact points

• Nearly 800,000 customers

• A total car park of nearly 700,000

• An enclosed sales and service area of 450,000 square

meters

• Approximately 750,000 cars in service stations

Doğuş Otomotiv in 2009

Despite the global economic crisis that started in 2008,

Doğuş Otomotiv achieved an outstanding performance with

regard to sales and after-sale services as well as cost and

risk management.

Celebrating its 15th anniversary in 2009, Doğuş Otomotiv

continues to invest in the future while pursuing its goal to

have “a productive and profitable presence in every stage

of the automotive value chain.” This philosophy has been

highly beneficial to the Doğuş Group as a whole, providing

the necessary resistance in terms of risk distribution. Doğuş

Otomotiv has accomplished this without compromising even

one iota on its reputation of quality.

Activities of the Company since 2008 have focused on

reducing fixed costs through cost-oriented management.

Steps taken in this direction provided the Company with

a flexible approach and have helped keep costs under

control. Services were created in a broad range of activities

that have added value to Doğuş Otomotiv, from sales to

vehicle inspection and from after-sales services to used

car dealerships, helping to put the Company in a very

advantageous position and strengthened its lead among the

competition.



Doğuş Otomotiv

services were created in a broad range of activities that have added value to Doğuş otomotiv, from sales to vehicle inspection and from after-sales services to used car dealerships, helping to put the Company in a very advantageous position and strengthened its lead among the competition.



Total Vehicle Wholesales (Unit) 2007 2008 2009

Passenger Cars 40,966 33,742 39,378

Volkswagen 26,110 21,485 26,862

Audi 5,898 5,647 6,260

Porsche 218 157 253

Bentley 19 12 7

Lamborghini 3 9 9

SEAT 3,426 2,874 2,577

Skoda 5,292 3,558 3,410

Light Commercial Vehicles 27,669 18,969 10,269

Volkswagen 27,669 18,969 10,268

Skoda 0 0 1

Heavy Commercial Vehicles 3,055 2,596 1,142

Scania 2,174 1,894 800

Krone 811 518 208

Meiller 70 184 134

Total 71,690 55,307 50,789

55

Value Chain 2009

* Subsidiaries** Representative Offices

Production

Doğuş OtomotivIndependent

Authorized Dealers

Import&Distribution

Retail

Replacement Parts&After Sales

Services

Used Car Sales

Finance

Other Investments

Krone* Meiller*

**

Yüce Auto*

Quick Fix to all Brands

Used Car Sales

Insurance*

TÜVTURK*

Insurance*Automotive Financing* LeasePlan*

Centre of Logistics




market share of 6.1% in its segment. In addition to its Tiguan

model, Volkswagen introduced the much-anticipated 1.6 TDI

engine during the year to the delight of its customers.

In November 2009, Volkswagen Commercial Vehicles

launched the New Transporter with its distinctive technology

and high quality. This long awaited vehicle combines

many new features and innovations; its introduction was

greeted with much interest by the press as well as potential

customers. According to the results of a survey carried by

Volkswagen AG in major European markets to determine

brand image, Volkswagen Commercial Vehicles generated

a higher rating than the European average; it ranked as the

most sought-after brand in Turkey.

Audi, another successful representative from the Volkswagen

Group, enriched its range of products with the introduction

of A5 Cabriolet during the summer followed by the A5

Sportback in November.

With the introduction of Cayenne Diesel and the New

Panamera, Porsche has gained new momentum with regard

to sales. The introduction of Cayenne Diesel to the market on

February 26, simultaneously with the opening of the Doğuş

Oto Esenyurt Showroom, has boosted sales in the SUV

segment resulting in an increase of 85% compared to 2008

figures. Porsche’s first ever 4-door Gran Turismo model, the

New Panamera was launched with a test drive on November

14th and 15th at İstanbul Park.

A year of record-breaking

During 2009, almost every sector experienced a certain

degree of constriction due to the economic crisis. The

automotive sector however, finished the year with the least

damage after a reduction in the private consumption tax. In

fact, there was even an improvement in some segments of

the industry when compared to the previous year.

Doğuş Otomotiv was able to adapt itself to rapidly changing

circumstances via skillful management and well-organized

sales and after-sales services; accordingly, it maintained its

turnover and profitability.

Year 2009 will forever be remembered as a record breaker

for sales at Doğuş Otomotiv. Audi outperformed other brands

with outstanding success for a volume of 6,251 vehicles

sold in Turkey. Porsche broke the sales record for the Doğuş

Otomotiv distributorship, which began in 1996, reaching a

total of 247 cars sold during 2009. Volkswagen Passenger

Cars, in line with its vision as “the world’s most innovative

automotive brand” increased its sales by 24% and became

the fifth best selling car on the market. In addition to vehicles

in the passenger car category, the upper luxury segment

Lamborghini also experienced increased sales compared to

the previous year.

A year of launches

From Doğuş Otomotiv’s point of view, 2009 has been

nothing short of dynamic and profitable. Much has been

accomplished with many of the Company’s innovations put

into practice. One of the most prominent launches of the

year was the New Polo hitting the market in September with

the slogan “You are Great!” The New Polo has achieved a

57

Doğuş otomotiv’s distinctive stance in after sales

Despite a constricting market, Doğuş Otomotiv was still

able to demonstrate its strength in the after-sale services

division as well. Utilizing their highly effective quality and

service systems, the number of vehicles received by Doğuş

Oto service stations from Doğuş Otomotiv’s subsidiaries

increased; customer satisfaction survey results also

increased.

This improved performance is not only the result of a well-

conceived and executed customer satisfaction philosophy,

but also the by-product of a widespread service concept

as well as publicity campaigns. In spite of the crisis,

investments for after-sales services have continued and the

development of an Authorized Dealer network has been

adopted. Volkswagen opened its first Authorized Dealership

in Rize, in 2009, and effectively implemented campaigns

such as Segment 2-3 and Discount Triple The Age have

helped to increase the number of cars received at Authorized

Services locations.

Customers respond to Doğuş otomotiv’s customer

satisfaction philosophy

The strong results of the CSS survey, carried by the

international brands represented by Doğuş Otomotiv to

assess customer satisfaction, has been evidence of the

Company’s meaningful response to its customer-oriented

approach.

Doğuş Otomotiv is actively involved with its customers,

understanding their needs and expectations and maintaining

direct communication with them. The activities intended

to improve customer relations within the framework of

CRM were again a Company priority in 2009; efforts in this

direction have continued without interruption.

Among the brands represented by Doğuş Otomotiv, SEAT,

with exciting new features and innovations has received

the most interest in 2009. SEAT renewed all of its existing

models with the introduction of the New Ibiza SC, New Leon,

New Altea XL and Exeo models and has the youngest range

of models on the market. Octavia, Skoda’s leading model,

achieved a significant breakthrough in 2009 with a renewed

image coupled with a new engine design and transmission

options.

leading products from the leading company

Working in concert with the strongest brands on the market,

Doğuş Otomotiv aims to become the leader in each area

within its field of operations. In 2009, Passat became the

market leader in its segment following a 22% increase in

sales over figures from the previous year. Passat Variant and

Scirocco, carrying a strong market share of 61% and 47%

respectively, maintained the lead in their segments, greatly

out-distancing their rivals. Audi’s Q5 and Q7 are leaders in a

class of their own.

Scania, represented by Doğuş Otomotiv in the 16-ton and

above heavy commercial vehicle import market, increased

its market share to 25% becoming the leader for the seventh

consecutive time, an amazing accomplishment since this

occurred at a time when a 48% constriction was being

experienced. The market leader since 2003, Scania delivered

its 15,000th vehicle during 2009.

vdf, a Doğuş Otomotiv subsidiary offering consumer

financing, led the market with a 30% share. The Company

established vdf Factoring Services Inc. in 2009 and

preserved its position in the finances services sector.




more investments

Given the fact that economic downturns are temporary

but competition is everlasting, Doğuş Otomotiv continued

making investments aimed at improving its efficiency in

the market; during 2009, it accomplished many important

projects. Undoubtedly, the establishment of D-Auto Suisse

SA, a Porsche Authorized Dealer and Service Center in

Lausanne, Switzerland ranks as the highest project of all.

After a preparation process lasting two years, D-Auto Suisse

SA was launched in September at an impressive opening

ceremony; it is the largest and most modern sales point in

Switzerland. This investment, realized with the support of

the Volkswagen Group, took its expressive place in Doğuş

Otomotiv’s corporate history since it is both a vindication

of our supplier’s confidence in us and also because we

have the chance to extend our operations beyond Turkey’s

borders. D-Auto Suisse made a powerful impact with

49 contracts and the sale of 30 cars from its opening in

September until the end of the year.

The Porsche Esenyurt Showroom, opened at the beginning

of 2009, is the fifth largest showroom in Central and Eastern

Europe. This facility occupies an enclosed area of 1,212

square meters and brings the number of Porsche sales

points to four.

Awards

Doğuş Otomotiv has received many awards in 2009 for

the brands and services it represents. The New Golf was

awarded “Car of the Year in the World” by COTY, and the

New Polo was named “Vehicle of the Year” together with the

“Green Steering Wheel” and “Golden Steering Wheel” awards

at the Golden Steering Wheel Awards ceremony during

2009. TSI, Volkswagen’s revolutionary new engine, was

awarded “Engine of the Year” and “Green Engine of the Year”

at the “Engine of the Year 2009” ceremony.

Audi, another leading brand, received the highest number

of awards for its A5, A6, Q7 and R8 models at the “Otobil”

contest organized by the Hürriyet newspaper. At the

“Otohaber” competition organized by Otohaber magazine,

Audi won commendations for its Q5, Q7, R8 and A6 models,

becoming the brand with the highest number of awards

given in 2009.

Similar triumphs occurred in the commercial vehicles

segment. For the fifth time, Meiller won the “Best Tipper of

the Year Award” at Germany’s traditional “Best Commercial

Vehicles and Brands” competition. This competition was

organized for the 13th time by publications that specialize

in the commercial vehicles industry. As a result of

accomplishments during 2009, OEM awarded Thermo King

Turkey with the “Outstanding Achievement Award.”

59

TÜvTurk operations are expanding

TÜVTURK was established in 2009 within the scope of

privatization of vehicle inspection services; it has become

one of Europe’s leading establishments with standardized

stations, inspection devices, high-tech operational process

management and implementations aiming to ensure

customer satisfaction and on-the-road safety. The number

of vehicle inspection stations around Turkey reached 190

as of the end of 2009. TÜVTURK inspected a total of 5.1

million vehicles during 2009 including mobile stations that

are designed to provide service in districts currently without

inspection sites. The process management system VIAonline

allows both operating and monitoring during the inspection

processes simultaneously and has been successfully

implemented. VIA online, an appointment based inspection

system, is intended to finish vehicle inspections in half an

hour.

Activities to increase sales points of other brands from

within the Group are ongoing and mainly focused on the

newcomers to establish Authorized Dealerships and Service

networks. This has been a year of structuring for Thermo

King, which produces the world’s leading cooling systems,

and since 2008, has been represented in Turkey by Doğuş

Otomotiv. Similarly, important steps have been taken to

improve the Authorized Dealership and Service Station

network of VW-Scania Industrial and Marine Engines. After

completion of the network, recruited personnel were trained

in the areas of sales, after-sales and marketing.

The Meiller Doğuş Damper factory in Sakarya started

production in 2008 within the scope of a “Presence at every

stage of the automotive value chain.” The infrastructure

works for the trailer factory, constructed in collaboration with

Krone in Tire, İzmir, was completed in 2009. However, the

inauguration of the facility was postponed because of a 53%

constriction in the trailer market due to the economic crisis.

The factory will be operational when market conditions return

to normal.

The leader in the used car market

Turkey’s pioneering corporate used car dealership, DOD, sold

more than 10,000 cars during 2009 and maintained its market

lead. Following more than 30 car auctions around Turkey in

2009, DOD has expanded operations to Adapazarı, Ankara,

Mersin and Samsun as well as İstanbul and İzmir. The Internet

is an important platform for the Company and in addition to

its new web solutions, DOD introduced a mobile application

that allows the customers to visit www.dod.com.tr via their

mobile phones. The infrastructure of a website intended to bring

together those who wish to buy and sell cars was completed

in 2009. A trial version of SensatDOD has been active since

December.



construction


Construction


Doğuş Construction currently is undertaking a total of 12 projects; six in Turkey and six abroad. The total contract value of these projects is us$ 5 billion; the Company’s share amounts to us$ 3.2 billion.


Construction 2006 2007 2008 2009

Total Assets 684,529 354,995 902,102 1,279,349

Revenue 270,767 304,636 590,050 706,007

Cost (242,001) (260,800) (508,848) (633,784)


EBITDA 15,052 34,510 69,476 68,941

EBITDA Margin (%) 5.6 11.3 11.8 9.8

Total Assets

Revenue

2009

2008

2007 354,995

2006 684,529

902,102

1,279,349

2009

2008

2007 304,636

2006 270,767

590,050

706,007

63

Doğuş Construction is one of the leading companies of

its sector due to its mega project perspective and its

superstructure and infrastructure projects undertaken both in

Turkey and in the international market. Doğuş Construction,

which ranks among the most reputable construction

companies since its establishment in 1950, has completed

160 projects worth more than US$ 9 billion until today.

The works performed so far include 19 dams and HEPPs

with a total electricity production capacity of 3 megawatts,

1,150 km of roads including 415 km of motorways,

2,000,000 m2 of building construction, infrastructure works,

bridges, more than 96,000 m of tunnels and diversion

tunnels, ports, marinas, irrigation projects, sewerage

systems, office buildings, shopping and leisure centers,

residential and industrial buildings.

Currently, the total value of the projects, in which Doğuş

is involved, is US$ 4,956 billion and the share of Doğuş in

these projects is US$ 3,168 billion. Doğuş takes part in the

execution of various prestigious rail mass transportation

system and road projects individually and as part of the

joint ventures or consortiums that are established with

participation of international construction companies in local

and international markets.

Doğuş’s strategy involves growing in the existing markets

while seeking business opportunities in potential markets,

maximizing profitability, improving its cash position and

minimizing risks. As part of its vision to diversify its portfolio,

airport projects are among the fields which Doğuş has added

to its portfolio and expects to grow in. Building projects

are also one of the fields where Doğuş looks for business

opportunities within the local and international markets.



Construction

Doğuş Construction, which ranks among the most reputable construction companies since its establishment in 1950, has completed 160 projects worth more than us$ 9 billion until today.



Ongoing Projects

Project

Expected Project Values

(US$ billion)Doğuş’s Share

(US$ billion)

Domestic Projects 3,553 1,981

Araklı - İyidere Coastal Road 0,167 0,086

Sinop - Boyabat Road 0,204 0,204

Kadıköy - Kozyatağı Mass Transportation 0,181 0,047

Otogar - Başakşehir Mass Transportation 1,136 0,568

Marmaray Project, 2nd Phase 1,160 0,371

Boyabat Dam and HEPP 0,705 0,705

International Projects 1,403 1,187

Morocco

Argana Amskroud Motorway, LOT I-II 0,186 0,186

Bulgaria

Sofia Metro Extension Project - Route II, LOT 1 0,234 0,234

Ukraine

Dnieper Railway and Highway Bridge 0,110 0,110

Boryspil State International Airport Development Project 0,345 0,129

Libya

Sirte University Complex, Construction of Section 1 0,433 0,433

Sirte University Complex, Construction of Library 0,095 0,095

Total 4,956 3,168

65

The Otogar-Kirazlı-Başakşehir Metro is a mass transportation

rail system project that covers construction and electro-

mechanical work and the delivery of rolling stock. The single-

track length of the 16 station twin-tunnel system will be 47.4

km in total. It starts from the intercity bus terminal (Otogar)

and extends through Bağcılar, Kirazlı and then divides into

two branches and reaches both the Olympic Village and

Başakşehir houses. It constitutes a considerable part of

İstanbul’s railway systems network. Four Tunnel Boring

Machines (TBM) are being utilized in the construction of the

twin tunnels; the circular cross-section of the TBM is 6.50

meters while the New Austrian Tunneling Method (NATM) is

7.80 meters. This project is being executed by a Gülermak-

Doğuş Joint Venture.

Construction work for another mass rail transportation

system project called Kadıköy-Kozyatağı Metro is currently

underway by the Anadoluray Joint Venture made up of

companies from Yapı Merkezi, Doğuş, Yüksel, Yenigün and

Belen Ltd. The length of the twin tunnel system, which will

extend from Kozyatağı to Kadıköy is 2 x 8.6 km; the NATM is

being used at seven of the stations, while two nos TBMs are

used in the main tunnel sections (9 stations in total).

Doğuş Construction’s projects, which are in progress at

home and abroad, are as follows:

Domestic Projects

• Araklı-İyidere Coastal Road

• Sinop-Boyabat Road Construction

• Kadıköy-Kozyatağı Metro Mass Transportation System

• Otogar-Kirazlı-Başakşehir Metro Mass Transportation

System

• Marmaray Contract CR1: Gebze-Haydarpaşa, Sirkeci-

Halkalı Commuter Rail Upgrading: Civil and Electrical and

Mechanical Systems (Marmaray, 2nd Phase)

• Boyabat Dam and HEPP

international Projects

• Morocco - Argana Amskroud Motorway, Section I-II

• Bulgaria - Sofia Metro Extension Project - Route II, LOT 1

• Ukraine - Dnieper Railway and Highway Bridge

Construction

• Ukraine - Boryspil State International Airport Development

Project

• Libya - Sirte University Complex, Construction of Section 1

• Libya - Sirte University Complex, Construction of

Administrative Building and Central Library




underpasses and overpasses, 9 nos vehicle crossing, 5 nos

pedestrian crossings, 216 nos box and pipe culverts as well

as various motorway structures.

The construction work on the Kiev- Dnieper Railway and

Highway Bridge with a length of 450 meters (2x3 motorway,

1x2 railway), elevation of 21 meters, width of 45 meters, 5

nos of piers, 6.0 m (d = 1.5 m) of piling work, is an important

project currently underway in Ukraine.

The project involves the construction of Kiev Boryspil State

International Airport in Ukraine and comprises 185,000

square meters of apron pavement, 60,000 square meters

of roads and a surface car park, 1.3 km of viaduct and an

international passenger terminal building of 83,500 square

meters. The project began with a joint venture led by Doğuş

Construction.

Doğuş Construction has begun work in Bulgaria following

being awarded the tender for the 3.8 km Sofia Metro

Extension Project LOT 1 section, a tunnel with an inner

diameter of 8.43 meters and four metro stations.

With numerous infrastructure and superstructure work

completed in Libya, Doğuş Construction was awarded

the construction contract for the first phase of the Sirte

University Complex. The complex includes an area of

218,000 square meters and encompasses 5 nos service

buildings and 9 nos faculty buildings.

Libya - Sirte University Complex, Construction of

Administrative Building and Central Library project includes

the construction of two administrative building, and a central

library with a total area of 26,400 m2.

The Marmaray Contract CR1 (Marmaray Phase 2) consists

of rehabilitation work on the İstanbul suburban railway

connecting Halkalı on the European side and Gebze

on the Anatolian side. When finished, it will provide an

uninterrupted, modern, high-capacity transport system.

Work is being carried out by our consortium to upgrade

the existing double-track, 64 km in length, to a triple-track

system including 36 stations and 15 bridges to be renovated;

the entire electrical and mechanical systems will be replaced.

The Boyabat Dam and HEPP projects will be constructed

as a concrete dam on the Kızılırmak River by Doğuş

Construction for energy generation. With an installed

capacity of 513 MW and at a height of 195 meters from the

foundation to the crest at a length of 262 meters, this dam

is planned to generate 1.5 billion kWh/year when it is fully

commissioned.

The Araklı-İyidere Coastal Road construction work, to be

constructed by the Doğuş-Polat Joint Venture, is a 27-km

2x2 lane road and a tunnel cross-section 11.80 meters wide

and 600 meters in length. It will have 17 hydraulic bridges,

9 junction bridges, 9 underpasses and overpasses and 160

nos box culverts.

The Sinop-Boyabat project is another road construction work

that includes a 1x2 lane road at a length of 52.2 km and a

tunnel 2 km x 11.80 m, six nos bridges and 233 box culverts

in total.

The Argana-Amskroud Motorway Project being constructed

for the National Motorways Administration of Morocco,

includes a 45.6 km 2x2-lane motorway, three viaducts, 11

67

The Company currently employs approximately 7,000

people in domestic as well as international projects. The

competency of the organization’s commitment, desire

to succeed, team work, openness to development and

change, quality orientation and self-reliance among Doğuş

Construction’s employees come to the forefront as a feature

integral to their overall success.

Acting in line with the understanding that the success of

its projects is directly proportional to the success of its

employees, Doğuş Construction creates a fair working

environment that provides the opportunity for technical,

personal and executive development to its employees.

Quality, occupational Health and safety, environment

Doğuş Construction adheres to Quality, Occupational Health

and Safety, Environmental Management Systems that were

designed based on the best superior global standards. All of

these three management systems are certified by the LRQA

(Lloyd’s Register).

Cost management system

Doğuş Construction finalized and implemented its “Cost

Management System” as of 2007. This system enables

sensitive and activity-based cost and productivity analyses at

all levels within the Company. It places Doğuş Construction

in a special position with regard to the assessment and

measurement of profitability and performance in respect of

internal processes while bringing improvement to productivity

indicators.

2009: Toward becoming a regional power

The liquidity crises sparked by mortgage foreclosures and

constraints in the loan market made 2009 a very tough year

for the companies. In spite of those drawbacks, Doğuş

Construction managed to add new projects to its project

portfolio in Turkey and the region while maintaining its

position as one of the key companies in its sector. Utilizing

its mega project approach and its long-standing experience,

the Company continued to grow on the basis of sound

and sustainable profitability. In addition to increasing its

profitability in its sector, Doğuş Construction has gained a

more dynamic structure, uninterruptedly continuing on the

path toward achieving its goal of becoming a regional power.

Doğuş Construction currently is undertaking a total of 12

projects; six in Turkey and six abroad. The total contract

value of these projects is US$ 5 billion; the Company’s share

amounts to US$ 3.2 billion.

making a considerable contribution to employment

Thanks to the engineering applications requiring different

areas of expertise, Doğuş Construction offers employees

a wide range of career opportunities in various locations

and cultures, helping to construct large scaled projects in

domestic as well as global markets.




rational and developed methods and implementation of

such for these draft projects and

• Business management services.

Teknik Mühendislik continues to successfully complete all

projects it has undertaken with experienced and trained key

personnel and technological equipment as it has since its

establishment.

Teknik Mühendislik is a company within the Doğuş

Construction Group and was established in 1984. It

provides engineering, consultation and technical services

to the Doğuş Construction Group and other institutions and

contractors.

Teknik Mühendislik is involved with projects such as

motorways, highways, railways, dams, hydroelectric power

plants, irrigation projects, water and sewerage system

projects and industrial plants. It provides the following:

• Any and all engineering, consultancy and technical

services,

• Planning and feasibility assessments, technical and

economical surveys, research and laboratory testing,

drilling and similar studies, assistance in finding more

Teknik Mühendislik ve Müşavirlik

Teknik mühendislik provides engineering, consultation and technical services to the Doğuş Construction Group and other institutions and contractors.

69

drilling length of 10,800 meters. Currently, Ayson is also

constructing the injection gallery tunnels, 2,625 meters

in total, for the same project. The injection work at these

tunnels with a total drilling length of 200,000 meters has

been undertaken and is being executed paralleling the

progress of the tunnel construction.

Ayson has completed work on four stations for the Sofia

Metro Extension Project LOT 1 Section, 3.8 kilometers in

length in Bulgaria. The project consisted of a diaphragm wall,

prestressed anchor construction, bored pile construction and

other relevant geotechnical work.

In Ukraine, Ayson served as geotechnical supervisor for the

Kiev Boryspil State International Airport Project made up of

22,000 meters of bored pile construction, 12 nos static axial

compressive load tests, 14 nos high-strain integrity tests and

505 nos low-strain integrity tests.

In 2009, Ayson established an integrated management

system with Quality, Occupational Health and Safety and

Environmental Management Systems and earned certificates

from the LRQA. These management systems were

established utilizing ISO 9001:2008, ISO 14001:2004 and

OHSAS 18001:2007 standards and managed by a highly

qualified technical staff with 35 years of experience. Laboring

under the slogan of “do it once, do it perfectly,” Ayson has

attracted high praise from local and foreign employers and

consultants for the quality of the work it performs.

Ayson, founded in 1977, is a division within the Doğuş Group

specialized in geotechnical work. It has provided services

at the highest technical level to both local and international

public and private enterprises.

Ayson’s fields of activity include all types of bored and

pre-cast concrete piles, prefabricated vertical drains (wick

drains), sand drains, jet grout columns, stone columns,

impervious walls, retaining walls, pre-stressed anchoring with

steel strands, sheet piling, bolting, soil nails, grouting works,

shotcreting, exploratory drilling, water well drilling, drainage

wells, foundation explorations, soil improvement works,

deep excavation supporting systems, ventilation shafts, and

excavation work, including preliminary studies for all of these

operations and evaluation through in-situ tests.

Ayson also offers a wide range marine structure services

that include: jetties, dolphins, ferry terminal ramps and

breakwaters. Recently, the company added viaduct

construction, steel superstructure construction and tunnel

construction to its field of activities. Ayson has successfully

completed more than 43,750 tons of grouting, 1,131,000

meters of bored piling and 513,000 meters of anchoring

work in projects it has undertaken so far.

Some major projects in Turkey and overseas are as follows:

Within the scope of the Boyabat Dam and HEPP being

constructed as a concrete dam on the Kızılırmak River by

Doğuş Construction, Ayson has executed downstream

cofferdam injection work totaling 810 cubic meters and a

Ayson Geoteknik ve Deniz İnşaat

in ukraine, Ayson served as geotechnical supervisor for the kiev Boryspil state international Airport Project made up of 22,000 meters of bored pile construction, 12 nos static axial compressive load tests, 14 nos high-strain integrity tests and 505 nos low-strain integrity tests.




Media


in 2009, the Doğuş media Group attained results above the sector average by increasing its market share to 9.7%.


Media 2006** 2007** 2008* 2009*

Total Assets 190,290 180,286 455,875 471,380

Revenue 172,878 186,461 181,766 182,688

Cost (98,708) (103,925) (147,378) (178,853)


EBITDA 24,797 20,005 (22,822) (57,802)

EBITDA Margin (%) 14.3 10.7 (12.6) (31.6)

* 2008 and 2009 data are taken from DYG’s consolidated IFRS report.

** 2006 and 2007 data are taken from DH’s consolidated financial statements.

Total Assets

Revenue

2009

2008

2007 180,286

2006 190,290

455,875

471,380

2009

2008

2007 186,461

2006 172,878

181,766

182,688

73

The Doğuş Media Group

since its founding, the Doğuş media Group has made significant progress with created/acquired brands and built upon global alliances with partners as CnBC, national Geographic, nBA, virgin radio and Condé nast/vogue.

2009

2009

2009

2009

TV Channels

Radio Stations

Periodicals

Internet

2008

2008

2008

2008

10.0%

12.5%

6.2%

4.6%

10.4%

15.0%

8.1%

4.6%

media Group market shares (%)The Doğuş Media Group began operations in 1999, prior to

the acquisition of NTV, Turkey’s first thematic channel. Since

that time, the Group has made significant progress with

created/acquired brands and built upon global alliances with

partners as CNBC, National Geographic, NBA, Virgin Radio

and Condé Nast/Vogue.

The Group has broadened its operations from TV to

magazines, radios, digital and print media and has become

the leading media organization providing thematic content to

the public. Currently, with 1,019 employees (649 male and

370 female) the Doğuş Media Group is one of the largest

companies in media industry.

The Doğuş Media Group fosters public trust with its

professionalism and quality-focused business dealings. The

sense of belonging it creates for consumers also gives rise to

expectations of continuous progress and distinction.

The close bonds developed with consumers by the Doğuş

Media Group (the Media Group) also have had an impact on

advertisers, leading them to prefer the Media Group brands

for promotion.

Always staying one step ahead in its advertising practices,

the Doğuş Media Group generates custom-tailored solutions

for customers who wish to be associated with the Media

Group’s brand equity and differentiate themselves from the

competition. Advertisers are offered various media solutions

and a high level of efficiency.

Activities in 2009

The Doğuş Media Group expanded its portfolio in 2009 with

the addition of five new brands: Radio Voyage, NTV Tarih,

NTV Bilim, NTV Spor Radio and oley.com despite the global

economic crisis.




Awards

The Doğuş Media Group has been honored as the recipient

of 603 awards (between the years 2001-2009) far for its

broadcasts and social responsibility campaigns. Of these

awards earned during 2009, a total of 78 have been granted

by various ministries, organizations, associations and

foundations, professional chambers, universities and high

schools.

Future Plans

The Doğuş Media Group will continue developing strategies

especially in the area of digital media in 2010. With new

programming formats, new names and marketing activities

the Group aims to strengthen the existing brands’ market

position and expand its market share.

At the end of 2009 and at the beginning of 2010, the Doğuş

Media Group launched a number of new brands; Online

gambling site, oley.com and the world’s leading fashion

magazine Vogue. The Condé Nast Magazine Group has a

global reputation with prestigious periodicals such as Vogue,

Glamour and GQ. The Doğuş Media Group has gained the

licensing rights of Condé Nast’s magazine titles for Turkey

and plans to release other magazines in the near future.

The Doğuş Media Group owns the largest radio group

in Turkey. With the release of NTV Spor radio, the Group

had strengthened its position in the radio industry. In

addition to the radio, “NTV Spor” has turned into a

network encompassing internet (ntvspor.net), radio and TV

broadcasts.

The Group follows global technological developments and

adapts its vision and products accordingly. Plans to invest in

online media and third-party projects are in the pipeline.

Although the total advertising market decreased by 15% due

to global economic crisis, the Doğuş Media Group performed

better than the market average and saw a rise in its market

share from 9.2% to 9.7%.

The Doğuş Media Group’s TV channels expanded their

market share to 10.4%, although the television industry

decreased by 15% in 2009.

In terms of radio stations, the Doğuş Media Group increased

its market share by 2.5% to 15%.

The Doğuş Media Group successfully launched two new

magazines, NTV Tarih and NTV Bilim and with it, the Group’s

market share rose from 6.2% to 8.1%.

The Doğuş Media Group maintained its market share of

approximately 5% in the Internet segment.

Technological Infrastructure

The uplink system that enables satellite distribution of the

Doğuş Media Group’s TV and radio programming consists

of eight live-broadcasting vehicles, four in İstanbul, three in

Ankara and one in Diyarbakır. The Group has a total of 216

NTV transmitters, two in the Turkish Republic of Northern

Cyprus, 51 CNBC-e transmitters, 93 NTV Spor transmitters,

50 NTV Radio transmitters, 41 Kral FM transmitters, 36

Virgin Radio transmitters and one transmitter for each Radio

N101, Radio Eksen and Billboard Radio.

Very closely following all the technological advancements

in broadcasting, the Doğuş Media Group has made

infrastructural investments to achieve compatibility with

DVB-T and HD broadcasts to be launched in the near future.

75

NTV

NTV began broadcasting in 1996 - the first 24-hour news

channel in Turkey. In January 1999, it became a member of

the Doğuş Media Group family. The success of NTV changed

the Turkish media industry and started the era of thematic

TV channels. NTV primarily broadcasts national and global

news as well as quality documentaries and programs on

the economy, culture and the arts, lifestyles and, of course,

sports.

NTV aims to bring accurate news and analyses to its

audience uninterruptedly and in an unbiased manner.

The quality of its content and impartial editorial approach

has made NTV a prestigious brand and the name NTV

synonymous with “reliable news.” NTV’s broadcasts on

health, education, and the environment, along with other

special projects are concrete examples of NTV’s social

responsibility approach.

In addition to NTV’s Head Office in İstanbul, the latest

developments in Turkey are followed by NTV from its offices

in other cities; Ankara, İzmir and Diyarbakır. Reporters

and news agencies scour the entire country for the latest

happenings. For international news, NTV relies on its office in

Brussels, reporters in major cities like Washington DC., Paris,

Strasbourg, Berlin, Athens, Lefkosia, Baghdad and Tehran as

well as worldwide well known news corporations - Reuters,

ENEX, APTN, and the BBC.

The Doğuş Media Group - Brands CNBC-e

CNBC-e is an example of the successful fusion of the

economy and entertainment under the same brand. It was

established on October 16, 2000, the result of co-operation

with the world’s leading business channel CNBC and the

Group’s entertainment channel Kanal e.

CNBC-e has two different programming formats; its day-time

format comes from the American channel CNBC while its

content is derived from the Doğuş Media Group. During the

day, CNBC-e targets business professionals and individual

investors enabling real-time access to economy and market

data.

The evening line-up sees CNBC-e become an entertainment

channel offering award-winning films, worldwide popular

TV series, dramas and important events in their original

language with Turkish subtitles. CNBC-e cooperates with the

giants of the industry, such as; HBO, WB, MGM, Paramount,

Buena Vista, Sony Columbia and Fox.

Surveys show that CNBC-e viewers tend to be well-

educated, selective city-dwellers who care about

creativeness and are seeking to raise their living standards.




e2

One of the steps that the Doğuş Media Group took into the

TV industry was the e2 TV channel, established in December

2006. Offering extraordinary entertainment, e2’s content

consists of talk shows and TV series.

With a loyal, highly involved and selective audience, e2

differentiates itself as a niche entertainment TV network,

bringing uncommon TV characters and celebrities to the

screen.

e2 has three broadcasting slots; at dawn, at dusk and at

midnight:

• At dawn, popular daily shows such as Rachel Ray and

Ellen are broadcast dubbed in Turkish.

• At dusk, the prime-time slot, presents the most popular

award-winning dramas and series such as Mad Men and

Dexter.

• At midnight, e2 welcomes audiences who enjoy prime

entertainment such as The Daily Show Global Edition with

Jon Stewart and Poker after Dark.

NTV Spor

Launched in March 2008, NTV Spor is a dedicated TV

channel producing sports-related programming 24 hours

a day. Using NTV’s expertise in news and sports and with

terrestrial broadcasting, NTV Spor is regarded as a sports

platform where fans can catch up on everything related to

sports all day and every day.

From the very beginning, NTV Spor aimed to provide up-to-

date, impartial sports news combined with rich content and

a dynamic programming format. Most programming on NTV

Spor is either live or tape-delay sporting events, national

and global sports news, sports-related documentaries and

TV shows with special guest appearances by major sports

figures. NTV Spor holds official broadcasting rights to large

sporting events from various sports branches such as; La

Liga, Serie A, Argentina League, NBA, NASCAR, The Golden

League, IAAF Grand Prix, UEFA Euro 2012 and 2014 FIFA

World Cup qualifying matches.

Only six months after it was launched, NTV Spor ranked

second among all thematic TV channels. NTV Spor started

broadcasting in the beginning of 2010.

77

NBA TV

NBA TV was launched by the Media Group on August 1,

2004. Its content includes live basketball games, news from

the NBA, special features and interviews. Broadcasting

at least one live basketball game every day with Turkish

narration and commentary, NBA TV offers fans the

opportunity to watch the greatest stars from the world of

basketball.

Kral TV

Kral TV was launched in August 1994 and became a member

of the Doğuş Media Group in June 2008. Kral TV broadcasts

Turkish music videos introduced by on-air hosts 24 hours a

day, seven days a week. As the first music channel in Turkey,

Kral TV has become a platform where both artists and fans

can gather for music news and promotion.

The content is highly relevant to the region and musical

tastes of the Turkish people, enabling Kral TV to attract a

broad national audience. TV share ratings indicate that Kral

TV is the most preferred music TV channel in Turkey today.

ntvmsnbc.com

Turkey’s News Portal, ntvmsnbc, was inaugurated on May

15, 2000 via a partnership with the world’s most visited

news portal, MSNBC. This partnership blends MSNBC’s

technological know-how with NTV’s news experience and

network.

The ntvmsnbc news portal provides information on a wide

range of subjects. Its content is prepared by its own staff

editors in an impartial and unbiased manner. Users can

access news of the latest developments as well as real-time

data about economic markets and other exclusive topics.

ntvmsnbc was re-launched in February 2009 utilizing WEB

2.0 technology. The website offers a modern interface

and infrastructure with user-friendly multimedia elements.

The new system enables users to personalize the portal

according to their own needs and interests.

Oley.com

E Elektronik Bahis successfully completed the required

technical infrastructure and then signed a contract with the

Turkish Spor Toto Association in June 2009. Operations were

started under the oley.com brand in December as part of the

Doğuş Group. Oley.com operates as the legal betting site

for Spor Toto giving access to betting games online such as

iddaa and TJK (Turkey Jockey Club) horse racing.

Internet




NTV Radyo

Launched in 2000, NTV Radyo carries out an important

mission in the area of news broadcasting. Programming

mainly consists of news during the weekdays and arts &

culture on weekends. NTV Radyo also delivers news from

Voice of America, Deutsche Welle, BBC Turkish as well as

BBC World Service to its audience.

Early morning broadcasts on the weekends are dedicated to

classical music at its best, as well as the stories about the

artists and composers. Saturday afternoon is dedicated to

jazz music.

NTV Radyo also has the radio broadcasting rights to Turkish

Super League and Ziraat Turkish Cup games.

Kral FM

Shortly after its launch in 1992, Kral FM became Turkey’s

leader in terms of its listening audience and still holding this

position by a large margin. According to the only official radio

research conducted by Ipsos KMG, Kral FM is the second

favorite radio station among its competitors in addition to its

own large listener community.

Kral FM has one of largest radio communities in Europe and

possibly in the world.

Radio StationsProviding games of chance, oley.com operates through

different channels by means of combining fast, reliable, high-

quality services and the most up-to-date contents. It forms a

legal online platform continuously accessible by its members.

Many important sports authorities contribute with their

opinions through special videos on oley.com, which are

prepared only for members and are available on the

“videoley” page. All of the actual information and news,

which need to be known concerning all of the sports

competitions, arranged take part under the title of “infoley”

with the bet slips, which are prepared by a powerful editorial

team, specialized in this field.

One of the most outstanding features of oley.com is its user-

friendly interface. Members can view last minute bets on

the home page and can play with a single click. In addition,

ongoing matches can be followed from the “live scores”

section.

A first in Turkey, oley.com provides members with the

opportunity to share the bet slips with the other members to

follow other bets and leave comments regarding the bets.

Oley.com also provides services related to horse races of

TJK.

With a mission to “be the address of choice for those who

bet with legal, reliable, user-friendly, innovative content in

Turkey,” oley.com has exceeded 100,000 members in just its

second month. Efforts to provide its membership with high-

quality, rich content services parallel the work of the Doğuş

Media Group and is ongoing.

79

Radyo N101

Easily associated with legendary radio showman, Cem

Ceminay, Radio N101 was launched in 2004 by the Doğuş

Media Group as a foreign-music radio channel. In February

2009, it was re-launched, this time as a Turkish-pop music

station.

Radyo N101 not only plays the current hits, but also delivers

the most famous hits from the past. Every weekday begins

with the ever-entertaining “Morning Show” by Cem Ceminay,

featuring numerous interviews and phone pranks.

Radyo N101 broadcasts on the 101.0 FM frequency in

İstanbul and live over the Internet and by satellite.

Radyo Eksen

Launched in November 2000, Radyo Eksen delivers a wide

range of quality music, from indie to country and from hard-

rock to modern-rock. Its broadcasting philosophy is based

on the reflection of urban life in modern music.

The “Less talk, more music” approach has created an

audience of Radyo Eksen lovers in a very short period of

time, making it a loved brand.

Kral FM plays the best of Turkish Pop, Turkish Folk, Turkish

Classical, Arabesque-Fantasy as well as Turkish Rock. Kral

FM is dedicated to the delivery of daily news and the latest

developments in Turkey.

Virgin Radio

One of the most prestigious members of the Virgin Group

and associated with its founder Sir Richard Branson, Virgin

Radio was launched under the Doğuş Media Group in late

2008.

With its entertaining and dynamic profile, Virgin Radio plays

the latest contemporary hits in urban, pop-rock, R&B, hip-

hop and dance music. “Ten Hits in a Row” deliver ten songs,

one after the other without commercial breaks.

The recent transfer of Turkey’s radio superstars Geveze

and Bay J to the station, who lead morning and afternoon

drive-time shows, underlines Virgin Radio’s commitment to

become the industry.

On weekends, Virgin Radio increases its tempo with music

from Judge Jules & Hed Kandi, the King of House Music -

DJ Roger Sanchez, Turkey’s most famous DJs Salih Saka,

DJ Tarkan and Can Hatipoğlu and trance music’s world

renowned name, Paul Van Dyk.




In addition to its broadcasts, Radyo Eksen continuously

communicates with its audience via sponsorships and

productions. Radyo Eksen has sponsored concerts by

Devotchka, Gutter Twins and Helldorado in İstanbul. In

addition, it has sponsored Judas Priest, Moby, Paul Weller,

Mark Knopfler and Metallica concerts as well as the İstanbul

Jazz Festival, H2000 Festival and IF Film Festival during

2008-2009. Radyo Eksen has added Babylon and Ghetto

venue sponsorships and media sponsorship of the Bob

Dylan concert in İstanbul to this prestigious list for 2010.

Radyo Eksen broadcasts on 96.2 FM in İstanbul and live on

the Internet and via satellite.

NTV Spor Radio

Launched in October 2009, NTV Spor Radio broadcasts on

the 87.7 FM frequency in İstanbul and live over the Internet

and satellite.

NTV Spor Radyo delivers 24 hours of sports news including

coverage of football matches, basketball, volleyball and

horse-racing as well as other sporting events.

Broadcasting in tandem with NTV Spor TV channel, NTV

Spor Radyo delivers the voices of famous names in Turkish

sports to its listeners.

In addition to these joint-broadcasts, NTV Spor Radyo also

presents its unique shows covering football, betting and

horse-racing complete with viewer comments.

Radio Voyage

Launched in January 2009, Radio Voyage is Turkey’s first

and only ambient and new age radio station.

Radio Voyage take its listeners on a voyage through

Ambient, New Age, Avant Classical, Gregorian Pop, World

Music and Ethnic Jazz, letting them discover new sounds

and music of these genre.

Radio Voyage broadcasts on the 107.4 FM frequency in

İstanbul and live via Internet and satellite sources.

81

Periodicals National Geographic

With a history dating back to 1888, with more than ten

million subscribers and over 50 million readers worldwide,

National Geographic is more than just a magazine; it is also

one of the most prestigious brands in the world.

The magazine’s Turkish edition debuted in 2001; each month

it presents to its readers a fresh array of fascinating features

and original articles about geography, science, exploration,

history and more.

National Geographic Kids

Published since 1975, National Geographic Kids was

launched in Turkey by the Doğuş Media Group in 2004.

The aim of this magazine is twofold: to entertain and

simultaneously equip children with knowledge via its high

quality content and visuals.

Vogue

The magazine that created fashion has come to Turkey.

Vogue, from Condé Nast Publications, had been anticipated

to reach Turkey for years. The first issue of this well known

magazine was launched in Turkey in March 2010.

Vogue has led and inspired the fashion world since 1892;

it is the world’s most famous fashion magazine sold in 19

different countries with readers numbering in the millions.

Vogue puts today’s fashions into a larger context than just

how we dress, live, socialize and covers what we eat, listen

to and watch. Vogue readers discover new international

talents, music, films, nouveau cuisine and luxurious night life

emanating from metropolitan cities around the world. Vogue,

the “world’s most influential fashion magazine” represents a

life style many people strive to attain.

The target audience of Vogue Türkiye is women between

the ages of 25-50 who are social, chic, elegant, tasteful

and sophisticated. The magazine has achieved pioneering

projects never before carried out in Turkey by well known

designers, photographers, models and artists from around

the world.

Vogue Türkiye not only brings global personalities to its

pages, but also introduces Turkey’s talents and stars to the

world.




CNBC-E Business

This magazine, first hit the newsstands in 2006, covers the

business world, global and Turkish economy and investment

trends. It contains lifestyle news for business professionals

and exclusive interviews with the leading figures in the

business community as well as politics.

Billboard

Billboard, published in the USA for more than 110 years,

was launched in Turkey by the Doğuş Media Group in 2006.

In only six months, it was named “the best selling music

magazine” in Turkey.

Billboard focuses on news and charts from the music

industry and includes the latest developments from many

music genres and exclusive interviews with artists.

Robb Report

The Robb Report joined the Doğuş Media Group in 2008,

as Turkey’s first magazine focused on the luxury market. Its

mission is to become an exclusive guide for high net worth

individuals who are passionate about celebrating life.

From yachts and automobiles to jewelry, priceless watches,

fashion and premiere vacation spots, Robb Report readers

can have all the elements for a luxurious lifestyle. This

magazine covers both the latest products and original styles

from world-renowned luxury brands.

Motor Boat & Yachting

Europe’s bestselling yachting magazine, Motor Boat &

Yachting was first published in Turkey in December 2007 by

the Doğuş Media Group.

With content support from the Yachting World, the world’s

first sailing magazine, Motor Boat &Yachting brings detailed

information and tips on boating and life on the seas, tests

and interviews to sea-going aficionados every month.

83

NTV Tarih

NTV Tarih debuted in January 2009 and is a popular history

magazine. An original content magazine, it consists of

academic research written in a language that everyone can

understand.

This magazine analyzes history and events according to the

time and circumstances in which they occurred. It looks at

them from a perspective of social life, human relations and

habits. The magazine also helps the readers to understand

and gain a fresh, scientific perspective of current events.

NTV History aims to inform its readership, improve history

consciousness and preserve cultural and geographic history,

for both national and international topics.

NTV Bilim

The Doğuş Media Group’s new magazine, NTV Science, hit

the stands in March 2009. New developments in science,

technology, the latest inventions that affect the future of

mankind, small but drastic designs that we use every day

and the secrets of the universe all meet up with the reader in

this new magazine.

The magazine’s content is prepared by academics, scientists

and researchers. With a visual richness and fluent wording,

NTV Science aims to carry science to a wider audience

and change its image from a thing of mystery that only a

handful of people can understand to something more easily

comprehended.

NTV Publications

NTV started publishing books in March 2007. NTV

Publications offer a new perspective while acting as a

reference for subjects such as history, science, the arts,

photography, politics and nature. Expanding its product line

every month, NTV Publications has become an important

and prestigious brand in the public eye in less than a year.



tourism and Services


Tourism and Services


in the tourism and services sector, the Doğuş Group operates with the Doğuş Tourism Group, the D-marin marinas Group and D-Gym.

Financial Highlights (TL thousand)*

Tourism and Services 2006 2007 2008 2009

Total Assets 829,874 957,105 1,303,369 1,387,114

Revenue 121,388 122,819 157,124 168,176

Cost (61,022) (64,253) (87,550) (94,583)


EBITDA 20,787 6,111 14,456 10,362

EBITDA Margin (%) 17.1 5.0 9.2 6.2

Total Assets

Revenue

2009

2008

2007 957,105

2006 829,874

1,303,369

1,387,114

2009

2008

2007 122,819

2006 121,388

157,124

168,176

* D-Marin Marinas Group and D-Gym are both represented in the tourism and services segment for annual report purposes. In Doğuş Holding Consolidated IFRS Report, D-Gym is represented in other segment.

87

The Doğuş Tourism Group

The Doğuş Tourism Group consists of 9 facilities, including 5 five-star hotels and 2 five-star holiday villages and a travel agency, as well as the Arena Giyim retail company. The Arena Giyim company is the creator of the in-formal brand name, and which also has contracts with world renowned luxury brands such as emporio Armani, Gucci and loro Piana.

The Doğuş Tourism Group was established in 1976 and

since its inception, has distinguished itself with a service-

oriented approach. It continues to stand out as a business

focused on quality that maximizes customer comfort while

providing complete satisfaction.

The Doğuş Tourism Group consists of 9 facilities, including

5 five-star hotels and 2 five-star holiday villages and a travel

agency, as well as the Arena Giyim retail company. The Arena

Giyim company is the creator of the In-formal brand name, and

which also has contracts with world renowned luxury brands

such as Emporio Armani, Gucci and Loro Piana.

Hotel facilities of the Doğuş Tourism Group include the Park

Hyatt İstanbul Maçka Palas, Grand Hyatt İstanbul, MARITIM

Hotel Club Alantur - Alanya, MARITIM Hotel Grand Azur -

Marmaris, Sheraton Voyager Antalya Hotel Resort & Spa,

Paradise Side Beach Hotel and Aldiana Side.

The Group secures its high level of international services

quality through global cooperation with Emporio Armani,

Gucci and Loro Piana in the fashion industry and with Hyatt

International (Europe Africa Middle East) LLC, Starwood

Hotels & Resorts, Worldwide Inc, HMS International Hotel

GmbH (MARITIM) and Aldiana GmbH in the tourism sector.

2009: Under the sway of the economic crisis

According to UNWTO statistics, international tourist arrivals

in 2009 declined by 4%, down to 880 million worldwide

due to uncertainties about unemployment, exchange rates,

the availability of credit and uncertainty over the A (H1N1)

influenza virus. In 2009, tourism industry was also negatively

affected by the reference of the consumers who tended

to travel closer locations, with less frequency also the

decreasing number of business trips due to global recession.

Despite these recessional negative factors, tourism industry

in Turkey continued to grow by 2.81% with 27 million

international tourist arrivals during 2009. Turkey’s popularity

as a favorite travel destination continued. New investments

in tourism, a wider choice of alternatives and the value of

the Turkish lira have all contributed positively to this result.

However, the impact of crisis is evident on tourism receipts

that fell by 3.2% to US$ 21.2 million; tourism spending per

person fell from US$ 708 to US$ 664.

Activities in 2009

The Doğuş Tourism Group continued with its development-

focused investments, concentrating on the renovation of

existing touristic establishments during 2009. Maintaining its

targeted objectives, it has strictly followed a planned growth-

oriented investment philosophy.

As of July 2009, the process to acquire Club Resort Select

Maris was underway. This facility is a five star resort situated

in one of the most beautiful bays in the world, 130 km

from Dalaman Airport and 35 km from Marmaris, offering

a splendid view of the Aegean Islands. The hotel has 274

rooms in 9 different categories and five private beaches; a

family beach, silent beach, palm beach, natural beach and

an activity beach. Planned for opening in April 2010, the

hotel also has meeting rooms, ten bars, water sports, tennis

and a spa.

Maritim Hotel Club Alantur was renovated and renewed in

2008. Accordingly, in 2009, Maritim Hotel Club Alantur was

upgraded to a five star quality hotel as a consequence of the

construction that took place in 2008.

Renovation work on the Sheraton Voyager Antalya Hotel

Resort & Spa continues.




In line with the concept of providing a high standard of

service, the Doğuş Tourism Group continues to renovate the

MARITIM Hotel Grand Azur.

Following upgrades and investments, including

enhancements to guestrooms and suites, meeting and public

areas, the Hyatt Regency İstanbul was re-branded as the

Grand Hyatt İstanbul on December 1, 2009. The property

now is consistent with the other 34 Grand Hyatt hotels

around the world that are recognized as a top quality hotel in

major gateway cities and international resort destinations by

international travelers.

Park Hyatt İstanbul - Maçka Palas has been acknowledged

as a Virtuoso property. Virtuoso is an exclusive network

of more than 6,000 elite travel advisors who specialize

in connecting travelers to the world’s best vacation

destinations. Acceptance in this network requires a

recommendation from an already existing member.

Arena Giyim is planning to open its eighth store as an outlet

in D-Marin Didim Shopping Complex in 2010. The Company

is also planning to open a boutique store in Club Resort

Select Maris in the same period.

Awards

A certificate of appreciation was awarded to MARITIM Hotel

Club Alantur for the best overall rating (93%) among all ten

hotels managed by HMS International. This award was given

by HMS International based on the ratings on Internet forums

Holidaycheck and Tripadvisor in 2009.

British tour operator Thomas Cook, bestowed its Excellence

Award 2009 to the Maritim Hotel Grand Azur. This important

recognition was derived by assessments expressed in

customer satisfaction surveys.

Paradise Side Beach Hotel won the Primo 2009 award

ranking it as the top family hotel among Neckerman hotels

worldwide.

Grand Hyatt won the Partners in Success 2010 Award

of Merit in the category for Best Hotel presented by the

Business Improvement Company (BI).

Throughout 2009, Park Hyatt İstanbul - Maçka Palas has

been listed among: Travel+Leisure Magazine’s 45 Best

New Hotels of 2009, Condé Nast Traveler - Hot List Hotel

- 2009, CNBC-E Business Magazine - Top 25 Business

Hotels 2009, Time Out İstanbul Magazine - Annual Food

& Beverage Awards - The Prime has been selected as the

Best New Restaurant of 2009. At the Boutique Hotel Design

Conference held in Miami, Park Hyatt İstanbul - Maçka Palas

was recognized as one of the world’s five best hotels of 2009

and was recognized as the finest restoration and renovation

of an existing building.

Future Plans

The Doğuş Tourism Group sets its future strategies in parallel

with those of the Doğuş Group, striving to become a regional

leader and to continue expanding in the sector. The Doğuş

Tourism Group will continue to reflect its growth-oriented

investment philosophy on its financial results and operations

in the coming years as well.


Antur Turizm A.Ş.

Antur Turizm A.Ş. (Antur), a member of IATA, ASTA IFTAA

and TURSAB, was established in 1966 to provide incoming

and outgoing ticket sales, hotel reservations, tour/conference

organizations and car/aircraft rental services. The Ministry of

Tourism has acknowledged the Company’s achievements in

bringing over US$ 1 million in foreign currency inflow into the

country.

Antur owns a five-star Maritim Hotel Club Alantur in Alanya

along the Mediterranean coast, 140 km east of Antalya.

Only 5 km from Alanya’s city center, the Maritim Hotel Club

Alantur welcomes its guests with 350 rooms and suites, all

built recently. The hotel, with its 60,000 square meter garden

and pool area is situated directly on the beach in an area

known as the “Turkish Riviera” and offers its guests a place

to relax or be entertained in addition to a number of sport

facilities located on site.

Datmar Turizm A.Ş.

Datmar Turizm A.Ş. owns two five-star holiday villages,

Aldiana Side and the Paradise Side Beach Hotel in Side,

both managed by Aldiana GmbH (Groupo Santana Carzorla

and Thomas Cook AG partnership). Both properties are

located in Side, 70 km from the airport and 80 km from

Antalya.

Aldiana Side, with a 600-bed capacity, is built in the Ottoman

caravanserai style and features a mini golf course and a

rock-climbing wall. In addition, Aldiana Side provides its

guests an array of facilities including an outdoor swimming

pool, 12 tennis courts, basketball, soccer, volleyball,

windsurfing, sailing, a snack bar, discotheque, day-care

center, sauna, health center, a gym as well as indoor and

outdoor restaurants.

Paradise Side Beach Hotel is also located along the

shoreline, next to the Aldiana Side. This holiday village,

with large detached apartments, has an 805-bed capacity;

60% of the apartments have a balcony and all have a sea

view. The holiday village also boasts sporting activities, a

150-person capacity conference area, two restaurants, a

health center and a gym.




Garanti Turizm Yatırım ve İşletme A.Ş.

Garanti Turizm Yatırım ve İşletme A.Ş. was established in

1988 and invested in a five-star luxury hotel. The Maritim

Hotel Grand Azur is situated in Marmaris approximately 100

km from Dalaman airport. The Hotel has 288 bedrooms and

a 610-bed capacity, with 93% of the bedrooms commanding

a view of the Aegean Sea. The Hotel also has a conference

area able to accommodate 350 people and two seminar

rooms with seating for 40 people.

Voyager Mediterranean Turizm Endüstrisi ve Ticaret A.Ş.

Voyager Mediterranean Turizm Endüstrisi ve Ticaret A.Ş.

owns the Sheraton Voyager Antalya Hotel, Resort & Spa,

managed by Starwood Hotels & Resorts Worldwide Inc.

The Sheraton Voyager Antalya Hotel, Resort & Spa is a

luxury five-star resort hotel with 400 bedrooms and an 828-

bed capacity. The impressive architectural style of the Hotel

attracts many visitors. Approximately 85% of the rooms

enjoy a view of the Mediterranean Sea. The Hotel has a

wide variety of sports facilities in addition to seminar and

conference rooms able to accommodate from 20 to 700

visitors. The Hotel also offers a spa facility.

Göktrans Turizm ve Ticaret A.Ş.

Göktrans Turizm ve Ticaret A.Ş. owns the Grand Hyatt

İstanbul, a five star facility, managed by Hyatt International

(Europe Africa Middle East) LLC, located in Taksim, in the

heart of İstanbul.

Grand Hyatt İstanbul is located in the center of the city’s

business district, just a five-minute walk from the Bosphorus

and Taksim Square. Renovated in 2003, Grand Hyatt

İstanbul has 360 Rooms including 102 king, 159 deluxe

king, 71 Grand Club rooms with special amenities, 22 suites

(12 with kitchenettes), three rooms for disabled guests

and seven fully furnished luxury apartments. The Grand

Club rooms offer VIP accommodation, separate check-in

and checkout facilities, a private lounge and boardrooms.

A total of 1,507 square meters of function space with 13

renovated meeting rooms including a ballroom are equipped

with high-tech essentials like “Easy Meet Unit” smart walls.

The award-winning Italian restaurant Spazio serves creative

Italian cuisine with a large selection of local and international

wines. Agora Restaurant, famous for its rich open buffets,

serves local and international cuisine with both buffet and a

la carte options. Other outlets include the Mezzanine Lounge

& Bar and the Library Bar. Fully renovated and redesigned,

the Gaia Fitness Center & Spa is an exclusive area offering

four specially designed treatment rooms, a fitness studio and

an exercise room for yoga and Pilates classes.


Do-Ça Tekstil Temizleme

Do-Ça Tekstil Temizleme (Do-Ça) was established in 1999

and currently operates in the Grand Hyatt İstanbul and Park

Hyatt İstanbul Maçka Palas. It provides laundry and dry

cleaning services to hotel guests and other customers.

Arena Giyim Sanayi Turizm ve Ticaret A.Ş.

Incorporated in 1997, Arena Giyim Head Offices are based

in İstanbul. The Company initially secured the franchises for

Emporio Armani and Gucci, opening their first boutiques in

one of İstanbul’s most prestigious locations, the historical

Maçka Palas Building. In 2003, the Company has secured

long-term leases for two properties from D-Marin Turgutreis

Marina Shopping Complex for the opening of Emporio

Armani boutique and Emporio Armani Caffe.

Arena Giyim also initiated a multi-brand fashion retail project

under the “In-formal” name. The first store was opened in the

D-Marin Turgutreis Marina Shopping Complex; the second is

located in the historical Maçka Palas Building. The boutique’s

philosophy is to present prestigious labels to fashion

conscious clientele with exclusive service standards in a very

unique surrounding.

The newest Emporio Armani, Armani Jeans and Gucci

boutiques and Emporio Armani Caffe were opened in 2007 at

the İstinye Park, one of İstanbul’s most prominent shopping

malls. In addition to these new boutiques, Arena Giyim also

secured the franchise of Loro Piana the same year, a well

known name for cashmere fashions. The first Loro Piana

boutique was opened in the fashionable Nişantaşı district of

İstanbul.

The Company is actively seeking other prestigious labels to

add to its portfolio.

The historic Maçka Palas building, owned by Arena Giyim,

has been converted into a 90-room boutique hotel under

the Park Hyatt İstanbul Maçka Palas Hotel brand name.

Ideally located in Nişantaşı, the trendy area of İstanbul, the

hotel uniquely combines the historic architecture of an art

deco building with an innovative interior design. Housing the

existing Emporio Armani and Gucci boutiques, the hotel is

also within walking distance to many other upscale designer

fashion houses, as well as ultra-trendy bars and restaurants.

There are 90 generously sized deluxe rooms averaging 59

square meters, including seven Park Suites, one Executive

Suite, one Diplomatic Suite and a Presidential Suite. The

residential top-floor suites offer a private terrace. Each

guestroom features a grand bathroom clad in local fossilized

limestone offering five different bathing experiences; 25 of

the rooms include an authentic Turkish bath, complete with

heated stone seat.

Arena Giyim is the proprietor of the famous Reina Nightclub,

operated by a third party and located in a stunning location

on the Bosphorus.




The D-Marin Marinas Group

With the aim of leading the market and playing an important role in the improvement of the marina sector in Turkey and europe, the D-marin marinas Group is set to utilize every investment opportunity in the sector both in Turkey and abroad.

D-Marin Turgutreis Marina is proud to be the first Marina in

the D-Marin Marinas Group. In 2009, D-Marin Didim Marina

commenced operations as the second marina in the chain.

Furthermore, in 2009, an agreement concerning the Port

Göcek Marina was signed and the marina will be a part of

the D-Marin Marinas Group starting from the third quarter of

2010. The construction of a new marina in Dalaman is also

expected to start in 2011. Last but not least, the D-Marin

Marinas Group began co-operating with NCP Marinas for the

operation of Mandalina Marina in Sibenik-Croatia.

With the aim of leading the market and playing an important

role in the improvement of the marina sector in Turkey and

Europe, the D-Marin Marinas Group is set to utilize every

investment opportunity in the sector both in Turkey and

abroad.

Maritime Tourism has made a major stride in the second

half of the twentieth century in developed coastal states

and the Mediterranean in particular. All countries expecting

revenue from yacht tourism have initially made investments in

marinas. The human and yacht traffic that was generated led

to the development of a society geared towards tourism.

The Doğuş Group believes that marina operations have a

very high growth potential in Turkey and in the region. While

the economic and social developments in our age have

enabled increasing numbers of people to travel; a shortening

of the working week, extension of holidays as well as an

increase in welfare and a rising interest in yachting have led

the Doğuş Group to develop marinas that would cater not

only to yachts but to establish integrated tourism facilities

catering to yachters and their associates.

93

D-Marin Turgutreis

In line with the Doğuş Group’s mission and vision, D-Marin

Turgutreis Marina gives the utmost priority to providing the

best service possible and anticipates becoming the sector

leader for marina operations all around Europe.

D-Marin Turgutreis Marina has a unique infrastructure, which

enables the Company to provide excellent services to its

customers thus making it the best marina operator in Turkey.

D-Marin Turgutreis Marina has a mooring capacity for 550

yachts in the sea and 150 yachts in dry dock (for yachts

between 8 and 50 meters in length). The Marina reached full

occupancy in 2009 without compromising service quality and

approach. Since its inception, the Company has provided a

wide range of high quality technical, social and administrative

services to yachts and yacht owners.

As host of the first Boat Show in Turkey organized in 2003

and the first open air Classical Music Festival held in a

marina, D-Marin Turgutreis Marina has demonstrated its

success by receiving many awards and certificates. The

Company has held the Blue Flag since 2004 and five Golden

Anchor flags from the Yacht Harbour Association (THYA)

wave from its flag pole. The Company was the recipient

of the Best Marina Investment award in 2004 and, for the

third consecutive year, has been awarded the Best Marina

Operation in the Skalite awards organized by SKAL Club

Turkey. The Company was also found worthy of the Best

Harbor Operation in 2009.

During 2009, the financial turmoil from the crisis also created

adverse effects in the tourism sector. The sector had low

results compared to the indicators from 2008 but thanks to

different operational parameters adopted and 122 dedicated

employees, D-Marin Turgutreis Marina ended the year with

satisfactory results. Despite the financial crisis, the Company

recorded an EBITDA of TL 5,415,207 and a net profit of

TL 1,320,107 at the end of 2009.





D-Marin Didim

With a capacity to berth 580 yachts and another 600 in dry

dock, D-Marin Didim is the largest marina in Turkey and can

handle yachts from 8 to 50 meters in length.

The Marina has two travel lifts, 400 tons and 75 tons,

respectively, a 40 ton-capacity trailer and a 30 by 60 meter

hangar; with a dry park area of 70,000 square meters, it is

the largest in the region. There are 36 well equipped technical

shops in the dry park area able to provide full maintenance

services throughout the year for D-Marin Didim’s customers.

The Marina offers a shopping and entertaining center including

brand-name stores, restaurants, cafeterias and bars. These

options greatly enhance Didim’s tourism, economy and social

life. In addition to first quality service and comfort, D-Marin

Didim offers a private beach, fitness center, tennis court and

a swimming pool. D-Marin Didim Marina is a port of entry

with ferryboat services for cruises to the Greek Islands. The

marina is able to provide the best berthing capacity, the largest

dry park area all set in an idyllic location. Also available are

transportation facilities from Bodrum and İzmir airport and a

modernized marina infrastructure in addition to its well trained

and customer-oriented Marina employees.

With these attributes, D-Marin Didim aims to be the best marina

of choice in the Aegean and Mediterranean coastal areas of

Turkey. The Marina’s longer term target involves becoming the

best marina along the entire Mediterranean coastline.

Marina Mandalina-Sibenik Croatia

Being joint owners of the Marina with Nautical Center Prgin

(NCP) company, the D-Marin Marinas Group also assumed

sole responsibility for the management of the Marina

Mandalina-Sibenik Croatia, in 2009. Situated in the scenic

coastal town of Sibenik on Croatia’s Dalmatian Coast, Marina

Mandalina features 350 in-water slips and 50 dry-dock

berths on land, accommodating vessels up to 280 feet in

length.

Sibenik, where the Marina is located is chosen as the

“world’s number one sailing destination” by the National

Geographic magazine, the town is noted especially for its

UNESCO protected cathedral and two national parks - the

waterfalls of Krka and the Kornati archipelago.

95

D-Gym

D-Gym is focused on quality while maximizing customer comfort and providing complete satisfaction and aims to provide personalized, high-quality customer service with its skilled and experienced trainers.

D-Gym, a new investment of the Doğuş Group in the tourism

and services sector, aims to bring corporate class quality to

the sports and fitness industry. Completed in eight months

after the commencement of the construction, D-Gym started

operations on October 15, 2009 within Doğuş Power Center

in Maslak, the financial district of İstanbul surrounded by

business centers as well as residential compounds.

D-Gym is focused on quality while maximizing customer

comfort and providing complete satisfaction and aims to

provide personalized, high-quality customer service with

its skilled and experienced trainers. Offering its members a

large, comfortable training facility filled with the latest fitness

equipment, D-Gym appeals to business professionals,

working or residing in Maslak and nearby neighborhoods.

D-Gym features; state-of-the-art cardiovascular and weight

training options, private training, group exercise classes,

café, full-service spa, Pilates studio and an indoor swimming

pool.




real estate


Real Estate


The Doğuş Group operates with two companies in the real estate sector, Doğuş-Ge reiT and Doğuş real estate.

Financial Highlights (TL thousand)**

Doğuş Real Estate 2008 2009

Segment Assets 345,006 448,940

Total Equity 293,198 323,582

Net Rental Income (318) 127

Other Operating Income (net) 87,791 39,375

EBIT 83,155 35,808

EBITDA 83,188 35,882

Net Income 61,501 26,929

ROA (%) 18 6

ROE (%) 21 8

** From IFRS Report

Financial Highlights (TL thousand)*

Doğuş-GE REIT 2007 2008 2009

Segment Assets 166,663 201,851 177,084

Revenues 42,171 8,717 41,699

Cost of Revenues (28,916) (1,880) (31,405)

Gross Profit Margin (%) 31 78 25

EBIT 17,084 35,470 5,427

EBITDA 17,312 36,064 5,518

EBITDA Margin (%) 41 407 13

Net Income 19,132 29,054 2,980

* From CMB Report and Annual Report

Doğuş-GE REIT Portfolio Breakdown 2009 (%)

Antalya 2000 Plaza 3% Doğuş Power Center 87%

Cash&Equivalents 10%

Doğuş Real Estate Portfolio Breakdown 2009 (%)

Cash&Equivalents 14% Investment Property 65%

Investment Property under Development 21%

99

Doğuş-GE REIT

supported by the synergy of its shareholder structure, Doğuş-Ge reiT is aiming to be one of Turkey’s leading investor and development companies.

Supported by the synergy of its shareholder structure,

Doğuş-GE REIT is aiming to be one of Turkey’s leading

investor and development companies. The combination of

GE Real Estate’s global experience and capital coupled with

the Doğuş Group’s experience in finance, construction and

real estate, will create this synergy.

Real Estate Investment Trust (REIT) Companies started

to operate in Turkey for the first time in 1995, thanks to

regulations prepared by the Capital Markets Board. Two

years later, they became publicly listed in the İstanbul Stock

Exchange (ISE).

On July 25, 1997, the Company began operating as the third

REIT on the Stock Exchange under the title Osmanlı REIT.

At that time, it had a registered capital of TL 5 trillion and a

paid-in capital of TL 250,000 and was listed on the ISE 100

index.

At the end of 2001, as a result of the merger between

Osmanlı Bank and Garanti Bank - both belonging to

the Doğuş Group, 51% of the Company’s shares were

transferred to Garanti Bank, making it a financial subsidiary

of the Bank; its name was changed into Garanti REIT. By

the end of 2005, the Company’s registered capital and

paid-in capital reached TL 500 million and TL 93.78 million,

respectively.

As of December 1, 2006, the shareholder structure of

Doğuş-GE REIT changed when Garanti Bank sold 50% of

its shares to GE Capital Corporation and 50% to Doğuş

Holding A.Ş. Currently, Doğuş Holding A.Ş. and GE Capital

Corporation each hold 25.5% of the shares, while 49% of

the shares are publicly held. Shares are listed on the İstanbul

Stock Exchange, National 100 and ISE-GMYO industrial

indices; their ticker symbol in the national market is DGGYO.

Vision and Mission

Supported by the synergy of its shareholder structure,

Doğuş-GE REIT is aiming to be one of Turkey’s leading

investment and development companies. The combination of

GE Real Estate’s global experience and capital coupled with

the Doğuş Group’s experience in finance, construction and

real estate, will create this synergy.

Doğuş-GE REIT’s mission is to increase the value of its

investment portfolio through stable growth. By offering

higher dividends and market capitalization, it will maximize

shareholder value and provide the highest customer

satisfaction for projects under its development.

Modern Quality Policies

Due to increasing competition in the marketplace, the quality

of products and services has become more important than

ever. The International Organization for Standardization has

established ISO-9000 quality system standards to secure

product and service quality systems to be implemented by

companies, inspected and documented by independent

institutions.




Approved upon inspections carried out by TUV Sudwest

TGK, the quality system was re-endorsed following an

audit performed in 2004. Thus, it was once again certified

that transparency, reliability and professionalism has been

maintained in the management processes of Doğuş-GE REIT

and that the management system established conforms to

international standards.

Activities in 2009

In 2009, Doğuş-GE REIT successfully executed dispositions

of Levent, Etiler and Taksim properties. With cash generated

from disposals, outstanding debt payments were realized.

Doğuş-GE REIT finished 2009 with solid earnings in line

with expectations and despite a very adverse economic

environment. Doğuş-GE REIT’s like-for-like net rental growth,

a key driver for operating income based on a comparable

portfolio year-on-year, was 24.5% in 2009.

Disposals in 2009

Doğuş-GE REIT sold its investment property in Taksim for

TL 16,778,300+VAT. Additionally, investment property in

Levent was also sold at TL 4,351,852+VAT and another

investment property in Etiler sold for TL 10,293,240+VAT.

Highlights from properties portfolio

The Doğuş-GE REIT portfolio includes the Doğuş Power

Center located in Maslak and the 2000 Plaza located in

Antalya.

İstanbul / maslak, shopping Center Project,

Doğuş Power Center

The Doğuş Power Center is a pioneer in Turkey, housing only

large areas and offering a unique mixture of shops that include

units such as automotive showrooms and service areas, a

supermarket, music market, home furniture, sports club,

media offices and a food court. Located in urban Maslak, the

Doğuş Power Center is also a main business center made up

of “Big Boxes” unlike similar centers elsewhere in the world; it

has a high-quality interior design and furnishing. The Maslak-

Levent area is Turkey’s banking and finance center with many

well-educated, white-collar employees. The Center also offers

significant access advantages due to its proximity to the

coastal road, TEM and E5 highways, the connecting roads for

both bridges, and the new metro subway station.

Doğuş Power Center provides additional advantages to

the shops housed there. Generally, shops that cannot find

reasonably priced large spaces in urban mall-type shopping

centers are forced to move out of the city, a disadvantage

when trying to attract the kind of customers they want.

Doğuş Power Center offers an opportunity to have spacious

areas in a very central location like Maslak. The Center has

a total indoor area of 58,000 square meters; 33,000 square

meters are dedicated to shops; 13,000 square meters of

enclosed and 9,000 square meters of open parking space

can accommodate 900 vehicles. Doğuş Power Center

was completed in November 2006; according to a report

prepared by Taksim Gayrimenkul Değerleme A.Ş. at the end

of 2009, its market value is TL 147,060,000.

Future Plans

Signs of a tangible recovery heralded in the start of 2010;

bringing with it a year of transition. REIT further increases in

rental income with resilient operational performance.

101

Doğuş Real Estate Investment and Management Company,

founded in 2006, is the newest, youngest and most dynamic

establishment 100% owned by the Doğuş Group. Doğuş

Real Estate aims to be one of the key players in the sector

utilizing its strong team and expertise in the areas of real

estate development, construction management, sales and

marketing, without compromising on reliability, honesty

and high-quality service approach. Doğuş Real Estate’s

mission is to increase its investments through stable

growth in the years to come and to provide the highest

customer satisfaction, carrying the Doğuş brand and its

professionalism into real estate projects.

Doğuş Real Estate Company is closely monitoring the

dynamics of the real estate industry throughout Turkey

and continuing its work on developing projects including

residential and commercial buildings as well as hospitals and

logistics facilities, utilizing the Doğuş Group’s extensive real

estate portfolio.

The Company is currently holding 14 assets in its balance

sheet. The team has focused on the development of two

major projects since its establishment; a shopping center

project in Gebze/Kocaeli and a residential project in Kartal/

İstanbul. Gebze Shopping Center Project will be inaugurated

in September 2010; the project is worth around US$ 200

million; the estimated total investment cost for the Kartal

Residential Project is approximately US$ 90 million. Both

projects are being designed around certain concepts that

offer unique architectural details including efficient and

affordable areas for the users. The team has focused on the

development of two office projects; a renovation project in

Ayazağa and a high-quality office building in Maslak.

Two multi-use projects, one in Balçova/İzmir and the other

at the Kartal Eas site in İstanbul, are in the pipeline. The

Kartal Eas site is located in the Kartal Urban Renewal

District, currently being designed by Architect Zaha Hadid.

Additionally, two residential projects, one in Riva/İstanbul

and the other in Bodrum-Yalıkavak/Muğla are in the planning

phase.

Doğuş Real Estate Investment and Management Company

aims to ensure that customer satisfaction will continue

to reflect all the values and professionalism of the Doğuş

Group. The Company’s current projects and investments will

be sustained without any concessions that affect the quality

of its reputation.

Doğuş Real Estate

Doğuş real estate Company is closely monitoring the dynamics of the real estate industry throughout Turkey and continuing its work on developing projects including residential and commercial buildings as well as hospitals and logistics facilities, utilizing the Doğuş Group’s extensive real estate portfolio.




Principles

• Trust,

• Respect,

• Honesty,

• Continuity and quality of service,

• Providing a permanent competitive advantage,

• An organizational structure that keeps teamwork at the

forefront,

• To fulfill its responsibilities for today and for generations yet

to come.

Ongoing Projects

The shopping Center Project in Gebze Centrum

For today’s citizens with little time to spare, it is crucial to

provide convenient shopping areas within the same shopping

center. Doğuş Real Estate is able to meet such demands

arising from the requirements of modern life with an efficient

high-quality project concept.

The Company is bringing something new to Gebze, a very

important industrial region in Turkey with a population of over

half million, close to İstanbul. This area is undergoing a total

change in almost every field from infrastructure to roads and

from public parks to social and cultural facilities.

With the Gebze Shopping Center Project, Doğuş Real Estate

aims to create a totally new attraction that fulfills such a

need within the region that includes both Gebze and the

neighborhood locations of İstanbul and Kocaeli provinces.

The Gebze Shopping Center is under construction, totally

funded by Doğuş Real Estate. It has a construction area of

140,000 square meters. Covering a total of 55,000 square

meters of gross leasable space, 10,500 square meters

has been designated as a hypermarket area, 7,600 square

meters for a construction market area, 2,800 square meters

for an electronics market, 23,100 square meters for a store

area, a 4,800 square meters food-court, 6,200 square

meters entertainment area (ice skating rink, go-kart, cinema,

kids’ play area and a bowling alley), a terrace area of 1,250

square meters and a parking lot and covered car-park for

1,500 vehicles.

Doğuş Real Estate, together with many big brands, set

its sights on creating diversity that will meet the needs of

investors and the local community, through a shop-mix

arranged to satisfy the demands of local retail shop owners.

103

Projects in the Pipeline

Housing and residential Project in kartal

Doğuş Real Estate brings people together with contemporary

houses for contemporary Turkey. Today, the word “house” is

synonymous with “lifestyle” rather than just a “space for living.”

The Company believes that the project is well suited to satisfy

all living standards as demanded by today’s modern families.

Doğuş Real Estate has conceptualized the housing and

residential project in Kartal from this viewpoint. It is a

neighbor to the Kartal Urban Transformation Area planned

to be the newest and most popular settlement area in

İstanbul. The development is being constructed to be at

the intersection of key roadways and sea, air and rail/metro

networks will substantially solve the transportation problem

in İstanbul.

Doğuş Real Estate is developing the Kartal Project as

the new center of living. The company desires it to be a

“home” that provides not only a higher quality of living but

also generates a return on their investment, incorporating

all kinds of social and commercial facilities. Construction

blueprints have been completed and a building permit has

been received from the municipality. A metro station will

be located within the project area which will have direct

access to the metro. This will add a unique advantage to the

residents of the project, which is being designed to meet all

the needs of the targeted customers, offering 600 alternative

residential units from studio flats to 3+1.

The main objective of Doğuş Real Estate is to see that its

customers and their loved ones lead a happy, safe and

advantageous life in Kartal, soon to become the new center

of living, culture and commerce in İstanbul.

Future Plans

Doğuş Real Estate aims to become the most valuable

and credible company in the sector, by concentrating

on unconditional customer satisfaction and carrying its

corporate identity and different points of view into all projects

while creating spaces that offer high standards of living.



energy


Doğuş Energy develops and grows through profitable

enterprises based on clean energy and its infrastructure.

It consistently acts in accordance with current social,

economical and geographical developments and maintains

its environmentally friendly focus.

The Energy Department was founded within Doğuş Holding

in 2005 to monitor all developments concerning and

pertaining to the energy sector, both within Turkey and

throughout the region. It is responsible for formulating and

generating strategies for all energy and energy-related

infrastructure investments within the Doğuş Group. Taking

necessary measures and creating profitable business

enterprises are ultimate goals of this organization.

The Doğuş Group retains many competitive advantages

within its structure. Since its establishment in 1951, the

Group has accumulated considerable experience, especially

with regard to dam building, constructing various power

stations and mining activities.

The Energy Sector

To maintain the continuity of the economic, sociological,

technological progress and expansion of Turkey, the energy

sector must adapt and keep up with the latest developments

in this industry. The liberalization process taking place in

the sector has underpinned growth, increasing the need for

new investments. To that end, it is estimated that the sector

needs an increase of approximately 30-35% of installed

capacity to meet an estimated 6.3-7% CAGR in demand for

the next decade.

Within this scope, Doğuş Energy has designated new

investment projects and privatizations for the generation and

distribution of electricity as well as the operation of these

assets and energy trading as its core areas of business.

Ongoing Investments

As a renewable and clean energy source, hydroelectric

energy has started to assume greater importance in Turkey;

the Doğuş Group bases its current strategies on this

premise. The Boyabat Hydroelectric Power plant, currently

under construction will have an installed capacity of 513 MW.

The Doğuş Group holds a 34% stake in this project which is

expected to start operating by the end of 2012. The licensed

Aslancık Hydroelectric Power plant with an installed capacity

of 120 MW, in which the Group holds a 33% stake, is

currently in the pre-construction phase. In addition, the

Group has submitted a license application for Artvin

Hydroelectric Power plant with an installed capacity of 332

MW, in which the Group owns a 100% share. The license

for the Artvin project is expected to be obtained in the first

quarter of 2010. The Group has also 25% share in the D-TES

Electric Power Trading Company.

Energy

Doğuş Energy

Doğuş energy has designated new investment projects and privatizations for the generation and distribution of electricity as well as the operation of these assets and energy trading as its core areas of business.

107

Future Plans

Doğuş Energy plans to develop and expand its range

of profitable enterprises based on clean energy and its

infrastructure as it acts in accordance with current social,

economic and geographic developments while maintaining

its environmentally friendly perspective.

Closely monitoring privatization initiatives in geographical

areas across Turkey, the Doğuş Group continues to operate

energy generation based on renewable and conventional

energy sources.



corporate citizenship


Corporate Social Responsibility

The Doğuş Group’s corporate social responsibility approach rests on the belief that child education and development is of the utmost importance for a sustainable world.

111INTRODUCTION MANAGEMENT ACTIVITIES OF 2009 CORPORATE CITIZENSHIP

Child Development

Doğuş kids (Doğuş Çocuk)

Established in December 2004, Doğuş Kids is the social

responsibility platform of the Doğuş Group and it is based on

the perspective that our future will be largely shaped by

today’s children and their development. This perspective

should be given utmost importance by all players today,

including the business sector.

Contributing to the development of the young children,

through education, entertainment activities and projects since

its inception, Doğuş Kids aims to create a more conscious

and responsible society in the areas of child development,

education, culture & arts, and communication.

With this objective in mind, Doğuş Kids engages in

partnerships with other institutions including non-

governmental organizations, international organizations, state

and governmental bodies. All of these other institutions share

the Doğuş Kids’ vision of cultivating social change through

our children.

Doğuş kids symphony orchestra

The “Doğuş Kids Symphony Orchestra” was established in

2006 as Turkey’s first national, and permanent, children’s

symphony orchestra. The Orchestra is comprised of

conservatory students, aged between 10 and 18 from

different regions of Turkey, and introduces the wonder of

symphonic music to Turkish children as performed by their

peers.

This is an effort to provide a wider recognition of the diverse

and universal music in our country, and to help this music

achieve the recognition it deserves, on a worldwide basis.

The “Doğuş Kids Symphony Orchestra” promotes the

artistic skills and achievements of children studying music,

simultaneously in Turkey and in the international arena.

Since 2006, proceeds, obtained from the concerts performed

by the Doğuş Kids Symphony Orchestra, have been used to

purchase musical instruments for the Fine Arts High Schools

in Anatolia, with contributions from ÇYDD (The Association

in Support of Contemporary Living). To date, donations

have been made to schools in 18 cities including Adıyaman,

Bingöl, Isparta, Şanlıurfa, Uşak, Tokat, Konya, Kocaeli, Sivas,

Kars, Hatay, Bartın, Niğde, Erzincan, Siirt, Edirne, Denizli

and Diyarbakır. In 2009, the Orchestra performed 7 concerts

in the regions of Ankara, İstanbul and Aspendos reaching a

combined audience of 7,000.

21st Century life Culture seminars

The Doğuş Group strongly believes that investing in children

is a very important corporate activity and gives equal

importance to the education of parents, whose actions have

a profound impact on the development of their children.

Starting with their own employees, the Doğuş Group

initiated a series of seminars in 2007, entitled “21st Century

Life Culture Seminars.” These seminars aim to prepare

parents for the challenges of child development in the 21st

century and to enable them to better understand the rapid

changes taking place in the world. In 2009, three seminars

were held under the moderation of Dr. Erdal Atabek, Social

Psychologist, and with the participation of different guest

speakers.

| Corporate Social Responsibility | Corporate Sponsorships

Doğuş Holding

Contributing to the development of the young children, through education, entertainment activities and projects since its inception, Doğuş kids aims to create a more conscious and responsible society in the areas of child development, education, culture & arts, and communication.


Doğuş kids Website www.doguscocuk.com.tr

The Doğuş Kids initiative also reaches children through its

website. With a target audience in the 7-12 age group, the

website’s editorial functions are also performed by volunteer

members. Through this interactive website, children express

themselves on various topics while sharing their opinions

with their peers. Covering sections on sports, health,

science, technology, cinema, theater and traffic, the website

has attracted nearly 100,000 members from 81 provinces of

the country to date.

Having reached its target audience number of 100,000 in

less than five years, the website has reached its targets and

will be replaced by the Doğuş Kids Symphony Orchestra

website as of July 2010.

Doğuş kids Activity Areas

Doğuş Kids has built “activity areas” at various locations

throughout Turkey, creating the opportunity to establish

direct communication with children and assist in their

development, through different kinds of games, which help

foster social development and physical motor skills in a

creative, healthy and safe manner.

Education

send me to school Campaign (Baba Beni okula Gönder)

Since 2006, Doğuş Holding has been providing scholarships

for the education of 50 female students on an annual basis,

through its support to the Send Me to School Campaign,

a joint effort with Milliyet newspaper, together with the

Association in Support of Contemporary Living (ÇYDD).

Health

The “my World” Project

The “My World” project has been implemented by Doğuş

Holding in coordination with UNFPA (The United Nations

Population Fund) since 2006. The project has identified

“peer education” activities, realized by UNFPA at various

universities worldwide, and has been carrying this concept

over to the Doğuş Kids website, resulting in wider group

access to these activities. Through this Project, Doğuş Kids

helps children to cope with the difficulties of their adolescent

years, enabling them to identify the changes facing them,

including the various growth processes.


Since its inception in 1992, the Ayhan Şahenk Foundation has

been undertaking initiatives in education, health, the environment

and sports as well as offering social aid to those in disadvantaged

areas. As in previous years, the Foundation continued to

implement significant projects in 2009 for the benefit of our

people and community with a responsible perspective to help our

government in fulfilling its social welfare duty.

Education In 2009, the Foundation focused its activities in the field of educa-

tion on provision of scholarships, donation of computers and train-

ing sets, as well as school renovations.

• In 2009, the Foundation finished carpentry and furnishing work at

“Resneli Niyazi Bey Primary School” to prepare this 42-classroom

school in İstanbul Mecidiyeköy for the new academic year.

• The Foundation finished maintenance, renewal and painting

work at “Sabiha Şahenk Library” which were pending due to

insufficient funds. The library was constructed and granted to the

Ministry of Culture in 2000 and then to Niğde University in 2003

by the Foundation.

• In order to help improve the level of equal opportunity in

education, the Foundation focused first and foremost on primary

schools in disadvantaged areas when donating computers,

books and other educational equipment.

Health In 2009, the number of people who benefited from the “Mobile Health-

care Units” project totaled 21,065; thereby, reaching a cumulative

number of 352,269 since the initiation of the project in 1997.

• In the context of the “2009 Foundation Civilization - Year of

Health” declared by the General Directorate of Foundations our

Mobile Healthcare Units provided eye and general examination

services in the city centers and towns in Ankara, Edirne and

Niğde in addition to İstanbul.

• In 2009, the Mobile Healthcare Units project was granted the

“Foundation Civilization - Year of Health Award” by the General

Directorate of Foundations and the “Social Responsibility in

Health Award” by the Health Volunteers of Turkey Association.

• In addition to the Mobile Healthcare Units project, the

Foundation spends its budget to support universities and health

care organizations for the fulfillment of their needs, which the

government is not able to supply. As an example, in 2009, the

Foundation repaired, renewed and equipped the Children’s

Infection Clinic of Şişli Etfal Hospital, which is one of the busiest

hospitals in İstanbul due to its central location. Thanks to the

project, the hospital is able to provide a better workplace for

health care personnel and a better service to its patients.

Environment In the context of Ayhan Şahenk Forests of Endearment Project

(Ayhan Şahenk Sevgi Ormanları) which had started with the aim of

leaving a healthy and livable environment for future generations,

over 537,000 trees to date have been planted in the forest areas

which were demolished through fires, mining, or erosion.

In 2009, the Foundation uninterruptedly continued to provide its

maintenance support to Ayhan Şahenk Forests of Endearment

planted in Marmaris, Bodrum, Niğde and İstanbul, in line with a

protocol signed with the Ministry of Environment and Forestry. The

maintenance support involved repairing fences and doors, as well

as tending plants and replacing dead ones with fresh plants.

Social Aid As a part of the Foundation’s ongoing commitment to provide

social aid to the underprivileged, the Ayhan Şahenk Foundation

provided clothing to 1,500 students and food staples to 2,500

poor families in 2009. During the month of Ramadan in 2009, the

Foundation served “iftar” dinners to approximately 2,500 people

per day and hosted 50,000 people in total.

Ayhan Şahenk Foundation

As in previous years, Ayhan Şahenk Foundation continued to implement significant projects in 2009 for the benefit of our people and community.



as, giving help for school repairs in villages, helping street

children, helping younger children whose parents have limited

means in their preparation for university exams, teaching

literacy and offering computer courses at Youth Service

Centers. Garanti Pension and Life is planning to increase its

support to the foundation in the coming years.

In 2010, Garanti Pension and Life will introduce a new,

long-term social responsibility project in cooperation with

the Ministry of National Education which aims to regain

elementary students working on the streets and return them

back to school. The development phase of the project was

initiated in 2009.

Denizyıldızları (starfish) Project

The Denizyıldızları (Starfish) Project, which founded and

completed the construction of four modern state schools

in the Darıca district of Kocaeli, has been supported by the

donations of employees, customers and friends of Garanti

since 1998. Every year, 2,500 students receive education at

the Denizyıldızları campus.

support to Cappadocia vocational school

Since 2008, Garanti Pension and Life has been supporting

the training programs run by the banking and insurance

department of Cappadocia Vocational School and the

preparations of the students for the Individual Pension

Licensing Exam. Through this project, Garanti Pension and

Life aims to contribute to the preparation of students for

business life.

Education

Teachers Academy Foundation

(Öğretmen Akademisi vakfı)

With the recognition of the role education plays in the overall

welfare of society, and as an indication of its long-term

commitment to contribute to quality education, Garanti Bank

established the Teachers Academy Foundation in 2008. The

foundation’s aim is to enhance teachers’ capacity to raise

the next generation, through providing them with specially

designed in-service training, for both their personal and

professional development.

With this understanding, the foundation’s first project,

Öğretmenin Sınırı Yok (No Limits in Teaching) aims to

contribute to the current education model, provoking

analytical thinking and research.

The Community volunteers Foundation (ToG)

Since 2003, Garanti Bank has been the main sponsor of the

TOG, whose vision is to realize social peace, solidarity and

change through the participation and leadership of youth.

Since 2006, Garanti Pension and Life has also supported

several projects on child education and personal development

projects carried out by the Community Volunteers Foundation.

Granting the foundation a specific percentage of its monthly

sales, Garanti Pension and Life has so far supported many

projects carried out by the young Community Volunteers such

Banking and Financial Services

since 2003, Garanti Bank has been the main sponsor of the Community volunteers Foundation, whose vision is to realize social peace, solidarity and change through the participation and leadership of youth.


With the support of Garanti Pension and Life, Cappadocia

Vocational School, which admitted its first students in

the 2005-2006 academic year, included a “Banking and

Insurance” department to its educational program in the

2007-2008 academic year. Furthermore, an old madrasah

(theological school) belonging to the school was renovated

and transformed into an extensive library serving the school

under the name of “The Garanti Pension and Life Library.”

During the 2008-2009 academic year, managers from Garanti

Pension and Life lectured Life Insurance and Individual

Pension System courses. In 2009, Garanti Pension and Life,

has also introduced a special course to the curriculum to

promote the knowledge and skills of graduates and enable

them to receive an Individual Pension Broker’s Certificate.

Garanti Pension and Life has also continued to offer summer

internships and job opportunities to students during 2009.

Health Since 2005, Garanti Pension and Life has been a permanent

supporter of the “Itinerant Health Services Project” carried

out by the Ayhan Şahenk Foundation. The project has been

implemented by means of modern health vehicles designed

particularly to render service in the fields of “Visual Health,”

“General Health” and “Children’s Health.” Under the scope of

the Project, health services are being offered free-of-charge

to people without social security and to people with limited

income and children of elementary education age in particular.

Environment

World Wide Fund for nature (WWF) - Turkey

Garanti has been the main sponsor of WWF-Turkey since

1992, supporting conservation and creating awareness

on major environmental issues. Launched in 2007, the

Environmentally Friendly Bonus Card is one of Garanti’s

many projects with the WWF and this credit card provides

customers the opportunity to donate parts of their spending

credits to WWF-Turkey.

Women

supporting Women entrepreneurs

Garanti has been supporting women entrepreneurs in Turkey

for the past four years. As part of this effort, in cooperation

with the Economist magazine, Garanti organizes the

“Turkey’s Women Entrepreneurs Competition.” In addition,

Garanti organizes the “Women Entrepreneurs Gatherings”

and co-hosts the meetings with the Women Entrepreneurs

Association of Turkey (KAGİDER). In these meetings, various

important issues are discussed, including topics related to

marketing, future trends, EU integration, technology and

image hints.

send me to school Campaign (Baba Beni okula Gönder)

Together with Milliyet newspaper, and in conjunction with

the Association in Support of Contemporary Living (ÇYDD),

Garanti joins the united effort to support the project, “Send Me

to School.” Since 2006, Garanti has provided scholarships, on

an annual basis, for the education of 100 female students.



The first of these initiatives is Platform Garanti Contemporary

Art Center whose activities have continued since it was taken

over as a part of the merger with Ottoman Bank in 2001.

Today, Platform is regarded as one of the world’s leading

institutions in contemporary arts.

Additionally, the Ottoman Bank Museum and the Ottoman

Bank Archives and Research Center, founded in 2002 in order

to perpetuate the invaluable legacy of Ottoman Bank, not

only narrate the story of an enterprise and a period, but also

contribute to collective memory with the endeavors in social

and economic areas, as well as a comprehensive activity

program.

Transformed from Garanti Art Gallery, Garanti Gallery was

established in 2003 and hosts projects that combines all

disciplines concerning architecture and design. Each one

producing major projects in its own field, these three entities

were recently brought together under Garanti Kültür A.Ş.

Garanti Kültür A.Ş. will actively commence operations by

early 2011 with exhibition, research, archive and education

functions, and serve as the new epicenter of culture and

the arts in İstanbul upon completion of the renovation of the

historical buildings in Galata (OBM) and Beyoğlu (Platform

Garanti). The company will be engaged in contemporary art,

architecture, design and cultural and social studies even more

strongly on a wide space of 15,000 square meters.

Customers

Garanti Anatolian meetings (GAs)

Since 2002, Garanti has organized a series of conferences

called “Garanti Anatolian Meetings,” aiming to gather SMEs

and local administrators.

The meetings have paved the way for professionals and

experts,

• to discuss various important issues, including changing

economic and market conditions,

• to evaluate regional and international opportunities,

• to explore potential spheres of business, and

• to find regional solutions in cooperation with local

industrialists and officials.

At present, Garanti has organized meetings with more than

20,000 SMEs.

Hobby Clubs Project

In 2008, Garanti Pension and Life initiated the Hobby Clubs

Project with the purpose of keeping customers happy by

providing pleasant moments not only after their retirement

but also during the accumulation phase. Currently, the project

covers 22 different hobbies ranging from arts to sports and

is implemented with the participation of 200 partners, all of

which are the leading institutions in their fields.

Arts and Culture

Garanti kültür A.Ş.

Giving utmost importance to contributing culture and arts in

a sustainable way, Garanti brought together its three cultural

and artistic institutions under Garanti Kültür A.Ş. to form a

“corporate” structure.


Automotive

in 2005, Doğuş otomotiv started to establish training laboratories to support education in industrial and vocational schools, as well as to provide education and job opportunities to more students.

In recognition of its social responsibilities, Doğuş Otomotiv

develops and undertakes projects that are innovative and

exemplary.

Safety

Traffic is life

Doğuş Otomotiv initiated its corporate social responsibility

projects in 2004 with the motto “Traffic Is Life” to increase

overall responsibility, awareness, and perception of traffic

among the Turkish general public, especially the younger

generation. Since the beginning of 2009, Doğuş Otomotiv

expanded previous social responsibility projects to a broader

platform and started sustainability activities to ensure they

would spread through all business processes.

In 2009, Doğuş Otomotiv completed the analysis of the

current conditions under the scope of sustainability, and long

and short-term goals and action plans were determined by the

evaluation of all business processes individually.

Education

Doğuş otomotiv-volkswagen Training lab,

samandıra and Şişli

In 2005, Doğuş Otomotiv started to establish training

laboratories to support education in industrial and vocational

schools, as well as to provide education and job opportunities

to more students.

Opening the first laboratory in the “Şişli Industrial and

Vocational School” and the second in the “Kartal Samandıra

Industrial and Vocational School,” Doğuş Otomotiv provides

training opportunities to 50 students at the Doğuş Otomotiv

Volkswagen Training Laboratory each year. Various topics

are taught at the laboratory including, among others, safety

at work, gasoline engines, diesel engines, basic electrical

and current diagrams, heating/AC and brake systems. Since

its foundation, Doğuş Otomotiv has supported 60 industrial

and vocational school. The company plans on opening more

laboratories for training purposes in Bursa, Ankara and İzmir in

the near future.



Health and Safety Local and international occupational health and safety require-

ments are meticulously applied in every phase of the con-

struction work. Compliance, with project specific and general

environmental and labor safety requirements of each project,

is key to the high service quality offered by Doğuş Construc-

tion to its clients. Accordingly, the employees are provided,

on a continuous basis, with training courses to keep up with

the changing requirements in the areas of Quality, the Environ-

ment, Occupational Health and Safety Management Systems.

Doğuş Construction is certified by Lloyd’s Register

(LRQA) with ISO 9001:2008 Quality Management, OHSAS

18001:2007 Occupational Health & Safety Management, and

ISO 14001:2004 Environmental Management systems.

Environment The preservation of the environment is of great importance in

the projects executed by Doğuş Construction. Particular care

is taken to protect natural resources, to minimize the nega-

tive environmental impacts and to adopt necessary mitigation

measures. To this end, Doğuş Construction is in full compli-

ance with the applicable environmental laws and regulations.

marmaray Cr1 Project

Planning studies are still underway with reference to the issue

of “noise.” Noise measurements have been completed by a

subcontractor firm and a detailed report has been provided. In

this study, noise measurements were performed in the entire

road path and the surrounding villages. Current noise levels

(detailed as “train passing noise level” and “ambient noise”)

are available in the company’s office. In fact, this study was

accomplished to compare the current noise level with the

noise level when CR1 Project is completed, to ensure that the

final noise level is less than the current level.

Construction

The preservation of the environment is of great importance in the projects executed by Doğuş Construction. Particular care is taken to protect natural resources, to minimize the negative environmental impacts and to adopt necessary mitigation measures.

Apart from this study, Doğuş Construction is performing noise

measurements by tracking the entire route with the employer,

the employer representative and a professor from İstanbul

Technical University (İTÜ). These measurements will observe

the noise that may be produced during the construction

process. In addition, Doğuş Construction will attempt to

determine critical receptors, or locations that are very close to

the route (i.e., apartments and specifically hospitals, schools,

mosques, etc.). As a result of this study, Doğuş is attempting

to determine the locations and areas with higher noise levels

and the potential methods of prevention to reduce the noise to

the minimum levels that are possible to achieve.

Within the scope of CR1 Project, 36 station buildings will be

constructed. In addition, historical station buildings, waiting

halls, historical canopies and hotels are located along the

route of the track. Besides these, there are historical buildings

that are not in the station areas but are still close to the route.

Accordingly, the Council of Monuments is conducting another

study, related to these buildings and the Council will decide

if some of these buildings will be preserved or restored and if

some will be moved to another location.

While the project route was under review, environmentally

vulnerable areas were considered and the route was adjusted

to avoid these vulnerable areas, including Soğuksu, Tuzla

Lagoon, Küçükçekmece Lake, the Bosphorus Conservation

Area and other environmentally sensitive areas.


In reality, apart from these studies, the Marmaray Project

aims to encourage the travelling population to select railway

transportation so that motorway vehicle traffic will be less

dense, and emissions will be reduced. In this way, air pollution

and the negative consequences of the greenhouse effect can

be prevented.

morocco, Argana - Amskroud motorway Project

The Argan tree is an endemic species, unique to Southern

Morocco, and the fruits resemble olives. The oil from the

Argan fruit is one of the most valuable plant oils in the world,

containing an abundant amount of Vitamin E. The absorption

rate of the oil is very high and it is used as a cream to nourish

the skin and to delay the aging process.

The Argan tree exists only in the south-western area of the

Moroccan State. This tree is an endangered species and

under protection. Accordingly, in collaboration with the

Moroccan Forest Administration, the Morocco, Argana -

Amskroud Project team chose to build the required depots

only where there were the minimum number of trees.

The project team compensated for any potential damage to

wildlife by using the depot areas to grow Argan trees in an

area of 75 hectares, as identified by the Moroccan Ministry of

Forestry. In this way, the project team attempted to protect the

wildlife and valuable natural resources, presenting a valuable

forest to the country.

sinop - Boyabat (via Tunnel) motorway Project

Along the projected route, there are five different areas (total

length of 8.8 km) where terrain observations and drillings

were accomplished. To reduce damage to forests, steep-

sloped high cutting excavations were eliminated. Further, in

geologically stratified flysch beds, “heel fillings” were built

to form the motorway platform and to reduce the potential

risk of landslip, with the hydraulic underground movements.

Finally, where the motorway route is constructed near villages

and neighborhoods, high cuttings were reduced in order

to conserve the forest and to prevent landslip risk in the

settlements.

In the context of the project, excavations were completed in

the Gökırmak Stream borrow pit and Stream material was

gathered, to be used in the motorway fillings. Further to a

correspondence between the project administration and the

Turkish Republican Motorways, the borrow pit excavations

were backfilled with the top layer of soil (i.e., organic layer)

which was removed from the motorway route. With this

method, the Stream’s flora was replenished.

Where the motorway runs parallel to the Stream in the project,

the Stream bed was modified to prevent soil erosion.



media

since 2008, nTv’s summer lineup has been mainly composed of environmental programs, called the “Green screen.”

Tourism and services

A Doğuş Tourism Group company, Arena Giyim, supports the global fight against AiDs, the terminal disease of our era.

Health From its first day, NTV has been working closely with NGOs

and charities, supporting them in their operations through

their media platform and donations. In 2009, NTV donated

the advertising revenue raised from the special New Year

lineup to CAYD (Society of Pediatric Emergency and Intensive

Care Medicine). CAYD aims to build new pediatric emergency

points all over Turkey. With NTV’s donation, 2 artificial ventila-

tion devices, called Ventilogic, were bought.

Environment

Green screen Project

Since 2008, NTV’s summer lineup has been mainly composed

of environmental programs, called the “Green Screen.” This

project aims to call attention to environmental problems and

raise public awareness on related issues; thereby answering

all questions and correcting common misunderstandings

about “green” issues.

During the lineup, NTV presents a variety of subjects in

different formats, such as global warming, renewable energy,

organic diets, green holidays etc. The project is being

supported by the other brands of the Doğuş Media Group as

well and the Group has been awarded prizes by NGOs and

academic institutions for its efforts and contributions made to

environmental issues.

Education The Doğuş Tourism Group maintains its support to Ayhan

Şahenk Alantur Primary School in Alanya Kestel, which was

built by the Group in 1985 and extended in 2005 with the ad-

dition of 8 extra classrooms.

Other social initiatives of the Doğuş Tourism Group include

fundraising support to “Bir Dilek Tut” (Make a Wish)

Foundation at Grand Hyatt İstanbul and to UNICEF at

Sheraton Voyager Antalya Hotel, Resort and Spa.

Health A Doğuş Tourism Group company, Arena Giyim, supports the

global fight against AIDS, the terminal disease of our era. Arena

contributes to the Global Fund to Fight AIDS, tuberculosis and

malaria within the scope of Emporio Armani’s “Red” Campaign.

Since 2006, Product Red items have held the spotlight within

the scope of this Campaign, by virtue of the involvement of

well-known celebrities from all over the world. These items

have been on sale at Emporio Armani stores, owned by Arena

Giyim. The Fund receives a donation of 40% of revenues

generated from sales of the Product Red collection, which

will expand its range each season. These donations support

projects aimed at developing treatments for AIDS, offering

nutritional and psychological support, and preventing the

transmission of the disease from mothers to children.

Environment Tourism and services is another industry, where the Doğuş Group

places a special importance to the protection of the environment.

Waste management is strictly handled in all tourism-related facili-

ties operating within the Group. D-Marin Turgutreis Marina and

D-Marin Didim Marina are especially important in this respect and

several precautions have been taken to minimize the environmen-

tal degradation in the surrounding regions.


real estate

Doğuş-Ge reiT has been implementing several social responsibility projects.

Community Doğuş-GE REIT intends to contribute to the social, cultural,

artistic and economic development of communities, in which

it operates. Doğuş-GE REIT has been implementing several

social responsibility projects to achieve this. The most signifi-

cant example of these projects is the Company’s support to

the Dudullu Cultural Center, with the aim of contributing to the

social and cultural development of the area, in parallel with the

Evidea Residential Project in Çekmeköy.

Both marinas are equipped with waste management systems and

include the following infrastructure: water circulation systems inside

the harbor, collection and refinement of household water, solid

waste collection points, bilge water collection services and waste

diesel collection points. The waste collection points are licensed

by the Ministry of Environment and Forestry and managed by the

marinas. Furthermore, sea barriers were built into the marinas for

the prevention of petroleum spills, and other fuel oil outflow, in case

of an accident at the marina.

The D-Marin Marinas Group management also maintained its

precautionary approach to minimize the effects of pesticide

treatments around the facility and continued its contract with the

licensed company which uses environmentally friendly pesticide

material. The swimming pools, available for the use of marina

guests, were also cleaned through ionization for the minimization of

chemical materials that are used for purification.

Turgutreis Marina has been awarded the “Blue Flag,” an

international environment award given to beaches and marinas

which possess the requirements concerning environmental

protection and sustainability measures, since the year 2004.

D-Marin Didim Marina, which opened in May 2009, has also been

awarded with the Blue Flag.

The D-Marin Turgutreis Marina continued its environment-related

activities in 2009 with the aim of raising awareness among its

employees, the local residents of Bodrum, Turgutreis and the

guests of the marina. In cooperation with DenizTemiz Turmepa

Foundation, the International Coastal Cleanup (ICC) Campaign,

one of the most remarkable annual events of this kind, again took

place in 2009 on the International Coastal Cleanup Day, with the

participation of D-Marin Turgutreis employees and guests.



Corporate Sponsorships

Besides initiating social responsibility projects, the Doğuş Group also supports societal and cultural development through sponsorship projects, which are sustainable and complimentary to the Group’s corporate citizenship efforts.


Arts and Culture

D-marin Turgutreis international Classical music Festival

The Doğuş Group continues to contribute to the development

of classical music and to provide support for this music.

The Group strives to ensure its access to a wider section of

the population and help Turkish artists produce world-class

pieces. Since 2005, the Doğuş Group has been organizing

the D-Marin Turgutreis International Classical Music Festival in

Bodrum. This Festival highlights the support that is required

for the development of diverse forms of music in Turkey.

D-Marin Turgutreis International Classical Music Festival is a

member of the European Festivals Association (EFA), which

is the umbrella organization for festivals across Europe. Over

more than 50 years, the Association has grown into a dynamic

network representing more than 100 music, dance, theatre

and multidisciplinary festivals, national festival associations

and cultural organizations from about 40 (mainly European)

countries.

In 2009, the Festival took place between July 22-25, and

hosted gifted artists from Turkey and other countries, including

Fazıl Say, Patricia Kopatchinskaja, Sun Huang, I Musici di

Roma and Symphonieorchester der Volksoper Wien.

Presidential symphony orchestra of Turkey -

symphony on Campus Project

The Presidential Symphony Orchestra of Turkey, which was

established in 1826, is one of few orchestras in the world

that has managed to survive to date. In November 2007,

the Doğuş Group signed an agreement, with the Ministry of

Culture and Tourism, to become the main sponsor of the

Orchestra for a period of 3 years and to start the “Technical

Betterment Project” of the concert building of the Orchestra.

The renovation work was completed in less than a year, by

October 2008, covering the renovation of the entire inner

building and the concert hall, the landscaping as well as

the renewal of the orchestra and office furniture. Under its

main sponsorship of the Presidential Symphony Orchestra of

Turkey, in 2009, Doğuş Holding has initiated a new corporate

sponsorship project: “Symphony on Campus.” The objective

of this project is to take the Orchestra on a tour covering state

universities in Anatolian cities where the Orchestra has never

visited and help promote classical music among university

students and the regional communities.

The pilot tour of the project, which took place between

October 13-17, 2009 covered the cities of Konya, Niğde and

Gaziantep, reaching a total audience of 2,200. İdil Biret, the

distinguished Turkish pianist, accompanied the Orchestra as

the soloist throughout the entire tour. The project will continue

by covering more regions and reaching more students in

2010.

Doğuş Holding

since 2005, the Doğuş Group has been organizing the D-marin Turgutreis international Classical music Festival in Bodrum. This Festival highlights the support that is required for the development of diverse forms of music in Turkey.



leyla Gencer voice Competition

Since 2006, Doğuş Holding and Garanti Bank have been

the sponsors of the Leyla Gencer Voice Competition. This

international voice competition was started by Ms. Gencer

herself in 1995, and it has supported several young opera

singers, from all over the world, through their career paths.

The 6th Biennial Leyla Gencer Voice Competition will be held in

İstanbul in August 2010.

santral İstanbul

In cooperation with İstanbul Bilgi University, the Doğuş Group,

became the strategic founding partner of the International

Modern Art Museum and Cultural Center, Santral İstanbul in

2006. Opened in September 2007, Santral İstanbul, the first

power station of the Ottoman Empire, has recently turned into

one of the main attractions in İstanbul in terms of culture&arts.

Beyond Babylon: Art, Trade, and Diplomacy in the

second millennium B.C.

“Beyond Babylon: Art, Trade, and Diplomacy in the Second

Millennium B.C.” exhibition at The Metropolitan Museum

of Art took place between November 18, 2008 - March

15, 2009. The Doğuş Group, in conjunction with the DEİK/

Turkish-American Business Council, sponsored the event in

cooperation with some of the other leading conglomerates in

Turkey.

İstanbul 2010 european Capital of Culture

İstanbul has been designated as the European Capital of

Culture for the year 2010 along with Pec of Hungary and

Essen of Germany. The Doğuş Group has become one of the

corporate sponsors of the İstanbul 2010 European Capital of

Culture Project.

Environment Since 2007, Doğuş Holding has been one of the corporate

members of the DenizTemiz Turmepa Foundation. DenizTemiz

Foundation was founded on April 8, 1994 by leading business

institutions and the marine sector with the aim of protecting

the seas and the 8,333 km long coastline that stretches from

Hopa to the İskenderun region within Turkey.


Audiovisual Culture (TÜRSAK). The festival, which started six

years ago in İstanbul, has for the last two years expanded to

Anatolia, reaching children in Ankara, İzmir, Urfa and Mardin.

Sports

Basketball

Basketball is a sport that reflects Garanti’s values of

teamwork, dedication, confidence and discipline. Thus the

Bank has been the main sponsor of the Turkish National Men’s

Basketball Team since 2001, and of the Turkish National

Women’s Basketball Team since 2005.

12 Giant Men Basketball School Project

As part of its sponsorship of the Men’s National Basketball

Team, Garanti sponsors the 12 Giant Men Basketball School

Project, which was launched in 2002 to teach basketball to

students. More than 27,000 young athletes have been trained

to date.

Garanti hosts NBA Skills Challenge, inviting aspiring players,

aged 13-18, to film their basketball skills and submit their

video online. The submitted videos gave them a chance to

attend a five-day instructional camp in the United States,

where winners joined more than 80 young basketball players

for basketball education.

Football

Garanti became one of the main sponsors of the Turkish

National Men’s Football Team in 2008, taking its dedication

to supporting sports one step further. In the process, the

Bank also launched the acclaimed communication campaign

naming the national footballers as “Turko”s.

Arts and Culture

İstanbul museum of modern Art

Garanti sponsors the education program of İstanbul Modern,

Turkey’s first and only modern and contemporary art museum.

Aiming to supplement classroom education, this program is

intended to play a central role in raising creative and inquisitive

individuals who are literate, and also actively involved, in the

arts.

Garanti Jazz

One of the leading sponsors of jazz music in Turkey, Garanti

aims to broaden and spice up music lovers’ horizons in the

genre of jazz. The main sponsor of the International İstanbul

Jazz Festival, organized by the İstanbul Foundation for Culture

and Arts, for the past 12 years, Garanti also supports the

İstanbul Jazz Center concerts, giving fans of this genre a

chance to listen to world famous jazz artists. Furthermore, for

ten years, Garanti has been sponsoring one of the top music

venues in İstanbul, Babylon, providing audiences with a wide

range of music, predominantly jazz and nu jazz. The Bank’s

support in jazz music is labelled “Garanti Jazz Green.”

The lycian Way

Garanti sponsored the way-marking of the Lycian Way, a 500

km long-distance trail stretching from Fethiye to Antalya, thus

facilitating guided trekking. Garanti further contributed to

tourism in the region by publishing a guidebook for the Lycian

Way in 2006.

Garanti mini Bank international Children’s Film Festival

Garanti has been the main sponsor of Turkey’s first film festival

for children, the Garanti Mini Bank International Children’s Film

Festival, organized by the Turkish Foundation of Cinema and


Banking and Financial services

one of the leading sponsors of jazz music in Turkey, Garanti aims to broaden and spice up music lovers’ horizons in the genre of jazz.


Sports

Darüşşafaka Ayhan Şahenk sport Complex

Since 2006, Doğuş Otomotiv has been supporting the Ayhan

Şahenk Sport Complex located in Maslak, İstanbul, within the

Darüşşafaka High School, which is one of the most prominent

and influential schools in Turkey.

The Darüşşafaka Ayhan Şahenk Sport Complex is a multi-

purpose complex with the ability to host various cultural

activities in addition to sports events to world class standards.

Doğuş Otomotiv will continue to support the Darüşşafaka

Ayhan Şahenk Sport Complex in the forthcoming years.

Automotive

since 2006, Doğuş otomotiv has been supporting the Ayhan Şahenk sport Complex located in maslak, İstanbul.

financial Statements

Doğuş Holding Anonim Şirketi and its Subsidiaries

Consolidated Financial StatementsAs at and for the Year Ended31 December 2009With Independent Auditors’ Report

Akis Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi16 April 2010

This report includes 1 page of independent auditors’ report and 97 pages of consolidated financial statements together with their explanatory notes and 3 pages of supplementary information.


Table of Contents

Independent Auditors’ Report•

Consolidated Statement of Financial Position•

Consolidated Statement of Comprehensive Income •

Consolidated Statement of Changes in Equity•

Consolidated Statement of Cash Flows•

Notes to the Consolidated Financial Statements•

Appendix: Supplementary Information•

Convenience Translation to US Dollar

131

Independent Auditors’ Report

To the Board of Directors of

Doğuş Holding Anonim Şirketi

We have audited the accompanying consolidated financial statements of Doğuş Holding Anonim Şirketi and its subsidiaries (“the Group”), which

comprise the consolidated statement of financial position as at 31 December 2009, and the consolidated statements of comprehensive income,

changes in equity, and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory

information. We did not audit the financial statements of certain consolidated companies as at and for the year ended 31 December 2009 which

statements reflect total assets constituting 2.24 percent and total revenues constituting 27.21 percent of the related consolidated totals. Those

statements were audited by other auditors whose reports have been furnished to us, and our report, insofar as it relates to the amounts included for

these companies, is based solely on the report of the other auditors.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International

Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and

fair presentation of financial statements that are free from material misstatements, whether due to fraud or error; selecting and applying appropriate

accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance

with International Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and perform the audit

to obtain reasonable assurance whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures

selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud

or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial

statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on

the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting principles used and the

reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Basis for Qualified Opinion

As at 31 December 2009, the accompanying consolidated statement of financial position includes a general provision amounting to TL 108,828

thousand provided by the Group management in line with conservatism principle considering the circumstances which may arise from any changes

in the economy or market conditions, and TL 99,759 thousand of such provision has been recognised as expense in the current year.

Qualified Opinion

In our opinion, except for the effect on the consolidated financial statements of the matter described in the Basis for Qualified Opinion paragraph, the

consolidated financial statements present fairly, in all material aspects, the consolidated financial position of the Group as at 31 December 2009, and

of its consolidated financial performance and its consolidated cash flows for the year the ended in accordance with International Financial Reporting

Standards.

Emphasis of Matter

Our audit was made for the purpose of forming an opinion on the consolidated financial statements taken as whole. The supplementary information

included in Appendix I is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The US

Dollar amounts presented in Appendix I are solely for the convenience of the reader as additional analysis and have not been subjected to the audit

procedures applied in the audit of the basic financial statements. Accordingly, we do not express an opinion on this supplementary information.

İstanbul, Turkey

16 April 2010


Doğuş Holding Anonim Şirketi and its SubsidiariesConsolidated Statement of Financial Position As at 31 December 2009

Currency: Thousands of Turkish Lira (“TL”)

Notes 2009 2008AssetsProperty and equipment 13 2,824,971 2,575,568Intangible assets 14 1,168,344 1,197,110Investments in debt securities 15 11,292,586 7,972,673Investments in equity securities 16 53,584 48,269Investment property 17 1,218,187 1,052,924Other non-current assets 18 1,028,947 827,445Deferred tax assets 12 192,287 165,738Total non-current assets 17,778,906 13,839,727

Inventories 19 474,405 774,782Accounts receivable 20 1,537,170 1,214,537Due from related parties 39 10,751 14,998Other current assets 22 710,192 738,267Banking loans and advances to customers 23 16,618,038 16,560,166Banking loans and advances to banks 24 3,254,878 2,418,882Financial assets at fair value through profit or loss 25 180,384 76,952Cash and cash equivalents 26 2,358,320 2,256,649Total current assets 25,144,138 24,055,233Total assets 42,923,044 37,894,960

EquityPaid-in capital 2,010,192 2,010,192Capital stock held by subsidiaries (53,655) (53,655)Share premium 159,350 159,350Fair value reserves 398,523 36,490Translation reserve 46,888 49,421Hedging reserve (8,226) 7,362Revaluation surplus 1,081,534 1,024,867Retained earnings 3,094,260 2,322,134Total equity attributable to equity holders of the Company 6,728,866 5,556,161

Minority interestŞahenk Family 106,751 100,530Others 123,681 100,107Total minority interest 230,432 200,637Total equity 27 6,959,298 5,756,798

LiabilitiesLong-term bank borrowings 28 5,039,922 4,299,548Subordinated liabilities 29 299,411 286,344Deferred tax liabilities 12 149,954 125,297Retirement benefit obligations 31 - 31,006Other non-current liabilities 30 573,125 545,198Total non-current liabilities 6,062,412 5,287,393

Short-term bank borrowings 32 2,241,507 1,969,524Short-term portion of long-term bank borrowings 28 1,301,579 1,435,814Banking deposits from banks 33 827,800 640,446Banking customers deposits 34 19,841,322 16,777,909Obligations under repurchase agreements 35 3,254,178 3,370,491Accounts payable 36 873,612 1,332,582Due to related parties 39 3,470 3,695Taxes payable on income 12 70,606 39,028Other current liabilities 37 1,487,260 1,281,280Total current liabilities 29,901,334 26,850,769Total liabilities 35,963,746 32,138,162Total equity and liabilities 42,923,044 37,894,960

The accompanying notes are an integral part of these consolidated financial statements.

133

Doğuş Holding Anonim Şirketi and its SubsidiariesConsolidated Statement of Comprehensive Income For the Year Ended 31 December 2009

Currency: Thousands of TL

Notes 2009 2008Revenues 7,819,616 6,950,442Cost of revenues (5,152,306) (4,968,267)Gross profit 7 2,667,310 1,982,175Administrative expenses 8 (1,028,810) (965,799)Selling, marketing and distribution expenses (143,407) (181,680)Impairment losses, net 9 (589,438) (181,974)Trading gain, net 25 219,638 147,504Other operating income, net 10 8,090 239,957Result from operating activities 1,133,383 1,040,183Finance income 616,883 873,199Finance expense (686,581) (1,410,442)Net finance costs 11 (69,698) (537,243)Share of profit of equity accounted investees 5,755 5,592Profit before income tax 1,069,440 508,532Income tax expense 12 (267,423) (98,486)Profit for the year 802,017 410,046Other comprehensive incomeRevaluation of property and equipment 87,183 264,838Change in fair value of available-for-sale financial assets 383,860 (19,140)Change in translation reserve (2,533) 45,373Effective portion of changes in fair value of cash flow hedges (15,588) (682)Income tax on other comprehensive income (24,448) (49,439)Other comprehensive income for the year, net of income tax 428,474 240,950Total comprehensive income for the year 1,230,491 650,996Profit attributable to:Equity holders of the Company 782,887 437,145Minority interest 27 19,130 (27,099)

-Şahenk Family 7,415 (6,998)-Others 11,715 (20,101)

802,017 410,046Total comprehensive income attributable to:Equity holders of the Company 1,199,331 678,956Minority interest 31,160 (27,960)

-Şahenk Family 6,903 (6,881)-Others 24,257 (21,079)

1,230,491 650,996



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135

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Notes 2009 2008Cash flows from operating activities

Profit for the year 802,017 410,046Adjustments for:

Impairment losses 9 589,438 181,974Fair value change in tangible assets held for sale 6 - 493Fair value change in investment property 10 (42,743) (134,574)Provision for and reversal of employee severance indemnity 6 and 30 11,442 15,851Reversal of retirement benefit obligation 6 and 31 (31,006) (18,735)Depreciation and amortisation 6 196,023 137,341Technical reserves relating to insurance operations 6 657 7,124Gain on sales of property and equipment (1,750) (8,024)Gain on sales of investment property (413) -Share of profit of equity accounted investees 6 (5,755) (5,592)Change in accrued interest expense/(income), net 6 59,684 (206,053)Provision for taxes on income 12 293,763 135,555Deferred tax benefit 12 (26,340) (37,069)Gain on sale of founder shares 10 - (232,444)Warranty provision 6 25,043 24,744

1,870,060 270,637Changes in operating assets and liabilities

Change in banking customer deposits 4,233,807 5,417,373Change in banking deposits from banks 236,512 (49,008)Change in banking loans and advances to banks (922,085) (572,176)Change in balances with the Central Bank 98,633 947,255Change in banking loans and advances to customers (2,762,780) (5,815,617)Change in financial assets at fair value through profit or loss (119,021) 91,354Change in other assets (338,698) (395,631)Change in inventories 300,377 (368,499)Change in accounts receivable (164,559) (455,609)Change in due from related parties 4,247 11,823Change in obligations under repurchase agreement 65,613 1,004,854Change in accounts payable (458,970) 641,185Change in due to related parties (225) (2,226)Change in other liabilities 284,047 356,330

2,326,958 1,082,045Interest paid (2,078,457) (2,026,638)Interest received 3,768,626 3,060,937Taxes paid 12 (325,070) (98,128)Dividend paid (24,979) (22,279)Warranties paid (26,203) (24,560)Employee severance indemnity paid 30 (7,528) (8,928)

Net cash from operating activities 3,633,347 1,962,449Cash flows from investing activities

Increase in interest in consolidated subsidiaries (2,245) (24,027)Decrease in interest in consolidated subsidiaries 880 40,382Proceeds from sale of founder shares - 272,062Acquisitions of investment property (32,270) (20,835)Increase in investments in debt securities (4,339,422) (3,606,682)Acquisition of property and equipment and intangible assets 6 (666,089) (750,616)Proceeds from sale of property and equipment 58,135 95,582Proceeds from sale of investment property 9,481 -

Cash flows used in investing activities (4,971,530) (3,994,134)Cash flows from financing activities

Change in short-term bank borrowings, net 455,023 1,470,641Change in long-term bank borrowings, net 1,135,831 2,239,115Change in subordinated liabilities 13,067 -

Cash flows from financing activities 1,603,921 3,709,756Net increase in cash and cash equivalents 265,738 1,678,071

Cash and cash equivalents at 1 January 3,215,667 1,537,606Cash and cash equivalents at 31 December 26 3,481,405 3,215,677

Doğuş Holding Anonim Şirketi and its SubsidiariesConsolidated Statement of Cash FlowsFor the Year Ended 31 December 2009



137

Doğuş Holding Anonim Şirketi and its SubsidiariesNotes to the Consolidated Financial StatementsAs at and for the Year Ended 31 December 2009


Notes to the consolidated financial statements

Note Description Pages1 Reporting entity 1382 Basis of preparation 1383 Significant accounting policies 1404 Determination of fair values 1565 Financial risk management 1576 Segment reporting 1677 Revenues and cost of revenues 1718 Administrative expenses 1719 Impairment losses, net 17210 Other operating income, net 17211 Net finance costs 17212 Taxation 17313 Property and equipment 17814 Intangible assets 18015 Investments in debt securities 18216 Investments in equity securities 18317 Investment property 18418 Other non-current assets 18519 Inventories 18620 Accounts receivable 18621 Due from/due to customers for contract work 18722 Other current assets 18723 Banking loans and advances to customers 18824 Banking loans and advances to banks 19025 Financial assets at fair value through profit or loss 19026 Cash and cash equivalents 19127 Capital and reserves 19128 Long-term bank borrowings 19329 Subordinated liabilities 19430 Other non-current liabilities 19531 Retirement benefit obligation 19632 Short-term bank borrowings 19933 Banking deposits from banks 19934 Banking customer deposits 19935 Obligations under repurchase agreements 20036 Accounts payable 20037 Other current liabilities 20138 Commitments and contingencies 20139 Related party disclosures 20540 Financial instruments 20641 Use of estimates and judgments 21742 Group enterprises 21943 Significant events 22744 Subsequent events 227

Appendix: Supplementary information




1 Reporting entity

Doğuş Holding Anonim Şirketi (“Doğuş Holding” or “the Company”) was established in 1975 to invest in and coordinate the activities of companies

operating in different industries, including banking and finance, automotive, construction, tourism, media, real estate and energy and is registered in

Turkey.

Doğuş Holding is owned and managed by the members of Şahenk Family. As at 31 December 2009, Doğuş Holding has 63 (2008: 53) subsidiaries

(the “Subsidiaries”), 40 (2008: 32) joint ventures (the “Joint Ventures”) and 8 (2008: 8) associates (the “Associates”) (referred to as “the Group” or

“Doğuş Group” herein and after). The consolidated financial statements of Doğuş Group as at and for the year ended 31 December 2009 comprises

Doğuş Holding and its subsidiaries and the Group’s interest in associates and jointly controlled entities. As explained in more detail in note 42,

Doğuş Holding holds controlling interest directly or indirectly via other companies owned and/or exercising the control over the voting rights of the

shares held by the members of the Şahenk Family, in all its subsidiaries included in the Group.

The Group operates partnerships and has distribution, management and franchise agreements with internationally recognised brand names, such

as General Electric Consumer Finance, Volkswagen AG, Volkswagen Finance AG, Audi AG, Porsche AG, Bentley Motors Limited, Seat SA, Scania,

Krone, Meiller Fahrzeug&Maschinenfabrik-GMBH&Co KG, Lamborghini S.p.A., Thermo King, ITT Sheraton, Neckerman Reisen, Hyatt International

Ltd., HMS International Hotel GMBH, Emporio Armani, Guccio Gucci Spa, CNBC, Condé Nast New Markets Europe/Africa NC (Vogue), Loro Piana,

Aldiana GMBH and Starwood Hotel & Resort Worldwide Inc..

The address of the registered office of Doğuş Holding is as follows:

Eski Büyükdere Caddesi

Oycan Plaza No:15

34398 Maslak/ İstanbul-Turkey

The number of employees of the Group at 31 December 2009 is approximately 28,000 (2008: 20,000).

2 Basis of preparation

(a) Statement of compliance

Doğuş Group entities operating in Turkey maintain their books of account and prepare their statutory financial statements in Turkish Lira (“TL”) in

accordance with the Accounting Practice Regulations as promulgated by the Banking Regulatory and Supervision Agency (“BRSA”) applicable to

Türkiye Garanti Bankası Anonim Şirketi (“Garanti Bank”), Turkish insurance legislation and accounting principles applicable to insurance business,

and accounting principles per Turkish Uniform Chart of Accounts and per Capital Market Board of Turkey applicable to entities operating in other

businesses.

Doğuş Group’s foreign entities maintain their books of account and prepare their statutory financial statements in accordance with the generally

accepted accounting principles and the related legislation applicable in the countries they operate.

The accompanying consolidated financial statements are based on these statutory records with adjustments and reclassifications for the purpose of

fair presentation in accordance with International Financial Reporting Standards (“IFRS”).

(b) Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis as adjusted for the effects of inflation that lasted until 31

December 2005, except for the following:

derivative financial instruments are measured at fair value,•

available-for-sale financial assets are measured at fair value,•

financial instruments at fair value through profit and loss are measured at fair value,•

investment property is measured at fair value,•

certain tangible assets are measured at fair value.•

The methods used to measure the fair values are discussed further in note 4.

139



2 Basis of preparation (continued)

(c) Functional and presentation currency

These consolidated financial statements are presented in TL which is Doğuş Holding’s functional currency. All financial information presented in TL

has been rounded to the nearest thousand.

(d) Use of estimates and judgements

The preparation of consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and

assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results

may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which

the estimate is revised and in any future periods affected.

Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the

consolidated financial statements is included in the following notes:

Note 15-Investment in debt securities

Note 23-Banking loans and advances to customers

Note 25-Financial assets at fair value through profit or loss

Note 33-Banking deposits from banks

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial

year are included in the following notes:

Note 4-Determination of fair valuesNote 12-Taxation (utilisation of tax losses) Note 14-Intangible assetsNote 31-Retirement benefit obligationNote 38-Commitments and contingenciesNote 40-Financial instruments

(e) Changes in accounting policies

OverviewStarting as of 1 January 2009, the Group has changed its accounting policies in the following areas:

Presentation of financial statements• Determination and presentation of operating segments•

(i) Presentation of financial statements

The Group applies revised IAS 1 Presentation of Financial Statements (2007), which became effective as at 1 January 2009. As a result, the Group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income.

Comparative information has been re-presented so that it also is in conformity with the revised standard.

(ii) Determination and presentation of operating segmentsAs of 1 January 2009, the Group determines and presents operating segments based on the information that internally is provided to the CEO and the board of directors as well, who are the Group’s chief operating decision makers. This change in accounting policy is due to the adoption of

IFRS 8 Operating Segments. Previously operating segments were determined and presented in accordance with IAS 14 Segment Reporting. The new accounting policy in respect of segment operating disclosures is presented as follows:

Comparative segment information has been re-presented in conformity with the transitional requirements of IFRS 8.




2 Basis of preparation (continued)

(e) Changes in accounting policies (continued)

(ii) Determination and presentation of operating segments (continued)An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed regularly by the CEO and the board of directors to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

3 Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities, except as explained in note 2(e), which addresses changes in accounting policies.

Certain comparative amounts have been reclassified to conform with the current year’s presentation as summarised below:

Subordinated liabilities, previously classified under banking customer deposits amounting to TL 31,396 thousand, long-term bank borrowings amounting to TL 235,759 thousand and other non-current liabilities amounting to TL 19,189 thousand were reclassified to subordinated liabilities as at 31 December 2008.

Other current liabilities amounting to TL 177,476 were reclassified to other non-current liabilities as at 31 December 2008.

Advertising agency risturn and commission expenses amounting to TL 12,147 thousand included in “selling, marketing and distribution expenses” in the consolidated statement of comprehensive income for the year ended 31 December 2008, has been netted-off against “revenues”.

(a) Basis of consolidationThe accompanying consolidated financial statements include the accounts of the parent company, Doğuş Holding, its subsidiaries, joint ventures and associates on the basis set out in sections below. The financial statements of the entities included in the consolidation have been prepared as at the date of the consolidated financial statements.

(i) SubsidiariesSubsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group.

(ii) Special purpose entitiesThe Group has established a number of special purpose entities (“SPEs”) to accomplish a narrow and well defined objective such as securitisation of particular assets, or the execution of specific borrowing or lending transactions. An SPE is consolidated if, based on an evaluation of the substance of its relationship with the Group and the SPE’s risks and rewards, the Group concludes that it controls the SPE. SPEs controlled by the Group were established under terms that impose strict limitations on the decision-making powers of the SPEs’ management and that result in the Group receiving the majority of the benefits related to the SPEs’ operations and net assets, being exposed to risks incident to the SPEs’ activities, and retaining the majority of the residual or ownership risks related to the SPE or their assets.

(iii) AssociatesAssociates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity. Associates are accounted for using the equity method and are initially recognised at cost. The consolidated financial statements include the Group’s share of the income and expenses and equity movements of associates after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases.

When the Group’s share of losses exceeds its interest in an associates, the carrying amount of that interest, including any long-term investments, is reduced to nil, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

(iv) Joint venturesJoint ventures are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Joint ventures are accounted for using the proportionate consolidation method. The consolidated financial statements include the Group’s proportionate share of the enterprises’ assets, liabilities, revenues and expenses with items of

a similar nature on a line-by-line basis, from the date that joint control commences until the date that joint control ceases.

141



3 Significant accounting policies (continued)

(a) Basis of consolidation (continued)

(v) Transactions eliminated on consolidationIntra-group balances and transactions and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(b) Accounting in hyperinflationary economiesUntil 31 December 2005, the financial statements of the Turkish entities have been restated for the changes in the general purchasing power of the Turkish Lira based on IAS 29 Financial Reporting in Hyperinflationary Economies.

Beginning from January 2006, it was declared that Turkey should be considered a non-hyperinflationary economy under IAS 29. Therefore, IAS 29 has not been applied to the accompanying consolidated financial statements since 1 January 2006.

(c) Foreign currency

(i) Foreign currency transactionsTransactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between the amortised cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the reporting period. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments, a financial liability designated as a hedge of the net investment in a foreign operation (see (iii) below), or qualifying cash flow hedges, which are recognised in other comprehensive income. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of transaction.

(ii) Foreign operationsThe assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to TL at exchange rates at the reporting date. The income and expenses of foreign operations are translated to TL at average exchange rates at the dates of the transactions.

Foreign currency differences are recognised in other comprehensive income and are presented within equity in the translation reserve. When a foreign operation is disposed of, in part or in full, the relevant amount in the translation reserve is transferred to profit or loss as part of the profit or loss on disposal. When the settlement of a monetary item receivable from or payable to a foreign operations is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented within equity in the translation reserve.

(iii) Hedge of net investment in foreign operationThe Group applies hedge accounting to foreign currency differences arising between the functional currency of the foreign operation and the parent entity’s functional currency (TL), regardless of whether the net investment is held directly or through an intermediate parent.

Foreign currency differences arising on the retranslation of a financial liability designated as a hedge of a net investment in a foreign operation are recognised in other comprehensive income, to the extent that the hedge is effective, and are presented within equity in the translation reserve. To the extent that the hedge is ineffective, such differences are recognised in profit or loss. When the hedged part of net investment is disposed of, the relevant amount in the translation reserve is transferred to profit or loss as a part of the profit or loss on disposal.

(d) Financial instruments

(i) Non-derivative financial assetsThe Group initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets (including assets designated at fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to the contractual

provisions of the instrument.





(d) Financial instruments (continued)

(i) Non-derivative financial assets (continued)The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The Group has the following non-derivative financial assets: financial assets at fair value through profit or loss, held-to-maturity financial assets and loans and receivables and available-for-sale financial assets.

Financial assets at fair value through profit or lossA financial asset is classified at fair value through profit or loss if it is classified as held for trading or is designated as such upon initial recognition. These include investments and certain purchased loans. Financial assets are designated at fair value through profit or loss if the Group manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Group’s documented risk management or investment strategy. Upon initial recognition attributable transaction costs are recognised in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value, and changes therein are recognised in profit or loss.

Held to maturity financial assetsIf the Group has the positive intent and ability to hold debt securities to maturity, then such financial assets are classified as held-to-maturity. Held-to-maturity financial assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, held to maturity financial assets are measured at amortised cost using the effective interest method less and impairment losses. Any sale or reclassification of a more than insignificant amount of held-to-maturity investments not close to their maturity would result in the reclassification of all held-to-maturity investments as available-for-sale, and prevent the Group from classifying investment securities as held-to-maturity for the current and the following two financial years. These include certain banking loans and advances to banks and customers and certain debt instruments.

Loans and receivablesLoans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. Loans and receivables comprise banking loans and advances to customers and banks, trade and other receivables, including service concession receivables, and due from related parties.

Finance lease receivablesLeases where the entire risks and rewards incident to ownership of an asset are substantially transferred to the lessee are classified as finance leases. A receivable at an amount equal to the present value of the lease payments, including any guaranteed residual value, is recognised. The difference between the gross receivable and the present value of the receivable is unearned finance income and is recognised over the term of the lease using the effective interest rate method. Finance lease receivables are included in banking loans and advances to customers.

Cash and cash equivalentsCash and cash equivalents comprise cash balances, call deposits, balances with Central Bank of Turkey (“CBT”) and other central banks and other liquid assets with original maturities of three months or less. Money market placements are classified in banking loans and advances to banks.

Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale and that are not classified in any of the previous categories. The Group’s investments in certain debt and equity instruments are classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses (see note 3(m)) and foreign currency differences on available-for-sale equity instruments (see note 3(c)(i)), other comprehensive income are recognised directly in other comprehensive income and presented within equity in the fair value reserve. When an instrument is derecognised, the cumulative gain or loss in other comprehensive income is transferred to profit or loss.

Accounting for interest income and expenses for banking and finance segment is discussed in note 3 (q). Accounting for finance income and

expenses for segments other than banking and finance is discussed in note 3 (t).

143





(i) Non-derivative financial assets (continued)

Service concession arrangements

The Group recognises a financial asset arising from a service concession arrangement when it has an unconditional contractual right to receive

cash or another financial asset from or at the direction of the grantor for the construction or upgrade services provided. Such financial assets are

measured at fair value upon initial recognition. Subsequent to initial recognition the financial assets are measured at amortised cost.

If the Group is paid for the construction services partly by a financial asset and partly by an intangible asset, then each component of the

consideration received or receivable is accounted for separately and is recognised initially at the fair value of the consideration received or receivable

(see also note 3(f)(ii)).

Other

Other non derivative financial instruments are measured at amortised cost using the effective interest rate method, less any impairment losses (see

accounting policy 3m).

Change in accounting policy

In October 2008, the IASB issued Reclassification of Financial Assets (Amendments to IAS 39 “Financial Instruments: Recognition and

Measurement” and IFRS 7 “Financial Instruments: Disclosures”. The amendment to IAS 39 permits an entity to reclassify non-derivative financial

assets, other than those designated at fair value through profit or loss upon initial recognition, out of the fair value through profit or loss category if

they are no longer held for the purpose of being sold or repurchased in the near term, as follows:

If the financial asset would have met the definition of loans and receivables, if the financial asset had not been required to be classified as fair •

value through profit or loss at initial recognition, then it may be reclassified if the entity has the intention and ability to hold the financial asset for

the foreseeable future or until maturity.

If the financial asset would not have met the definition of loans and receivables, then it may be reclassified out of the financial assets at fair value •

through profit or loss category only in ‘rare circumstances’.

The amendments are effective retrospectively from 1 July 2008.

(ii) Non-derivative financial liabilities

The Group initially recognises in debt securities issued, banking deposits from banks and customers, obligations under repurchase agreements,

due to related parties and subordinated liabilities on the date that they are originated. All other financial liabilities (including liabilities designated at

fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the

instrument.

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a

legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The Group has the following non-derivative financial liabilities: banking deposits from banks, banking deposits from customers, obligations under

repurchase agreements, borrowings, accounts and other payables, subordinated liabilities, due to related parties and liabilities from short-term

sales of financial instruments.

Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these

financial liabilities are measured at amortised cost using the effective interest method.

(iii) Derivative financial instruments including hedge accounting

The Group holds derivative financial instruments to hedge its certain risk exposures. Embedded derivatives are separated from the host contract

and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a

separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not

measured at fair value through profit or loss.






(iii) Derivative financial instruments including hedge accounting (continued)

On initial designation of the hedge, the Group formally documents the relationship between the hedging instrument(s) and hedged item(s), including

the risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the

effectiveness of the hedging relationship. The Group makes an assessment, both at the inception of the hedge relationship as well as on an

ongoing basis, whether the hedging instruments are expected to be “highly effective” in offsetting the changes in the fair value or cash flows of

the respective hedged items during the period for which the hedge is designated, and whether the actual results of each hedge are within a range

of 80-125 percent. For a cash flow hedge of a forecast transaction, the transaction should be highly probable to occur and should present an

exposure to variations in cash flows that could ultimately affect reported net income. Derivatives are recognised initially at fair value; attributable

transaction costs are recognised in profit or loss when incurred. All trading derivatives in a net receivable position (positive fair value) as well as

options purchased are reported as trading assets. All trading derivatives in a net payable position (negative fair value), as well as options written,

are reported as trading liabilities. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as

described below.

Cash flow hedges

When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable to a particular risk associated with

a recognised asset or liability or a highly probable forecast transaction that could affect profit or loss, the effective portion of changes in the fair

value of the derivative is recognised in other comprehensive income and presented in the hedging reserve in equity. The amount recognised in

other comprehensive income is removed and included in profit or loss in the same period as the hedged cash flows affect profit or loss under the

same line item in the statement of comprehensive income as the hedged item. Any ineffective portion of changes in the fair value of the derivative is

recognised immediately in profit or loss.

If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated, exercised or the designation is revoked,

then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in other comprehensive income and

presented in the hedging reserve in equity remains there until the forecast transaction affects profit or loss. When the hedged item is a non-financial

asset, the amount recognised in other comprehensive income is transferred to the carrying amount of the asset when the asset is recognised. If the

forecast transaction is no longer expected to occur, then the balance in other comprehensive income is recognised immediately in profit or loss. In

other cases the amount recognised in other comprehensive income is transferred to profit or loss in the same period that the hedged item affects

profit or loss.

Embedded derivatives

Derivatives may be embedded in another contractual arrangement (a “host contract”). The Group accounts for embedded derivatives separately

from the host contract when the host contract is not itself carried at fair value through profit or loss, and the characteristics of the embedded

derivatives are not clearly and closely related to the host contract. Separated embedded derivatives are accounted for depending on their

classification, and are presented in the statement of financial position together with the host contract.

(iv) Share capital

Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from

equity, net of any tax effects.

Repurchase of share capital (Treasury shares)

When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of

any tax effects, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented as a deduction

from total equity. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and resulting

surplus or deficit on the transaction is transferred to/from retained earnings.

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(e) Property and equipment

(i) Recognition and measurement

The costs of items of property and equipment purchased before 31 December 2005 are restated for the effects of inflation in TL units current at 31

December 2005 pursuant to IAS 29. Property and equipment purchased after this date are recorded at their historical costs. Accordingly, property

and equipment are measured at cost, less accumulated depreciation and accumulated impairment losses, if any (see accounting policy 3m), except

as explained below:

In the first year of application of IAS 29, the construction machineries and equipment owned by a consolidated entity, Doğuş İnşaat ve Ticaret

Anonim Şirketi (“Doğuş İnşaat”), were reflected at their replacement costs on the basis of publicly available information on their quoted prices or

on the prices of the comparable items as at 31 December 1997; and such replacement costs were restated for the effects of inflation in TL units

current at 31 December 2005 pursuant to IAS 29. In 2006, Doğuş İnşaat assigned a third party appraisal company to count and evaluate the market

prices of its construction machineries and motor vehicles. Based on the report of the appraisal company Doğuş İnşaat adjusted its construction

machineries and motor vehicles.

In 2001, the Group started to reflect the land and buildings at their fair values as appraised by independent third party appraisers. Any increase

arising on the revaluation of such land and buildings is credited to other comprehensive income, and presented in revaluation surplus in equity,

except to the extent that it reverses a revaluation decrease for the same asset previously recognised as an expense, in which case the increase

is credited to profit or loss to the extent of the decrease previously charged. A decrease in the carrying amount arising on the revaluation of such

land and buildings is charged as an expense to the extent that it exceeds the balance, if any, held in the revaluation surplus relating to a previous

revaluation of that asset.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of

materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of

dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs. Purchased software that is

integral to the functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major components) of

property and equipment.

Gains and losses on disposal of an item of property and equipment are determined by comparing the proceeds from disposal with the carrying

amount of property and equipment and are recognised net within “other operating income, net” in profit or loss. When revalued assets are sold, the

amounts included in the revaluation surplus reserve are transferred to retained earnings.

(ii) Reclassification to investment property

When the use of a property changes from owner-occupied to investment property, the property is remeasured to fair value and reclassified as

investment property. Property that is being constructed for future use as investment property is accounted for at fair value. Any gain arising on

remeasurement is recognised in profit or loss to the extent the gain reverses a previous impairment loss on the specific property, with any remaining

gain recognised in other comprehensive income and presented in the revaluation reserve in equity. Any loss is recognised in other comprehensive

income and presented in the revaluation reserve in equity to the extent that an amount had previously been included in the revaluation reserve

relating to the specific property, with any remaining loss recognised immediately in profit or loss.

(iii) Subsequent costs

The cost of replacing a part of an item of property and equipment is recognised in the carrying amount of the item if it is probable that the future

economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part

is derecognised. The costs of the day-to-day servicing of property and equipment are recognised in profit or loss as incurred.





(e) Property and equipment (continued)

(iv) Depreciation

Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property and equipment,

since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Leased assets are

depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of

the lease term. Land is not depreciated.

The estimated useful lives for the current and comparative periods are as follows:

Description YearBuildings 50Furniture and equipment 4-20Motor vehicles 5-10

Leasehold improvements are amortised over the periods of the respective leases, also on a straight-line basis.

Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.

Tangible assets purchased before 2005 at Garanti Bank and its subsidiaries are depreciated over their estimated useful lives on a straight line basis from the date of their acquisition. Assets acquired after this date are depreciated based on the declining balance method, one of the accelerated depreciation methods. For the assets acquired after 1 January 2009, the straight line depreciation method is in use.

(f) Intangible assets

(i) GoodwillGoodwill that arises upon the acquisition of subsidiaries and joint ventures is included in intangible assets.

Goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess is negative (negative goodwill), it is recognised immediately in profit or loss.

Acquisitions of minority interests Goodwill arising on the acquisition of a minority interest in a subsidiary represents the excess of the cost of the additional investment over the carrying amount of the net assets acquired at the date of exchange.

Subsequent measurementGoodwill is measured at cost less accumulated impairment losses (see accounting policy 3m). In respect of associates, the carrying amount of goodwill is included in the carrying amount of the investment, and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the associates.

(ii) Service concession arrangementsConcession rights acquired by the Group have finite useful lives of 20 years starting from 15 August 2007, and are measured at cost less accumulated amortisation. Cost includes borrowing costs directly attributable to the acquisition of the concession rights. The Group capitalises the borrowing costs directly attributable to the acquisition, or construction of a qualifying asset as part of the cost of that asset. (iii) Other intangible assetsOther intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortisation and accumulated impairment losses, if any (see accounting policy 3(m)).

(iv) Subsequent expenditureSubsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All

other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.

147




(f) Intangible assets (continued)

(v) AmortisationAmortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset.

Amortisation of concession rights acquired by the Group is recognised in profit or loss on a straight line basis over the finite useful lives of 20 years.

Amortisation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.

(g) Securities borrowing and lending businessInvestments lent under securities lending arrangements continue to be recognised in the statement of consolidated financial position and are measured in accordance with the accounting policy for the related assets as appropriate. Cash collateral received in respect of securities lent is recognised as liabilities to either banks or customers. Investments borrowed under securities borrowing agreements are not recognised. Cash collateral placements in respect of securities borrowed are recognised under banking loans and advances to either banks or customers. Income and expenses arising from the securities borrowing and lending business are recognised on an accrual basis over the period of the transactions and are included in “Revenues” or “Cost of revenues”.

(h) Repurchase and resale agreements over investmentsGaranti Bank and its subsidiaries enter into purchases of investments under agreements to resell (“reverse repo”) substantially identical investments at a certain date in the future at a fixed price. Investments purchased subject to commitments to resell them at future dates are not recognised. The amounts paid are recognised in banking loans to either banks or customers. The receivables are shown as collateralised by the underlying security. Investments sold under repurchase agreements (“repo”) continue to be recognised in the consolidated statement of financial position and are measured in accordance with the accounting policy for the related assets as appropriate. The proceeds from the sale of the investments are reported as “obligations under repurchase agreements”, a liability account.

Income and expenses arising from the repurchase and resale agreements over investments are recognised on an accrual basis over the period of the transactions and are included in “Revenues” or “Cost of revenues”.

(i) Investment propertyInvestment property is property held either to earn rental income or for capital appreciation or for both but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is measured at fair value with any change therein recognised in profit or loss.

When the use of a property changes such that it is reclassified as property and equipment, its fair value at the date of reclassification becomes its cost for subsequent accounting.

(j) Leased assetsLeases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Lease liabilities are reduced through repayments of principal, while the finance charge component of the lease payment is charged directly to profit or loss.

Other leases are operating leases and, except for investment property, the leased assets are not recognised on the Group’s consolidated statement of financial position. Investment property held under an operating lease is recognised on the Group’s consolidated statement of financial position at its fair value.

(k) InventoriesInventories are measured at the lower of cost and net realisable value. Except as discussed in the following paragraphs, the cost of inventories is mainly based on the moving weighted average, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories cost includes an appropriate share of production overheads based on normal operating capacity.

Cost of trading goods and trading properties are determined on “specific identification” basis by the entities operating in automotive and

construction businesses.





(k) Inventories( continued)

Trading properties comprised land and buildings that are held for trading purposes.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(l) Construction work in progress

Construction work in progress represents the gross unbilled amount expected to be collected from customers for contract work performed to date.

It is measured at cost plus profit recognised to date less progress billings and recognised losses. Cost includes all expenditure related directly to

specific projects and an allocation of fixed and variable overheads incurred in the Group’s contract activities based on normal operating capacity.

Construction work in progress is presented as part of accounts receivable in the statement of financial position for all contracts in which costs

incurred plus recognised profits exceed progress billings. If progress billings exceed cost incurred plus recognised profits, then the difference is

presented as deferred income in the consolidated statement of financial position.

The asset, “Due from customers for contract work” represents revenues recognised in excess of amounts billed. The liability, “Due to customers for

contract work” represents billings in excess of revenues recognised.

(m) Impairment

(i) Financial assetsA financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.

Impairment losses on available-for-sale investment securities are recognised by transferring the cumulative loss that has been recognised in other comprehensive income, and presented in the fair value reserve in equity, to profit or loss. The cumulative loss that is removed from other comprehensive income and recognised in profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss previously recognised in profit or loss. Changes in impairment provisions attributable to time value are reflected as a component of interest income.

If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised in profit or loss, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However, any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognised in other comprehensive income.

Loans and receivables and held-to-maturity investmentsThe recoverable amounts of banking loans and receivables and held-to-maturity instruments are calculated as the present values of the expected future cash flows discounted at the instruments’ original effective interest rates. Short-term balances are not discounted.

Loans and receivables are presented net of specific and portfolio basis allowances for uncollectibility. Specific allowances are made against the carrying amounts of loans and receivables that are identified as being impaired based on regular reviews of outstanding balances to reduce these banking loans and receivables to their recoverable amounts. In assessing the recoverable amounts of banking loans and receivables, the estimated future cash flows are discounted to their present value. Portfolio basis allowances are maintained to reduce the carrying amount of portfolios of similar banking loans and receivables to their estimated recoverable amounts at the reporting date. The expected cash flows for portfolios of similar assets are estimated based on previous experience and considering the credit rating of the underlying customers and late payments of interest or penalties. Increases in the allowance account are recognised in profit or loss. When a banking loan is known to be uncollectible, all the necessary legal procedures have been completed, and the final loss has been determined, the loan is written off directly. If, in a subsequent period, the amount of impairment loss decreases and the decrease can be linked objectively to an event occurring after the write down, the write-down or allowance is

reversed through profit or loss.

149




(m) Impairment (continued)

(i) Financial assets (continued)

Financial assets remeasured to fair value

The recoverable amount of an equity instrument is its fair value. The recoverable amount of debt instruments and purchased loans remeasured to

fair value is calculated as the present value of the expected future cash flows discounted at the current market rate of interest.

Where an asset remeasured to fair value is impaired, the write-down is recognised in profit or loss.

If, in a subsequent period, the amount of impairment loss decreases and the decrease can be linked objectively to an event occurring after the

write-down, the write-down is reversed through profit or loss.

(ii) Non-financial assets

The carrying amounts of the Group’s non-financial assets, other than investment property, inventories and deferred tax assets, are reviewed at

each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount

is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, the recoverable amount is estimated at

each year at the same time.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value

in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments

of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are

grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows

of other assets or groups of assets (the “cash-generating unit, or CGU”). Subject to an operating segment ceiling test, for the purposes of goodwill

impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects the lowest

level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs

that are expected to benefit from the synergies of the combination.

The Group’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the

recoverable amount is determined for the CGU to which the corporate asset belongs.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the

carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro

rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at

each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change

in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does

not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Goodwill that forms part of the carrying amount of an investment in an associate is not recognised separately, and therefore is not tested for

impairment separately. Instead, the entire amount of the investment in an associate is tested for impairment as a single asset when there is objective

evidence that the investment in an associate may be impaired.

(n) Non-current assets held for sale

Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale rather than through

continuing use, are classified as held for sale. Immediately before classification as held for sale, the assets, or components of a disposal group, are

remeasured in accordance with the Group’s accounting policies. Thereafter generally the assets (or disposal group) are measured at the lower of

their carrying amount and fair value less cost to sell. Any impairment loss on a disposal group first is allocated to goodwill, and then to remaining

assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets and investment property,

which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale and

subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.





(o) Employee benefits

(i) Defined benefit plan

A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee and his/her dependants will receive on

retirement, usually dependent on one or more factors such as age, years of service and compensation.

Garanti Bank, jointly controlled entity, has a defined benefit plan (“the Plan”) for its employees namely Türkiye Garanti Bankası Anonim Şirketi Memur

ve Müstahdemleri Emekli ve Yardım Sandığı Vakfı (“the Fund”). The Fund is a separate legal entity and a foundation recognised by an official decree,

providing pension and post-retirement medical benefits to its all qualified employees. This benefit plan is funded through contributions of both by the

employees and the employer as required by Social Security Law numbered 506 and these contributions are as follows:

2009Employer % Employee %

Pension contributions 15.5 10.0Medical benefit contributions 6.0 5.0

2008Employer % Employee %

Pension contributions 15.5 10.0Medical benefit contributions 6.0 5.0

This benefit plan is composed of a) the contractual benefits of the employees, which are subject to transfer to Social Security Foundation (“SSF”) (“pension and medical benefits transferable to SSF”) (see Note 31(i)) other excess social rights and payments provided in the existing trust indenture but not transferable to SSF and medical benefits provided by Garanti Bank for its constructive obligation (“excess benefits”) (see Note 31(ii)). Pension and medical benefits transferable to SSFAs discussed in Note 31, Garanti Bank expects to transfer a portion of the obligation of the Fund to SSF. This transfer will be a settlement of that portion of the Fund’s obligation. Final legislation establishing the terms for this transfer was enacted on 8 May 2008. Although the settlement will not be recognised until the transfer is made, Garanti Bank believes that it is more appropriate to measure the obligation at 31 December 2009 as the value of the payment that would need to be made to SSF to settle the obligation at the date of the statement of financial position in accordance with the Temporary Article 20 of the Law No.5754: “Law regarding the changes in Social Insurance and General Health Insurance Law and other laws and regulations” (“the New Law”).

The pension disclosures set out in Note 31 reflect the actuarial assumptions and mortality tables specified in the New Law, including a discount rate of 9.80 percent. The pension benefits transferable to SSF are calculated annually by an independent actuary, who is registered with the Undersecretariat of the Treasury.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are directly charged to profit or loss.

Excess benefits not transferable to SSFThe excess benefits, which are not subject to the transfer, are accounted in accordance with IAS 19, “Employee Benefits”. The obligation in respect of the retained portion of the defined benefit pension plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value by using the projected unit credit method, and any unrecognised past service costs and the fair value of any plan assets are deducted. The discount rate is a floating discount rate between 10.86 - 8.42 percent as at 31 December 2009 (2008: 17.41 - 10.51 percent).

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are directly charged to profit or loss.

(ii) Reserve for employee severance indemnityReserve for employee severance indemnity represents the present value of the estimated future probable obligation of the Group arising from the retirement of the employees and calculated in accordance with the Turkish Labour Law. It is computed and reflected in the consolidated financial statements on an accrual basis as it is earned by serving employees. The computation of the liabilities is based upon the retirement pay ceiling announced by the Government. The ceiling amounts applicable for each year of employment were TL 2.37 thousand and TL 2.17 thousand at 31

December 2009 and 2008, respectively.

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(o) Employee benefits (continued)

(ii) Reserve for employee severance indemnity (continued)

International Financial Reporting Standards require actuarial valuation methods to be developed to estimate the entity’s obligation under defined

benefit plans. The principal statistical assumptions used in the calculation of the total liability in the accompanying consolidated financial statements

at 31 December were as follows:

2009 2008% %

Discount rate 5.92 6.26Turnover rate to estimate the probability of retirement 1.0-8.52 1.0-8.70

(p) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and

it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected

future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The

unwinding of the discount is recognised as finance cost.

(i) Warranties

A provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical warranty data and a

weighting of all possible outcomes against their associated probabilities.

The warranties on automobiles sold by the Group are issued by the producers (Volkswagen, Audi, Porsche, Seat, Scania, Krone) where the Group

acts as an intermediary between the customers and the producer. The claims of customers to the Group are recognised as warranty expense in the

profit or loss. The Group recognises the amount claimed from the producers as warranty income and offset against warranty expense. The Group

incurs the cost that is not paid by the manufacturers. Accordingly, the Group recognises the estimated liability for the difference between possible

warranty claims of customers and possible warranty claims from producers based on historical service statistics.

(ii) Onerous contracts

A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the

unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost

of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognises any

impairment loss on the assets associated with that contract.

(q) Revenue and cost recognition

(i) Banking and finance business

Fees and commission income: Fees and commission income and expenses that are integral to the effective interest rate on a financial asset

or liability are included in the measurement of the effective interest rate. Other fees and commission income, including account servicing fees,

investment management fees, sales commission, placement fees and syndication fees, are recognised as the related services are performed.

When a loan commitment is not expected to result in the draw-down of a loan, loan commitment fees are recognised on a straight-line basis over

the commitment period. Other fees and commission expense relate mainly to transaction and service fees, which are expensed as the services are

received.

Interest income and expense: Interest income and expense are recognised in profit or loss as they accrue, except for interest income on overdue

loans, taking into account the effective yield of the asset or an applicable floating rate. Interest income on overdue loans that are under legal follow

up is recognised on cash basis. Interest income and expense include the amortisation of any discount or premium or other differences between the

initial carrying amount of an interest bearing instrument and its amount at maturity calculated on an effective interest rate basis.

Trading gain (loss), net: Trading gain/(loss) includes gains and losses arising from disposals of financial assets at fair value through profit or loss and

available-for-sale.





(q) Revenue and cost recognition (continued)

(ii) Insurance business

Premium income: For short-term insurance contracts, premiums are recognised as revenue (earned premiums), net of premium ceded to reinsurer

firms, proportionately over the period of coverage. The portion of premium received on in-force contracts that relates to unexpired risks at the

reporting date is recognised as the reserve for unearned premiums that are calculated on a daily pro-rata basis. Premiums are shown before

deduction of commissions and deferred acquisition cost, and are gross of any taxes and duties levied on premiums. For long-term insurance

contracts, premiums are recognised as revenue when the premiums are due from the policyholders. Premiums received for long-term insurance

contracts with discretionary participation feature (“DPF”), are not recognised as revenue, insurance premiums for such contracts are recognised

directly as liabilities.

Unearned premium reserve: Unearned premiums are those proportions of the premiums written in a period that relate to the period of risk

subsequent to the reporting date for all short-term insurance policies. In accordance with the incumbent legislation on the computation of insurance

contract liabilities, unearned premium reserve set aside for unexpired risks as at the reporting date has been computed on daily pro-rata basis. The

change in the provision for unearned premium is recognised in profit or loss in the order that revenue is recognised over the period of risk.

Claims and provision for outstanding claims: Claims are recognised in the period in which they occur, based on reported claims or on the basis of

estimates when not reported. The claims provision is the total estimated ultimate cost of settling all claims arising from events, which have occurred

up to the end of the accounting period. Full provision is accounted for outstanding claims, including claim settlements reported at the period-end.

Incurred but not reported claims (“IBNR”) are also provided for under the provision for outstanding claims.

Liability adequacy test: At each reporting date, asset-liability adequacy tests are performed to ensure the adequacy of the contract liabilities, net

of related deferred acquisition cost. In performing these tests, current best estimates of future cash flows are used. Any deficiency is immediately

charged to profit or loss.

Income generated from pension business: Revenue arising from asset management and other related services offered by the proportionately

consolidated insurance joint venture are recognised in the accounting period in which the service is rendered. Fees consist primarily of investment

management fees arising from services rendered in conjunction with the issue and management of investment contracts where the company

actively manages the consideration received from its customers to fund a return that is based on the investment profile that the customer selected

on origination of the instrument. These services comprise the activity of trading financial assets in order to reproduce the contractual services. In all

cases, these services comprise an indeterminate number of acts over the life of the individual contracts.

Mathematical provisions: Mathematical provisions are the provisions recorded against the liabilities of the proportionately consolidated insurance

joint venture to the beneficiaries of long-term life, health and individual accident policies based on actuarial assumptions. Mathematical provisions

consist of actuarial mathematical provisions for long term insurance contracts, saving portion of the saving life products classified as investment

contracts and related profit sharing reserves.

Actuarial mathematical provisions are calculated as the difference between the net present values of premiums written in return of the risk covered

by the insurance joint venture and the liabilities to policyholders for long-term insurance contracts based on the basis of actuarial mortality

assumptions as approved by the Republic of Turkey Prime Ministry Undersecretariat of Treasury, which are applicable for Turkish insurance

companies.

Profit sharing reserves are the reserves provided against income obtained from asset backing saving life insurance contracts. These contracts

entitle the beneficiaries of those contracts to a minimum guaranteed crediting rate per annum or, when higher, a bonus rate declared by the

insurance affiliate from the eligible surplus available to date.

Mathematical provisions are presented under other liabilities in the accompanying consolidated financial statements.

(iii) Construction contracts

Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments to the extent

that it is probable that they will result in revenue and can be measured reliably. As soon as the outcome of a construction contract can be estimated

reliably, contract revenue is recognised in profit or loss in proportion to the stage of completion of the contract. Contract expenses are recognised

as incurred unless they create an asset related to future contract activity.

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(q) Revenue and cost recognition (continued)

(iii) Construction contracts (continued)

The stage of completion is assessed by reference to the proportion that contract costs incurred for work performed to date bear to the estimated

total contract costs. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of

contract costs incurred that are likely to be recoverable. An expected loss on a contract is recognised immediately in profit or loss.

(iv) Commissions

When the Group acts in the capacity of an agent rather than as the principal in a transaction, the revenue recognised is the net amount of

commission made by the Group.

(v) Rental income

Rental income from investment property is recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives granted

are recognised as an integral part of the total rental income, over the term of the lease. Rental income from subleased property is recognised as

other income.

(vi) Service concession arrangements

Inspection revenues and cost of revenues

Inspection revenues constitute fees charged to the customers for services rendered in the Vehicle Inspection Stations (“VIS”) through sub-

operators. Such inspection fees are recognised as revenue in the profit or loss at the date the service is provided. The cost of inspection revenues

constitutes sub-operators’ share for their sub-operating activities which constitutes the 63 percent of the inspection revenues and payments to the

Government for its share as provided in the concession agreement which constitutes 30 percent of the inspection revenues.

Revenues from sub-operation fees and cost of revenues

The sub-operation fees are the payments made by the sub-operators to the Group for their use of the sub-operation rights in the manner and

conditions set out in sub-operation agreements. The sub-operation fees are initially recognised as unearned revenue in the statement of financial

position and then transferred to the profit or loss in the periods from the starting date of operations in the VIS until the end of the concession period.

The sub-operation fees constitute a profit margin plus various costs of the Group to prepare the vehicles inspection stations for their intended use.

Such costs represent the cost of the concession right paid by the Group and all other relevant expenditures including station construction, testing

equipment, preparation of station personnel, setting-up sub-operation systems and related borrowing costs that are altogether considered as the

cost of sub-operation fees. Profit derived from the sub-operation fees is recognised in the profit or loss from the starting date of operations in the

vehicle inspection stations until the end of the concession period on a straight line basis. Cost of sub-operation fees including depreciation expense

of property and equipment of the vehicle inspection stations that have opened and the amortization expense of the concession right, and the

related station personnel expenses, among others are recognised as expense in the period in which the economic benefits associated with those

cost items are consumed or expired.

(vii) Other businesses

Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of

returns and allowances, trade discounts and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an

executed sales agreement, that the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is

probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with

the goods and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured

reliably, then the discount is recognised as a reduction of revenue as the sale is recognised.

Transfers of risks and rewards vary depending on the individual terms of the contract of sale. Revenue from services rendered is recognised in profit

or loss in proportion to the stage of completion of the transaction at the reporting date.

(viii) Research and development costs

Expenditure on research activities is recognised in profit or loss when incurred.

(ix) Dividend income

Dividend income is recognised on the date that the Group’s right to receive payment is established, which in the case of quoted securities is the

ex-dividend date.





(r) Government grants

Government grants are recognised initially as deferred income at fair value when there is reasonable assurance that they will be received and that

the Group will comply with the conditions associated with the grant. Grants that compensate the Group for expenses incurred are recognised in

profit or loss as other income on a systematic basis in the same periods in which the expenses are recognised. Grants that compensate the Group

for the cost of an asset are recognised in profit or loss on a systematic basis over the useful life of the asset.

(s) Lease payments

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received

are recognised as an integral part of the total lease expense, over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability.

The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance

of the liability.

Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease

adjustment is confirmed.

Determining whether an arrangement contains a lease

At inception of an arrangement, the Group determines whether such an arrangement is or contains a lease. A specific asset is the subject of a

lease if fulfillment of the arrangement is dependent on the use of that specified asset. An arrangement conveys the right to use the asset if the

arrangement conveys to the Group the right to control the use of the underlying asset.

At inception or upon reassessment of the arrangement, the Group separates payments and other consideration required by such an arrangement

into those for the lease and those for other elements on the basis of their relative fair values. If the Group concludes for a finance lease that it

is impracticable to separate the payments reliably, an asset and a liability are recognised at an amount equal to the fair value of the underlying

asset. Subsequently the liability is reduced as payments are made and an imputed finance charge on the liability is recognised using the Group’s

incremental borrowing rate.

(t) Finance income and finance costs

Finance income comprises interest income on funds invested, foreign currency gains, and gains on derivative instruments that are recognised in

profit or loss. Interest income is recognised as it accrues, using the effective interest method.

Finance costs comprise interest expense on borrowings, foreign currency losses, and losses on derivative instruments that are recognised in profit

or loss. All borrowing costs are recognised in profit or loss using the effective interest method unless if it meets the qualifying asset criteria for to

capitalise. Foreign currency gains and losses are reported on a net basis.

(u) Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it

relates to a business combination, or items recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at

the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes

and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of

assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences

relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable

future. In addition, deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is

measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted

or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax

liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they

intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

155




(u) Income tax (continued)

A deferred tax asset is recognised for unused tax losses, tax credits and deductable temporary differences, to the extent that it is probable that

future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting

date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Deferred taxes related to fair value measurement of available for sale assets and cash flow hedges are charged or credited to equity and

subsequently recognised in profit or loss together with the deferred gains that are realised.

(v) Items held in trust

Assets, other than cash deposits held Garanti Bank and its subsidiraries in fiduciary or agency capacities for its customers and government entities,

are not included in the accompanying consolidated statement of financial position, since such items are not under the ownership of Garanti Bank.

(w) Financial guarantees

The financial guarantees are contracts that require the Group to make specified payments to reimburse the holder for a loss it incurs because of a

specified debtor fails to make payment when due in accordance with the terms of a debt instrument.

Financial guarantee liabilities are initially recognised at their fair value, and the initial fair value is amortised over the life of the financial guarantee. The

guarantee liability is subsequently carried at the higher of this amortised amount and the present value of any expected payment (when a payment

under the guarantee has become probable).

(x) Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses,

including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are

reviewed regularly by the CEO and BOD members to make decisions about resources to be allocated to the segment and assess its performance,

and for which discrete financial information is available.

(y) De-merger/ Spin off

Economically a de-merger represents a division of an entity into separate parts. The result of a de-merger is that the same shareholders own

the same group of businesses; the shareholders structure and their ownership interests are identical both before and after the de-merger. In the

absence of further guidance in IFRS, the Group has accounted the de-merger via book values.

(z) New standards and interpretations not yet adopted

A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 31 December 2009, and have

not been applied in preparing these consolidated financial statements. The following standards and amendments are expected to affect the

consolidated financial statements of the Group:

Revised IFRS 3 • Business Combinations (2008) incorporates the following changes that are likely to be relevant to the Group’s operations:

- the definition of a business has been broadened, which is likely to result in more acquisitions being treated as business combinations.

- contingent consideration will be measured at fair value, with subsequent changes therein recognised in profit or loss.

- transaction costs, other than share and debt issue costs, will be expensed as incurred.

- any pre-existing interest in the acquiree will be measured at fair value with the gain or loss recognised in profit or loss.

- any non-controlling (minority) interest will be measured at either fair value, or at its proportionate interest in the identifiable assets and liabilities

of the acquiree, on a transaction-by-transaction basis.

Revised IFRS 3, which becomes mandatory for the Group’s 2010 consolidated financial statements, will be applied prospectively and therefore

there will be no impact on prior periods in the Group’s 2010 consolidated financial statements.

Amended IAS 27 • Consolidated and Separate Financial Statements (2008) requires accounting for changes in ownership interests by the Group

in a subsidiary, while maintaining control, to be recognised as an equity transaction. When the Group loses control of a subsidiary, any interest

retained in the former subsidiary will be measured at fair value with the gain or loss recognised in profit or loss. The amendments to IAS 27, which

become mandatory for the Group’s 2010 consolidated financial statements, will be applied prospectively and therefore there will be no impact on

prior periods in the Group’s 2010 consolidated financial statements.





(z) New standards and interpretations not yet adopted (continued)

IFRS 9 is the first standard issued as part of a wider project to replace IAS 39. IFRS 9 retains but simplifies the mixed measurement model and •

establishes two primary measurement categories for financial assets: amortised cost and fair value. The basis of classification depends on the

entity’s business model and the contractual cash flow characteristics of the financial asset. The guidance in IAS 39 on impairment of financial

assets and hedge accounting continues to apply. The amendment is effective for annual periods beginning on or after 1 January 2013, although

entities are permitted to adopt them earlier. Prior periods need not be restated if an entity adopts the standard for reporting periods beginning

before 1 January 2012. The Group is currently in the process of evaluating the potential effect of this amendment.

4 Determination of fair values

A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and

liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further

information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

(a) Property and equipment

The fair value of property and equipment recognised as a result of a business combination is based on market values. The market value of property

is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s

length transaction after proper marketing wherein the parties had each acted knowledgeably and willingly.

The Group reflects land and buildings at their fair values as appraised by independent third party appraisers. The fair values of land and buildings

are determined based on the discounted cash flow method, depreciable replacement cost or market prices for similar items.

(b) Intangible assets

The fair value of intangible assets, which comprised the broadcasting rights, acquired in a business combination, is based on the discounted cash

flows expected to be derived from the use and eventual sale of the assets.

(c) Investment property

External, independent valuation companies, having appropriate recognised professional qualifications and recent experience in the location and

category of property being valued, values the Group’s investment property portfolio every year. The fair values are based on market values, being

the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s

length transaction after proper marketing wherein the parties had each acted knowledgeably and willingly.

In the absence of current prices in an active market, the valuations are prepared by considering the aggregate of the estimated cash flows expected

to be received from renting out the property. A yield that reflects the specific risks inherent in the net cash flows then is applied to the net annual

cash flows to arrive at the property valuation.

Valuations reflect, when appropriate; the type of tenants actually in occupation or responsible for meeting lease commitments or likely to be in

occupation after letting vacant accommodation, the allocation of maintenance and insurance responsibilities between the Group and the lessee;

and the remaining economic life of the property. When rent reviews or lease renewals are pending with anticipated reversionary increases, it is

assumed that all notices and when appropriate counter-notices have been served validly and within the appropriate time.

(d) Inventories

The fair value of inventories acquired in a business combination is determined based on its estimated selling price in the ordinary course of business

less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventories.

(e) Investments in equity and debt securities

The fair value of financial assets at fair value through profit or loss, held-to-maturity investments and available-for-sale financial assets is determined

by reference to their quoted bid price at the reporting date. The fair value of held-to-maturity investments is determined for disclosure purposes only.

(f) Trade and other receivables

The fair value of trade and other receivables, excluding construction work in progress, is estimated as the present value of future cash flows,

discounted at the market rate of interest at the reporting date. The fair value is determined for disclosure purposes.

157



4 Determination of fair values (continued)

(g) DerivativesThe fair values of forward exchange contracts, options and other derivative contracts are based on their listed market prices, if available. If a listed market price is not available, then fair value is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate (based on government bonds).

The fair value of interest rate swaps is based on broker quotes. Those quotes are tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a similar instrument at the measurement date.

Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Group entity and counterparty when appropriate.

(h) Non-derivative financial liabilitiesFair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. For finance leases the market rate of interest is determined by reference to similar lease agreements.

5 Financial risk management

(a) OverviewThe Group has exposure to the following risks from its use of financial instruments:

credit risk• liquidity risk• market risk• operational risk•

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risks, and the Group’s management of capital. Further quantitative disclosures are included throughout these consolidated financial statements.

Risk management frameworkCorporate Risk Management efforts have been initiated by the Group since 2006 and these efforts have been executed by Doğuş Holding Risk Management Department.

Among all the key institutional responsibilities, Doğuş Holding Risk Management Department coordinates and monitors the risk management application within the Group through corporate risk management, and identifies investor and shareholder risk preference.

The Group’s risk management practices are defined as, identifying variables and uncertainties that will impact the Group’s objectives, conducting proactively and managing through the most appropriate steps, supervising the implementation of steps in line with the shareholders’ risk preference.

Each Group company manages its own risks (both financial and non-financial) by defined risk management processes. Considering the current economic climate and business environment, the major financial risks involved in the operations of Group companies are determined as currency and interest rate risks. The Group’s risk management function provides advice and guidance to the Group’s business on best practice in risk management and control systems.

Corporate Risk Management activities are executed throughout the Group in the following fields: Determining risk management standards and policies,• Developing group-wide culture and capabilities,• Conducting risk analysis of existing and potential investments,• Creating an executive reporting channel of new investments of a company, sector or group,• Determining risk levels, limits and action plans,• Supporting the implementation of these action plans,•

Enhancing strategic processes with a risk management approach.•




5 Financial risk management (continued)

(a) Overview (continued)

Risk management framework (continued)Doğuş Holding’s Risk Management Department, established to ensure the implementation of Risk Management practices across the Group, is under the supervision of Doğuş Holding’s Chief Executive Officer (“CEO”) and Risk Management Committee of the Board of Directors.

Shareholder risk preference is determined and conveyed by the Risk Management Committee to ensure that risks are managed at appropriate levels. Doğuş Holding’s CEO has the ultimate responsibility for Corporate Risk Management. (b) Risk management framework for the corporate segments

(i) AutomotiveCorporate Risk Management, which was established to define the uncertainties affecting the company; to manage the company’s risk-taking profile and provide reasonable assurance to reach its corporate goals; has an effective structure, which is influenced by employees, top management and the Board of Directors and utilised in terms of setting strategies and applied throughout the organization. The Risk Management Committee, an ancillary to and appointed with full responsibility by the Board of Directors is tasked with advising on and coordinating the risk management praxis. Risks that are handled in terms of likelihood, impact and process are classified as financial, operational, strategic and external risks. The Board of Directors and Audit and Risk Committee are briefed by Executive Board Presidency within the context of Risk Management by means of which all the risks that are monitored as per their contents by the related departments and General Directorate of Financial and Administrative Affairs. The Audit and Risk Committee, constituted from the members of the Board of Directors and the Executive Committee, acts in compliance with the Audit and Risk Committee Charter. The Committee assists the Board of Directors’ oversight role in accounting, auditing, internal control system and financial reporting applications.

(ii) ConstructionRisk organizationThe Board of Doğuş İnşaat has established a Risk Committee in 2009 to have a better view over risks and implement the enterprise-wide risk management process within the construction group. The Risk Committee shall be accountable to the Board and shall advise the Board on risk management, aiming to manage risks in a more systematic manner and foster a risk culture within the company. The management of the company has the overall responsibility for the establishment and oversight of the risk management framework. In January 2010, Doğuş İnşaat Risk Management Department has been established and assigned to managing risk management processes.

Risk management visionRisk management vision of Doğuş İnşaat is defined as, identifying and monitoring risks and opportunities that will impact the corporate objectives, managing risks and uncertainties in the most effective and efficient manner and in line with the shareholders’ risk appetite, and proactively implementing the most appropriate response to risk.

Risk policies and procedures Doğuş İnşaat’s risk management policies and procedures are established to identify and analyze the risks faced by the company, to set up appropriate risk limits and controls, and to monitor risks, responses, and adherence to such limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and Doğuş İnşaat’s activities.

Risks are identified and managed at three levels: i) corporate level ii) business process level and iii) project level. Risks are discussed at monthly Risk Committee meetings with management and monitored by regular reports.

(iii) MediaThe Board of Directors has overall responsibility for establishment and oversight of the Media’s risk management framework. In January 2010, Internal Audit and Risk Management Department was established with the decision of the Board. This will strengthen focus on corporate risk management throughout the Media by developing methodology as well as centralizing risk management operations. (iv) TourismIn 2010, Doğuş Tourism Group has started to develop a risk management process to strengthen the internal controls and focus on risk assessment at the strategic level of the business. Within this perspective, Doğuş Tourism Group has selected an internationally accepted internal control model and built a framework to operationalise the selected model in the organization.

The risk management framework consists of five interrelated components derived from the way management runs the business process: control

environment, risk assessment, control activities, information and communication and monitoring.

159




(c) Risk management framework for the banking and finance segment

Developing risk management policies and strategies, and controlling these functions are among the responsibilities of Garanti Bank Board of

Directors. Consequently, the Risk Management Department, which carries out the risk management activities and works independently from

executive activities, report directly to the Board of Directors of Garanti Bank.

Garanti Bank’s Board of Directors monitors the effectiveness of the risk management system through the audit committee, other related committees

and senior management.

Garanti Bank’s risk management policy is established on its maintainable long term, value adding growth strategy. This policy is measuring

risks with the methods in compliance with its activities and international standards, and optimal allocation of economic capital to business lines

considering the risk-return balance.

The Risk Management System consists of all the mechanisms related to establishment of standards, information flow, determination of the

compliance with standards, decision making and applications processes; which were put into practice by the Board of Directors of Garanti Bank

in order to monitor, control and change when deemed necessary the risk-return structure and the future cash flows of Garanti Bank and its

subsidiaries and the quality and the level of related activities.

The risks are measured with the internationally accepted methodologies in compliance with local and international regulations, Garanti Bank’s

structure, policy and procedures. The risks are assessed in a continuously developing manner. Garanti Bank, through its training and management

standards and procedures, aims to manage those risks effectively. At the same time, studies for compliance with the international banking

applications, such as Basel II, are carried out.

In order to ensure compliance with the rules altered pursuant to the Articles 23, 29 and 31 of the Banking Law No. 5411 and the Articles 36 and

43 of Regulation on Internal Systems within the Banks, dated 1 November 2006, Garanti Bank revised its written policies and implementation

procedures regarding management of each risk encountered in its activities in February 2007.

Garanti Bank has purchased an integrated software system to place better risk management and Basel II applications in order to support and

improve risk management activities. Garanti Bank aims to establish the Basel II applications in line with the BRSA’s roadmap.

(i) Audit Committee

The Audit Committee consists of two members of the Board of Directors of Garanti Bank who do not have any executive functions. The Audit

Committee, which was established to assist the Board of Directors of Garanti Bank in its auditing and supervising activities, is responsible for:

The supervision of the efficiency and effectiveness of the internal control, risk management and internal audit systems of Garanti Bank, •

functioning of these systems as well as accounting and reporting systems within the framework of related procedures, and the integrity of

information generated;

The preliminary assessment on the selection process of independent audit firms and the systematic monitoring of the activities of these •

companies;

The maintenance and coordination of the internal audit functions of subsidiaries subject to consolidated internal audits.•

(ii) Other committees

Market, credit and operational sub-risk committees have been established in order to support the implementation of risk management and internal

audit systems within Garanti Bank by sharing information with the involved units.

(iii) Derivative financial instruments

Garanti Bank and its subsidiaries enter into a variety of derivative financial instruments for hedging and risk management purposes. This note

describes the derivatives used. Further details of the objectives and strategies in the use of derivatives are set out in the sections of this note on

non-trading activities. Details of the nature and terms of derivative instruments outstanding at the reporting dates are set out in Note 40. Derivative

financial instruments used include swaps, futures, forwards, options and other similar types of contracts whose values change in response to the

changes in interest rates, foreign exchange rates and gold prices. Derivatives are individually negotiated over-the-counter contracts. A description of

the main types of derivative instruments used is set out below:





(c) Risk management framework for the banking and finance segment (continued)

(iii) Derivative financial instruments (continued)SwapsSwaps are over-the-counter agreements to exchange future cash flows based upon agreed notional amounts. Most commonly used swaps are currency swaps. Garanti Bank and its subsidiaries are subject to credit risk arising from the respective counterparties’ failure to perform. Market risk arises from the possibility of unfavorable movements in market rates relative to the contractual rates of the contract.

Futures and forwardsFutures and forward contracts are commitments to either purchase or sell a designated financial instrument, currency, commodity or an index at a specified future date for a specified price and may be settled in cash or another financial asset. Futures are standardised exchange-traded contracts whereas forwards are individually traded over-the-counter contracts. Initial margin requirements for futures are met in cash or other instruments, and changes in the future contract values are settled daily. Therefore credit risk is limited to the net positive change in the market value for a single day. Futures contracts have little credit risk because the counterparties are futures exchanges. Forward contracts result in credit exposure to the counterparty. Futures and forward contracts both result in exposure to market risk based on changes in market prices relative to contracted amounts.

OptionsOptions are derivative financial instruments that give the buyer, in exchange for a premium payment, the right, but not the obligation, to either purchase from (call option) or sell (put option) to the writer a specified underlying at a specified price on or before a specified date. Garanti Bank enters into foreign exchange options. Foreign currency options provide protection against rising or falling currency rates. Garanti Bank, as a buyer of over-the-counter options, is subject to market risk and credit risk since the counterparty is obliged to make payments under the terms of the contract if Garanti Bank exercises the option. As the writer of over-the-counter options, Garanti Bank is subject to market risk only since it is obliged to make payments if the option is exercised.

(iv) Trading activitiesGaranti Bank and its subsidiaries maintain active trading positions in non-derivative financial instruments. Most of the trading activities are customer driven. In anticipation of customer demand, an inventory of capital market instruments is carried and access to market liquidity is maintained by quoting bid and offer prices to and trading with other market makers. Positions are also taken in the interest rate, foreign exchange, debt and equity markets based on expectations of future market conditions. These activities constitute the proprietary trading business and enable Garanti Bank and its subsidiaries to provide customers with capital market products at competitive prices. As trading strategies depend on both market-making and proprietary positions, given the relationships between instruments and markets, those are managed in concert to maximize net trading income. Trading activities are managed by type of risk involved and on the basis of the categories of trading instruments held.

(d) Credit risk

(i) Banking and finance segmentGaranti Bank and its subsidiaries’ counterparty credit exposure at the reporting date from financial instruments held or issued for trading purposes is represented by the fair value of instruments with a positive fair value at that date, as recorded on the consolidated statement of financial position. Notional amounts disclosed in the notes to the consolidated financial statements do not represent the amounts to be exchanged by the parties to derivatives and do not measure the exposure to credit or market risks. The amounts to be exchanged are based on the terms of the derivatives.

The risk that counterparties to trading instruments might default on their obligations is monitored on an ongoing basis. In monitoring credit risk exposure, consideration is given to trading instruments with a positive fair value and to the volatility of the fair value of trading instruments. To manage the level of credit risk, Garanti Bank and its subsidiaries deal with counterparties of good credit standing, enter into master netting agreements whenever possible, and when appropriate, obtain collateral. Master netting agreements provide for the net settlement of contracts with the same counterparty in the event of default.

Garanti Bank and its subsidiaries are subject to credit risk through their trading, lending, hedging and investing activities and in cases where they act as intermediaries on behalf of customers or other third parties or issues guarantees.

Credit risk associated with trading and investing activities is managed through Garanti Bank’s market risk management process.

Garanti Bank and its subsidiaries’ primary exposures to credit risk arise through their loans and advances. The amount of credit exposure in this regard is represented by the carrying amounts of these assets on the consolidated statement of financial position. Garanti Bank developed a statistical-based internal risk rating model for its credit portfolio of corporate/commercial/medium-sized companies. This internal risk rating model has been in use for customer credibility assessment since 2003. Risk rating has become a requirement for loan applications, and ratings are used

both to determine branch managers’ credit authorisation limits and in credit assessment process.

161




(d) Credit risk (continued)

(i) Banking and finance segment (continued)Garanti Bank and its subsidiaries are exposed to credit risk on various other financial assets, including derivative instruments used for hedging and debt investments. The current credit exposure in respect of these instruments is equal to the carrying amount of these assets in the consolidated statement of financial position. In addition, Garanti Bank and its subsidiaries are exposed to off statement of financial position credit risk through guarantees issued (Note 40).

The risk that counterparties to both derivative and other instruments might default on their obligations is monitored on an ongoing basis. To manage the level of credit risk, Garanti Bank and its subsidiaries deal with counterparties of good credit standing, enter into master netting agreements whenever possible, and when appropriate, obtain collateral.

Concentrations of credit risk (whether on or off statement of financial position) that arise from financial instruments exist for groups of counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions.

Impaired loansImpaired loans are those which Garanti Bank determines that it is probable that it will be unable to collect all principal and interest due according to the contractual terms of the loan agreement due to lack of assets, high debtness ratio, insufficient working capital and/or equity of the customer.

Allowance for impaired loansGaranti Bank establishes an allowance for impairment losses that represents its estimate of incurred losses in its loan portfolio. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a portfolio-basis loan loss allowance established for groups of homogeneous assets in respect of losses that have been incurred but have not been identified on loans subject to individual assessment for impairment.

Write-off policyGaranti Bank writes off a receivable balance (and any related allowances for impairment losses) when it is determined that the receivable is uncollectible based on the evidence of insolvency issued by the Court. In cases where any possible collections are negligible comparing to the prospective expenses and costs, such receivables are written off by the decision of the Board of Directors. Collateral policyGaranti Bank’s policy is to require suitable collateral to be provided by certain customers prior to the disbursement of approved loans. Garanti Bank and its subsidiaries currently hold collateral against banking loans and advances to customers in the form of mortgage interests over property, other registered securities over assets and guarantees. Collateral generally is not held over banking loans and advances to banks, except when securities are held as part of reverse repurchase and securities borrowing activity. Collateral usually is not held against investment securities, and no such collateral was held at 31 December 2009 and 2008.

Approximately 72 percent (2008: 72 percent) of the outstanding performing loans are collateralised. Guarantees and letters of credit are also subject to strict credit assessments before being provided. The agreements specify monetary limits to Garanti Bank and its subsidiaries’ obligations. The extent of collateral held for performing guarantees and letters of credit is approximately 78 percent (2008: 82 percent).

(ii) Other corporate segmentsCredit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and investment securities.

Accounts receivableThe Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer in which the segments other than banking and finance entities operate. The demographics of the Group’s customer base, including the default risk of the industry and country in which customers operate has an influence on credit risk. Since the Group operates in construction, automotive, media, real estate and tourism businesses, geographically the concentration of credit risk for the Group’s entities operating in the mentioned businesses are mainly in Turkey.

Majority of accounts receivable in the automotive business segments are due from dealers. Entities operating under automotive business segment have set an effective control mechanism to follow up and limit the risk for each counter party and obtain letters of guarantee from its dealers against

its receivables for vehicle and spare part sales.





(d) Credit risk (continued)

(ii) Other corporate segments (continued)Accounts receivable (continued)The companies operating under the segments other than banking and finance segment and automotive segment have set a credit policy under which each new customer is analysed individually for the creditworthiness before each company’s standard payment and delivery terms and conditions are offered.

In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are a dealer, tourism agency, retail or end-user customer, geographic location, industry, aging profile, maturity and existence of previous financial difficulties.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of accounts receivable. The component of this allowance is a specific loss component that relates to individually significant exposures. The Group establishes an allowance for impairment losses that represent its estimate of incurred losses in its receivables portfolio. The Group sets impairment for its receivables if there is objective evidence that the Group will not be able to collect all amounts due. The amount of the provision is the difference between the carrying amount and the recoverable amount, being the present value of all cash flows, including amounts recoverable from guarantees and collateral discounted based on the original effective interest rate of the originated receivables at inception.

GuaranteesIn general terms, the Group’s policy is to provide guarantees to its group enterprises in terms of sureties, letters of guarantee in the nature of the businesses that each entity operates.

(e) Liquidity riskLiquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

(i) Banking and finance segmentLiquidity risk arises in the general funding of Garanti Bank and its subsidiaries’ activities and in the management of positions. It includes both the risk of being unable to fund assets at appropriate maturities and rates and the risk of being unable to liquidate an asset at a reasonable price and in an appropriate time frame.

Garanti Bank’s approach to managing liquidity is to ensure, as for as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Garanti Bank’s reputation. Funds are raised using a broad range of instruments including deposits, syndications, securitisations, bonds issuance, other funding sources and share capital. This enhances funding flexibility, limits dependence on any one source of funds and generally lowers the cost of funds. Garanti Bank strives to maintain a balance between continuity of funding and flexibility through the use of liabilities with a range of maturities. Liquidity risk is continuously assessed through identifying and monitoring changes in funding required for meeting business goals and targets set in terms of the overall strategy. In addition, a portfolio of liquid assets is held as a part of Garanti Bank’s liquidity risk management strategy.

The calculation method used to measure Garanti Bank’s compliance with the liquidity limit is set by BRSA. Currently, this calculation is performed on a bank only basis. In November 2006, BRSA issued a new communiqué on the measurement of liquidity adequacy of banks. The legislation requires the banks to meet minimum 80 percent liquidity ratio of foreign currency assets/liabilities and minimum 100 percent liquidity ratio of total assets/liabilities on a weekly and monthly basis effective from 1 June 2007.

Exposure to liquidity risk

Garanti Bank’s liquidity ratios in are as follows:

2009 First Maturity Bracket (Weekly) Second Maturity Bracket (Monthly)FC FC + TL FC FC + TL

Average (%) 140.51 175.51 99.52 117.84

2008 First Maturity Bracket (Weekly) Second Maturity Bracket (Monthly)FC FC + TL FC FC + TL

Average (%) 168.14 149.56 110.42 108.99

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(e) Liquidity risk (continued)

(i) Banking and finance segment (continued)Garanti Bank’s banking subsidiary in the Netherlands is subject to a similar liquidity measurement, however the Dutch Central Bank does not impose limits, rather monitors the banks’ overall liquidity position to ensure there is no significant deterioration in the liquidity of banks operating in the Netherlands.

Garanti Bank’s banking subsidiary in Russia is subject to three levels of liquidity requirement since 2004; instant liquidity of minimum 15 percent, current liquidity of minimum 50 percent and long-term liquidity of maximum 120 percent.

(ii) Other Corporate SegmentsTypically, the Group entities operating under other corporate segments ensure that they have sufficient cash on demand to meet expected operational expenses in terms of the relevant characteristics of the businesses they operate, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

For the entities operating under automotive business segment, risk of funding current and potential requirements is mitigated by ensuring the availability of adequate number of creditworthy lending parties. Entities operating under automotive business segment, in order to minimize liquidity risk, hold adequate cash and available line of credit (including factoring capacity).

(f) Market risk

(i) Banking and finance segmentAll trading instruments are subject to market risk, the risk that future changes in market conditions may make an instrument less valuable or more onerous. The instruments are recognised at fair value, and all changes in market conditions directly affect trading gain.

Garanti Bank and its subsidiaries manage their use of trading instruments in response to changing market conditions. Exposure to market risk is formally managed in accordance with risk limits set by Board of Directors by buying or selling instruments or entering into offsetting positions. Currency riskGaranti Bank and its subsidiaries are exposed to currency risk through transactions in foreign currencies and through their investments in foreign operations.

Garanti Bank and its subsidiaries’ main foreign operations are in the Netherlands and Russia. The measurement currencies of these operations are Euro and USD. As the currency in which Garanti Bank presents its consolidated financial statements is TL, the consolidated financial statements are affected by currency exchange rate fluctuations against TL.

Garanti Bank finances a significant portion of its net investment in foreign operations with borrowings in the same currencies as the relevant measurement currencies to mitigate its currency risk. Currency swaps are also used to match the currency of some of its other borrowings to the measurement currencies involved.

Garanti Bank and its subsidiaries’ transactional exposures give rise to foreign currency gains and losses that are recognised in profit or loss. These exposures comprise the monetary assets and monetary liabilities that are not denominated in the measurement currency of Garanti Bank involved, excluding borrowings treated as hedges of net investments in foreign operations.

The short positions in the consolidated statement of financial position of Garanti Bank and its subsidiaries are hedged by currency swaps, forward contracts and other derivatives entered into to manage these currency exposures. In respect of monetary assets and liabilities in foreign currencies that are not economically hedged, Garanti Bank and its subsidiaries ensure that their net exposures are kept to an acceptable level by buying and selling foreign currencies at spot rates when considered appropriate.

Interest rate riskGaranti Bank and its subsidiaries’ operations are subject to the risk of interest rate fluctuations to the extent that interest-earning assets (including investments) and interest-bearing liabilities mature or reprice at different times or in differing amounts. In the case of floating rate assets and liabilities, Garanti Bank and its subsidiaries are also exposed to basis risk, which is the difference in repricing characteristics of the various floating rate indices, such as the deposit rate and libor and different types of interest. Treasury activities are aimed at optimizing net interest income, given market interest rate levels consistent with Garanti Bank’s business strategies.





(f) Market risk (continued)

(i) Banking and finance segment (continued)Interest rate risk (continued)Asset-liability risk management activities are conducted in the context of Garanti Bank’s sensitivity to interest rate changes. In general, as common in current economic environment, the consolidated financial statements are liability sensitive because its interest-earning assets have a longer duration and reprice slightly less frequently than interest-bearing liabilities. This means that in rising interest rate environments, margins earned will narrow as liabilities reprice. However, the actual effect will depend on a number of factors, including the extent to which repayments are made earlier or later than the contracted dates and variations in interest rate sensitivity within repricing periods and among currencies.

Interest rate derivatives are primarily used to bridge the mismatch in the repricing of assets and liabilities. This is done in accordance with the guidelines established by Garanti Bank’s Assets and Liabilities Management Committee.

Some assets have indefinite maturities or interest rate sensitivities and are not readily matched with specific liabilities. Those assets are funded through liability pools based on the assets’ estimated maturities and repricing characteristics.

Part of Garanti Bank’s return on financial instruments is obtained from controlled mismatching of the dates on which interest receivable on assets and interest payable on liabilities are next reset to market rates or, if earlier, the dates on which the instruments mature.

The market risk arising from trading transactions is calculated via Value at Risk (“VaR”). In addition to this, the stress tests and scenario analysis are performed. The interest rate risk of the statement of financial position is monitored with methods such as static duration, gap and sensitivity analysis.

Internal limits are set as well as legal limits in order to restrict market risk; value at risk limits for trading portfolio, position limits set for trading desks, single transaction limits set for traders and stop-loss limits. Approval, update, monitoring, override and warning procedures of these limits are put into practice and changed with the approval of the Board of Directors of Garanti Bank.

As a part of the duration-gap analysis, Garanti Bank-only sensitivity analysis for a +/-1 point change in the present values of interest sensitive statement of financial position items excluding trading and available-for-sale portfolios and for a +/-5% point change in the foreign currency exchange rates used for foreign currency position and derivative transactions as at 31 December 2009 is provided in the table below:

Sensitivity analysis for TL interest rates:Stress applied Change in portfolio value(+) %1 (22,571) (-) %1 22,736 Sensitivity analysis for FC interest rates:Stress applied Change in portfolio value(+) %1 (43,382)(-) %1 48,775 Sensitivity analysis for FX rates:Stress applied Change in foreign exchange result(+) %5 3,216(-) %5 6,710

The consolidated value at market risks as at 31 December calculated as per the statutory consolidated financial statements of Garanti Bank and its subsidiaries prepared for BRSA reporting purposes within the scope of “Regulation on Measurement and Assessment of Capital Adequacy Ratios

of Banks” published in Official Gazette no.26333 dated 1 November 2006, are as follows:

2009 2008Average Highest Lowest Average Highest Lowest

Interest rate risk 1,256,045 1,486,870 1,110,197 891,485 1,109,830 361,914Common share risk 40,582 58,711 30,018 40,968 60,708 15,269Currency risk 97,291 142,115 65,251 56,190 68,395 46,864Option risk 108,667 177,737 36,979 64,967 106,820 36,967Total value at risk 1,502,585 1,865,433 1,242,445 1,053,610 1,345,753 461,014

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(f) Market risk (continued)

(i) Banking and finance segment (continued)

Exposure to interest rate risk-non-trading portfolios

Garanti Bank had already started working on risk management area before the regulations on Banks’ Internal Control and Risk Management

Systems and Measurement and Assessment of Capital Adequacy Ratios of Banks issued by the BRSA in February 2001, and restructured its internal systems in accordance with the related regulations under the responsibility of the Board of Directors and currently works accordingly.

In order to comply with the regulations, Garanti Bank revisited its activities related with market risk management in accordance with “Regulation on Banks’ Internal Control and Risk Management Systems” and “Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks” published in Official Gazette no. 26333 dated 1 November 2006.

The risk policies defined for Garanti Bank’s market risk exposure and the applications are approved and reviewed regularly by the Board of Directors.

The top management is responsible for applying risk policies, principles and application procedures approved by the board of directors, ensuring timely and reliable reporting to the board of directors about the important risks identified, assessing internal control, internal audit and risk reports prepared for departments and either eliminating risks, deficiencies or defects identified in these departments or taking the necessary precautions to prevent those and participating in determination of risk limits.

The Board of Directors follows up the effectiveness of risk management systems through audit committee, related other committees and top management, and takes decisions in the light of various risk reports and the assessments made by audit committee. The Board of Directors is responsible of healthy performance of internal systems.

Market risks arising from trading transactions are measured by internal risk measurement model using (VaR) methodology. In the VaR calculations, trading and available-for-sale portfolios are taken into account. VaR is calculated by three different methods, namely historical simulation, monte carlo simulation and parametric method. Garanti Bank takes the historical VaR results as the basis for the internal management of market risk and determination of limits. The calculations made according to other two methods are used for comparison and monitoring purposes. In the VaR calculation, one year historical market data set is used, and 99 percent confidence interval and one-day retention period are taken into account. In order to test the reliability of the VaR model, back tests are performed. Stress tests and scenario analysis are also applied in order to reflect the effects of prospective severe market fluctuations in the VaR calculations.

In the quantification of market risk arising from maturity mismatches of assets and liabilities, duration and variance analysis are also used. In duration analysis, the present values of interest sensitive asset and liability items are calculated based on their cash flows and yield curves developed from market interest rates. The results are supported by the sensitivity and scenario analysis performed periodically due to the prospective fluctuations in markets.

The capital requirement for general market risk and specific risks is calculated using the standard method defined by the “Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks” and reported monthly. (ii) Other corporate segmentsMarket risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Currency riskThe Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities, primarily, but also Euro, Swiss Francs (“CHF”), Sterling (“GBP”), Bulgarian Leva (“BVL”), Libyan Dinar (“LYD”), Japanese Yen (“JPY”) and Morocco Dirham (“MAD”). The currencies in which these transactions primarily are denominated are TL, Euro and USD.

In respect of other monetary assets and liabilities denominated in foreign currencies, the Group ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.

The Group is exposed to currency risk through the impact of rate changes on the translation of foreign currency denominated payables and bank borrowings from financial institutions. Such risk is monitored by the Board of Directors and limited through taking positions within approved limits as well as using derivative instruments where necessary.

To minimize risk arising from foreign currency denominated statement of financial position items, the Group sometimes utilises derivative

instruments as well as keeping part of its idle cash in foreign currencies.





(g) Operational risk

(i) Banking and finance segment

Operational risk expresses the probability of loss that may arise from the overlook of faults and inconsistency with the established rules due to the

deficiencies in Garanti Bank and its subsidiaries’ internal controls, manner of the management and the personnel that are not in coherence with time

and conditions, deficiencies in the bank management, faults and problems in information technology systems and disasters such as earthquake,

fire, flood or terror attacks.

The operational risk items in Garanti Bank are determined in accordance with the definition of operational risk by considering Garanti Bank’s whole

processes, products and departments. The control areas are set for operational risks within Garanti Bank and all operational risks are followed by

assigning the risks to these control areas. In this context, appropriate monitoring methodology is developed for each control area that covers all

operational risks and control frequencies are determined.

Currently, the value at operational risk is calculated according to the basic indicator approach as per the Article 14 of “Regulation on Measurement

and Assessment of Capital Adequacy Ratios of Banks”.

The annual gross income is defined as net interest income plus net non-interest income reduced by realised gains/losses from the sale of securities

available-for-sale and held-to-maturity, non-recurring gains and income derived from insurance claims. The result is added to risk weighted assets in

the capital adequacy calculation.

Capital management-regulatory capital

BRSA sets and monitors capital requirements for Garanti Bank as a whole. The parent company and individual banking operations are directly

supervised by their local regulators. In implementing current capital requirements, BRSA requires the banks to maintain a prescribed ratio of

minimum 8 percent of total capital to total value at credit, market and operational risks. Garanti Bank and its subsidiaries’ consolidated regulatory

capital is analysed into two tiers:

Tier 1 capital, which includes paid-in capital, share premium, legal reserves, retained earnings, translation reserve and minority interest after •

deductions for goodwill and certain cost items.

Tier 2 capital, which includes qualifying subordinated liabilities, general impairment allowances and the element of the fair value reserve relating to •

unrealised gain/loss on assets classified as available-for-sale.

Banking operations are categorised as either trading book or banking book, and risk-weighted assets are determined according to specified

requirements that seek to reflect the varying levels of risk attached to assets and off-statement of financial position exposures.

Garanti Bank’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future

development of the business. The impact of the level of capital on shareholders’ return is also recognised and Garanti Bank recognises the need

to maintain a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by a sound

capital position. There have been no material changes in the Garanti Bank’s management of capital during the period.

Garanti Bank and its individually regulated operations have complied with externally imposed capital requirements throughout the period.

Hedging

Due to Garanti Bank and its subsidiaries’ overall interest rate risk position and funding structure, its risk management policies require that it should

minimize its exposure to changes in foreign currency rates and manage interest rate, credit risk and market price risk exposure within certain

guidelines. Derivative financial instruments are used to manage the potential earnings impact of interest rate and foreign currency movements.

Several types of derivative financial instruments are used for this purpose, including interest rate swaps and currency swaps, options, financial

futures, forward contracts and other derivatives. The purpose of the hedging activities is to protect Garanti Bank and its subsidiaries from the risk

that the net cash inflows will be adversely affected by changes in interest or exchange rates, credit ratings or market prices. Garanti Bank and its

subsidiaries enter into transactions to ensure that they are economically hedged in accordance with risk management policies. In the accompanying

consolidated financial statements, hedge accounting is applied for the cases where hedge accounting relationship is evidenced.

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(g) Operational risk (continued)

(i) Banking and finance segment (continued)

Hedging (continued)

In prior periods, Garanti Bank entered into various interest rate swap transactions in order to hedge its certain cash flow exposures primarily on

floating rate assets and liabilities, through converting its floating rate income/payments into fixed rate income/payments. The following table includes

certain characteristics of such swap transactions outstanding as at 31 December 2009:

Notional amount Fixed payer rate % Floating payer rate %

Fixed payment

frequency MaturityUSD 24.9 million 3.35 3 month libor + 0.40 Quarterly 2012

In January 2009, Garanti Bank has exercised eleven interest rate swap transactions held for cash flow risk management of the prior periods before

their maturities. Garanti Bank has recognised a total income amounting EUR 10,980 thousand and USD 4,837 thousand (equivalent of TL 30,474

thousand in total) collected on the same transaction dates as per the related agreements under trading gain in the accompanying consolidated

financial statements.

In January 2008, Garanti Bank has exercised four interest rate swap transactions held for cash flow risk management before their maturities.

Garanti Bank has recognised a total income amounting EUR 11,686 thousand (equivalent of TL 13,600 thousand) collected on the dates of these

transactions as per the related agreements under trading gain in the accompanying consolidated financial statements.

(ii) Other corporate segments

Due to the Group’s overall interest rate risk position and funding structure, its risk management policies require that it should minimize its exposure

to changes in interest rate. Derivative financial instruments are used to manage the potential earnings impact of interest rate and foreign currency

movements. Several types of derivative financial instruments are used for this purpose, including interest rate swaps and currency swaps, options,

financial futures, forward contracts and other derivatives. The purpose of the hedging activities is to protect the Group from the risk that the net

cash inflows will be adversely affected by changes in interest rates.

6 Segment reporting

The Group has five reportable segments, as described below, which are largely organised and managed separately according to nature of products

and services provided, distribution channels and profile of customers.

Almost each entity included in the Group operates in one specific industry. Accordingly, all the financial statement components of an entity

concerned are considered related only to its specific industry.

The Group’s main business segments are as follows:

Banking and finance: Entities operating in the banking and finance segment are mainly involved in retail banking, insurance, leasing and factoring

businesses.

Construction: Entities operating in the construction segment are mainly involved in the constructions of buildings, infrastructure and related civil

engineering businesses.

Automotive: Entities operating in the automotive segment are exclusively involved in the importation, distribution and retailing of Volkswagen, Audi,

Seat, Porsche, Bentley, Scania, Lamborghini, Krone and Meiller brand motor vehicles and spare parts and after sales services in Turkey.

Tourism: Entities in the tourism segment are involved in hotel and marina investments, hotel management, ticket sales, hotel reservation, and tour/

conference organisation services.

Others: Entities in other operations segment are mainly involved in media, real estate and several service businesses. Doğuş Holding is included in

the other industrial segment as well.




6 Segment reporting (continued)

6.1 Geographical segments

The Group operates principally in Turkey, but also has operations in the Netherlands, Russia, Ireland, Turkish Republic of Northern Cyprus, Malta,

Luxembourg, Switzerland, Germany, Romania, Morocco, Ukraine and Croatia. In presenting information on the basis of geographical segments,

segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of the assets.

As at and for the years ended 31 December, total geographical sector risk concentrations, both on and off statement of financial position, are

presented below:

2009Banking loans

and advances to

customers Total assets Total liabilities Non-cash loans

Capital

expenditureTurkey 15,370,450 37,041,652 18,107,285 3,781,504 560,332Romania 707,948 1,247,255 624,982 57,415 11,527The Netherlands 145,144 349,941 907,623 47,098 1,140Russia 145,129 295,831 81,517 20,497 8,867Switzerland 31,162 86,048 197,906 54,250 21,365USA 13,217 255,115 2,342,360 227,275 -United Kingdom 9,798 1,761,526 3,984,786 82,373 -Germany 2,957 480,295 1,051,469 24,672 236Others 192,233 1,405,381 2,603,406 327,859 62,622

16,618,038 42,923,044 29,901,334 4,622,943 666,089

2008Banking loans

and advances to

customers Total assets Total liabilities Non-cash loans

Capital

expenditureTurkey 15,344,833 33,559,020 23,344,860 3,469,165 733,143 Romania 770,382 1,016,852 415,823 68,196 12,617Russia 150,305 350,934 48,624 42,134 118The Netherlands 67,622 632,451 981,680 153,119 664Switzerland 29,829 35,140 308,290 55,218 -USA 13,546 264,960 2,076,524 224,734 -United Kingdom 7,319 577,522 1,957,184 102,988 -Germany 5,508 470,518 944,098 30,411 20Others 170,822 987,563 2,061,079 380,996 4,054

16,560,166 37,894,960 32,138,162 4,526,961 750,616

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6.2 Business segments

31 December 2009

Banking and

finance Construction Automotive Tourism Other TotalRevenuesTotal external revenue 4,164,507 681,954 2,372,296 167,741 479,191 7,865,689Intersegment revenue 4,722 8,640 4,308 6,141 22,262 46,073Net segment revenue 4,159,785 673,314 2,367,988 161,600 456,929 7,819,616

Gross profit 2,133,963 67,035 328,114 33,011 105,187 2,667,310Result from operating activities 1,051,344 38,581 95,681 (31,409) (20,814) 1,133,383Interest income 3,453 11,641 7,494 381 18,405 41,374Interest expense (1,976) (825) (52,628) (10,815) (133,172) (199,416)Share of profit of equity accounted investees 2,787 - 2,968 - - 5,755Income tax expense (246,936) (4,674) (13,149) 5,006 (7,670) (267,423)Profit for the period attributable to the equity

holders of the Company 859,069 41,305 27,076 (36,463) (108,100) 782,88731 December 2009Other informationSegment assets 35,426,792 1,320,570 1,330,561 1,207,860 3,583,677 42,869,460Investments in equity securities 21,270 - 26,991 - 5,323 53,584Total assets 35,448,062 1,320,570 1,357,552 1,207,860 3,589,000 42,923,044Segment liabilities 31,112,609 1,020,719 1,079,624 466,684 2,284,110 35,963,746Total liabilities 31,112,609 1,020,719 1,079,624 466,684 2,284,110 35,963,74631 December 2009Capital expenditure 121,307 188,938 67,236 86,125 202,483 666,089Depreciation 58,723 23,366 22,362 40,294 25,827 170,572Non-cash (income)/expenses other than

depreciation 573,579 23,260 44,822 6,791 (10,486) 637,966

31 December 2008

Banking and

finance Construction Automotive Tourism Other TotalRevenuesTotal external revenue 3,802,112 582,410 2,203,741 160,104 230,436 6,978,803Intersegment revenue 3,103 - 229 8,857 16,172 28,361Net segment revenue 3,799,009 582,410 2,203,512 151,247 214,264 6,950,442

Gross profit 1,504,040 86,723 295,492 37,495 58,425 1,982,175Result from operating activities 769,313 53,474 13,748 (21,892) 225,540 1,040,183Interest income 868 2,989 13,301 4,250 40,260 61,668Interest expense (118) (1,931) (60,745) (14,755) (90,902) (168,451)Share of profit of equity accounted investees 3,221 - 2,371 - - 5,592Income tax expense (130,292) (8,772) 31,001 (14,627) 24,204 (98,486)Profit for the period attributable to the equity

holders of the Company 570,688 48,006 (69,562) (92,941) (19,046) 437,14531 December 2008Other informationSegment assets 30,294,842 917,068 1,684,405 1,152,612 3,797,764 37,846,691Investments in equity securities 20,847 - 21,866 - 5,556 48,269Total assets 30,315,689 917,068 1,706,271 1,152,612 3,803,320 37,894,960Segment liabilities 27,150,573 680,533 1,511,806 419,141 2,376,109 32,138,162Total liabilities 27,150,573 680,533 1,511,806 419,141 2,376,109 32,138,16231 December 2008Capital expenditure 119,552 46,365 184,476 129,998 270,225 750,616Depreciation 56,026 15,400 17,414 26,898 17,697 133,435Non-cash (income)/expenses other than

depreciation (139,736) 68,455 37,388 5,369 (96,746) (125,270)





6.3 Interests in joint ventures

As explained under accounting policy 3a, interests in joint ventures are proportionately consolidated in the accompanying consolidated financial

statements.

As at 31 December 2009, total assets related to interest in joint ventures in the banking and finance segment amount to TL 35,447,692 thousand

(2008: TL 30,315,187 thousand), and total liabilities amount to TL 31,112,516 thousand (2008: TL 27,150,429 thousand). For the year ended 31

December 2009, profit for the period related to joint ventures in banking and finance segment amount to TL 859,152 thousand (2008: TL 570,743

thousand).

As at 31 December 2009, total assets related to interest in joint ventures in the construction segment amount to TL 537,399 thousand (2008: TL

382,245 thousand), and total liabilities amount to TL 405,254 thousand (2008: TL 240,785 thousand). For the year ended 31 December 2009, profit

for the period related to joint ventures in the construction segment amount to TL 44,519 thousand (2008: TL 28,114 thousand).

As at 31 December 2009, total assets related to interest in joint ventures in the automotive segment amount to TL 453,369 thousand (2008: TL

464,674 thousand), and total liabilities amount to TL 391,220 thousand (2008: TL 497,307 thousand). For the year ended 31 December 2009, loss

for the period related to joint ventures in the automotive segment amount to TL 225 thousand (2008: TL 12,180 thousand).

As at 31 December 2009, total assets related to joint ventures in the other segment amounted to TL 43,776 thousand (2008: TL 54,642 thousand),

and total liabilities amount to TL 3,133 thousand (2008: TL 9,316 thousand). For the year ended 31 December 2009, loss for the period related to

joint ventures in the other segment amount to TL 1,525 thousand (2008: profit amounting to TL 8,808 thousand).

6.4 Non-cash (income)/expenses other than depreciation

Non-cash (income)/expenses other than depreciation for the year ended 31 December 2009 were as follows:

Banking and

finance Construction Automotive Tourism Others TotalProvision for loans 597,458 - - - - 597,458Provision for general banking risks 99,759 - - - - 99,759Accrued interest and other accruals 33,351 19,432 (3,070) 2,658 7,313 59,684Impairment in value of goodwill 38,772 - - - - 38,772Warranty provision - - 25,043 - - 25,043Amortisation of other intangible assets 2,668 - 21,793 383 607 25,451Impairment in tangible assets 67 256 - - 14,630 14,953Provision for employee severance indemnity 610 3,572 573 2,573 5,366 12,694Provision for doubtful receivables 1,147 - 483 1,672 2,392 5,694Insurance technical reserves and provisions 657 - - - - 657Recoveries of loan losses (179,149) - - - - (179,149)Fair value change in investment property - - - - (42,743) (42,743)Reversal of defined benefit obligations (31,006) - - - - (31,006)Reversal of impairment in tangible assets (7,693) - - - (987) (8,680)Reversal of employee severance indemnity (1,048) - - (204) - (1,252)Recoveries of doubtful receivables (66) - - (291) (393) (750)Others 18,052 - - - 3,329 21,381Total 573,579 23,260 44,822 6,791 (10,486) 637,966

171




6.4 Non-cash (income)/expenses other than depreciation (continued)

Non-cash (income)/expenses other than depreciation for the year ended 31 December 2008 were as follows:

Banking and

finance Construction Automotive Tourism Others TotalProvision for loans 184,945 - - - - 184,945Warranty provision - - 24,744 - - 24,744Provision for employee severance indemnity 2,859 2,181 2,188 1,519 7,104 15,851Provision for general banking risks 9,066 - - - - 9,066Provision for doubtful receivables 5,683 - 145 461 1,168 7,457Insurance technical reserves and provisions 7,124 - - - - 7,124Amortisation of other intangible assets 1,301 - 2,605 - - 3,906Fair value change in assets held for sale 493 - - - - 493Accrued interest and other accruals (304,741) 66,274 7,719 3,498 21,197 (206,053)Fair value change in investment property - - - - (134,574) (134,574)Reversal of defined benefit obligations (18,735) - - - - (18,735)Recoveries of loan losses (11,145) - - - - (11,145)Recoveries of doubtful receivables - - (182) (109) (744) (1,035)Reversal of impairment in tangible assets (695) - - - (292) (987)Others (15,891) - 169 - 9,395 (6,327)Total (139,736) 68,455 37,388 5,369 (96,746) (125,270)

7 Revenues and cost of revenues

For the years ended 31 December, revenues and cost of revenues of banking and finance segment and other corporate segments were as follows:

2009 2008Banking and finance segmentBanking operations:Interest income 3,435,748 3,141,954Interest expense (1,776,377) (2,041,276) Fees and commission income 676,873 615,988Fees and commission expense (242,943) (245,447) Net operating income 2,093,301 1,471,219Insurance operations:Technical gain 47,165 41,067Technical loss (6,503) (8,246)Net technical gain 40,662 32,821Gross profit for banking and finance segment 2,133,963 1,504,040Other corporate segmentsNet revenues 3,659,830 3,151,433Cost of revenues (3,126,483) (2,673,298)Gross profit for other industrial segments 533,347 478,135Total gross profit 2,667,310 1,982,175

8 Administrative expenses

For the years ended 31 December, general and administrative expenses comprised the following:

2009 2008Personnel expenses 552,353 530,399Depreciation and amortisation 111,094 99,099Taxes and duties other than taxes on income 51,554 40,345Rent expenses 48,228 39,854Telecommunication expenses 42,392 43,631Electronic data processing expenses 28,478 25,236Provision for employee severance indemnity 12,694 15,851Others 182,017 171,384Administrative expenses 1,028,810 965,799




9 Impairment losses, net

For the years ended 31 December, impairment losses, net comprised the following:

2009 2008Provision for banking loans (Note 23) 597,458 184,945Provision for general banking risk 99,759 9,066Impairment in value of goodwill (Note 14) 38,772 -Impairment on tangible assets (Note 13) 14,953 -Provision for doubtful receivables (Note 20) 5,694 7,457Recoveries of provision for banking loans (Note 23) (179,149) (11,145)Reversal of impairment on tangible assets (Note 13) (8,680) (987)Recoveries of doubtful receivables (Note 20) (750) (1,035)Other provisions / (recoveries) 21,381 (6,327)Impairment losses, net 589,438 181,974

10 Other operating income, net

For the years ended 31 December, other operating income, net comprised the following:

2009 2008Fair value change in investment property 42,743 134,574Warranty expense (25,043) (24,744)Income from sale of founders’ share - 232,444Fair value change in tangible assets held for resale-banking - (493)Other income/(expense), net (9,610) (101,824)Total other operating income, net 8,090 239,957

Doğuş Holding sold 182 founder shares of Garanti Bank to Garanti Bank on 13 June 2008 subsequent to the permissions obtained from the related legal authorities and recognised a gain of TL 232,444 thousand in its consolidated financial statements for the year ended 31 December 2008.

11 Net finance costs

For the years ended 31 December, net finance costs comprised the following:

Recognised in profit or loss 2009 2008Finance income:Foreign exchange gains 575,509 811,531Interest income on bank deposits 30,969 37,902Interest income on trading securities 2,101 2,976Other interest and similar items 8,304 20,790Total finance income 616,883 873,199Finance expense:Foreign exchange losses (487,165) (1,241,991)Interest expense on borrowings (158,018) (107,906)Other interest and similar items (41,398) (60,545)Total finance expense (686,581) (1,410,442)Net finance costs recognised in profit or loss (69,698) (537,243)

Recognised in other comprehensive incomeChange in fair value of available-for-sale financial assets (5,293) 10,525Change in translation reserve (1,090) (1,671)Effective portion of changes in fair value of cash flow hedges 3,501 (7,807)Income tax on other comprehensive income 1,059 (2,105)Finance income recognised in other comprehensive income, net of tax (1,823) (1,058)

Attributable to:Equity holders of the Company (1,777) (1,092)Minority interest (46) 34

Finance income recognised in other comprehensive income, net of tax (1,823) (1,058)

Interest income and interest expense amounts included in “Net finance costs” above relate only to the segments other than banking and finance

since such amounts are reflected in “revenues” and “cost of revenues” in the results of the “banking and finance segment”.

173



12 Taxation

In Turkey, corporate income tax is levied at the rate of 20 percent (2008: 20 percent) on the statutory corporate income tax base, which is

determined by modifying accounting income for certain exclusions and allowances for tax purposes. According to the Corporate Tax Law, 75

percent of the capital gains arising from the sale of tangible assets and investments owned for at least two years are exempted from corporate tax

on the condition that such gains are reflected in the equity from the date of the sale. The remaining 25 percent of such capital gains are subject to

corporate tax.

There is also a withholding tax on the dividends paid and is accrued only at the time of such payments. The withholding tax rate on the

dividend payments other than the ones paid to the non-resident institutions generating income in Turkey through their operations or permanent

representatives and the resident institutions is 15 percent. In applying the withholding tax rates on dividend payments to the non-resident institutions

and the individuals, the withholding tax rates covered in the related Double Tax Treaty Agreements are taken into account. Appropriation of retained

earnings to capital is not considered as profit distribution and therefore is not subject to withholding tax.

The transfer pricing law is covered under Article 13 “disguised profit distribution via transfer pricing” of the Corporate Tax Law. The General

Communique on disguised profit distribution via transfer pricing dated 18 November 2007 sets details about implementation. If a tax payer enters

into transactions regarding sale or purchase of goods and services with related parties, where the prices are not set in accordance with arm’s

length basis, then related profits are considered to be distributed in a disguised manner through transfer pricing. Such disguised profit distributions

through transfer pricing are not accepted as a tax deductable for corporate income tax purposes.

In Turkey, the tax legislation does not permit a parent company and its subsidiaries to file a consolidated tax return. Therefore, provision for taxes

shown in the consolidated financial statements reflects the total amount of taxes calculated on each entity that are included in the consolidation.

Under the Turkish taxation system, tax losses can be carried forward to be offset against future taxable income for up to five years. Tax losses

cannot be carried back.

In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Companies file their tax returns within four months

following the close of the accounting year to which they relate. Tax returns are open for five years from the beginning of the year that follows the date

of filing during which time the tax authorities have the right to audit tax returns, and the related accounting records on which they are based, and

may issue re-assessments based on their findings.

Investment allowance

The Temporary Article 69 added to the Income Tax Law no.193 with the Law no.5479, which became effective starting from 1 January 2006, upon

being promulgated in the Official Gazette no.26133 dated 8 April 2006, stating that taxpayers can deduct the amount of the investment allowance

exemption which they are entitled to according to legislative provisions effective at 31 December 2005 (including rulings on the tax rate) only from

the taxable income of 2006, 2007 and 2008. Accordingly, the investment incentive allowance practice was ended as at 1 January 2006. At this

perspective, an investment allowance which cannot be deducted partially or fully in three years time was not allowed to be carried forward to the

following years and became unavailable as at 31 December 2008. On the other side, the Article 19 of the Income Tax Law was annulled and the

investment allowance practice was ended as at 1 January 2006 with effectiveness of the Article 2 and the Article 15 of the Law no.5479 and the

investment allowance rights on the investment expenditures incurred during the period of 1 January 2006 and 8 April 2006 became unavailable.

However, on 15 October 2009, the Turkish Constitutional Court decided to cancel the clause no.2 of the Article 15 of the Law no.5479 and the

expressions of “2006, 2007, 2008” in the Temporary Article 69 related to investment allowance mentioned above that enables effectiveness of

the Law as at 1 January 2006 rather than 8 April 2006, since it is against the Constitution. Accordingly, the time limitations for the carried forward

investment allowances that were entitled to in the previous period of mentioned date and the limitations related with the investment expenditures

incurred between the issuance date of the Law promulgated and 1 January 2006 were eliminated. According to the decision of Turkish

Constitutional Court, cancellation related with the investment allowance became effective with promulgation of the decision on the Official Gazette

and the decision of the Turkish Constitutional Court was promulgated in the Official Gazette no.27456 dated 8 January 2010.

According to the decision mentioned above, the investment allowances carried forward to the year 2006 due to the lack of taxable income and the

investment allowances earned through the investments started before 1 January 2006 and continued after that date constituting economic and

technical integrity will be used not only in 2006, 2007 and 2008, but also in the following years. In addition, 40% of investment expenditures that

are realized between 1 January 2006 and 8 April 2006, within the context of the Article 19 of the Income Tax Law will have the right for investment

allowance exemption.




12 Taxation (continued)

Tax applications for foreign branches of Garanti Bank


According to the Corporate Tax Law of the Turkish Republic of Northern Cyprus no.41/1976 as amended, the corporate earnings (including

foreign corporations) are subject to a 10 percent (2008: 10 percent) corporate tax and 15 percent (2008: 15 percent) income tax. This tax is

calculated based on the income that the taxpayers earn in an accounting period. Tax base is determined by modifying accounting income for

certain exclusions and allowances for tax purposes. The corporations cannot benefit from the rights of offsetting losses, investment incentives and

amortisation unless they prepare and have certified their statements of financial position, statements of comprehensive income and accounting

records used for tax calculations by an auditor authorized by the Ministry of Finance. In cases where it is revealed that the earnings of a corporation

were not subject to taxation in prior years or the tax paid on such earnings are understated, additional taxes can be charged in the next 12 years

following the related taxation period. The corporate tax returns are filed in the tax administration office in April following the end of the accounting

year to which they relate. The corporate taxes are paid in two equal installments in May and October.

Malta

The corporate earnings are subjected to a 35 percent (2008: 35 percent) corporate tax. This rate is determined by modifying accounting income for

certain exclusions and allowances for tax purposes. The earnings of the foreign corporations’ branches in Malta are also subject to the same tax

rate that the resident corporations in Malta are subject to. The earnings of such branches that are transferred to their head offices are not subject

to an additional tax. The prepaid taxes are paid in April, August and December in the related years. The prepayments can be deducted from the

annual corporate tax calculated for the whole year earnings. The excess part of the corporate tax that is not covered by such prepayments is paid to

the tax office in September.

Luxembourg

The corporate earnings are subjected to a 21 percent (2008: 22 percent) corporate tax. This rate is determined by modifying accounting income

for certain exclusions and allowances for tax purposes. An additional 4 percent of the calculated corporate tax is paid as a contribution for

unemployment insurance fund. This rate is 6.75 percent in the municipality where Garanti Bank’s Luxembourg branch operates. The tax returns are

examined by the authorized bodies, and in case of detected errors, the amount of the taxes to be paid is revised. The amounts and the payment

dates of prepaid taxes are determined and declared by the tax office at the beginning of the taxation period. The corporations, whose head offices

are outside Luxembourg, are allowed to transfer the rest of their net income after tax following the allocation of 5 percent of it for legal reserves, to

their head offices.

Tax applications for foreign subsidiaries of the Group

The Netherlands

In the Netherlands, corporate income tax is levied at the rate of 20 percent (2008: 20 percent) for tax profits up to EUR 200,000 and 25.5

percent (2008: 25.5 percent) for the excess part over this amount on the worldwide income of resident companies, which is determined by

modifying accounting income for certain exclusions and allowances for tax purposes for the related year. A unilateral decree for the avoidance of

double taxation provides relief for resident companies from Dutch tax on income, such as foreign business profits derived through a permanent

establishment abroad, if no tax treaty applies. There is an additional dividend tax of 5 percent computed only on the amounts of dividend

distribution at the time of such payments. Under the Dutch taxation system, tax losses can be carried forward for nine years to offset against

future taxable income. Tax losses can be carried back to the prior year only. Companies must file their tax returns within nine months following the

end of the tax year to which they relate, unless the company applies for an extension (normally an additional nine months). Tax returns are open

for five years from the date of final assessment of the tax return during which time the tax authorities have the right to audit tax returns, and the

related accounting records on which they are based, and may issue re-assessments based on their findings. The corporate income tax has been

calculated using the nominal tax rate of 25.5 percent over the Dutch taxable income, 30 percent over the local taxable income of Germany branch

and 16 percent over the local taxable income of Romania branches.

Romania

The applicable tax rate for current and deferred tax is 16 percent (2008: 16 percent). The Romanian Government has a number of agencies that are

authorised to conduct audits (controls) of Romanian companies as well as foreign companies doing business in Romania. These controls are similar

in nature to tax audits performed by tax authorities in many countries, but may extend not only to tax matters, but to other legal and regulatory

matters in which the applicable agency may be interested in. When management is aware of specific circumstances where there exists a probability

of fine, appropriate reserves are established for such contingencies.

175




RussiaThe applicable tax rate for current and deferred tax for Garanti Bank’s consolidated affiliate in Russia is 20 percent (2 percent federal and 18 percent regional-in some locations 4.5 percent regional) (2008: 24 percent). The taxation system in the Russian Federation is relatively new and is characterised by frequent changes in legislation, official pronouncements and court decisions, which are often unclear, contradictory and subject to varying interpretation by different tax authorities. Taxes are subject to review and investigation by a number of authorities, which have the authority to impose severe fines, penalties and interest charges. A tax year remains open for review by the tax authorities during the three subsequent calendar years; however, under certain circumstances a tax year may remain open for a longer period.

EgyptAs at 31 December 2009, enacted corporation tax rate is 20 percent for the subsidiaries registered in Egypt according to local tax law (2008: 20 percent).

SwitzerlandAs at 31 December 2009, enacted corporation tax rate is 22.8 percent for the subsidiaries registered in Switzerland according to local tax law (2008: 22.8 percent).

12.1 Income tax expense

The taxation charge for the years ended 31 December comprised the following items:

2009 2008Current corporation and income taxes 293,763 135,555Deferred tax (26,340) (37,069)Total income tax expense 267,423 98,486

Reconciliation of effective tax rate

The reported taxation charges for the years ended 31 December are different than the amounts computed by applying statutory tax rate to profit

before tax as shown in the following reconciliation:

2009 2008Amount % Amount %

Reported profit before taxation 1,069,440 508,532Taxes on reported profit per statutory tax rate (213,888) (20.00) (101,706) (20.00)Permanent differences:

Disallowable expenses (5,549) (0.52) (15,980) (3.14)Tax exempt income 1,569 0.15 10,742 2.11General banking provision (19,952) (1.87) (1,813) (0.36)Investment incentive (*) 10,563 0.99 - -

Current year losses for which no deferred tax

asset was recognised (6,871) (0.64) (17,303) (3.39)Effect of different tax rates applied (27,958) (2.62) 17,784 3.49Others, net (5,337) (0.50) 9,790 1.93Income tax expense (267,423) (25.01) (98,486) (19.36)

(*) As per the annulment decision of the Turkish Constitutional Court, some of the subsidiaries of the Group are subject to investment allowance

ruling and can use their available allowances to reduce their taxable corporate income without any time limitations. Accordingly, a deferred tax

asset amounting TL 10,563 thousand is recorded in the accompanying consolidated financial statements as at 31 December 2009 considering

the fact that those subsidiaries may use their right of deducting investment allowances from their corporate income in the future.

Income tax recognised in other comprehensive income

2009 2008Revaluation of land and buildings (Note 27.3) (2,621) (57,723)Available-for-sale financial assets (21,827) 8,284Total income tax credit recognised in other comprehensive income (24,448) (49,439)





12.2 Taxes payable on income

In accordance with the tax legislation in Turkey, tax payments that are made in advance during the year are being deducted from the total final tax

liability of the fiscal year. Accordingly, the taxation charge on income is not equal to the final tax liability appearing on the consolidated statement of

financial position.

Taxes payable on income as at 31 December comprised the following:

2009 2008Taxes on income 267,423 98,486Add: Taxes carried forward 39,028 1,601Add: Current tax recognised in other comprehensive income 62,885 -Add: Deferred taxes on taxable temporary differences 26,340 37,069Less: Corporation taxes paid in advance (325,070) (98,128)Taxes payable on income 70,606 39,028

12.3 Deferred tax assets and liabilities

Deferred tax is provided in respect of taxable temporary differences arising between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes, except for the differences relating to goodwill not deductible for tax purposes and the initial recognition of assets and liabilities which affect neither accounting nor taxable profit.

Unrecognised deferred tax assets and liabilitiesAs at 31 December 2009, deferred tax assets amounting to TL 83,809 thousand (2008: TL 59,261 thousand) have not been recognised with respect to the statutory tax losses carried forward and deductible temporary differences amounting to TL 39,519 thousand and TL 44,290 thousand, respectively (2008: TL 44,644 thousand and TL 14,617 thousand, respectively). Such losses carried forward expire until 2014. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilise the benefits there from.

Recognised deferred tax assets and liabilitiesDeferred tax assets and deferred tax liabilities at 31 December are attributable to the items detailed in the table below:

2009 2008Assets Liabilities Assets Liabilities

Revaluation on land and buildings - (106,091) - (103,470)Provisions 28,484 - 27,318 -Effect of percentage of completion method 24,843 (17,860) 19,516 (20,850)Employee severance indemnity and short term

employee benefits

14,196 - 16,158 -

Pro-rata basis depreciation expense - (20,811) - (5,050)Fair value gain from investment property - (15,500) - (6,729)Valuation difference of financial assets and

liabilities

8,551 - 10,322 -

Investment incentives 10,563 - - -Other temporary differences 38,688 (54,949) 45,016 (47,625)Subtotal 125,325 (215,211) 118,330 (183,724)Tax losses carried forward 132,219 - 105,835 -Total deferred tax assets/(liabilities) 257,544 (215,211) 224,165 (183,724)

According to the Tax Procedural Law in Turkey, statutory losses can be carried forward maximum for five years. Consequently, 2014 is the latest year for recovering the deferred tax assets arising from such tax losses carried forward. The Group management forecasted to generate taxable income during 2010 and the years thereafter and based on this forecast, it has been assessed as probable that the deferred tax assets resulting from tax losses carried forward in the amount of TL 661,095 thousand (2008: TL 529,175 thousand) will be realisable; hence, such realisable deferred tax assets in the amount of TL 132,219 thousand (2008: TL 105,835 thousand) are recognised in the consolidated financial statements.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and

when the deferred income taxes relate to the same fiscal authority.

177




12.3 Deferred tax assets and liabilities (continued)

Recognised deferred tax assets and liabilities (continued)

The following amounts as at 31 December determined after appropriate offsetting are shown in the consolidated financial position:

2009 2008Gross Offsetting Net Gross Offsetting Net

Deferred tax assets 257,544 (65,257) 192,287 224,165 (58,427) 165,738Deferred tax liabilities (215,211) 65,257 (149,954) (183,724) 58,427 (125,297)Deferred tax assets, net 42,333 42,333 40,441 40,441

Movements in temporary differences during the year

Movements in deferred tax assets / (liabilities) were as follows:

Balance

1 Jan 08

Recognised in

profit or loss

Recognised

in other

comprehensive

income

Balance

31 Dec 08

Recognised in

profit or loss

Recognised

in other

comprehensive

income

Balance

31 Dec 09

Revaluation on land and buildings (45,747) - (57,723) (103,470) - (2,621) (106,091)

Provisions 18,117 9,201 - 27,318 1,166 - 28,484

Effect of percentage of completion method 12,685 (14,019) - (1,334) 8,317 - 6,983

Employee severance indemnity 9,640 6,518 - 16,158 (1,962) - 14,196

Fair value gain from investment property - (6,729) - (6,729) (8,771) - (15,500)

Pro-rata basis depreciation expense (9,600) 4,550 - (5,050) (15,761) - (20,811)

Valuation difference on financial assets and

liabilities 689 1,349 8,284 10,322 20,056 (21,827) 8,551

Investment incentives - - - - 10,563 - 10,563

Other temporary differences 6,973 (9,582) - (2,609) (13,652) - (16,261)

Tax losses carried forward 60,054 45,781 - 105,835 26,384 - 132,219

Total deferred tax assets/(liabilities) 52,811 37,069 (49,439) 40,441 26,340 (24,448) 42,333


13

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103,

006

1,43

8,92

9

Net

boo

k va

lue

2,61

3,35

8-

(56,

385)

(294

,542

)14

,209

-(1

,307

)90

,550

2,85

4,43

7

Less

: Im

pairm

ent i

n va

lue

(37,

790)

(14

,953

)8,

680

17,9

99-

-(3

5)-

(26,

099)

Less

: Rev

alua

tion

of b

uild

ing

tran

sfer

red

to

inve

stm

ent p

rop

erty

--

--

--

-(3

,367

)(3

,367

)

Net

car

ryin

g va

lue

2,57

5,56

8(2

76,5

43)

14,2

09-

(1,3

40)

87,

183

2,82

4,97

1

A p

ortio

n of

the

addi

tions

am

ount

ing

to T

L 27

,032

thou

sand

dur

ing

the

year

200

9 re

pres

ente

d th

e ta

ngib

le a

sset

s of

a n

ewly

con

solid

ated

sub

sidi

ary

of th

e G

aran

ti B

ank.

(*) T

rans

fer

to in

vest

men

t and

trad

ing

prop

ertie

s in

clud

e pr

oper

ty w

ith a

tota

l net

boo

k va

lue

of T

L 11

3,52

7 th

ousa

nd tr

ansf

erre

d to

inve

stm

ent p

rope

rty

and

prop

ertie

s w

ith a

tota

l net

book

val

ue o

f TL

163,

016

thou

sand

tran

sfer

red

to tr

adin

g pr

oper

ties

whi

ch a

re r

esid

entia

l bui

ldin

gs.

Do

ğu

ş H

old

ing

An

on

im Ş

irke

ti a

nd

its

Su

bsi

dia

ries

No

tes

to t

he C

ons

olid

ated

Fin

anci

al S

tate

men

tsA

s at

and

fo

r th

e Ye

ar E

nded

31

Dec

emb

er 2

009

Cur

renc

y: T

hous

and

s of

TL

179

13 P

rop

ert

y a

nd

eq

uip

me

nt

(con

tinue

d)

Mov

emen

ts o

f pro

pert

y an

d eq

uipm

ent a

nd r

elat

ed a

ccum

ulat

ed d

epre

ciat

ion

durin

g th

e ye

ar e

nded

31

Dec

embe

r 20

08 w

ere

as fo

llow

s:

Co

st1

Jan

uar

yA

dd

itio

ns

Dis

po

sals

Tran

sfer

to

inve

stm

ent

pro

per

tyTr

ansf

ers

Eff

ects

of

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vem

ents

in e

xch

ang

e

rate

s

Net

reva

luat

ion

incr

ease

31 D

ecem

ber

Land

and

bui

ldin

gs2,

204,

882

161,

717

(30,

533)

(318

,660

)93

,621

5,17

632

9,22

72,

445,

430

Furn

iture

and

equ

ipm

ent

784,

593

149,

774

(103

,032

)-

14,5

8712

,954

-85

8,87

6Le

aseh

old

impr

ovem

ents

189,

377

39,6

09(1

0,59

8)-

16,3

421,

221

-23

5,95

1M

otor

veh

icle

s60

,143

41,3

03(6

,134

)-

321,

244

-96

,588

Con

stru

ctio

n in

pro

gres

s10

8,19

719

1,61

7(1

1,79

9)-

(118

,944

)1,

391

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ther

s26

,103

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5,62

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(5,6

38)

--

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9To

tal c

ost

3,37

3,29

558

7,77

2(1

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(318

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21,9

8632

9,22

73,

815,

896

Les

s: A

ccu

mu

late

d d

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1 Ja

nu

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Cu

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ar

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ge

Dis

po

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Tran

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Eff

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rate

s

Net

reva

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31 D

ecem

ber

Bui

ldin

gs38

8,40

638

,505

(17,

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(5,1

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-46

964

,389

469,

528

Furn

iture

and

equ

ipm

ent

604,

604

54,1

11(6

6,64

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-4,

485

-59

6,55

8Le

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old

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55,9

2628

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(2,2

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--

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Mot

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1,09

4,31

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3,43

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5,71

464

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1,20

2,53

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et b

ook

valu

e2,

278,

979

(87,

558)

(313

,510

)16

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264,

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8Le

ss: I

mpa

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t in

valu

e(3

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987

--

--

(37,

790)

Net

car

ryin

g va

lue

2,24

0,20

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264,

838

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5,56

8

Do

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on

im Ş

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ti a

nd

its

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dia

ries

No

tes

to t

he C

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olid

ated

Fin

anci

al S

tate

men

tsA

s at

and

fo

r th

e Ye

ar E

nded

31

Dec

emb

er 2

009

Cur

renc

y: T

hous

and

s of

TL




13 Property and equipment (continued)

The Group’s land and buildings are revalued for the purpose of the consolidated financial statements. Independent third party appraisers conduct

the appraisals periodically on the basis of fair market value. As at 31 December 2009, the revaluation surplus, net of minority interest and deferred

taxes, amounting to TL 1,081,534 thousand including the fair value differences of investment and trading properties and land and buildings (2008:

TL 1,024,867 thousand) was recognised in other comprehensive income, and presented in “revaluation surplus” account within the equity.

Had there been no revaluation on land and buildings, the balances of land and buildings as at 31 December would have been as follows:

Historical cost

Accumulated

depreciation Net Book Value31 December 2009 1,532,066 (306,011) 1,226,05531 December 2008 1,512,147 (272,027) 1,240,120

14 Intangible assets

At 31 December, intangible assets comprised the following:

2009 2008Goodwill 734,763 772,073Concession rights (a) 235,824 249,221Broadcasting rights (b) 140,721 135,600Other intangible assets, net 57,036 40,216

1,168,344 1,197,110

(a) The partnership established by the Group, Akfen Holding Anonim Şirketi and TÜV-SÜD Teknik Güvenlik ve Kalite Denetim Ticaret Limited Şirketi,

obtained the right to tender vehicle inspection services for 20 years as at 20 December 2004. Following the completion of taking the advice of

1st Circuit of State, the Concession Agreement, regarding the privatisation of vehicle inspection services with the Privatisation Administration

was signed on 15 August 2007, and TÜVTÜRK Kuzey Taşıt Muayene İstasyonları Yapım ve İşletim Anonim Şirketi (“TÜVTÜRK Kuzey”) and

TÜVTÜRK Güney Taşıt Muayene İstasyonları Yapım ve İşletim Anonim Şirketi (“TÜVTÜRK Güney”) have started their operations. As at 31

December 2009, 190 vehicle inspection stations in 81 cities have started their operations.

(b) Following the tender organised by Saving Deposits Insurance Fund on 18 June 2008; the transfer of the commercial and economic assets of

Kral TV and Kral FM to A Yapım Televizyon Programcılık Anonim şirketi (“A Yapım”), a consolidated entity operating in media business, was

started and Competition Authority approvals were obtained. Radio Television Supreme Council approved the process and A Yapım took over

Kral TV and Kral FM on 16 October 2008 and recognised the amounts paid as broadcasting rights under intangible assets.

181

14 In

tan

gib

le a

sset

s (c

ontin

ued

)

At 3

1 D

ecem

ber,

good

will

com

pris

ed th

e fo

llow

ing:

Co

mp

an

y

Typ

e o

f

pu

rch

ase

Acq

uis

itio

n

cost

Net

ass

et

fair

va

lue

Pu

rch

ase

dat

e

Sh

are

s

acq

uir

ed

%

Gro

up

sha

re

Eff

ect

s o

f

mo

vem

en

ts in

exch

an

ge

rate

s

Imp

air

me

nt

in v

alu

e o

f

go

od

will

200

9

Net

amo

un

t

200

8

Net

amo

un

t

Gar

anti

Ban

kC

ash

789,

884

7,21

5,64

0D

ec. 2

007

4.65

335,

527

--

454,

357

454,

357

Doğ

uş G

E B

.V.

Cas

h15

9,04

961

,685

Dec

. 200

749

.90

30,7

8133

,758

(38,

772)

123,

254

160,

564

NT

V R

adyo

ve

Tele

vizy

on Y

ayın

cılığ

ı Ano

nim

Şirk

eti (

“NT

V R

adyo

”)C

ash

98,8

7712

,081

Ap

r. 20

0497

.00

11,7

19-

-87

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58

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orm

asyo

n R

ekla

mcı

lık v

e Fi

lmci

lik S

anay

i

ve T

icar

et A

noni

m Ş

irket

i (“E

nfor

mas

yon”

)C

ash

40,0

9110

,783

Jul.

2003

70.0

07,

548

--

30,1

0030

,100

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uş İn

şaat

ve

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ret A

noni

m Ş

irket

i

(“D

oğuş

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at”)

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h89

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4D

ec. 2

006

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61,0

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,983

27,9

83

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ital R

adyo

ve

Tele

vizy

on Y

ayın

cılığ

ı

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nim

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eti (

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ital R

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”)C

ash

9,24

672

Dec

. 200

797

.00

70-

-9,

176

9,17

6

Doğ

uş O

tom

otiv

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vis

ve T

icar

et A

noni

m

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eti (

“DO

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ash

2,73

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. 200

650

.00

--

-2,

735

2,73

5

33,7

58(3

8,77

2)73

4,76

377

2,07

3

* Th

e re

cove

rabl

e am

ount

of g

oodw

ill re

late

d w

ith G

aran

ti B

ank

is h

ighe

r th

an th

e ca

rryi

ng a

mou

nt a

s at

31

Dec

embe

r 20

09.

* Th

e re

cove

rabl

e am

ount

of g

oodw

ill re

late

d to

Doğ

uş G

E B

.V.,

NT

V R

adyo

, Enf

orm

asyo

n, K

apita

l Rad

yo w

ere

base

d on

thei

r va

lue

in u

se a

nd w

ere

dete

rmin

ed b

ased

on

the

repo

rts

of th

e in

depe

nden

t app

rais

ers.

Va

lue

in u

se is

det

erm

ined

by

disc

ount

ing

futu

re c

ash

flow

s ge

nera

ted

from

the

cont

inui

ng u

se o

f the

se c

ash

gene

ratin

g un

its. B

ased

on

the

annu

al im

pairm

ent t

ests

of g

oodw

ill

rela

ted

to th

ese

com

pani

es e

xcep

t for

the

Doğ

uş G

E B

.V.,

the

reco

vera

ble

amou

nts

of g

oodw

ill ar

e hi

gher

than

thei

r ca

rryi

ng a

mou

nt a

s at

31

Dec

embe

r 20

09.

Th

e ca

rryi

ng a

mou

nt o

f Doğ

uş G

E B

.V. w

as d

eter

min

ed to

be

high

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an it

s re

cove

rabl

e am

ount

and

an

impa

irmen

t los

s of

TL

38,7

72 (2

008:

nil)

was

rec

ogni

sed

as a

t 31

Dec

embe

r

2009

. The

impa

irmen

t los

s w

as fu

lly a

lloca

ted

to g

oodw

ill an

d in

clud

ed in

impa

irmen

t los

ses,

net

in p

rofit

or

loss

.

Do

ğu

ş H

old

ing

An

on

im Ş

irke

ti a

nd

its

Su

bsi

dia

ries

No

tes

to t

he C

ons

olid

ated

Fin

anci

al S

tate

men

tsA

s at

and

fo

r th

e Ye

ar E

nded

31

Dec

emb

er 2

009

Cur

renc

y: T

hous

and

s of

TL




14 Intangible assets (continued)

The movements in goodwill were as follows:

2009 2008Balance at the beginning of the year 772,073 739,777Impairment in value of goodwill (38,772) -Adjustments for currency translation 1,462 32,296Balance at the end of the year 734,763 772,073

15 Investments in debt securities

At 31 December, debt securities available-for-sale and held-to-maturity comprised the following:

2009 2008

Face value Carrying value

Interest rate

range % Latest maturity Carrying valueDebt and other instruments available-for-sale:Government bonds at floating rates 2,778,537 2,963,818 10-12 2016 2,196,937Government bonds indexed to consumer price index 1,463,396 1,941,050 7-12 2014 44,459Government bonds in TL 1,323,628 1,363,235 8-17 2014 786,346Discounted government bonds in TL 1,400,809 1,326,969 7-9 2011 1,416,256Bonds issued by corporations (a) 650,190 651,260 2-20 2034 611,273Euro bonds 257,843 300,399 5-12 2038 206,594Bonds issued by financial institutions 257,909 270,732 3-18 2019 208,512Bonds issued by foreign governments 99,561 99,428 4-11 2015 688Government bonds in foreign currency 83,922 84,902 1-6 2010 123,849Others 33,269 - 25,320Total securities available-for-sale 9,035,062 5,620,234Debt and other instruments held-to-maturity:Government bonds in TL 982,750 923,876 14-17 2012 926,309Government bonds at floating rates (b) 779,576 810,845 10-12 2014 825,798Euro bonds 424,187 428,418 7-12 2036 497,472Others - 11,644 - - 12,016Total held-to-maturity portfolio 2,174,783 2,261,595Accrued interest income 82,741 90,844Total held-to-maturity portfolio 2,257,524 2,352,439Total 11,292,586 7,972,673

(a) Bonds issued by corporations include credit linked notes with a total face value of US 266,864 thousand and EUR 151 thousand (2008: US

270,620 thousand and EUR 355 thousand) and a total carrying value of TL 403,792 thousand (2008: TL 419,874 thousand).

(b) The interest rates applied on these securities are floating quarterly based on interest rates of government bond bids of the government.

In 2008, Garanti Bank reclassified certain security investments, previously classified in its securities available-for-sale portfolio in its financial statements, with total face values of TL 855,730 thousand and USD 255,011 thousand to its securities held-to-maturity portfolio as a result of change in its intention to hold such securities. Such securities were included in the securities held-to-maturity portfolio at their fair values of TL 811,439 thousand and USD 257,708 thousand as at their reclassification date. The negative valuation differences amounting to TL 29,943 thousand and USD 2,034 thousand of these securities are recorded under other comprehensive income, presented in fair value reserve and amortised through the profit or loss throughout their maturities. As at the reporting date, the negative valuation differences under equity are TL 21,361 thousand and USD 2,065 thousand.

Interest income from debt and other fixed or floating instruments is reflected in interest on securities, whereas gains and losses arising from changes in the effective portion of the fair value of cash flow hedges and available-for-sale assets are deferred as a separate component of equity.

Impairment losses provided on investment securities as at 31 December 2009 amounted to TL 888 thousand (2008: TL 26 thousand).

As at 31 December 2009, government bonds and treasury bills include securities pledged under repurchase agreements with customers amounting

to TL 3,337,180 thousand (2008: TL 3,518,010 thousand).

183



15 Investments in debt securities (continued)

The following table summarizes securities that were deposited as collaterals with respect to various banking, insurance and asset management

transactions:

2009 2008Face value Carrying value Face value Carrying value

Collateralised to foreign banks 2,821,169 2,934,622 2,148,172 2,188,606Deposited at Istanbul Stock Exchange 722,588 844,883 1,736,342 1,785,191Deposited at central banks for repurchase

transactions 415,391 445,292 465,775 485,387Deposited at Central Bank of Turkey (“CBT”) for

foreign currency money market transactions 304,477 327,233 175,874 176,514Deposited at CBT for interbank transactions 172,545 180,868 180,994 190,384Deposited at Clearing Bank (“Takasbank”) 16,219 17,041 3,022 3,048Others 14,946 41,955

4,764,885 4,871,085

16 Investments in equity securities

At 31 December, the Group held equity investments in the following companies:

2009 2008Equity accounted investees: Carrying value % of ownership Carrying value % of ownershipVolkswagen Doğuş TüketiciFinansmanı Anonim Şirketi (“VDF Tüketici”) 21,285 49.00 18,152 49.00Eureko Sigorta Anonim Şirketi (“Eureko Sigorta”) 15,290 6.05 12,191 6.04Yüce Auto Anonim Şirketi (“Yüce Auto”) 3,627 50.00 3,466 50.00VDF Servis Holding Anonim Şirketi (“VDF Servis Holding”) 3,138 49.00 981 49.00Other equity investmentsIMKB Takas ve Saklama Bankası Anonim Şirketi (“Takasbank”) 3,616 1.76 3,615 1.76Doğan TV Yayıncılık Anonim Şirketi 1,767 0.29 1,767 0.29DTV Haber Görsel ve Yayıncılık Anonim Şirketi 2,593 5.19 2,593 5.19Garanti Filo Yönetimi Hizmetleri Anonim Şirketi (“Garanti Filo”) - - 3,022 30.22Garanti Konut Finansmanı Danışmanlık HizmetleriAnonim Şirketi (“Garanti Konut”) 750 30.23 227 30.22Others 1,518 - 2,255 -Total 53,584 48,269

Takasbank and other equity participations do not have a quoted market price in an active market and other methods of reasonably estimating their values would be inappropriate and impracticable, accordingly they are stated at cost, restated for the effects of inflation until 31 December 2005.

80 percent shares of a previously consolidated subsidiary, Garanti Sigorta Anonim Şirketi (“Garanti Sigorta”), owned by Garanti Bank were sold to Eureko BV on 21 June 2007. After the sale, the remaining 20 percent was reclassified to investments in equity participations and accounted under equity method of accounting. Subsequent to this sale, at 1 October 2007 the legal name of the company was changed as Eureko Sigorta. For the year ended 31 December 2009, the investment in Eureko Sigorta amounts to TL 15,290 thousand (2008: TL 12,191 thousand) and Group’s share of net income is TL 2,788 thousand (2008: TL 3,221 thousand).

The summary financial information for equity accounted investees, not adjusted for the percentage ownership held is presented below:

2009

Total assets Equity

Property and

equipment and

intangible assets

Profit/(loss) for the

yearVDF Tüketici 1,094,220 43,439 2,699 6,395 Eureko Sigorta 563,506 252,898 13,691 46,609 Yüce Auto 39,034 7,254 263 332 VDF Servis Holding 12,344 6,403 1,354 (599)Total 1,709,104 309,994 18,007 52,737




16 Investments in equity securities (continued)

2008

Total assets Equity

Property and

equipment and

intangible assets

Profit/(loss) for the

yearVDF Tüketici 1,387,578 37,045 2,868 (14,877)Eureko Sigorta 491,110 201,711 20,811 59,947 Yüce Oto 43,302 6,932 317 (3,709)VDF Servis Holding 6,623 2,002 510 591 Total 1,928,613 247,690 24,506 41,952

Garanti Konut was established as per the decision made during the Board of Directors meeting of Garanti Bank on 15 September 2007 to provide

consultancy and outsourcing services to banks, housing finance and mortgage finance companies. Its legal registration process was completed on

3 October 2007. Garanti Bank owns 100 percent of the company shares. 1/4 of the share capital of Garanti Konut amounting to TL 750 thousand

in total (the Group’s interest amounting to TL 227 thousand) is paid. This company is not consolidated in the accompanying consolidated financial

statements as it does not currently have material operations comparing to the consolidated performance of the Group, instead it is recorded under

investments in equity participations and valued at cost.

Garanti Filo was established on 10 January 2007 as an operational leasing company, and fully owned and controlled by the leasing subsidiary of

Garanti Bank. The company’s main objective is to rent cars to corporations, institutional and small and medium size enterprises. The paid in share

capital is TL 10,000 thousand (the Group’s interest amounting to TL 3,023 thousand) as at the reporting date. This company is consolidated in

the Group’s consolidated financial statements as at 31 December 2009. As at 31 December 2008, it was recorded under investments in equity

securities and valued at cost due to its low level of operations in 2008.

At the Garanti Bank’s Board of Directors meeting held on 3 June 2009, it was decided to participate in the capital increase of Kredi Garanti Fonu

Anonim Şirketi (“Kredi Garanti”) by TL 4,000 thousand (the Group’s interest amounting to TL 1,209 thousand) and to subscribe for future capital

increases up to TL 1,209 thousand in restructuring of the company to build a three-shareholder structure including the Turkish Union of Chambers

and Commodity Exchanges (“TOBB”), the Small and Medium Size Enterprises Development Organization (“KOSGEB”) and the banks. As per this

decision, Garanti Bank has paid TL 2,000 thousand (the Group’s interest amounting to TL 605 thousand) of its capital commitment of TL 4,000

thousand at 15 October 2009 for the capital increase of Kredi Garanti decided on 11 September 2009.

17 Investment property

As at 31 December, the movement in investment property was as follows:

2009 2008Balance at 1 January 1,052,924 631,508Transfer from property and equipment 113,527 266,958Transfer to property and equipment (14,209) -Fair value change recognised in profit or loss 42,743 134,574Additions 32,270 20,835Disposals (9,068) (951)Balance at 31 December 1,218,187 1,052,924

The Group obtained independent appraisal reports for each item of investment properties and stated them at their fair values. In 2009, the transfer

from property and equipment to investment property comprises land, buildings and construction in progress of a shopping mall. In 2008, transfer

from property and equipment to investment property comprised various land and buildings held for rental income or capital appreciation held by a

consolidated subsidiary, Doğuş Gayrimenkul Yatırım ve İşletme Anonim Şirketi (“Doğuş Gayrimenkul”).

185



18 Other non-current assets

At 31 December, other non-current assets comprised the following:

2009 2008Reserve deposits at central banks 634,528 535,895Advances given for property and equipment 170,201 65,688Long-term trade and other receivables 122,294 138,840Progress billings 39,734 30,418Assets held for sale 28,926 27,424Others 33,264 29,180

1,028,947 827,445

Reserve deposits at central banks

At 31 December 2009, reserve deposits at the Central Bank of Turkey are kept as minimum reserve requirement. These funds are not available

for the daily business of Garanti Bank and its subsidiaries. As required by the Turkish Banking Law, these reserve deposits are calculated on the

basis of TL and foreign currency liabilities taken at the rates determined by the Central Bank of Turkey. In accordance with the current legislation,

the reserve deposit rates for TL and foreign currency liabilities are 5 percent and 9 percent, respectively (2008: 6 percent and 9 percent). Interest

rates applied for reserve requirements are 5.20 percent (2008: 12 percent) for TL deposits. The foreign currency reserves do not earn any interests.

The reserve deposits at the Central Bank of the Netherlands, as required by the Dutch Banking Law, are calculated as 2 percent on all customer

deposits with an original maturity of less than 2 years and 2 percent on bank deposits of non-EU banks with an original maturity of less than 2 years.

The banks operating in Romania are obliged to keep minimum reserve requirements in accounts held with Romanian Central Bank (“NBR”). The

reserve requirements are to be held in Romanian New Leu (“RON”) for RON liabilities and in EUR or USD for foreign currency liabilities. Presently, in

line with stipulations of related legislation in force, the rates for reserve requirements are 15 percent for RON denominated liabilities with a remaining

maturity of less than 2 years and 25 percent for foreign currency denominated liabilities with a remaining maturity of less than 2 years excluding

Romanian banks’ fundings (2008: 18 percent for RON and 30 percent for foreign currency). The interest rates paid by the NBR to banks for reserve

requirements are subject of permanent update, presently there are 3.36 percent for RON reserves, 1.26 percent for EUR reserves and 1.29 percent

for USD reserves.

The reserve deposits at the Central Bank of Russia are not available for the daily business, as required by the Russian Banking Law, these reserve

deposits are calculated on the basis of Russian Ruble (“RUR”) and foreign currency liabilities taken at the rates determined by the Central Bank of

Russia. In accordance with the current legislation, the reserve deposit rates for RUR and foreign currency liabilities banks-nonresident (RUR and

foreign currency liabilities), individuals (RUR) and other liabilities are 2.5 percent (2008: banks-nonresident (RUR and foreign currency liabilities) 0.5

percent, individuals (RUR) 0.5 percent, other liabilities (RUR and foreign currency liabilities) 0.5 percent).

TL 24,544 thousand (2008: TL 22,473 thousand) of the tangible assets held for sale is comprised of foreclosed real estate acquired by Garanti Bank

against its impaired receivables. Such assets are required to be disposed of within three years following their acquisitions per the Turkish Banking

Law. This three-year period can be extended by a legal permission from the regulators. In case of real estate held for sale, this requirement is valid

only if the legal limit on the size of the real estate portfolio that a bank can maintain is exceeded. Currently, as Garanti Bank is within this legal limit,

it is not subject to the above requirement.

Impairment losses provided on real estate held for sale were determined based on the appraisals of independent appraisal firms. As at 31

December 2009, real estate held for sale amounting TL 22,941 thousand (2008: TL 23,636 thousand) have been impaired by TL 2,986 thousand

(2008: TL 1,432 thousand).

As at 31 December 2009, the rights of repurchase on various tangible assets held for sale amounted to TL 986 thousand (2008: TL 4,144 thousand).




19 Inventories

At 31 December, inventories comprised the following:

2009 2008Goods in transit 182,066 458,255Trading goods 113,159 169,530Spare parts 44,061 47,247Trading property, net of impairment 56,008 46,552Raw materials 26,729 23,248Finished goods 1,352 1,227Other inventory 51,030 28,723

474,405 774,782

20 Accounts receivable

At 31 December, accounts receivable comprised the following:

2009 2008Premiums receivable 421,207 282,817Contracts receivable 309,168 292,991Factoring receivables 256,359 196,974Due from customers for contract work (Note 21) 239,545 112,354Trade receivables 224,271 191,517Doubtful receivables 113,332 110,092Forfeiting receivables 46,829 107,459Other 39,645 30,425Total accounts receivable 1,650,356 1,324,629Allowance for doubtful receivables (113,186) (110,092)Accounts receivable, net 1,537,170 1,214,537

Movements in the allowance for doubtful receivables during the years ended 31 December were as follows:

2009 2008Balance at the beginning of the year 110,092 87,216Provision for the year 5,694 7,457Recoveries (750) (1,035)Exchange rate differences on foreign currency balances (1,850) 16,454Balance at the end of the year 113,186 110,092

At 31 December 2009, the Group held letters of guarantee amounting to TL 100,602 thousand (2008: TL 76,533 thousand) as collateral for its

receivables.

187



21 Due from/due to customers for contract work

At 31 December, the details of uncompleted contracts were as follows:

2009 2008Total costs incurred on uncompleted contracts 1,690,011 1,006,976Estimated earnings/(costs) 234,579 266,587Total estimated revenue on uncompleted contracts 1,924,590 1,273,563Less: Billings to date (1,711,343) (1,185,639)Net amounts due from / (due to) customers for contract work 213,247 87,924

Due from customers for contract work and due to customers for contract work were included in the accompanying consolidated statement of

financial position under the following captions:

2009 2008Due from customers for contract work (Note 20) 239,545 112,354Due to customers for contract work (Note 36) (26,298) (24,430)

213,247 87,924

22 Other current assets

At 31 December, other current assets comprised the following:

2009 2008Prepaid expenses and similar items 235,398 194,762Accrued exchange gain on derivatives 194,216 245,506Taxes and funds to be refunded 108,952 110,839Warranty receivables 19,849 19,747Others 151,777 167,413

710,192 738,267




23 Banking loans and advances to customers

At 31 December, outstanding loans were as follows:

2009 2008Consumer loans 5,395,354 5,205,360Service sector 1,597,327 1,441,475Energy 1,224,144 1,085,963Transportation and logistics 843,048 855,731Construction 784,352 846,665Food 743,610 585,207Transportation vehicles and sub-industry 654,333 724,839Metal and metal products 637,836 526,452Textile 579,199 624,777Tourism 450,995 412,233Data processing 384,401 369,355Financial institutions 361,564 591,170Durable consumption 234,754 289,583Agriculture and stockbreeding 232,314 222,306Chemistry and chemical product 217,145 242,925Machinery and equipment 214,395 203,576Stone, rock and related products 195,804 194,999Electronic, optical and medical equipment 170,549 164,818Mining 120,140 120,240Plastic products 88,083 98,566Paper and paper products 84,058 93,240Others 692,310 660,671Total performing loans 15,905,715 15,560,151Non-performing loans and lease receivables (Note 40.2) 821,991 430,739Total gross loans 16,727,706 15,990,890Finance lease receivables, net of unearned income 414,123 603,513Accrued interest income on loans and lease receivables 242,779 349,404Allowance for possible losses on loans and lease receivables (766,570) (383,641)Banking loans and advances to customers, net 16,618,038 16,560,166

As at 31 December 2009, interest rates on loans granted to customers range between 1 percent - 24 percent (2008: 2 percent - 30 percent) per

annum for the foreign currency loans and 7 percent - 32 percent (2008: 14 percent - 35 percent) per annum for the TL loans.

189



23 Banking loans and advances to customers (continued)

The finance lease receivables are secured through the underlying assets. At 31 December, banking loans and advances to customers included the

following finance lease receivables:

2009 2008Finance lease receivables, net of unearned income 414,123 603,513Add: Non-performing lease receivables 67,901 30,696Less: Allowance for possible losses from finance lease receivables (19,916) (4,568)Finance lease receivables, net 462,108 629,641Accrued interest on lease receivables 3,810 6,186

Analysis of finance lease receivables, grossDue within 1 year 235,334 325,665Due between 1 and 5 years 285,346 384,017Due after 5 years 15,217 18,231Finance lease receivables, gross 535,897 727,913Unearned income (73,789) (98,272)Finance lease receivables, net 462,108 629,641Analysis of finance lease receivables, netDue within 1 year 196,950 274,163Due between 1 and 5 years 250,940 338,940Due after 5 years 14,218 16,538Finance lease receivables, net 462,108 629,641

The provision for possible losses is comprised of amounts specifically identified as being impaired and non-performing loans and advances and

a further portfolio-basis amount considered adequate to cover the residual inherent risk of loss present in the lending relationships presently

performing in accordance with agreements made with borrowers. The amount of the portfolio basis allowance is TL 103,096 thousand (2008: TL

59,337 thousand).

Movements in the allowance account during the years ended 31 December are as follows:

2009 2008Balance at the beginning of the year 383,641 245,015Provision for the year 597,458 184,945Write-offs (41,512) (39,860)Recoveries (179,149) (11,145)Exchange rate difference on foreign currency balances 6,132 4,686Balance at the end of the year 766,570 383,641




24 Banking loans and advances to banks

At 31 December, banking loans and advances to banks comprised the following:

2009 2008TL Foreign currency Total Total

Loans and advances-demand:Domestic banks 130 1,567 1,697 866Foreign banks 77,116 179,408 256,524 294,834

77,246 180,975 258,221 295,700Loans and advances-time:

Domestic banks 199,612 429,169 628,781 584,248Foreign banks 673,167 1,371,751 2,044,918 1,506,368

872,779 1,800,920 2,673,699 2,090,616Total loans and advances to banks 950,025 1,981,895 2,931,920 2,386,316Placements at money markets 302,300 - 302,300 12,255Accrued interest income 11,381 9,277 20,658 20,311

1,263,706 1,991,172 3,254,878 2,418,882

At 31 December 2009, almost all time deposits were short-term, maturing within one year, with interest rates ranging between 0 percent - 12

percent (2008: 1 percent - 11 percent) per annum for foreign currency time deposits and 5 percent - 26 percent (2008: 15 percent - 23 percent) per

annum for TL time deposits.

At 31 December 2009, deposits at foreign banks included blocked accounts of TL 1,438,720 thousand (2008: TL 586,071 thousand) held against

the securitisations, funding and insurance business of Garanti Bank.

25 Financial assets at fair value through profit or loss

At 31 December, financial assets at fair value through profit or loss comprised the following:

2009 2008

Debt and other instruments at fair value Face value Carrying value

Interest rate

range %

Latest

maturity Carrying valueDiscounted government bonds in TL 104,465 99,469 7-9 2011 1,098Gold - 33,201 - - 7,545Government bonds in TL 18,611 18,390 8-17 2014 37,237Bonds issued by corporations - - - - 16,317Others - 29,317 - - 14,751

180,377 76,948Listed shares - 7 4Total 180,384 76,952

Income from debt and other instruments held at fair value is reflected in profit or loss as interest income. Gains and losses arising on derivative

financial instruments and changes in fair value of other trading instruments are reflected in trading gain, net, whereas gains and losses arising from

changes in the effective portion of the fair value of cash flow hedges are reflected as a separate component of equity.

Net gain from trading of financial assets is comprised of the following:

2009 2008Fixed/floating securities 126,049 18,487Derivative transactions 93,589 129,017Trading gain, net 219,638 147,504

As at 31 December 2009, financial assets at fair value through profit or loss amounting of TL 27 thousand (2008: TL 27 thousand) are blocked

against asset management operations.

191



25 Financial assets at fair value through profit or loss (continued)

A proportionately consolidated joint venture in banking and finance segment reclassified some of its investment securities, previously reported as financial assets held for trading amounting to TL 42,945 thousand with a total face value of TL 42,387 thousand to financial assets available-for-

sale as at 1 July 2008 as per the Amendments to IAS 39 “Financial Instruments: Recognition and Measurement” as issued by the International Accounting Standards Board in October 2008.

26 Cash and cash equivalents

At 31 December, cash and cash equivalents comprised the following:

2009 2008Balances with central banks excluding reserve deposits 1,445,478 997,313Cash at banks 660,351 1,028,969Cash at branches of the Group banks 241,114 203,186Cash on hand 1,016 700Other liquid assets and cheques 10,361 26,481Total cash and cash equivalents 2,358,320 2,256,649

At 31 December, cash and cash equivalents disclosed in the consolidated statement of cash flows comprised the following:

2009 2008Loans and advances to banks with original maturity periods of less than three months 2,568,563 1,956,331Cash at banks 660,351 1,028,969Cash at branches of the Group banks 241,114 203,186Other liquid assets and cheques 10,361 26,481Cash on hand 1,016 700Cash and cash equivalents in the statement of cash flows 3,481,405 3,215,677

27 Capital and reserves

27.1 Paid in capital

As at 31 December 2009, the paid-in capital of Doğuş Holding amounted to TL 2,010,192 thousand (2008: TL 2,010,192 thousand) in the consolidated financial statements.

The paid-in capital of Doğuş Holding comprises 820,000,000 shares (2008: 820,000,000 shares) of TL 0.001 each.

At 31 December, the shareholding structure of Doğuş Holding based on the number of shares is presented below:

2009 2008Thousands of

shares %

Thousands of

shares %Ferit Şahenk 276,671 33.74 276,671 33.74Filiz Şahenk 258,932 31.58 258,932 31.58Deniz Şahenk 147,143 17.94 147,143 17.94Doğuş Araştırma Geliştirme ve Müşavirlik Hizmetleri AŞ (“Doğuş Arge”) 87,183 10.63 87,183 10.63DOAŞ 31,381 3.83 31,381 3.83Doğuş Hava Taşımacılığı Anonim Şirketi (“Doğuş Hava”) 5,264 0.64 5,264 0.64Doğuş Sigorta Aracılık Hizmetleri Anonim Şirketi (“Doğuş Sigorta”) 4,589 0.56 4,589 0.56Antur Turizm Anonim Şirketi (“Antur”) 3,824 0.47 3,824 0.47Lasaş Lastik Sanayi ve Ticaret Anonim Şirketi (”Lasaş”) 3,824 0.47 3,824 0.47Doğuş Turizm Sağlık Yatırımları ve İşletmeciliği Sanayi ve Ticaret Anonim

Şirketi (“Doğuş Turizm”) 765 0.09 765 0.09Others 424 0.05 424 0.05

820,000 100.00 820,000 100.00




27 Capital and reserves (continued)

27.2 Reserves

The legal reserves, included in retained earnings, are generated by annual appropriations amounting to 5 percent of income disclosed in the

Group’s statutory accounts until it reaches 20 percent of paid-in share capital (first legal reserve). Without limit, a further 10 percent of dividend

distributions in excess of 5 percent of paid-in capital is to be appropriated to increase legal reserves (second legal reserve). The legal reserves are

restricted and are not available for distribution as dividend unless they exceed 50 percent of share capital. In the consolidated financial statements,

total legal reserves of the consolidated entities amounted to TL 224,310 thousand as at 31 December 2009 (2008: TL 207,409 thousand).

27.3 Revaluation surplus

For the years ended 31 December, the movements of revaluation surplus were as follows:

2009 2008Balance at the beginning of the year 1,024,867 826,603Revaluation increase in land and buildings 87,183 264,838Deferred taxes on revaluation surplus (2,621) (57,723)Minority portion of revaluation increments, net of deferred taxes (12,030) 861Depreciation effect on revaluation surplus of prior year (15,865) (9,712)Balance at the end of the year 1,081,534 1,024,867

27.4 Minority interest

For the years ended 31 December, movements of the minority interest are as follows:

2009 2008Balance at the beginning of the year 200,637 212,242Sales to minority 1,004 40,371Release of minority interest through dividend distribution (306) (7,165)Effect of share capital increase 182 7,176Purchases from minority (2,245) (24,027)Minority interest of changes in revaluation surplus 12,030 (861)Minority interest of profit/(loss) for the period 19,130 (27,099)Balance at the end of the year 230,432 200,637

27.5 Translation reserve

The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations.

Garanti Bank had applied net investment hedge accounting for the exchange rate differences on the net investment risks on its foreign subsidiaries

and its related financial liabilities denominated in foreign currencies in the previous periods. Garanti Bank prospectively discontinued this application

as of 1 January 2009 within the framework of IFRIC 16 Comment on Hedges of a Net Investment in a Foreign Operation, effective for annual periods

beginning on or after 1 October 2008.

193



28 Long-term bank borrowings

At 31 December, long-term borrowings comprised the following:

2009 2008

Interest rate (%)

Original amount in

thousand

Long-term

borrowings

Long-term

borrowingsUSD 1.26-8.15 2,724,760 4,102,671 3,959,031EUR 1.00-10.05 557,745 1,204,896 1,088,927Others 3.75-20.32 951,447 584,912Total long-term bank borrowings 6,259,014 5,632,870Accrued interest expenses 82,487 102,492Total 6,341,501 5,735,362Less: Short-term portion of long-term bank borrowings

including accrued interest expenses (1,301,579) (1,435,814)Total 5,039,922 4,299,548

On 22 August 2008, Garanti Bank completed a securitization (the “DPR Securitization-IX”) transaction by issuance of certificates; a tranche of EUR

60.4 million with 10 years maturity from European Investment Bank.

On 28 June 2007, Garanti Bank completed a securitization (the “DPR Securitization-VIII”) transaction by issuance of certificates; three tranches of

USD 166.2 million with 10 years maturity wrapped by Ambac Assurance Corp., Financial Guaranty Insurance Corp. and XL Capital Assurance and a

tranche of USD 15.11 million with 8 years maturity and no financial guarantee.

On 24 January 2007, Garanti Bank borrowed TL 131 million from Deutsche Bank AG, London with a maturity of 10 years at 12.93% annual fixed

interest rate through a secured financing transaction. Accordingly, Garanti Bank pledged USD 90.7 million of cash collateral to Deutsche Bank

AG, London. Subsequently, Garanti Bank has entered into two more secured financing transactions with the same counterparty under the same

collateral conditions and borrowed in total TL 80.39 million in two separate transactions on 28 June and 3 July 2007 with maturity of 10 years for

each and pledged USD 30.2 million of cash collateral for each. The funding costs are 11.30 percent and 11.35 percent, respectively. The cash

collaterals earn annually USD libor floating interest rate.

In December 2006, Garanti Bank completed a securitization (the “DPR Securitization-VII”) transaction by issuance of certificates: USD 120.88 million

tranche with a maturity of 10 years and USD 30 million tranche with a maturity of 8 years. Both of the series were issued on an unwrapped basis.

In May 2006, Garanti Bank completed a securitization (the “DPR Securitization-VI”) transaction by issuance of certificates: Euro 91 million with a

guarantee issued by MBIA Insurance Corp. with a maturity of 5 years, USD 91 million with no financial guarantee and a maturity of 7 years and USD

68 million with a guarantee issued by Ambac Assurance Corp. with a maturity of 10 years.

In November 2005, Garanti Bank completed a securitization (the “DPR Securitization-V”) transaction by issuance of certificate: USD 45 million with a

guarantee issued by CIFG Inc. with a maturity of 7 years, USD 76 million with a guarantee issued by XL Capital Assurance with a maturity of 8 years

and USD 38 million with no financial guarantee and a maturity of 8 years.

In September 2005, Garanti Bank completed a securitization (the “DPR Securitisation-IV”) transaction by issuance of certificate: USD 45 million

with a guarantee issued by Financial Guaranty Insurance Corp. with a final maturity of 7 years, USD 45 million with a guarantee issued by Financial

Security Assurance with a final maturity of 8 years, USD 50 million with a financial guarantee issued by Assured Guaranty Corp. with a final maturity

of 8 years, USD 33 million with a financial guarantee issued by Radian Asset Assurance Inc. with a final maturity of 7 years, USD 8 million with no

financial guarantee and a final maturity of 7 years.

In May 2005, Garanti Bank completed a securitization (the “DPR Securitisation-III”) transaction by issuance of certificate: USD 91 million with a

guarantee issued by MBIA Insurance Corp., a final maturity of 8 years.

The DPR securitization is a way of securitizing Garanti Bank’s payment orders created via SWIFT MT 103 or similar payment orders in terms of USD,

Euro and GBP accepted as derived primarily from Garanti Bank’s trade finance and other corporate businesses and paid through foreign depository

banks.




28 Long-term bank borrowings (continued)

Terms and debt repayment schedule

The redemption schedules of long-term and short-term portion of long-term bank borrowings at 31 December are summarised below:

2009 20082009 - 1,435,8142010 1,301,579 813,3582011 1,079,278 304,7822012 and over 3,960,644 3,181,408Balance at the end of the year 6,341,501 5,735,362

At 31 December, the terms and conditions of outstanding short-term and long-term bank borrowings were as follows:

2009

Currency

Nominal

interest rate

Year of

Maturity

Face

value

Carrying

amountSecured USD (Libor+1.32-5.75) 2.26-8.25 2010-2020 4,132,966 4,141,900

Secured EUR

(Euribor+0.90-6.25) (Libor+

2.56) 1.00-7.87 2010-2020 1,657,007 1,632,080Secured Other (Bubor+ 1.85) 3.16-12.37 2010 1,317,544 1,318,362Unsecured USD (Libor+0.60.5-50) 1.26-14.00 2010-2017 623,812 622,338

Unsecured EUR

(Euribor+0.13-7.85)

(Libor+2.00-5.50) 3.80-10.68 2010-2016 555,617 554,111Unsecured Other 3.75-17.00 2010-2014 313,229 314,217

8,600,175 8,583,008

2008

Currency

Nominal

interest rate

Year of

Maturity

Face

value

Carrying

amountSecured USD (Libor+0.6-5.9) 3.44-7.97 2009-2017 3,696,517 3,712,485Secured EUR (Euribor+0.90-3.65) 5.02-6.85 2009-2013 1,428,582 1,428,142Secured Other (Bubor+ 6.94) 2.33-21.42 2009 925,030 924,800Unsecured USD (Libor+1.5-15) 3.00-12.00 2009-2017 858,437 859,142Unsecured EUR (Euribor+0.13-2.20) 6.00-14.00 2009-2016 674,323 670,175Unsecured Other 19.50-33.00 2009 109,355 110,142

7,692,244 7,704,886

29 Subordinated liabilities

At 31 December, subordinated liabilities comprised the following:

2009 2008Latest maturity Interest rate Carrying amount Carrying Amount

Subordinated debt of USD 151 million 2017 6.95 224,907 229,219Subordinated debt of EUR 15 million 2021 Euribor+3.50 32,319 -Subordinated bonds payable of EUR 9 million 2016 Euribor+1.57 19,391 19,182Subordinated deposit of EUR 7 million 2016 4.42 - 6.06 15,351 30,695

291,968 279,096Accrued interest on subordinated liabilities 7,443 7,248

299,411 286,344

On 23 February 2009, Garanti Bank has obtained a 12-year subordinated loan of EUR 15 million due March 2021 from Proparco (Societe de Promotion et de Participation pour la Cooperation Economique SA) a company of the French Development Agency Group, with an interest of Euribor+3.5% and a repayment option for Garanti Bank at the end of the seventh year.

On 5 February 2007, Garanti Bank obtained a 10-year subordinated fixed-rate note of US$ 151 million due February 2017 with a repayment option for Garanti Bank at the end of the fifth year. The fixed rate notes with Political Risk Insurance provided by Steadfast (a subsidiary of Zurich American Insurance Company) received a rating of Baa1 by Moody’s Investors Service and priced at par to yield 6.95% to investors.

195



29 Subordinated liabilities (continued)

On 29 September 2006, one of Garanti Bank’s subsidiaries issued its first floating rate note for EUR 9 million, Euro-denominated lower tier-2 capital,

priced at 99.30, arranged by Deutsche Bank and traded on the alternative market in Frankfurt.

As at 31 December 2009, subordinated deposits obtained by the proportionately consolidated joint venture in the Netherlands in banking and

finance segment amounted to EUR 7 million (equivalent of TL 15,351 thousand) (2008: EUR 14.5 million, equivalent of TL 30,695 thousand).

30 Other non-current liabilities

At 31 December, other non-current liabilities comprised the following:

2009 2008Long-term advances received 449,972 452,046Technical reserves relating to insurance operations 38,880 37,353Reserve for severance payments 38,543 34,629Lease obligations 16,749 8,019Others 28,981 13,151

573,125 545,198

As at 31 December 2009, long-term advances received include the upfront sub-operation fees amounting to TL 258,022 (2008: TL 274,570

thousand) due to the collections in cash from the sub-operators of TÜVTÜRK Kuzey and TÜVTÜRK Güney for the vehicle inspection stations that

were opened before 31 December 2009. As at 31 December 2009, 190 vehicle inspection stations in all 81 cities have started operations in total

(2008: 183 stations 77 cities).

30.1 Technical reserves relating to insurance operations

2009 2008Reserve for unearned premiums, netGross 24,469 16,218Reinsurers’ share (9,957) (3,051)

14,512 13,167Provision for claims, netGross 6,153 2,347Reinsurers’ share (2,977) (102)

3,176 2,245Life mathematical reserves 21,192 21,941

38,880 37,353

30.2 Reserve for severance payments

For the years ended 31 December, the movements in the reserve for severance payments were as follows:

2009 2008Balance at the beginning of the year 34,629 27,706Provision for the year 12,694 15,851Reversal of employee severance indemnity (1,252) -Paid during the year (7,528) (8,928)Balance at the end of the year 38,543 34,629

The reserve has been calculated by estimating the present value of future probable obligation of the Group arising from the retirement of the

employees.




30 Other non-current liabilities (continued)

30.2 Reserve for severance payments (continued)

Statistical valuation methods were developed to estimate the enterprise’s obligation under defined benefit plans. Accordingly, the following statistical

assumptions were used in the calculation of the total liability:

2009 2008Discount rate 5.92% 6.26%Interest rate 11% 12%Expected rate of salary/limit increase 4.80% 5.40%The range of turnover rate to estimate the probability retirement 1.0-8.52% 1.0-8.70%

The computation of the liability is predicated upon retirement pay ceiling announced by the Government. As at 31 December 2009, the ceiling

amount was TL 2.37 thousand (2008: TL 2.17 thousand).

31 Retirement benefit obligation

Defined benefit plan

As a result of the changes in legislation described below, Garanti Bank will transfer a substantial portion of its pension liability under defined

benefit plan (“the Plan”) to SSF. This transfer, which will be a settlement of Garanti Bank’s obligation in respect of the pension and medical benefits

transferable to SSF, will occur within three years from the enactment of the New Law in May 2008. The actual date of the transfer has not been

specified yet. However, in its financial statements for the year ended 31 December 2007, Garanti Bank modified the accounting required by IAS 19

Employee Benefits as Garanti Bank believes that it is more appropriate to measure the obligation, in respect of the benefits that will be transferred to

SSF, at the expected transfer amount prior to the date on which the transfer and settlement will occur. The expected transfer amount is calculated

based on the methodology and actuarial assumptions (discount rate and mortality tables) prescribed in the New Law. As such, this calculation

measures the liability to be transferred at the expected settlement amount i.e., the expected value of the payment to be made to SSF to assume that

obligation. The obligation with respect to the excess benefits is accounted for as a defined benefit plan under IAS 19.

(i) Pension and medical benefits transferable to SSF

As per the provisional Article no.23 of the Turkish Banking Law no.5411 as approved by the Turkish Parliament on 19 October 2005, pension

funds which are in essence similar to foundations are required to be transferred directly to SSF within a period of three years. In accordance with

the Banking Law, the actuarial calculation of the liability (if any) on the transfer should be performed regarding the methodology and parameters

determined by the commission established by Ministry of Labor and Social Security. Accordingly, Garanti Bank calculated the pension benefits

transferable to SSF in accordance with the Decree published by the Council of Ministers in the Official Gazette no. 26377 dated 15 December 2006

(“the Decree”) for the purpose of determining the principles and procedures to be applied during the transfer of funds. However the said Article was vetoed by the President and at 2 November 2005 the President initiated a lawsuit before the Turkish Constitutional Court in order to rescind certain paragraphs of the provisional article no.23.

Garanti Bank obtained an actuarial report regarding its obligations at 31 December 2006. This report, which was dated 12 February 2007, is from an actuary, who is registered with the Undersecretariat of the Treasury regarding this Fund in accordance with the Decree. Based on this Decree, the actuarial statement of financial position of the Fund has been prepared using a discount rate of 10.24 percent and the CSO 1980 mortality table. Based on the actuarial report, the assets of the plan exceed the amount that will be required to be paid to transfer the obligation at 31 December 2006. In accordance with the existing legislation at 31 December 2006, the pension and medical benefits within the social security limits were subject to transfer and the banks were not required to provide any excess social rights and payments.

On 22 March 2007, the Turkish Constitutional Court reached a verdict with regards to the suspension of the execution of the first paragraph of provisional article no.23 of the Turkish Banking Law, which requires the transfer of pension funds to SSF, until the decision regarding the cancellation thereof is published in the Official Gazette. The Constitutional Court stated in its reasoned ruling published in the Official Gazette numbered 26731, dated 15 December 2007 that the reason behind this cancellation was the possible loss of antecedent rights of the members of pension funds. Following the publication of the verdict, the Grand National Assembly of Republic of Turkey (“Turkish Parliament”) worked on the new legal arrangements by taking the cancellation reasoning into account. At 17 April 2008, the New Law has been accepted by the Turkish Parliament and the New Law has been enacted at 8 May 2008 following its publishing in the Official Gazette no 26870.

In accordance with the New Law, members of the funds established in accordance with the Social Security Law should be transferred to SSF within three years following its enactment date.

197



31 Retirement benefit obligation (continued)

Defined benefit plan (continued)(i) Pension and medical benefits transferable to SSF (continued)At 19 June 2008, Cumhuriyet Halk Partisi (“CHP”) has applied to the Constitutional Court for the cancellation of various articles of the Law including the first paragraph of the provisional Article 20. As at the issuing date of the accompanying consolidated financial statements, there is not any published ruling of the Constitutional Court regarding this application.

Garanti Bank obtained an actuarial report dated 15 January 2010 from an independent actuary reflecting the principles and procedures on determining the application of transfer transactions in accordance with the New Law. The actuarial statement of financial position of the Fund has been prepared using a discount rate of 9.80 percent and the CSO 1980 mortality table, and the assets of the plan exceed the amount that will be required to be paid to transfer the obligation at 31 December 2009.

Garanti Bank’s obligation in respect of the pension and medical benefits transferable to SSF has been determined as the value of the payment that would need to be made to SSF to settle the obligation at the reporting date in accordance with the related article of the New Law. The pension disclosures set out below therefore reflect the methodology and actuarial assumptions specified in the New Law. This calculation measures the benefit obligation at the expected transfer amount i.e., the estimated amount Garanti Bank will pay to SSF to assume this portion of the obligation.

The pension benefits are calculated annually, as per the calculation as at 31 December 2009, the present value of funded obligations amount to TL 34,286 thousand (2008: TL 53,312 thousand) and the fair value of the planned assets amount to TL 252,772 thousand (2008: TL 187,845 thousand).

2009 2008Present value of funded obligations

- Pension benefits transferable to SSF (obligation measured at the expected transfer amount) (87,057) (89,550)- Medical benefits transferable to SSF (obligation measured at the expected transfer amount) 57,897 40,918- General administrative expenses (5,126) (4,680)

(34,286) (53,312)Fair value of plan assets 252,772 187,845Asset surplus in the plan (*) 218,486 134,533

(*) Asset surplus in this plan will be used as plan assets of the excess benefit plan.

At 31 December, plan assets consist of the following:

2009 2008Securities 201,208 145,226Land and buildings 29,550 33,423Cash and due from banks 22,014 9,196

252,772 187,845

(ii) Excess benefits not transferable to SSF

The other social rights and payments representing benefits in excess of social security limits are not subject to transfer to SSF. Therefore these

excess benefits are accounted as an ongoing defined benefit plan.

At 31 December, asset surplus on present value of defined benefit obligation is as follows:

2009 2008Present value of defined benefit obligation

- Pension (56,982) (49,064)- Health (63,315) (75,557)

Fair value of plan assets (*) 218,486 134,533Asset surplus over present value of defined benefit obligation 98,189 9,912

(*) Plan assets are composed of asset surplus in the plan explained in section (i).




31 Retirement benefit obligation (continued)

Defined benefit plan (continued)

(ii) Excess benefits not transferable to SSF (continued)

As per the actuarial calculation performed as at 31 December 2009 as detailed above, the asset surplus over the fair value of the plan assets to

be used for the payment of the obligations also fully covers the benefits not transferable and still a surplus of TL 98,189 thousand (2008: TL 9,912

thousand) remains. However, Garanti Bank’s management, acting prudently, did not consider the health premium surplus amounting TL 57,897

thousand (2008 TL 40,918 thousand) as stated above that resulted from the present value of medical benefits and health premiums transferable

to SSF. However, despite this treatment, there is no excess obligation that needs to be provided against as at 31 December 2009. Accordingly,

it was decided to reverse the provision amounting to TL 31,006 thousand that was charged fully as expense in prior years, in the accompanying

consolidated financial statements as at 31 December 2009.

2009 2008Asset surplus over present value of defined benefit obligation 98,189 9,912Net present value of medical benefits and health premiums transferable to SSF (57,897) (40,918)Present value of defined benefit obligation 40,292 (31,006)

The pension benefits are calculated annually by an independent actuary.

Expenses recognised regarding this benefit plan in profit or loss for the years ended 31 December 2009 and 2008 are as follows:

2009 2008Total contribution payment 34,692 26,205(Reversal of)/Provision for unfunded liability - -

34,692 26,205

Principal actuarial assumptions used at 31 December are as follows:

2009 2008Discount rates 10.86-8.42 17.41-10.51Inflation rates 6.90-4.80 9.50-5.73Future real salary increase rates 1.5 1.5Medical cost trend rates 20.50-6.80 17.80-11.77Future pension increase rates 6.90-4.80 9.50-5.73

Assumptions regarding future mortality are based on published statistics and mortality tables. The average life expectancy of an individual retiring at

age 60 is 17 for males, and at age 58 for females is 23.

The sensitivity analysis of defined benefit obligation of excess liabilities at 31 December is as follows:

2009Percentage of change in defined benefit obligation

Assumption change Pension benefits % Medical benefits % Overall %Discount rate +1% (11.1) (12.5) (11.3)Discount rate -1% 13.8 15.8 14.1Medical inflation +10% of CPI - 7.7 4.1Medical inflation -10% of CPI - (6.7) (3.5)

2008Percentage of change in defined benefit obligation

Assumption change Pension benefits % Medical benefits % Overall %Discount rate +1% (10.5) (14.2) (12.8)Discount rate -1% 13.1 18.3 16.3Medical inflation +10% of CPI - 16.6 10.1Medical inflation -10% of CPI - (7.9) (4.8)

199



32 Short-term bank borrowings

At 31 December, short-term bank borrowings comprised the following:

2009 2008Foreign banks 1,419,921 1,601,974Domestic banks 813,522 359,240

2,233,443 1,961,214Accrued interest expenses 8,064 8,310

2,241,507 1,969,524

As at 31 December 2009, short-term bank borrowings included various promissory notes amounting to TL 56,008 thousand in total with latest

maturity of 2010 (2008: TL 288,050 thousand with latest maturity of 2009).

As at 31 December 2008, short-term bank borrowings included a two-year syndicated facility to finance export contracts in two tranches of (i)

USD 45,829 thousand and EUR 110,521 thousand with the rates of Libor +2 percent and Euribor +2 percent per annum with the participation of 35

banks from 15 countries (equivalent of TL 304,601 thousand) and (ii) USD 33,245 thousand and EUR 156,384 thousand with the rates of Libor +2.5

percent and Euribor +2.5 percent per annum with the participation of 31 banks from 15 different countries (equivalent of TL 383,915 thousand).

33 Banking deposits from banks

At 31 December, banking deposits from banks comprised the following:

2009 2008Payable on demand 480,390 284,702Term deposits 346,458 352,988

826,848 637,690Accrued interest expenses 952 2,756

827,800 640,446

At 31 December 2009, banking deposits from banks include both TL accounts in the amount of TL 257,890 thousand (2008: TL 165,620 thousand)

and foreign currency denominated accounts in the amount of TL 568,958 thousand (2008: TL 472,070 thousand). As at 31 December 2009, interest

rates applicable to TL bank deposits and foreign currency bank deposits varied within ranges of 3 percent - 16 percent and 0 percent - 8 percent

(2008: 13 percent - 22 percent and 1 percent - 8 percent), respectively.

34 Banking customer deposits

At 31 December, banking customer deposits comprised the following:

2009 2008Demand Time Total Total

Foreign currency 2,290,746 6,734,262 9,025,008 8,078,268Saving 554,049 5,744,038 6,298,087 5,503,027Commercial 687,976 3,429,478 4,117,454 2,592,808Public and other 266,112 60,340 326,452 490,958

3,798,883 15,968,118 19,767,001 16,665,061Accrued interest expenses 39 74,282 74,321 112,848

3,798,922 16,042,400 19,841,322 16,777,909

At 31 December 2009, interest rates applicable to TL deposits and foreign currency deposits varied between 3 percent - 18 percent

(2008: 13 percent - 24 percent) and 0 percent - 11 percent (2008: 1 percent - 11 percent), respectively.




35 Obligations under repurchase agreements

The proportionately consolidated financial joint ventures raise funds by selling financial instruments under agreements to repay the funds by

repurchasing the instruments at future dates at the same price plus interest at a predetermined rate. Repurchase agreements are commonly used

as a tool for short-term financing of interest-earning assets, depending on the prevailing interest rates.

At 31 December, assets sold under repurchase agreements are as follows:

2009 Carrying value

Fair value of

underlying assets

Carrying amount

of corresponding

liabilities

Range of

repurchase dates Repurchase price

Investments in debt securities 3,337,180 3,400,450 3,254,178 Jan’10-Feb’11 3,294,7543,337,180 3,400,450 3,254,178 3,294,754

2008Investments in debt securities 3,518,010 3,548,012 3,370,491 Jan’09-Feb’11 3,410,480

3,518,010 3,548,012 3,370,491 3,410,480

As at 31 December 2009, accrued interest on obligations under repurchase agreements amounting to TL 17,886 thousand (2008: TL 18,577

thousand) is included in the carrying amount of the corresponding liabilities.

In general, the carrying values of such assets are more than the corresponding liabilities due to the margins set between parties, since such funding

is raised against assets collateralised.

The proceeds from the sales of securities under repurchase agreements are treated as liabilities and recorded as obligations under repurchase

agreements. As at 31 December 2009, the maturities of the obligations varied from one day to fourteen months and interest rates varied between 2

percent - 11 percent (2008: 3 percent - 17 percent with maturities varying from one day to twenty six months).

36 Accounts payable

At 31 December, accounts payable comprised the following:

2009 2008Payables to insurance and reinsurance companies 408,190 273,716Trade payables 399,768 972,151Due to customers for contract work (Note 21) 26,298 24,430Notes payable 21,039 18,575Others 18,317 43,710

873,612 1,332,582

201



37 Other current liabilities

At 31 December, other current liabilities comprised the following:

2009 2008Blocked accounts against expenditures of card holders 671,076 548,562Import deposits and advances received 160,932 47,699Other interest and expense accruals 124,892 115,879Provision for general banking risks 108,828 9,066Accrued exchange losses on derivatives 105,385 183,967Withholding taxes and duties payable 76,131 117,716Short term employee benefits 37,996 46,840Unearned income 27,466 32,539Transfer orders 19,492 20,185Blocked accounts 12,036 10,747Lease obligations 11,594 3,288Others 131,432 144,792

1,487,260 1,281,280

As at 31 December 2009, a general provision amounting to TL 108,828 thousand (2008: TL 9,066 thousand) is provided by Garanti Bank in line with

conservatism principle considering the circumstances which may arise from any changes in economy or market conditions.

38 Commitments and contingencies

Commitments and contingent liabilities are discussed separately for “segments other than banking and finance” and “banking and finance segment”

in the following paragraphs.

38.1 Segments other than banking and finance

Commitments and contingent liabilities arising in the ordinary course of business for the entities operating in the “segments other than banking and

finance” comprised the following items as at 31 December:

Letters of guarantee 2009 2008Given to suppliers 564,073 803,789Obtained from banks and given to government organisations 586,830 450,416Given to customs administrations 7,719 8,238Given to banks - 372Given to others 161,150 132,469Total letters of guarantee 1,319,772 1,395,284Sureties given 49,065 46,344

The Group, as a guarantor, has given its equity holdings in some group companies with a total nominal amount of TL 339,096 thousand (31

December 2008: TL 374,138 thousand) and tangible assets at an amount of TL 397,094 thousand (equivalent of USD 134,600 thousand and EUR

90,000 thousand) (31 December 2008: TL 144,878 thousand, equivalent of USD 95,800 thousand) as collateral. In terms of the related borrowing

agreements, one of the tourism segment consolidated subsidiaries’ profit from hotels has been attached.




38 Commitments and contingencies (continued)

38.2 Banking and finance segment

In the ordinary course of banking and finance activities, the entities included in the “banking and finance segment” undertake various commitments

and incur certain contingent liabilities that are not presented in the consolidated financial statements, including letters of guarantee, acceptance

credits and letters of credit.

At 31 December, commitments and contingent liabilities comprised the following items:

2009 2008

Letters of guarantee 3,601,684 3,455,003Letters of credit 983,565 1,001,712Acceptance credits 37,694 37,414Others - 32,832

4,622,943 4,526,961

As at 31 December 2009, commitments for unused credit limits for credit cards, overdrafts, cheques and loans to customers, and commitments for

“credit linked notes” amount approximately to TL 5,554,332 thousand (2008: TL 5,294,817 thousand) in total.

As at 31 December 2009, commitments for the derivative transactions carried out on behalf of customers in the Turkish Derivatives Exchange

amounted to TL 147,234 thousand (2008: TL 102,952 thousand) in total.

As at 31 December 2009, commitments for purchases and sales of foreign currencies under spot, forwards, swaps, future rate agreements, options

and forward agreements for gold trading amounted to TL 7,153,384 thousand (2008: TL 7,259,895 thousand), approximately 83 percent of which

are due within a year.

203




38.2 Banking and finance segment (continued)

The following tables summarize the contractual amounts of the forward exchange, swap, futures and options contracts, showing the details of

the remaining periods to maturity. Foreign currency amounts are translated at rates ruling at the reporting date. Monetary items denominated in

a foreign currency are economically hedged using foreign currency derivative contracts. All gains and losses on foreign currency contracts are

recognised in profit or loss, except for contracts of cash flow hedges as stated above. At 31 December 2009, approximately 100 percent of net

consolidated financial position foreign currency open position was hedged through the use of foreign currency contracts (2008: 112 percent).

Notional amount with remaining life of

31 December 2009

Up to 1

month

1 to 3

months

3 to 6

months

6 to 12

months

Over 1

year TotalInterest rate derivativesInterest rate swaps 1,772 3,751 1,383 31,832 206 38,944

Purchases 1,284 3,479 612 2,157 206 7,738Sales 488 272 771 29,675 - 31,206

Interest rate futures - 10,636 - - - 10,636Purchases - 907 - - - 907Sales - 9,729 - - - 9,729

Other derivativesSecurities, shares and index options 522 - 35,112 1,813 1,034,204 1,071,651

Purchases 522 - 32,865 - 517,102 550,489Sales - - 2,247 1,813 517,102 521,162

Other forward contracts 93,133 30,124 4,254 - - 127,511Purchases 37,343 16,896 4,254 - - 58,493Sales 55,790 13,228 - - - 69,018

Currency derivativesSpot exchange contracts 298,518 - - - - 298,518

Purchases 176,362 - - - - 176,362Sales 122,156 - - - - 122,156

Forward exchange contracts 418,308 86,872 102,229 45,783 35,317 688,509Purchases 276,279 47,133 40,294 32,188 12,094 407,988Sales 142,029 39,739 61,935 13,595 23,223 280,521

Currency/cross currency swaps 1,904,771 546,888 391,560 161,305 163,731 3,168,255Purchases 1,413,770 188,766 293,393 155,921 151,570 2,203,420Sales 491,001 358,122 98,167 5,384 12,161 964,835

Options 845,894 374,326 292,797 252,461 - 1,765,478Purchases 642,705 152,144 102,802 104,483 - 1,002,134Sales 203,189 222,182 189,995 147,978 - 763,344

Foreign currency futures - 1,264 158 - - 1,422Purchases - 1,264 158 - - 1,422Sales - - - - - -

Subtotal purchases 2,548,265 410,589 474,378 294,749 680,972 4,408,953Subtotal sales 1,014,653 643,272 353,115 198,445 552,486 2,761,971Total of transactions 3,562,918 1,053,861 827,493 493,194 1,233,458 7,170,924






Notional amount with remaining life of

31 December 2008

Up to 1

month

1 to 3

months

3 to 6

months

6 to 12

months

Over 1

year TotalInterest rate derivativesInterest rate swaps 938 5,358 55,285 58,848 4,909 125,338

Purchases 213 3,664 8,000 5,018 4,593 21,488Sales 725 1,694 47,285 53,830 316 103,850

Interest rate futures - 1,423 - - - 1,423Purchases - - - - - -Sales - 1,423 - - - 1,423

Other derivativesSecurities, shares and index options - - 20,610 9,359 511,516 541,485

Purchases - - 20,610 3,216 255,758 279,584Sales - - - 6,143 255,758 261,901

Currency derivativesSpot exchange contracts 219,989 - - - - 219,989

Purchases 146,201 - - - - 146,201Sales 73,788 - - - - 73,788

Forward exchange contracts 367,177 215,233 63,978 60,080 53,143 759,611Purchases 217,067 100,926 42,023 29,766 20,582 410,364Sales 150,110 114,307 21,955 30,314 32,561 349,247

Currency/cross currency swaps 2,166,005 915,770 581,738 649,194 260,438 4,573,145Purchases 798,772 434,775 266,194 530,064 232,813 2,262,618Sales 1,367,233 480,995 315,544 119,130 27,625 2,310,527

Options 406,207 231,050 226,122 196,156 7,817 1,067,352Purchases 155,907 122,301 125,284 80,665 3,507 487,664Sales 250,300 108,749 100,838 115,491 4,310 579,688

Foreign currency futures - 3,277 - - - 3,277Purchases - 687 - - - 687Sales - 2,590 - - - 2,590

Other foreign exchange contracts 38,684 4,828 2,682 - - 46,194Purchases 1,804 568 - - - 2,372Sales 36,880 4,260 2,682 - - 43,822

Subtotal purchases 1,319,964 662,921 462,111 648,729 517,253 3,610,978Subtotal sales 1,879,036 714,018 488,304 324,908 320,570 3,726,836Total of transactions 3,199,000 1,376,939 950,415 973,637 837,823 7,337,814

205





The breakdown of such commitments outstanding at 31 December, by type, is as follows:

2009 2008Purchase Sale Purchase Sale

Currency swap agreements for hedging purposes 2,123,693 962,446 2,008,853 2,287,936Interest rate and foreign currency options 904,932 1,219,840 702,320 776,169Spot foreign currency transactions 176,362 122,156 146,201 73,788Forward agreements for customer dealing activities 126,632 240,053 186,106 270,166Forward rate agreements, foreign currency and interest rate futures 2,329 9,729 687 4,013Options for customer dealing activities 647,693 64,664 64,928 65,421Forward agreements for hedging purposes 281,356 40,469 224,257 79,081Forward agreements for gold trading 58,492 69,018 2,372 43,822Currency swap agreements for customer dealing activities 79,727 2,389 253,765 22,590Interest rate swap agreements 7,737 31,207 21,489 103,850

4,408,953 2,761,971 3,610,978 3,726,836

38.3 Commitments and contingencies applicable to the business segments

As at 31 December 2009, commitment for uncalled capital of affiliated companies amounted to TL 14,814 thousand (2008: TL 36,272 thousand).

39 Related party disclosuresFor the purpose of the consolidated financial statements, the shareholders, key management personnel and the Board members, and in each case, together with their families and companies controlled by/affiliated with them; and associates, investments and joint ventures are considered and referred to as the related parties. A number of transactions are entered into with the related parties in the normal course of business. Most of the related party activity is eliminated at consolidation and the remaining activity is not material to the Group. These transactions were carried out on an arm’s-length basis during the normal course of business.

39.1 Related party balances

At 31 December, the Group had the following balances outstanding from its related parties:

2009 2008Banking customer deposits 68,401 46,299Due from related parties 10,751 14,998Due to related parties 3,470 3,695Letters of guarantee 3,440 2,213

39.2 Related party transactions

For the years ended 31 December, the revenues earned and expenses incurred by the Group in relation to transactions with its related parties as

summarised below:

2009 2008Revenues 5,161 4,062Interest expense 5,512 4,089

No impairment losses have been recorded against balances outstanding during the period with related parties and no specific allowance has been made for impairment losses on balances with the related parties as at 31 December 2009.

Garanti Bank sold a real estate, a building in Maslak, to Doğuş Holding on 11 March 2008 at a sales price of USD 35 million (the Group’s interest amounting to USD 10.6 million). Before the year end, the total amount was fully collected and a gain of TL 81 thousand on this sale was recorded as at 31 December 2008.

Doğuş Holding sold 182 founder shares of Garanti Bank to Garanti Bank on 13 June 2008 subsequent to the permissions obtained from the related legal authorities and recognised a gain of TL 232,444 thousand in its consolidated financial statements.




39 Related party disclosures (continued)

39.3 Transactions with key management personnel

On a consolidated basis, key management costs included in general and administrative expenses for the years ended 31 December 2009 and 2008

amounted to TL 81,565 thousand and TL 82,265 thousand, respectively.

40 Financial instruments

40.1 Liquidity risk

The following tables provide an analysis of monetary assets and monetary liabilities of the Group into relevant maturity groupings based on the

remaining periods to repayment:

31 December 2009Monetary assets Up to 1 month 1 to 3 months 3 to 12 months Over 1 year TotalTurkish Lira:Investments in debt securities - - - 9,496,531 9,496,531Other non-current assets - - - 61,906 61,906Accounts receivable 138,221 650,366 151,613 - 940,200Due from related parties - - 10,751 - 10,751Other current assets 105,332 330,730 27,187 - 463,249Banking loans and advances to banks 553,989 62,487 71,724 575,506 1,263,706Banking loans and advances to customers 2,951,434 885,893 943,443 3,287,524 8,068,294Financial assets at fair value through profit or loss 15,064 2,547 87,825 28,407 133,843Cash and cash equivalents 1,250,086 46 16,922 - 1,267,054Total TL monetary assets 5,014,126 1,932,069 1,309,465 13,449,874 21,705,534Foreign Currencies:Investments in debt securities - - - 1,796,055 1,796,055Other non-current assets - - - 967,041 967,041Accounts receivable 102,813 107,786 386,371 - 596,970Other current assets 93,554 110,284 43,105 - 246,943Banking loans and advances to banks 584,539 348,360 245,408 812,865 1,991,172Banking loans and advances to customers 499,198 827,296 1,795,362 5,427,888 8,549,744Financial assets at fair value through profit or loss 15,101 6,066 15,222 10,152 46,541Cash and cash equivalents 1,065,611 1,411 24,244 - 1,091,266Total foreign currency monetary assets 2,360,816 1,401,203 2,509,712 9,014,001 15,285,732Total monetary assets 7,374,942 3,333,271 3,819,178 22,463,875 36,991,266

207



40 Financial instruments (continued)

40.1 Liquidity risk (continued)

31 December 2009Monetary liabilities Up to 1 month 1 to 3 months 3 to 12 months Over 1 year TotalTurkish Lira:Long-term borrowings - - 936,092 936,092Subordinated liabilities - - - - -Other non-current liabilities - - - 394,571 394,571Short-term and short-term portion of long-

term bank borrowings 541,512 11,417 56,322 - 609,251Banking customer deposits and banking

deposits from banks 9,719,510 1,121,935 53,112 46,079 10,940,636Obligations under repurchase agreements 2,963,944 112 125,886 47,102 3,137,044Accounts payable 67,265 81,700 396,957 15,990 561,912Due to related parties - - 2,037 - 2,037Other current liabilities 685,597 18,072 524,661 - 1,228,330Total TL monetary liabilities 13,977,828 1,233,236 1,158,975 1,439,834 17,809,873Foreign CurrenciesLong-term bank borrowings - - - 4,103,830 4,103,830Subordinated liability 4,382 5,087 2,636 287,306 299,411Other non-current liabilities - - - 178,554 178,554Short-term and short-term portion of long-

term bank borrowings 453,505 276,782 2,203,548 - 2,933,835Banking customer deposits and banking

deposits from banks 7,974,639 808,650 635,000 310,197 9,728,486Obligations under repurchase agreements 117,134 - - - 117,134Accounts payable 40,152 220,961 42,324 8,263 311,700Due to related parties - - 1,433 - 1,433Other current liabilities 54,052 49,563 155,315 - 258,930Total foreign currency monetary liabilities 8,643,864 1,361,043 3,040,256 4,888,150 17,933,313Total monetary liabilities 22,621,692 2,594,279 4,199,231 6,327,984 35,743,186

Liquidity position/(gap) (15,246,750) 738,993 (380,054) 16,135,891 1,248,080




40 Financial instruments(continued)

40.1 Liquidity risk(continued)

31 December 2008Monetary assets Up to 1 month 1 to 3 months 3 to 12 months Over 1 year TotalTurkish Lira:Investments in debt securities - - - 6,382,486 6,382,486Other non-current assets - - - 104,596 104,596Accounts receivable 214,451 464,371 106,248 - 785,070Due from related parties - 1,992 13,006 - 14,998Other current assets 232,627 112,236 201,725 - 546,588Banking loans and advances to banks 223,567 12,360 21,474 283,050 540,451Banking loans and advances to customers 2,755,590 1,002,413 912,704 3,023,581 7,694,288Financial assets at fair value through profit or

loss 6,702 674 12,290 27,469 47,135Cash and cash equivalents 1,036,132 31,236 - - 1,067,368Total TL monetary assets 4,469,069 1,625,282 1,267,447 9,821,182 17,182,980Foreign Currencies:Investments in debt securities - - - 1,590,187 1,590,187Other non-current assets - - - 722,849 722,849Accounts receivable 64,009 136,605 228,853 - 429,467Other current assets 83,659 76,730 31,290 - 191,679Banking loans and advances to banks 1,129,284 79,205 340,700 329,242 1,878,431Banking loans and advances to customers 368,459 801,098 2,268,352 5,427,969 8,865,878Financial assets at fair value through profit or

loss 3,383 120 4,939 21,375 29,817Cash and cash equivalents 1,160,100 29,181 - - 1,189,281Total foreign currency monetary assets 2,808,894 1,122,939 2,874,134 8,091,622 14,897,589Total monetary assets 7,277,963 2,748,221 4,141,581 17,912,804 32,080,569

31 December 2008Monetary liabilities Up to 1 month 1 to 3 months 3 to 12 months Over 1 year TotalTurkish Lira:Long-term borrowings - - - 450,591 450,591Other non-current liabilities - - - 426,804 426,804Retirement benefit obligation - - - 31,006 31,006Short-term and short-term portion of long-

term bank borrowings 279,971 45,060 131,815 - 456,846Banking customer deposits and banking

deposits from banks 8,014,036 687,096 77,100 29,359 8,807,591Obligations under repurchase agreements 2,986,156 98 - 172,499 3,158,753Accounts payable 123,426 62,508 342,691 2,638 531,263Due to related parties 2,379 423 794 - 3,596Other current liabilities 628,135 261,064 211,933 - 1,101,132Total TL monetary liabilities 12,034,103 1,056,249 764,333 1,112,897 14,967,582Foreign CurrenciesLong-term bank borrowings - - - 3,848,957 3,848,957Subordinated liability 242 15,860 30,177 240,065 286,344Other non-current liabilities - - - 118,394 118,394Short-term and short-term portion of long-

term bank borrowings 344,833 480,688 2,122,971 - 2,948,492Banking customer deposits and banking

deposits from banks 6,992,423 625,808 652,509 340,024 8,610,764Obligations under repurchase agreements 86,373 58,293 67,072 - 211,738Accounts payable 47,265 82,652 665,099 6,303 801,319Due to related parties - - 99 - 99Other current liabilities 18,122 46,657 115,369 - 180,148Total foreign currency monetary liabilities 7,489,258 1,309,958 3,653,296 4,553,743 17,006,255Total monetary liabilities 19,523,361 2,366,207 4,417,629 5,666,640 31,973,837

Liquidity position/(gap) (12,245,398) 382,014 (276,048) 12,246,164 106,732

209




40.2 Credit risk

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was

as follows:

2009 2008Cash and cash equivalents* 2,357,304 2,255,949Accounts receivable 1,537,170 1,214,537Due from related parties 10,751 14,998Banking loans and advances to customers and banks 19,872,916 18,979,048Investments in debt securities 11,292,586 7,972,673Financial assets at fair value through profit or loss 180,384 76,952Other current assets** 365,842 432,666Other non-current assets** 849,649 761,757

36,466,602 31,708,580

(*) Cash on hand is excluded from cash and cash equivalents.

(**) Non-financial instruments such as advances given, VAT deductible and carried forward, prepaid expenses and advances given are excluded

from other current assets and other non-current assets.

Exposure to credit risk for segments other than banking and finance segment

The maximum exposure to credit risk for trade receivables at the reporting date by type of customer was as follows:

2009 2008Contract receivables 540,342 395,018Retailers 124,629 129,997Advertising agencies 51,297 35,289End-users 48,307 31,083Tourism agencies 1,896 1,911Other 46,304 34,529

812,775 627,827

The maximum exposure to credit risk for trade receivables at the reporting date by geographic concentration was as follows:

Carrying amount2009 2008

Turkey 490,465 466,357Euro zone 103,427 9,003Libya 162,027 102,530Morocco 25,414 23,712Ukraine - 3,303Other 31,442 22,922

812,775 627,827





40.2 Credit risk (continued)

Impairment losses

The aging of trade receivables at the reporting date was:

2009 2009 2008 2008Gross Impairment Gross Impairment

Not past due 580,657 (155) 418,014 (10)Past due 0-30 days 45,577 (40) 155,877 (15)Past due 31-120 days 19,125 (1,569) 29,977 (3,012)Past due 121-365 days 113,251 (3,092) - -More than one year 167,351 (108,330) 134,144 (107,055)Total 925,961 (113,186) 738,012 (110,092)

Segments other than banking and finance including the D Netherland Holding B.V. (“D Netherlands”) figures

The following tables are the contractual maturities of financial liabilities, including interest payments and excluding the impact of netting agreements:

31 December 2009

Carrying

amount

Contractual

cash flows

6 months

or less

6-12

months 1-2 years 2-5 years

More than

5 years

Non-derivative financial liabilities

Secured bank borrowings 2,383,024 (2,550,759) (464,674) (93,688) (302,741) (1,297,619) (392,037)

Unsecured bank borrowings 1,490,666 (1,504,036) (898,162) (322,937) (162,777) (109,420) (10,740)

Finance lease liabilities 28,343 (27,556) (9,582) (8,230) (9,315) (429) -

Accounts payable 389,954 (387,549) (197,826) (189,723) - - -

Derivative financial liabilities

Forward contracts 813 (5,589) (404) (404) (809) (2,426) (1,546)

4,292,800 (4,475,489) (1,570,648) (614,982) (475,642) (1,409,894) (404,323)

31 December 2008

Carrying

amount

Contractual

cash flows

6 months

or less

6-12

months 1-2 years 2-5 years

More than

5 years

Non-derivative financial liabilities

Secured bank borrowings 2,002,775 (2,184,406) (306,697) (155,310) (256,785) (1,051,372) (414,242)

Unsecured bank borrowings 1,639,459 (1,956,143) (746,440) (203,982) (664,223) (267,242) (74,256)

Finance lease liabilities 11,307 (11,307) (1,829) (1,459) (7,512) (507) -

Accounts payable 870,674 (870,674) (185,999) (682,198) (2,477) - -

Derivative financial liabilities

Forward contracts 12,748 (21,204) (1,682) (1,873) (3,279) (10,099) (4,271)

4,536,963 (5,043,734) (1,242,647) (1,044,822) (934,276) (1,329,220) (492,769)

211





Exposure to credit risk for banking and finance segment

Contractual maturity analysis of liabilities of Garanti Bank and its subsidiaries according to remaining maturities

The remaining maturities table of the contractual liabilities includes the undiscounted future cash outflows for the principal amounts of Garanti Bank

and its subsidiaries’ financial liabilities as per their earliest likely contractual maturities.

31 December 2009

Carrying

Amount

Nominal

Principal

Outflows Demand

Up to 1

Month 1-3 Months 3-12 Months 1-5 Years

More than 5

YearsBanking deposits from banks and

customers 20,669,122 20,593,808 4,279,312 13,335,067 1,935,572 723,026 288,411 32,420Obligations under repurchase

agreements 3,254,178 3,236,291 - 3,069,915 111 120,920 45,345 -Bank borrowings 4,709,318 4,635,796 - 351,837 96,351 1,299,678 1,766,499 1,121,431Subordinated liabilities 299,411 291,967 - 4,381 4,540 547 2,636 279,863Total financial liabilities 28,932,029 28,757,862 4,279,312 16,761,200 2,036,574 2,144,171 2,102,891 1,433,714

31 December 2008

Carrying

Amount

Nominal

Principal

Outflows Demand

Up to 1

Month 1-3 Months 3-12 Months 1-5 Years

More than 5

YearsBanking loans and advances to

customers and banks 17,418,355 17,302,614 3,198,972 11,722,036 1,298,378 714,988 333,056 35,184Obligations under repurchase

agreements 3,370,491 3,351,913 - 3,062,942 57,181 65,580 166,210 -Bank borrowings 4,062,652 3,975,405 - 318,881 159,517 1,522,047 1,151,094 823,866Subordinated liabilities 286,344 279,096 - - - - 49,877 229,219Total financial liabilities 25,137,842 24,909,028 3,198,972 15,103,859 1,515,076 2,302,615 1,700,237 1,088,269

Banking loans and advances

given to customers2009 2008

Individually impaired 821,991 430,739Allowance for impairment (647,973) (319,874)Carrying amount 174,018 110,865

Collectively impaired 228,199 286,655Allowance for impairment (118,597) (63,767)Carrying amount 109,602 222,388

Past due but not impaired 178,396 216,046178,396 216,046

Neither past due nor impaired 16,095,639 15,994,075Loans with renegotiated terms 60,383 16,792Carrying amount 16,156,022 16,010,867

Total carrying amount 16,618,038 16,560,166

At 31 December 2009 and 2008, Garanti Bank has no allowance for loans and advances to banks.

Garanti Bank developed a statistical-based internal risk rating model for its credit portfolio of corporate/commercial/medium-size companies.

This internal risk rating model has been in use for customer credibility assessment since 2003. Risk rating has become a requirement for loan

applications, and ratings are used both to determine branch managers’ credit authorization limits and in credit assessment process.






Exposure to credit risk for banking and finance segment (continued)

The concentration table of the cash and non-cash loans for Garanti Bank according to the risk rating system for its customers defined as corporate,

commercial and medium-size enterprises is presented below. The small and micro-size enterprises, consumer loans and credit card portfolios are

not included in this table as they are subject to different rating scorings on a product basis.

31 December

2009

31 December

2008% %

Above Average 40 50Average 50 43Below Average 10 7

100 100

Sectoral and geographical concentration of impaired loans for banking and finance segment including D Netherlands.

An analysis of concentrations of non-performing loans and lease receivables is shown below:

2009 2008Consumer loans 468,781 258,190Textile 70,268 39,748Construction 40,991 16,438Food 26,125 12,270Agriculture and stockbreeding 23,986 11,482Chemistry and chemical products 23,017 21,313Service sector 18,530 9,116Durable consumption 16,126 6,086Metal and metal products 15,113 5,250Transportation and logistics 11,569 3,411Tourism 8,698 5,771Transportation vehicles and sub-industries 6,855 2,872Paper and paper products 5,971 679Energy 4,994 1,290Others 80,967 36,823Total non-performing loans and finance lease receivables 821,991 430,739

2009 2008Turkey 751,769 405,923Romania 60,803 19,020Russia 4,625 1,564Brazil 3,048 3,121Others 1,746 1,111Total non-performing loans and finance lease receivables 821,991 430,739

Past due but not impaired loans for banking and finance segment including D Netherlands

These are loans where contractual interest or principal payments are past due but the Group believes that impairment is not appropriate on the

basis of the level of collateral available and the customer’s current activities, assets and financial position.

213





The breakdown of performing cash and non-cash loans and advances to customers by type of collateral is as follows:

2009 2008Cash loansSecured loans: 11,927,660 11,848,390

Secured by mortgages 4,227,426 4,048,013Secured by government institutions or government securities 648,601 609,078Secured by cash collateral 303,681 367,945Guarantees issued by financial institutions 83,105 51,109Other collateral (pledge on assets, corporate and personal guarantees, promissory notes) 6,664,847 6,772,246

Unsecured loans 4,648,537 4,585,842Total performing loans and finance lease receivables 16,576,197 16,434,232

Non-cash loansSecured loans: 3,603,783 3,722,503

Secured by cash collateral 177,502 184,341Secured by mortgages 498,757 450,665Guarantees issued by financial institutions 22,410 1,525Other collateral (pledge on assets, corporate and personal guarantees, promissory notes) 2,905,114 3,085,972

Unsecured loans 1,019,160 804,458Total non-cash loans (Note 6.1) 4,622,943 4,526,961

An estimate of the fair value of collateral held against non-performing loans and receivables is as follows:

2009 2008Mortgages 217,900 106,794Promissory notes and surety 187,232 92,443Pledge assets 102,062 49,633Cash collateral 958 116Unsecured 313,839 181,753

821,991 430,739

The amounts reflected in the tables above represent the maximum accounting loss that would be recognised at the reporting date if counterparties failed completely to perform as contracted and any collateral or security proved to be of no value.

40.3 Market risk

(i) Interest rate risk

ProfileAs at 31 December, the interest rate profile of the Group’s interest-bearing financial instruments other than banking and finance was as follows:

2009 2008Fixed rate instrumentsFinancial assets 610,339 639,280Financial liabilities (836,834) (647,020)Interest rate swap, fixed leg (96,466) (78,792)

(322,961) (86,532)

Variable rate instrumentsFinancial assets 47,651 94,455Financial liabilities (2,591,978) (3,021,438)Interest rate swap, variable leg 96,466 78,792

(2,447,861) (2,848,191)

Cash flow sensitivity analysis for variable rate instruments for segments other than banking and finance segment





40.3 Market risk (continued)

(i) Interest rate risk (continued)

A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts

shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. This analysis is performed on the

same basis for 2008.

Profit or loss Equity100 bp 100 bp

31 December 2009 increase decrease increase decreaseVariable rate instruments 941 (941) 3,311 (4,620)Cash flow sensitivity (net) 941 (941) 3,311 (4,620)

Profit or loss Equity100 bp 100 bp

31 December 2008 increase decrease increase decreaseVariable rate instruments (3,893) 3,881 - -Cash flow sensitivity (net) (3,893) 3,881 - -

The following table indicates the effective interest rates by major currencies for the major components of the consolidated statements of financial

position of the Group for the years ended 31 December:

2009USD% Euro% TL% Other currencies%

AssetsBanking loans and advances to banks 4.41-8.00 1.00-7.00 7.00-11.00 3.00-12.00Debt and other fixed or floating income

instruments 6.00-13.00 4.00 14.00 -Banking loans and advances to customers 3.00-17.00 1.00-17.00 7.00-27.00 1.00-23.00LiabilitiesBanking deposits

Foreign currency 1.00-8.00 2.00-8.00 - 2.00-11.00Bank 0-8.00 1.00-7.00 7.00 3.00-6.00Saving - - 3.00-14.00 -Commercial - - 3.00-16.00 -Public and other deposits - - 9.00 -

Obligations under repurchase agreements 5.00 - 7.00 5.00-8.00Bank borrowings 1.26-14.00 1.00-10.68 7.00-17.00 3.00-21.94

2008USD% Euro% TL% Other currencies%

AssetsBanking loans and advances to banks 1.00-6.70 1.00-7.60 15.00-22.85 -Debt and other fixed or floating income

instruments 6.86-10.00 7.19 14.00-21.00Banking loans and advances to customers 2.00-19.00 3.15-19.00 14.00-24.53 5.51-22.00LiabilitiesBanking deposits

Foreign currency 1.00-6.5 2.00-7.50 - 2.00-10.50Bank 1.50-6.85 1.95-6.94 15.00-18.11 0.75Saving - - 15.75-21.98 -Commercial - - 15.75-23.52 -Public and other deposits - - 21.89 -

Obligations under repurchase agreements 3.03-4.90 3.70-6.75 15.26 9.80Bank borrowings 3.44-15.00 5.02-14.00 14.50-33.00 2.33

215





(ii) Currency risk

The Group is exposed to currency risk through transactions in foreign currencies and through its investment in foreign operations.

Main foreign operations of the banking and finance segment are in the Netherlands, Romania and Russia. The measurement currencies of these

operations are Euro, RON and US Dollars. As the currency in which the Group presents its consolidated financial statements is TL, the consolidated

financial statements are affected by currency exchange rate fluctuations against TL.

At 31 December, the currency risk exposures of the Group are as follows:

2009

USD Euro

Other

currencies TotalForeign currency monetary assetsInvestments in debt securities 1,440,684 250,459 104,912 1,796,055Other non-current assets 728,638 213,416 24,987 967,041Accounts receivable 419,453 73,858 103,659 596,970Other current assets 132,583 47,700 66,660 246,943Banking loans and advances to banks and

customers 6,086,336 4,033,537 421,043 10,540,916Financial assets at fair value through profit or loss 17,318 12,934 16,289 46,541Cash and cash equivalents 526,912 524,143 40,211 1,091,266Total foreign currency monetary assets 9,351,924 5,156,047 777,761 15,285,732Foreign currency monetary liabilitiesLong-term bank borrowings 3,342,426 761,404 - 4,103,830Subordinated liabilities 231,693 67,718 - 299,411Other non-current liabilities 55,332 66,734 56,488 178,554Short-term bank borrowings 616,015 957,033 66,150 1,639,198Short-term portion of long-term bank borrowings 805,797 460,815 28,025 1,294,637Banking customer deposits and banking

deposits from banks 5,043,242 4,267,815 417,429 9,728,486Obligations under repurchase agreements 47,598 - 69,536 117,134Accounts payable 25,608 209,441 76,651 311,700Due to related parties 1,433 - - 1,433Other current liabilities 116,669 64,214 78,047 258,930Total foreign currency monetary liabilities 10,285,813 6,855,174 792,326 17,933,313Gross statement of financial position

exposure (933,889) (1,699,127) (14,565) (2,647,581) Off Balance Sheet exposure (726,543) 1,128,095 35,374 436,926Net exposure (1,660,432) (571,032) 20,809 (2,210,655)






(ii) Currency risk (continued)

2008

USD Euro

Other

currencies TotalForeign currency monetary assetsInvestments in debt securities 1,466,634 107,888 15,665 1,590,187Other non-current assets 664,529 53,392 4,928 722,849Accounts receivable 251,303 60,988 117,176 429,467Other current assets 85,441 71,831 34,407 191,679Banking loans and advances to banks and customers 6,251,596 4,030,891 461,822 10,744,309Financial assets at fair value through profit or loss 11,080 14,632 4,105 29,817Cash and cash equivalents 940,233 212,872 36,176 1,189,281Total foreign currency monetary assets 9,670,816 4,552,494 674,279 14,897,589Foreign currency monetary liabilitiesLong-term bank borrowings 3,127,607 721,350 - 3,848,957Subordinated liabilities 235,759 50,585 - 286,344Other non-current liabilities 33,500 60,984 23,910 118,394Short-term bank borrowings 539,834 995,433 29,736 1,565,003Short-term portion of long-term bank borrowings 904,185 381,534 97,770 1,383,489Banking customer deposits and banking deposits from banks 4,588,440 3,786,651 235,673 8,610,764Obligations under repurchase agreements 150,221 47,117 14,400 211,738Accounts payable 24,908 746,897 29,514 801,319Due to related parties 35 64 - 99Other current liabilities 62,377 79,586 38,185 180,148Total foreign currency monetary liabilities 9,666,866 6,870,201 469,188 17,006,255Gross statement of financial position exposure 3,950 (2,317,707) 205,091 (2,108,666) Off Balance Sheet exposure (1,741,604) 1,254,586 (2,414) (489,432)Net exposure (1,737,654) (1,063,121) 202,677 (2,598,098)

For the purposes of the evaluation of the table above, the figures represent the TL equivalent of the related hard currencies.

Sensitivity analysis

A 10 percent weakening of TL against the above currencies at 31 December would have increased (decreased) equity and profit or loss by the

amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the

same basis for 2008.

Equity Profit or loss31 December 2009USD (6,617) (159,427)Euro (1,150) (55,953)Others (482) 2,56331 December 2008USD (839) (172,926)Euro (62) (106,250)Others (9) 20,277

A 10 percent of strengthening of TL against the above currencies at 31 December would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

40.4 Fair value information

Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced

sale of liquidation, and is best evidenced by a quoted market price.

217




40.4 Fair value information (continued)

The estimated fair values of financial instruments have been determined using available market information by the Group, and where it exists, using appropriate valuation methodologies. However, judgment is necessarily required to interpret market data to determine the estimated fair value. Turkey has shown signs of an emerging market and has experienced a significant decline in the volume of activity in its financial market. While the management of the Group has used available market information in estimating the fair values of financial instruments, the market information may not be fully reflective of the value that could be realised in the current circumstances.

Management has estimated that the fair values of certain financial assets and financial liabilities are not materially different than their recorded values except for loans and advances to customers on investment securities. These financial assets and financial liabilities include loans and advances to banks, obligations under repurchase agreements, loans and advances from banks, and other short-term assets and liabilities that are of a contractual nature. Management believes that the carrying amounts of these particular financial assets and liabilities approximate their fair values, partially due to the fact that it is a practice to renegotiate interest rates to reflect current market conditions.

As at 31 December 2009, the fair value of banking loans and advances to customers was TL 16,758,811 thousand (2008: TL 16,561,455 thousand), whereas the carrying amount was TL 16,618,038 thousand (2008: TL 16,560,166 thousand).

As at 31 December 2009, the fair value of investment in debt securities was TL 11,471,164 thousand (2008: TL 7,974,272 thousand), whereas the carrying amount was TL 11,292,586 thousand (2008: TL 7,972,673 thousand).

The table below analyses financial instruments carried at fair value, by valuation method:

2009 Level 1 Level 2 Level 3 TotalFinancial assets at fair value through profit or loss 140,367 2,364 37,653 180,384Accrued exchange gain on derivatives 45,403 148,704 109 194,216Debt and other instruments available-for-sale 8,433,279 115,799 485,984 9,035,062Investments in equity participations 5 - 15,395 15,400Financial assets at fair value 8,619,054 266,867 539,141 9,425,062Accrued exchange losses on derivatives 41,242 63,941 202 105,385Financial liabilities at fair value 41,242 63,941 202 105,385

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilitiesLevel 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices)

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)

41 Use of estimates and judgments

Management discussed with the Audit Committee the development, selection and disclosure of the Group’s critical accounting policies and estimates, and the application of these policies and estimates. These disclosures supplement the commentary on basis of preparation (see note 2(d)).

Key sources of estimation uncertaintyAllowance for credit lossesAssets accounted for at amortised cost are evaluated for impairment on a basis described in accounting policy note 3(m).

The specific counterparty component of the total allowances for impairment applies to claims evaluated individually for impairment and is based upon management’s best estimate of the present value of the cash flows that are expected to be received. In estimating these cash flows, management makes judgement about counterparty’s financial situation and the net realisable value of any underlying collateral. Each impaired asset is assessed on its merits, and the workout strategy and estimate of cash flows considered recoverable are independently approved by the credit risk function.

Portfolio-basis assessed impairment allowances cover credit losses inherent in portfolios of claims with similar economic characteristics when there is objective evidence to suggest that they contain impaired claims, but the individual impaired items cannot yet be identified. A component of portfolio-basis assessed allowances is for country risks. In assessing the need for collective loan loss allowances, management considers factors such as credit quality, portfolio size, concentrations, and economic factors. In order to estimate the required allowance, assumptions are made to define the way inherent losses are modelled and to determine the required input parameters, based on historical experience and current economic conditions. The accuracy of the allowances depends on how well these estimate future cash flows for specific counterparty allowances and the model assumptions and parameters used in determining collective allowances.




41 Use of estimates and judgments (continued)

Key sources of estimation uncertainty (continued)

Determining fair values

The determination of fair value for financial assets and liabilities for which there is no observable market price requires the use of valuation

techniques as described in significant accounting policies and Note 4. For financial instruments that trade infrequently and have little price

transparency, fair value is less objective, and requires varying degrees of judgement depending on liquidity, concentration, uncertainty of market

factors, pricing assumptions and other risks affecting the specific instrument.

Critical accounting judgements in applying the Group’s accounting policies

Critical accounting judgements made in applying the Group’s accounting policies include:

Financial asset and liability classification

The Group’s accounting policies provide scope for assets and liabilities to be designated on inception into different accounting categories in certain

circumstances:

In classifying financial assets or liabilities as “trading”, the Group has determined that it meets the description of trading assets and liabilities set •

out in accounting policy 3(d) Financial instruments.

In designating financial assets or liabilities at fair value through profit or loss, the Group has determined that it has met one of the criteria for this •

designation set out in accounting policy 3(d) Financial instruments.

In classifying financial assets as held-to-maturity, the Group has determined that it has both the positive intention and ability to hold the assets •

until their maturity date as required by accounting policy 3(d) Financial instruments.

Securitisations

In applying its policies on securitised financial assets, the Group has considered both the degree of transfer of risks and rewards on assets

transferred to another entity and the degree of control exercised by the Group over the other entity:

When the Group, in substance, controls the entity to which financial assets have been transferred, the entity is included in these consolidated •

financial statements and the transferred assets are recognised in the Group’s consolidated statement of financial position.

When the Group has transferred financial assets to another entity, but has not transferred substantially all of the risks and rewards relating to the •

transferred assets, the assets are recognised in the Group’s consolidated statement of financial position.

When the Group transfers substantially all the risks and rewards relating to the transferred assets to an entity that it does not control, the assets •

have been derecognised from the Group’s consolidated statement of financial position.

Details of the Group’s securitisation activities are given in Note 28.

219



42 Group enterprises

The consolidated financial statements aggregate financial information from the following entities:

42.1 Entities in Banking and Finance Segment

The entities first consolidated under Garanti Bank; then proportionately consolidated under the Group in accordance with IAS 31 “Interests in Joint

Ventures”:

Name Nature of businessEureko Sigorta InsuranceGaranti Bank BankingGaranti Bank International NV (“GBI”) BankingGaranti Bank Moscow (“GB Moscow”) BankingGaranti Bilişim Teknolojisi ve Ticaret Anonim Şirketi (“Garanti Bilişim”) (a) IT servicesGaranti Diversified Payment Rights Finance Company (“Garanti DPR”) Special purpose entity for securitisation transactionGaranti Emeklilik ve Hayat Anonim Şirketi (“GEHAŞ”) Life insuranceGaranti Faktoring Hizmetleri Anonim Şirketi (“Garanti Faktoring”) FactoringGaranti Filo Yönetimi Anonim Şirketi (”Garanti Filo) (a) Fleet managementGaranti Financial Services plc. (“Garanti Financial”) A non-operating companyGaranti Finansal Kiralama Anonim Şirketi (“Garanti Leasing“) LeasingGaranti Kültür Anonim Şirketi (“Garanti Kültür”) (a) Cultural activitiesGaranti Fund Management Company Limited (“GFM”) Fund managementGaranti Portföy Yönetimi Anonim Şirketi (“Garanti Portföy”) Fund managementGaranti Yatırım Menkul Kıymetler Anonim Şirketi (“Garanti Yatırım”) Brokerage and investment bankingT-2 Capital Finance Company (”T-2 Capital”) Special purpose entity for subordinated debt transactions

(a) These companies are subsidiaries of Garanti Bank and are operating in businesses other than banking and/or finance. They are included within

the “banking and finance” segment for the purposes of Doğuş Holding’s consolidated financial statements since Garanti Bank owns their controlling

interests.

The entities first consolidated under D Netherlands; then consolidated under the Group in accordance with IAS 31 “Interests in Joint Ventures”:

Name Nature of businessD Netherlands Holding companyDoğuş GE B.V. (b) FinanceDomenia (b) MortgageGE Garanti Bank S.A. (b) BankingRalfi IFN SA (“Ralfi”) (b) Consumer FinanceS.C. Motoractive IFN SA (“Motoractive”) (b) Leasing

(b) These companies are subsidiaries of Doğuş GE B.V. and are operating in banking and finance sector. They are included within the bankings and

finance segment for the purpose of Doğuş Holding’s consolidated financial statements since Doğuş GE B.V. owns their controlling interest. Doğuş

GE B.V. is a proportionately consolidated joint venture of Doğuş Holding.




42 Group enterprises (continued)

42.2 Entities in Construction Segment

Name Nature of businessAslancık Elektrik Üretim ve Ticaret Limited Şirketi (“Aslancık”) Electricity generationAyson Geoteknik ve Deniz İnşaat Anonim Şirketi (“Ayson”) DrillingAyson Hydro Gradenje d.o.o. (“Ayson Hydro”) DrillingBoyabat Elektrik Üretim ve Ticaret Anonim Şirketi (“Boyabat”) Electricity generationD Enerji Üretim ve Yatırım Anonim Şirketi (“D Enerji”) EnergyDogus Insaat ES ConstructionDogus Maroc SARL ConstructionDoğuş Alarko YDA İnşaat (“Doğuş Alarko”) ConstructionDoğuş Enerji Üretim ve Ticaret Anonim Şirketi (“Doğuş Enerji”) EnergyDoğuş EOOD ConstructionDoğuş International Limited (“Doğuş International”) Construction equipmentsDoğuş İnşaat ConstructionDoğuş İnşaat Limited (Ukraine) (“Doğuş İnşaat Limited”) ConstructionDoğuş Mandalina Razvitak d.o.o. (“Doğuş Mandalina Razvitak”) Construction developmentDoğuş Polat Adi Ortaklığı (“Doğuş Polat”) ConstructionGülermak-Doğuş Adi Ortaklığı (“Gülermak Doğuş”) ConstructionIGY Marina Mandalina Razvitak d.o.o. (“IGY Razvitak”) Construction developmentIGY Mandalina Hoteli d.o.o. (“IGY Mandalina Hoteli”) Construction developmentKazakhstan Joint Venture (“Doğuş Prestige”) ConstructionYapı Merkezi-Doğuş-Yüksel-Yenigün-Belen Adi Ortaklığı (“YMDYYB”) ConstructionTeknik Mühendislik ve Müşavirlik Anonim Şirketi (“Teknik Mühendislik”) Civil engineering

42.3 Entities in Automotive Segment

First consolidated under Doğuş Otomotiv Servis ve Ticaret AŞ (“DOAŞ”); then consolidated under the Group.

Name Nature of businessDOAŞ Automotive distributionDoğuş Auto Mısır JS Automotive distributionDoğuş Auto Mısr LLC Automotive distributionD-Auto Suisse SA Automotive retailDoğuş Oto Pazarlama ve Ticaret Anonim Şirketi (“Doğuş Oto”) Automotive retailDoğuş Sigorta Insurance brokerageKrone-Doğuş Treyler Sanayi ve Ticaret Anonim Şirketi (“Krone Doğuş”) (c) ProductionLeaseplan Otomotiv Servis ve Ticaret Anonim Şirketi (“Leaseplan”) Automotive retailLPD Holding Anonim Şirketi (“LPD Holding”) AutomotiveMeiller Doğuş Damper Sanayi ve Ticaret Limited Şirketi (“Meiller Doğuş”) (c) ProductionTÜVTÜRK Kuzey (c) Vehicle inspection stationTÜVTÜRK Güney (c) Vehicle inspection stationTÜVTÜRK İstanbul (c) Vehicle inspection stationVDF Sigorta Aracılık Hizmetleri Anonim Şirketi (“VDF Sigorta”) InsuranceVDF Servis Holding Automotive financeVDF Tüketici Consumer financeYüce Auto Automotive distribution

(c) These companies are proportionately consolidated joint ventures of Doğuş Holding.

221




42.4 Entities in Tourism Segment

Name Nature of businessAntur Hospitality and travel agencyArena Giyim Sanayi ve Ticaret Anonim Şirketi (“Arena”) Hospitality and clothing retailDatmar Turizm Anonim Şirketi (“Datmar”) HospitalityDoğuş Dalaman Marina İşletmeleri Turistik ve Ticaret Anonim Şirketi (“Doğuş Dalaman”) (d) A non-operating companyDoğuş Didim Marina İşletmeleri ve Ticaret Anonim Şirketi (“Doğuş Didim”) MarinaDoğuş Hoteli d.o.o. (“Doğuş Hoteli”) Hotel managementDoğuş Marina Mandalina d.o.o. (“Doğuş Marina ”) Marina managementDoğuş Marina Upravljanje d.o.o. (“Doğuş Marina Upravljanje”) Marina managementDoğuş Turgutreis Marina İşletmeleri Turistik ve Ticaret Anonim Şirketi (“Doğuş Turgutreis”) Marina managementGaranti Turizm Yatırım ve İşletme Anonim Şirketi (“Garanti Turizm”) HospitalityGöktrans Turizm ve Ticaret Anonim Şirketi (“Göktrans Turizm”) HospitalityIGY Marina Mandalina Upravljanje d.o.o. (“IGY Marina”) Marina managementNCP Marina Mandalina d.o.o. (“NCP Marina Mandalina”) MarinaNCP Hoteli d.o.o. (“NCP Hoteli”) Hotel managementŞahintur Şahinler Otelcilik Turizm Yatırım İşletmeciliği Anonim Şirketi (“Şahintur”) A non-operating companyVoyager Mediterranean Turizm Endüstrisi ve Ticareti Anonim Şirketi (“Voyager”) Hospitality

(d) Doğuş Dalaman was established to build and operate yachting marina in seaside resort tows in Mediterranean coasts of Turkey. However,Doğuş

Dalaman has not yet started operations and accordingly was noted as non-operating.

42.5 Entities in Other Segment

Name Nature of businessA Yapım MediaCappadocia Investments Limited (“Cappadocia”) A non-operating companyCompagnie Ottomane d’Investissement BV (“COIBV”) A non-operating companyDAF Araştırma Geliştirme Anonim Şirketi (“DAF”) LotteryDG Finance Holding BV (“DG Finance”) A non-operating company DO-ÇA Tekstil Temizleme ve Ticaret Anonim Şirketi (“DO-ÇA”) Dry cleaningDoğuş Arge InvestingDoğuş Finance Ukraine A non-operating companyDoğuş Gayrimenkul Real estate developmentDoğuş-GE Gayrimenkul Yatırım Ortaklığı Anonim Şirketi (“Doğuş GE”) Real estate investment fund Doğuş Grubu İletişim Yayıncılık ve Ticaret Anonim Şirketi (“Doğuş İletişim”) MediaDoğuş Hava A non-operating companyDoğuş Hizmet Yönetimi Organizasyon ve Danışmanlık Anonim Şirketi (“Doğuş Hizmet”) Operation services to banksDoğuş Investment A non-operating companyDoğuş Luxembourg S.á.r.l. (“Doğuş Lux”) A non-operating companyDoğuş Nakliyat ve Ticaret Anonim Şirketi (“Doğuş Nakliyat”) A non-operating companyDoğuş SA A non-operating companyDoğuş Spor ve Sağlık Hizmetleri Anonim Şirketi (“Doğuş Spor”) Sports activitiesDoğuş Telekomünikasyon Hizmetleri Anonim Şirketi (“Doğuş Telekom”) A non-operating companyDoğuş Turizm Real estate developmentDoğuş Uydu Haberleşme ve Teknik Hizmetler Anonim Şirketi (“Doğuş Uydu”) MediaDoğuş Yayın Grubu Anonim Şirketi (“Doğuş Yayın Grubu”) Media





42.5 Entities in Other Segment (continued)

Name Nature of businessEnformasyon Mediaİkibinondokuz Radyoculuk ve Sanat Organizasyonu Ticaret Anonim Şirketi (“2019 Radyo”) Mediaİstinye Yönetim Hizmetleri Anonim Şirketi (“İstinye Yönetim Hizmetleri”) Shopping mall administrationKapital Radyo MediaKörfez Havacılık Turizm ve Ticaret Anonim Şirketi (“Körfez Hava”) TransportationLasaş A non-operating companyMakro San. Mam. İmalat ve Pazarlama Limited Şirketi (“Makro”) A non-operating companyMarina Services Holdings BV (“Marina Services”) Marina managementN Radyo Televizyon ve Yayıncılık Anonim Şirketi (“N Radyo”) MediaNTV Radyo MediaSititur Turizm Temizlik Taşımacılık Organizasyon Bilgisayar DanışmanlıkYapı Anonim Şirketi (“Sititur”)Sanayi ve Ticaret Anonim Şirketi (“Sititur”) A non-operating companyE Elektronik Bahis Oyunları Anonim Şirketi (“E Elektronik”) LotteryYonca Radyo ve TV Yayıncılık Anonim Şirketi (“Yonca Radyo”) Media

All Subsidiaries are registered in Turkey except for the following companies:

Name Country of incorporationAyson Hydro CroatiaCappadocia United KingdomCOIBV The NetherlandsDomenia RomaniaDG Finance The NetherlandsDoğuş GE BV The NetherlandsDoğuş Auto Mısr JS EgyptDoğuş Auto Mısr LLC EgyptDoğuş EOOD BulgariaDoğuş Finance Ukraine UkraineDoğuş Hoteli CroatiaDoğuş Investment UkraineDogus İnsaat ES MoroccoDogus İnsaat Limited UkraineDoğuş International United KingdomDoğuş Lux LuxembourgDoğuş Mandalina Razvitak CroatiaDoğuş Marina CroatiaDoğuş Marina Upravljanje CroatiaDogus Maroc SARL MoroccoDoğuş SA SwitzerlandD Netherlands The NetherlandsD-Auto Suisse SA SwitzerlandGaranti Financial IrelandGB Moscow RussiaGBI The NetherlandsGE Garanti Bank S.A. RomaniaGFM MaltaIGY Mandalina Hoteli CroatiaIGY Marina CroatiaIGY Razvitak CroatiaMarina Services The NetherlandsMotoractive RomaniaNCP Hoteli CroatiaNCP Marina Mandalina CroatiaRalfi Romania

223




42.6 Subsidiaries

The table below sets out all the Subsidiaries and shows their shareholding structure at 31 December 2009:

Name

Direct and

indirect

ownership

interest

by Doğuş

Holding and its

subsidiaries

Ownership

interest through

shares held by

Şahenk Family

Proportion

of ownership

interest

Proportion

of effective

interest of Doğuş

Holding and its

subsidiaries

Proportion of

effective interest

of Şahenk Family

Proportion of

effective interestA Yapım 97.00 - 97.00 96.85 0.15 97.00Antur 96.38 3.60 99.98 96.17 3.81 99.98Arena 99.98 0.02 100.00 97.52 2.39 99.91Ayson 70.00 - 70.00 66.61 3.39 70.00Ayson Hydro 70.00 - 70.00 66.61 3.39 70.00Cappadocia 100.00 - 100.00 100.00 - 100.00COIBV 100.00 - 100.00 100.00 - 100.00D Enerji 100.00 - 100.00 100.00 - 100.00D Netherlands 100.00 - 100.00 100.00 - 100.00Datmar 99.57 0.43 100.00 98.67 1.18 99.85DG Finance 100.00 - 100.00 100.00 - 100.00DOAŞ 72.46 - 72.46 70.17 2.29 72.46DO-ÇA 87.27 12.73 100.00 85.24 14.62 99.86Doğuş Arge 92.44 7.56 100.00 92.44 7.56 100.00Doğuş Auto Mısr JS 100.00 - 100.00 70.18 2.29 72.47Doğuş Auto Mısr LLC 99.00 - 99.00 69.48 2.27 71.75Doğuş Dalaman 100.00 - 100.00 100.00 - 100.00Doğuş Didim 100.00 - 100.00 100.00 - 100.00Doğuş Enerji 100.00 - 100.00 92.46 7.54 100.00Doğuş EOOD 100.00 - 100.00 92.46 7.54 100.00Doğuş Gayrimenkul 97.40 2.60 100.00 97.40 2.60 100.00Doğuş Finance Ukraine 100.00 - 100.00 100.00 - 100.00Doğuş Hava 100.00 - 100.00 100.00 - 100.00Doğuş Hoteli 100.00 - 100.00 100.00 - 100.00Doğuş Investment 100.00 - 100.00 99.99 0.01 100.00Doğuş İletişim 100.00 - 100.00 99.84 0.16 100.00Doğuş İnşaat 92.46 7.54 100.00 92.46 7.54 100.00Dogus Insaat ES 100.00 - 100.00 92.46 7.54 100.00Doğuş İnşaat Limited 100.00 - 100.00 92.46 7.54 100.00Doğuş International 100.00 - 100.00 92.43 7.57 100.00Doğuş Lux 100.00 - 100.00 100.00 - 100.00Doğuş Mandalina Razvitak 92.46 7.54 100.00 92.46 7.54 100.00Doğuş Marina 100.00 - 100.00 100.00 - 100.00Doğuş Marina Upravljanje 100.00 - 100.00 100.00 - 100.00Dogus Maroc SARL 100.00 - 100.00 92.46 7.54 100.00Doğuş Nakliyat 89.73 0.77 90.50 89.69 0.81 90.50Doğuş Oto 100.00 - 100.00 71.30 2.21 73.51Doğuş SA 100.00 - 100.00 95.07 3.55 98.62Doğuş Sigorta 99.00 1.00 100.00 86.47 1.96 88.43Doğuş Spor 100.00 - 100.00 100.00 - 100.00Doğuş Telekom 100.00 - 100.00 100.00 - 100.00





42.6 Subsidiaries (continued)

Name

Direct and

indirect

ownership

interest

by Doğuş

Holding and its

subsidiaries

Ownership

interest through

shares held by

Şahenk Family

Proportion

of ownership

interest

Proportion

of effective

interest of Doğuş

Holding and its

subsidiaries

Proportion of

effective interest

of Şahenk Family

Proportion of

effective interestDoğuş Turgutreis (a) 43.37 56.63 100.00 40.77 59.18 99.95Doğuş Turizm 100.00 - 100.00 100.00 - 100.00Doğuş Uydu 100.00 - 100.00 98.68 0.18 98.86Doğuş Yayın Grubu 100.00 - 100.00 99.84 0.16 100.00D-Auto Suisse SA 100.00 - 100.00 70.19 2.29 72.48Enformasyon 97.00 - 97.00 96.85 0.15 97.00E Elektronik 100.00 - 100.00 99.83 0.17 100.00Garanti Turizm 100.00 - 100.00 96.56 2.36 98.92Göktrans Turizm 100.00 - 100.00 98.90 1.04 99.94Kapital Radyo 98.89 - 98.89 98.73 0.16 98.89Körfez Hava 100.00 - 100.00 100.00 - 100.00Lasaş 100.00 - 100.00 100.00 - 100.00Makro 100.00 - 100.00 99.58 0.32 99.90Marina Service Holding 100.00 - 100.00 78.08 21.90 99.98N Radyo 97.00 - 97.00 96.84 0.16 97.00NTV Radyo 99.31 - 99.31 99.15 0.16 99.31Sititur 100.00 - 100.00 100.00 - 100.00Şahintur 100.00 - 100.00 100.00 - 100.00Teknik Mühendislik 99.70 - 99.70 98.58 1.12 99.70Voyager 99.05 0.95 100.00 99.03 0.97 100.00Yonca Radyo 97.00 - 97.00 96.85 0.15 97.002019 Radyo 98.78 - 98.78 98.62 0.16 98.78

(a) Although the ownership rate of the Group on this company is less than 50 percent, Doğuş Holding has the controlling power on the operations

and financial policies of this company.

225




42.7 Joint ventures

The table below sets out the Joint Ventures and shows the shareholding structure at 31 December 2009:

Name

Direct and

indirect

ownership

interest

by Doğuş

Holding and its

subsidiaries

Ownership

interest through

shares held by

Şahenk Family

Proportion

of ownership

interest

Proportion

of effective

interest of Doğuş

Holding and its

subsidiaries

Proportion of

effective interest

of Şahenk Family

Proportion of

effective interestAslancık 25.00 - 25.00 25.00 - 25.00Boyabat 33.74 - 33.74 33.72 0.02 33.74DAF 33.33 - 33.33 33.33 - 33.33Doğuş Alarko 37.50 - 37.50 34.67 2.83 37.50Doğuş Hizmet 100.00 - 100.00 32.17 0.28 32.45Doğuş Polat 50.00 - 50.00 46.23 3.77 50.00Doğuş-GE 31.11 - 31.11 27.20 0.02 27.22Doğuş GE BV 49.90 - 49.90 49.90 - 49.90Doğuş-Prestij 60.00 - 60.00 55.48 4.52 60.00Domenia 49.90 - 49.90 49.90 - 49.90Garanti Bank 30.52 - 30.52 30.23 0.29 30.52Garanti Bilişim 100.00 - 100.00 30.23 0.29 30.52Garanti DPR (a) - - - - - -Garanti Kültür 100.00 - 100.00 30.23 0.29 30.52Garanti Faktoring 81.84 - 81.84 24.74 0.24 24.98Garanti Filo 100.00 - 100.00 30.23 0.29 30.52Garanti Financial 100.00 - 100.00 30.23 0.29 30.52Garanti Leasing 100.00 - 100.00 29.93 0.29 30.22Garanti FM 100.00 - 100.00 30.23 0.29 30.52Garanti Portföy 100.00 - 100.00 30.23 0.29 30.52Garanti Yatırım 100.00 - 100.00 30.23 0.29 30.52GBI 100.00 - 100.00 30.23 0.29 30.52GB Moscow 100.00 - 100.00 30.23 0.29 30.52GE Garanti Bank S.A. 49.90 - 49.90 49.90 - 49.90GEHAŞ 85.00 - 85.00 25.67 0.29 25.96Gülermak Doğuş 50.00 - 50.00 46.23 3.77 50.00IGY Marina 50.00 - 50.00 50.00 - 50.00IGY Razvitak 50.00 - 50.00 46.23 3.77 50.00IGY Mandalina Hoteli 50.00 - 50.00 46.23 3.77 50.00Krone Doğuş 49.00 - 49.00 34.38 1.12 35.50Meiller Doğuş 49.00 - 49.00 34.38 1.12 35.50Motoractive 49.90 - 49.90 49.90 - 49.90NCP Hoteli 37.50 - 37.50 37.50 - 37.50NCP Marina Mandalina 20.00 - 20.00 20.00 - 20.00Ralfi 49.90 - 49.90 49.90 - 49.90TÜVTURK Kuzey 33.33 - 33.33 23.39 0.76 24.15TÜVTURK Güney 33.33 - 33.33 23.39 0.76 24.15TÜVTURK İstanbul 33.33 - 33.33 23.39 0.76 24.15T-2 Capital (a) - - - - - -YMDYYB 26.00 - 26.00 24.04 1.96 26.00

(a) Garanti DPR and T-2 Capital are special purpose entities established for Garanti Bank’s securitisation and subordinated debt transactions,

respectively. The Group does not have any shareholding interest in these companies.





42.8 Associates

The table below sets out the associates and their shareholding structure at 31 December 2009:

Name

Direct and

indirect

ownership

interest

by Doğuş

Holding and its

subsidiaries

Ownership

interest through

shares held by

Şahenk Family

Proportion

of ownership

interest

Proportion

of effective

interest of Doğuş

Holding and its

subsidiaries

Proportion of

effective interest

of Şahenk Family

Proportion of

effective interestEureko Sigorta 20.00 - 20.00 6.05 0.06 6.11İstinye Yönetim Hizmetleri 42.00 - 42.00 42.00 - 42.00Leaseplan 100.00 -- 100.00 37.60 0.88 38.48LPD Holding 49.00 - 49.00 37.60 0.88 38.48VDF Tüketici 49.00 - 49.00 34.68 1.10 35.78VDF Servis Holding 49.00 - 49.00 37.60 0.88 38.48VDF Sigorta (a) 100.00 - 100.00 37.60 0.88 38.48Yüce Auto 50.00 - 50.00 35.09 1.15 36.24

(a) Consolidated under VDF Servis Holding.

The major changes in Group enterprises during the year ended 31 December 2009 are summarised in the following paragraphs:

Change in structure/ title

On 30 January 2009, Aslancık Elektrik Üretim ve Ticaret Limited Şirketi changed its legal name as “Aslancık Elektrik Üretim ve Ticaret Anonim Şirketi”.

On 6 March 2009, VDF Holding Anonim Şirketi changed its legal name as “LPD Holding Anonim Şirketi”.

On 6 March 2009, VDF Otomotiv Servis ve Ticaret Anonim Şirketi changed its legal name as “Leaseplan Otomotiv Servis ve Ticaret Anonim Şirketi”.

On 30 December 2009, TV En Prodüksiyon Reklam Anonim Şirketi changed its legal name as “Doğuş Uydu Haberleşme ve Teknik Hizmetler Anonim Şirketi”.

Liquidation of entities

Garanti FM and Garanti Financial and Marina Services Holding B.V. are under liquidation as at the reporting date.

Establishment of entities

On 4 February 2009, the Group jointly established DAF with Alarko Holding Anonim Şirketi and Fina Holding Anonim Şirketi.

On 30 March 2009, Doğuş Yayın Grubu established E Elektronik.

In March 2009, the shareholders of Doğuş GE B.V. increased the share capital of Doğuş GE B.V. by Euro 11,400 thousand (the Group’s interest amounting to Euro 5,689 thousand). The capital increase was used by Doğuş GE B.V. to form a new entity in Romania, GE Garanti Bank SA. This entity was incorporated on 6 April 2009. Doğuş GE B.V. owns 99.9 percent of the newly established GE Garanti Bank SA.

On 9 June 2009, Doğuş İnşaat established Doğuş Mandalina Razvitak.

On 16 June 2009, Doğuş Holding established Doğuş Marina Upravljanje, Doğuş Marina and Doğuş Hoteli.

On 18 June 2009, Doğuş Holding established D Enerji.

On 21 October 2009, Ayson established Ayson Hydro Gradenje d.o.o.in Croatia.

227



43 Significant events

43.1 According to the decree of the Council of Ministers numbered 2007/11963 and dated 4 April 2007, the national currency unit of the Republic of

Turkey called the “New Turkish Lira” is called the “Turkish Lira” effective from 1 January 2009.

Both New Turkish Lira and Turkish Lira banknotes and coins were in physical circulation in 2009, for one year. New Turkish Lira banknotes are

withdrawn from circulation as at 1 January 2010 (after this date Central Bank will convert them to new banknotes for a period of 10 years).

All documents have been prepared and accounting records have been kept in New Turkish Lira until 31 December 2008. These records and

documents will be kept as they are. Accounting data was converted to Turkish Lira on 1 January 2009, and from 1 January 2009 onwards, all

documents and accounting data is in Turkish Lira, regardless of the fact that both New Turkish Lira and Turkish Lira were in circulation physically

during 2009.

43.2 The reporting currency of Garanti Bank’s Luxembourg branch is changed from USD to EUR effective from 1 January 2009. The capital of USD

89,500 thousand (the Group’s interest amounting to USD 27,047 thousand) allocated to the branch is converted into EUR 64,310 thousand (the

Group’s interest amounting to EUR 19,434 thousand).

43.3 On 24 February 2009, Doğuş İletişim signed an agreement with Condé Nast New Markets Europe /Africa INC., on publishing rights of “Vogue”

magazine in Turkey.

43.4 Doğuş Didim has started its operations in August 2009.

43.5 Garanti Bank has acquired one ordinary share that EFG Finansal Kiralama Anonim Şirketi had in Garanti Bank Moscow, one of the Garanti

Bank’s subsidiaries, representing a 0.0578% ownership in the registered share capital of this bank at a nominal value of Rouble 255 thousand on 15

October 2009 for a purchase price of USD 65 thousand.

43.6 On 16 November 2009, Doğuş Holding has utilised a bank loan amounting to USD 140 million with a floating interest rate and maturity of

January 2015.

43.7 With share transfer agreement dated 27 October 2009, the Group decided to purchase Port Göcek Marina from Turkon Holding Anonim Şirketi

(“Turkon Holding”) for a consideration of EUR 27 million. The deal is not closed at the reporting date.

44 Subsequent events

44.1 “The Law for the Amendments to the Law on the Procedure for the Collection of Public Receivables and Certain Laws” was accepted by the

Planning and Budget Commission of the Turkish Parliament at the meeting held on 20 January 2010 and became effective by being published on

the Official Gazette dated 5 February 2010. According to aforementioned Law; banks founded in Turkey and the foreign banks having head offices

in Turkey are required to pay TL 200 thousand for each year to obtain operating license. The banks founded to operate in the free trade zones and

branches of the foreign banks are required to pay TL 200 thousand for each branch and for each year to obtain operating license. All the branches

of the banks including the branches operating in free trade zones (excluding branches of the foreign banks established in free trade zones) are

required to pay license fee according to the population of the operating area at the beginning of the prior calendar year; branches operating in

the municipalities which have population up to 5,000 are required to pay TL 12 thousand; branches operating in the municipalities which have

population between 5,000 and 25,000 are required to pay TL 36 thousand; and branches operating in the municipalities which have population

more than 25,000 and branches operating in the free trade zones are required to pay 48 thousand for each year and for each branch.

44.2 Vogue Turkey Magazine and Vogue Turkey Internet Portal were launched on February 2010.

44.3 Doğuş Yayın has obtained a bank loan for its working capital needs amounting to EUR 15,000 thousand with a floating interest rate and

maturity of March 2013.

44.4 Doğuş Yayın has obtained a bank loan for its working capital needs amounting to USD 5,000 thousand with a floating interest rate and maturity

of March 2013.




44 Subsequent events (continued)

44.5 Doğuş İnşaat was awarded for the expansion of Al-Tahady University Library building by Organization for Development and Improvement

Centers (ODAC). The terms of the contract are as follows:

Employer ODACContract value 119 million Libyan DinarDoğuş İnşaat share 100 percentType Al-Tahady University Library BuildingsDate of contract April 2010Date of completion December 2011

44.6 Doğuş Enerji, a subsidiary of Doğuş İnşaat, got an electricity generation license for 49 years. The details of the licence is summarised below:

Validity period 49 yearsProject name Artvin dam and hydroelectric power plant projectDoğuş İnşaat share 100 percentFacility completion date 4 August 2018-preconstruction 24 months, construction 78 months

44.7 On 23 March 2010, Doğuş Turizm has utilised a bank loan amounting to EUR 29 million with a floating interest rate and a maturity of March 2020.

44.8 On 12 February 2010, Doğuş Holding has utilised a bank loan amounting to EUR 50 million with a floating interest rate and a maturity of

February 2013.

44.9 On 15 January 2010, Boyabat has signed a loan agreement with a consortium amounting to USD 750 million for current loan repayments and

project finance.

44.10 According to share transfer agreement dated on 26 October 2009, the Group decided to purchase Kartal Otel Marmaris Turizm İşletmeciliği

Ticaret ve Sanayi Anonim Şirketi (“Kartal Otel”) from Turkon Holding for a consideration of EUR 38 million. On 4 March 2010, the share transfer is finalised

with a closing agreement. On 10 March 2010, Kartal Otel changed its title as D Otel Marmaris Turizm İşletmeciliği Ticaret ve Sanayi Anonim Şirketi.

44.11 On 31 March 2010, Motoractive has utilised two loans amounting to EUR 12,000 thousand and EUR 38,000 thousand from Leasemart

Holding B.V. (“Leasemart”).

44.12 On 31 March 2010, Domenia has utilised two loans amounting to USD 32,500 thousand and EUR 38,000 thousand from Leasemart.

44.13 On 31 March 2010, Motoractive has utilised two loans amounting to RON 100,000 thousand and RON 102,000 thousand from Leasemart.

229

The US Dollar (“USD”) amounts shown in the consolidated statement of financial position and consolidated statement of comprehensive income on

the following pages have been included solely for the convenience of the reader.

For the current year’s consolidated financial statements, USD amounts are translated from TL consolidated financial statements using the official

TL exchange rate of 1.5057 TL/USD prevailing on 31 December 2009. For the prior year’s consolidated financial statements, USD amounts are

translated from TL consolidated financial statements using the official TL exchange rate of 1.5123 TL/USD prevailing on 31 December 2008.

Such translation should not be construed as a representation that the TL amounts have been converted into USD pursuant to the requirements of

IFRS or Generally Accepted Accounting Principles in the United States of America or in any other country.

Doğuş Holding Anonim Şirketi and its Subsidiaries Appendix ISupplementary InformationConvenience Translation to US Dollar31 December 2009


2009 2008

Assets

Property and equipment 1,876,184 1,703,080

Intangible assets 775,947 791,582

Investments in debt securities 7,499,891 5,271,886

Investments in equity securities 35,587 31,918

Investment property 809,050 696,240

Other non-current assets 683,368 547,143

Deferred tax assets 127,706 109,593

Total non-current assets 11,807,733 9,151,442

Inventories 315,073 512,321

Accounts receivable 1,020,901 803,106

Due from related parties 7,140 9,917

Other current assets 471,670 488,175

Banking loans and advances to customers 11,036,752 10,950,318

Banking loans and advances to banks 2,161,704 1,599,472

Financial assets at fair value through profit or loss 119,801 50,884

Cash and cash equivalents 1,566,262 1,492,197

Total current assets 16,699,303 15,906,390

Total assets 28,507,036 25,057,832

Equity

Paid-in capital 1,335,055 1,329,228

Capital stock held by subsidiaries (35,635) (35,479)

Share premium 105,831 105,369

Fair value reserves 264,676 24,129

Translation reserve 31,140 32,679

Hedging reserve (5,463) 4,868

Revaluation surplus 718,293 677,688

Retained earnings 2,055,031 1,535,498

Total equity attributable to equity holders of the Company 4,468,928 3,673,980

Minority interest

Şahenk Family 70,898 66,475

Others 82,142 66,195

Total minority interest 153,040 132,670

Total equity 4,621,968 3,806,650

Liabilities

Long-term bank borrowings 3,347,229 2,843,052

Subordinated liabilities 198,852 189,343

Deferred tax liabilities 99,591 82,852

Retirement benefit obligations - 20,503

Other non-current liabilities 380,637 360,509

Total non-current liabilities 4,026,309 3,496,259

Short-term bank borrowings 1,488,681 1,302,337

Short-term portion of long-term bank borrowings 864,434 949,424

Banking deposits from banks 549,778 423,491

Banking customers deposits 13,177,474 11,094,301

Obligations under repurchase agreements 2,161,239 2,228,719

Accounts payable 580,203 881,162

Due to related parties 2,305 2,443

Taxes payable on income 46,892 25,807

Other current liabilities 987,753 847,239

Total current liabilities 19,858,759 17,754,923

Total liabilities 23,885,068 21,251,182

Total equity and liabilities 28,507,036 25,057,832

Doğuş Holding Anonim Şirketi and its Subsidiaries Appendix I.1Consolidated Statement of Financial PositionAs at 31 December 2009

Amounts translated into thousands of USD for convenience purposes only

231

2009 2008

Revenues 5,193,343 4,595,941

Cost of revenues (3,421,868) (3,285,239)

Gross profit 1,771,475 1,310,702

Administrative expenses (683,277) (638,629)

Selling, marketing and distribution expenses (95,243) (120,135)

Impairment losses, net (391,471) (120,329)

Trading gain, net 145,871 97,536

Other operating income, net 5,373 158,670

Result from operating activities 752,728 687,815

Finance income 409,698 577,398

Finance expense (455,987) (932,647)

Net finance costs (46,289) (355,249)

Share of profit of equity accounted investees 3,822 3,698

Profit before income tax 710,261 336,264

Income tax expense (177,607) (65,123)

Profit for the year 532,654 271,141

Other comprehensive income

Revaluation of property and equipment 57,902 175,123

Change in fair value of available-for-sale financial assets 254,938 (12,656)

Change in translation reserve (1,682) 30,003

Effective portion of changes in fair value of cash flow hedges (10,353) (451)

Income tax on other comprehensive income (16,237) (32,691)

Other comprehensive income for the year, net of income tax 284,568 159,328

Total comprehensive income for the year for the period 817,222 430,469

Profit attributable to:

Equity holders of the Company 519,949 289,060

Minority interest 12,705 (17,919)

-Şahenk Family 4,925 (4,627)

-Others 7,780 (13,292)

532,654 271,141

Total comprehensive income attributable to:

Equity holders of the Company 796,528 448,957

Minority interest 20,694 (18,488)

-Şahenk Family 4,585 (4,550)

-Others 16,109 (13,938)

817,222 430,469

Doğuş Holding Anonim Şirketi and its Subsidiaries Appendix I.2Consolidated Statement of Comprehensive IncomeFor the Year Ended 31 December 2009

Amounts translated into thousands of USD for convenience purposes only

Annual Report 2009

www.dogusgrubu.com.tr

Doğuş Holding A.Ş.Ayazağa Mah. Eski Büyükdere Cad.No: 15 Oycan Plaza Kat: 3-4-534398 Maslak, İstanbul - TurkeyPhone: +90 (212) 335 32 32Fax: +90 (212) 335 30 90

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Contents

Introduction

02 The Doğuş Group at a Glance The Doğuş Group Structure Operational Map 06 Financial and Operational Highlights Consolidated Financial Information by Segments 09 The Doğuş Group in Brief Corporate Profile Doğuş Holding and its Functions Corporate Risk Management and Internal Audit The Doğuş Group’s Approach Toward its Stakeholders Credit Ratings

Management

16 Message from the Chairman 18 Members of the Board of Directors 20 Committees Subject to the Board of Directors 21 Message from the CEO

Activities of 2009

24 Financial Services 50 Automotive 60 Construction 70 Media 84 Tourism and Services 96 Real Estate 104 Energy

Corporate Citizenship

108 Corporate Social Responsibility 122 Corporate Sponsorships

Financial Statements

129 Consolidated Financial Statements

Dogus Group Annual Report 2009

Documents

Transcript of Dogus Group Annual Report 2009