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ANNUAL REPORT

07

Contents 01 >Corporate Profile 02 >Financial Highlights 04 >Consolidated Financial Information by Segments & Dou Group Network 05 >Ratings 06 >Message from the Chairman 09 >The Dou Group's Approach Towards its Stakeholders 10 >Board of Directors 12 >Committees Subject to the Board of Directors 13 >Dou Holding, Holding Functions 15 >Our Strategy and 2007 Performance 20 >Financial Services 36 >Automotive 48 >Construction 54 >Media 62 >Tourism 70 >Real Estate 78 >Energy 82 >Corporate Citizenship 94 >Consolidated Financial Statements

>Dou Group Structure

Corporate Profile

01

>Corporate Profile
More than 70 companies, seven business sectors Established in 1951, the Dou Group has taken its place among the leading business conglomerates of Turkey and, in keeping with its corporate vision, conducts itself as a leader in the region. The Dou Group is active in seven core businesses: financial services automotive construction media tourism real estate energy With over 70 companies and around 20 thousand employees, the Dou Group focuses on engendering customer loyalty and building brand value with its high technology infrastructure. A key actor in the Turkish economy with a strong global recognition The Dou Group is a significant actor 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. The Dou Group is not only a key actor in the national economy, but it also has important presence in the global market. The Group represents Turkey across the world with brands developed over the course of its operating history and is highly ranked among the top establishments most preferred by global investors seeking to do business in Turkey and in the surrounding region. Partnerships with General Electric in the financial services and real estate sectors, Volkswagen AG and TV SD of Germany in automotive sector, Alstom of France and Marubeni of Japan in the construction sector, CNBC in the media sector and Hyatt International Ltd., Starwood Hotels & Resorts, Worldwide Inc. and HMS International Hotel GmbH (Maritim) and Aldiana GmbH in the tourism sector are among the international cooperations the Group has so far established. A model management style and corporate citizenship Behind the impressive financial performance of the Dou Group, there lies a customer-centered and productivity-oriented management style. The Dou Group always provides its services based upon the principles of trust and customer satisfaction. This successful management philosophy not only brings an enviable level of profitability, but also encompasses a strong corporate citizenship approach from which the entire society benefits today and will continue to do so in the future. Besides initiating and engaging in several social responsibility projects particularly with a focus on child education and development, the Group provides sponsorships to a variety of projects in different areas ranging from education to culture&arts and sports. Values that endure Dou Group companies share a set of core values: Integrity, understanding, excellence, creativity, unity, and responsibility. These values, which have been part of the Group's beliefs and convictions since its earliest days, continue to guide and drive the business decisions of all Dou companies. New horizons with a regional focus Having world-class brands and significant partnerships on a global scale, the Dou Group continues to contribute to Turkey's ongoing process of transformation and innovation. This outlook clearly summarizes the Group's vision, particularly in services. By making the most effective use of its superior human resources and advanced technological infrastructure, the Group will maintain its high standards for the maximization of the value of its brands and will seek to grow through strong global alliances, and become a regional leader in the services sector.

Dou Group Annual Report 2007

02 Financial Highlights

>Financial Highlights
With the financial results that it achieved in 2007, the Dou 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 all contributed to the development of revenues, business volume, number of customers and profitability. In all of its lines of business, the Group's consolidated revenues reached to YTL 5,682 million in value while its operating profit amounted to YTL 839 million. The Group's total assets rose by 50% to YTL 27,892 million in 2007. The Group's consolidated shareholders' equity in 2007 reached YTL 4,899 million, up from the previous year's level of YTL 3,806 million.

>Key Financial Indicators


(YTL thousand) Total Assets Total Shareholders' Equity Revenues Gross Profit EBITDA Net Profit for the Year 2004 33,399,214 1,292,366 8,406,684 2,741,371 1,253,829 547,151 2005 16,843,232 3,291,765 9,138,520 3,422,827 3,039,049 2,256,286 2006 18,559,867 3,805,857 5,283,298 1,430,815 752,808 470,003 2007 27,891,620 4,899,484 5,682,177 1,657,505 992,709 623,097

>Principal Performance Ratios


(%) Gross Profitability Net Profitability EBITDA Margin ROA - Return on Assets ROE - Return on Group Equity 2004 33 7 15 2 42 2005 37 25 33 13 69 2006 27 9 14 3 12 2007 29 11 17 2 13

Dou Group Annual Report 2007

Financial Highlights

03

>Corporate Profile
2007 Total Assets by Segments (%) 2007 Total Revenues by Segments (%)

Financial Services 84

Financial Services 45

Automotive 45

Construction 1 Automotive 4 Media 1 Tourism 3 Others 7

Construction 5 Tourism 2 Media 3

Total Assets (TRY million)

Total Shareholders Equity (YTL million)

33,399

27,892

16,843

18,560

2004

2005

1,292

2006

2007

2004

2005

3,292

2006

3,806

2007

Revenues (YTL million)

Net Profit for the Year (YTL million)

9,139

8,407

5,283

5,682

2,256

547

2004

2005

2006

2007

2004

2005

2006

470

2007

Dou Group Annual Report 2007

623

4,899

04 Consolidated Financial Information by Segments & Dou Group Network

>Consolidated Financial Information by Segments


(YTL thousand) Banking and Finance Segment Assets Total Interests and Commission Income Automotive Segment Assets Revenues Construction Segment Assets Revenues Tourism Segment Assets Revenues Media Segment Assets Revenues Others Segment Assets Revenues 187,622 23,433 277,962 75,546 734,432 15,464 1,773,919 27,521 110,398 108,603 125,430 111,362 394,647 166,182 406,140 181,093 986,560 101,550 1,034,248 112,464 738,118 121,388 802,693 122,819 448,916 203,825 418,110 262,239 410,596 272,979 283,846 304,636 654,550 2,412,210 697,455 2,465,691 781,623 2,527,200 1,053,360 2,552,972 30,998,777 4,485,946 12,835,940 5,105,996 14,673,002 2,189,816 23,212,300 2,507,362 2004 2005 2006 2007

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 associates are eliminated and jointly controlled entities are accounted proportionally over the Group's "proportionate share of the enterprise".

>Dou Group Network


Garanti Bank 592 branches (583 in Turkey, 9 abroad) 1,800+ ATMs Call center: 2.6 mn+ calls/mnth Internet site: 1 mn+ Internet Bank Active Customers Dou Otomotiv 500+ customer contact points 75+ brand models covering nearly 90% of the total market Leader of the import car market with an 11.4% market share The Dou Media Group NTVMSNBC - 2.3 million hits/day

Dou Group Annual Report 2007

Ratings

05

>Ratings
Dou Holding-Ratings Transparency and accountability are the two key components of the Dou Group's management approach. In line with this approach, Dou Holding has become the first holding company in Turkey to be rated by the three major international rating agencies: Standard & Poor's, Fitch and Moody's. As a consequence of these ratings, Dou Holding benefits from instant comparability in credit terms both in the national and international contexts by providing its stakeholders with standardized and reliable information. This not only creates an opportunity for the Holding's current and potential investors with regards to their credit risk analysis, but is also an acknowledgement by the rating agencies that the Group's management quality reflects its alignment with global corporate governance principles. In 2007, Dou Holding received the following ratings from the three agencies:

Fitch Ratings Security Class Dou Holding Foreign Currency IDR* Local Currency IDR* Rating Outlook Current Rating BBBBPositive

*IDR- Issuer Default Rating

Standard & Poors Credit Rating BB-/Stable*/B

* In April 2008, S&P revised its outlook to negative following that on the sovereign.

Moodys Category Outlook Corporate Family Rating Rating Stable Ba3

Dou Group Annual Report 2007

06 Message from the Chairman

>Message from the Chairman


The Turkish economy has firmly adhered to the economic program that was launched after the 2001 crisis and thus achieved macroeconomic stability. The policy anchors provided by the IMF backed programs and by the EU accession negotiations have been very helpful. Fiscal consolidation and reforms to improve economic governance and investment conditions have transformed the Turkish economy. Public debt has been significantly reduced, as has been inflation. Confidence increased and risk premia dropped. These achievements are of course very much related to the ongoing structural reform process of the recent years that has put in place well functioning and autonomous regulatory institutions; a solid and transparent financial services sector, with an end result of increased confidence in the Turkish economy. Investment by residents and foreigners has been buoyant and GDP growth has been strong and sustained. Backed by a sound economy, Turkey is a preferred location for investment. The level of cumulative FDI to Turkey has increased significantly. Between the years 1995-2004, it stood at USD 1.4 billion in total, in comparison to this cumulative number, by 2005 this figure had increased to USD 10 billion, in 2006 to USD 20 billion and 22 billion in 2007 on an annual basis. We expect a relatively modest trend in 2008. As for our Group, we pursued a prudent and active developing strategy in all seven sectors. This approach helped us to enhance our strong collaborations with our global partners. In 2007, the Dou Group invested YTL 2,714 million. The number of our employees reached around 20,000; 6,316 of which were newly recruited. At the same time, our Group paid YTL 2,336 million in taxes, amounting to 1.53% of the total tax revenues of the Turkish Republic. The total assets of the Group increased to YTL 27.9 billion.

In 2007, our Group pursued a prudent and active developing strategy in all seven sectors. This approach helped us to enhance our strong collaborations with our global partners.

Dou Group Annual Report 2007

Message from the Chairman

07

>Corporate Profile
In financial services, our business lines under the Garanti brand continued its improvement and despite the net addition of 105 branches since the end of 2006, cost/income ratio progress remained intact due to larger growth in revenues and effective cost management. With an asset growth of 33%, Garanti Bank became the second largest private bank in Turkey on a consolidated basis and moved up to the leadership position in total cash and non-cash lending. As of the end of 2007, Garanti Bank's total loans reached YTL 52 billion and its net profit increased by 108% compared to previous year from YTL 1.2 billion to YTL 2.4 billion. Following the mortgage law, which became effective in March, Garanti Bank launched Garanti Mortgage in October, to meet the expectations and needs of its clients. We signed a partnership agreement with Eureko, which is one of the leading insurance companies in Europe and took concrete steps in foreign markets to transform Garanti from a national bank into a regional bank in Europe. In the automotive sector, the Dou Group continued to sustain its profitability and its expansion abroad. Dou Otomotiv launched Dogus Auto MISR in Cairo, Egypt and was authorized to undertake Porsche sales in Lausanne, Switzerland. In addition, the Dou Group further strengthened its partnerships with Bernard Krone Holding and F.X. Meiller in the past year. In 2007, Dou Otomotiv signed a partnership agreement with Krone for the establishment of a production plant in Tire, zmir in 2008. The Company also signed a partnership agreement with Meiller for a production investment in Sakarya, Turkey. The structuring of Industrial and Marine Engines as a brand head office under the umbrella of Dou Otomotiv and the take over of the distribution activities of Volkswagen Marine Engines in addition to the ongoing distribution activities of Scania Engines were the other key developments in 2007, contributing to the Company's product and brand variety. In 2007, Dou Construction remained as one of the key companies in its sector due to its mega project approach and its above-ground and underground projects undertaken both in Turkey and in the region. Dou Construction presently executes projects totaling USD 4.5 billion and the share of Dou in these projects amounts to USD 2.9 billion. Dou takes part in execution of various prestigious mass rail transportation projects either within the joint ventures or within consortiums established with the participation of worldwide active construction companies. Yusufeli, Boyabat and Aslanck dams and hydroelectric power plant projects are noteworthy projects to be started by Dou Construction. Argana Amskroud Motorway project in Morocco, Kiev Dnyepr highway and railway bridge construction and Zaporizhzhia biological waste water treatment plant constructions in Ukraine are some of the outstanding examples of the overseas works under execution. While working on the previously undertaken projects in the year 2008, Dou Construction in the coming years will be exploring further project opportunities in North Africa, Eastern Europe, Russia, Ukraine and the CIS and the Gulf Countries. Our Media Group expanded its portfolio in 2007 with the addition of five new brands: e2 TV Channel, Capital Radio, NTV Publications, EVO and Motor Boat & Yachting magazines. We had a satisfactory financial performance and Dou Media Group has been honored with 65 awards for its broadcasts and social responsibility campaigns in 2007. We will follow an expansion strategy during 2008 within the existing sectors and will take progress on newly established and acquired media channels.

Dou Group Annual Report 2007

08 Message from the Chairman

>The Dou Group As A Corporate Citizen


2007 was a good year for tourism in Turkey. The Dou Tourism Group benefited from this strong market development. The Dou Tourism Group continued with the renovation of the existing hotel properties and its development-focused investments within the scope of 2007 targets. One of our Tourism Group's remarkable initiatives was the Park Hyatt stanbul, which is expected to be opened in the summer of 2008. In 2007, the Dou Group experienced significant developments in the real estate sector as a result of the partnership it had established with GE in 2006 and the establishment of Dou Real Estate Company by the end of 2006. At the end of 2007, DOU-GE REIT's net asset value rose by 6.3% reaching to YTL 136.2 million with a market capitalization of YTL 129.4 million and a market share of 6.6% in the real estate sector in Turkey. The newly established Dou Real Estate Company on the other hand, focused its operations on land development and construction projects in Turkey during 2007. In the energy sector, the Dou Group experienced a quite fruitful year particularly in the area of hydroelectric energy. In 2007, the Group obtained licenses to build and operate the Boyabat Hydroelectric Powerplant (513 MW), in which it holds a 34% stake, and the Aslanck Hydroelectric Powerplant (120 MW), in which it holds a 25% stake. Furthermore, the Group also acquired a 25% share in the D-TES Electric Power Trading Company in 2007. Overall, thanks to our efficient working, we have achieved significant level of success in all our sectors with our strong commitment to social responsibility. We took active role in the projects with the aim of contributing to social welfare of our society and to promote development that is sustainable economically, socially and environmentally. I would like to express my gratitude to our esteemed partners, shareholders and customers for their faith and confidence in the Dou Group and thank my colleagues for their hard work in 2007. We will continue to serve honestly and with dedication to provide our customers with a better way of life and to promote the wellbeing of our country.

Ferit F. ahenk Chairman

Dou Group Annual Report 2007

The Dou Groups Approach Towards its Stakeholders

09

>The Dou Groups Approach Towards its Stakeholders


Transparency and Accountability The Dou Group deeply acknowledges the importance of transparency and accountability in today's business environment, where all business-related actors ranging from corporations to customers and from employees to society in general are strongly affected by each others' actions. In all of its operations and business activities, the Dou Group integrates globally accepted ethical and social measures and communicates the consequences of its activities to its stakeholders in line with its principle of responsible business conduct. The Dou Group not only strictly follows ethical standards in its own business, but also requires the same approach on the part of all of its stakeholders, both in the national and international contexts. The Dou Group embraces the principle of not being involved with any party that acts contrary to globally accepted standards and is unable to provide reliable disclosures with regards to its actions. The Dou Group pays a great deal of attention for disclosures of its financial and non-financial information to its stakeholders including its shareholders, employees, customers, national and international business partners, suppliers, the existing and potential investors of its publicly-floated companies, and the public at large. In line with this approach, the Group makes all relevant information available on its website, www.dogusgrubu.com.tr and keeps the public duly informed on its corporate strategy, activities, and new fields of investment through annual reports and through periodic press releases and conferences. The Group's financials are drawn up quarterly in accordance with the International Financial Reporting Standards (IFRS), and the independent audit reports are shared with the public. Besides the audit reports, Dou Holding has been regularly rated by three international rating agencies (Moody's, S&P and Fitch), detailed information on which could also be found in this report. The fields of activity and performances of the Group's publicly-floated companies are publicly disclosed in conformity with the CMB principles by the respective companies. In terms of public disclosure, the ISE material event disclosures are under the responsibility of the Holding's Finance Department. Ethical Principles Strict employee compliance with the code of conduct and standards is a key principle for the Dou Group. Actions in violation of 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 reaffirms its commitment to respect and preserve human rights and labor standards and to fight against corruption both internally and in other areas which fall within the sphere of its influence. Ethical principles are spelled out and documented in procedures under the headings of time and resources utilization at the companies; relations with customers/subcontractors, suppliers of goods and other companies and persons the Company has commercial relations with, accepting gifts, invites, aids and donations, relations with the media, actions that will result in conflict of interests, safeguarding of the information pertaining to the companies, personal information, professional misconduct, security, and harassment.

Dou Group Annual Report 2007

10 Board of Directors

>Board of Directors
The Dou 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 F. ahenk Chairman of the Board of Directors Ferit F. ahenk has an undergraduate degree from Boston College, Boston in Marketing and Human Resources. He also attended Harvard University, Boston for Owner/President management program. Mr. ahenk joined the Group operations in the financial sector in 1991. Currently, he is the Chairman of the Board of Directors for Dou Holding and Garanti Bank. Mr. ahenk is the Chairman of the Turkish U.S. Business Council. He is also the Vice President of the Turkish Industrialists and Businessmen's Association (TSAD) and President of the Economic and Financial Affairs Commission under TSAD. He is a member of the World Economic Forum (WEF) Young Global Leaders Program. Hsn Akhan Member of the Board of Directors and CEO of Dou Holding Hsn 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 Dou Group in 1994 and served as Executive VP in charge of Treasury, Operations and International Relations at T. Garanti Bankas A.. before being promoted to President & CEOship of Krfezbank A.. He held the positions of member of the BOD and CFO for Dou Holding between 2001-2005. He currently serves as the member of the BOD for the Dou Group and the CEO of Dou Holding, Chairman for DOU-GE REIT, Krfez Aviation, Dou Real Estate Co. and member of the BOD for TVTURK, Dou Construction, GarantiBank Moscow, GarantiBank Netherlands. Sleyman Szen Deputy Chairman of the Board of Directors Sleyman Szen is a graduate of Ankara University, Faculty of Political Sciences. Mr. Szen has held various positions of responsibility in the Ministry of Finance and the private sector. He joined the Dou Group in 1997. He is a Deputy Chairman for the Board of Directors for Garanti Bank and Dou Holding. Mr. Szen also serves as the Chairman for the Board of Directors for GarantiBank International and GarantiBank Moscow. 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 Dou 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 Dou Otomotiv. He is a member of Board of Directors of Dou Holding. Ahmet Kurutluolu Member of the Board of Directors Ahmet Kurutluolu 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, Istanbul University. He joined Dou Group in 1981 and has served as a Legal Consultant for Dou Holding and Dou Construction. He currently serves as a member of the Board of Directors for Dou Holding and as the Chief Legal Consultant of the Group.

Dou Group Annual Report 2007

Board of Directors

11

>The Dou Groups Approach Towards its Stakeholders


Erman Yerdelen Member of the Board of Directors Erman Yerdelen visited Mnster University, Germany, where he attended the School of Business Administration. In 1966, he graduated from the Finance and Business Administration Faculty of Istanbul School of Economy and Commerce. He has received his masters degree in 1996 from Marmara University, stanbul. 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 Dou Holding Board of Directors representing the Dou Media Group. Muhsin Mengtrk Member of the Board of Directors Muhsin Mengtrk is a graduate of Robert College, stanbul 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 Mengtrk taught at Bosphorus University and Istanbul Technical University. In the 1990s, he held various managerial posts in the private sector and between 19972000, 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 Dou Holding. adan Grta Member of the Board of Directors adan Grta is a graduate of Anadolu University, Faculty of Economic and Commercial Sciences. He has joined the Dou Group in 1968 and currently serves as a member of the Board of Directors of the Dou Group. Doan Gnay Member of the Board of Directors Doan Gnay is a graduate of Bosphorus University, Faculty of Administrative Sciences where he completed both graduate and undergraduate degrees in Business Administration. He joined the Dou Group in 1991. In 1995, he became a member of the Board for Dou Tourism Group companies. Furthermore, currently he serves as a member of the Board of Directors for Dou Holding. Gnl Talu Member of the Board of Directors Gnl Talu is a graduate of Istanbul Technical University with a master of sciences degree in civil engineering. He joined the Dou Group in 1969 and has held various managerial positions in Dou Construction. Since 1991, he serves as the CEO and the Chairman of the Board of Directors for Dou Construction. He is also a member of the Board of Directors for Dou Holding. Sadi Gdn Member of the Board of Directors Sadi Gdn is a graduate of Academy of Economics and Commerce, stanbul and obtained his PhD in economics and commerce in 1971. He joined the Dou 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 a member of the Board of Directors of Dou Holding and Dou Construction. Ycel elik Member of the Board of Directors Ycel elik is a graduate of Ankara University, Faculty of Social Sciences. He has served in the finance sector prior to joining the Dou Group in 1983 with Garanti Bank. Between 1986-2006, he has been a member of the Board of Directors for Garanti Bank and its subsidiaries. Currently, he serves as a member of the Board of Directors for Dou Holding.

Dou Group Annual Report 2007

12 Committees Subject to the Board of Directors

>Committees Subject to the Board of Directors


There currently exist three committees subject to the oversight of the Dou Group Board of Directors: The Audit Committee, the Risk Management Committee and the Coordination Committee. In addition to these three committees, the Group also has a Legal Advisory Council. Legal Advisory Council Legal Advisory Council has the following duties: Make a general evaluation of law-related issues pertinent to the Dou Group, Identify important matters among these issues, Specify the legal processes that are to be followed and the measures that are 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 Dou Group companies. The Committee is made up of three members who are elected by the Board of Directors upon the proposals of the Chairman. The Audit Committee convenes at least four times a year according to a meeting schedule agreed to in advance by the Board of Directors. The major responsibilities of the Committee include: Overseeing the efficacy of actions taken by Group companies in response to the findings of all financial, operational, and information technology audits performed by the Dou Holding Internal Audit Department in Group companies, Evaluating the efficacy of the internal control processes of Dou Group companies and advising on ways to improve the internal control environment, Overseeing the efficacy of financial control and internal audit activities within Dou Group companies, Overseeing the security, efficiency and effectiveness of the information systems used by Dou Group companies and reviewing and approving their contingency plans, Assisting the Board of Directors in ensuring that the business activities of Group companies are in compliance with the requirements of applicable laws and regulations. >The Risk Management Committee The Dou Group's Risk Management Committee was established to assist and advise the Board of Directors in its oversight of corporate risk management practices by Dou Group companies. The Committee is made up of three directors who are elected by the Board upon the proposals made by the Chairman. The Risk Management Committee convenes at least four times a year according to a meeting schedule agreed to in advance by the Board of Directors. The major responsibilities of the Committee include: Reviewing significant risks assumed by Dou Group companies in the conduct of their activities and determining the alignment of these with shareholders' risk-taking preferences and willingness, Advising the Board of Directors on any action or common policy that must be taken with regards to risk management within the Group, Overseeing the effectiveness of risk management actions and their alignment with common policies and standards within all Dou Group companies. >The Coordination Committee The Coordination Committee is made up of four members and convenes twice in every month. The major responsibilities of the Committee include: Coordinating the financial, strategic, marketing and communications practices of Dou Holding, Providing information to the Chairman of the Board and to the Board of Directors on the project development processes in these areas, Periodically planning and evaluating the Group's brand management, financial, strategical and business planning practices under the guidance of the CEO of Dou Holding.

Dou Group Annual Report 2007

Dou Holding, Holding Functions

13

>Dou Holding
It is the mission of Dou Holding to fulfill steering, coordination, control and audit functions, as well as to generate value for the Group and its companies, monitor the activities of the Group companies on behalf of the shareholders, and perform the financial audit and administer control systems. Dou Holding aims to create competitive companies that put regional growth at the focal point of their operations. In the management of its subsidiaries, Dou Holding is committed to these basic responsibilities: Updating the Group's strategy along with the lines of the changing investment climate and steering 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 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
Dou Corporate Communications Dou Corporate Communications is responsible for the Dou 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 Dou Group companies. Dou Strategy Dou Strategy is responsible for determining short, medium and long-term business strategies in line with the Dou Group's vision. It manages business development projects and seeks investment opportunities to create competitive advantage to the Dou 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 within the Group. Finance The Finance Department is responsible for relations with local and foreign financial institutions, parallel to the financing needs of Dou 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 Dou Group. Human Resources The Human Resources Department is responsible for the management of Dou 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.

Dou Group Annual Report 2007

14 Holding Functions

>Holding Functions
The Department is also responsible for establishing the communication platform among the other Dou Group companies and providing human resources consultancy services for non-Garanti branded companies of the Dou Group. Risk Management The Risk Management Department is accountable for running Enterprise Risk Management for the Group companies which intends to identify risks and initiate and/or follow up the mitigating actions. The Department focuses on risks that may have a direct or indirect effect on the shareholders assets. Areas such as regular operations, business strategies, new business investment alternatives, legal issues and finance related matters fall under the scope of the Department. Risk management practice has been implemented in late 2006. During the year of 2007, significant progress has been made on risk identification and assessments. Mitigating controls and action plans are being designed and developed continuously. Throughout the fiscal year, the department regularly reports to the CEO, the Risk Committee and the Board where risks, causes and potential effects and action plans are discussed. Internal Audit and Financial Reporting The Internal Audit unit of the Department is responsible for the performance of financial, operational and IT audits at Dou 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. Legal Affairs The Legal Affairs is responsible for the legal representation of Dou 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. 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 Dou Group, its tax liabilities, as well as the subsidiary relations and its financial activity compliance. Chairman's Office The Chairman's Office is responsible for the coordination of internal and external relations of the Chairman. The Department serves as a central support unit for economic research, protocol management and media relations of the Chairman as well as the coordination of relations with third parties, including international economic and financial institutions, business partners, NGOs, universities and the government.

Dou Group Annual Report 2007

Our Strategy and 2007 Performance

15

>Our Strategy and 2007 Performance


2007 was another successful year for the Dou Group. The financial and operational results posted by the Dou Group in 2007 further strengthened its leading and competitive positions in the seven business lines in which it is active. Its corporate perspective enabled the Dou Group to create increasingly more added value while also continuing to provide the uninterrupted energy it needs in its efforts to deliver the very best to stakeholders, customers, business partners and employees. Far more than registering an excellent performance however, we also continued, without any loss of momentum, to undertake important projects and ventures that will shape the future of our Group. The world class projects undertaken by our Group point to the successes that we will be achieving and to the areas of our potential growth in the future while also laying out the growth roadmap that we will be following in the medium term. The challenge before the Dou Group now is to unleash the full potential of the Group to deliver on a promising future. New business lines, new investments Since the day it was founded, the Dou Group has sought out and involved itself in global business relationships and it has had a high degree of access to world markets. In line with its strategy of being a regional force, in 2007, the Group made a number of important and bold corporate decisions and it charted a new course on the roadmap of its future growth. Having decided to enter into real estate and energy in addition to its existing five principal business lines, the Group turned its attentions intensively to both sectors in 2007. In line with this, the Dou Group expanded the scope of its activities by entering the business of energy production and distribution together with a newly-formed international consortium and that of real estate in partnership with global giant GE Real Estate. Strong financial results On the basis of our budget targets as well as of all the different performance criteria that we continuously monitor in the conduct of day-to-day business, the Dou Group posted successful results in 2007 and advanced yet another step closer to realizing its strategic vision. A sustainable growth strategy that is focused on risk At the core of the Dou Group's corporate outlook lie the principles of sustainable profitability and risk-focused growth management. The Dou Group defines its competitive edge and charts the roadmap of its future through: Strong governance mechanisms, Effective global collaboration, Transparent and close communication with customers and investors. The Group formulates all of its plans in different business lines with this strategy and it analyzes its practices and results within the context of the same framework. Abiding by a philosophy that successfully combines enterprise with realism, the Dou Group's objective is to be the leader or at least one of the top three contenders in every line of business in which it is active. A consolidated risk map In keeping with the risk-focused sustainable growth strategy that it put into effect in early 2007, the Group has successfully introduced its risk-focused approach to management in all of its non-financial companies. Corporate risk management is an issue to which the Group companies have always given great importance. The members of the Dou Group are the authors of the first risk management practices introduced in their respective sectors in our country. As a result of a group-wise restructuring completed in 2007, the concept of risk was set on a shared management platform throughout the Dou Group and the Group's consolidated risk management has so far been largely completed.

Dou Group Annual Report 2007

16 Our Strategy and 2007 Performance

>The Dou Group Board of Directors


Looking in retrospect as of the end of 2007, we can see that risk and its management have been completely consolidated throughout all of the Group's non-financial concerns. With the culmination of this project, the Group is now in a position to monitor and assess its risks on a consolidated basis. In light of findings and of the consolidated picture that has emerged, the concept of risk is now playing an important role in achieving a much more effective and flexible structure in management both on an individual company basis and throughout the Group as a whole. At this juncture, the Group's immediate objective is to include its financial services subsidiaries within the scope of its risk management practices in 2008. This addition will raise the effectiveness of management to an unparalleled degree in all business lines while elevating the Group's competitive strength to a whole new level. Garanti became the second largest private bank in Turkey In 2007, Garanti succeeded in increasing its market share in all product categories. With an asset growth of 33%, Garanti became the second largest private bank in Turkey on a consolidated basis and moved up to the leadership position in total cash and non-cash lending. In assets and deposits, the growth achieved has been twice the pace of the sector. Garanti Bank had a very successful year in 2007 with a solid balance sheet growth while continuously enhancing the quality of its revenue streams. The Bank was also successful in achieving its physical growth target in 2007 with a total of 592 branches as of yearend. Our stake in Garanti also increased in 2007 Looking at developments in the financial services industry in 2007, one of the major events for us was the Group's reacquisition of a 4.65% stake in Garanti Bank from our strategic partner, GE. With this move, the Group's shareholding interest in Garanti Bank increased to the 30.52% level. This acquisition was an important operation for the Dou Group and a significant evidence of the Group's faith in Garanti Bank and in the banking sector. Expanding collaboration with GE in financial services Within the framework of an existing agreement with GE, the Dou Group's strategic partner in the financial services sector, the Group acquired 50% of three Romanian financial services companies that were owned by GE. This move gives Dou equal stakes with GE in the management and capital of these companies. This acquisition represents the first important step taken in line with our strategy of pursuing regional expansion in financial services. The Dou Group's next objective is to combine the three companies that it owns jointly with GE with the 38 Romanian branches of GarantiBank International and restructure everything under the roof of a single bank. After this restructuring, which is slated for completion during the first quarter of 2009, the resulting bank will conduct its operations under the GEGarantiBank trademark with a network of more than 70 branches and total assets worth around USD 2 billion. The automotives segment: Strong performance continues Dou Otomotiv closed 2007 with successful results in the passenger car, light commercial vehicle, and heavy commercial vehicle markets. The Company controlled an aggregate 11.4% market share last year with 71,690 unit sales to all segments. Structuring its growth map around the principle of having a productive and profitable presence in every link of the automotive value chain, Dou Otomotiv is not only an importer and distributor, but is also active in such complementary service lines as retailing, automotive financing, spare parts and accessories trade, logistics and customer services, used car trading, fleet management and leasing, express service, vehicle inspections, and insurance.

Dou Group Annual Report 2007

Our Strategy and 2007 Performance

17

>Dou Holding
First step to become a regional power Dogus Auto MISR, Dou Otomotiv's first step in its strategy of moving into the international arena and becoming an effective regional power in its business, has opened its first showroom in Cairo. Dogus Auto MISR is widely regarded as an indication of the confidence that Volkswagen AG has in Dou Otomotiv's successful performance to date, particularly in the areas of sales and after-sales services. Dou Otomotiv's second venture on the international scene was a proposal to provide authorized sales and services for Porsche in the Swiss city of Lausanne and its environments. The Porsche showroom and service outlet in Lausanne have received authorization and have been set up. They will begin serving customers in the first half of 2009. New partnerships for production Dou Otomotiv has taken its first step into production, which it regards as another essential link in the automotive value chain. The Company has launched trailer and tipper manufacturing investments in joint ventures with two leaders of the heavy commercial vehicle sector, Krone and Meiller, with the goal of distinguishing itself in both business lines as well. More brand diversification in the automotive sector One of Turkey's biggest automotive distributors, Dou Otomotiv made a new entry to its lineup of international brands that it offers to the Turkish automotive market with the addition of Bugatti in 2007. This addition brings the number of global brands represented by the Company to 14. In 2007, the Company added Lamborghini and Bentley to its lineup under exclusive agreements with those two marques. New investment in after-sales services Dou Otomotiv provides a complete range of maintenance and repair activities that includes everything from full-service to spare parts and accessories at more than 500 contact points. Dou Otomotiv's most recent investment in after-sales services, Oto-Fix Express Service, went into operation at three locations in 2007. Oto-Fix provides all brands with fast, reliable, and guaranteed fault diagnosis, repair, and maintenance services. Restructuring in fleet and vehicle management Dou Otomotiv restructured its fleet management and leasing services under a new partnership structure in 2007. VW Financial Services AG sold its 51% stake in stanbul-based vdf to LeasePlan Corporation, Europe's biggest and the world's second-largest fleet and vehicle management company. Under this new structure, LeasePlan and Dou Otomotiv have embarked upon a new collaboration in long-term fleet management and vehicle services in Turkey. TVTURK TVTURK, which is a consortium set up by Dou Otomotiv, Akfen, and TV SD, has been awarded a 20-year concession by the Turkish Privatization Administration to open and operate periodic roadworthiness testing stations for motor vehicles in Turkey. Dou Otomotiv has a 33.33% stake in TVTURK. Continued bold ventures in international construction contracting In 2007, Dou Construction maintained its position as one of key companies in its sector, due to its mega project approach and its above-ground and underground projects undertaken both in Turkey and in the region and continued its growth on the basis of sound and sustainable profitability. Dou also maintains strong partnerships with international companies and extends its works not only in construction, but also in concession contracts as well and provides a wide range of services including motorways, dams, hydroelectric power plants, thermal power plants, bridges, tunnels, railways, metro projects, ports, marinas, irrigation projects, sewerage systems, office buildings, shopping and residential centers as well as industrial buildings. Marmaray Project One of the most exciting developments for the Group in the construction segment last year was the awarding of the Marmaray Project contract to the consortium consisting of Dou and its international partners Alstom (France) and Marubeni (Japan). The project value is to reach USD 1,160 million. This award is a sterling and prestigious new addition to the Group's superior record of performance in construction and it will also serve as an important benchmark of its engineering prowess at the international level.

Dou Group Annual Report 2007

18 Our Strategy and 2007 Performance

International markets in our sight Dou targets to expand its working arena in the international market and will be exploring new businesses in North Africa, Eastern Europe, Russia, Ukraine and the CIS and the Gulf Countries. Diversification in media services continues The Dou Group's activities in the media segment continue to grow and develop. In addition to its existing CNBC-e and NTV channels in Turkey, the Group's digital-based e2 channel has gone into operation. Another new Dou Group venture in media is the NTV Spor channel, which recently began full-time broadcasting. With the acquisition of Capital Radio in late 2007, the number of radio stations owned by the Dou Group has reached five. The Group also had new ventures in magazine publishing, which continuously grew in 2007. NTV Publications was established in 2007 which offers reference books on many subjects. In addition, the Group has recently launched the Turkish edition of Robb Report Magazine. Our two major investments in tourism near completion The Dou Tourism Group has unstintingly pushed ahead with the renovation of existing tourist establishments and its development-focused investments within the scope of 2007 targets, and strictly followed its growth-oriented investment philosophy. In keeping with its strategic development plans, the Dou Tourism Group carries out its initiatives in the tourism sector with the Park Hyatt Istanbul Maka Palace project for the conversion of one of the historic landmarks in Istanbul into a 90-room boutique hotel in addition to its Didim and Dalaman Marina projects. Construction work on Park Hyatt Maka Palace project is 98% complete and the Hotel is on schedule to commence operations in August 2008. The other Dou Group project that is slated for completion in 2008 is its investment in the Didim Marina. About 60% of the

work on this project is completed and the Marina should be able to begin accepting yachts in September-October 2008. The Marina's official opening is planned for May 2009. Work is currently in progress on the Dalaman Marina project and is scheduled to start in 2009. Developments in the real estate sector In 2007, the Dou Group had significant achievements in the area of real estate thanks to two main developments; the partnership it had established with GE in 2006 and the establishment of Dou Real Estate Company by the end of 2006. The combination of GE Real Estate's global experience and capital strength with the Dou Group's experience in finance, construction and real estate has rendered DOU-GE REIT an important player in the market as well as in the region. At the end of 2007, the Company's net asset value increased by 6.3% reaching to YTL 136.2 million with a market capitalization of YTL 129.4 million and a market share of 6.6% in the Turkish real estate sector. The Dou Group plans to start up at least 5 real estate development projects as of mid-2008 and further strengthen its position in the real estate sector in the coming year. Through DOU-GE REIT, the Dou Group targets to establish a real estate investment portfolio and to undertake the management of this portfolio in the near future. DOU-GE REIT also develops an Office Tower in Maslak District of stanbul with a total construction area of 105,000 sqm and a gross leasable area of 65,000 sqm that is planned to be opened by the end of 2010. Additionally, another development as a mixed use project is planned in Nilfer district of Bursa City with a total enclosed construction area of 208,000 sqm including a shopping center with 58,000 sqm GLA and 485 residential units. Dou Real Estate Company, with its registered capital of YTL 230 million, will focus its operations on land development and construction projects in different areas of Turkey including the Kartal/stanbul and Gebze/Kocaeli regions.

Dou Group Annual Report 2007

Our Strategy and 2007 Performance

19

>Dou Holding
Intensive activities in the energy sector During 2007, the Dou Group continued to engage in intensive activities in the energy sector, a new business line that it has entered as a consortium member. Due to the rapid increases in oil and energy prices within the global context, hydroelectric energy, as a renewable and clean energy source, has started to assume greater importance in our nation's energy policies. The Dou Group also bases its future strategies on this premise. The Group obtained licenses to build and operate the Boyabat Hydroelectric Powerplant (513 MW), in which it holds a 34% stake, and the Aslanck Hydroelectric Powerplant (120 MW), in which it holds a 25% stake. In addition, the Dou Group also acquired a 25% share in the D-TES Electric Power Trading Company. The Group's first objectives in this sector are to undertake the Boyabat Dam and Hydroelectric Power Plant before midyear 2008 followed by investment and construction work on the Aslanck Dam and Hydroelectric Power Plant. Pursuing growth in line with energy sector opportunities Closely monitoring privatization initiatives in geographical areas across Turkey, the Dou Group continues to operate in energy generation based on renewable and conventional energy sources. The Dou Group Energy Department is developing investment plans on prospective projects, and aims to build its total installed capacity up to 1,000-1,500 MW. Transparency and accountability on a global scale Dou Holding has authored a first in Turkey and became the first holding company to be rated by S&P. Dou Holding has undersigned yet another first, by becoming the only holding company to be rated by all three major rating agencies in the world: S&P, Fitch, Moody's. This represents an international endorsement by the rating agencies that the Group's management quality reflects its transparency and approach to management that is aligned with corporate governance principles. >Looking forward... Ability to keep our strategies up to date The Dou Group gives careful consideration to global and national macroeconomic conditions and ensures that changes are incorporated into its business plans skillfully and at the right time. The Dou Group is structured to be as agile and effective as it is corporate. The Group's style of thinking and acting makes it possible to keep a close watch on Turkey and on the lines of the Dou Group's business. The Dou Group is a corporate group that has a high degree of competency in the management of change. Its ability to act strategically made it possible to keep its growth map current with important new ventures in 2007 and to restructure its corporate strategies in line with market conditions and opportunities in the best way possible. The momentum will continue and accelerate The momentum that the Dou Group has created in offering products and services to customers in collaboration with the Group's business partners will continue and accelerate in 2008. In addition to the primary avenues of growth, energy and construction, the Group will also be pursuing diversified growth in its core businesses. Pioneering and innovative product and service provision competencies will make it possible for the Dou Group to serve increasingly more customers in increasingly more places.

Dou Group Annual Report 2007

Financial Services

21

Financial Services
With its subsidiaries in banking, leasing, factoring, brokerage, asset management, pension and life insurance, Garanti Bank operates as a fully-integrated financial services company.

22 Financial Services

>Financial Highlights*
In 2007, Financial Services segment's total assets rose by 32.4% to YTL 75,325 million. Consolidated revenues came to YTL 3,099 million while its operating profit amounted to YTL 2,961 million.

(YTL thousands) Segment Assets Net Interest Income Net Fees and Commission Income Gross Profit Margin Income from Operations Income from Operations Margin

2006 56,914,230 2,203,276 1,035,385 46.1% 1,601,683 22.8%

2007 75,324,720 3,099,156 1,288,573 45.7% 2,961,173 30.8%

Segment Assets

(YTL million)

Total Net Interest and Net Commission Income (YTL million)

75,325

41,134

56,914

2005

2006

2007

2,648

3,239

2005

2006

2007

* Figures are based on Garanti Bank IFRS consolidated financial statements.

Dou Group Annual Report 2007

4,388

Financial Services

23

GARANTI BANK Garanti: Turkey's second largest private bank Founded in 1946 in Ankara, Garanti Bank with its consistently improving performance throughout the years, is the second largest private bank in Turkey* today. Through corporate, commercial, SME and retail banking lines of business, the Bank offers diverse financial services with a customer-centric approach and without compromising quality. Dou Holding and GECF, the Bank's majority shareholders, act in accordance with the principle of equal partnership. Aiming to sustain its consistent growth trend, Garanti, as of today, operates 583 domestic branches and employs 14,500 employees. In addition to its domestic distribution network, with its branches in Luxembourg, Malta and Turkish Republic of Northern Cyprus, representative offices in Shanghai, London, Moscow and Dsseldorf and nine financial services subsidiaries, Garanti operates as a fully-integrated financial services company.

In accordance with its vision to become a regional player in the banking sector, Garanti pursues close and lasting relationships with markets in the geographic regions of close proximity. Activities in 2007 Garanti had the most successful year in its 61-year history during 2007. It was the Bank's high-powered human resources capable of making a difference that was behind this outstanding performance. Garanti maintains employee competencies at the highest level by supporting its operations with state-of-the-art technology. Combining these advantages with innovative customer-oriented products and services as well as the best customer relationship management solutions, Garanti has indeed made a difference in the banking sector achieving a record income of YTL 2.4 billion in 2007. Garanti succeeded in increasing its market share in all product categories and moved up to the leadership position in total cash and non-cash lending. In assets and deposits, the growth achieved has been twice the pace of the sector.

Financial Highlights* (YTL million) Total Assets Total Cash Loans Total Non-Cash Loans Total Deposits Shareholders' Equity

2006 57,120 29,235 10,048 33,780 4,824

2007 76,148 39,002 12,891 43,690 7,126

Growth 33% 33% 28% 29% 48% 2007 Normalized **

Net Income ROAA ROAE Cost/Income

1,167 2.33% 27.43% 53.72%

2,422 3.71% 40.41% 41.74%

1,641 2.52% 27.38% 50.06%

* According to Garanti Bank's 2007 BRSA consolidated financial statements. ** Excluding nonrecurring income items of YTL 669 million (post-tax) and YTL 112 million (post-tax) from the sale of stakes in Garanti Insurance and Garanti Pension and Life, and from the sale of the custody services business, respectively.

Dou Group Annual Report 2007

24 Financial Services

Hence, its strong brand recognition and excellent reputation have earned the Bank the Euromoney Award for Excellence for the eighth time, naming it the Best Bank in Turkey. With 105 new branches opened during the year, Garanti supports its extensive branch network with centralized operations, exceptional data warehousing and management reporting systems, integrated financial services and the efficient use of alternative delivery channels. Growth via pioneering and innovative offerings Garanti Bank has developed several groundbreaking products and services both in Turkey and around the world. The Bank does not build its competition strategies on pricing, but rather pushes forward the competition in services. To this end, it lays special emphasis on establishing closer and longer-lasting relationships with customers being dynamic and innovative and making a difference. Credit cards that set standards One of the areas where Garanti stands out is its credit cards business where it is the most innovative with many firsts. The Bank is currently managing a huge payment systems infrastructure serving 6.5 million credit cards. Bonus Card, introduced in 2000 as the first multibranded chip-based credit card in Turkey, has won several awards and soon after its launch, enabled Garanti to offer credit card-related consultancy services to all over the world. Shop&Miles, a credit card that enables card holders to earn flight miles as they spend money using their cards, was launched in cooperation with Turkish Airlines the same year. Shop&Miles&Club followed in 2004, offering solutions that allow members to enjoy life and have more leisure time, in addition to all the features that come with the original Shop&Miles. In 2006, Garanti designed Flexi for customers who tend to analyze benefits, live the life of their choice and follow the innovations closely. Card holders can choose from among the alternatives that best suit their spending habits and payment preferences. Fully customizable Flexi allows card holders to create a card with the interest rate, the reward system, the card fee and even the card design of their choice.

Since 2006, Garanti has been the only bank in Turkey entitled to issue American Express Centurion Line and Business cards and to enroll member companies. It was during the same year that MasterCard's revolutionary PayPass technology facilitating small ticket purchases was introduced in Europe for the first time, through Garanti's Bonus Trink Card. In 2007, Garanti launched yet another novelty in Europe, freeing credit cards from their traditional physical form and turning them into watches, stickers and key-chains. Garanti - the Mortgage Expert! In 2007, Garanti, the leader in the mortgage market, launched a series of training programs for real estate agencies on the specifics of housing finance. The Bank also cooperated with Istanbul Bilgi University to develop a certificate program for the specialization of branch personnel in this area. SMEs, the backbone of the economy, backed by Garanti The first Turkish bank to treat SME banking as a separate business line, Garanti is offering one-stop solutions to cater to the commercial and retail banking needs of entrepreneurs. In 2004, the Bank launched the Cash Management Package GAN to support companies in areas such as cash flow planning and pricing. In 2005, it began to provide products that can be customized according to investment requirements and structures within different industries and regions. As the first bank in Turkey to design a special support package for women entrepreneurs, Garanti is running special training programs for women, in collaboration with the Women Entrepreneurs Association of Turkey (KAGDER).

Dou Group Annual Report 2007

Financial Services

25

In 2002, Garanti initiated a series of conferences, known as Garanti Anatolian Meetings, to bring industrialists and managers from all over Turkey together with leading experts and jointly develop regional solutions. So far, 48 gatherings in 37 different provinces have been organized in cooperation with the Dnya Newspaper, where the Bank met with approximately 16,000 SMEs. Moreover, in 2005, Garanti launched a series of Basel II Meetings to inform SMEs on issues related to the Basel II Capital Accord; 17 meetings were held in 14 provinces where an estimated 5,000 SMEs were informed about the opportunities offered by Basel II. BranchLess! Garanti is continuously investing in alternative delivery channels, significantly improving operational efficiency and profitability. The Bank performs 85% of all comparable banking transactions, including cash withdrawals, through alternative delivery channels. Garanti has one of the largest call centers in Turkey (Alo Garanti: 444 0 333) and is also a leader in online banking (garanti.com.tr). In 2007, Garanti celebrated the 10th anniversary of its online banking and also introduced Cep ube (Mobile Branch), enabling the majority of online banking transactions through mobile phones with WAP or Internet access. Citizenship for a higher quality of life Garanti follows an efficient, profitable and sustainable growth strategy to create banking services that add value to both the economy and the society. This approach is also manifest in the Bank's corporate social responsibility projects. In areas such as culture, arts, environment, education and sports that improve the vision of both the individual and the society, Garanti either creates long-term projects of its own or provides sponsorship for existing projects. Taking its mission one step further, Garanti aims to improve both the cultural life of society and its own corporate culture, through institutions set up under the roof of the Bank via Platform Garanti Contemporary Arts Center, Garanti Gallery and the Ottoman Bank Museum. Garanti sponsors several important art activities, aiming to shed light on the future through the past while contributing to the promotion of Turkey around the world.

Future plans Garanti will remain cautious with respect to anticipated turbulences in markets while taking determined strides to grow, complying strictly with its medium and longterm strategic plans. Strengthening its network with the addition of 105 branches in 2007, Garanti will continue opening new branches in 2008 in an effort to accomplish its goal of customer-focused growth. Garanti outpaced every large-scale bank in Turkey in terms of new branch openings during 2007. In the medium-term, Garanti aims to reach a total of 1,000 branches throughout the country. In line with this goal, it plans to open around 150 new branches in 2008. In addition to its robust organic growth in Turkey, Garanti will reinforce its efforts toward becoming a regional bank. Along with the Romanian market, where Garanti will pursue an effective and proactive growth strategy, it also seeks opportunities to enter markets offering a high growth potential, such as Ukraine. For sustainable growth, Garanti believes it should offer its customers products and services beyond their expectations, thus capturing their hearts. It will continue to offer innovative products and services by combining its superior technological capabilities with a customeroriented culture and top-notch human resources.

Dou Group Annual Report 2007

26 Financial Services

GARANTIBANK INTERNATIONAL N.V. GarantiBank International N.V. (GBI), headquartered in Amsterdam, was incorporated in December 1990 and started its activities in April 1991. GarantiBank International N.V. is fully owned by Garanti Bank. In addition to the Netherlands, GBI has also been active in Germany, Switzerland, Romania, Turkey, Ukraine, Kazakhstan and China through its branches and representations. GBI positions itself as a global boutique and delivers fast, accurate, tailor-made, innovative and countryspecific financial solutions to its clients globally. Trade Finance, Private Banking, Structured Finance and Retail Banking are the areas where GBI delivers global financial solutions. From 2001 to present, GBI has played an active role in Romania, Russia, Kazakhstan, Ukraine and Azerbaijan serving financial and non-financial institutions via direct and structured transactions. Turkey remains one of the core markets of GBI. GBI has a Long Term Deposits Rating of 'A3' from Moody's Investors Service. This rating, which is 7 notches higher than Turkish sovereign rating, reflects GBI's success in its core activities as well as its strong financial fundamentals and asset quality, reliable funding resources, sustainable and rising profitability, product development capability and increasing volume of emerging market transactions. Activities in 2007 The total assets of the Bank reached USD 5 billion with a growth of 19% and the number of employees was 613 at the end of 2007. In addition, a significant net profit growth of 30% was achieved despite the adverse global financial environment and new representative offices were established in Ukraine, China and Kazakhstan.

In 2007, the total volume of the Bank's trade finance activities reached USD 7.6 billion. The increase is due to higher levels of activity at all fronts. Especially origination and distribution of assets in transactional commodity finance, structured trade finance, bilateral and syndicated loans and forfeiting segments were the main drivers of revenue generation for GBI. For the first time, GBI arranged a syndicated loan facility in the amount of USD 50 million and acted as one of the bookrunners together with ICICI Bank UK plc. The syndicated deal which was arranged for International Bank of Azerbaijan, Moscow attracted 14 investors from 11 countries. The Private Banking division made a serious contribution to the total revenues of the Bank. The geographical diversification of customers continued in 2007 to include new corporations and high net-worth individuals from Europe, Middle East, Russia and CIS countries. The total Client Assets under management grew by 52% to reach USD 1.7 billion. Furthermore, the Structured Finance Division has been established as a separate business line to develop and pursue opportunities in project finance, Islamic finance and shipping finance areas. 2007 Activities in Romania The regional expansion in Romania continued and GBI reached 35 branches in Romania in 2007. Romania's first cross border bonus facility credit card Bonus Card and Internet Banking were launched and SME and Retail lines of businesses were added to the Bank's portfolio with a loan volume growth of 38% year-onyear to Euro 171 millions. As a final point, the core banking system Globus was replaced with TGB core banking system by Garanti Technology in line with GBI Romania's strategy of becoming a universal bank. Future plans GBI will continue to implement its strategy of diversified growth at a sustainable rate in 2008 while maintaining its high asset quality and targets double-digit growth in all of its business lines.

Dou Group Annual Report 2007

Financial Services

27

GARANTIBANK MOSCOW GarantiBank Moscow (GBM), which began operations in Moscow in 1996, is one of the 61 foreign banks operating in Russia. GBM has a full banking license and is a member of the Russian Deposits Insurance System. The Bank operates one branch and four satellite branches and has 89 employees. Activities in 2007 In 2007, there has been remarkable growth in all major segments. The loan portfolio of the Bank was diversified through new customer acquisitions; the Bank grew in both cash and non-cash products. Sectoral distribution of loans was expanded, the deposit base expanded both in terms of number of customers and volume and foreign currency transactions and fee and commission generating transactions grew at a record rate. The number of Russian, Turkish and foreign banks with which correspondent relations were established increased, resulting in greater funding opportunities for the Bank. In 2007, there has also been more active involvement in treasury banking activities. As of the end of 2007, GBM had more than 800 active corporate and commercial customers, 80% in Russia and the remaining 20% from outside Russia. GBM has 106 medium and large- scale loan customers. The share of Russian companies in the loan portfolio in terms of units and volume are 71% and 70% respectively and as the loan portfolio continues to grow, Russian companies are increasing their share. In 2007, GBM increased total assets by 25.4%, to USD 502.8 million. Pre-tax income, calculated in accordance with IFRS, increased by 114%, to USD 13.7 million. The cash loan portfolio of the Bank grew by 42.5%, reaching USD 286.4 million. This growth was achieved by diversifying the industries to which loans are extended and by increasing the number of active companies. Meanwhile, the volume of non-cash loans, mainly extended to the construction industry, rose to USD 51.2 million.

Although the Bank has only one branch and does not operate in retail banking, total deposits increased in terms of both volume and number of customers and the deposit base expanded. Total deposits increased 64.5% over the previous year, reaching USD 185.7 million. Funds obtained from Russian, Turkish and foreign banks totaled USD 210 million. This level was reached through GBM's own facilities and dynamics, without resorting to funding opportunities such as syndication. Parallel to the rapid growth in fee and commission generating transactions, net fee and commission income went up 79.1%, to USD 4.8 million. There was a similar upward trend in foreign currency transactions revenue, which increased by 88% to USD 2.7 million. GBM provides cash services for leading tour operators. Its share of tourism flows from Russia to Turkey has reached 50%. The Bank has intermediated USD 600 million in tourism revenue between Russia and Turkey. Furthermore, in 2007, GBM's securities portfolio grew 22%, to USD 88.5 million. This portfolio mainly consisted of Russian Treasury Bonds denominated in US dollars and corporate bonds denominated in rubles. Future plans Backed by 12 years in the Russian market and banking experience in emerging markets, GBM's objectives for the coming years are to achieve sustainable growth by increasing its market share and transaction volume in its main business segments, particularly in corporate and commercial banking. To achieve these goals, GBM targets efficient risk management, a high-quality customer portfolio, dynamic services, high return on equity and strict adherence to 'know-your-customer' principle.

Dou Group Annual Report 2007

28 Financial Services

GARANTI SECURITIES Garanti Securities, an affiliate of Garanti Bank, provides corporate finance, research and capital markets brokerage services for domestic and international customers. With its market strength in mergers and acquisitions advisory, equity and debt offerings, domestic and international brokerage, settlement and custody services, Garanti Securities remains the leading brokerage house in Turkey. In June 2007, Garanti Securities was named the Best Investment Banking Institution in Turkey by international finance magazine Global Finance. In December 2007, Turkey's leading finance magazine, Capital granted Garanti Securities the Most Admired Brokerage House award for the fifth time. Activities in 2007 >Corporate Finance This has been another successful year for Garanti Securities, the total transaction volume for mergers and acquisitions increased more than 30% in 2007. Six major transactions were finalized during the year and the total transaction volume was USD 2.3 billion. Garanti Securities was the joint-global coordinator in the equity offering of TAV Havalimanlar Holding A.., in the first quarter of 2007, at a market value of USD 1.74 billion. The total demand exceeded USD 5 billion for the USD 320 million offering. Garanti Securities performed 5 merger and acquisition transactions in 2007. In May 2007, it participated in the privatization of the land owned by the 17th Region of the General Directorate of Highways, as sell-side advisor. At the end of a public tender, Zorlu Holding purchased the land for USD 800 million. In May 2007, Garanti Securities acted as the sell-side advisory to Sanko Holding at the sale of the stake of imko imento to Cementerie Aldo Barbetti at a market value of USD 1.3 billion and for the PSA-Akfen

consortium during the privatization of Mersin Port, which concluded at USD 755 million. Garanti Securities also acted as the sell-side advisor to the Savings Deposit Insurance Fund (SDIF) during the sale of Sagra for USD 77 million and to the sale of anlurfa imento for USD 210 million. In 2007, Garanti Securities played an active role in the offering of corporate bonds. It was the lead arranger in the offering of the corporate bonds of Ko Finans, with a maturity of 18 months and had a total nominal value of YTL 60 million. >Brokerage Services Garanti Securities provides stock brokerage services for customers through its Domestic and International Capital Markets Departments. Brokerage activities are supported by the Research Department, which has strong reporting capabilities on the Turkish economy, listed companies and investment recommendations. Garanti Securities served 170,000 customers in 2007 and total trading volume in brokerage services went up 26%, to USD 26.4 billion. As of the end of the year, Garanti Securities' market share in the ISE was 4.1%. Future plans Garanti Securities is planning to maintain its strong position in public offerings, mergers and acquisitions and focus on private equity transactions and corporate bonds. The Company also aims to play an active and leading role in privatization tenders in key industries such as energy, infrastructure and real estate.

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GARANTI ASSET MANAGEMENT Garanti Asset Management, the first asset management company in Turkey, has been providing individual and institutional investors with mutual fund, pension fund and discretionary portfolio management solutions for a decade. Mutual Fund Management In 2007, the mutual fund market expanded 20%, from around YTL 22 billion to YTL 26 billion. During the same period, the volume of mutual funds managed by Garanti Asset Management increased by 37%, from YTL 2.7 billion to YTL 3.7 billion. Pension Fund Management With regard to pension funds, one of the fastest-growing investment products, the market grew 64% in 2007, from YTL 2.8 billion to YTL 4.6 billion. During the same period, the volume of pension funds managed by Garanti Asset Management increased faster than the market average, by a massive 90%, from YTL 296 million to YTL 562 million. Discretionary Portfolio Management 2007 was a fruitful year for Discretionary Portfolio Management. According to the December data published by the Capital Markets Board, the discretionary portfolio management market grew 12.5%, from YTL 1.6 billion to YTL 1.8 billion. Garanti Asset Management's business volume increased 122% in this period, from YTL 235 million to YTL 524 million, much faster than the market average. Garanti Asset Management closed the year as a leader in discretionary portfolio management.

Activities in 2007 Garanti Asset Management manages 15 mutual funds for Garanti Bank, 3 mutual funds for Garanti Securities, 10 pension funds for Garanti Pension and the assets of Garanti Investment Trust. As of the end of the year, total assets under management in mutual and pension funds amounted to YTL 4.2 billion. In 2007, Garanti Asset Management organized 15 mutual fund courses for 450 bank employees, also providing a post-training information/support network. Furthermore, 7 regional meetings were held in Istanbul, Ankara, Adana, zmir, Antalya and Bursa, where regional managers, branch managers and branch sales personnel were given information on mutual funds and pension funds. 2,000 Garanti employees received field information support in this way. During the year, 75 individual and 30 corporate clients were visited for the purpose of promoting asset management products. Existing customers were visited at the end of the performance period and kept up-to-date on their portfolios and on expectations from the coming period. Garanti Asset Management signed an agreement with Morgan Stanley Capital International for the licensing rights of the MSCI Turkey Index. This index will be used for the Exchange Traded Fund (ETF) that will be established by Garanti Bank and managed by Garanti Asset Management. ETF will enable domestic and international investors to invest in the largest publicly traded companies of Turkey. In 2007, Garanti Asset Management applied to the Capital Markets Board for the establishment of the Hedge Funds, Capital Protected Fund, and Guaranteed Funds. Future plans Garanti Asset Management will remain the first choice of customers in 2008, displaying a performance worthy of the Garanti brand. In this context, the Company aims to increase its market share and solidify its position by using efficient delivery channels and launching new products.

Dou Group Annual Report 2007

30 Financial Services

GARANTI LEASING Garanti Leasing provides leasing-based financial solutions for commodity, equipment and real-estate purchases of customers. SMEs make up a significant portion of Garanti Leasing's customer base. As of the end of 2007, Garanti Leasing had over 41,000 service contracts. The Company has been assigned the highest ratings possible for a Turkish company by credit rating agencies such as Standard & Poor's and Fitch and is the only Turkish leasing company to be graded by two different agencies. Activities in 2007 Garanti Leasing had total assets worth YTL 2.2 billion at the end of 2007. Thanks to accurate sales strategies targeting an extensive customer base, there has been a 65% increase in trading volume. In 2007, Garanti Leasing achieved a market share of 19.11% and maintained its leadership in the market by adding 9,846 contracts to its portfolio, which is the highest number of contracts achieved by a single company in the industry. Garanti Leasing launched several new projects in 2007 and created 12 alternatives from a single leasing product. These were introduced as new products to meet customers' needs. In a survey held by the monthly business magazine Capital, Garanti Leasing was chosen as Turkey's most admired leasing company. According to independently audited IAS financial tables, Garanti Leasing increased its profit 51% in 2007, up from its 2006 level of YTL 38,749,000. In 2007, Garanti Leasing increased the efficiency of vendor leasing operations by improving cooperation with prominent vendors of heavy-duty equipment, CNC machines, agricultural equipment and various manufacturing equipment. The Kolkola Leasing Project (Arm-to-Arm Leasing), launched in the previous year, continued in 2007. The share of transactions executed through vendor leasing together with this project in total leasing transactions reached 35%.

Garanti Leasing leverages the advantage of an extensive delivery channel and serves customers at 22 different points. Three new regional offices were opened in 2007, parallel to Garanti Bank's regional structuring efforts. Garanti Leasing remained the highest-credibility Turkish leasing company in international markets in 2007. A Euro 200 million syndication loan was obtained, the largest ever loan obtained by a leasing company in Turkey. The Euro 100 million external guarantee, which was the non-cash tranche of this transaction, was used for a loan of same amount obtained from the European Investment Bank. Consequently, Garanti Leasing became the first Turkish leasing company to secure a loan directly from the European Investment Bank. Garanti Filo Ynetimi A.. was founded in 2007 to operate in the fleet management industry, which has a great potential in Turkey. This wholly-owned subsidiary of Garanti Leasing had a balance sheet size of USD 30 million and a fleet of 1,100 vehicles as of the end of the year. The Company is planning to reach a fleet size of 5,000 vehicles in 2008. Future plans The demand for leasing is expected to increase substantially in heavy construction equipment, land vehicles, transportation and healthcare. Collaboration with companies in these industries will continue at an accelerating pace. New representative offices are planned for opening in promising markets in 2008.

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GARANTI FACTORING Garanti Factoring was established in 1990 as one of the first factoring companies in Turkey. Currently 34.82% of its shares are traded on the ISE National Market. Garanti Factoring provides value-added financial products to corporations with extensive dealer/supplier networks, importers, exporters and SMEs. Catering to business partners' needs for collection, financing and guarantee services, Garanti Factoring also makes a significant contribution to their operational productivity. Activities in 2007 In addition to traditional services such as domestic export and import factoring, Garanti Factoring diversified services in 2007 by focusing on factoring products customized for different industries and customer profiles. Customers served by Garanti Factoring in 2007 were primarily involved in trade (32%), machinery (11%), iron and steel (11%), textile (7%), food (6%) and automotive (5%). In 2007, there has been intensive cross-selling cooperation with all delivery channels of Garanti Bank, especially in the branches, which were effectively used to offer factoring services to customers all over Turkey, not only in big cities. In this way, a productive working environment was created within the Group and greater diversity was achieved in terms of geographic location, customers and products. Through sales and marketing activities, Garanti Factoring brought its market share from 12% in 2006 to 14% in 2007. With a factoring volume of USD 3 billion in 2007, Garanti Factoring ranked second among the members of the Factoring Association. The Company aims to achieve a minimum volume of USD 4 billion in 2008. In 2007, Garanti Factoring increased its profit from YTL 4.6 million to YTL 5.7 million and total net assets from YTL 673 million to YTL 758 million. This growth came as a result of the Company's emphasis on human resources and training.

In the same period, Garanti Factoring also increased international factoring volume and strengthened its position within IFG (International Factoring Group) and FCI (Factors Chain International), which further developed its correspondent network. At the end of 2007, Garanti Factoring was a member of the Board of the IFG Group. Future plans To ensure fast and efficient access to customers in the SME segment, Garanti Factoring contacted organized industrial zones, chambers of commerce and industrialists' associations, taking the initial steps for introductory meetings and cooperation projects in 2008. Garanti's strategies for 2008 can be summarized as follows: Focusing on SME segments, Increasing market share in international factoring transactions through closer contacts with multinationals and corporate enterprises, Becoming a market maker on both domestic and international platforms, Increasing IT investments and operational productivity, Increasing commission income and the number of customers contacted, Emphasizing high-return products and Developing the infrastructure established with the delivery channels of Garanti Bank. Through these strategies, Garanti Factoring will continue to improve its performance in 2008 and take critical steps toward becoming the leading factoring company in Turkey.

Dou Group Annual Report 2007

32 Financial Services

GARANTI PENSION Founded as Garanti Life Insurance in 1992 and renamed as Garanti Pension in 2002, the Company has 554 employees, of whom 392 are employed in regional offices. With the introduction of the individual pension system in Turkey, Garanti Pension went through a restructuring process in 2003 in order to expand the scope of services and started individual pension activities, in addition to the life insurance business. Activities in 2007 Especially in the last three years, Garanti Pension has grown rapidly in the area of life insurance. The Company's market share increased from 2.75% in 2004 to 8% in 2007. As of the end of the year, the Company had 1.7 million life insurance policies and generated YTL 108 million in premiums. In the pension market, Garanti Pension increased its market share in terms of participants by 1.4% over the previous year, to 19%. As of the end of 2007, the company had 278,193 participants. At the same time, total fund size grew to YTL 573 million, with the corresponding market share going up from 10.65% to 12.55%. In 2007, Garanti Pension continued efforts to reach and serve customers in a more efficient way using alternative delivery channels. Within this framework, online applications on garantiemeklilik.com.tr for individual and corporate retirement plans was made possible, while individual retirement plans are also available in an interactive system through the Internet Branch of Garanti Bank (garanti.com.tr), which has around one million active users. Renewed in 2007, garantiemeklilik.com.tr won five prestigious international awards. The website won the Insurance Standard of Excellence and Financial Services Standard of Excellence awards presented by the Web Marketing Association. In addition, the Interactive Media Council (IMC) granted the Outstanding Achievement award in finance and marketing and the W3 Award Processing Center granted the Silver Prize in financial services to the internet site.

Garanti Pension purchased an island on the real-time interactive computer game Second Life, where four million people from around the world are leading their virtual second lives. The Company was the first Turkish financial organization to undertake marketing on this platform. Garanti Pension partnered with Garanti Payment Systems (GPS) to implement a special project for the first time in Turkey. With this project, currently in progress, references for retirement plans will be created through the 1,500 payment points of GPS around Turkey and these references will eventually be turned into actual sales by the licensed sales teams of the Company. Future plans Garanti Pension aims to reach more customers in 2008 and improve its market share of pension funds in the growing Turkish market. With regard to life insurance premium production, the company will preserve profitability through package sales of banking products and sustain rapid growth in this field. New products that guarantee the payment of an individual's debts and bills when he/she is unemployed will be launched in 2008. Similarly, the Mutlu Yarnlar (Happy Future) product, which provides protection against three serious diseases, is planned to be introduced during the year. Work on revenue insurance will continue in 2008 as well and an improved version of the Customer Satisfaction Project, which was created to offer better services for customers, will be introduced in 2008.

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GARANTI MORTGAGE The Housing Finance Department of Garanti Bank, which was established at the end of 2005 as the first of its kind in the banking sector, was incorporated as a separate entity, a subsidiary of the Bank, named Garanti Konut Finansman Danmanlk Hizmetleri A.. (Garanti Mortgage) in October 2007. The Company aims to promote and enhance Garanti Bank's expertise in this field and further strengthen its position as a market leader. Activities in 2007 After the enactment of the Mortgage Law, new housing finance products, including the Variable Rate Mortgage launched by Garanti for the first time in Turkey, were developed to meet different needs. Such products assisted the Bank in leading the market at the end of 2007 with a share of 13.57%. The housing loans portfolio of the Bank increased considerably, from YTL 2,709 million at the beginning of 2007 to YTL 4,166 million at the end of the year, with market share going up from 12.06% to 13.57% during the same period. The share of housing loans within the consumer loans portfolio remained at around 50%, excluding credit cards. 2007 has been a very successful year in terms of new product development, due in part to the opportunities offered by the Mortgage Law. Products such as the Falling Interest Mortgage, Flexible Term Mortgage, Variable Interest Mortgage, Fixed-Variable Interest Mortgage and All-Inclusive Mortgage have been launched during the year. Furthermore, considering the increasing number of foreigners coming to Turkey from Europe to buy real estate, Non-Resident Mortgage was launched in late 2007.

A large portion of Garanti Bank's portfolio, offering the widest range of products in the banking sector, consists of Fixed Interest and Discounted Mortgage (Fixed Rate Mortgage with lower interest rate and higher upfront commission) products. Consequently, the Falling Interest Mortgage has been the most popular product of the year. Although variable rate products have not yet created a significant demand as they are relatively new to the market, they are expected to gain momentum in the upcoming years. Future plans After the introduction of the new retail housing loans process in 2008, it will be possible to make the underwriting in the fastest and most accurate way for disbursement. This will be one of the 2008 priorities in addition to new product development in line with the changing requirements and risk perceptions of consumers. Expanding and increasing the number of developer financing projects and improving relations with real estate agencies by enlarging field teams will be among the top priorities in 2008 as well. Market share and profitability will be increased by supporting such channels in addition to the online application facility and the new mortgage call center of the Bank, 444 EVM (444 MY HOME), which will be the Turkey's first mortgage call center.

Dou Group Annual Report 2007

34 Financial Services

GARANTI PAYMENT SYSTEMS Garanti Payment Systems (GPS) was established by Garanti Bank in 1999 to provide services in the credit card market as the fastest product developer on chip-based multi and joint branded card programs, commercial cards, virtual cards, business-based marketing and e-commerce services. Garanti Payment Systems leads and directs the sector with its projects in the area of payment systems, and at the same time, continuously enhances and improves the products and services it provides to its costumers. With its innovative, visionary structure and marketoriented team, GPS develops products and services with leading edge concepts both in Turkey and in international payment systems. Garanti Payment Systems meets every business need within the field of payments while offering services in e-commerce and e-retail through garantialisveris.com, as well as offering solutions in every category from POS to ADSL POS, to Mobile POS and Virtual POS. Sustainable growth in recent years qualifies GPS for leadership not only in Turkey but also in Europe as a whole. GPS provides management services for its own cards (such as Bonus Card, Flexi, Shop&Miles and American Express), as well as for commercial cards, debit cards and virtual cards. Activities in 2007 In 2007, Garanti Payment Systems achieved 15.6% growth in the number of cards issued, 30% growth in card turnover, 31.5% growth in the number of POS terminals and 36% growth in corporate members' revenue. Credit cards, one of the major sources of non-interest income, accounted for 54% of the Bank's total commission income in 2007. Garanti has a 23% acquiring market share in the market, which makes it a leader.

The success of Bonus Card crossed the boundaries of Turkey and entered Romania in 2007. With the world's first ever cross-border rewards program, Garanti made it possible for cardholders to earn bonus points in Turkey or Romania and be able to redeem their rewards in either country. As the first chip-based credit card in Romania complying with EMV standards, Bonus Card began to offer several tangible benefits for customers, by combining the features of a shopping card with those of a credit card, including the opportunity to collect bonuses rather than points and use them for shopping at partner shops without charge and with the convenience of paying in installments. In 2007, GPS also took the credit card out of regular card format and changed it into a Key Fog and Watch for the first time across Europe and into a Sticker (Smart sticker) format for the first time in the world with the trade mark of Bonus Trink. Furthermore, also a first in Europe, a system has been developed for making the ticket payments with a new system designed by Garanti Bank, which was initially integrated into the municipal buses in Samsun and anakkale and 500 taxis in stanbul. Future plans Garanti is currently managing a huge infrastructure of payment systems, serving more than 11 million credit and debit cards and shaping the sector with various projects in payment systems and credit cards. GPS aims to further improve customer satisfaction and will therefore be targeting a wider use of payment systems through diversified innovative products.

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GARANTI TECHNOLOGY Garanti Technology (GT), which is a Dou Group company and a subsidiary of Garanti Bank, provides technology infrastructure, software development on various platforms, Internet applications, integration, system management, security management, project management, and office application services to companies that are in the banking and financial services, automotive, construction, media and tourism industries. The Company also provides consultancy services related to these sectors. GT develops IT strategies for the institutions it serves, turns solutions into value-added services, creates and manages change and quality and ensures sustainability. GT's corporate governance is based on the ITIL process model and built on the principle of Design-OperateSupport. Every single project is prepared in accordance with quality standards such as COBIT and ISO, to ensure the most appropriate solutions that meet the requirements of the institutions served. Activities in 2007 At the end of 2007, GT had 631 employees, competent in all platforms and equipped with the ability to provide creative technological solutions. In the area of Software Development, GT initiated several projects including the Cep ube (Mobile Phone Branch), Bonus Trink, CepBank Shopping, Garanti Discount, ESignature, Derivatives Exchange and adaptations of new Garanti products to GBI Romania.

In the area of International Business Consulting and Project Management, a banking system application along with product and process catalogues were prepared, functions to be included in Garanti Technology International Banking Solution were identified, methodologies for overseas projects, approaches to be adopted in gap analyses and templates for presentation, question and screen sets were prepared, IT Service and Software contracts were updated and gap analyses were completed for T-Bank, Garanti Luxembourg Branch, Budapest Bank Hungary and Motoractive Leasing Romania. GT also had several new initiatives in the areas of Strategy and Application Management, System and Operation Management and Network and Field Management in 2007. Future plans As a pioneering institution, Garanti Technology has adopted the mission of keeping Garanti Bank, its subsidiaries and other companies of the Dou Group one step ahead at all times. Garanti Technology will continuously invest in state-of-the-art technology, uninterrupted transaction competency and infrastructure security, maintaining its leadership in technology.

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Automotive
Dou Otomotiv brands closed 2007 with successful results in the passenger car, light commercial vehicle, and heavy commercial vehicle markets. The Company controlled an aggregate 11.4% market share last year with 71,690 unit sales to all segments.

38 Automotive

>Financial Highlights*
Thanks to the successful operational performance, Dou Otomotivs net income in 2007 tripled and reached YTL 64 million. 2007 was a year of investments for Dou Otomotiv. During the year, the Company made investments worth YTL 113 million, up 390% from 2006. Though unit sales decreased in line with the market developments, the sales volume of Dou Otomotiv rose by 1% and reached YTL 2,552 million.
(YTL thousands) Segment Assets Revenues Cost Gross Profit Margin EBITDA EBITDA Margin 2006 1,133,823 2,527,200 (2,237,739) 11.5% 77,510 3.1% 2007 1,160,188 2,552,084 (2,199,519) 13.8% 110,989 4.3%

Segment Assets

(YTL million)

Revenues

(YTL million)

1,134

1,160

1,018

2005

2006

2007

2005

2,466

2006

2,527

2007

* Figures are based on standalone financial statements of the segment.

Dou Group Annual Report 2007

2,552

Automotive

39

>Corporate Profile
Structuring its business plans with the vision of providing innovative service beyond expectations, Dou Otomotiv regards having a presence in every link of the automotive value chain as the fundamental basis of its corporate strategy. Being Turkeys leading automotive importer and one of the biggest automotive distributors, Dou Otomotiv represents 14 international brands in the segments consisting of: Passenger cars Light commercial vehicles Heavy commercial vehicles Industrial and marine engines Dou Otomotiv supplies the Turkish automotives market with nearly 75 models of Volkswagen Passenger Cars, Volkswagen Commercial Vehicles, Audi, Porsche, Bentley, Lamborghini, Bugatti, SEAT, Skoda, Scania, Krone, and Meiller. It is also the Turkish representative for Volkswagen Marine and Scania Engines in the industrial and marine engine markets. Providing sales, after-sales, and spare parts services for all the brands that it represents through a service network with a truly national reach, Dou Otomotiv is the only company in the world that brings every Volkswagen Group brands together under a single roof. With one of the most extensive authorized dealership and service networks in Turkey, Dou Otomotiv delivers services focused on unconditional customer satisfaction through an organization consisting of more than 500 contact points. Structuring its growth map around the principle of having a productive and profitable presence in every link of the automotive value chain, Dou Otomotiv is not only an importer and distributor but is also active in such complementary service lines as retailing, automotive financing, spare parts and accessories trade, logistics and customer services, used car trading, fleet management and leasing, express service, vehicle inspections, and insurance. Dou Otomotiv has taken its first step into production, which it regards as another essential link in the automotive value chain. The Company has launched trailer and tipper manufacturing investments in joint ventures with two leaders of the heavy commercial vehicle sector, Krone and Meiller, with the goal of distinguishing itself in both business lines as well. Dou Otomotiv has undertaken the first venture of its strategy of becoming a regional power and moving into international markets in Egypt. Dogus Auto MISR has begun providing sales and after-sales services for Volkswagen Commercial Vehicles at its newly-opened showroom in Cairo. The second step of Dou Otomotiv's regional expansion strategy has been taken in Switzerland. The Company has entered into an agreement with Porsche to provide authorized sales and services in the city of Lausanne. With a solid reputation and being one of the most highly-respected brands in Turkey, Dou Otomotiv has adhered to a service policy focused on quality and customer satisfaction ever since it was founded and this is what ensures the continuity of its creative and dynamic service processes. In recognition of its social responsibilities, Dou Otomotiv develops and undertakes projects that are innovative and exemplary. Carried out under the overall heading of Traffic is Life, these projects have the shared goal of increasing Turkish public awareness of traffic-related knowledge and responsibilities, with a special emphasis on young people. Dou Otomotivs shares are traded on the Istanbul Stock Exchange (ISE) under the ticker DOAS.

Dou Group Annual Report 2007

40 Automotive

>Dou Otomotivs Value Chain in 2007

Production

Import & Distribution

Retail

Replacement Parts & After Sales Services

Used Car Sales

Finance

Other Investments

Krone*

Centre of Logistics

Used Car Sales

Automotive Financing*

TVTURK*

**

Dou Otomotiv Independent Authorized Dealers

Meiller*

Quick Fix to all Brands

Fleet Rental LeasePlan*

Dou OtoMotion stanbul

(Switzerland)

Insurance*

Yce Auto*

Insurance*

* Subsidiaries **Represantative Offices

Dou Group Annual Report 2007

Automotive

41

>Dou Otomotiv in 2007


Supplier of the worlds leading automotive brands to the Turkish market, Dou Otomotiv provides a complete array of automotive products and services capable of responding to every need and expectation under a single roof. Dou Otomotiv stands by its customer at every moment of the automotive life cycle with everything from a network of authorized dealerships and service outlets expert in vehicle sales and maintenance to convenient consumer financing for purchases and from used car sales to production. Strong performance continues Dou Otomotiv brands closed 2007 with successful results in the passenger car, light commercial vehicle, and heavy commercial vehicle markets. The Company controlled an aggregate 11.4% market share last year with 71,690 unit sales to all segments. In 2007, Dou Otomotiv booked a net profit of YTL 64 million on a turnover amounting to YTL 2,552 million. During the same period, total assets rose to YTL 1,160 million, total investments to YTL 113 million. Due to the investments undertaken, net operating capital fell to YTL 74 million. A regional power and a global player Dogus Auto MISR, Dou Otomotivs first step in its strategy of moving into the international arena and becoming an effective regional power in its business, has opened its first showroom in Cairo. Dogus Auto MISR will be providing sales and after-sales services for Volkswagen Commercials Caddy, Transporter, and Crafter models. Dogus Auto MISR is widely regarded as an indication of the confidence that Volkswagen AG has in Dou Otomotivs successful performance to date, particularly in the areas of sales and after-sales services. The project is being undertaken at an investment cost of USD 3 million. Dou Otomotiv sees Egypt as a major market for the international automotive industry and has set its sights on a market share of 4-5% by the end of its first year of operation in the country with 1,000 vehicle sales and a turnover of USD 20 million. Dou Otomotivs second venture on the international scene was a proposal to provide authorized sales and services for Porsche in the Swiss city of Lausanne and its environs. This proposal was accepted and an agreement with Porsche AG has been signed. This is an important project, particularly because it is the Companys first service point in Europe. The Porsche showroom and service outlet in Lausanne have received authorization and have been set up. They will begin serving customers in the first half of 2009. Strong steps towards production Dou Otomotiv introduced the value chain concept to the Turkish automotive sector by providing the broadest array of products and services. In 2007, it further extended the chain by adding a production link as well. The Companys first venture in this direction takes the form of an agreement with the German Krone firm, one of the leading global trailer manufacturers, whose products Dou Otomotiv has been distributing in Turkey for four years. Under this agreement, a plant will be set up in zmirs Tire Organized Industrial Zone to produce trailers in Turkey. The foundations of this plant are to be laid during 2008 and manufacturing operations are slated to begin by mid-2009. Built at a total investment cost of EUR 35 million, the plants production capacity will be 10,000 units a year while its painting and dipping capacity will be 30,000 units/year. This joint venture with Krone will make important contributions to Turkeys commercial vehicle and super structure sector while making Dou Otomotiv the biggest player in the countrys trailer market and Krone the biggest trailer producer worldwide.

Dou Group Annual Report 2007

42 Automotive

>Financial Highlights
Dou Otomotivs second venture into production takes the form of an agreement that it has entered into with Meiller, Europes leading maker of heavy transport vehicles equipment. The distributorship agreement that the two companies signed in 2007 quickly led to a fruitful collaboration and to a decision to undertake the joint manufacturing of tippers in Turkey. The plant, which will be set up in the Sakarya 1st Organized Industrial Zone at an investment cost of EUR 10 million, will have an annual production capacity of 3,000 units at the outset. The plant will be making tipper bodies and trailers for trucks and will contain metal forming, painting, and assembly sections that manufacture to EU standards. Already playing an influential role in the heavy commercial vehicle market with the brands that it represents, this strategic cooperation with Meiller will make Dou Otomotiv one of the most important domestic producers in this segment. Still more brand diversification One of Turkeys biggest automotive distributors, Dou Otomotiv made a new entry to its lineup of international brands that it offers to the Turkish automotive market with the addition of Bugatti in 2007. One of the worlds leading manufacturers of super sport car, Bugattis publicity, marketing, and sales activities in Turkey will be carried out by Dou Otomotiv. This addition brings the number of global brands represented by the Company to 14. A letter of intent that was signed between Dou Otomotiv and Lamborghini S.p.A in 2006 blossomed into a full-scale collaboration with the signing of a direct sales authorization agreement between the two in 2007. A letter of intent given in 2006 to Bentley Motor Limited, Britains premier luxury automobile maker and another Volkswagen-owned badge, reached a new stage with the signing of a distributorship agreement in 2007. Dou Otomotiv has opened a Bentley showroom in stanbuls Ortaky district from which it has begun marketing and selling Bentley vehicles. Used car sales As the first and largest institutional used car brand in Turkey, DOD, a brand of Dou Otomotiv, became a symbol of trust in the sector with its customer oriented approaches, fast and flexible solution alternatives, developed infrastructure and widespread dealer network. DOD engages in purchasing, sales, and trading of used cars of all brands, models and age through its nationwide authorized dealer organization. Having sold 7,760 vehicles in 2006, DOD sold 13,024 vehicles in 2007, bucking the general contraction in the sector to chalk up a 70% increase on the year. By reaching its customers through auctions held at specific intervals, DOD sold 413 vehicles in 13 different auctions in 2007, selling 1 vehicle per 84 seconds during the auctions. DOD's objective is to consolidate its success gained in 2007 and ensure the sustainable long term growth strategy, while targeting sales of 20,000 in 2008. As part of its strategy to move closer to its customers, DOD has concentrated on institutional restructuring in 2007, raising the number of authorized dealers to 83 in 34 cities where service points are located. Besides, as the first used car brand which composed its own brand standards and institutional identity, DOD completed the construction of 21 special DOD showrooms throughout Turkey in 2007, and still has 14 investments in progress in different cities. The DOD Certification System is developed to certify that the vehicle is bought with DOD safety standards, for customers who acquire vehicles through the DOD dealer network. It is provided to customers with the vehicle license and contains all the details about the vehicle. This new application, which will enable numerous advantages to the vehicle owner in the revaluation period, was initiated through a pilot practice in December 2007 and will operate within DOD's authorized dealer network in 2008.

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Automotive

43

Europe's largest integrated used car vehicle center, DOD City, delivered its 1,000th vehicle to its owner in its 9th month of operation. Achieving sales of 1,364 vehicles in 2007, DOD City increased its target sales for 2008 up to 2,500. After-sales services gain momentum In keeping with its principle of having a presence in every aspect of the automotive value chain, Dou Otomotiv provides after-sales services for the brands that it distributes. The Company believes that effective after-sales services are the most important factor influencing and supporting sales and for this reason, the investments that it undertakes and carries out in this area are guided by an approach that puts customer satisfaction ahead of everything. Bringing customers and all the brands it represents together under a single roof at more than 500 contact points, Dou Otomotiv provides a complete range of maintenance and repair activities that includes everything from full-service to spare parts and accessories. Dou Otomotivs most recent investment in after-sales services, Oto-Fix Express Service, went into operation at three locations in 2007. Oto-Fix provides vehicle owners with fast, reliable, and guaranteed fault diagnosis, repair, and maintenance services. Oto-Fixs services include everything from battery, shock absorber, tire, and oil and filter replacements to electrical system work, brake maintenance, periodic maintenance, alignment and balancing, air conditioning, and exhaust replacement to all the car brands and models. With flexible working hours and a drop-in appointmentfree service approach, Oto-Fix Express Services goal is to deliver instant service to customers whenever they need it. Dou Otomotiv plans to expand the scope of the Oto-Fix service network so as to reach more than 200 locations by the end of 2010.

Customer relations through proactive CRM Dou Otomotiv develops initiatives that enhance customer loyalty and ensure close communication with its customers. All efforts are taken to perform promptly and with utmost care and attention, with a view of providing customers with a service that is beyond their expectations. New structure in fleet and vehicle management Dou Otomotiv restructured its fleet management and leasing services under a new partnership structure in 2007. VW Financial Services AG sold its 51% stake in stanbulbased vdf to LeasePlan Corporation, Europes biggest and the worlds second-largest fleet and vehicle management company. Under this new structure, LeasePlan and Dou Otomotiv have embarked upon a new collaboration in long-term fleet management and vehicle services in Turkey. Set up with the vision of providing customers with effectively-priced, flexible, and integrated vehicle management services, LeasePlan Turkey has an extensive portfolio of vehicles that includes virtually every brand available.

Dou Group Annual Report 2007

44 Automotive

TVTURK: Turkeys new name in periodic roadworthiness testing A consortium set up by Dou Otomotiv, Akfen, and TV SD, TVTURK has been awarded a 20-year contract by the Turkish Privatization Administration to open and operate periodic roadworthiness testing stations for motor vehicles in Turkey. Dou Otomotiv controls a 33.33% stake in TVTURK. By performing periodic roadworthiness vehicle testing in compliance with EU norms, TVTURK will be making a vital contribution to traffic and motor vehicle safety in Turkey. Set up as a joint venture, TVTURK eventually will be serving with at least 270 vehicle inspection stations (189 immobile, 81 mobile) located in 81 provincial and 88 township centers. Operating to strict EU norms, every TVTURK motor vehicle inspection station will also provide exhaust emission testing, roadworthiness testing, and special inspection (vehicle modification and compulsory inspection) services in addition to the normal gamut of functional and visual periodic vehicle inspections. All these services will be performed by specially trained personnel at stations that have identical features and complete with the very same standards. In addition to providing a significant source of employment nationwide, TVTURK is expected to quickly raise vehicle inspection rates in Turkey to EU standards once it becomes operational. Sustainable growth will continue With its entrepreneurial drive and tremendous potential for growth and development, Dou Otomotivs strategy is defined as: Achieving greater depth in the national market and maintaining leadership of the imports market, Becoming a regional power at the international arena.

Dou Otomotiv lays out its roadmap of future growth according to business plans that are in accordance with its overall corporate strategies. In the near term, the Companys goals are to: Launch more than 24 new products in 2008, Have sales topping 100,000 units and 1,000,000 service tag entries, and Reach a turnover of close to USD 3 billion in 2010. In the medium and longer terms, Dou Otomotiv will continue its efforts to increase its investors satisfaction and to create increasingly more value for all of its stakeholders. OtoMotion: Turkeys first, one of the leading global experiential marketing centers For the purpose of offering customer-focused and value-creating solutions by bringing the worlds of art, design, and technology together for the brands that it represents, Dou Otomotiv has launched Dou OtoMotion stanbul. A perfect reflection of Dou Otomotivs imagination, innovativeness, and energy, Dou OtoMotion stanbul is a dynamic and creative platform with its own vehicle showrooms and activity areas. Located in the Dou Power Center in stanbuls prestigious Maslak district, Dou OtoMotions architecture, layout, innovative exhibition methods, and special functions all come together to make it a living environment. In addition to its 4,200 m2 showroom in which models of the major international brands such as Volkswagen, Audi, Bentley, Lamborghini, Porsche, SEAT, and Skoda are on display, the center also incorporates many new, wide-ranging features. While promoting Dou Otomotivs own products and services and the brands that it represents, Dou OtoMotion stanbul will also serve as a venue for a host of events such as concerts, exhibitions, and meetings and at which visitors can spend an enjoyable time.

Dou Group Annual Report 2007

Automotive

45

DOU OTO Dou Oto Pazarlama ve Ticaret A.., a subsidiary of Dou Otomotiv, provides services for 7 brands (VW Passenger Cars, VW Commercial Vehicles, Audi, Porsche, SEAT, Skoda, DOD) in stanbul, Ankara, zmir, Bursa and Mula; it operates in a total of six regions with 31 authorized dealers within a total enclosed area of over 103,000 m2, employing 1,143 staff. Dou Oto serves as the Dou Groups service provider in the automotive sector for its end-customers, while acting as a bridge to convey customer needs and expectations to the distributor company. Besides providing insurance, finance and after sales services to all Dou Otomotiv brands, Dou Oto is also responsible for the retail sales of new and used cars, spare parts and accessories in all of the regions where it operates. Growth supported by customer satisfaction and quality of service Placing customer satisfaction and high quality service provision as its foremost priority, Dou Oto sustained its growth in 2007 by increasing its share in the passenger and light commercial vehicle market in from 3.23% in 2006 to 3.37% in 2007. The number of vehicles received by Dou Oto service stations in 2007 reached 162,705, an increase of 9% over the 149,037 in 2006. Sales up by 0.4% Dou Oto sold 20,040 units of new vehicles in 2007, an increase from the 19,949 sold in 2006. The Company managed to increase its share in Dou Otomotiv Groups brands total retail sales from 28.6% in 2006 to 30.6% in 2007. Dou Oto also increased its market share in the total passenger and light commercial vehicles from 3.23% in 2006 to 3.37% in 2007.

Significant increase in used car sales Apart from sales of new cars, Dou Oto also undertakes retail sales of used cars as DODs authorized dealer. Although stiff competition in new vehicle sales in 2007 took a toll on the used car market, Dou Oto increased its used car sales by 13%. Dou Oto realized sales of 1,956 used cars in 2007, compared to 1,732 cars in 2006. Rapid growth in demand for our after sales services In parallel with its success in the sales channel, Dou Oto in 2007 has achieved notable progress in the after sales services area. The number of vehicles received by Dou Oto service stations in 2007 reached 162,705, a 9% rise over the 2006 level of 149,037. Dou Oto's total revenues in after sales services increased by 8% over its 2006 level. Plans for 2008 The opening of the Dou Otos second facility is planned for May 2008 in the Ankara region. The facility will also provide services for Audi through its authorized dealers and service provision, as well as used car sales. 2008 new vehicle sales target: 22,319 units Dou Oto aims to increase the share of new vehicle sales within Dou Otomotiv to 32.6%, targeting 22,319 sales, and raise its total market share to 3.75%. Dou Oto's targets used car sales of 2,344 in 2008. With this sales unit goal, sales of used cars are expected to rise by 37.7% over their 2007 level. For 2008, Dou Oto aims to service 191,265 vehicles and raise its aftersales services revenues by 21.8%.

Dou Group Annual Report 2007

46 Automotive

>DOD
vdf GROUP vdf Group aims to participate in every link of the value chain in the automotive and finance sectors, and create additional profit and business for our strategic partners. It is structured as a holding company and with effect from 2008, it consists of three companies: Volkswagen Dou Tketici Finansman A.., which operates in consumer finance business, vdf Sigorta Araclk Hizmetleri A.. in insurance services business and vdf Servis Holding A.. vdf Otomotiv Servis ve Ticaret A.. (vdf Fleet Services), active in the operational leasing business, was separated from vdf Group on 8 November, 2007, as Volkswagen Financial Services AG (VW FS AG), the major shareholder of vdf Group, transferred 51% of its shares to Europes leading operational leasing company, LeasePlan Corporation N.V. last year. The share of the Dou Group in the new partnership remained at 49%. vdf Automotive Finance (Volkswagen Dou Tketici Finansman A..) vdf Automotive Finance enjoyed a successful 2007 and secured its leadership position by capturing a 42% market share among consumer finance companies. Among all financial institutions in retail car loan market, vdfs market share stands at 14% and it has achieved a penetration rate of 24% from the 27 brands with which it has partnership agreements in automotive financing. By the end of 2007, vdf had extended a total of 38,776 vehicle credits, reaching an annual total transaction volume of YTL 1 billion, with YTL 1.56 billion of total assets. vdf Automotive Finance aims to give 40,500 new credit contracts in 2008. One of vdf Automotive Finances most important activities in 2007 was the expansion of its portfolio of brands to which it provides services. Bentley, Lamborghini, Volkswagen Marine and Scania Marine were new additions to its portfolio in 2007, bringing the total number of brands served up to 27. vdf Insurance Services (vdf Sigorta Araclk Hizmetleri A..) vdf Insurance Services was established in 2004 and provides automotive focused insurance products to its customers with a wide range of products. KomboPlan, the new product developed by vdf Insurance Services and vdf Automotive Finance, offers consumers a 5-year motor-insurance policy together with their vehicle credit. vdf Insurance Services, which ran the vehicle and traffic insurance services of Dou Oto dealers in 2006, additionally started to provide extended warranty products for Volkswagen Passenger Cars, Volkswagen Commercial Vehicles, Audi, SEAT and Skoda in 2007, under the name of Full Life. vdf Fleet Services (vdf Otomotiv Servis ve Ticaret A.) vdf Fleet Services Company, established as a partnership of Volkswagen Financial Services (51%) and Dou Otomotiv (49%), transferred its shares to Lease Plan Corporation N.V. on November 8, 2007. The new company LeasePlan Turkey was established after this transfer. Leaseplan Turkey will establish synergies with the global power of LeasePlan Corporation N.V. and Dou Otomotiv's local experience in the fleet market and will provide long term fleet rental to large and middle sized global and local companies. vdf Kkbakkalky used car sales center vdf Fleet Services organized a used car sales center in Kkbakkalky for the returned vehicles from the fleets. At the end of 2007, vdf Fleet Services increased the number of vehicles in its portfolio by 16% compared to the previous year to 6,295, with 2,857 new contracts. With an 8% increase in the number of new contracts, vdf Fleet Services has also enlarged its customer portfolio to 954 customers.

Dou Group Annual Report 2007

Automotive

47

LOGISTICS SERVICES In 2007, Dou Otomotiv Logistics Services imported and delivered 62,430 vehicles to authorized dealers. The Company closed the year 2007 with revenues of YTL 238 million from the sale of spare parts and accessories, notching up a gross profit margin of 39.1%. Dou Otomotiv Logistics Services manages the import, warehousing and distribution of the vehicles and spare parts to authorized dealers of the worlds most prestigious brands: Volkswagen, Audi, SEAT, Porsche, Bentley, Lamborghini, Scania, Krone, Meiller, and Volkswagen and Scania brand Industrial and Marine Engines and spare parts, all represented by Dou Otomotiv. Advanced practices to create synergy Dou Otomotiv Logistics Services, established in 1992, is located in Gebze ekerpnar in Kocaeli region. The center has a total enclosed area of 150,000 m2, encompassing a 65,000 m2 open bonded area, a 42,500 m2 temporary bonded area, an 18,000 m2 stock area, a 7,500 m2 delivery area for vehicles and a 13,500 m2 spare parts warehouse used for stocking original spare parts.

Dou Group Annual Report 2007

Construction

49

Construction
2007: Acting in full collaboration and enthusiasm within its sector, Dou Construction Group completed another year of continuous development through integrating its long years of experience and know-how with contemporary approaches and new construction technologies to provide best solutions in execution of the projects.

50 Construction

>Financial Highlights*
In 2007, the Dou Construction Group recorded net sales of YTL 305 million, up 13% from last year's level with a gross profit margin of 14.4%. The Group's EBITDA was YTL 35 million that resulted in an EBITDA margin of 11.3%.

(YTL thousands) Segment Assets Revenues Cost Gross Profit Margin EBITDA EBITDA Margin

2006 684,529 270,767 (242,001) 10.6% 15,052 5.6%

2007 354,997 304,636 (260,800) 14.4% 34,510 11.3%

Segment Assets

(YTL million)

Revenues

(YTL million)

1,838

685

2005

355

2006

2007

2005

271

2006

271

2007

* Figures are based on the standalone financial statements pertaining to each segment.

Dou Group Annual Report 2007

305

Construction

51

>Corporate Profile
Dou Construction ranks among the most reputable construction companies in domestic and international markets and so far has completed 160 projects amounting to the value of more than USD 8 billion. The works performed can be outlined as 19 dams and HEPPs, 1,150 km of roads including 415 km of motorways, 1,500,000 m2 of buildings, infrastructure works, bridges, more than 47,000 m of tunnels and diversion tunnels, ports, marinas, irrigation projects, sewerage systems, office buildings, shopping and residential centers and industrial buildings. Dou presently executes projects totaling USD 4.5 billion and the share of Dou in these projects amounts to USD 2.9 billion.

>Ongoing Projects
Project Total USD Domestic Projects Arakl-yidere Coastal Road Sinop-Boyabat Road Kadky-Kartal Mass Transportation Otogar-Baakehir Mass Transportation Yusufeli Dam and HEPP Marmaray Project, 2nd Phase Aslanck Dam and HEPP Boyabat Dam and HEPP International Projects MOROCCO Argana Amskroud Motorway, Lot I-II UKRAINE Dnepr Railway and Highway Bridge Zaporizhzhia Biological Waste Water Treatment Plant 110 16 110 16 226 226 Expected Project Values (USD million) 4,525 4,173 165 192 181 870 855 1,160 150 600 352 Dou Share (USD million) 2,912 2,560 85 192 47 435 680 371 150 600 352

* As of March 31st, 2008

Dou Group Annual Report 2007

52 Construction

The Arakl-yidere Coastal Road construction works executed by the Dou-Polat Joint Venture include 27 km 2x2 lane road and 600 m long tunnel of 11.80 m cross-section, 17 hydraulic bridges, 9 junction bridges, 9 underpasses and overpasses. Sinop-Boyabat is an other road construction work including 2 km long tunnel with the diameter of 11.80 m; and the road is 52.4 km 1x2 lane road with 3 bridges and 215 box and pipe culverts in total. The Otogar-Kirazl-Baakehir Metro is a rail transportation system project that covers construction and electromechanical works and the delivery of railway vehicles. Single-track length of the twin-tunnel system to have 16 stations in total is 47.4 km. It starts from the city bus terminal (Otogar) and extends through the alignment of Baclar, Kirazl to reach both the Olympic Village and Baakehir houses and constitutes a considerable part of the railway systems chain in stanbul. 4 Tunnel Boring Machines (TBM) are used for the twin tunnels with excavation diameter of 6.50 m. The project is under construction by the GlermakDou Joint Venture. Construction works of another mass transportation system project titled Kadky-Kartal Metro is under execution by the Anadoluray Joint Venture consisting of Yap Merkezi, Dou, Yksel, Yenign and Belen Ltd. companies. Twin tunnel system to extend from Kozyata to Kadky is 17 km long and the New Austrian Tunneling Method is applied for station areas, while 2 TBMs are used for main tunnel sections. The Marmaray Contract CR1, (Marmaray Phase 2), which provides an upgrading of the commuter rail system in Istanbul, connecting Halkal on the European side with Gebze on the Asian side with an uninterrupted, modern, high-capacity commuter rail system is under execution by the consortium consisting of the Dou, Alstom and Marubeni companies. 63.7 km of existing double-track will be upgraded to triple-track system and 36 existing stations will be renovated and the entire electrical and mechanical systems will be replaced.

Yusufeli Dam and Hydraulic Power Plant Project which will be the 2nd highest rockfill dam in the world with the height of 270 m is a project undertaken by the DouAlstom-Coyne & Bellier and Dolsar consortium under an intergovernmental bilateral protocol. Construction work in the project will be carried out by Dou Construction, while the electromechanical and engineering services will be rendered by Alstom, Coyne & Bellier and Dolsar. Yusufeli project is expected to start in the second half of 2008. Furthermore, two mega hydropower investment projects, where the Dou Group is involved as one of the main investors are also starting; the Boyabat Dam and HEPP with the installed capacity of 513 MW and the Aslanck Dam and HEPP with the installed capacity of 120 MW. Argana-Amskroud Motorway Project where the Client is the National Motorways Administration of Morocco, includes 46 km 2x2-lane motorway, 3 viaducts, 17 underpasses and overpasses and various motorway structures. In Ukraine, 450 m long Kiev-Dnepr Railway and Highway Bridge with the elevation of 20.6 m and Zaporizhzhia Biological Waste Water Treatment Plant construction works continue, while Dou also signed 60,000 m2 A Class office building project to be started in mid 2008.

Dou Group Annual Report 2007

Construction

53

TEKNK MHENDSLK VE MAVRLK A.. Teknik Mhendislik is a Dou Construction Group company established in 1984 and provides engineering, consultancy and technical services to the Dou Construction Group and other institutions and contractors. Teknik Mhendislik offers the following services for projects on the construction of motorways, highways, railways, dams, hydroelectric power plants, irrigation projects, water and sewerage system projects and industrial plants: All types of engineering, consultancy and technical services Planning and feasibility surveys Technical and economical surveys Research and laboratory tests Drilling and similar studies Design and cost optimization Teknik Mhendislik continues to complete successfully in all fields undertaken, with its experienced and trained key personnel and the high quality of the technological equipment which has been used since its establishment.

AYSON GEOTEKNK VE DENZ NAAT A.. Ayson, founded in 1977, is a Dou Construction Group company specialized in geotechnical works. Since then, it has provided services at the highest technical level to the 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 wells drilling, drainage wells, foundation explorations, soil improvement works, deep excavation supporting systems, ventilation shafts, and excavation work, including preliminary studies of all these operations and evaluation through in-situ tests. Ayson also offers a wide range of services in marine structures, jetties, dolphins, ferry terminal ramps and breakwaters. Ayson has successfully completed more than 40,000 tons of grouting, 1,000,000 m of bored piles and 315,000 meters of anchoring works in the projects undertaken so far. Managed by the highly qualified technical staff with 30 years of experience, and its do it once, do it perfect motto, Ayson has attracted high praise from local and foreign employers and consultants for the quality of the works it performs in its entire field of activities.

Dou Group Annual Report 2007

Media

55

Media
A name that has become synonymous with prestigious publications and quality broadcasting, the Dou Media Group operates five TV channels, five radio stations, nine periodicals, three internet portals and NTV Publications in the Turkish media sector.

56 Media

>Financial Highlights*
The Dou Media Group showed a satisfactory financial performance in 2007, attaining YTL 180 million in consolidated net assets and a gross profit margin 44.3%. In 2007, the Groups EBITDA was YTL 20 million with an EBITDA margin of 10.7%.

(YTL thousands) Segment Assets Revenues Cost Gross Profit Margin EBITDA EBITDA Margin

2006 190,290 172,878 (98,708) 42.9% 24,797 14.3%

2007 180,286 186,461 (103,925) 44.3% 20,005 10.7%

Media Group Market Shares

(%)

10.3

10.8

4.8

5.0

4.8

2006 2007 TV

2006 2007 Radio

2006 2007 Periodicals

4.8

2006 2007 Internet

* Figures are based on the standalone financial statements pertaining to each segment.

Dou Group Annual Report 2007

13.0

15.0

Media

57

The Dou Media Group's professional and qualityfocused business approach fosters the public's trust in its brands and creates a sense of belonging for consumers, thereby giving rise to an expectation of continuous progress and distinction. The close bonds the Dou Media Group (The Media Group) has developed with media consumers also has an impact upon advertisers, leading them to prefer the Media Group brands when promoting their brands to target audiences. Always one step ahead in its advertising practices, the Dou Media Group generates custom-tailored solutions for its customers who wish to be associated with the Media Group's brand equity and to differentiate themselves from the competition. Advertisers are offered a variety of media and a high level of efficiency thanks to successful campaigns on the Media Group's TV channels, radio stations, internet portals, and periodicals. Financial and operational performance in 2007 The Dou Media Group expanded its portfolio in 2007 with the addition of five new brands: e2 TV Channel, Capital Radio, NTV Publications, EVO and Motor Boat & Yachting magazines. In addition, a strategic partnership was set up with Turkish Telecom for the content of its internet portal, TTNetmuzik.com. The Dou Media Group displayed a satisfactory financial performance in 2007, attaining YTL 180 million in consolidated net assets and a gross profit margin 44.3%. In 2007, the Groups EBITDA was YTL 20 million with an EBITDA margin of 10.7%. While the TV sector in Turkey grew 10% in 2007, the Dou Media Group's TV channels achieved 13% growth in turnover, and increased their market share from 10.3% to 10.8%. In terms of its radio stations, the Media Group secured 24% growth on a turnover basis, far outpacing Turkey's radio sector growth of 15% in 2007, while raising its market share from 4.8% to 5%.

The periodical sector grew 10% in 2007. The Dou Media Group's periodical revenues increased by 10%, and the Media Group maintained its market share of the previous year at 4.8%. While the internet advertising market grew 30% in 2007, the Dou Media Group captured 57% expansion in this segment, increasing its market share from 13% to 15%. Technological infrastructure The uplink system that enables satellite distribution of the TV channels and radio stations of the Dou Media Group consists of a total of eight live-broadcasting vehicles, of which four are in Istanbul, three in Ankara, and one in Diyarbakr; a total of 217 NTV transmitters, of which two are in the Turkish Republic of Northern Cyprus; 51 CNBC-e transmitters; and 40 NTV Radio transmitters, 16 Capital Radio transmitters and one transmitter each for Radio N101, Radio Eksen and Billboard Radio. Very closely following all the technological advancements in broadcasting, the Dou Media Group makes all its infrastructural investments in a manner to achieve compatibility with DVB-T and HD broadcasts that will be launched in the near future. Awards The Dou Media Group has been honored with a total of 489 awards thus far for its broadcasts and social responsibility campaigns. 65 of them earned in 2007, these awards have been granted in different areas by various ministries, organizations, associations and foundations, professional chambers, universities, and high schools. Targets and strategies for 2008 The Dou Media Group will pursue an expansion strategy during 2008 within the existing sectors and will progress its newly established and acquired media channels. In early 2008, the Group launched the Robb Report Magazine, NTV Spor TV channel, Billboard Radio and Billboard.com.tr in Turkey.

Dou Group Annual Report 2007

58 Media

>Television Channels

>NTV Established in 1996, NTV joined the Dou Media Group in 1999, as the latter's first TV channel. A pioneer of thematic news channels in Turkey, NTV primarily broadcasts national and global news as well as quality documentaries and programs on economy, culture and arts, lifestyles, and sports. The quality of content and impartial editorial position developed over time by NTV has contributed to the Dou Media Group's stellar reputation as a trustworthy, reliable source of news and information. This in turn brought along the assumption of new duties in terms of social responsibility. NTV's broadcasts on health, education, and the environment, along with other special projects are concrete examples of the approach to social responsibility awareness that characterizes NTV and forms a major part of its corporate identity.

>NBA TV The Media Group launched NBA TV in Turkey on August 1, 2004. NBA TV airs live basketball games, news from the NBA, special features and interviews. Broadcasting at least one live basketball game every day with Turkish narrations and commentary, NBA TV offers fans the opportunity to watch the greatest stars of the world of basketball.

>e2 Adding a new link to its television channels, the Dou Media Group set up e2 in January 2007. As Turkey's new entertainment channel, e2 brings new options to TV viewers.

>CNBC-e The Dou Media Group established CNBC-e by combining the forces of the world's number one economy channel, CNBC with Kanal E. Enabling realtime access to economy and market data, CNBC-e targets professionals at the helm of the world economy as well as individual investors. Assuming a totally different identity at prime time, CNBC-e brings to the small screen award-winning series that break rating records across the world, and films by world famous directors in their original languages with Turkish subtitles.

>NTV SPOR The Media Group launched NTV Spor in March 2008. NTV's news power and expertise in sports broadcasting comes together at NTV Spor for sports fans that need up-to-date and impartial sports news. Everything about sports can be followed all day on NTV Spor. Big organizations from various sports such as La Liga, Bundesliga, Serie A, Argentina League, NBA, Turkish Basketball League, The Golden League, MotoGP and WRC will be broadcasted live on NTV Spor.

Dou Group Annual Report 2007

Media

59

>Radio Stations

>NTV RADIO NTV Radio, which made its debut on November 13, 2000, covers a wide range of news and developments from economy and sports to films and concerts. NTV Radio brings listeners the Turkish language broadcasts of the BBC, Voice of America and Deutsche Welle, as well as the BBC World Service's news in English. Listeners can tune in to NTV Radio nationally or via internet.

>CAPITAL RADIO Capital Radio went on air in February 1993 in Ankara and joined the Dou Media Group in December 2007. Capital Radio broadcasts live around the clock bringing to listeners the best and the latest hits, the most popular songs of the '80s and '90s, along with news from the music and entertainment world, show programs and brief news on current events. Capital Radio can be tuned in to at www.capitalradio.com.tr which broadcasts in AAC(+) digital audio format.

>RADIO EKSEN Radio Eksen first hit the airwaves on November 1, 2000 on 96.2 FM. The station presents listeners with a rich musical range from modern rock and country, to indie and heavy metal. A proponent of less talk, more music, listeners can also tune in to Radio Eksen via its website at www.radioeksen.com.

>RADIO N101 Radio N101 radio station is located in stanbul at frequency 101 FM. Broadcasting since April 2004, Radio N101 combines unforgettable tunes of the recent past with today's biggest hits, as well as news from the music world and current events, all delivered by high quality DJs.

>BILLBOARD RADIO Billboard Radio started broadcasting on March 03, 2008 at frequency 87.7 FM. Basing its selections on the Billboard charts that is widely recognized as a reference, the radio station mainly plays the songs that have made it to the top of the charts. Billboard Radio presents the latest in the music industry to its listeners as they happen, and is also the only official broadcaster of a large number of international programs in Turkey.

Dou Group Annual Report 2007

60 Media

>Periodicals

>NATIONAL GEOGRAPHIC With over 10 million subscribers and more than 50 million readers worldwide, National Geographic is one of the world's most prestigious periodicals. The magazine made its debut in Turkey when the Dou Media Group launched a Turkish edition in April 2001. Each month, National Geographic presents readers with another array of fascinating features and new stories in geography, science, exploration, history and more.

>F1 RACING F1 Racing was launched in May 2000 in Turkey. The only Formula 1 magazine targeting Turkish readers, F1 Racing is the world's bestselling magazine in its segment. Offering everything F1 fans are looking for in this world of speed and excitement, the magazine covers all teams, and automobiles with exclusive photos, interviews, race analysis, and technical reports.

>NATIONAL GEOGRAPHIC KIDS Published since 1975, National Geographic KIDS was launched in Turkey by the Dou Media Group in October 2004. The magazine's aim is twofold; to amuse kids on the one hand, while equipping them with knowledge on the other by ushering children into a colorful, fascinating world with its high quality visuals and enticing articles.

>SLAM America's best-selling basketball magazine Slam started publication in Turkey in March 2006 as part of the Dou Media Group. The Turkish edition combines extensive, expert coverage of NBA stars with news and features about the stars of the Turkish and European leagues as well.

>CNBC-E BUSINESS CNBC-e Business first hit newsstands in November 2006. The periodical covers the business world, the global and Turkish economy, investment trends, lifestyle news for business professionals and exclusive interviews with the important personalities of business, economy and politics.

>EVO An auto magazine of international fame, EVO started publication in Turkey in April 2007. Boasting the slogan the thrill of driving, EVO forges a unique bond with its readers and is distinguished from other auto magazines, particularly in terms of its photography and its humorous approach to automotive topics.

>BILLBOARD Published in the USA for more than 110 years, Billboard made is debut in Turkey in November 2006. Focusing only on news from the music industry and charts, Billboard Trkiye includes the latest news from all genres of music, exclusive interviews with artists, and contests open to readers.

MOTOR BOAT & YACHTING Europe's bestselling yachting magazine, Motor Boat & Yachting started to be published in Turkey in December 2007 under the Dou Media Group. Also receiving content support from the Yachting World, the world's first sailing magazine, Motor Boat &Yachting brings detailed information and tips on boats and the life on the sea, tests and interviews to sea aficionados every month.

Dou Group Annual Report 2007

Media

61

>Internet

>ROBB REPORT Robb Report started publication in Turkey as of May 2008 under the Dou Media Group. Robb Report provides its readers solely with the privileged in every issue ranging from yachts to cars, unique jewelleries to invaluable watches and travel routes to fashion. With its specialized staff, Robb Report interprets the luxury industry with the eye of an insider and presents the newest products and unique styles of the sophisticated brands to its readers every month.

>NTVMSNBC The Dou Media Group's representative in the internet world, NTVMSNBC went live in May 2000 in cooperation with MSNBC, the world's most visited news website. Harvesting MSNBC's experience in technology and the internet combined with NTV's extensive news network, NTVMSNBC presents a world of news that meets the needs of modern online readers with up-to-date content produced by its experienced editorial team.

>Publications
>NTV PUBLICATIONS NTV started publishing books in March 2007. NTV Publications offers perspective while acting as a reference on subjects such as history, science, arts, photography, politics and nature. Expanding its product line every month, NTV Publications became an important and prestigious brand in the public eye in less than a year. >NTVSPOR.NET NTVSpor.net, one of the online publications of NTV, was launched on June 9, 2006, the same day the 2006 World Cup started. Sports pages of NTVMSNBC were presented to sports fans under the name NTVSpor.net, with a different outlook and more comprehensive content. News about football, basketball, tennis, volleyball, athletics and other sports can be found on the web portal, along with articles about current events and matches, special interviews, weekly footage from the Premier League and the fantasy football game.

>BILLBOARD.COM.TR Representing the third leg of the Billboard platform after the magazine and the radio, billboard.com.tr went live on March 25, 2008. Destined to be the meeting point of music fans, the portal will soon reach a large audience with the customized personal web pages.

Dou Group Annual Report 2007

Tourism

63

Tourism
The Dou Tourism Group consists of nine facilities, including four five-star hotels, one four-star hotel, one first class holiday village, one five-star holiday village and one marina, as well as the Arena Giyim clothing company.

64 Tourism

>Financial Highlights*
In 2007, the Dou Tourism Group recorded net sales of YTL 123 million, indicating a rise of 2% over the previous year with a gross profit margin of 47.7%. The Group recorded YTL 6.1 million in EBITDA, leading to an EBITDA margin of 5%.

(YTL thousands) Segment Assets Revenues Cost Gross Profit Margin EBITDA EBITDA Margin

2006 829,874 121,388 (61,022) 49.7% 20,787 17.1%

2007 957,105 122,819 (64,253) 47.7% 6,111 5.0%

Segment Assets

(YTL million)

Revenues

(YTL million)

1,081

2005

830

957

2006

2007

2005

112

2006

121

2007

* Figures are based on standalone financial statements of the segment.

Dou Group Annual Report 2007

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Tourism

65

The Dou Tourism Group ("The Tourism Group") was established in 1976. Since its inception, the Dou Tourism Group has distinguished itself with a serviceoriented approach and continues to stand out as a business focused on quality while maximizing customer comfort and providing complete satisfaction. The Dou Tourism Group consists of nine facilities, including four five-star hotels, one four-star hotel, one first class holiday village, one five-star holiday village and one marina, as well as the Arena Giyim clothing company, which 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. Dou Tourism Group's hotel facilities include the Hyatt Regency Istanbul, MARITIM Hotel Club Alantur, MARITIM Hotel Grand Azur, Sheraton Voyager Antalya Hotel Resort & Spa, Paradise Side Beach Hotel, Aldiana Side and the Park Hyatt Istanbul Maka Palas, which is due to open in the summer of 2008. The Tourism Group opened Dou Turgutreis Marina in 2003, which enjoys a privileged position as one of Europe's most modern marinas with a capacity of 650 boats. Earning Five Golden Anchors and the Blue Flag awards, the facility has brought the world class quality standards to the Turkish coastline. The Group secures its high levels of international service quality through global cooperation with Emporio Armani, Gucci and Loro Piana in the fashion industry, and with Hyatt International Ltd., Starwood Hotels & Resorts, Worldwide Inc, HMS International Hotel GmbH (MARITIM) and Aldiana GmbH in the tourism sector.

2007: A year of tremendous success Following a downturn in 2006, the tourism sector in Turkey, as one of the 10 most popular tourist destinations worldwide, grew by about 18%. The total numbers of tourists visiting Turkey reached 23.3 million, with tourism receipts reaching USD 18.5 billion, marking an increase of 10% with respect to the previous year. However, tourism spending per person declined by 7% compared to the previous year, to USD 679. New initiatives The Dou Tourism Group has unstintingly pushed ahead with the renovation of existing tourist establishments and its development-focused investments within the scope of 2007 targets, and strictly followed its growth-oriented investment philosophy. In keeping with its strategic development plans, the Dou Tourism Group carries out its initiatives in the tourism sector with the Park Hyatt Istanbul Maka Palas project for the conversion of one of the historic landmarks in Istanbul into a 90-room boutique hotel in addition to its Didim and Dalaman Marina projects. Work on the Didim Marina project continued during 2007. The Marina will have a capacity of 1,200 yachts and is scheduled to be completed by 2009. Another major marina project is the 1,300 yacht capacity Dalaman Marina project, work on which is scheduled to start in 2009.

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66 Tourism

Highlights from 2007 Continuing from 2006, the MARITIM Hotel Club Alantur has been totally renovated and presents an array of new facilities to its guests. In addition, the renovation of the Sheraton Voyager Hotel Resort & Spa continues. In line with the concept of providing a high standard of service, the Dou Tourism Group has also started to renovate the MARITIM Hotel Grand Azur. Dedicated to its guest-focused philosophy, the Dou Tourism Group completed a major investment, the Gaia Fitness Centre & Spa at the Hyatt Regency Istanbul. In 2007, new global standards were implemented at the Emporio Armani and Gucci Maka locations, which were completely renovated in accordance with new concepts created by the brands. The Company has successively maintained its growth policy, opening new Emporio Armani, Armani Jeans and Gucci boutiques and an Emporio Armani Cafe in the new stinye Park shopping mall, as well as adding the famous cashmere brand, Loro Piana, to its portfolio.

As a sign of quality in the area of Marinas, the D-Marin received the The Best Marina in Turkey award by SKAL in 2007. The outlook The Dou Tourism Group sets its future strategies in line with the Dou Group's strategies to become a regional leader and to expand. The Dou Tourism Group will continue to reflect its growth-oriented investment philosophy to its financial results and operations in the coming years as well.

Dou Group Annual Report 2007

Tourism

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ANTUR TURZM A.. Antur Turizm A.. (Antur), a member of IATA, ASTA IFTAA and TRSAB, was established in 1966. Antur serves its customers by providing incoming and outgoing ticket sales, hotel reservations, tour/conference organizations and car/aircraft rental services. The Ministry of Tourism recognized the Company's achievements in bringing over USD 1 million in foreign currency inflows into the country. Antur owns a four-star hotel located on the Mediterranean coast in Alanya, located 140 km east of Antalya. Following the management agreement signed in July 2006 with HMS International Hotel GmbH to operate the hotel under the MARITIM brand name, Antur started to manage the hotel as Maritim Hotel Club Alantur from January 1, 2007. The Maritim Hotel Club Alantur, with unrivalled surroundings and sandy beaches (a 550 meters long and 50 meter wide stretch of golden sand), has 370 rooms with a 776-bed capacity.

DATMAR TURZM A.. Datmar Turizm A.. owns one first class holiday village and one 5 star holiday village, namely Aldiana Side and the Paradise Side Beach Hotel in Side, which are both managed by Aldiana GmbH (Groupo Santana Carzorla, Thomas Cook AG). Both properties are located in Side, 70 km from the airport and 80 km from Antalya. Aldiana Side, with its 600-bed capacity, is built in the style of an Ottoman caravanserai and features a mini golf course and a rock-climbing wall. In addition, Aldiana Side offers its guests an array of facilities including an outdoor swimming pool, 12 tennis courts, basketball, soccer, volleyball, windsurfing, sailing, two indoor and outdoor restaurants, a snack bar, discotheque, daycare center, sauna, health center and a gym. Paradise Side Beach is also located on the shore next to the Aldiana Side. The Holiday Village, with large self contained apartments, has an 805-bed capacity, with 60% of the apartments enjoying a sea view; all apartments have a balcony and are equipped with full bathrooms, heating and air conditioning, a TV, refrigerator, computer ports, a safe deposit box and a telephone. The Holiday Village also boasts sporting activities, a 150 person capacity meeting room, two restaurants, a health center and a gym.

Dou Group Annual Report 2007

68 Tourism

GARANT TURZM YATIRIM VE LETME A.. Garanti Turizm Yatrm ve letme A.. (Garanti Turizm) was established in 1988 and invested in a five-star luxury hotel. The Maritim Hotel Grand Azur is situated in Marmaris some 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 boasts a conference room, which can accommodate 350 people and two seminar rooms, which can each seat 40 people. Garanti Turizm signed a management agreement in July 2006 with the HMS International Hotel GmbH to operate the hotel under the MARITIM brand name. MARITIM started to manage the hotel as the Maritim Hotel Grand Azur from January 1, 2007.

GKTRANS TURZM VE TCARET A.. Gktrans Turizm ve Ticaret A.. owns the 5-star Hyatt Regency stanbul, which is managed by Hyatt International Ltd. (Europe, Africa, and Middle East), located in Taksim at the heart of stanbul. The 380 bedroom hotel offers a myriad of special amenities. The Hyatt Regency stanbul offers 18 junior suites, one presidential suite and 11 Penthouse Apartments among its accommodations. The Hotel also has a ballroom, which can accommodate 300 people with dining set-up and five meeting rooms. The Hotel also houses the Spazio and Agora restaurants which serve fine Italian cuisine and exotic Turkish specialties. A full renovation project, which started in 2002 for guestrooms and banquet facilities, was completed in 2004. Supporting guests' personal development by providing a place and an experience centered on the promotion of the individual, the Gaia Fitness Centre & Spa, renovated in 2007, has created a space in which guests are invited to explore and blend, slip into a tranquil state of relaxation and consider their conscious awareness, spiritual growth and physical health.

VOYAGER MEDITERRANEAN TURZM ENDSTRS VE TCARET A.. Voyager Mediterranean Turizm Endstrisi ve Ticaret A.. owns the Sheraton Voyager Antalya Hotel, Resort & Spa, which is managed by Starwood Hotels & Resorts Worldwide Inc. The Sheraton Voyager Antalya Hotel, Resort & Spa is a luxury five-star resort hotel with 395 bedrooms and an 814-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 boasts every comfort imaginable as well as a wide variety of sports facilities in addition to seminar and conference rooms, which accommodate from 20 to 700 people. The Hotel also offers a spa facility. The Sheraton Voyager Antalya Hotel, Resort & Spa has been selected as one of the 100 best hotels among the hotels served worldwide by the German tour operator, TUI, according to TUI's guest satisfaction surveys conducted in 2007.

DO-A TEKSTL TEMZLEME A.. Do-a Tekstil Temizleme (Do-a) was established in 1999. Do-a currently operates in the Hyatt Regency stanbul, and provides laundry dry cleaning services to hotel guests and other customers.

Dou Group Annual Report 2007

Tourism

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ARENA GYM SANAY TURZM VE TCARET A.. Incorporated in 1997, Arena Giyim Head Offices are based in Istanbul, Turkey. The Company has initially secured the franchise of Emporio Armani and Gucci and first boutiques were opened in Istanbul, located in one of Istanbul's most prestigious locations, the historical Maka Palas Building. In 2003, the Company has secured long-term leases of two premises from Turgutreis D-Marin Shopping Complex to open Emporio Armani boutique and Emporio Armani Cafe. Also in the same year, Arena initiated a multi-brand fashion retail project under the 'In-formal' name. The first store was opened in the Turgutreis D-Marin Shopping Complex, while the second is situated in the historical Maka Palas Building. The boutique's philosophy is to present prestigious labels to its fashion conscious clientele with exclusive service standards, in a very unique surrounding. In 2007, the new Emporio Armani, Armani Jeans and Gucci boutiques and Emporio Armani Cafe were opened at stinye Park, one of Istanbul's most famous new shopping malls. As well as these new boutiques, Arena also secured the franchise of Loro Piana in the same year, a very famous cashmere brand. The first Loro Piana boutique was opened in the fashionable Nianta district of stanbul. The Company is actively seeking prestigious labels to add to its portfolio. The historical Maka Palas building, which is owned by Arena Giyim, will be converted into a 90 room boutique hotel under the Park Hyatt stanbul Maka Palas Hotel brand name. The Hotel will be opened in the summer of 2008. Arena Giyim is the landlord of the famous Reina Nightclub, which is operated by a third party and located in a stunning location on the Bosphorus.

DOU TURGUTRES MARNA LETMECL TURZM VE TCARET A.. D-Marin Turgutreis Marina, which has a berthing capacity of 550 yachts in sea and 100 yachts in dry berths (for yachts of between 8 m and 50 m in length) is built with modern equipment and facilities to provide a range of technical, social and administrative services to yachts and their owners with high quality standards. The marina also has provided a significant contribution to the tourism industry of the country. OTHER MARINAS The Dou Tourism Group has decided to invest in marinas to meet the current demand in the market. The Group was awarded Build-Operate-Transfer contracts for the Dalaman, Didim and Turgutreis Marinas. Presently, only the Turgutreis Marina has been completed and has been operational since 2003. Work on the Didim Marina project started in October 2006 and work on the Dalaman Marina project is scheduled to start in 2009.

Dou Group Annual Report 2007

Real Estate

71

Real Estate
Supported by the synergy of the new shareholder structure, DOU-GE REIT's ambition is to be one of Turkey's leading investor and developer companies. The combination of GE Real Estate's global experience and capital with the Dou Group's experience in finance, construction and real estate will create this synergy. The Dou Real Estate Company team is closely monitoring the dynamics of the real estate sector in Turkey, analyzing the large real estate portfolio owned by the Dou Group and continuing its work on potential developments that include residential, commercial, hospitality and logistics projects.

72 Real Estate

>DOU-GE REIT's Financial Highlights*


DOU-GE REIT's net asset value rose to YTL 136.2 million at year-end 2007, up 6.3% from previous year's level. Enjoying a market capitalization of YTL 129.4 million, the Company has 6.6% share in the market.

(YTL thousands) Segment Assets Revenues Cost Gross Profit Margin EBITDA EBITDA Margin

2006 171,597 24,026 (15,909) 34% 25,925 108%

2007 166,555 42,171 (28,916) 31.4% 16,662 39.5%

Portfolio Breakdown 2007 (%)


Etiler Property 3.2 Taksim Property 4.7 Levent Property 1.4 Antalya 2000 Plaza 4.1 Cash 0.1 Evidea 3.9 GKY Real Estate Investments SA 2.4

Dou Power Center 80.2

* Figures are based on standalone financial statements of the segment.

Dou Group Annual Report 2007

Real Estate

73

History Real Estate Investment Trust (REIT) companies started to operate in our country for the first time in 1995, thanks to regulations prepared by the Capital Market Board, and they became publicly listed in the stock exchange starting from 1997. On July 25, 1997, our Company started to operate as the third REIT in the stock exchange with the title "Osmanl REIT", had a registered capital of TL 5 trillion and a paid-in capital of TL 250,000 and was listed on the Istanbul Stock Exchange (ISE) 100 index. At the end of 2001, as a result of the merger of Osmanl Bank and Garanti Bank - both belong to the Dou Group - 51% of the Company's shares were transferred to Garanti Bank, making it a financial subsidiary of Garanti Bank and its name was changed into Garanti REIT. As of 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 shareholding structure of DOU-GE REIT changed as Garanti Bank sold 50% of its shares to GE Capital Corporation and 50% to Dou Holding A.. Currently, Dou Holding A.. and GE Capital Corporation each hold 25.5% of the shares, while 49% of the shares are publicly held. Shares are listed on the Istanbul Stock Exchange (ISE) National 100 and ISE-GMYO industrial indices, and their ticker symbol in the national market is "DGGYO". Vision & Mission Supported by the synergy of the new shareholder structure, DOU-GE REIT's ambition is to be one of Turkey's leading investor and developer companies. The combination of GE Real Estate's global experience and capital with the Dou Group's experience in finance, construction and real estate will create this synergy. DOU-GE REIT's mission is to increase the value of its investment portfolio through stable growth, thus maximizing shareholder value by offering higher dividends and market capitalization and to provide the highest customer satisfaction in the projects developed.

Focal point of our investment strategy: Original and affordable residential units DOU-GE REIT's strategic target is to invest in architecturally original and financially reasonable housing development projects with a certain conceptual approach, appealing to middle and upper-middle income groups in metropolitan areas such as Istanbul, and in commercial real estate and development projects with regular, low risk and high lease returns. Modern quality policies The quality of products and services has become more important than ever due to ever-increasing competition. Therefore, the ISO (International Organization for Standardization) has set the ISO-9000 quality system standards in order to secure product and service quality systems implemented by companies are inspected and documented by independent institutions. Approved upon the inspection carried out by TUV Sudwest TGK, the quality system was re-endorsed with the audit performed in 2004, thus once again certifying that transparency, reliability and professionalism elements are maintained in the management processes of DOU-GE REIT and that the management system established conforms to international standards. Headlines from 2007 activities DOU-GE REIT bases its activities on the policy of expanding its portfolio by investing in profitable and large-scale projects, and of creating high value for its shareholders and investors. The Company's net asset value rose to YTL 136.2 million at year-end 2007, up 6.3%. Enjoying a market capitalization of YTL 129.4 million, the Company has 6.6% share in the market. With the impact of the realization of the profit figure arising from the delivered units within the scope of Evidea Project, the rental income from Dou Power Center, and the increased value of real estate, the Company registered YTL 19.1 million in net profit.

Dou Group Annual Report 2007

74 Real Estate

Highlights from properties portfolio DOU-GE REIT has a large portfolio of properties with the Evidea Residential Project in mraniye, stanbul and the Dou Power Center in Maslak, stanbul. The portfolio also encompasses two commercial properties in stanbul, one in Levent and the other in Etiler and a shopping mall, Antalya 2000 Plaza, in Antalya. >stanbul/mraniye, Residential Project, "Evidea" Evidea, the Company's first residential project, is composed of 473 residential units in mraniye, ekmeky; its construction started in 2004. The project was developed by joint venture where Yap Kredi Koray REIT has a 50% share; the construction has been carried out by Dou Construction and Koray Construction Consortium and was completed in 2007. The land belongs to Garanti Bank. Evidea was put on sale in October 2004 and all the houses were sold in a short time, approximately in one year, after which it became a brand name. Evidea was developed on 34,000 m2 of land; the total construction area is 101,000 m2, with 73,000 m2 for houses and 24,500 m2 for common facilities. This residential project offers homes of 15 different types and sizes, ranging from 70 to 204 m2 and 1+1 to 4+1; it is based on the main theme of gardens and common social life, offers all kinds of social and sports activities, and has very original architectural lines. It offers indoor parking and warehousing facilities for each home and prevents vehicle traffic within the compound due to the underground parking system. All of the homes are located around a courtyard garden so that they can benefit from the landscaped areas. Evidea is composed of buildings with a maximum of 9 floors and has a modern, clear and light design. The objective of Evidea Project is to offer at reasonable prices the kind of standards found in expensive homes and to reach European Union standards in housing. The project aims at optimizing the use of space, thus maximizing the benefit gained from the price paid; the focus group discussions held during the development phase of the project helped create a customer- and demand-focused design.

The professional compound management system and round-the-clock security services both of which will be available right after the end of construction phase aim at creating a compound that is orderly, safe and well taken care of. Evidea aims at offering its residents a life that meets European standards. 100% of the construction has been completed at and all of the homes have been delivered to their owners by the end of 2007. >stanbul/Maslak, Shopping Center Project, "Dou Power Center" In the classification of shopping centers, the term "power center" is used for shopping centers that contain large shops that are category killers due to their size and the variety of the products and brands they carry. Such centers are quite common in especially the USA and offer customers the opportunity to shop comfortably in large spaces, to find a variety of brands for one product, and to ship at reasonable prices. These centers are also easy to access and park at; some contain department stores only, whereas others also contain small shops, entertainment and food units to support the department stores. Dou Power Center is a pioneer in Turkey since it contains large spaces only and has a unique mixture of shops. This mixture includes units such as automotive showrooms and service areas, food market, music market, home furniture, sports equipment, electronics and food court. Dou Power Center is in Maslak, an urban location that is also a main business center, and includes only large shops or 'Big Boxes'; unlike similar centers elsewhere in the world, it has high-quality internal design and furnishing. The most important factor behind this fact is that the Maslak-Levent area is Turkey's banking and finance center where many well-educated, white-collar employees work. 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.

Dou Group Annual Report 2007

Real Estate

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Dou Power Center offers significant advantages to the shops it hosts. Shops that cannot find reasonably priced yet large enough spaces in urban mall-type shopping centers are forced to move out of the city, thus creating disadvantages in attracting the kind of customers they want to have. Dou Power Center offers such shops the opportunity to have large spaces in a very central location like Maslak. The center has a total indoor area of 58,000 m2, 33,000 m2 of which is dedicated to shops. 13,000 m2 of closed and 9,000 m2 of open parking space can accommodate 900 vehicles. Dou Power Center was completed in November 2006 and has been in use since. According to the expertise report prepared by Elit Gayrimenkul Deerleme A.. by the end of 2007, its market value is YTL 126,090,000. >Romania/Bucharest, Investments In addition to these investments, DOU-GE REIT also owns a company in Romania, "GKY Real Estate Investments SA", with Yap Kredi Koray REIT with a 50%-50% partnership structure. The aim of this initiative was to develop investment projects and make real estate investments in Romania. The Company's first investment was the purchase of 34,500 m2 of land in Bucharest's Voluntari region, a mostly residential area. The land was purchased at the beginning of 2005 and is available for 45,000 m2 of construction.

Outlook DOU-GE REIT's main strategy will be based on the establishment of a real estate investment portfolio and management of this portfolio starting from the year 2008. Furthermore, through the newly established Dou Real Estate Company, the Dou Group will focus more on land development projects as well as acquisition opportunities of commercial assets in different parts of Turkey.

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76 Real Estate

DOU REAL ESTATE COMPANY As the newest, youngest and dynamic establishment owned 100% by the Dou Group; Dou Real Estate aims to be one of the key players in the sector with its strong team and expertise in the areas of architecture, construction, construction management, sales and marketing.

Dou Group Annual Report 2007

Real Estate

77

Dou Real Estate Company was founded in December 2006 with an objective of developing and managing real estate projects; primarily on the lands owned by the Dou Group. As the newest, youngest and dynamic establishment owned 100% by the Dou Group; Dou Real Estate aims to be one of the key players in the sector with its strong team and expertise in the areas of architecture, construction, construction management, sales and marketing. The Company is currently holding 10 assets in its balance sheet. The team has been focusing on the development of two major projects since the Company's establishment; a residential project in Kartal/stanbul and a shopping center project in Gebze/Kocaeli. The estimated total investment cost for the Kartal Residential Project is approximately USD 51 million whereas the estimated total investment cost for the Gebze Shopping Center Project is around USD 104 million. Both projects are being designed around certain concepts that offer unique architectural details, efficient and affordable spaces to the users. Two mixed use projects, one in Balova/zmir and the other in Kartal Eas site in stanbul are in the pipeline. Kartal Eas site is located in the Kartal Urban Renewal District, which is being designed by Architect Zaha Hadid. Additionally, two residential projects, one in Riva/stanbul and the other in BodrumYalkavak/Mula, are in the planning phase.

Dou Real Estate's mission is to increase its investments through stable growth in the years to come and to provide the highest customer satisfaction by carrying Dou brand and its professionalism into real estate projects. The Dou Real Estate Company team is closely monitoring the dynamics of the real estate sector in Turkey, analyzing the large real estate portfolio owned by the Dou Group and continuing its work on potential developments that include residential, commercial, hospitality and logistics projects.

Dou Group Annual Report 2007

Energy

79

Energy
Closely monitoring privatization initiatives in geographical areas across Turkey, the Dou Group continues to operate in energy generation based on renewable and conventional energy sources and in electricity distribution.

80 Energy

Dou Energy aims to develop and expand through profitable enterprises based on clean energy and its infrastructure, while acting in accordance with the current social, economical and geographic developments and maintaining its environmental friendly perspective. Dou Energy has designated new investment projects and privatizations in the generation and distribution of electricity as well as the operation of these assets and energy trading as its core areas of business.

Dou Group Annual Report 2007

Energy

81

History The Energy Department was founded within Dou Holding in 2005. The objective of the department is to monitor all development concerning and pertaining to the energy sector, both within Turkey and throughout the region; thereby formulating and generating strategies for all energy and energy-related infrastructure investments planned within the Dou Group. Taking necessary measures and creating profitable business enterprises are ultimate goals of this newly declared business line. The Dou Group retains many competitive advantages within its structure. Since its establishment in 1951, the Group has accumulated considerable experience, especially in building dams and constructing various power stations and in mining activities. The energy sector To maintain the continuity of the economic, sociological, technological progress and expansion of our country, the energy sector must adapt and keep up with this rate of progress. 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 will need as much as USD 130 billion in investment in total to meet an estimated 7% CAGR in demand until 2020. Within this scope, Dou Energy has designated new investment projects and privatizations in 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 Dou Group also bases its future strategies on this premise. The Group obtained licenses to build and operate the Boyabat Hydroelectric Powerplant (513 MW), in which it holds a 34% stake, and the Aslanck Hydroelectric Powerplant (120 MW), in which it holds a 25% stake. In addition, the Group also acquired a 25% share in the D-TES Electric Power Trading Company. Prospects Dou Energy aims to develop and expand through profitable enterprises based on clean energy and its infrastructure, while acting in accordance with the current social, economical and geographic developments and maintaining its environmental friendly perspective. Outlook Closely monitoring privatization initiatives in geographical areas across Turkey, the Dou Group continues to operate in energy generation based on renewable and conventional energy sources and in electricity distribution. The Energy Department is developing investment plans on prospective projects, and aims to build its total installed capacity up to 1,000-1,500 MW, mainly from renewable resources.

Dou Group Annual Report 2007

Corporate Citizenship

83

Corporate Citizenship
The Dou Group is strongly committed to its social and environmental responsibilities and upholds its role as a corporate citizen in all business activities and operations, as well as in the work place.

84 Corporate Citizenship

>The Dou Group as a Corporate Citizen


The rapid changes brought about by globalization and new technology have set the stage for changing expectations from corporations all over the world, both in developed and developing countries. The days when companies were merely assessed by their economic indicators are over, to be replaced by a new era where all companies regardless of their sector, size and brand value are subject to a triple bottom line assessment, with economic success, social responsibilities and environmental sensitivity taken as the new benchmarks. The Dou Group is strongly committed to its social and environmental responsibilities and upholds its role as a corporate citizen in all business activities and operations, as well as in the work place. While playing an active role to work towards the good of the world and society as a whole through corporate social responsibility projects and philanthropic acts, the Dou Group is well aware of the need to work with a responsible business making strategy and integrate social and environmental concerns into the business operations every sector where it works. The Dou Group's corporate social responsibility approach rests on the belief that children are our future. In line with this belief, the Group created the Dou Kids as its social responsibility platform and has been conducting several projects and initiatives under this platform ranging from art and culture to health and environment. The Dou Group is a participant to the United Nations Global Compact As an indication of its sensitivity towards human rights and sustainable development, the Dou Group became a participant to the United Nations (UN) Global Compact in April 2007. By signing the Global Compact and making a commitment to its ten principles, the Dou Group has once again emphasized its deep commitment to its social and environmental responsibilities as a corporate citizen. After the Group's participation to the Compact, Dou Holding Corporate Communications Department created an internal communication strategy, using different means of communication within the Group with the aim of informing all Group employees on Dou Group's participation to the UN Global Compact and the commitments it has agreed to abide by becoming a participant. The future agenda of the Group in the area of corporate social responsibility includes further training on the Compact, preparation of the Group's first sustainability report and the development of sustainable corporate responsibility projects under four headlines. The UN Global Compact is the largest corporate social responsibility initiative in the world and was launched by the former Secretary-General of the United Nations, Kofi Annan, with a vision of a sustainable and inclusive global economy and voluntary participation. The initiative takes its roots from the 1999 Davos World Economic Forum, where Kofi Annan called on business leaders to join forces for the achievement of the Millennium Development Goals by 2015. Subsequently, ten global principles were derived from the Universal Declaration of Human Rights, the International Labor Organization's Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on Environment and Development and the United Nations Convention Against Corruption under four headings including human rights, labor standards, environment, and anticorruption. Since its launch, over 5,000 companies have joined the initiative worldwide and committed themselves to align their business strategies, operations and cultures with the ten principles. The Dou Group is proud to be a part of this ever growing global momentum and will take every necessary step to fulfill its commitments.

Dou Group Annual Report 2007

Corporate Citizenship

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>The Dou Group's Social Responsibility Projects


DOU KIDS Dou Kids is the Dou Group's social responsibility platform and was established in December 2004 based on the perspective that our future will be largely shaped by today's children and child development should be given utmost importance by all actors of the current era including the business sector. Contributing to the development of the young through educating and entertaining activities and projects since its inception, Dou Kids aims to create a more conscious and responsible society in the areas of child development, health, safety, education, culture and arts, environment and communication. With this objective in mind, Dou Kids engages in partnerships with other institutions including nongovernmental organizations, international organizations, state and governmental bodies, who share the Dou Kids' vision of cultivating social change through our children. >Development I- Music is the key to child development The Dou Kids Symphony Orchestra was set up in 2006 as Turkey's first national and permanent children's symphony orchestra. The Orchestra is comprised of students aged between 10 and 16 from a whole range of backgrounds in Turkey and introduces the wonder of symphonic music to Turkish children as performed by their peers, in an effort to receive the wider recognition of diverse universal music in our country, and to help this music achieve the recognition it deserves worldwide. The "Dou Kids Symphony Orchestra" simultaneously promotes the artistic skills and achievements of children studying music, both in Turkey and in the international arena. In 2007, 9 concerts were performed by the Dou Kids Symphony Orchestra in Mersin, Adana, Ankara, Samsun, Bodrum and stanbul, in front of a combined audience of 4,200. Proceeds from the concerts performed by the Dou Kids Symphony Orchestra in 2007 were used to purchase musical instruments to be sent to the Fine Arts High Schools in anlurfa, Kars and Sivas, with contributions from YDD (The Association in Support of Contemporary Living). II- Parent education is the key to child development The Dou Group strongly believes in investing in children and gives equal importance to the education of parents, whose actions have profound impacts on the development of their children. Starting from their own employees, the Dou Group initiated a series of seminars in 2007, entitled 21st Century Life Culture Seminars, which 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. Under the moderation of Dr. Erdal Atabek, Social Psychologist, and with the participation of different guest speakers, the 21st Century Life Culture Seminars, with a different subject each month, have been open to all employees of the Group along with their spouses. >Health The My World Project: Marking the first of several health-related projects, My World has been implemented in coordination with UNFPA (The United Nations Population Fund) since 2006. The My World Project carries over the peer education activities realized by UNFPA at various universities worldwide to the Dou Kids website, resulting in wider group access to these activities. Through this Project, Dou Kids helps children cope with the difficulties of their adolescent years, enabling them to identify the changes facing them, including the various growth processes. In 2007, the My World section of the Dou Kids website reached to 162,235 hits.

Dou Group Annual Report 2007

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>The Dou Group As A Corporate Citizen


The Experiment and Smile Project: The Project was launched in 2006. The simple aim of the project was to educate children about oral and dental care, as well as to establish protective dental health awareness through good practice since 84% of children under the age of 12 in Turkey were found to have cavities in their teeth. The Dou Kids healthcare caravan introduced oral and dental health and hygiene training to children at primary schools in Krkkale, Nide, Aksaray, Karaman, Yozgat and Mula between April-June 2007, reaching over 12,000 children, incorporation with the Turkish Ministry of Education. In order to create social responsibility awareness among these students and to expand the sphere of influence of the project, students were provided with packed soaps and were asked to write down messages on these packages covering what they learnt during the training sessions. Following the completion of the trainings, these packages were sent to their younger peers residing at the countrywide centers of the Prime Ministry of Turkey, Social Services and Child Protection Institute. >Safety Traffic is Life: Every year, hundreds of Turkish citizens lose their lives in traffic accidents. In the light of this tragic statistics, the safety theme has been covered by a series of projects implemented within the framework of the Traffic is Life! Campaign with the support of Dou Otomotiv. Among these projects, the Trafficthemed Music Contest aims to convey children's thoughts on traffic to adults, and to draw the attention of both adults and children to this matter. Organized during the traffic week each year, the competition is held among the primary schools throughout Turkey. In 2007, 10 schools from the cities of Istanbul, Ankara, zmir, Manisa, Mula and Kars were selected in the semi-finals and gained the right to compete in the final competition, where the best 3 performances were selected by the jury of the contest. The total number of countrywide applications to the contest reached 550 in 2007. The Back Seat is Mine: The Back Seat is Mine! Campaign encourages children under the age of 12 to sit in the back seats of vehicles, on a child seat or with seat belts fastened to help prevent children from suffering casualties in traffic accidents due to the misuse of seat belts or failing to use seat belts at all. It also aims to encourage children to draw their families' attention on this subject. From the start of the campaign, training sessions entitled the The Back Seat is Mine have been conducted in various elementary schools, reaching a total of 20,000 children. >Education Within the scope of the Campaign for Supporting Computerized Education of the Ministry of Education, a total of 4,011 computers were donated on behalf of the Dou Group. Of these computers, 2,667 were sent to Nide and 1,344 to rnak. These donations help ensure that children living in these areas benefit from the advantages that technology can bring to education. Furthermore, in another example of corporation with the Ministry of Education, the Dou Group donated 107,000 and 154,000 books to primary schools in Nide and Mardin respectively, as a part of its Book Donation Project in 2007. >Environment Dou Kids also highly values the environment and supports projects which teach children the importance of developing environmental awareness. In 2007, efforts to expand the environmental section on the Dou Kids website continued to raise environmental awareness among children. Moreover, the Group also worked to develop projects related to the environment and climate change in 2007.

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>Communication www.doguscocuk.com.tr The Dou Kids initiative also reaches children through its website. With a target audience in the 7-12 age groups, the website's editorial functions are also performed by volunteer children. Through this interactive website, children express themselves on various topics while sharing their opinions with other children. Covering sections on sports, health, science, technology, cinema, theater and traffic, the website had attracted more than 67,000 members in 81 provinces at the end of 2007. Several competitions and activities were organized on the Dou Kids website in 2007 including; Dou Kids Letters to Atatrk Members of the Dou Kids website expressed their thoughts and feelings about the founder and the eternal leader of the Republic of Turkey, Kemal Atatrk, throughout the Atatrk Week. A total of 1,008 letters were submitted by members of the website, 50 of which were selected and turned into a book entitled Atam'a Mektuplar (Letters to Atatrk). Furthermore, the selected letters were also exhibited in the Antkabir Atatrk's Mausoleum. I AM FREE Contest On the International Children Rights Day in 2007, Dou Kids website members expressed their thoughts and feelings on the rights that they should have within the context of the I AM FREE Contest. With the participation of 2,191 children, a declaration with 50 articles was prepared and released by the end of the contest. >Dou Kids Activity Areas Dou Kids has prepared activity areas at various airports and stadiums 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. SPONSORSHIPS Adding value to Turkey is our primary goal. D-Marin Turgutreis International Classical Music Festival The Dou Group continues to contribute to and provide support for the development of classical music. It strives to both ensure its access to a wider section of the population and help Turkish artists produce world-class pieces. Organized in Bodrum since 2005 by the Dou Group, the D-Marin Turgutreis International Classical Music Festival highlights support extended to the development of diverse forms of music. In 2007, the Festival took place between August 30th-September 2nd, hosting various valuable artists both from Turkey and other countries including Glsin Onay, Han-Na Chang, Shlomo Mintz, Kit Armstrong and Mirjam Tschopp. Darafaka Ayhan ahenk Sport Complex Since 2006, the Dou Group has been supporting the sports facilities at the Darafaka Center in Maslak, stanbul, one of Turkey's most established educational institutions in Turkey. Operating under the name Ayhan ahenk Darafaka Sport Complex, the facility is designed as a multi-purpose complex hosting a range of artistic and cultural activities, in addition to sports events at world-class standards. The Dou Group will maintain its support to the Darafaka facilities well into the next decade. Santral stanbul Incorporation with stanbul Bilgi University, the Dou Group had become the strategic founding partner of the international modern art museum and cultural center, Santral stanbul, in 2006. Santral stanbul, the first power station of the Ottoman Empire, opened as a venue for cultural activities in September 2007.

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AYHAN AHENK FOUNDATION Ayhan ahenk Foundation was established in 1992 by Ayhan ahenk, the honorary chairman and founder of the Dou Group, to undertake initiatives in education, culture, health, environmental issues and sport as well as offering social aid to those in disadvantaged areas. The majority of the Foundation's activities in 2007 focused on education, health and environmental issues and the target audience for these activities were children as in the previous years. Developed from a project initiated in 1997, more than 306,000 patients from disadvantaged backgrounds have been treated through mobile healthcare units by the end of 2007, with 21,874 of these patients treated in 2007. In terms of educational activities, the stanbul Bykekmece Ahmediye Dou Primary School was restored with some new equipment purchased to prepare the school for the academic year. Additionally, as part of the Group's commitment to bring social aid to the underprivileged, food staples were offered to 1,500 families and clothing to 1,000 students, while 75,000 people were hosted at iftar dinners served throughout the month of Ramadan. The Ayhan ahenk Sevgi Ormanlar Project paved the way for the planting of saplings in Marmaris, Nide and Bodrum, as well as a total of 37,000 saplings planted in two different areas of stanbul in 2007 and 20,000 in the Beykoz and Karakiraz regions with the support of Garanti Pension. A further 17,000 saplings were planted in Alemda, with the support of Garanti Technology. By the end of 2007, the number of saplings planted reached to 537,000. In 2007, the Ayhan ahenk Foundation received the honor of being chosen as the winning project in the competition of The Most Successfully Applied Environmental Project by the General Directorate of Foundations. The Foundation received this award as a result of the reforestation of 175 hectares with 200,000 saplings, planted in a forest which had been razed to the ground in a forest fire in Konack, Bodrum.

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>Social Responsibility on the Basis of Sectors


FINANCIAL SERVICES Garanti Bank Social Responsibility Projects Garanti, following a productive, profitable and sustainable growth strategy, offers banking services that add value to both the economy and the society. This approach is also manifest in the corporate social responsibility projects of the Bank. In areas such as culture, arts, environment, education and sports that improve the vision of both the individual and the society, Garanti either creates long-term projects of its own or provides sponsorship support for existing projects. Taking its mission one step further, Garanti aims to provide long-term support for both the cultural life of society and its own corporate culture, through institutions set up under the umbrella of the Bank. >Cultural Institutions Platform Garanti Contemporary Arts Center Istanbul's meeting point with contemporary arts, Platform hosted several exhibitions, workshops and conferences attended by more than 620,000 people since 2001. In addition to its archive of artists' folders, international contemporary art magazines and DVDs, Platform also functions as a research center with a library of 6,500 publications and as an international source for artists in Turkey. In 2007, Platform hosted 4 exhibitions visited by 69,399 people and 21 activities attended by 3,584. Garanti Gallery (GG) Since 2003, GG has been offering a platform where different concepts in architecture and design are debated through exhibitions and additional activities. GG encompasses all disciplines related to design with a special interest in urban planning, architecture, industrial design, graphic design and fashion. Exhibitions organized by GG since its inception had been seen by 172,627 people by the end of 2007. In 2007, the Garanti Gallery hosted 7 exhibitions visited by 33,823 people and 10 activities attended by 1,385. Ottoman Bank Museum (OBM) The Ottoman Bank Museum (OBM) was founded in 2002 to protect the extensive archives of the Ottoman Bank and to shed light on to the years in which the Bank was active. The historical building in Karaky, which served as the headquarters of the Ottoman Bank for 108 years, is currently being used as a cultural center comprised of a museum, library, movie theaters, exhibition halls, an archive and a cafeteria. With activities ranging from exhibitions to meetings, documentary screenings and science events, the OBM contributes to the revival and preservation of social history. In 2007, the Ottoman Bank Museum hosted 3 exhibitions visited by 8,524 people and 100 activities attended by 6,799. 4 exhibitions outside stanbul attracted 20,825 visitors. >International Projects Garanti sponsors several important art activities around the world, aiming to reflect on the future from the past and contribute to the promotion of Turkey. Turks in London Garanti was one of the main sponsors of the exhibition Turks: A Journey of a Thousand Years, 600-1600 held at the Royal Academy of Arts in London between January 22-April 12, 2005. This exhibition was later produced in the form of a documentary. Genghis Khan and his Legacy Garanti sponsored the exhibition Genghis Khan and his Legacy-The Great Mongol Empire, held at Sabanc University's Sabanc Museum between December 7, 2005 - April 8, 2006.

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Venice Biennial and the Turkish Pavilion At the International Venice Biennial, regarded as one of the most important art events in the world, Garanti sponsored the Turkish Pavilion in 2005 and 2007. >Sponsorship Projects Garanti's approach to sponsorship is based on providing long-term support to selected events or projects that complement the Bank's corporate culture and adds to the value of its brand. The Bank works like a partner with the organizations with which it cooperates and ensures that the project is sustainable. Garanti Jazz Green Garanti is a major sponsor of jazz in Turkey. The Bank has been the main sponsor of the International Istanbul Jazz Festival organized by the Istanbul Foundation for Culture and Arts since 1998. Garanti continued this support under the slogan Garanti Jazz Green in 2007. Garanti for Nature Garanti has been the main sponsor of the World Wildlife Fund (WWF-Turkey) since 1992, supporting many of the organization's projects for the sustainable use and preservation of natural resources in Turkey. Garanti supported the Turkish screening of An Inconvenient Truth, former US Vice President Al Gore's documentary on global climate change, in 2007. Hosted by Garanti and WWF-Turkey, Gore also gave a conference on Global Climate Change, which took place on June 12, 2007 in Istanbul. 12 Giant Men and the Nymphs of Basketball Garanti is a dedicated supporter of basketball, a sport that reflects Garanti's values of teamwork, dedication, confidence and discipline. The Bank has been the main sponsor of the 12 Giant Men (Turkish National Men's Basketball Team) since 2001 and of the Nymphs of Basketball (Turkish National Women's Basketball Team) since 2005. Garanti also sponsors the 12 Giant Men Basketball Schools Project, which was launched in 2002 to teach basketball to students and thus add to the sport's popularity in Turkey. Approximately 21,000 students have so far been trained at these programs. Furthermore, in 2007, Garanti supported the Golden Wrists Basketball School organized free of charge by the Antalya Metropolitan Municipality. Community Volunteers Foundation Since 2003, Garanti has been a main sponsor of the Community Volunteers Foundation's activities. The mission of the Community Volunteers Foundation is to prepare children for their future as sensible and responsible individuals. Deniz Yldzlar (Starfish) Project The Deniz Yldzlar (Starfish) Project has been supported by the donations of employees, customers and friends of Garanti since 1998. The schools constructed under this project (a primary school, an Anatolian technical high school, an Anatolian vocational high school, an industrial high school and a technical high school) are located in Darca on an area of nearly 55,000 square meters. >Shedding Light on the Past Lycian Way from Fethiye to Antalya Work on the Lycian Way had begun with the Four Lights for the Future Competition, which was organized by Garanti in 1996 to celebrate its 50th anniversary. With the implementation of this project, which won the first prize in the environment category of the competition, the historic Lycian Way, 509 km between Fethiye and Antalya, was turned into a trekking path. Garanti further contributed to tourism in the region by publishing a guidebook for the Lycian Way in 2006, a tribute to the 60th anniversary of the Bank.

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>Corporate Profile
Arykanda Garanti has sponsored excavations in the 4000-yearold city of Arykanda for the past decade. This program aims to uncover the shared heritage of mankind and its preserved values. Black Sea: A Floating Exhibit of Turkey This documentary, sponsored by Garanti Bank and the Netherlands Culture Fund, was screened at the Ottoman Bank Museum between December 20, 2006 and March 20, 2007. The Black Sea: A Floating Exhibit of Turkey was the result of an important project that offers a new perspective to Turkey's much-needed promotional efforts. The documentary tells the story of the mobile exhibition project implemented at Kemal Atatrk's suggestion three years after the proclamation of the Republic, for the purpose of promoting Turkey in Europe. >Services that Create Value for Customers Garanti Anatolian Meetings In 2002, Garanti initiated a series of gatherings, known as Garanti Anatolian Meetings to bring industrialists and managers from around Turkey together with leading experts of the country and jointly develop regional solutions. Organized jointly with the Dnya Newspaper, the meetings continued in 2007 with gatherings in Bafra, Bursa, Antalya, Denizli, Nevehir, Tekirda, Ordu, Sivas, Diyarbakr, Gaziantep, Kayseri and Mersin. Thus far, 48 gatherings in 37 provinces have been organized, making it possible for the Bank to meet with roughly 16,000 professionals; 141 speakers took part at these meetings. Basel II Criteria and Related Opportunities In 2005, Garanti launched a series of meetings to inform SMEs on the Basel II criteria and help them adapt to the financial practices of the 21st century. As of the end of 2007, 17 meetings had been held in 13 provinces with the participation of economists and Garanti managers as speakers. Bonus Academy Founded in 2002, the Bonus Academy organizes conferences and training programs for Bonus Card member companies. Hosting conferences where worldrenowned experts and managers share their experience, Bonus Academy also offers training sessions and seminars to support the personal and professional development of the sales teams of member companies. To date, 13 speakers have been invited to Bonus Academy activities. Garanti Foreign Trade Meetings Legislation Seminars Beginning in 2004, Garanti has organized a series of Legislation Seminars as part of Foreign Trade Meetings to create opportunities for Turkish companies in international markets. The Bank has shared the latest information on foreign trade legislation, payment methods and letters of credit with its customers through 36 seminars, 7 of which were held in 2007.

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AUTOMOTIVE Dou Otomotiv In recognition of its social responsibilities, Dou Otomotiv develops and undertakes projects that are innovative and exemplary. Traffic is Life Dou Otomotiv initiated a series of social responsibility activities in 2004 with the aim of promoting a higher level of overall responsibility, awareness and perception about traffic among the Turkish general public, and the young generation in particular. Gathered under a single banner of Traffic is Life, these social responsibility activities give a new dimension to traffic education. Being able to reach 1.5 million children through its advertising campaigns including Traffic-themed Music Contest, Back Seat is Mine and Stop at Red Light, Dou Otomotiv aims to reach a larger audience and increase public awareness through more advertising campaigns. In 2008, Dou Otomotiv plans a more integrated communication plan through extended advertisement campaigns and training projects to be carried out in coordination with its brands. Dou Otomotiv-Volkswagen Training Lab, Samandra Dou Otomotiv started to establish Training Laboratories to support education in industrial and vocational colleges, as well as to provide education and job opportunities to more students. Opening the first laboratory in the ili Industrial and Vocational College and the second in the Kartal Samandra Industrial and Vocational College, Dou Otomotiv provides training and employment opportunities to 18 students at the Dou Otomotiv Volkswagen Training Laboratory each year. The educational topics taught at the laboratory include safety at work, gasoline engines, diesel engines, basic electrical and current diagrams, heating/AC and brake systems, etc. CONSTRUCTION Dou Construction Environment-friendly project approach The preservation of environment is of much importance in the projects executed by Dou Construction. A particular care is taken to protect natural resources and to minimize the negative environmental impacts and to adopt necessary mitigation measures. To this end, the applicable environmental laws and regulations are fully complied with. Furthermore, local and international occupational health and safety requirements are meticulously applied in every phase of the construction works. Compliance with project specific and general environmental and labor safety requirements of each project is a key to the high service quality offered by Dou Construction to its clients. Accordingly, the employees are continuously provided with training courses to keep up with the changing requirements in the areas of Quality, Environment, Occupational Health and Safety Management Systems. Dou Construction is certified by the Det Norske Veritas (DNV) whose objectives are "Safeguarding life, property, and the environment" and is a leading provider of services for managing risk. DNV issued ISO 9001:2000 Quality, OHSAS 18001:1999 Occupational Health and Safety, and ISO 14001:2004 Environmental Management certificates for Dou Construction. MEDIA The Dou Media Group More Schools! Campaign NTV launched the campaign on April 23, 2007 in collaboration with UNICEF to raise funds for 100 new classrooms. At the end of NTV's 15-hour telethon, the target was surpassed, with enough donations collected for 125 new classrooms.

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>Corporate Profile
Charitable individuals and institutions responding to NTV's call participated in the campaign by sending text messages and/or donating money to the bank accounts, addressed during the broadcast. In total, YTL 1.6 million funds raised for the More Schools! Campaign. Turkey's leading companies and famous artists also extended their support to the campaign through donations. The text messages sent by the individuals watching the program accounted for YTL 600 thousand. In addition, NTV also donated the advertising revenues it gained on April 23rd, the National Sovereignty and Children's Day, to this campaign. Turkey as Photographed by Children During 2007, Turkey as Photographed by Children Project was implemented with the joint efforts of the Ministry of Education and NTVMSNBC. The Project aimed to introduce the infinite world of photographs and of the art of photography to children, thus helping them to find new means of self-expression. A total of 512 primary school students from 8 cities received theoretical training and field training in this discipline. The children were provided with the chance of taking photographs freely for a period of two weeks. A special project page was created on NTVMSNBC devoted to the photographs taken by the children, therefore sharing them with the public through a virtual exhibition. TOURISM The Dou Tourism Group The Dou Tourism Group maintains its support to Ayhan ahenk Alantur Primary School in Alanya Kestel, which had been built by the Group in 1985 and extended in 2005 with the addition 8 extra classrooms. The Group has also been giving its support to Marmaris Spor and the Marmaris Maritime Festival along with the contributions it has provided for the renovation of the Marmaris Management of Safety and Security's building. Other social initiatives of the Dou Tourism Group include fundraising supports to Bir Dilek Tut (Make a Wish) Foundation at Hyatt Regency stanbul and to UNICEF at Sheraton Voyager Antalya Hotel, Resort and Spa. A Dou 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 the Emporio Armani's Red campaign. Since 2006, Product Red items have been on sale at Emporio Armani stores owned by Arena Giyim within the scope of this campaign that holds the spotlight by virtue of the involvement of well-known celebrities from all over the world. The Fund receives a donation of 40% of revenues generated from sales of the Product Red collection, which will expand in 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. REAL ESTATE DOU-GE REIT DOU-GE REIT (Real Estate Investment Trust) aims to contribute to the social, cultural, artistic and economic development of the communities in the regions where the REIT develops projects and targets to implement several social responsibility projects in order to achieve this goal. The most significant example to these projects is the Company's sponsorship to the Dudullu Cultural Center with the aim of supporting the social and cultural development of the area in parallel with the Evidea Residential Project in ekmeky. Furthermore, DOU-GE REIT extended its support to the Community Volunteers Foundation during 2007 by providing monthly donations to the organization. The aim of these donations was to support the young generation in their efforts to pursue various countrywide social activities under the Community Service from the Young, Support from You All Campaign.

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Consolidated Financial Statements as at and for the Year Ended 31 December 2007 with Independent Auditors Report
Akis Bamsz Denetim ve Serbest Muhasebeci Mali Mavirlik Anonim irketi 16 May 2008 This report includes 1 pages of independent auditors report and 106 pages of consolidated financial statements together with their explanatory notes and 3 pages of supplementary information.

Table of Contents Independent Auditors Report Consolidated Balance Sheet Consolidated Income Statement Consolidated Statement of Recognised Income and Expense Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Appendix: Supplementary Information Convenience Translation to US Dollar

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Independent Auditors Report


To the Board of Directors of Dou Holding Anonim irketi We have audited the accompanying consolidated financial statements of Dou Holding Anonim irketi and its subsidiaries (the Group), which comprise the consolidated balance sheet as at 31 December 2007, and the consolidated income statement, the consolidated statement of recognised income and expense and the consolidated cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes. We did not audit the financial statements of certain consolidated companies as of and for the year ended 31 December 2007 which statements reflect total assets constituting 3.77 percent and total revenues constituting 44.91 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. Managements 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 entitys 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 entitys 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. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2007, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards after giving retroactive effect to the Social Security Law No. 5754 enacted 8 May 2008. 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.

stanbul, Turkey 16 May 2008

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Consolidated Balance Sheet As at 31 December 2007
Currency: Thousands of New Turkish Lira (YTL)
Notes Assets Property and equipment Intangible assets Investments in debt securities Investments in equity securities Investment property Other non-current assets Deferred tax assets Total non-current assets Inventories Accounts receivable Due from related parties Other current assets Banking loans and advances to customers Banking loans and advances to banks Financial assets at fair value through profit or loss Cash and cash equivalents Total current assets Total assets Equity Paid-in capital Capital stock held by subsidiaries Share premium Fair value reserves Translation reserve Hedging reserve Revaluation surplus Retained earnings Total equity attributable to equity holders of the Company Minority interest ahenk Family Others Total minority interest Total equity Liabilities Long-term bank borrowings Deferred tax liabilities Other non-current liabilities Total non-current liabilities Short-term bank borrowings Short-term portion of long-term bank borrowings Banking deposits from banks Banking customers deposits Obligations under repurchase agreements Accounts payable Due to related parties Taxes payable on income Other current liabilities Total current liabilities Total liabilities Total equity and liabilities 14 15 16 17 18 19 13 2007 2,240,202 1,005,876 5,389,836 51,790 631,508 1,581,276 110,642 11,011,130 359,900 765,350 26,821 362,133 12,559,710 1,525,820 178,383 1,102,373 16,880,490 27,891,620 2006 1,966,242 169,941 3,862,366 39,840 35,335 840,141 63,095 6,976,960 486,675 766,677 13,986 200,153 7,718,754 647,560 107,664 1,641,438 11,582,907 18,559,867

20 21 38 23 24 25 26 27

2,010,192 (53,655) 159,350 47,346 4,048 8,044 826,603 1,897,556 4,899,484

2,010,192 (53,655) 159,350 30,260 4,580 804 376,789 1,277,537 3,805,857

28

85,344 126,898 212,242 5,111,726

71,892 115,003 186,895 3,992,752

29 13 30

2,669,875 57,831 179,401 2,907,107 1,166,012 1,011,857 736,187 12,442,193 2,596,489 691,397 5,921 49,909 1,172,822 19,872,787 22,779,894 27,891,620

1,602,681 29,866 95,724 1,728,271 822,312 448,470 402,403 8,128,292 1,354,070 686,306 177,106 34,261 785,624 12,838,844 14,567,115 18,559,867

31 29 32 33 34 35 38 13 36

The accompanying notes are an integral part of these consolidated financial statements.

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Consolidated Income Statement For the Year Ended 31 December 2007
Currency: Thousands of YTL
Notes Revenues Cost of revenues Gross profit Administrative expenses Selling, marketing and distribution expenses Impairment losses, net Trading loss, net Other operating income, net Results from operating activities Finance income Finance expense Net finance expense Other non operating expense Share of profit of equity accounted investees Profit before income tax Income tax expense Profit for the year Attributable to: Equity holders of the Company Minority interest -ahenk Family -Others Profit for the period 13 12 2007 5,682,177 (4,050,094) 1,632,083 (726,949) (165,556) (75,671) (38,249) 212,922 838,580 348,032 (450,335) (102,303) (25,482) 2,754 713,549 (70,772) 642,777 2006 5,283,298 (3,852,483) 1,430,815 (634,572) (164,836) (41,189) (9,780) 69,450 649,888 635,926 (645,733) (9,807) (7,220) 1,515 634,376 (159,119) 475,257

8 9 10 26 11

28

623,097 19,680 6,468 13,212 642,777

470,003 5,254 (1,957) 7,211 475,257

The accompanying notes are an integral part of these consolidated financial statements.

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Consolidated Statement of Recognised Income and Expense For the Year Ended 31 December 2007
Currency: Thousands of YTL
Notes 28 2007 475,606 17,086 (532) 7,240 (2,460) 496,940 642,777 1,139,717 2006 66,095 (20,485) 4,580 (305) (29,358) 20,527 475,257 495,784

Revaluation of property and equipment Net change in fair value of available-for-sale financial assets Foreign currency translation differences for foreign operations Cash flow hedges: Effective portion of changes in fair value Income tax on income and expense recognized directly in equity Income and expense recognised directly in equity Profit for the year Total recognised income and expense for the year Attributable to: Equity holders of the Company Minority interest Total recognised income and expense for the year

13

1,118,264 21,453 1,139,717

509,563 (13,779) 495,784

The accompanying notes are an integral part of these consolidated financial statements.

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Consolidated Statement of Cash Flows For the Year Ended 31 December 2007
Currency: Thousands of YTL

Notes Cash flows from operating activities Profit for the year Adjustments for: Impairment on loans and receivables Impairment of investment property Fair value change in tangible assets held for sale Provision for employee severance indemnity Depreciation and amortisation Technical reserves relating to insurance operations Gain on sales of tangible assets Share of (profit)/loss of equity accounted investees Change in accrued interest expense/(income), net Provision for taxes on income Deferred tax charge/(benefit) Changes in operating assets and liabilities Change in banking customer deposits Change in banking deposits from banks Change in banking loans and advances to banks Change in balances with the Central Bank Change in banking loans and advances to customers Change in financial assets at fair value through profit or loss Change in other assets Change in inventories Change in accounts receivable Change in due from related parties Change in obligations under repurchase agreement Change in accounts payable Change in due to related parties Change in other liabilities Interest paid Interest received Taxes paid Dividend paid Employee termination indemnity paid Net cash from operating activities Cash flows from investing activities Proceeds from sales of investments in equity securities Increase in interest in consolidated subsidiaries Decrease in interest in consolidated subsidiaries Increase in investments in debt securities Acquisition of property and equipment and intangible assets Proceeds from sale of property and equipment Cash paid on acquisitions, net of cash acquired Cash flows (used in)/from investing activities Cash flows from financing activities Change in short-term bank borrowings, net Change in long-term bank borrowings, net Cash flows (used in)/provided by financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at 1 January Cash and cash equivalents at 31 December

2007 642,777

2006 475,257 41,189 7,220 5,269 5,566 124,060 13,686 (771) (1,515) (147,705) 82,588 76,531 681,375 1,659,586 109,508 (84,591) -(1,819,982) 64,175 (42,775) (43,627) (147,123) 8,445 745,802 163,734 (36,390) (344,728) 913,409 (1,025,392) 453,823 (79,690) -(4,242) 257,908

10 11 9 6 6 6 6 13 13

75,671 25,482 (35) 6,911 138,762 8,109 (41,718) (2,754) (14,349) 92,814 (22,042) 909,628 3,197,405 268,303 (624,288) (599,504) (2,647,761) (63,479) 114,756 126,775 73,197 (12,835) 1,013,842 12,709 (179,596) 291,115 1,880,267 (1,277,696) 523,408 (70,784) (22,417) (3,065) 1,029,713

(7,792) (65) 4,874 (1,180,032) (604,764) 61,927 (928,704) (2,654,556)

-(86,136) 6,789 (545,113) (361,455) 76,212 -(909,703)

27

(221,196) 1,305,231 1,084,035 (540,808) 2,078,414 1,537,606

(304,998) 218,599 (86,399) (738,194) 2,816,608 2,078,414

The accompanying notes are an integral part of these consolidated financial statements.

Dou Group Annual Report 2007

100 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements (31 December 2007)
Currency: Thousands of YTL
Note Description 1 Reporting entity 2 Basis of preparation 3 Significant accounting policies 4 Determination of fair values 5 Financial risk management 6 Segment reporting 7 Acquisition of subsidiaries 8 Revenues and cost of revenues 9 Administrative expenses 10 Impairment losses 11 Other operating income, net 12 Net finance expense 13 Taxation 14 Property and equipment 15 Intangible assets 16 Investments in debt securities 17 Investments in equity securities 18 Investment property 19 Other non-current assets 20 Inventories 21 Accounts receivable 22 Due from/due to customers for contract work 23 Other current assets 24 Banking loans and advances to customers 25 Banking loans and advances to banks 26 Financial assets at fair value through profit or loss 27 Cash and cash equivalents 28 Capital and reserves 29 Long-term bank borrowings 30 Other non-current liabilities 31 Short-term bank borrowings 32 Banking deposits from banks 33 Banking customer deposits 34 Obligations under repurchase agreements 35 Accounts payable 36 Other current liabilities 37 Commitments and contingencies 38 Related party disclosures 39 Financial instruments 40 Use of estimates and judgments 41 Group enterprises 42 Subsequent events Appendix: Supplementary information Pages 101 101 102 120 121 132 137 138 139 139 139 140 140 145 146 148 149 150 151 151 152 152 153 154 156 157 158 159 162 164 168 168 169 169 170 170 170 175 178 190 192 201 202

Dou Group Annual Report 2007

101 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
1 Reporting entity Dou Holding Anonim irketi (Dou 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 and real estate and is registered in Turkey. Dou Holding is owned and managed by the members of ahenk Family. As at 31 December 2007, Dou Holding has 52 (2006: 47) subsidiaries (the Subsidiaries), 31 (2006: 23) joint ventures (the Joint Ventures) and 7 (2006: 6) associates (the Associates) (referred to as the Group or Dou Group herein and after). As explained in more detail in note 41, Dou 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 ahenk 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., ITT Sheraton, Neckerman Reisen, Hyatt Regency, HMS International Hotel GMBH, Giorgio Armani, Guccio Gucci Spa and CNBC. The address of the registered office of Dou Holding is as follows: Dou Grubu Binalar Bykdere Caddesi No: 65 34390 Maslak/stanbul-Turkey The number of employees of the Group at 31 December 2007 is approximately 20,395 (2006: 17,996). 2 Basis of preparation (a) Statement of compliance Dou Group entities operating in Turkey maintain their books of account and prepare their statutory financial statements in New Turkish Lira (YTL) in accordance with the Accounting Practice Regulations as promulgated by the Banking Regulatory and Supervision Agency (BRSA) applicable to Trkiye Garanti Bankas Anonim irketi (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. Dou Groups 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) after giving retroactive effect to the Social Security Law No. 5754 enacted 8 May 2008.

Dou Group Annual Report 2007

102 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
(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. (c) Functional and presentation currency These consolidated financial statements are presented in YTL which is Dou Holdings functional currency. All financial information presented in YTL has been rounded to the nearest thousand. (d) Use of estimates and judgements The preparation of 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. In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in notes 4, 16, 23, 24, 26, 30, 39 and 40. 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. Certain comparative amounts have been reclassified to conform with the current years presentation as summarised below: As at 31 December 2006, the factoring payables reflected under accounts payable amounting to YTL 45,658 thousand were netted off with the same amount of factoring receivables reflected under accounts receivable. As at 31 December 2006, the Groups payable to Garanti Bank amounting to YTL 147,616 thousand and 12,554 thousand have been reclassified from accounts payable and other non-current liabilities, respectively to due to related parties. As at 31 December 2007, it was decided to reclassify the balances reflected under other current assets, other non-current assets, other current liabilities and other non-current liabilities regarding the interests in joint ventures in the construction segment into the related items of assets and liabilities on a line-by-line basis.

Dou Group Annual Report 2007

103 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Accordingly, the balances regarding the interests in joint ventures as at 31 December 2006 previously reported under other current assets, other non-current assets, other current liabilities and other non-current liabilities were also reclassified to the related items of assets and liabilities on a line-by-line basis to conform to the current periods presentation. Accordingly, the reclassifications are summarised as follows: Reported balances as at 31 December 2006 Property and equipment 1,908,008 Intangible assets 169,030 Other non-current assets 899,286 Inventories 476,002 Accounts receivable 783,057 Due from related parties 5,717 Other current assets 259,963 Cash and cash equivalents 1,629,848 Long-term bank borrowings 1,597,554 Other non-current liabilities 113,405 Short-term bank borrowings 816,675 Short-term portion of long-term bank borrowings 446,715 Accounts payable 876,550 Due to related parties 6,881 Other current liabilities 806,101 Adjusted balances as at 31 December 2006 1,966,242 169,941 840,141 486,675 766,677 13,986 200,153 1,641,438 1,602,681 95,724 822,312 448,470 686,306 177,106 785,624

Reclassifications 58,234 911 (59,145) 10,673 (16,380) 8,269 (59,810) 11,590 5,127 (17,681) 5,637 1,755 (190,244) 170,225 (20,477)

(a) Basis of consolidation The accompanying consolidated financial statements include the accounts of the parent company, Dou 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 of the date of the consolidated financial statements. (i) Subsidiaries Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. 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 entities The 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 a 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 SPEs 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 its assets. (iii) Associates Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence presumed to exist when the Group holds between 20 and 50 percent of the voting power of

Dou Group Annual Report 2007

104 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
another entity. Associates are accounted for using the equity method and are initially recognised at cost. The consolidated financial statements include the Groups 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 Groups share of losses exceeds its interest in an associate, 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 ventures Joint 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 Groups 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. (v) Transactions eliminated on consolidation Intra-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 Groups 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 economies The financial statements of the Turkish entities have been restated for the changes in the general purchasing power of the New Turkish Lira based on International Accounting Standard (IAS ) No. 29 Financial Reporting in Hyperinflationary Economies as at 31 December 2005. IAS 29 requires that financial statements prepared in the currency of a hyperinflationary economy be stated in terms of the measuring unit current at the balance sheet date, and that corresponding figures for previous periods be restated in the same terms. One characteristic that necessitates the application of IAS 29 is a cumulative three-year inflation rate approaching or exceeding 100 percent. The cumulative threeyear inflation rate in Turkey has been 35.61 percent as at 31 December 2005, based on the Turkish nation-wide wholesale price indices announced by the Turkish Statistical Institute (TURKSTAT). By taking this into consideration, together with the sustained positive trend in quantitative factors, such as the stabilisation in financial and monetary markets, decrease in interest rates and the appreciation of YTL against American Dollar (USD) and other hard currencies, it was declared that Turkey should be considered a non-hyperinflationary economy under IAS 29 from 1 January 2006. Therefore, IAS 29 has not been applied to the accompanying consolidated financial statements for the years ended 31 December 2007 and 2006. (c) Foreign currency (i) Foreign currency transactions Transactions 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 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 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.

Dou Group Annual Report 2007

105 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
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 or a financial liability designated as a hedge of the net investment in a foreign operation, or qualifying cash flow hedges, which are recognised directly in equity (see (iii) below). (ii) Foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to YTL at exchange rates at the reporting date. The income and expenses of foreign operations are translated to YTL at average exchange rates at the dates. Foreign currency differences are recognised directly in equity. Such differences are recognised 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. Foreign currency gains and losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of a net investment in a foreign operation and are recognised directly in equity in the translation reserve. (iii) Hedge of net investment in foreign operation Foreign currency differences arising on the retranslation of a financial liability designated as a hedge of a net investment in foreign operation are recognised directly in equity, in the translation reserve, to the extent that the hedge is effective. To the extent that the hedge is ineffective, such differences are recognised in profit or loss. When the hedged net investment is disposed of, the cumulative amount in equity is transferred to profit or loss as an adjustment to the profit or loss on disposal. (d) Financial instruments (i) Non-derivative financial instruments Non derivative financial instruments comprise investments in debt and equity securities, accounts receivable, due from related parties, banking loans and advances to customers and banks, financial assets at fair value through profit or loss, cash and cash equivalents, accounts payable, bank borrowings, banking deposits from banks, banking deposits from customers, obligations under repurchase agreements, due to related parties, certain purchased loans and derivative contracts that are not designated as effective hedging instruments, liabilities from short-term sales of financial instruments. In general, the fair values of financial instruments are based on their quoted market prices at the balance sheet date without any deduction for transaction cost. If a quoted market price is not available, fair value of an instrument is estimated using the available market information and the appropriate valuation methodologies. However, judgement is necessarily required to interpret market data to develop the estimated fair value. Accordingly, the estimates made are not necessarily indicative of the amounts that could be realised in current market exchange. The fair values of derivatives that are not exchange-traded are estimated amounts that the Group would receive or pay to terminate the contracts at the balance sheet date taking into account current market conditions and the current creditworthiness of the counter parties. Non-derivative financial instruments are recognised initially at fair value plus, directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as described below:

Dou Group Annual Report 2007

106 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Cash and cash equivalents Cash and cash equivalents comprise cash balances, call deposits, balances with Central Bank of Turkey (CBT) and other central banks and other liquid assets. Money market placements are classified in banking loans and advances to banks. 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). Held to maturity investments If the Group has the positive intent and ability to hold debt securities to maturity, then they are classified as held-tomaturity. Held-to-maturity investments are measured at amortised cost using the effective interest method, less any impairment losses. Premiums and discounts, including initial transaction costs are included in the carrying amount of the related instrument and amortised based on the effective interest rate of the instrument. These include certain banking loans and advances to banks and customers and certain debt instruments. Available-for-sale financial assets The Groups 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 are recognised directly in equity, except that any instrument that does not have a quoted market price in an active market and whose fair value cannot be reliably measured is stated at amortised cost. When an instrument is derecognised, the cumulative gain or loss in equity is transferred to profit or loss. Financial assets at fair value through profit or loss An instrument is classified at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. These include investments, certain purchased loans and derivative contracts that are not designated as effective hedging instruments, and liabilities from short-term sales of financial instruments. Financial instruments 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 Groups documented risk management or investment strategy. Upon the initial recognition attributable transaction costs are recognised in profit or loss when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and changes therein are recognised in profit or loss. 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 option written, are reported as trading liabilities. Banking loans and receivables Banking loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the banking and finance segment jointly controlled entity and its subsidiaries provide money, goods and services directly to a debtor with no injection of trading the receivable. Banking loans and advances comprise banking loans and advances to banks and customers. Banking loans and receivables advances are measured at amortised cost less impairment losses. Banking loans and receivables provided by the banking and finance segment jointly controlled entities are classified as banking loans and advances, and reported net of allowances to reflect the estimated recoverable amounts. Amortised cost is calculated on the effective interest rate method. Premium discounts, including initial transaction costs, are included in the carrying amount of the related instrument and amortised based on the effective interest rate of the instrument. Financial lease receivable Leases where the entire risks and rewards incident to ownership of an asset are substantially transferred to the lessee are classified as financial 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. Financial lease receivables are included in banking loans and advances to customers.

Dou Group Annual Report 2007

107 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
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) Gains and losses on subsequent measurement Gains and losses arising from changes in the fair values of financial instruments at fair value are recognised in profit or loss, whereas gains and losses arising from changes in the fair value of cash flow hedges and available-for-sale assets are deferred as a separate component of equity. Derecognition A financial asset is derecognised when the control over the contractual rights that comprise that asset is lost. This occurs when the rights are realised, expire or are surrendered. A financial liability is derecognised when it is extinguished. Available-for-sale assets and assets held for trading that are sold are derecognised and corresponding receivables from the buyer for the payment are recognised as of the date the Group commits to sell the assets. The specific identification method is used to determine the gain or loss on derecognition. Held-to-maturity instruments and banking loans and advances are derecognised on the day they are transferred by the Group. (ii) Derivative financial instruments held for risk management purposes 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. Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below. Cash flow hedges Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in equity to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognised in profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in equity remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised in equity is transferred to the carrying amount of the asset when it is recognised. In other cases the amount recognised in equity is transferred to profit or loss in the same period that the hedged item affects profit or loss. Economic hedges Hedge accounting is not applied to derivative instruments that economically hedge monetary assets and liabilities denominated in foreign currencies. Changes in the fair value of such derivatives are recognised in profit or loss as part of foreign currency gains and losses.

Dou Group Annual Report 2007

108 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
(iii) 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, is net off any tax effects, and 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. (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 YTL 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 carried at cost, less accumulated depreciation and accumulated impairment losses (see accounting policy 3m), except as explained below: In the first year of application of IAS 29, the construction machineries owned by a consolidated entity, Dou naat ve Ticaret Anonim irketi (Dou naat), 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 of 31 December 1997; and since then such replacement costs are restated for the effects of inflation in YTL units current at 31 December 2005 pursuant to IAS 29. In 2006, Dou naat has 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 Dou naat has 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 the properties revaluation surplus account under 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 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 properties 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 labor, 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. 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.

Dou Group Annual Report 2007

109 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
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 with in 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 Property that is being constructed for future use as investment property is accounted for as property and equipment until construction or development is complete, at which time it is remeasured to fair value and reclassified as investment property. Any gain or loss arising on remeasurement is recognised in profit or loss. 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. Any gain arising on remeasurement is recognised directly in the equity. Any loss is recognised immediately in profit or loss. (iii) Subsequent costs The cost of replacing 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. (iv) Depreciation 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. 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 Buildings Furniture and equipment Motor vehicles Year 50 4-20 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 reassessed at each reporting date. 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. (f) Intangible assets (i) Goodwill Goodwill (negative goodwill) arises on the acquisition of subsidiaries, associates and joint ventures. Goodwill represents the excess of the cost of the acquisition over the Groups 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.

Dou Group Annual Report 2007

110 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
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 measurement Goodwill 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. (ii) Other intangible assets Other intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortisation and accumulated impairment losses (see accounting policy 3m). (iii) Subsequent expenditure Subsequent 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. (iv) Amortisation Amortisation 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. (g) Securities borrowing and lending business Investments lent under securities lending arrangements continue to be recognised in the consolidated balance sheet 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 interest Revenues or Cost of revenues. (h) Repurchase and resale agreements over investments The Group enters 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 balance sheet 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 property Investment 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.

Dou Group Annual Report 2007

111 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
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 assets Leases 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 Groups consolidated balance sheet. Investment property held under an operating lease is recognised on the Groups consolidated balance sheet at its fair value. (k) Inventories Inventories 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 first-in first-out principle, 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. Trading properties comprised land and buildings that are held for trading purposes. Net realizable 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 Groups contract activities based on normal operating capacity. Construction work in progress is presented as part of accounts receivable in the consolidated balance sheet. If payments received from customers exceed the income recognised, then the difference is presented as deferred income in the consolidated balance sheet. 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 assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profit or loss. Any cumulative loss in respect of an available-for-sale financial asset recognised previously in equity is transferred to profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost and available-for-sale financial assets that are debt securities, the reversal is recognised in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is recognised directly in equity. (ii) Loans and receivables and held-to-maturity investments The 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 rate. 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 balance sheet 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. (iii) 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. (iv) Non-financial assets The carrying amounts of the Groups 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 assets 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 reporting date.

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113 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
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 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). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash generating units that are expected to benefit from the synergies of the combination. 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 cashgenerating 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 assets 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. (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 Groups 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 Groups 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 Trkiye Garanti Bankas Anonim irketi Memur ve Mstahdemleri Emekli ve Yardm Sand Vakf (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 all qualified bank 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: 2007 Pension contributions Medical benefit contributions Employer % 15.5 6.0 Employee % 10.0 5.0

Dou Group Annual Report 2007

114 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
This benefit plan is composed of a) the contractual benefits of the employees, which are subject to transfer to Social Security Foundation (SGK) (pension and medical benefits transferable to SGK) (see Note 30) and b) other excess social rights and payments provided in the existing trust indenture but not transferable to SGK and medical benefits provided by Garanti Bank for its constructive obligation (excess benefits). Pension and medical benefits transferable to SGK As discussed in Note 30, Garanti Bank expects to transfer a portion of the obligation of the Fund to SGK. This transfer will be a settlement of that portion of the Funds 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 2007 as the value of the payment that would need to be made to SGK to settle the obligation at the balance sheet date 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 30 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 SGK 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 SGK The 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 16.77 10.17 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 indemnity Reserve 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 YTL 2,030.19 and YTL 1,857.44 at 31 December 2007 and 2006, respectively.

Dou Group Annual Report 2007

115 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
International Financial Reporting Standards require actuarial valuation methods to be developed to estimate the entitys 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: 2007 % 5.7 3.0-8.0 2006 % 5.7 3.0-8.0

Discount rate Turnover rate to estimate the probability of retirement

(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. (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. The Group recognises the amount claimed from the procedures 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 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 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. Fee and commission income: Fee 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.

Dou Group Annual Report 2007

116 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Net trading loss: Net trading loss includes gains and losses arising from disposals of financial assets at fair value through profit or loss and available-for-sale. (ii) Insurance business Earned premiums: In respect of non-life branches, under the annual basis of accounting, written premiums comprise the premiums due on contracts, net of taxes and cancellations, entered into during a financial year. These premiums are adjusted by the reserve for unearned premiums. In respect of life branches, earned premiums represent premiums accrued on policies issued and adjusted by the reserve for unearned premiums during the year. Claims and provision for outstanding claims: Claims incurred include all claims (including claim estimates) and claims settlement payments made in respect of the financial period and the movement in the provision for outstanding claims and settlement expenses. Provisions for outstanding claims and settlement expenses include claims incurred but not reported (IBNR), net of salvage and subrogation recoveries. Unearned premium reserve: Provision for unearned premiums is provided for in respect of in-force policies for which the premium period does not end simultaneously with the accounting period. Unearned premiums are determined from premiums written during the year, less reinsurance. Life mathematical reserves: The life mathematical reserves have been calculated on the life policies in force at period-end by using actuarial assumptions and formulas approved by the Prime Ministry Undersecretariat of Treasury. Life profit share reserve: Life profit share is the portion of investment income allocated to life policy holders from income generated due to premiums of life policies with a savings clause. Such policies normally have at least 10 years of maturity and policy holders are entitled to receive a profit share after 3 years from the date of policy issuance. Profit share is calculated on an individual policy basis. Investment income presented within income from insurance operations represents income generated through utilisation of funds associated with mathematical reserves in various investment tools whereas the provision for profit share represents the amount allocated to policy holders out of investment income after certain deductions. Liability adequacy test: At each balance sheet date, liability adequacy tests are performed to ensure the adequacy of the contract liabilities. Any deficiency is immediately charged to the profit or loss. The Group has no additional liability with respect to the life insurance portfolio of its subsidiary in the insurance business since in its revised tariffs, the subsidiary changed the basis of its life profit share calculation to guarantee an annual return of the lower of the guaranteed rate or the annual inflation rate. (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 and expenses are recognised in profit or loss in proportion to the stage of completion of the contract. Contract revenue and expenses are recognised in profit or loss in proportion to the stage of completion of the contract. 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.

Dou Group Annual Report 2007

117 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
(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. (vi) Other businesses Revenue from the sale of goods 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 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. 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. (vii) Research and development costs Expenditure on research activities is recognised in profit or loss when incurred. (viii) Dividend income Dividend income is recognised on the date that the Groups 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 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 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. (t) Finance income and finance expense Finance income comprises interest income on funds invested, foreign currency gains, and gains on hedging instruments that are recognised in profit or loss. Interest income is recognised as it accrues, using the effective interest method. Finance expenses comprise interest expense on borrowings, foreign currency losses, and losses on hedging 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.

Dou Group Annual Report 2007

118 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Foreign currency gains and losses are reported on a gross basis. (u) Income tax Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustments to tax payable in respect of previous years. Deferred tax is recognised using the balance sheet method, providing for 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, and differences relating to investments in subsidiaries to the extent that they probably 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 the 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 off set if there is a legally enforceable right to off set 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 on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised 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 recognized in profit or loss together with the deferred gains that are realised. (v) Offsetting Financial assets and liabilities are offset and the net amount presented in the consolidated balance sheet when, and only when, there is a legally enforceable right to set off the amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted by the accounting standards, or for gains and losses from a group of similar transactions. (w) Items held in trust Assets, other than cash deposits, held by the Group in fiduciary or agency capacities for its customers and government entities are not included in the accompanying consolidated balance sheet, since such items are not under the ownership of the Group. (x) 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).

Dou Group Annual Report 2007

119 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
(y) Discontinued operations A discontinued operation is a component of the Groups business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative income statement is restated as if the operation had been discontinued from the start of the comparative period. (z) Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. Segment information is presented in respect of the Groups business and geographical segments. The Groups primary format for segment reporting is based on business segments. The business segments are determined based on the Groups management and internal reporting structure. Inter-segment pricing is determined on an arms length basis. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly deferred tax assets, prepaid taxes and interest earning assets of non-finance segments. Unallocated liabilities comprise deferred tax liabilities, taxes payable on income and interest bearing liabilities of other corporate segments. Segment capital expenditure is the total cost incurred during the period to acquire property and equipment and intangible assets other than goodwill. (aa) 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 absence of further guidance in IFRS, the Group has accounted the de-merger via book values. (bb) 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 2007, and have not been applied in preparing these consolidated financial statements: IFRS 8 Operating Segments introduces the management approach to segment reporting. IFRS 8, which becomes mandatory for the Groups 2009 financial statements, will require the disclosure of segment information based on the internal reports regularly reviewed by the Groups Chief Operating Decision Maker in order to assess each segments performance and to allocate resources to them. Currently the Group presents segment information in respect of its business and geographical segments (see note 6). Under the management approach, the Group will present segment information in respect of banking and finance, construction, automotive, tourism and other. IFRIC 11 IFRS 2 Group and Treasury Share Transactions requires a share-based payment arrangement in which an entity receives goods or services as consideration for its own equity instruments to be accounted for as an equity-settled sharebased payment transaction, regardless of how the equity instruments are obtained. IFRIC 11 will become mandatory for the Groups 2008 financial statements, with retrospective application required. It is not expected to have any impact on the consolidated financial statements.

Dou Group Annual Report 2007

120 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
IFRIC 12 Service Concession Arrangements provides guidance on certain recognition and measurement issues that arise in accounting for public-to-private service concession arrangements. IFRIC 12 will become mandatory for the Groups 2008 financial statements. The Group has not determined the potential effect of the interpretation. IFRIC 13 Customer Loyalty Programmes addresses the accounting by entities that operate, or otherwise participate in, customer loyalty programmes for their customers. It relates to customer loyalty programmes under which the customer can redeem credits for awards such as free or discounted goods or services. IFRIC 13 will become mandatory for the Groups 2009 financial statements. The Group has not determined the potential effect of the interpretation. IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction clarifies when refunds or reductions in future contributions in relation to defined benefit assets should be regarded as available and provides guidance on the impact of minimum funding requirements (MFR) on such assets. It also addresses when an MFR might give rise to a liability. IFRIC 14 will become mandatory for the Groups 2008 financial statements, with retrospective application required. The Group has not yet determined the potential effect of the interpretation. 4 Determination of fair values A number of the Groups 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 arms length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. 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 item. (b) Intangible assets The fair value of other intangible assets 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 An external, independent valuation company, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued, values the Groups 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 arms length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. 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.

Dou Group Annual Report 2007

121 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
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, and the markets general perception of their creditworthiness; 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 where 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. (g) Derivatives The 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. (h) Non-derivative financial liabilities Fair 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) Overview The 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 Groups exposure to each of the above risks, The Groups objectives, policies and processes for measuring and managing risks, and the Groups management of capital. Further quantitative disclosures are included throughout these consolidated financial statements.

Dou Group Annual Report 2007

122 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Corporate Risk Management efforts have been initiated by the Group since 2006. These efforts have been executed by Dou Holding Risk Management Department since November 2006. Among the Groups key institutional responsibilities, the Group coordinates and monitors the Group risk management application through corporate risk management, and identifies investor and shareholder risk preference. The Groups risk management vision is defined as, identifying variables and uncertainties that will impact the Groups objectives, conducting proactively and managing through the most appropriate steps, supervising the implementation of steps in line with the shareholders risk preference. Corporate Risk Management activities are executed within the Group as a whole in the following fields: Determining risk management standards and policies, Developing a uniform risk management oriented work culture and capabilities, Conducting risk analysis of existing and potential investments, Creating a senior administration vehicle reporting on the risks of new investments of a company, sector or group, Determining risk limitations and action plans, Supporting the implementation of these action plans, Supporting strategic processes with a risk management approach. Dou Holdings Risk Management Department, established with an effort to implement Risk Management across the Group, is under the supervision of Dou Holdings Chief Executive Officer (CEO) and Risk Management Committee of the Board of Directors. The latter determines shareholder risk preference, ensuring that appropriate risk management applications are in place. Dou Holdings CEO has the ultimate responsibility for Corporate Risk Management. (b) Risk management framework for the automotive segment It is composed of forming internal audit and risk management policies and strategies and controlling their operability and finally it is included in the functions of the Dou Otomotiv Servis ve Ticaret Anonim irketi (DOA) Board of Directors. Financial risks are monitored by the Office of Finance Coordinator and reported to the Board of Directors and the Audit Committee. Operational risks are being managed by the brand directors in accordance with DOAs policies based on the Internal Audit Departments findings. DOA Board of Directors has assigned the Audit Committee formed by the Board members to implement the function of audit. DOA Audit Committee carries out its activities within the terms of Audit Committee Rules. Pursuant to this, there is an Internal Audit Department supervising internal control mechanisms which continues its activities within the scope of DOA Audit Department Regulation prepared in accordance with International Internal Auditing Standards. Once in every three months at minimum, Internal Audit department gives information on the audit findings and the issues that require taking actions when necessary. (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 Banks Board of Directors monitors the effectiveness of the risk management system through the audit committee, other related committees and senior management.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Garanti Banks 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 Banks structure, policies and procedures. They are effectively managed and assessed in a continuously growing manner. 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 the current 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 roadmap of BRSA. (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. (c) Risk management framework for the banking and finance segment (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 balance sheet dates are set out in Note 37. 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:

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Swaps Swaps 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 forwards Futures 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. Options Options 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. (c) Risk management framework for the banking and finance segment (iv) Trading activities Garanti 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 segment Garanti Bank and its subsidiaries counterparty credit exposure at the balance sheet 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 balance sheet. Notional amounts disclosed in the notes to the 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.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
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 its 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 Banks market risk management process. Garanti Bank and its subsidiaries primary exposures to credit risk arise through loans and advances. The amount of credit exposure in this regard is represented by the carrying amounts of these assets on the balance sheet. 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. 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 balance sheet. In addition, Garanti Bank and its subsidiaries are exposed to off balance sheet credit risk through guarantees issued (Note 39). 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 balance sheet) 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 loans Impaired loans 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 loans Garanti 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.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Write-off policy Garanti 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 policy Garanti Banks 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 2007 and 2006. Approximately 74 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 79 Percent. (ii) Other corporate segments Credit 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 Groups receivables from customers and investment securities. Accounts receivable The Groups 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 Groups 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 Groups 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. 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 companys 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 based on the evidence of insolvency issued by the Court.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Guarantees In general terms, the Groups 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 risk (i) Banking and finance segment Liquidity 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 and its subsidiaries have access to a diverse funding base. 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 Banks liquidity risk management strategy. Exposure to liquidity risk The calculation method used to measure the banks 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 communiqu 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. Garanti Banks liquidity ratios in 2007 are as follows: First Maturity Bracket (Weekly) FC FC + YTL 205.49 188.04 251.92 212.33 158.32 148.21 Second Maturity Bracket (Monthly) FC FC + YTL 127.36 123.78 147.16 130.54 112.59 116.03

Average Maximum Minimum

(%) (%) (%)

Garanti Banks 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 Banks 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. Garanti Banks subsidiary in Russia complies with the local legislation. (ii) Other Corporate Segments Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Groups 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 Groups reputation.

Dou Group Annual Report 2007

128 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Typically, the Groups 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 segment All 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 net trading loss. 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 senior management by buying or selling instruments or entering into offsetting positions. Currency risk Garanti 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 YTL, the consolidated financial statements are affected by currency exchange rate fluctuations against YTL. 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, excluding borrowings treated as hedges of net investments in foreign operations. Interest rate risk Garanti Bank and its subsidiaries operations are subject to the risk of interest rate fluctuations to the extent that interestearning 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 Banks business strategies. Asset-liability risk management activities are conducted in the context of Garanti Banks sensitivity to interest rate changes. In general, as common in current economic environment, the consolidated financial statements are liability sensitive

Dou Group Annual Report 2007

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
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 Banks Assets and Liabilities Committee (ALCO). 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 Banks 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 balance sheet interest rate risk 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. The consolidated value at market risks as at 31 December calculated as per the statutory consolidated financial statements of Garanti Bank 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: 2007 Highest 436,742 12,920 82,791 56,753 589,206 2006 Highest 728,572 35,587 70,623 46,544 881,326

Interest rate risk Common share risk Currency risk Option risk Total value at risk

Average 372,751 3,505 57,687 30,821 464,764

Lowest 306,226 6 30,086 11,314 347,632

Average 573,965 19,534 57,975 17,185 668,659

Lowest 311,501 6 46,994 2,094 360,595

Exposure to interest rate risk non-trading portfolios Balance sheet management is performed by the Assets and Liabilities Management Department in line with the main strategies determined by ALCO. Hedging transactions for Garanti Banks balance sheet are carried out upon the decisions of ALCO. ALCO can determine limits to balance sheet transactions if considered necessary. The balance sheet interest rate risk is monitored with methods such as static duration gap and sensitivity analysis based on all interest rate sensitive assets and liabilities. The scenarios include 100 basis point parallel fall or rise in all yield curves. In the analysis presented below, the sensitivity of profit or loss is the effect of possible changes in the interest rates on the net interest income of floating rate financial assets and liabilities not held for trading purposes as at 31 December 2007.

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130 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
The sensitivity of the shareholders equity as at 31 December 2007 is calculated through valuation of financial assets available-for-sale taking into account the possible changes in interest rates. The below analysis is currently prepared only on a bank only basis for Garanti Bank, not on a consolidated basis. The tax effects are not considered in the analysis. The other variables, especially exchanges rates, are assumed to be fixed in this analysis. The same method is applied for 31 December 2006. The sensitivity of trading portfolio is also included in the below table: Profit or (loss) 100 bp increase decrease 4,869 (5,132) --72,497 (75,790) (22,936) 23,894 54,430 (57,028) Profit or (loss) 100 bp increase decrease 869 (878) --30,151 (31,194) (10,380) 10,551 20,640 (21,521) Equity 100 bp increase decrease --63,193 (68,973) ----63,193 (68,973) Equity 100 bp increase decrease --22,711 (23,901) ----22,711 (23,901)

31 December 2007 Financial assets at fair value through profit or loss Financial assets available-for-sale Financial assets at floating rates Financial liabilities at floating rates Total value at risk

31 December 2006 Financial assets at fair value through profit or loss Financial assets available-for-sale Financial assets at floating rates Financial liabilities at floating rates Total value at risk

(ii) Other corporate segments Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the Groups 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 risk The 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 YTL, but also Euro, Swiss Francs (CHF), Sterling (GBP), Egyptian Pound (EGP), and Morocco Dirham (MAD). The currencies in which these transactions primarily are denominated are YTL, 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 balance sheet items, the Group sometimes utilises derivative instruments as well as keeping part of its idle cash in foreign currencies.

Dou Group Annual Report 2007

131 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
(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 Banks 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 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 risk-weighted assets. 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 gains on securities 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-balance sheet exposures. Garanti Banks 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 Banks management of capital during the period. Garanti Bank and its individually regulated operations have complied with externally imposed capital requirements throughout the period. 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

Dou Group Annual Report 2007

132 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
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 it is 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. In September 2007, Garanti Bank has entered into two interest rate swap transactions in order to hedge its certain cash flow exposures primarily on floating rate assets, through converting its floating rate receivables into fixed rate receivables. The following table includes certain characteristics of these swap transactions: Notional amount USD 30.2 million USD 15.1 million Fixed collection rate % 7.525 7.335 Floating collection rate % 6 month libor + 2.80 6 month libor + 2.61 Fixed collection frequency Semi annual Semi annual Maturity 2011 2011

In May 2007, Garanti Bank has entered into two interest rate swap transactions in order to hedge its certain cash flow exposures primarily on fixed rate liabilities, through converting its fixed rate payments into floating rate payments. The following table includes certain characteristics of these swap transactions: Notional amount USD 75.6 million USD 75.6 million Fixed payer rate % 6.95 6.95 Floating payer rate % 6 month libor + 1.64 6 month libor + 1.64 Fixed payment frequency Semi annual Semi annual Maturity 2012 2012

In 2004, Garanti Bank has entered into an interest rate swap transaction in order to hedge its certain cash flow exposures primarily on floating rate liabilities, through converting its floating rate payments into fixed rate payments. The following table includes certain characteristics of this swap transaction: Notional amount USD 39.7 million Fixed payer rate % 5.445 Floating payer rate % 3 month libor + 1.75 Fixed payment frequency Quarterly Maturity 2009

(i) Other corporate segments Due to the Groups 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. Notional amount YTL 7,5 million 6 Segment reporting 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. Fixed payer rate % -Floating payer rate % 6 month libor + 2.50 Fixed payment frequency Semi annual Maturity 2017

Dou Group Annual Report 2007

133 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
The Groups 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: Subsidiaries operating in the construction segment are mainly involved in the constructions of buildings, infrastructure and related civil engineering businesses. Automotive: Subsidiaries 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: Subsidiaries in the tourism segment are involved in hotel and marina investments, hotel management, ticket sales, hotel reservation, and tour/conference organisation services. Others: Subsidiaries in other operations segment are mainly involved in media, real estate and several service businesses. Dou Holding is included in the other industrial segment as well. 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, Luxemburg, Switzerland, Germany, Romania, Morocco and Ukraine. 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. For the years ended 31 December, total geographical sector risk concentrations, both on and off balance sheet, are presented below; 2007 Loans 11,937,789 158,118 142,437 77,528 36,143 11,265 9,481 4,309 182,640 12,559,710 Total assets 24,786,807 337,366 1,008,647 116,607 483,231 142,556 411,766 7,206 586,288 27,880,474 Total liabilities 17,209,246 63,864 938,929 80,327 1,165,011 1,550,902 504,094 40,816 1,208,568 22,761,757 Capital Non-cash loans expenditure 3,192,773 426,498 42,361 156 96,641 9,637 17,090 -91,407 -96,272 -23,429 -69,480 -266,192 10,835 3,895,645 446,926

Turkey Russia The Netherlands Romania United Kingdom USA Germany France Others

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134 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
2006 Loans 7,372,496 114,967 71,452 57,021 22,619 12,689 8,535 3,105 55,870 7,718,754 Total assets 16,447,018 229,638 118,819 81,615 58,533 104,383 252,947 353,199 913,715 18,559,867 Total liabilities 10,093,532 16,516 279,288 58,346 647,854 1,536,159 600,322 73,369 1,261,729 14,567,115 Capital Non-cash loans expenditure 2,162,956 359,320 7,942 157 66,450 1,978 11,937 -16,804 -4,139 -17,543 ---281,343 -2,569,114 361,455

Turkey Russia The Netherlands Romania United Kingdom USA Germany France Others

6.2 Business segments Banking and 31 December 2007 finance Construction Automotive Revenues Total external revenue 2,506,258 303,460 2,552,882 Intersegment revenue 1,104 1,176 90 Total segment revenue 2,507,362 304,636 2,552,972 Result Segment result 781,056 18,933 92,308 Unallocated expenses Results from operating activities Other non operating expense Net finance costs Share of profit/(loss) of equity accounted investees 1,048 -2,299 Income tax expense Profit for the period 31 December 2007 Other information Segment assets 23,212,300 283,846 1,053,360 Investments in equity securities 14,680 -34,804 Unallocated assets Total assets Segment liabilities 20,880,830 164,169 496,834 Unallocated liabilities Total liabilities 31 December 2007 Capital expenditure 92,509 41,301 126,729 Depreciation 47,544 16,516 16,428 Non-cash expenses other than depreciation 113,239 28,283 396

Tourism 115,703 7,116 122,819 (25,753)

Other Eliminations 203,874 4,740 208,614 3,776 -(14,226) (14,226) 16,568

Total 5,682,177 -5,682,177 886,888 (48,308) 838,580 (25,482) (102,303) 2,754 (105,869) 649,768

--

(593)

--

802,693 2,180,059 -2,306

(109,795) --

39,507

68,856

(94,479)

27,422,463 51,790 417,367 27,891,620 21,555,717 1,224,177 22,779,894 446,926 134,354 145,923

92,509 30,945 3,893

93,878 22,921 112

----

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135 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Banking and 31 December 2006 finance Construction Automotive Revenues Total external revenue 2,188,961 272,376 2,525,633 Intersegment revenue 855 603 1,567 Total segment revenue 2,189,816 272,979 2,527,200 Result Segment result 466,559 24,585 66,431 Unallocated expenses Results from operating activities Other non operating expense, net Net finance costs Share of profit/(loss) of equity accounted investees --2,783 Income tax expense Profit for the period 31 December 2006 Other information Segment assets 14,673,002 410,596 781,623 Investments in equity securities 4,704 -33,406 Unallocated assets Total assets Segment liabilities 13,256,693 165,690 577,446 Unallocated liabilities Total liabilities 31 December 2006 Capital expenditure 42,900 7,604 21,214 Depreciation 51,851 10,989 12,687 Non-cash (income)/expenses other than depreciation (82,969) 8,349 6,772 6.3 Interests in joint ventures As explained under accounting policy 3a, interests in joint ventures are proportionally consolidated in the consolidated financial statements. As at 31 December 2007, total assets related to interest in joint ventures in the banking and finance segment amount to YTL 22,760,247 thousand (2006: YTL 14,606,161 thousand), total liabilities amount to YTL 20,553,507 thousand (2006: YTL 13,335,368 thousand). For the year ended 31 December 2007, net profit for the period related to joint ventures in banking and finance segment amount to YTL 628,571 thousand (2006: YTL 296,882 thousand). As at 31 December 2007, total assets related to interest in joint ventures in the construction segment amount to YTL 118,060 thousand (2006: YTL 126,676 thousand), total liabilities amount to YTL 47,042 thousand (2006: YTL 44,658 thousand). For the year ended 31 December 2007, net profit for the year related to joint ventures in the construction segment amount to YTL 26,609 thousand (2006: YTL 13,225 thousand).

Tourism 121,388 -121,388 (10,639)

Other Eliminations 174,940 6,706 181,646 126,682 -(9,731) (9,731) 32,347

Total 5,283,298 -5,283,298 705,965 (56,077) 649,888 (7,220) (9,807) 1,515 (159,119) 475,257

--

(1,268)

--

738,118 1,129,079 -1,730

(294,571) --

31,379

336,458

(275,969)

17,437,847 39,840 1,082,180 18,559,867 14,091,697 475,418 14,567,115 361,455 122,406 (73,121)

13,914 32,689 3,419

275,823 14,190 (8,692)

----

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136 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
As at 31 December 2007, total assets related to interest in joint ventures in the automotive segment amount to YTL 288,103 thousand (2006: YTL 3,072 thousand), total liabilities amount to YTL 242,792 thousand (2006: YTL 31 thousand). For the year ended 31 December 2007, net loss for the year related to joint ventures in the automotive segment amount to YTL 10,262 thousand (2006: YTL 924 thousand). 6.4 Non-cash (income)/expenses other than depreciation Non-cash expenses other than depreciation for the year ended 31 December 2007 were as follows: Banking and finance Provision for loans and doubtful receivables Impairment on tangible assets Provision for defined benefit obligations Impairment on investment property Insurance technical reserves and provisions Provision for employee severance indemnity Amortisation of other intangible assets Fair value change in assets held for sale Reversal of doubtful receivables Recoveries of loan losses Accrued interest and other (income)/expenses Others Total 82,374 13,003 42,087 -8,109 3,348 -(35) (55) (10,682) (13,011) (11,899) 113,239

Construction 1,200 --25,482 -870 ----731 -28,283

Automotive 198 ----252 2,047 ---(2,101) -396

Tourism -----1,246 ----2,647 -3,893

Others 1,532 ----1,195 ----(2,615) -112

Total 85,304 13,003 42,087 25,482 8,109 6,911 2,047 (35) (55) (10,682) (14,349) (11,899) 145,923

Dou Group Annual Report 2007

137 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Non-cash expenses other than depreciation for the year ended 31 December 2006 were as follows: Banking and finance Provision for loans and doubtful receivables Insurance technical reserves and provisions Impairment on investment property Impairment on tangible assets Provision for employee severance indemnity Fair value change in assets held for sale Amortisation of other intangible assets Reversal of doubtful receivables Reversal of impairment on tangible assets Recoveries of loan losses Accrued interest and other expenses Others Total 7 Acquisition of subsidiaries In December 2007, the Group acquired 49.9 percent interest in Dou GE B.V. for 93 million Euro (YTL 159,049 thousand). The carrying amount of 49.9 percent of net assets on the date of acquisition was YTL 30,781 thousand. The acquisitions had the following effects on the Groups assets and liabilities on acquisition date: Dou-GE BV Non-current assets Current assets Cash and cash equivalents Non-current liabilities Current liabilities Net identifiable assets and liabilities Goodwill on acquisition Consideration paid, satisfied in cash Cash acquired Net cash outflow Recognised values on acquisition 5,515 360,126 8,355 (21,518) (321,697) 30,781 128,268 159,049 (8,355) 150,694 43,686 13,686 -3,068 3,265 5,269 --(12,879) (21,987) (148,153) 31,076 (82,969)

Construction --7,220 -284 -----845 -8,349

Automotive 225 ---86 -1,654 ---4,807 -6,772

Tourism 95 ---1,647 --(37) --1,714 -3,419

Others 100 ---284 --(1,866) (292) -(6,918) -(8,692)

Total 44,106 13,686 7,220 3,068 5,566 5,269 1,654 (1,903) (13,171) (21,987) (147,705) 31,076 (73,121)

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138 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Pre-acquisition carrying amounts were determined based on applicable IFRSs immediately before the acquisition. The preacquisition carrying values of assets, liabilities, and contingent liabilities recognised on acquisition are estimated to approach to their fair values (see note 4 for methods used in determining fair values). Kapital Radyo ve Televizyon Yayncl Anonim irketi (Kapital Radyo) Non-current assets Current assets Current liabilities Net identifiable assets and liabilities Goodwill on acquisition Consideration paid, satisfied in cash Cash acquired Net cash outflow Recognised values on acquisition 118 15 (63) 70 9,176 9,246 -9,246

Pre-acquisition carrying amounts were determined based on applicable statutory financial statements immediately before the acquisition. The pre-acquisition carrying values of assets, liabilities, and contingent liabilities recognised on acquisition are estimated to approach to their fair values (see note 4 for methods used in determining fair values). Acquisition of minority interests On 24 December 2007, the Group acquired an additional 4.65 percent interest in Garanti Bank for YTL 789,884 thousand in cash, increasing its ownership from 25.57 to 30.22 percent. The carrying amount of Garanti Banks 4.65 percent of the net assets in the consolidated financial statements on the date of the acquisition was YTL 335,527 thousand. The Group recognised goodwill amounting to YTL 454,357 thousand. 8 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: 2007 Banking and finance segment Banking operations: Interest income Interest expense Fees and commission income Fees and commission expense Net operating income Insurance operations: Technical gain Technical loss Net technical gain Gross profit for banking and finance segment Other corporate segments Net revenues Cost of revenues Gross profit for other industrial segments Total gross profit 2006

2,016,018 (1,216,315) 439,700 (155,746) 1,083,657 50,540 (14,772) 35,768 1,119,425 3,175,919 (2,663,261) 512,658 1,632,083

1,676,029 (1,031,785) 442,182 (96,201) 990,225 70,750 (45,436) 25,314 1,015,539 3,094,337 (2,679,061) 415,276 1,430,815

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139 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
9 Administrative expenses For the years ended 31 December, general and administrative expenses comprised the following: 2007 391,957 97,936 39,253 29,207 23,203 17,183 6,911 121,299 726,949 2006 304,950 82,627 26,861 31,813 19,705 20,921 5,566 142,129 634,572

Personnel expenses Depreciation and amortisation Taxes and duties other than taxes on income Telecommunication expenses Rent expenses Electronic data processing expenses Provision for employee severance indemnity Others Administrative expenses 10 Impairment losses For the years ended 31 December, impairment losses comprised the following:

Provision for banking loans Impairment on tangible assets Provision for doubtful receivables Recoveries of doubtful receivables Recoveries of provision for banking loans Reversal of impairment on tangible assets Other provisions Impairment losses, net 11 Other operating income, net

2007 82,374 13,003 2,930 (55) (10,682) -(11,899) 75,671

2006 43,686 3,068 420 (1,903) (21,987) (13,171) 31,076 41,189

For the years ended 31 December, other operating income and expenses comprised the following: 2007 179,962 37,786 35 (32,849) 27,988 212,922 2006 166,080 -(5,269) (21,251) (70,110) 69,450

Gain on sales of jointly controlled entity Gain on sale of custody services Fair value change in tangible assets held for resale-banking Warranty expense Other, net Total other operating income, net

As discussed in note 38.4, on 21 June 2007, Garanti Bank sold its 80 percent share in Eureko Sigorta Anonim irketi (Eureko Sigorta) (formerly known as Garanti Sigorta) and 15 percent share in Garanti Emeklilik ve Hayat Anonim irketi (Garanti Emeklilik) to Eureko BV recognizing total gain amounting to YTL 179,962.

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140 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
On 5 July 2007, Garanti Bank reached an agreement with Deutsche Bank AG regarding the transfer of its custody services to foreign institutional investors for USD 29.4 million. Pursuant to the agreement, ongoing services provided to foreign institutional investors will continue to be provided by Garanti Bank for the duration of the next ten months. USD 29.4 million (YTL 37.6 million) that was paid in cash by Deutsche Bank AG for the transfer of the said services up front is recorded under other operating income. 12 Net finance expense For the years ended 31 December, net finance income and expense comprised the following: 2007 Finance income: Foreign exchange gains Interest income on bank deposits Interest income on trading securities Other interest and similar items Total finance income Finance expense: Foreign exchange losses Interest expense on borrowings Other interest and similar items Total finance expense Net finance expense 284,191 62,575 -1,266 348,032 (383,083) (25,337) (41,915) (450,335) (102,303) 2006 517,321 96,818 21,113 674 635,926 (544,995) (40,732) (60,006) (645,733) (9,807)

Interest income and interest expense amounts included in Net finance expense 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. 13 Taxation In Turkey, corporate income tax is levied at the rate of 20 percent on the statutory corporate income tax base, which is determined by modifying accounting income for certain exclusions and allowances for tax purposes for the years 2007 and 2006. This rate was 30 percent for the year 2005. In accordance with Article No. 32 of the new Corporate Tax Law No. 5520 published in the Official Gazette No. 26205 dated 21 June 2006, corporate tax rate was reduced from 30 to 20 percent. Accordingly, effective from 1 January 2006, statutory income is subject to corporate tax at 20 percent. According to the new 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. According to the amendments in the tax legislations, which became effective from 24 April 2003, dividends that are paid to the shareholders from the profits of the years between 1999 and 2002 are immune from the withholding tax, if such profits are exempted from corporation tax bases of the companies. As per the decision no.2006/10731 of the Council of Ministers published in the Official Gazette no.26237 dated 23 July 2006, certain duty rates included in the articles no.15 and 30 of the new Corporate Tax Law no.5520 are revised. Accordingly, 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

Dou Group Annual Report 2007

141 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
the resident institutions, increased from 10 to 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 provisions have been stated under the Article 13 of Corporate Tax Law with the heading of disguised profit distribution via transfer pricing. 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 arms 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 to offset profits from previous periods. 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. The applicable tax rate for current and deferred tax for the consolidated subsidiary of Garanti Bank in Russia is 24 percent. The taxation system in the Russian Federation is relatively new and is characterised by frequent changes in the tax 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. In the Netherlands, corporate income tax is levied at the rate of 25.5 percent (31 December 2006: 29.6 percent) 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 one prior year. 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 reassessments 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, 40 percent over the local taxable income of Germany branch and 16 percent over the local taxable income of Romania branches.

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142 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
13.1 Income tax expense The taxation charge for the years ended 31 December comprised the following items: Current tax expense Current corporation and income taxes Deferred tax Total income tax expense 2007 92,814 (22,042) 70,772 2006 82,588 76,531 159,119

Reconciliation of effective tax rate The reported taxation charge 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: 2007 Reported profit before taxation Taxes on reported profit per statutory tax rate Permanent differences: Disallowable expenses Tax exempt income Refund from the tax litigation* Fair value of investments Consolidation adjustments Tax losses carry over utilisable Reversal of valuation allowance on impairment of tangible assets Effect of change in tax rate Others, net Income tax expense Amount 713,549 (142,710) (19,452) 54,808 35,097 3,564 (6,255) 18,655 --(14,479) (70,772) % (20.00) (2.73) 7.68 4.92 0.50 (0.88) 2.61 --(2.02) (9.92) Amount 634,376 (126,875) (49,211) 57,821 -9,850 (83,990) 27,162 20,298 (32,063) 17,889 (159,119) 2006 % (20.00) (7.76) 9.11 -1.55 (13.24) 4.28 3.20 (5.05) 2.83 (25.08)

*Garanti Bank had called off its existing legal cases against Boazii Corporations Tax Office related with the final and interim corporate tax returns of the years from 2001 to 2005 and settled up with the related tax authority as per the article 3 of the Law No.5736 Collection of Certain Public Sector Receivables through Conciliation published in the Official Gazette No.26800 dated 27 February 2008. Accordingly, following the adjustments made to the corporate tax returns of the period from 2001 to 2005, and using the investment incentive rights that Garanti Bank had but could not have benefited before, in the corporate tax return of 2005 as a result of such adjustments to corporate tax returns, the tax refund that Garanti Bank will collect through conciliation from the tax office, due to the prepaid taxes in 2005 is agreed to be YTL 35,097 thousand. Income tax recognised directly in equity 2007 (24,019) 21,559 (2,460) 2006 (21,728) (7,630) (29,358)

Revaluation land and buildings Available-for-sale financial assets Total income tax credit recognised directly in equity

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143 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
13.2 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 balance sheet. Taxes payable on income as of 31 December comprised the following: 2007 70,772 22,042 (42,905) 49,909 2006 159,119 (76,531) (48,327) 34,261

Taxes on income Less: Deferred taxes on taxable temporary differences Less: Corporation taxes paid in advance Taxes payable on income 13.3 Deferred tax assets and liabilities

Deferred tax is provided, using the balance sheet method, on all 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 liabilities As at 31 December 2007, deferred tax assets amounting YTL 14,488 have not been recognised in respect of the statutory losses carried forward. Such losses carried forward expire until 2012. 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 liabilities Deferred tax assets and deferred tax liabilities at 31 December were attributable to the items detailed in the table below: 2007 Liabilities (45,747) -(8,341) -(9,600) -(46,315) (110,003) -(110,003) 2006 Liabilities (21,728) (28,268) (1,755) -(8,419) (6,466) (6,447) (73,083) -(73,083)

Revaluation on land and building Provisions Effect of percentage of completion method Employee severance indemnity Pro-rata basis depreciation expense Amortised cost effect and fair value difference on financial assets and liabilities Other temporary differences Subtotal Carried forward tax losses Total deferred tax assets/(liabilities)

Assets -18,117 21,026 9,640 -689 53,288 102,760 60,054 162,814

Assets -46,424 -7,264 -6,255 4,970 64,913 41,399 106,312

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144 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
According to the Tax Procedural Law, statutory losses can be carried forward maximum for five years. Consequently, 2012 is the latest year for recovering the deferred tax assets arising from carried forward tax losses. The Group management forecasted to generate taxable income during 2008 and the years thereafter and based on this forecast, it has been assessed as probable that the deferred tax assets resulting from carried forward tax losses in the amount of YTL 300,270 thousand will be realisable; hence, such realisable deferred tax assets 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. The following amounts as at 31 December determined after appropriate offsetting, are shown in the consolidated balance sheet: 2007 Offsetting (52,172) 52,172 -2006 Offsetting (43,217) 43,217 --

Deferred tax assets Deferred tax liabilities Deferred tax assets, net

Gross 162,814 (110,003) 52,811

Net 110,642 (57,831) 52,811

Gross 106,312 (73,083) 33,229

Net 63,095 (29,866) 33,229

Movement in temporary differences during the year Movements in deferred tax assets/(liabilities) were as follows:
Balance 1 Jan 06 Revaluation on land and building Provisions Effect of percentage of completion method Employee severance indemnity Pro-rata basis depreciation expense Amortised cost effect and fair value difference on financial assets and liabilities Other temporary differences Carried forward tax losses Total deferred tax assets/(liabilities) -72,856 31,146 4,194 (3,964) Recognised in Recognised profit or loss in equity -(54,700) (32,901) 3,070 (4,455) (21,728) ----Balance 31 Dec 06 (21,728) 18,156 (1,755) 7,264 (8,419) Recognised in profit or loss -(39) 14,440 2,376 (1,181) Recognised in equity (24,019) ----Balance 31 Dec 07 (45,747) 18,117 12,685 9,640 (9,600)

2,177 (99,695) 132,404 139,118

5,242 98,218 (91,005) (76,531)

(7,630) --(29,358)

(211) (1,477) 41,399 33,229

(20,659) 8,450 18,655 22,042

21,559 --(2,460)

689 6,973 60,054 52,811

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145 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
14 Property and equipment Movements of property and equipment and related accumulated depreciation during the year ended 31 December 2007 were as follows:
Rate Transfer to change Adjustment Net investment difference of for currency revaluation property Transfers joint venture translation increase 31 December (179,222) 17,980 72,985 (1,490) 96,617 2,304,444 -2,852 63,889 (424) -840,075 -30,885 11,244 (187) -191,885 --2,492 45 -86,503 -- (45,845) 441 (28) -108,272 -(5,872) ---25,761 (179,222) -151,051 (2,084) 96,617 3,556,940

Cost 1 January Additions Disposals Land and buildings 2,169,453 148,433 (20,312) Furniture and equipment 731,481 103,383 (61,106) Leasehold improvements 144,406 28,207 (22,670) Motor vehicles 80,429 12,856 (9,319) Construction in progress 18,945 137,350 (2,591) Others 15,575 16,697 (639) Total cost 3,160,289 446,926 (116,637)

Less: Accumulated depreciation 1 January Buildings 365,226 Furniture and equipment 543,826 Leasehold improvements 54,547 Motor vehicles 33,009 Others 9,822 Total accumulated depreciation 1,006,430 Net book value 2,153,859 Less: Impairment in value (187,617) Net carrying value 1,966,242

Rate Current Transfer to change Adjustment Net year investment difference of for currency revaluation charge Disposals property Transfers joint venture translation increase 31 December 37,985 (11,602) --7,799 (135) 17,620 416,893 71,266 (57,596) -(6) 34,830 (245) -592,075 17,151 (21,429) --5,811 --56,080 7,867 (8,616) -6 987 14 -33,267 85 (373) -----9,534 134,354 312,572 (13,003) 299,569 (99,616) -(17,021) (179,222) --(17,021) (179,222) ---49,427 101,624 (8,269) 93,355 (366) (1,718) -(1,718) 17,620 78,997 -78,997 1,107,849 2,449,091 (208,889) 2,240,202

The Groups 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 of 31 December 2007, the revaluation surplus, net of minority interest and deferred taxes, amounting to YTL 826,603 thousand including the fair value differences of investment property and land and buildings (2006: 376,789 YTL thousand) was credited to revaluation surplus account in the equity. Had there been no revaluation on land and buildings, the balances of land and buildings as of 31 December would have been as follows: Historical cost 874,788 1,490,381 Accumulated depreciation (266,555) (251,212) Net Book Value 608,233 1,239,169

31 December 2007 31 December 2006

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Movements of property and equipment and related accumulated depreciation during the year ended 31 December 2006 were as follows:
Transfer to Adjustment investment for currency property Transfers translation (35,335) -2,116 --552 -12,391 207 --2 -- (12,391) ----(35,335) -2,877 Net revaluation increase 31 December 153,022 2,169,453 -731,481 -144,406 -80,429 -18,945 -15,575 153,022 3,160,289 Net revaluation increase 31 December 71,272 365,226 -543,826 -54,547 -33,009 -9,822 71,272 81,750 -81,750 1,006,430 2,153,859 (187,617) 1,966,242

Cost Land and buildings Furniture and equipment Leasehold improvements Motor vehicles Construction in progress Others Total cost

1 January Additions Disposals* 1,793,460 280,103 (23,913) 885,888 29,337 (184,296) 121,877 18,363 (8,432) 108,210 5,726 (33,509) 11,231 25,975 (5,870) 16,214 1,951 (2,590) 2,936,880 361,455 (258,610)

Less: Accumulated depreciation Buildings Furniture and equipment Leasehold improvements Motor vehicles Others Total accumulated depreciation Net book value Less: Impairment in value Net carrying value

1 January 292,036 612,807 45,682 77,660 9,921 1,038,106 1,898,774 (190,500) 1,708,274

Current Transfer to Adjustment year investment for currency charge Disposals* property Transfers translation 46,440 (44,629) --107 58,924 (128,213) --308 9,939 (1,074) ---6,678 (51,312) --(17) 425 (524) ---122,406 239,049 (10,288) 228,761 (225,752) (32,858) 13,171 (19,687) -(35,335) -(35,335) ----398 2,479 -2,479

(*) The disposal amounts include disposals during the year and the effect of change in ownership of interest in joint ventures 15 Intangible assets At 31 December, intangible assets comprised the following: 2007 739,777 242,718 23,381 1,005,876 2006 147,976 -21,965 169,941

Goodwill Concession rights (a) Other intangible assets, net

(a) The partnership established by the Group, Akfen Holding Anonim irketi and TV-SD Teknik Gvenlik ve Kalite Denetim Ticaret Limited irketi, obtained the right to tender vehicle inspection services for 20 years as of 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 is signed on 15 August 2007. TVTURK Kuzey and TVTURK Gney have started their operations. Beginning from sign off date, 189 stable and 38 mobile stations will be operational countrywide within 18 months.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
At 31 December, goodwill comprised the following: Type of Company purchase Garanti Bank Cash Dou GE B.V. Cash NTV * Cash Enformasyon Reklamclk ve Filmcilik Sanayi ve Ticaret Anonim irketi (Enformasyon) Cash Dou naat Cash Kapital Radyo Cash DOA** Cash Acquisition cost 789,884 159,049 98,877 Net asset fair value 7,215,640 61,685 12,081 Purchase date Dec. 2007 Dec. 2007 Apr. 2004 Shares Group 2007 acquired share Net amount 4.65% 335,527 454,357 49.90% 30,781 128,268 97.00% 11,719 87,158 2006 Net amount --87,158

40,091 89,076 9,246 2,735

10,783 1,491,894 72 --

Jul. 2003 Dec. 2006 Dec. 2007 Dec. 2006

70.00% 4.10% 97.00% 50.00%

7,548 61,093 70 --

30,100 27,983 9,176 2,735 739,777

30,100 27,983 -2,735 147,976

*The name of the company has changed from A Yapm Televizyon Programclk Anonim irketi to NTV Radyo ve Televizyon Yayn Anonim irketi (NTV). **The Capital Market Board of Turkey has approved the merger document submitted in relation to merger of the legal entities DOA and Katalonya Oto on 22 August 2007. On 5 September 2007, the Board of Directors of DOA made a call to shareholders for Extraordinary General Assembly to be held on 25 September 2007 in relation to the legal merger. The merger is registered on 28 September 2007 at the Trade Registry. Movements in goodwill during the years ended 31 December were as follows: 2007 147,976 590,529 738,505 2006 117,258 30,718 147,976

Balance at the beginning of the year Additions during the year Balance at the end of the year

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
16 Investments in debt securities At 31 December, debt securities available-for-sale and held-to-maturity comprised the following: 2007 Carrying value 1,202,103 885,984 800,683 521,814 413,350 153,989 45,399 36,362 8,335 22,250 4,090,269 857,531 202,208 141,653 35,242 905 519 6,818 1,244,876 54,691 1,299,567 5,389,836 2006 Carrying value 971,039 441,185 13,825 362,441 274,164 405,798 46,971 -12,904 11,398 2,539,725 711,435 240,688 145,211 36,048 105,386 5,693 11,799 1,256,260 66,381 1,322,641 3,862,366

Face value Debt and other instruments available-for-sale: Government bonds at floating rates Discounted government bonds in YTL Government bonds in YTL Euro bonds Bonds issued by corporations (a) Government bonds in foreign currency Bonds issued by financial institutions Government bonds indexed to consumer price index Bonds issued by foreign governments Others (b) Total securities available-for-sale Debt and other instruments held-to-maturity: Government bonds at floating rates Euro bonds Government bonds in YTL Bonds issued by foreign governments Discounted government bonds in YTL Bonds issued by financial institutions Others Total held-to-maturity portfolio Accrued interest income Total held-to-maturity portfolio Total 1,101,096 1,026,630 785,440 474,357 414,167 149,254 45,368 32,179 8,335

Interest rate range % 18-22 16-17 14-17 5-12 5-18 7 5-12 10 6-13

Latest maturity 2014 2009 2012 2036 2017 2010 2014 2012 2028

815,618 188,250 147,302 35,055 905 523

(c) 9-12 14-17 3 7 7-8

2011 2030 2011 2008 2008 2014

(a) Bonds issued by corporations include credit linked notes with face value amounting to YTL 306,733 thousand (2006: YTL 222,938 thousand) and carrying value amounting to YTL 314,114 thousand (2006: YTL 229,366 thousand) that are linked to the default risk of the Turkish Government. All bonds issued by corporations are valued at amortised cost since these financial assets are not quoted in an active market. The consolidated factoring subsidiarys financial assets available-for-sale portfolio in the banking and finance segment also includes private sector bonds with credit linked bonds at a total face value of USD 10,833,870 and Euro 755,500 (2006:nil) and a total carrying value of YTL 9,257 thousands (2006: nil). (b) In 2006, Garanti Bank recorded 128,181 shares of MasterCard Incorporated at a total nominal value of USD 12.82 acquired free of charge for its credit card marketing activities on MasterCard. As of 27 July 2006, Garanti Bank sold 75,627 shares of MasterCard Incorporated at a total nominal value of USD 7.56 amounting to USD 2,326,627. As of 31 December 2006, Garanti Bank recorded 44,468 shares of MasterCard Incorporated at a nominal value of USD 5.26 and one share of Visa Europe Limited at a nominal value of Euro 10 acquired free of charge for its credit card marketing activities, in its investment securities available-for-sale portfolio.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
(c) The interest rates applied on these securities are floating quarterly based on interest ownership of government bond bids of the government. Interest income on debt and other fixed or floating-income instruments is reflected in interest on securities whereas gains and losses arising from changes in the fair value of cash flow hedges and available-for-sale assets are deferred as a separate component of equity. Government bonds and treasury bills include securities pledged under repurchase agreements with customers amounting to YTL 2,936,975 thousand (2006: YTL 1,551,078 thousand). In 2006, Garanti Bank reclassified certain security investments, previously classified in its securities available-for-sale portfolio, amounting to YTL 765,508 thousand with total face value of YTL 750,764 thousand to its securities held-tomaturity portfolio. Such securities are included in the securities held-to-maturity portfolio above at their fair values of YTL 794,960 thousand as of their reclassification dates. The value increases of such securities amounting to YTL 5,902 thousand are recorded under equity and amortised through the profit or loss up to their maturities as earned. The following table summarizes securities that were deposited as collaterals with respect to various banking transactions: 2007 Carrying value 2,313,043 835,871 162,349 64,233 29,884 23,097 11,364 3,439,841 2006 Carrying value 1,034,384 700,779 157,395 3,699 10,644 20,087 11,622 1,938,610

Deposited at Istanbul Stock Exchange Collateralised to foreign banks Deposited at CBT for interbank transactions Deposited at CBT for foreign currency money market transactions Deposited at Clearing Bank Deposited at CBT for repurchase transactions Others

Face value 2,246,685 772,666 156,117 58,143 29,412 23,998 --

Face value 1,062,451 640,176 151,899 3,567 10,796 21,365 --

17 Investments in equity securities At 31 December, the Group holds equity investments in the following companies: 2007 Investments in associated companies: Volkswagen Dou Tketici Finansman Anonim irketi Eureko Sigorta Anonim irketi (Eureko Sigorta) Yce Auto Anonim irketi VDF Holding Anonim irketi MKB Takas ve Saklama Bankas Anonim irketi (Takasbank) Others Total Carrying value 24,922 8,763 5,367 3,185 3,601 5,952 51,790 % of ownership 49.00 20.00 50.00 49.00 5.83 -Carrying value 18,719 -5,388 6,715 3,047 5,971 39,840 2006 % of ownership 49.00 -50.00 49.00 5.83 --

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150 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
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. As discussed in more detail in note 38, 80 percent shares of a previously consolidated subsidiary, Garanti Sigorta Anonim irketi (Garanti Sigorta), owned by Garanti Bank are sold to Eureko BV on 21 June 2007. After the sale, the remaining 20 percent is 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 has been changed as Eureko Sigorta Anonim irketi. Garanti Konut Finansman Danmanlk Anonim irketi is 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 has been completed on 3 October 2007. Garanti Bank owns 99.99 percent of the company shares. 1/4 of the share capital of the company amounting YTL 226,7 in total is paid. This company is not consolidated in the Garanti Bank and its subsidiaries consolidated financial statements as currently it does not have material operations comparing to the consolidated performance of Garanti Bank and its subsidiaries, instead it is recorded under investments in equity participations in others above and valued at cost. Garanti Filo Ynetimi Hizmetleri ve Ticaret Anonim irketi was established on 10 January 2007 as an operational leasing company, and fully owned and controlled by the leasing subsidiary of Garanti Bank. The companys main objective is to rent cars to corporates, institutional and small and medium size enterprises. The paid share capital is YTL 302.2 thousand as of the issue date of the financial statements. This company is not consolidated in the Garanti Bank and its subsidiaries consolidated financial statements as currently it does not have material operations comparing to the consolidated performance of Garanti Bank and its subsidiaries, instead it is recorded under investments in equity participations in others above and valued at cost. On 1 March 2006, the Garanti Bank participated in Gelien letmeler Piyasalar Anonim irketi by 5 percent for YTL 151 thousands of which YTL 75.5 thousand was paid. The investment in this company is included in others above. 18 Investment property As at 31 December, the movement in the investment property was as follows: 2007 35,335 179,222 411,140 2,795 3,016 631,508 2006 -35,335 ---35,335

Balance at 1 January Transfer from property and equipment Fair value change for transfers from property and equipment Fair value change recognized in profit loss Addition Balance at 31 December

The transfer from property and equipment to investment property comprises a shopping mall. The Group obtained an independent appraisal report for the shopping mall and stated the shopping mall at its fair value.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
19 Other non-current assets At 31 December, other non-current assets comprised the following: 2007 1,483,150 34,114 28,956 21,839 13,217 1,581,276 2006 747,847 29,456 50,249 6,917 5,672 840,141

Reserve deposits at CBT Assets held for sale Long-term trade and other receivables Progress billings Others

At 31 December 2007, 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 YTL 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 YTL and foreign currency liabilities are 6 and 11 percent, respectively. Interest rates applied for reserve requirements are 11.81 percent (2006: 13.12 percent) for YTL deposits and 1.95 and 1.80 percent (2006: 1.73 percent and 2.515 percent) for foreign currency deposits in USD and Euro, respectively. YTL 30,396 thousand (2006: YTL 25,428 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 estates 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. As at 31 December 2007, the rights of repurchase on various tangible assets held for sale amounted to YTL 9,022 thousand (2006: YTL 2,306 thousand). 20 Inventories At 31 December, inventories comprised the following: 2007 197,557 119,175 16,139 3,706 915 22,408 359,900 2006 291,759 134,958 7,050 2,089 34,165 16,654 486,675

Goods in transit Trading goods Raw materials Finished goods Trading property, net of impairment Other inventory

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152 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
21 Accounts receivable At 31 December, accounts receivable comprised the following: 2007 232,126 175,486 149,408 129,292 43,516 5,438 30,084 87,216 852,566 (87,216) 765,350 2006 191,975 105,564 90,159 153,146 97,462 50,416 77,955 95,045 861,722 (95,045) 766,677

Trade receivables Premiums receivable Factoring receivables Forfeiting receivables Contracts receivable Due from customers for contract work (Note 22) Other Doubtful receivables Total accounts receivable Allowance for doubtful receivables Accounts receivable, net

Movements in the allowance for doubtful receivables during the years ended 31 December were as follows: 2007 95,045 2,930 (55) (10,704) 87,216 2006 94,180 420 (1,903) 2,348 95,045

Balance at the beginning of the year Provision for the year Recoveries Exchange rate differences on foreign currency balances Balance at the end of the year

At 31 December 2007, the Group held letters of guarantee amounting to YTL 96,645 thousand (2006: YTL 152,949 thousand) as collateral for its receivables. All the factoring receivables are domestic transactions on recourse basis with maturity of less than three months. 22 Due from/due to customers for contract work At 31 December, the details of uncompleted contracts were as follows: 2007 725,223 83,101 808,324 (823,298) (14,974) 2006 687,020 46,660 733,680 (693,588) 40,092

Total costs incurred on uncompleted contracts Estimated earnings/(costs) Total estimated revenue on uncompleted contracts Less: Billings to date Net amounts due from (due to) customers for contract work

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Due from customers for contract work and due to customers for contract work were included in the accompanying consolidated balance sheets under the following captions: 2007 5,438 (20,412) (14,974) 2006 50,416 (10,324) 40,092

Due from customers for contract work (Note 21) Due to customers for contract work (Note 35)

23 Other current assets At 31 December, other current assets comprised the following: 2007 88,991 87,609 41,227 20,302 124,004 362,133 2006 86,190 55,674 15,322 9,820 33,147 200,153

Taxes and funds to be refunded Prepaid expenses and similar items Accrued exchange gain on derivatives Warranty receivables Others

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
24 Banking loans and advances to customers At 31 December, outstanding loans were as follows: 2007 4,166,011 862,831 698,729 617,392 600,602 596,328 512,840 466,062 446,258 390,378 383,082 295,037 247,369 219,911 171,060 143,026 139,111 132,110 84,801 81,042 72,531 463,564 11,790,075 268,461 12,058,536 581,143 165,046 (245,015) 12,559,710 2006 2,603,989 611,577 281,781 373,225 372,427 407,339 317,198 328,641 287,307 270,563 194,019 186,066 126,903 124,228 97,107 91,809 102,122 59,160 55,275 57,636 42,652 264,344 7,255,368 168,180 7,423,548 324,669 122,685 (152,148) 7,718,754

Consumer loans Service sector Construction Food Energy Financial institutions Transportation and logistics Textile Transportation vehicles and sub-industry Metal and metal products Data processing Tourism Durable consumption Agriculture and stockbreeding Machinery and equipment Electronic, optical and medical equipment Chemistry and chemical product Stone, rock and related products Mining Paper and paper products Plastic products Others Total performing loans Non-performing loans and lease receivables Total gross loans Financial lease receivables, net of unearned income Accrued interest income on loans and lease receivables Allowance for possible losses on loans and lease receivables Banking loans and advances to customers, net

As at 31 December 2007, interest rates on loans granted to customers range between 2-16 percent (31 December 2006: 314 percent) per annum for the foreign currency loans and 16-31 percent (31 December 2006: 14 percent-31 percent) per annum for the YTL loans. The finance leases typically run for a period of one to five years, with transfer of ownership of the leased asset at the end of the lease term. Interest is charged over the period of the lease.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
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: 2007 581,143 4,890 (5,083) 580,950 7,025 2006 324,669 3,449 (2,274) 325,844 3,209

Finance lease receivables, net of unearned income Add: Non-performing lease receivables Less: Allowance for possible losses from finance lease receivables Finance lease receivables, net Accrued interest on lease receivables Analysis of finance lease receivables, gross Due within 1 year Due between 1 and 5 years Finance lease receivables, gross Unearned income Finance lease receivables, net Analysis of finance lease receivables, net Due within 1 year Due between 1 and 5 years Finance lease receivables, net

298,480 374,732 673,212 (92,262) 580,950 249,915 331,035 580,950

179,043 199,057 378,100 (52,256) 325,844 150,667 175,177 325,844

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 YTL 46,480 thousand (31 December 2006: YTL 21,780 thousand). Movements in the allowance account during the years ended 31 December were as follows: 2007 152,148 82,374 (21,354) (10,682) 42,529 245,015 2006 169,025 43,686 (27,980) (21,987) (10,596) 152,148

Balance at the beginning of the year Provision for the year Write-offs Recoveries Effect of change in the ownership interest in joint venture Balance at the end of the year

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
25 Banking loans and advances to banks At 31 December, banking loans and advances to banks comprised the following: 2007 Foreign currency 1,179 66,129 67,308 2006 Total 1,611 76,760 78,371 Total 1,746 38,286 40,032

YTL Loans and advances-demand: Domestic banks Foreign banks 432 10,631 11,063

Loans and advances-time: Domestic banks Foreign banks

79,159 220,978 300,137 311,200 19,388 330,588

302,689 811,533 1,114,222 1,181,530 13,702 1,195,232

381,848 1,032,511 1,414,359 1,492,730 33,090 1,525,820

243,009 362,366 605,375 645,407 2,153 647,560

Total loans and advances to banks Accrued interest income

At 31 December 2007, all time deposits were almost short-term, maturing within one year, with interest rates ranging between 2-7 percent (2006: 3-9 percent) per annum for foreign currency time deposits and 16-21 percent (2006: 16-22 percent) per annum for YTL time deposits. At 31 December 2007, demand deposits at foreign banks included blocked accounts of YTL 331,034 thousand (2006: YTL 65,342 thousand) held against the Diversified Payment Rights securitisations, the legal legislations for the branches operating in foreign countries and the insurance business.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
26 Financial assets at fair value through profit or loss At 31 December, financial assets at fair value through profit or loss comprised the following: 2007 Carrying value 66,256 29,171 28,441 20,986 7,394 5,639 3,178 1,368 15,909 178,342 41 178,383 2006 Carrying value 10,154 16,745 33,187 4,245 12,916 11,853 16,141 66 2,213 107,520 144 107,664

Debt and other instruments at fair value Government bonds in YTL Eurobonds Bonds issued by foreign institutions Gold Bonds issued by corporations Discounted government bonds in YTL Government bonds in foreign currency Government bonds at floating rates Others Listed shares Total

Face value 67,095 24,479 27,798 -6,965 6,894 3,065 1,252

Interest rate range % 14-21 5-12 9 -8-21 16-17 6-7 18-22

Latest maturity 2014 2036 2010 -2010 2009 2010 2014

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 loss, net, whereas gains and losses arising from changes in the fair value of cash flow hedges are reflected as a separate component of equity. For the year ended 31 December 2007, net loss from trading of financial assets amounting to YTL 38,249 thousand (2006: YTL 9,780 thousand) in total is included in trading loss, net. Net loss from trading of financial assets is comprised of the following: Fixed/floating securities Foreign currency differences Derivative transactions Trading loss, net 2007 17,853 (3,292) (52,810) (38,249) 2006 12,437 (1,628) (20,589) (9,780)

As at 31 December 2007, government bonds and treasury bills pledged under repurchase agreements with customers amount to YTL 39,005 thousand (2006: YTL 34,136 thousand). As at 31 December 2007, financial assets at fair value through profit or loss amounting of YTL 551 thousand (2006: YTL 2,050 thousand) are blocked against insurance business related transactions.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
27 Cash and cash equivalents At 31 December, cash and cash equivalents comprised the following: 2007 219,100 731,561 137,258 527 13,927 1,102,373 2006 1,001,687 542,309 85,732 1,259 10,451 1,641,438

Cash at banks Balances with CBT Cash at branches of the Group banks Cash on hand Other liquid assets Total cash and cash equivalents

At 31 December, cash and cash equivalents disclosed in the consolidated statement of cash flows comprise the following: 2007 219,100 1,166,793 137,258 13,928 527 -1,537,606 2006 1,001,687 989,284 85,732 10,451 1,259 (9,999) 2,078,414

Cash at banks Loans and advances to banks with original maturity periods of less than three months Cash at branches of the Group banks Other liquid assets Cash on hand Less: Accrued interest on balances with CBT Cash and cash equivalents in the statement of cash flows

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
28 Capital and reserves For the years ended 31 December, the reconciliation of movement in capital and reserves were as follows:
Capital stock Fair Paid-in held by Share Value Translation Hedging Revaluation capital subsidiaries premium reserve reserve reserve surplus 1,416,954 (53,655) 159,350 50,745 -1,109 313,585

Balances 1 January 2006 Net fair value losses from cash flow hedges, net of minority interest -Net market value gains from available-for-sale portfolio, net of minority interest -Transferred to net income from fair value increases, net of minority interest -Foreign currency translation differences for foreign operations -Net loss on hedge of net investment in foreign operations -Increase in share capital 593,238 Change in revaluation surplus, net of minority interest -Effect of change in ownership interests in joint ventures -Change in minority interest on consolidated subsidiaries -Profit for the period -Balances as at 31 December 2006 2,010,192 Net fair value gains from cash flow hedges, net of minority interest -Net market value gains from available-for-sale portfolio, net of minority interest -Transferred to net income from fair value increases, net of minority interest -Foreign currency translation differences for foreign operations -Net loss on hedge of net investment in foreign operations -Change in revaluation surplus, net of minority interest -Change in minority interest on consolidated subsidiaries -Effect of change in ownership interests in joint ventures -Dividend distribution -Profit for the period -Balances as at 31 December 2007 2,010,192

Retained earnings Total 1,403,677 3,291,765

Minority interest 223,357

Total equity 3,515,122

--

--

--

--

(104)

--

--

(104)

--

(104)

--

--

652

--

--

--

--

652

--

652

--

-- (10,869)

--

--

--

--

(10,869)

--

(10,869)

--

--

--

10,338

--

--

--

10,338

--

10,338

------(53,655)

----

----

(5,758) -----4,580

---(201) --804

--69,304 (6,100) ---

-(593,238) 9,555 -(12,460) 470,003

(5,758) -78,859 (16,569) (12,460) 470,003

----(36,462) --

(5,758) -78,859 (16,569) (48,922) 470,003

-- (10,268) --159,350 --30,260

376,789 1,277,537 3,805,857

186,895 3,992,752

--

--

--

--

8,557

--

--

8,557

--

8,557

--

--

23,283

--

--

--

--

23,283

--

23,283

--------(53,655)

--------159,350

(3,089) ----(3,108) --47,346

-(7,929) 7,039 --358 --4,048

-----(1,317) --8,044

---449,814 --

---19,339 --(22,417) 623,097

(3,089) (7,929) 7,039 469,153

----25,347

(3,089) (7,929) 7,039 469,153 25,347 (4,067) (22,417) 623,097

---

(4,067) (22,417) 623,097

----

826,603 1,897,556 4,899,484

212,242 5,111,726

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160 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
28.1 Paid in capital As at 31 December 2007, the paid-in capital of Dou Holding amounted to YTL 2,010,192 thousand (2006: YTL 2,010,192 thousand) in the consolidated financial statements. The paid-in capital of Dou Holding comprises 820,000,000 shares (2006: 820,000,000 shares) of YTL 0,001 each. The movement in the number of shares issued for the years ended 31 December were as follows: In thousands of ordinary shares 2007 2006 820,000 226,762 -593,238 820,000 820,000

Number of shares at the beginning of the year Issued as a result of transfer from income on sales of investments Number of shares at the end of the year fully paid

At 31 December, the shareholding structure of Dou Holding based on the number of shares is presented below: 2007 Thousands of shares 276,671 258,932 147,143 87,183 31,381 5,264 4,589 3,824 3,824 765 424 820,000 % 33.74 31.58 17.94 10.63 3.83 0.64 0.56 0.47 0.47 0.09 0.05 100.00 Thousands of shares 276,671 258,932 147,143 87,183 31,381 5,264 4,589 3,824 3,824 765 424 820,000 2006 % 33.74 31.58 17.94 10.63 3.83 0.64 0.56 0.47 0.47 0.09 0.05 100.00

Ferit ahenk Filiz ahenk Deniz ahenk Dou Aratrma Gelitirme ve Mavirlik Hizmetleri A Dou Otomotiv Servis ve Ticaret A Dou Hava Tamacl A Dou Sigorta Araclk Hizmetleri A Antur Turizm A Lasa Lastik Sanayi ve Ticaret A Dou Turizm Salk Yatrmlar ve letmecilii Sanayi ve Ticaret A Others

28.2 Reserves The legal reserves, included in retained earnings, are generated by annual appropriations amounting to 5 percent of income disclosed in the Groups 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 first legal reserve is restricted and is not available for distribution as dividend unless it exceeds 50 percent of share capital. In the consolidated financial statements, total legal reserves of the consolidated entities amounted to YTL 163,353 thousand as of 31 December 2007 (2006: YTL 138,020 thousand). The reserves also include certain reserves appropriated by Garanti Bank, for the general banking reserve as well as amounts appropriated for purposes of adding to Garanti Banks statutory reserves.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
28.3 Revaluation surplus For the years ended 31 December, the movements of revaluation surplus were as follows: 2007 376,789 490,137 (24,019) (1,773) 4,808 (19,339) 826,603 2006 313,585 81,750 (21,728) 18,837 (6,100) (9,555) 376,789

Balance at the beginning of the year Revaluation increase in land and buildings Deferred taxes on revaluation surplus Minority portion of revaluation increments, net of deferred taxes Effects of change in ownership interest in joint ventures Depreciation effect on revaluation surplus of prior year Balance at the end of the year 28.4 Minority interest

For the years ended 31 December, movements of the minority interest were as follows: 2007 186,895 3,959 -(65) 1,773 19,680 212,242 2006 223,357 6,789 (12,459) (17,209) (18,837) 5,254 186,895

Balance at the beginning of the year Sales to minority Release of minority interest through dividend distribution Purchases from minority Minority interest of changes in revaluation surplus Minority interest of profit for the period Balance at the end of the year 28.5 Fair value reserve

For the years ended at 31 December, movements of fair value reserve were as follows: 2007 30,260 23,283 (3,108) (3,089) 47,346 2006 50,745 652 (10,268) (10,869) 30,260

Balance at the beginning of the year Net market value gains from available-for-sale portfolio, net of minority interest Effect of changes in ownership interest in joint ventures Transferred to net income from fair value increases, net of minority interest Balance at the end of the year 28.6 Translation reserve

The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations as well as from the translation of liabilities amounting to YTL 234 thousand that hedges the Groups net investment in foreign operations. The financial liabilities designated as hedging instruments amount to Euro 41,366,216 and USD 8,544,488. The hedging relation is effective in achieving of setting the changes in foreign currencies attributable to hedged item due to changes in foreign currency rates.

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162 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
For the years ended 31 December, movements of translation reserve were as follows: 2007 4,580 7,039 (7,929) 358 4,048 2006 (5,758) 10,338 4,580

Balance at the beginning of the year Net loss on hedge of net investment in foreign operations Foreign currency translation differences for foreign operations Effect of changes in ownership interest in joint ventures Balance at the end of the year 28.7 Hedging reserve

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred. For the years ended of 31 December, movements of hedging reserve were as follows: 2007 804 8,557 (1,317) 8,044 2006 1,109 (104) (201) 804

Balance at the beginning of the year Net fair value (gains)/loss from cash flow hedges Effect of changes in ownership interest in joint ventures Balance at the end of the year 29 Long-term bank borrowings At 31 December, long-term borrowings comprised the following: 2007 Original amount in million 2,480,516 299,447

USD EUR Others Total long-term bank borrowings Accrued interest expenses Total Less: Short-term portion of long-term bank borrowings including accrued interest expenses Total

Interest rate (%) 5.27-6.22% 4.65-5.85% 1.85-18.38%

Long-term borrowings 2,889,046 512,115 229,564 3,630,725 51,007 3,681,732 (1,011,857) 2,669,875

2006 Long-term borrowings 1,618,838 416,121 1,718 2,036,677 14,474 2,051,151 (448,470) 1,602,681

On 28 June 2007, Garanti Bank obtained a securitisation (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 15.1 million with 8 years maturity and no financial guarantee. On 5 February 2007, Garanti Bank obtained a 10-year subordinated fixed-rate note of USD 151.1 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 Moodys Investors Service.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
On 24 January 2007, Garanti Bank borrowed YTL 131.5 million from Deutsche Bank AG, London with a maturity of 10 years at 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 YTL 80.4 million in two separate transactions on 28 June and 3 July 2007 with maturity of 10 years for each and pledged USD 100 million of cash collateral for each. The cash collaterals earn annually USD libor floating interest rate. In December 2006, Garanti Bank completed a securitisation (the DPR Securitisation-VII) transaction by issuance of certificates: USD 102 million with a maturity of 10 years and USD 26 million with a maturity of 8 years. Both of the series were issued on an unwrapped basis. In November 2006, Garanti Bank signed a two year syndicated club term-loan facility amounting to USD 179 million as signed with the 23 mandated lead arrangers. In May 2006, Garanti Bank completed a securitisation (the DPR Securitisation-VI) transaction by issuance of certificates: EUR 77 million with a guarantee issued by MBIA Insurance Corp. with maturity of 5 years, USD 77 million with no financial guarantee and a maturity of 7 years and USD 58 million with a guarantee issued by Ambac Assurance Corp. with maturity of 10 years. One of the Garanti Banks subsidiaries obtained a two-year syndication loan amounting USD 63.93 million in March 2006 as signed with 25 banks. In November 2005, Garanti Bank completed a securitisation (the DPR Securitisation-V) transaction by issuance of certificate: USD 47 million with a guarantee issued by CIFG Inc. with a maturity of 7 years, USD 78 million with a guarantee issued by XL Capital Assurance with a maturity of 8 years and USD 39 million with no financial guarantee and a maturity of 8 years. In September 2005, Garanti Bank completed a securitisation (the DPR Securitisation-IV) transaction by issuance of certificate: USD 47 million with a guarantee issued by Financial Guaranty Insurance Corp. with a final maturity of 7 years, USD 47 million with a guarantee issued by Financial Security Assurance with a final maturity of 8 years, USD 66 million with a financial guarantee issued by Assured Guaranty Corp. with a final maturity of 8 years, USD 34 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 securitisation (the DPR Securitisation-III) transaction by issuance of certificate: USD 94 million with a guarantee issued by MBIA Insurance Corp., a final maturity of 8 years. The DPR securitisation is a way of securitising Garanti Banks payment orders created via SWIFT MT 103 or similar payment orders in terms of US Dollar, Euro and GBP accepted as derived primarily from Garanti Banks trade finance and other corporate businesses and paid through foreign depository banks.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
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: 2007 1,011,857 189,010 2,480,865 3,681,732 2006 448,470 530,186 1,072,495 2,051,151

2008 2009 2010 and over Balance at the end of the year

At 31 December, the terms and conditions of outstanding short-term and long-term bank borrowings were as follows: 2007 Carrying amount 3,016,466 1,059,392 576,610 44,725 78,362 72,189 4,847,744 2006 Carrying amount 1,593,135 477,285 636,954 63,315 86,076 16,698 2,873,463

Secured Secured Secured Unsecured Unsecured Unsecured

Currency USD Euro Other USD Euro Other

Nominal interest rate (Libor+1.94-2.40)4.21-7.75 (Euribor+0.20-0.90) 11.4-12.9 (Libor+0.95-2.20)5.41-9.21 (Euribor+0.28-1.33) (Bubor+6.94-9.21)7.00

Year of maturity 2008-2017 2008-2012 2008-2017 2008-2017 2008-2012 2008-2014

Face value 2,858,447 1,108,696 576,610 43,561 84,233 83,445 4,754,992

Face value 1,586,541 644,187 618,541 60,190 87,912 16,742 3,014,113

30 Other non-current liabilities At 31 December, other non-current liabilities comprised the following: 2007 49,742 44,848 30,568 27,706 18,951 1,358 6,228 179,401 2006 --52,864 22,004 14,103 2,215 4,538 95,724

Recognized liability for defined benefit obligations Long-term advances received Technical reserves relating to insurance operations Reserve for severance payments Bearer bonds Lease obligations Others

On 29 September 2006, one of Garanti Banks subsidiaries issued its first FRN (bearer notes) for Euro 7.67 million, Eurodenominated lower tier-2 capital, priced at 99.30, arranged by Deutsche Bank and traded on the alternative market in Frankfurt. 30.1 Recognized liability for defined benefit obligations 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 the Plan to SGK. This transfer, which will be a settlement of Garanti Banks obligation in respect of the pension and medical benefits transferable to SGK, 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 consolidated financial statements for the

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
year ended 31 December 2007, Garanti Bank has 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 SGK, 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 SGK to assume that obligation. The obligation with respect to excess benefits is accounted as a defined benefit plan under IAS 19. Pension and medical benefits transferable to SGK 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 SGK 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 SGK 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 balance sheet 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 SGK, 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 (the 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 publishment 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 SGK within three years following its enactment date. Garanti Bank obtained an actuarial report dated 13 May 2008 from an independent actuary reflecting the principles and procedures on determining the application of transfer transactions in accordance with the New Law. The actuarial balance sheet 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 2007. Garanti Banks obligation in respect of the pension and medical benefits transferable to SGK has been determined as the value of the payment that would need to be made to SGK to settle the obligation at the balance sheet 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 SGK to assume this portion of the obligation.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
2007 Present value of funded obligations - Pension benefits transferable to SGK (obligation measured at the expected transfer amount) - Medical benefits transferable to SGK (obligation measured at the expected transfer amount) Fair value of plan assets Asset surplus in the plan (*) *Asset surplus in this plan will be used as plan assets of the excess benefit plan. Plan assets consist of the following: 2007 104,053 34,198 3,762 142,013 2006 55,481 25,452 8,150 89,083 2006

(109,725) 13,197 142,013 45,485

(68,924) 26,449 89,083 46,608

Securities Land and buildings Cash and due from banks

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. Excess benefits not transferable to SGK The other social rights and payments representing benefits in excess of social security limits are not subject to transfer to SGK. Therefore these excess benefits are accounted as an ongoing defined benefit plan. The amounts recognized in the consolidated balance sheet are as follows: 2007 Present value of defined benefit obligation - Pension benefits - Medical benefits Fair value of plan assets (*) Liability in the consolidated balance sheet (32,964) (62,263) 45,485 (49,742)

* Plan assets are composed of asset surplus in the plan explained in section Pension and medical benefits transferable to SGK. Provision charge for excess benefits amounting to YTL 49,742 thousand has been recognised as employee benefits in the accompanying consolidated income statement for the year ended 31 December 2007. Expense recognised in profit or loss in the year 2007 is as follows: 2007 27,524 49,742 77,266

Total contribution payment Unfunded liability Liability in the balance sheet

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Principal actuarial assumptions used at the reporting date were as follows: 2007 16.77-10.17 8-4.85 1.5 12.8-7.76 8-4.85

Discount rate at 31 December Inflation Future real salary increases Medical cost trend rate Future pension increases

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 is as follows: Percentage of change in defined benefit obligation Pension benefits % Medical benefits % (9.3) (13.2) 11.3 16.8 -9.9 -(7.8)

Assumption change Discount rate +1% Discount rate -1% Medical inflation +10% of CPI Medical inflation -10% of CPI

Overall % (11.9) 14.9 6.4 (5.1)

30.2 Technical reserves relating to insurance operations 2007 Reserve for unearned premiums Gross Reinsurers share Deferred commission net Provision for claims Gross Reinsurers share Life mathematical reserves 8,117 (505) -7,612 1,518 (42) 1,476 21,480 30,568 2006 50,949 (24,460) (639) 25,850 22,625 (13,336) 9,289 17,725 52,864

30.3 Reserve for employee severance indemnity For the years ended 31 December, the movements in the reserve for severance payments were as follows: 2007 22,004 6,911 (3,065) 2,007 (151) 27,706 2006 22,537 5,566 (4,242) (1,857) -22,004

Balance at the beginning of the year Provision for the year Paid during the year Effect of change in ownership interest in joint ventures Disposal due to sale of consolidated affiliate Balance at the end of the year

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
The reserve has been calculated by estimating the present value of future probable obligation of the Group arising from the retirement of the employees. Statistical valuation methods were developed to estimate the enterprises obligation under defined benefit plans. Accordingly, the following statistical assumptions were used in the calculation of the total liability: 2007 5.7% 3.0-8.0% 2006 5.7% 3.0-8.0%

Discount rate The range of turnover rate to estimate the probability of retirement

The computation of the liability is predicated upon retirement pay ceiling announced by the Government. As at 31 December 2007, the ceiling amount was YTL 2,030.19 (2006: YTL 1,857.44). 31 Short-term bank borrowings At 31 December, short-term bank borrowings comprised the following: 2007 926,897 231,825 1,158,722 7,290 1,166,012 2006 632,334 166,856 799,190 23,122 822,312

Foreign banks Domestic banks Accrued interest expenses

As at 31 December 2007, loans and advances from banks included various promissory notes amounting to YTL 327,723 thousand in total with latest maturity of 2008 (2006: YTL 222,867 thousand with latest maturity of 2008) of which YTL 81,872 thousand (2006: YTL 67,809 thousand) are classified under long term debts. As at 31 December 2006, short-term borrowings included one-year syndicated facility to finance pre-export contracts of Garanti Banks corporate customers with a total amount of Euro 153.42 million (equivalent of YTL 281,940 thousand) as signed with the 31 mandated lead arrangers. 32 Banking deposits from banks At 31 December, banking deposits from banks comprised the following: 2007 617,955 113,903 731,858 4,329 736,187 2006 319,833 79,516 399,349 3,054 402,403

Term deposits Payable on demand Accrued interest expenses

At 31 December 2007, banking deposits from banks include both YTL accounts in the amount of YTL 571,944 thousand (2006: YTL 180,392 thousand) and foreign currency denominated accounts in the amount of YTL 159,914 thousand (2006: YTL 230,530 thousand). As at 31 December 2007, interest rates applicable to YTL bank deposits and foreign currency bank deposits varied within ranges of 16-21 percent and 4-11 percent (2006: 14-23 percent and 2-7 percent), respectively.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
33 Banking customer deposits At 31 December, banking customers deposits comprised the following: 2007 Time 5,004,376 3,451,331 1,277,015 90,304 9,823,026 66,550 9,889,576 2006 Total 4,624,889 2,312,880 1,029,777 117,810 8,085,356 42,936 8,128,292

Foreign currency Saving Commercial Public and other Accrued interest expenses

Demand 1,588,615 322,819 495,131 146,049 2,552,614 3 2,552,617

Total 6,592,991 3,774,150 1,772,146 236,353 12,375,640 66,553 12,442,193

At 31 December 2007, interest rates applicable to YTL deposits and foreign currency deposits varied between 16-21 percent (2006: 11-22 percent) and 1-9 percent (2006: 1-11 percent), respectively. As at 31 December 2007, subordinated deposits obtained by the Garanti Banks subsidiary in the Netherlands amounting to Euro 15 million (equivalent of YTL 24,617 thousand) are included in foreign currency time deposits (2006: YTL 22,557 thousand). 34 Obligations under repurchase agreements The consolidated financial entities 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 were as follows: Carrying amount of corresponding liabilities

Carrying value 2007 Financial assets at fair value through profit or loss Investments in debt securities 2006 Financial assets at fair value through profit or loss Investments in debt securities

Fair value of underlying assets

Range of repurchase Repurchase dates price

39,005 2,936,975 2,975,980

39,005 2,937,494 2,976,499

35,197 Jan08-Dec08 2,561,292 Jan08-Feb11 2,596,489

35,524 2,624,916 2,660,440

34,136 1,551,078 1,585,214

34,136 1,550,997 1,585,133

30,892 Mar07-Dec08 1,323,178 Jan07-Feb'11 1,354,070

32,535 1,337,864 1,370,399

As at 31 December 2007, accrued interest on obligations under repurchase agreements amounting to YTL 21,440 thousand (2006: YTL 19,315 thousand) is included in the carrying amount of the corresponding liabilities.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
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 sale of securities under repurchase agreements are treated as liabilities and recorded as obligations under repurchase agreements. As at 31 December 2007, the maturities of the obligations varied from one day to three years and interest rates varied between 4-18 percent (2006: 3-19 percent). 35 Accounts payable At 31 December, accounts payable comprised the following: 2007 433,306 173,243 55,824 3,946 20,412 4,666 691,397 2006 570,278 88,097 -13,637 10,324 3,970 686,306

Trade payables Payables to insurance and reinsurance companies Payables arising from factoring transactions Notes payable Due to customers for contract work (Note 22) Others

36 Other current liabilities At 31 December, other current liabilities comprised the following: 2007 508,684 166,076 67,222 64,747 53,848 35,012 19,825 16,652 14,351 226,405 1,172,822 2006 309,945 66,366 97,081 49,259 94,906 31,295 486 2,561 16,467 117,258 785,624

Blocked accounts against expenditures of card holders Accrued exchange losses on derivatives Import deposits and advances taken Withholding taxes and duties payable Transfer orders Other interest and expense accruals Lease obligations Unearned income Blocked accounts Others

37 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.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
37.1 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 of 31 December: Letters of guarantee Given to suppliers Obtained from banks and given to government organisations Given to customs administrations Given to banks Given to others 2007 634,764 271,354 7,350 122 1,474 915,064 41,174 2006 658,404 117,893 3,991 309 1,796 782,393 96,381

Sureties given

On 8 April 2005, an agreement was signed between TVTURK Kuzey, TVTURK Gney and TVTURK stanbul Tat Muayene stasyonlar letim Anonim irketi (TVTURK Istanbul), ABN Amro Bank NV and Bayerische Hypo-und Vereinsbank AG regarding the financing of a structured loan amounting to USD 552,000 thousand, for which the Group is the guarantor for the principal, interest and other financial obligations thereof. Following the clarification of the legal status of the concession agreement with Privatization Administration regarding the construction and operation of the vehicle inspection stations, the aforementioned financing agreement has been signed on 10 August 2007. With respect to this agreement, out of the total borrowing obtained, an amount of USD 70,150 thousand and USD 281,850 thousand have been utilised by TVTURK Kuzey and TVTURK Gney, respectively, while the remaining USD 200,000 thousand has been utilised by TVTURK stanbul. The Group, as a guarantor, along with other shareholders in TVTURK Kuzey, TVTURK Gney and TVTURK stanbul has given its equity holdings in these companies as collateral. The Groups consolidated subsidiarys shares in the tourism segment have been given as collateral in terms of the borrowing utilised by the respective subsidiary. In terms of the borrowing agreement of Groups consolidated subsidiary in the tourism segment, tangible assets have been kept as collateral at an amount of USD 95,800 thousand on behalf of the respective bank. Additionally, in terms of the related borrowing agreement, one of the tourism segment consolidated subsidiaries profit from hotels has been attached. In accordance with the terms of the borrowing agreement signed by one of the subsidiaries of the Group, in order to finance the acquisition of a vehicle, the respective vehicle has been kept as collateral. 37.2 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.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
At 31 December, commitments and contingent liabilities comprised the following items: 2007 2,952,357 881,276 35,202 26,810 3,895,645 2006 1,881,673 635,625 36,703 15,113 2,569,114

Letters of guarantee Letters of credit Acceptance credits Other guarantees and endorsements

At 31 December 2007, demand deposits at foreign banks included blocked accounts of YTL 331,034 thousand (2006: YTL 65,342 thousand) held against the Diversified Payment Rights securitisations, the legal legislations for the branches operating in foreign countries and the insurance business. As at 31 December 2007, commitments for unused credit limits for credit cards, overdrafts, cheques and loans to customers, and commitments for credit linked notes amount approximately to YTL 4,174,026 thousand (2006: YTL 2,844,635 thousand) in total. As at 31 December 2007, financial assets at fair value through profit or loss amounting of YTL 551 thousand (2006: YTL 2,050 thousand) are blocked against insurance business related transactions. As at 31 December 2007, commitments for the derivative transactions carried out on behalf of customers in the Turkish Derivatives Exchange amounted to YTL 106,976 thousand (2006: YTL 15,729 thousand) in total. As at 31 December 2007, commitments for purchases and sales of foreign currencies under spot, forwards, swaps, future rate agreements, options and forward agreements for gold trading amounted to YTL 4,160,183 thousand (2006: YTL 2,161,105 thousand), approximately 98 percent of which are due within a year.

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173 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
The following table summarizes 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 balance sheet date. Monetary items denominated in a foreign currency are economically hedged using foreign currency derivative contracts. All trading 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 2007, approximately 105 percent of net consolidated balance sheet foreign currency open position was hedged through the use of foreign currency contracts (2006: 106 percent). Notional amount with remaining life of 3 to 6 6 to 12 Over 1 months months year ---3,217 1,959 1,258 ---150 75 75 ---31,278 14,643 16,635 288,418 276,324 12,094 201,363 117,953 83,410 671 671 ----411,625 113,472 525,097 --------1,792 896 896 ---38,496 27,817 10,679 301,205 272,702 28,503 205,049 111,010 94,039 ------412,425 134,117 546,542 ---4,923 4,216 707 ---------3,037 1,396 1,641 89,099 82,380 6,719 385 385 -------88,377 9,067 97,444

31 December 2007 Interest rate derivatives Future rate agreements Purchases Sales Interest rate swaps Purchases Sales Interest rate futures Purchases Sales Other derivatives Securities, shares and index options Purchases Sales Currency derivatives Spot exchange contracts Purchases Sales Forward exchange contracts Purchases Sales Currency/cross currency swaps Purchases Sales Options Purchases Sales Foreign currency futures Purchases Sales Other foreign exchange contracts Purchases Sales Subtotal purchases Subtotal sales Total of transactions

Up to 1 month ---1,155 41 1,114 ---106,868 87,601 19,267

1 to 3 months

Total 3,506 1,753 1,753 15,578 12,474 3,104 1,209 1,209 -138,789 95,059 43,730 263,602 142,334 121,268 268,798 164,158 104,640 2,118,637 1,327,631 791,006 1,178,975 644,477 534,498 32,010 7,704 24,306 139,079 41,934 97,145 2,438,733 1,721,450 4,160,183

3,506 1,753 1,753 6,283 6,258 25 1,209 1,209 -29,979 6,487 23,492

263,602 -142,334 -121,268 -161,025 34,962 103,000 17,302 58,025 17,660 893,103 546,812 580,831 115,394 312,272 431,418 271,535 500,643 155,593 259,536 115,942 241,107 -31,339 -7,033 -24,306 139,079 -41,934 -97,145 -1,111,334 414,972 725,033 739,761 1,836,367 1,154,733

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174 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Notional amount with remaining life of 3 to 6 6 to 12 Over 1 months months year ------464 379 85 ---7,356 4,281 3,075 157,839 130,865 26,974 17,539 11,654 5,885 1,957 626 1,331 ---147,805 37,350 185,155 17,840 17,840 -130 130 -------2,667 1,692 975 230,619 25,984 204,635 10,887 4,168 6,719 ------49,814 212,329 262,143 ---1,258 1,258 -------1,334 1,283 51 58,849 14,915 43,934 ---------17,456 43,985 61,441

31 December 2006 Interest rate derivatives Future rate agreements Purchases Sales Interest rate swaps Purchases Sales Interest rate futures Purchases Sales Currency derivatives Spot exchange contracts Purchases Sales Forward exchange contracts Purchases Sales Currency/cross currency swaps Purchases Sales Options Purchases Sales Foreign currency futures Purchases Sales Other foreign exchange contracts Purchases Sales Subtotal purchases Subtotal sales Total of transactions

Up to 1 month ---3,238 3,238 ---40,507 15,393 25,114 143,698 62,707 80,991 712,573 366,816 345,757 168,080 100,061 68,019 ---8,208 4,296 3,912 549,273 527,031 1,076,304

1 to 3 months

Total 17,840 17,840 -4,670 1,410 3,260 2,842 1,337 1,505 40,507 15,393 25,114 183,302 85,185 98,117 1,633,819 650,968 982,851 248,123 157,722 90,401 21,794 6,274 15,520 8,208 4,296 3,912 940,425 1,220,680 2,161,105

---44 22 22 2,378 958 1,420 ---28,247 15,222 13,025 473,939 112,388 361,551 51,617 41,839 9,778 19,837 5,648 14,189 ---176,077 399,985 576,062

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175 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
The breakdown of such commitments outstanding at 31 December, by type, was as follows: 2007 Purchase Currency swap agreements for hedging purposes Interest rate and foreign currency options Spot foreign currency transactions Forward agreements for customer dealing activities Forward rate agreements, foreign currency and interest rate futures Options for customer dealing activities Forward agreements for hedging purposes Forward agreements for gold trading Currency swap agreements for customer dealing activities Spot foreign currency transactions for customer dealing activities Interest rate swap agreements 1,292,359 652,899 142,334 15,212 10,665 86,637 148,946 41,934 35,271 -12,476 2,438,733 Sale 771,082 540,963 121,268 59,708 26,059 37,263 44,934 97,145 19,925 -3,103 1,721,450 Purchase 603,781 148,606 15,393 61,374 25,450 9,117 23,811 4,296 47,188 -1,409 940,425 2006 Sale 966,707 78,761 25,114 35,709 17,025 11,640 62,408 3,912 16,143 -3,261 1,220,680

37.3 Commitments and contingencies applicable to the business segments As at 31 December 2007, commitment for uncalled capital of affiliated companies amounted approximately to YTL 17,350 thousand (2006: YTL 16,723 thousand). 38 Related party disclosures For 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 arms-length basis during the normal course of business. 38.1 Related party balances At 31 December, the Group had the following balances outstanding from its related parties: 2007 32 26,821 5,921 5,909 2006 24 13,986 177,106 595

Banking customers deposits Due from related parties Due to related parties Letters of guarantee

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176 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
38.2 Related party transactions For the years ended 31 December, the Group earned income amounts and was charged for expense amounts in relation to transactions with its related parties as summarised below: 2007 6,749 2006 6,473

Revenues 38.3 Transactions with key management personnel

On a consolidated basis, key management costs included in general and administrative expenses for the years ended 31 December 2007 and 2006 amounted to YTL 14,901 thousand and YTL 33,120 thousand, respectively. 38.4 Other related party disclosures Sale of subsidiaries and restructuring in the banking and finance segment Dou Holding signed an Agreement (the Agreement) with General Electric (GE) on 24 August 2005 for the sale of 53,550,000,000 shares representing 25.5 percent of the Garanti Banks issued share capital. According to the terms of the Agreement, certain subsidiaries, associates and real estates were to be taken over by Dou Holding at a total price of YTL 958 million calculated based on the consolidated financial statements as at 31 March 2005 of which 50 percent was paid of the closing date and the remaining to be paid in two equal installments of the first and second anniversaries. Accordingly, the shares of Voyager Mediterranean Turizm Endstri ve Ticaret Anonim irketi (Voyager), Sititur Turizm Tamaclk Organizasyon Anonim irketi (Sititur), Lasa Lastik Sanayi ve Ticaret Anonim irketi (Lasa), Krfez Havaclk Turizm ve Ticaret Anonim irketi (Krfez Havaclk), ahintur ahinler Otelcilik Turizm Yatrm letmeleri Anonim irketi (ahintur), and Dou Turizm Salk Yatrm letmeleri Ticaret Anonim irketi (Dou Turizm), having a total book value of YTL 508,432 thousand were purchased by Dou Holding at a total sale price of YTL 503,490 thousand in December 2005. Subsequent to the year end 2005, the assets that are categorised as the second group representing certain subsidiaries, namely Garanti Turizm Yatrm ve letmeleri Anonim irketi (Garanti Turizm) and Doc Finance SA (Doc Finance) with a total book value of YTL 31,556 thousand and certain real estates either in use or held for sale having a total book value of YTL 242,261 thousand were altogether purchased by Dou Holding on 17 April 2006. YTL 100,000 thousand of the total purchase price amounting to YTL 273,397 thousand was paid on the date of purchase and the remaining was to be paid in two equal installments, each amounting to YTL 86,698.5 thousand, on 22 December 2006 and 24 December 2007. In December 2006, the first installments of the first and second group asset purchases were fully paid by Dou Holding. In 2007, the remaining payments were made by Dou Holding. Garanti Bank has sold a real estate, a building in Maslak to Dou Holding on 15 August 2006. USD 20 million of the sales price of USD 32 million was collected on the date of sale. The remaining balance was paid during 2007 in three installments. Acquisition of interest in joint ventures and subsidiaries On 2 November 2006, the Board of Directors of Garanti Bank accepted the purchase offer jointly made by GE Real Estate Europe (GE Real Estate) and Dou Holding to acquire 50.98 percent ownership interest held in the publicly traded real estate investment company, Dou GE Gayrimenkul Yatrm Ortakl Anonim irketi (Dou GE GYO) (formerly named as Garanti Gayrimenkul Yatrm Ortakl Anonim irketi). The transaction allowed the sale of the total 1,475,410 A Type Dou GE GYO shares, of which 737,705 were purchased by Dou Holding and 737,705 were purchased by GE Real Estate and

Dou Group Annual Report 2007

177 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
the total 36,147,535 B Type Dou GE GYO shares, of which 18,066,240 were purchased by Dou Holding and 18,081,295 were purchased by GE Real Estate. The transaction value was calculated at YTL 1.928 per share and was paid in cash at the time of the transfer of the shares. Garanti Banks authorised bodies accepted this offer on 2 November 2006 and the sale took place on 1 December 2006. Dou GE GYO is continued to be consolidated proportionately in accordance with IAS 31 Interest in Joint Ventures in the accompanying consolidated financial statements. Sale of shares in the proportionately consolidated entity An agreement has been reached between Garanti Bank and Eureko BV (The Netherlands) on 21 March 2007 for the sale of 80 percent shares in Garanti Sigorta, representing nominal shares of YTL 48,000,000 for Euro 365,000,000. The share transfer is completed on 21 June 2007. The gain on sale of this proportionately consolidated entity is YTL 137,964 thousand before tax. The tax expense effect of this gain amounts to YTL 7,633 thousand as per the local tax regulation. As part of the sale transactions mentioned above, Garanti Bank has a sale option on the remaining shares of Garanti Sigorta Anonim irketi. As at 31 December 2007, Eureko Sigorta had YTL 2,035 thousand (2006: YTL 1,758 thousand) of interest income on deposits at banks, YTL 4,160 thousand (2006: YTL 5,460 thousand) of commission and fee income, YTL 133 thousand (2006: YTL 291 thousand) of other expense and YTL 39 thousand (2006: YTL 40 thousand) of other income from intercompany transactions that were eliminated in the accompanying consolidated financial statements during consolidation process. Eureko Sigorta contributed YTL 10,525 thousand (2006: YTL 5,214 thousand) to the Groups net operating cash flow and paid YTL 318 thousand (2006: received YTL 716 thousand) in respect of investing activities for the year ended 31 December 2007. An agreement has been reached between Garanti Bank and Eureko BV (Holland) on 21 March 2007 for the sale of 15 percent shares in Garanti Emeklilik, representing nominal shares of YTL 7,500,000 for Euro 100,000,000. The share transfer is completed on 21 June 2007. The gain on sale of shares of this proportionately consolidated entity is YTL 41,998 thousand before tax. As part of the sale transactions mentioned above, Eureko BV has purchase and sale options on the shares of Garanti Emeklilik. Sale of subsidiary On 18 October 2007, Dou Holding has decided to sell its 65.999 shares of Boyabat Elektrik retim ve Ticaret Anonim irketi to Doan Enerji Yatrmlar Sanayi ve Ticaret Anonim irketi at an amount of USD 952,379, one of its shares to Adilbey Holding Anonim irketi for USD 1 and 66.000 shares to Unit Investment N.V. for an amount of USD 952,380. On 4 December 2006, DOA purchased 49.995 percent and 0.005 percent ownership interest held by Orhan Refik Yce and Yce Motor Motorlu Aralar Ticaret A, respectively in Katalonya Oto Servis ve Ticaret A.

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178 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
39 Financial instruments 39.1 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 2007 3 to 6 6 to 12 months months ---128,083 --787,197 2,419 29,157 -946,856 ---114,468 -1,410,971 268,979 36,934 -1,831,352 2,778,208 --31,478 45,071 971 -2,688,265 187,049 29,731 -2,982,565 --94 61,467 -3,636,171 132,699 60,609

Monetary assets New Turkish Lira: Investments in debt securities Other non-current assets Deferred tax assets Accounts receivable Due from related parties Other current assets Banking loans and advances to customers Banking loans and advances to banks Financial assets at fair value through profit or loss Cash and cash equivalents Total YTL monetary assets Foreign Currencies: Investments in debt securities Other non-current assets Deferred tax assets Accounts receivable Other current assets Banking loans and advances to customers Banking loans and advances to banks Financial assets at fair value through profit or loss Cash and cash equivalents Total foreign currency monetary assets Total monetary assets

Up to 1 month ---195,391 1,425 49,769 2,207,813 134,615 871 174,020 2,763,904 ---40,597 299,137 307,694 561,226 13,592 926,250

1 to 3 months

Over 1 year 4,025,794 1,075,455 77,024 -------5,178,273 1,364,042 505,821 2,046 ---170,690 -1,673 2,044,272 7,222,545

Total 4,025,794 1,075,455 108,502 524,141 26,821 62,996 6,453,022 330,588 59,836 174,450 12,841,605 1,364,042 505,821 2,140 241,209 299,137 6,106,688 1,195,232 118,547 927,923 10,760,739 23,602,344

---155,596 24,425 13,227 769,747 6,505 77 430 970,007 ---24,677 -751,852 61,638 7,412 --

2,148,496 845,579 4,912,400 1,815,586

3,891,040 6,873,605

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179 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
31 December 2007 3 to 6 6 to 12 months months ---102,293 97,001 63,073 195,807 -48,527 416,650 923,351 ---1,118,962 98,117 98,625 146,992 -964 35,433 1,499,093 2,422,444 355,764 ----49,704 172,691 96,183 --23,564 342,142 ---149,256 50,906 -6,458 --27,373 233,993 576,135 6,297,470

Monetary liabilities New Turkish Lira Long-term borrowings Deferred tax liabilities Other non-current liabilities Short-term and short-term portion of long-term bank borrowings Banking customer deposits and banking deposits from banks Obligations under repurchase agreements Accounts payable Due to related parties Taxes payable on income Other current liabilities Total YTL monetary liabilities Foreign Currencies Long-term bank borrowings Deferred tax liabilities Other non-current liabilities Short-term and short-term portion of long-term bank borrowings Banking customer deposits and banking deposits from banks Obligations under repurchase agreements Accounts payable Due to related parties Taxes payable on income Other current liabilities Total foreign currency monetary liabilities Total monetary liabilities Liquidity position/(gap)

Up to 1 month ---70,304 5,340,976

1 to 3 months

Over 1 year 234,001 52,475 177,611 ------464,087 2,435,874 5,356 1,790 -------2,443,020 2,907,107 4,315,438

Total 234,001 52,475 177,611 343,085 7,055,430 2,250,757 347,979 5,921 48,812 962,625 11,478,696 2,435,874 5,356 1,790 1,834,784 6,122,950 345,732 343,418 -1,097 210,197 11,301,198 22,779,894 822,450

---170,488 1,567,749

1,983,912 31,081 25,500 30,489 5,921 --285 178,526 343,885 7,605,139 2,143,977 ---143,527 5,342,417 145,922 70,501 --52,721 ---423,039 631,510 101,185 119,467 -133 94,670

5,755,088 1,370,004 13,360,227 3,513,981 (8,447,827) (1,698,395)

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180 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
31 December 2006 3 to 6 6 to 12 months months ---77,858 -16,206 266,611 256 960 -361,891 --22,617 20,398 312,085 62,142 3,279 -420,521 782,412 ---18,584 -62,749 1,587,658 -8,423 -1,677,414 --142,908 23,195 2,520,196 52,396 90,794 -2,829,489 4,506,903

Monetary assets New Turkish Lira: Investments in debt securities Other non-current assets Deferred tax assets Accounts receivable Due from related parties Other current assets Banking loans and advances to customers Banking loans and advances to banks Financial assets at fair value through profit or loss Cash and cash equivalents Total YTL monetary assets Foreign Currencies: Investments in debt securities Other non-current assets Accounts receivable Other current assets Banking loans and advances to customers Banking loans and advances to banks Financial assets at fair value through profit or loss Cash and cash equivalents Total foreign currency monetary assets Total monetary assets

Up to 1 month ---221,343 13,986 33,388 1,680,760 45,361 1,153 244,632 2,240,623 --9,750 21,028 255,957 415,158 1,757 1,396,170

1 to 3 months

Over 1 year 2,460,735 350,896 63,095 ----3,735 --2,878,461 1,401,631 511,935 ---29,127 --1,942,693 4,821,154

Total 2,460,735 350,896 63,095 497,379 13,986 127,237 4,078,882 65,549 10,860 245,268 7,913,887 1,401,631 511,935 269,298 72,916 3,639,872 582,011 96,804 1,396,170 7,970,637 15,884,524

---179,594 -14,894 543,853 16,197 324 636 755,498 --94,023 8,295 551,634 23,188 974 --

2,099,820 678,114 4,340,443 1,433,612

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181 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
31 December 2006 3 to 6 6 to 12 months months ---18,228 14,197 -38,109 -33,464 139,042 243,040 --434,295 93,271 23,190 222,961 -528 47,552 821,797 1,064,837 (282,425) ---12,363 110,329 13,813 39,068 --36,100 211,673 --400,220 188,295 33,440 56,884 --207,273 886,112 1,097,785 3,409,118

Monetary liabilities New Turkish Lira Long-term bank borrowings Deferred tax liabilities Other non-current liabilities Banking customer deposits and banking deposits from banks Short-term and short-term portion of long-term bank borrowings Obligations under repurchase agreements Accounts payable Due to related parties Taxes payable on income Other current liabilities Total YTL monetary liabilities Foreign Currencies Long-term bank borrowings Deferred tax liabilities Other non-current liabilities Short-term and short-term portion of long-term bank borrowings Banking customer deposits and banking deposits from banks Obligations under repurchase agreements Accounts payable Due to related parties Taxes payable on income Other current liabilities Total foreign currency monetary liabilities Total monetary liabilities Liquidity position/(gap)

Up to 1 month ---3,329,712 142,020 709,950 25,114 89,838 -100,808 4,397,442 --59,249 4,137,997 43,595 98,390 --83,099

1 to 3 months

Over 1 year -29,766 9,952 1,161 -199,339 ----240,218 1,602,681 100 85,777 --79,279 -5,218 --1,773,055 2,013,273 2,807,881

Total -29,766 9,952 3,608,591 272,885 1,102,243 133,590 178,012 33,733 314,370 5,683,142 1,602,681 100 85,777 997,897 4,922,104 251,827 552,716 5,218 528 471,254 8,890,102 14,573,244 1,311,280

---247,127 6,339 179,141 31,299 88,174 269 38,420 590,769 --104,133 502,541 72,323 174,481 --133,330

4,422,330 986,808 8,819,772 1,577,577 (4,479,329) (143,965)

Dou Group Annual Report 2007

182 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
39.2 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; 2007 1,102,373 765,350 26,821 14,085,530 5,389,836 178,383 185,533 1,559,437 23,293,263 2006 1,641,438 766,677 13,986 8,366,314 3,862,366 107,664 58,289 855,914 15,672,648

Cash and cash equivalents Trade receivables Due from related parties Banking loans and advances to customers and banks Investment in debt securities Financial assets at fair value through profit or loss Other current assets* Other non-current assets*

(*) 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: 2007 114,084 43,011 37,432 34,392 918 81,327 311,164 2006 118,463 147,878 41,270 28,018 823 81,356 417,808

Retailers Contract receivables Advertising agencies End-users Tourism agencies Other

The maximum exposure to credit risk for trade receivables at the reporting date by geographic concentration was as follows; Carrying amount 2007 2006 Turkey 272,849 374,837 Morocco 21,057 34,035 Ukraine 7,010 1,421 Egypt 4,124 -Euro zone 470 331 Other 5,654 7,184 311,164 417,808

Dou Group Annual Report 2007

183 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Impairment losses The aging of trade receivables at the reporting date was; 2007 Gross 290,990 11,499 9,257 86,634 398,380 2007 Impairment 1,200 9 1,127 84,880 87,216 2006 Gross 390,011 10,905 6,733 105,204 512,853 2006 Impairment --420 94,625 95,045

Not past due Past due 0-30 days Past due 31-120 days More than one year Total

Segments other than banking and finance segment including the DNetherland Holding B.V. figures The following tables are the contractual maturities of financial liabilities, including interest payments and excluding the impact of netting agreements: 2007 Carrying amount Non-derivative financial liabilities Secured bank borrowings 1,195,188 Unsecured bank borrowings 195,378 Finance lease liabilities 21,183 Accounts payable 490,866 Derivative financial liabilities Forward contracts Contractual cash flows (1,260,767) (212,139) (21,183) (490,866) 6 months or less (340,370) (50,539) (2,238) (388,225) 6-12 months (134,897) (13,473) (2,273) (102,641) 1-2 years (85,496) (52,334) (16,614) -2-5 years (593,361) (89,491) (58) -More than 5 years (106,643) (6,302) ---

4,872 1,907,487

(5,703) (1,990,658)

(320) (781,692)

(320) (253,604) 2006

(640) (155,084)

(1,920) (684,830)

(2,503) (115,448)

Carrying amount Non-derivative financial liabilities Secured bank borrowings 250,640 Unsecured bank borrowings 166,768 Finance lease liabilities 2,701 Accounts payables 584,529 1,004,638

Contractual cash flows (291,566) (180,192) (2,701) (584,529) (1,058,988)

6 months or less (46,243) (73,545) (2,635) (488,577) (611,000)

6-12 months (162,355) (33,192) -(95,952) (291,499)

1-2 years (40,432) (25,655) (66) -(66,153)

2-5 years (18,940) (39,931) --(58,871)

More than 5 years (23,596) (7,869) --(31,465)

Dou Group Annual Report 2007

184 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Exposure to credit risk for banking and finance segment Banking loans and advances given to customers 2007 2006 268,461 168,180 (198,535) (130,368) 69,926 37,812 -(46,480) (46,480) 18,771 18,771 12,537,292 (19,799) 12,517,493 12,559,710 -(21,780) (21,780) --7,731,549 (28,827) 7,702,722 7,718,754

Individually impaired Allowance for impairment Carrying amount Collectively impaired Allowance for impairment Carrying amount Past due but not impaired

Neither past due nor impaired Loans with renegotiated terms Carrying amount Total carrying amount

At 31 December 2007 and 2006, Garanti Bank has no allowance for loans and advances to banks. Sectoral and geographical concentration of impaired loans for banking and finance segment Garanti Bank and its subsidiaries monitor concentrations of credit risk by sector and by geographic location. An analysis of concentrations of non-performing loans and lease receivables is shown below: 2007 176,340 23,139 15,904 7,347 7,022 6,627 3,673 3,492 2,981 2,473 19,463 268,461 2007 176,340 23,139 15,904 7,347 45,731 268,461 2006 98,207 17,041 14,723 3,586 4,385 3,962 2,532 2,381 1,402 2,036 17,925 168,180 2006 98,207 17,041 14,723 3,586 34,623 168,180

Consumer loans Textile Chemistry and chemical products Food Service sector Construction Durable consumption Metal and metal products Agriculture and stockbreeding Financial institutions Others Total non-performing loans and finance lease receivables

Turkey Holland Germany Romania Others Total non-performing loans and finance lease receivables

Dou Group Annual Report 2007

185 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Past due but not impaired loans for banking and finance segment 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 customers current activities, assets and financial position. The breakdown of performing cash and non-cash loans and advances to customers by type of collateral is as follows: 2007 Cash loans Secured loans: Secured by mortgages Secured by government institutions or government securities Secured by cash collateral Guarantees issued by financial institutions Other collateral (pledge on assets, corporate and personal guarantees, promissory notes) Unsecured loans Total performing loans and finance lease receivables Non-cash loans Secured loans: Secured by cash collateral Secured by mortgages Guarantees issued by financial institutions Other collateral (pledge on assets, corporate and personal guarantees, promissory notes) Unsecured loans Total non-cash loans 2006

2,367,915 440,594 354,768 56,318 5,850,101 3,143,836 12,213,532

1,328,591 304,537 279,870 66,829 3,597,344 2,160,269 7,737,440

149,942 52,553 1,138 2,860,044 831,967 3,895,644

81,030 32,224 6,688 1,906,497 542,675 2,569,114

An estimate of the fair value of collateral held against non-performing loans and receivables is as follows: 2007 52,778 50,265 26,921 107 138,390 268,461 2006 26,659 39,622 6,100 126 95,673 168,180

Mortgages Promissory notes and surety Pledge assets Cash collateral Unsecured

The amounts reflected in the tables above represent the maximum accounting loss that would be recognized at the balance sheet date if counterparties failed completely to perform as contracted and any collateral or security proved to be of no value. The amounts, therefore, greatly exceed expected losses, which are included in the allowance for uncollectibility.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
39.3 Market risk (i) Interest rate risk Profile As at 31 December, the interest rate profile of the Groups interest-bearing financial instruments was as follows: 2007 Fixed rate instruments Financial assets Financial liabilities 4,703,441 (2,599,594) 2,103,847 2006 4,014,786 (1,682,319) 2,332,467

Variable rate instruments Financial assets Financial liabilities

2,131,277 (2,248,150) (116,873)

1,682,474 (1,191,144) 491,330

Cash flow sensitivity analysis for variable rate instruments for segments other than banking and finance segment 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 2006. Profit or loss 100 bp increase decrease 111,945 (111,945) 111,945 (111,945) Profit or loss 100 bp increase decrease 2,541 (2,541) 2,541 (2,541) Equity 100 bp increase decrease ----Equity 100 bp increase decrease -----

31 December 2007 Variable rate instruments Cash flow sensitivity (net)

31 December 2006 Variable rate instruments Cash flow sensitivity (net)

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
The following table indicates the effective interest rates by major currencies for the major balance sheet components of the Group for the years ended 31 December: 2007 USD% Assets Banking loans and advances to banks Debt and other fixed or floating income instruments Banking loans and advances to customers Liabilities Banking deposits Foreign currency Bank Saving Commercial Public and other deposits Obligations under repurchase agreements Bank borrowings 4.23-5.51 2.25-12.39 483-13.00 Euro% 3.70-6.27 1.05-10.63 4.00-10.79 YTL% 16.00-21.58 10.00-20.78 16.45-30.82 Other currencies% 8.45-9.70 3.50-5.25 2.31-16.00

1.00-6.50 3.75-6.72 ---5.06-5.83 5.27-6.22

1.50-5.00 3.50-7.07 ---4.11-5.06 4.91-5.85

-13.00-18.00 18.52-19.75 18.99-19.75 18.53 15.44 13.66-18.38 2006

0.50-9.25 3.75-6.50 ----1.85

USD% Assets Banking loans and advances to banks Debt and other fixed or floating income instruments Banking loans and advances to customers Liabilities Banking deposits Foreign currency Bank Saving Commercial Public and other deposits Obligations under repurchase agreements Bank borrowings 3.25-8.00 7.95-9.25 7.00-14.33

Euro% 2.75-4.75 6.39-6.50 5.73-9.93

YTL% 17.34-21.50 20.00-23.06 14.00-25.16

Other currencies% 5.00-9.20 4.00-13.36 8.00-13.00

4.85-6.75 5.25-7.35 ---5.26-5.45 5.50-6.70

2.25-5.00 3.33-5.67 ---3.33 3.97-4.41

-15.00-18.56 19.00-19.84 18.13-21.03 20.08 14.20-17.14 14.69-19.83

0.50-9.00 2.00-6.25 ------

(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 and Russia. The measurement currencies of these operations are Euro and US Dollars. As the currency in which the Group presents its consolidated financial statements is YTL, the consolidated financial statements are affected by currency exchange rate fluctuations against YTL.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
At 31 December, the currency risk exposures of the Group were as follows: 2007 Other currencies 19,048 5,491 561 55,822 52,687 265,646 20,418 -16,204 435,877 -5,356 -71,715 -6,605 246,308 -24,380 -55 50,944 405,363 30,514 -30,514

USD Foreign currency monetary assets Investments in debt securities Other non-current assets Deferred tax assets Accounts receivable Other current assets Banking loans and advances to customers Banking loans and advances to banks Financial assets at fair value through profit or loss Cash and cash equivalents Total foreign currency monetary assets Foreign currency monetary liabilities Long-term bank borrowings Deferred tax liabilities Other non-current liabilities Short-term bank borrowings Short-term portion of long-term bank borrowings Banking deposits from banks Banking customer deposits Obligations under repurchase agreements Accounts payable Due to related parties Taxes payable on income Other current liabilities Total foreign currency monetary liabilities Net On Balance Sheet Position Off Balance Sheet Net Notional Position Net Long/(Short) Position 1,294,424 73,782 -150,463 25,815 3,446,843 983,618 103,355 225,053 6,303,353 2,117,179 -200 135,672 808,339 88,932 3,316,147 305,731 11,635 --95,993 6,879,828 (576,475) 328,587 (247,888)

Euro 50,570 426,548 1,579 34,924 220,635 2,394,199 191,196 15,192 686,666 4,021,509 318,695 -1,590 617,650 201,409 64,377 2,400,581 40,001 307,403 -1,042 63,261 4,016,009 5,500 101,908 107,408

Total 1,364,042 505,821 2,140 241,209 299,137 6,106,688 1,195,232 118,547 927,923 10,760,739 2,435,874 5,356 1,790 825,037 1,009,748 159,914 5,963,036 345,732 343,418 -1,097 210,198 11,301,200 (540,461) 430,495 (109,966)

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
2006 Other currencies 8,750 -77,126 58,219 90,588 10,715 4,612 18,173 268,183 1,567 15,777 5 174 9,346 162,380 --17,019 --11,077 217,345 50,838 -50,838

USD Foreign currency monetary assets Investments in debt securities Other non-current assets Accounts receivable Other current assets Banking loans and advances to customers Banking loans and advances to banks Financial assets at fair value through profit or loss Cash and cash equivalents Total foreign currency monetary assets Foreign currency monetary liabilities Long-term bank borrowings Short-term bank borrowings Deferred tax liability Other non-current liability Banking deposits from banks Banking customer deposits Short term portion of long-term bank borrowings Obligations under repurchase agreements Accounts payable Due to related parties Taxes payable on income Other current liabilities Total foreign currency monetary liabilities Net On Balance Sheet Position Off Balance Sheet Net Notional Position Net Long Position 1,326,165 44,352 152,392 2,651 2,165,658 363,982 79,488 845,947 4,980,635 1,367,876 208,592 -85,109 136,983 2,844,068 331,244 224,912 24,037 5,218 -359,218 5,587,257 (606,622) 2,008,709 1,402,087

Euro 66,716 467,583 39,780 12,046 1,383,626 207,314 12,704 532,050 2,721,819 233,238 329,629 95 494 84,201 1,685,126 112,655 26,915 511,660 -528 100,959 3,085,500 (363,681) 551,075 187,394

Total 1,401,631 511,935 269,298 72,916 3,639,872 582,011 96,804 1,396,170 7,970,637 1,602,681 553,998 100 85,777 230,530 4,691,574 443,899 251,827 552,716 5,218 528 471,254 8,890,102 (919,465) 2,559,784 1,640,319

For the purposes of the evaluation of the table above, the figures represent the YTL equivalent of the related hard currencies. At 31 December 2007, approximately 105 percent (2006: 106 percent) of the amounts shown in the table above, are economically 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, the Group ensures that the net exposures are kept to an acceptable level by buying and selling foreign currencies at spot rates when considered appropriate. The net amount of Russian Rubles denominated assets and liabilities as included in the above table at their YTL equivalents, is a net asset of YTL 30,231 thousand at 31 December 2007 (2006: YTL 26,611 thousand).

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190 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Sensitivity analysis A 10 percent weakening of YTL 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 2006. 31 December 2007 USD Euro Others 31 December 2006 USD Euro Others Equity (5,283) 4,343 2,434 (613) 2,119 3,294 Profit or loss (63,578) (4,910) 8,435 40,551 (47,819) 15,389

A 10 percent of strengthening of YTL 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. 39.4 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. 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 balance sheet instruments are not materially different than their recorded values except for security investments. These balance sheet instruments include loans and advances to banks and customers, 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 2007, the fair value of banking loans and advances to customers was YTL 12,648,489 thousand (2006: YTL 7,676,074 thousand), whereas the carrying amount was YTL 12,559,710 thousand (2006: YTL 7,718,754 thousand). As at 31 December 2007, the fair value of investment in debt securities was YTL 5,386,293 thousand (2006: YTL 3,846,249 thousand), whereas the carrying amount was YTL 5,389,836 thousand (2006: YTL 3,862,366 thousand). 40 Use of estimates and judgments Management discussed with the Audit Committee the development, selection and disclosure of the Groups critical accounting policies and estimates, and the application of these policies and estimates. These disclosures supplement the commentary on basis of preparation (see note 2d).

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191 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Key sources of estimation uncertainty Allowance for credit losses Assets accounted for at amortized cost are evaluated for impairment on a basis described in accounting policy note 3m. The specific counterparty component of the total allowances for impairment applies to claims evaluated individually for impairment and is based upon managements 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 counterpartys 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. 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 Groups accounting policies Critical accounting judgements made in applying the Groups accounting policies include: Financial asset and liability classification The Groups 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 3d 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 3d 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 3d 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 Groups consolidated balance sheet.

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
When the Group has transferred financial assets to another entity, but has not transferred substantially all of the risk and rewards relating to the transferred assets, the assets are recognised in the Groups consolidated balance sheet. 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 Groups consolidated balance sheet. Details of the Groups securitisation activities are given in Note 29. 41 Group enterprises The consolidated financial statements aggregate financial information from the following entities: 41.1 Entities in Banking and Finance Segment The entities first consolidated under Garanti Bank; then proportionately consolidated under the Group in accordance with IAS 31 Interest in Joint Ventures: Name Garanti Bank Galata Aratrma Yaynclk Tantm ve Biliim Teknoloji Hizmetleri Anonim irketi (a) GarantiBank International NV GarantiBank Moscow Garanti Biliim Teknolojisi ve Ticaret Anonim irketi (a) Garanti Diversified Payment Rights Finance Company Garanti Emeklilik ve Hayat Anonim irketi Garanti Faktoring Hizmetleri Anonim irketi Garanti Financial Services plc. Garanti Finansal Kiralama Anonim irketi Garanti Fund Management Company Limited Garanti deme Sistemleri A Garanti Portfy Ynetimi A Eureko Sigorta Anonim irketi Garanti Yatrm Menkul Kymetler A Nature of business Banking Real Estate Banking Banking IT services Special purpose entity for securitisation transaction Life insurance Factoring Financial services Leasing Fund management Cards & payment services Fund management Insurance Brokerage and investment banking

(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 Dou Holdings consolidated financial statements since Garanti Bank owns their controlling interests. The entities first consolidated under D Netherlands Holding B.V.; then consolidated under the Group in accordance with IAS 31 Interest in Joint Ventures: Name D Netherlands Holding B.V. Domenia Credit SA Ralfi IFN SA S.C. Motoractive IFN SA Dou GE B.V. Nature of business Holding company Mortgage Consumer Finance Leasing Finance

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
41.2 Entities in Construction Segment Name Dou naat Aslanck Elektrik retim ve Ticaret Limited irketi Ayson Sondaj Aratrma ve naat Anonim irketi Boyabat Elektrik retim ve Ticaret Limited irketi Dogus Insaat ES Dogus Maroc SARL Dou Eko Adi Ortakl Dou International Limited Dou Polat Adi Ortakl Dou naat Koray naat Adi Ortakl Dou naat Limited Glermak-Dou Adi Ortakl Kazakhistan Joint Venture Yap Merkezi-Dou-Yksel-Yenign Adi Ortakl Teknik Mhendislik ve Mavirlik A 41.3 Entities in Automotive Segment First consolidated under Dou Otomotiv Servis ve Ticaret A (DOA); then consolidated under the Group. Name DOA Dou Auto Msr JS Dou Auto Msr LLC D-Auto Suisse SA Otofiks Ekspres Servis Hizmetleri ve Ticaret Anonim irketi Dou Oto Pazarlama ve Ticaret Anonim irketi Dou Sigorta Araclk Hizmetleri A TVTURK Kuzey TVTURK Gney TVTURK stanbul Tat Muayene stasyonlar Yapm ve letim Anonim irketi (TVTURK stanbul) Meiller-Dou Damper Sanayi ve Ticaret Limited irketi Volkswagen Dou Tketici Finansman Anonim irketi Yce Auto Anonim irketi VDF Holding Anonim irketi VDF Otomotiv Servis ve Ticaret Anonim irketi VDF Sigorta Araclk Hizmetleri Anonim irketi VDF Servis Holding Anonim irketi Nature of business Automotive distribution Automotive distribution Automotive distribution Automotive distribution After sales service Automotive retail Insurance brokerage Vehicle inspection station Vehicle inspection station Vehicle inspection station Production Consumer finance Automotive retail Automotive Automotive retail Insurance Automotive finance Nature of business Construction A non-operating company Drilling A non-operating company Construction Construction Construction Construction equipments Construction Construction Construction Construction Construction Construction Civil engineering

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
41.4 Entities in Tourism Segment Name Antur Turizm Anonim irketi Arena Giyim Sanayi ve Ticaret Anonim irketi Datmar Turizm Anonim irketi Dou Antalya Marina letmeleri Turistik ve Ticaret Anonim irketi (b) Dou Bodrum Marina letmeleri Turistik ve Ticaret Anonim irketi (b) Dou Dalaman Marina letmeleri Turistik ve Ticaret Anonim irketi (b) Dou Didim Marina letmeleri ve Ticaret Anonim irketi (b) Dou Turgutreis Marina letmeleri Turistik ve Ticaret Anonim irketi Garanti Turizm Yatrm ve letme Anonim irketi (Garanti Turizm) Gktrans Turizm ve Ticaret Anonim irketi ahintur ahinler Otelcilik Turizm Yatrm letmecilii Anonim irketi (ahintur) Voyager Mediterranean Turizm Endstrisi ve Ticareti Anonim irketi (Voyager) Nature of business Hospitality and travel agency Clothing retail Hospitality A non-operating company A non-operating company A non-operating company A non-operating company Marina Hospitality Hospitality A non-operating company Hospitality

(b) These companies were established to build and operate yachting marinas in four seaside resort towns in Aegean and Mediterranean coasts of Turkey. However, they have not yet started operations, and accordingly were noted as nonoperating. 41.5 Entities in Other Segment Name NTV Radyo ve Televizyon Yayncl Anonim irketi* Cappadocia Investments Limited Compagnie Ottomane d'Investissement BV (COIBV) DO-A Tekstil Temizleme ve Ticaret Anonim irketi Dou Aratrma Gelitirme ve Mavirlik Hizm. Anonim irketi Dou Gayrimenkul Yatrm ve letmeleri Anonim irketi Dou Hava Tamacl Anonim irketi (Dou Hava) Krfez Havaclk Turizm ve Ticaret Anonim irketi Dou Hizmet Ynetimi Organizasyon ve Danmanlk A Dou Grubu letiim Yaynclk ve Ticaret Anonim irketi Dou Luxembourg S..r.l. Dou Nakliyat ve Ticaret Anonim irketi Dou SA Dou Telekomnikasyon Hizmetleri Anonim irketi Dou Turizm Salk Yatrmlar ve letmeleri Sanayi ve Ticaret Anonim irketi Enformasyon Reklamclk ve Filmcilik Sanayi ve Ticaret Anonim irketi Dou-GE Gayrimenkul Yatrm Ortakl Anonim irketi ** Jeeves Clothes Care Temizleme Anonim irketi Makro San. Mam. malat ve Pazarlama Limited irketi Lasa Lastik Sanayi ve Ticaret A (Lasa) Sititur Turizm Temizlik Tamaclk Organizasyon Bilgisayar Danmanlk Yap Sanayi ve Ticaret A (Sititur) Nature of business Media Investing A non-operating company Dry cleaning Investing Real estate development A non-operating company Transportation Operation services to banks Media Trade and project finance A non-operating company Trade and project finance A non-operating company Real estate development Media Real estate investment fund Dry cleaning A non-operating company A non-operating company A non-operating company

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Dou Yayn Grubu Anonim irketi Kapital Radyo ve Televizyon Yayncl Anonim irketi N Radyo Televizyon ve Yaynclk Anonim irketi kibinondokuz Radyoculuk ve Sanat Organizasyonu Ticaret Anonim irketi Yonca Radyo ve TV Yaynclk Anonim irketi Media Media Media Media Media

(*) A Yapm Televizyon Programclk Anonim irketi changed its legal name to NTV Radyo ve Televizyon Yayncl Anonim irketi. (**) Garanti Gayrimenkul Yatrm Ortakl Anonim irketi changed its legal name to Dou-GE Gayrimenkul Yatrm Ortakl Anonim irketi. All Subsidiaries are registered in Turkey except for the following companies: Name Cappadocia Investments Limited COIBV D Netherlands Holding B.V. Domenia Credit SA Ralfi IFN SA S.C. Motoractive IFN SA Dou GE B.V. Dou Auto Msr JS Dou Auto Msr LLC D-Auto Suisse SA Dogus nsaat ES Dogus nsaat Limited Dogus Maroc SARL Dou SA Dou International Ltd Dou Luxembourg S..r.l. GarantiBank Moscow GarantiBank International NV Garanti Financial Services plc. Garanti Fund Management Company Limited Country of incorporation United Kingdom The Netherlands The Netherlands Romania Romania Romania The Netherlands Egypt Egypt Switzerland Morocco Ukraine Morocco Switzerland United Kingdom Luxembourg Russia The Netherlands Ireland Malta

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
41.6 Subsidiaries The table below sets out all the Subsidiaries and shows their shareholding structure at 31 December 2007: Direct and indirect ownership interest by Dou Holding and its Name Subsidiaries Antur Turizm A 94.56 Arena Giyim Sanayi ve Ticaret A 99.97 Ayson Sondaj Aratrma ve naat A 70.00 Cappadocia Investments Limited 100.00 Compagnie Ottomane dInvestissement BV 100.00 Datmar Turizm A 99.57 DO--A Tekstil Temizleme ve Ticaret A 87.27 Dogus Insaat ES 100.00 Dogus Maroc SARL 100.00 Dou Antalya Marina letmeleri Turistik ve Ticaret A 100.00 Dou Aratrma Gelitirme ve Mavirlik Hizm. Anonim irketi 92.46 Dou Bodrum Marina letmeleri Turistik ve Ticaret A 100.00 Dou Dalaman Marina letmeleri Turistik ve Ticaret A 69.83 Dou Didim Marina letmeleri Turistik ve Ticaret A 100.00 Dou Gayrimenkul Yatrm ve letmeleri Anonim irketi 97.22 Dou Hava Tamacl A 100.00 Dou Hizmet Ynetimi Organizasyon ve Danmanlk A 100.00 Dou Grubu letiim ve Yaynclk Tic. A 100.00 Dou naat ve Ticaret A 92.46 Dou naat Limited 100.00 Dou International Ltd. 100.00 Dou Luxembourg S..r.l. 100.00 Dou Nakliyat ve Ticaret A 89.73 D Netherlands Holding B.V. 100.00 Dou Auto Msr JS 99.00 Dou Auto Msr LLC 98.01 D-Auto Suisse SA 100.00

Ownership interest through shares held by ahenk Family 5.41 0.03 ---0.43 12.73 ---7.54 ---2.78 ---7.54 ---0.77 -----

Proportion of effective interest of Dou Proportion of Holding ownership and its interest Subsidiaries 99.97 94.24 100.00 97.13 70.00 66.59 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 69.83 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 90.50 100.00 99.00 98.01 100.00 100.00 98.58 84.68 92.43 92.43 96.11 92.45 96.11 98.30 100.00 97.21 100.00 32.17 99.81 92.43 92.43 92.43 100.00 89.69 100.00 69.48 68.78 70.18

Proportion of effective interest of ahenk Family 5.73 2.75 3.41 --1.27 15.16 7.57 7.57 3.63 7.55 3.63 1.53 -2.79 -0.28 0.19 7.57 7.57 7.57 -0.81 -2.27 2.24 2.29

Proportion of effective interest 99.97 99.88 70.00 100.00 100.00 99.85 99.84 100.00 100.00 99.74 100.00 99.74 99.83 100.00 100.00 100.00 32.45 100.00 100.00 100.00 100.00 100.00 90.50 100.00 71.75 71.02 72.47

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Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Direct and indirect ownership interest by Dou Holding and its Name Subsidiaries Dou Oto Pazarlama ve Ticaret A 100.00 Dou Otomotiv Servis ve Ticaret A 72.46 Dous SA 100.00 Dou Sigorta Araclk Hizmetleri A 99.00 Dou Telekomnikasyon Hizmetleri A 100.00 Dou Turgutreis Marina letmeleri Turistik ve Ticaret A (a) 43.37 Dou Turizm Salk Yatrmlar ve letmecilii Sanayi ve Ticaret A 100.00 Enformasyon Reklamclk ve Filmcilik Sanayi ve Ticaret A 97.00 Garanti Turizm Yatrm ve letme A 100.00 Gktrans Turizm ve Ticaret A 100.00 kibinondokuz Radyoculuk ve Sanat Organizasyonu Ticaret Anonim irketi 98.54 Jeeves Clothes Care Temizleme A 78.40 Kapital Radyo ve Televizyon Yayncl Anonim irketi 97.00 Krfez Havaclk Turizm ve Ticaret Anonim irketi 100.00 Lasa Lastik Sanayi ve Ticaret A 100.00 Makro Sanayi Mamlleri malat ve Pazarlama Ltd. ti. 100.00 N Radyo Televizyon ve Yaynclk A 97.00 NTV Radyo ve Televizyon Yayncl Anonim irketi 97.00 Otofiks Ekspres Servis Hizmetleri ve Ticaret Anonim irketi 99.90 Dou Yayn Grubu A 100.00 Sititur Turizm Temizlik Tamaclk Organizasyon Bilgisayar Danmanlk Yap Sanayi ve Ticaret A 100.00 ahintur ahinler Otelcilik Turizm Yatrm letmecilii A 100.00 Teknik Mhendislik ve Mavirlik A 99.70 Voyager Mediterranean Turizm Endstrisi ve Ticareti A 99.05 Yonca Radyo ve TV Yaynclk A 98.48

Ownership interest through shares held by ahenk Family ---1.00 -56.63 -----21.60 ---------

Proportion of effective interest of Dou Proportion of Holding ownership and its interest Subsidiaries 100.00 71.32 72.46 70.18 100.00 95.06 100.00 86.48 100.00 100.00 100.00 100.00 97.00 100.00 100.00 98.54 100.00 97.00 100.00 100.00 100.00 97.00 97.00 99.90 100.00 40.69 100.00 96.81 96.57 98.73 98.35 77.59 96.78 100.00 100.00 99.58 96.81 96.81 70.11 99.81

Proportion of effective interest of ahenk Family 2.20 2.29 3.55 1.96 -59.25 -0.19 2.35 1.20 -22.36 ---0.32 --2.28 --

Proportion of effective interest 73.52 72.47 98.61 88.44 100.00 99.94 100.00 97.00 98.92 99.93 98.35 99.95 96.78 100.00 100.00 99.90 96.81 96.81 72.39 99.81

---0.95 --

100.00 100.00 99.70 100.00 98.48

100.00 100.00 98.57 98.74 98.29

--1.13 1.22 0.19

100.00 100.00 99.70 99.96 98.48

Dou Group Annual Report 2007

198 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
(a) Although the ownership rates of Dou Holding on these companies are less than 50 percent, Dou Holding has the controlling power on the operations and financial policies of these companies. 41.7 Joint ventures The table below sets out the Joint Ventures and shows the shareholding structure at 31 December 2007: Direct and indirect ownership interest by Dou Holding and its Subsidiaries 70.00 50.00 50.00 100.00 100.00 99.94 100.00 -80.26 78.94 99.99 100.00 100.00 31.11 99.92 100.00 100.00 50.00 30.52 25.00 34.00 60.00 33.33 33.33 31.67 49.00 30.00

Name Dou Eko Adi Ortakl Dou Polat Adi Ortakl Dou naat -- Koray naat Adi Ortakl Galata Aratrma Yaynclk Tantm ve Biliim Teknoloji A GarantiBank International NV GarantiBank Moscow Garanti Biliim Teknoloji ve Ticaret A Garanti Diversified Payment Rights Finance Company (a) Garanti Emeklilik ve Hayat A Garanti Faktoring Hizmetleri A Garanti Financial Services plc. Garanti Finansal Kiralama A Garanti Fund Management Company Ltd. Dou-GE Gayrimenkul Yatrm Ortakl A Garanti deme Sistemleri A Garanti Portfy Ynetimi A Garanti Yatrm Menkul Kymetler A Glermak--Dou Adi Ortakl Trkiye Garanti Bankas A Aslanck Elektrik retim ve Ticaret Ltd ti Boyabat Elektrik retim ve Ticaret Ltd ti. Kazakhistan Joint Venture TVTURK Kuzey (b) TVTURK Gney (b) TVTURK stanbul Tat Muayene stasyonlar Yapm ve letim A (b) Meiller--Dou Damper Sanayi ve Ticaret Ltd ti. Yap MerkeziDou--Yksel--Yenign Adi Ortakl

Ownership interest through shares held by ahenk Family ----------------------------

Proportion of effective interest of Dou Proportion of Holding ownership and its interest Subsidiaries 70.00 64.70 50.00 46.21 50.00 100.00 100.00 99.94 100.00 -80.26 78.94 99.99 100.00 100.00 31.11 99.92 100.00 100.00 50.00 30.52 25.00 34.00 60.00 33.33 33.33 31.67 49.00 30.00 46.21 30.22 30.22 30.20 30.22 -24.23 23.86 30.22 29.88 30.22 27.19 30.20 30.22 30.22 46.22 30.22 25.00 33.96 55.46 23.39 23.39 22.22 34.39 27.73

Proportion of effective interest of ahenk Family 5.30 3.79 3.79 0.29 0.29 0.29 0.29 -0.29 0.23 0.29 0.28 0.29 0.02 0.29 0.29 0.29 3.78 0.29 --4.54 0.76 0.76 0.72 1.12 2.27

Proportion of effective interest 70.00 50.00 50.00 30.51 30.51 30.49 30.51 -24.52 24.09 30.51 30.16 30.51 27.21 30.49 30.51 30.51 50.00 30.51 25.00 33.96 60.00 24.15 24.15 22.94 35.51 30.00

Dou Group Annual Report 2007

199 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Direct and indirect ownership interest by Dou Holding and its Subsidiaries 49.90 49.90 49.90 49.90

Name Domenia Credit SA Ralfi IFN SA S.C. Motoractive IFN SA Dou GE B.V.

Ownership interest through shares held by ahenk Family -----

Proportion of effective interest of Dou Proportion of Holding ownership and its interest Subsidiaries 49.90 49.90 49.90 49.90 49.90 49.90 49.90 49.90

Proportion of effective interest of ahenk Family -----

Proportion of effective interest 49.90 49.90 49.90 49.90

(a) Garanti Diversified Payment Rights Finance Company is a special purpose entity established for the Groups securitisation transactions. The Group does not have any shareholding interest in this company. (b) The partnership established by the Group, Akfen Holding A and TV-SD Teknik Gvenlik ve Kalite Denetim Ticaret Limited irketi obtained the right to render the vehicle inspection services for 20 years by offering USD 552 million for the bid of the Privatisation of Vehicle Inspection Stations first and second regions led by Privatisation Administration of Turkey. Vehicle Inspection Station services will be performed by TVTURK Kuzey and TVTURK Gney, which were established with a share capital of YTL 50 thousand on 21 March 2005 and YTL 50 thousand on 2 May 2005, respectively by the partnership. 41.8 Investments in equity securities The table below sets out the associates and their shareholding structure at 31 December 2007: Direct and indirect ownership interest by Dou Holding and its Subsidiaries 20.00 49.00 49.00 49.00 100.00 100.00 50.00

Name Eureko Sigorta A Volkswagen Dou Tketici Finansman A VDF Holding A VDF Servis Holding A.. VDF Otomotiv Servis ve Ticaret A (a) VDF Sigorta Araclk Hizmetleri A (a) Yce Auto A

Ownership interest through shares held by ahenk Family --------

Proportion of effective interest of Dou Proportion of Holding ownership and its interest Subsidiaries 20.00 6.04 49.00 49.00 49.00 100.00 100.00 50.00 34.68 37.61 37.61 37.61 37.61 35.09

Proportion of effective interest of ahenk Family 0.06 1.10 0.87 0.87 0.87 0.87 1.14

Proportion of effective interest 6.10 35.78 38.48 38.48 38.48 38.48 36.23

(a) Consolidated under VDF Holding A The major changes in subsidiaries are summarised in the following paragraphs: Liquidation of subsidiaries Garanti Fund Management Co. Ltd. (100.00 percent) is under liquidation as of the reporting date. The liquidation procedures are expected to be completed in 2008. Dou Antalya Marina letmecilii Turizm ve Ticaret Anonim irketi and Dou Bodrum Marina letmecilii Turizm ve Ticaret Anonim irketi are under liquidation process.

Dou Group Annual Report 2007

200 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
Merger of subsidiaries and interest in joint ventures On 15 January 2007, the Board of Directors of E Haber Reklam ve Ticaret Anonim irketi (E Haber), a consolidated subsidiary of Dou Holding, decided to merge with NTV, a consolidated subsidiary of Dou Holding. The merger has been completed on 31 January 2007 by taking all the rights, assets and liabilities of NTV which ceased its legal corporate existence after the merger. E Haber has changed its trade registered name to Dou Yayn Grubu Anonim irketi on 31 January 2007. Dou SA merged with DOC Finance SA, a consolidated subsidiary of Dou Holding on 19 July 2007, by taking over all the rights, assets, liabilities and obligations of DOC Finance SA ceasing its legal corporate existence after the merger. NTV Haber Ajans Reklam ve Ticaret A (NTV) merged with zm Yaynclk ve Ticaret A (zm Yaynclk), a consolidated subsidiary of Dou Holding during 2006, by taking over all the rights, assets, liabilities and obligation of zm Yaynclk ceasing its legal corporate existence after the merger. Establishment of equity accounted investees On 8 May 2007, DOA and Volkswagen Financial Services AG established VDF Servis Holding Anonim irketi with an initial capital of YTL 50 thousand in order to invest, finance, organise, manage and establish subsidiaries. Establishment of subsidiaries in banking and finance segment According to the resolution of board of directors of Garanti Bank dated on 15 September 2007, it was decided to establish a new company named Garanti Financial Services NV in the Netherlands for the purpose of cross border expansions and accordingly to authorize the head office to carry out the establishment procedures. Establishment of jointly controlled entity A joint venture agreement is signed between DOA and Meiller Fahrzeug&Maschinenfabrik-GMBH&Co KG on 22 October 2007 for the production of Meiller products in Turkey. Accordingly, DOA holds 49 percent of shares of Meiller Fahrzeug&Maschinenfabrik-GMBH&Co KG, which is established on 16 November 2007. Change in share capital structure of equity accounted investees On 8 October 2007, VW Financial Services AG transferred its 51 percent shares in share capital of VDF Holding to LeasePlan Corporation N.V., which operates in long-term fleet rental business. The share transfer has resulted in no change in the Groups share percentage in the capital of VDF Holding, which is still 48.51 percent. Restructuring of Dou naat (De-merger) Dou naat transferred most of its investments to a newly established subsidiary of Dou Holding, namely Dou Aratrma Gelitirme ve Mavirlik Hizmetleri A (Dou Arge). As a result, total assets and equity of Dou naat have decreased after the merger. Dou Arges share capital was in-kind capital in respect of the investments transferred by Dou naat. Additionally, Dou naat transferred most of its real estate to a newly established subsidiary of Dou Holding, namely Dou Gayrimenkul Yatrm letmeleri A (Dou Gayrimenkul). Dou Gayrimenkuls share capital was in-kind capital in respect of the properties transferred by Dou naat. Establishment of subsidiaries A letter of intent was signed between DOA and Volkswagen Nutzfahrzeuge on 10 July 2006, regarding the rights of importing, exclusive distribution and after-sales services of Volkswagen branded commercial vehicles in Egypt. According to this letter of intent, the establishment and registration process of the joint-venture company with an initial capital of Egypt Pound 500,000, namely Dou Auto Misr For Trading and Manufacturing Vehicles Joint Stock Company was completed on 20 November 2006. On 5 April 2007, DOA established Otofiks Ekspres Servis Hizmetleri ve Ticaret Anonim irketi in order to give repair and maintenance services and provide spare parts to motor vehicles.

Dou Group Annual Report 2007

201 >Dou Holding Anonim irketi and its Subsidiaries


Notes to the Consolidated Financial Statements As at and for the Year Ended 31 December 2007
Currency: Thousands of YTL
On 14 May 2007, DOA announced that DOA and Dr. Ing. h.c. F Porsche AG (Porsche AG) have agreed that DOA will operate as an Authorised Dealer and Service company in Lausanne, Switzerland. As a result of agreement between DOA and Porsche AG, establishment procedures of D-Auto Suisse SA which will provide sales and after sales services as an authorised dealer of Porsche AG in Lausanne Switzerland are completed on 24 July 2007. Initial capital of D-Auto Suisse SA, 99% of which is owned by DOA is CHF 1 million. As mentioned in Restructuring of Dou naat (De-Merger), Dou Arge and Dou Gayrimenkul were established in December 2006. 42 Subsequent events A joint venture agreement was already signed between DOA, Fahrzeugwer Bernard Krone GmbH, Bernard Krone and Bernard Krone Holding GmbH&Co., on 31 October 2007 to produce Krone branded products in Turkey, where DOA would hold 49 percent shares of the new company to be established. In accordance with the aforementioned agreement, Krone Dou Treyler Sanayi ve Ticaret Anonim irketi has been established on 5 February 2008. According to Dou Holding Board of Directors resolution dated 23 January 2008, Dou Holding has utilised a borrowing from JP Morgan Plc. as a lead arranger and JP Morgan Chase Bank NA in respect of acquisition financing of Garanti Bank shares up to an amount of USD 600 million with a maturity of 84 months. Social Security Law No. 5754, which requires the transfer of the liabilities of the members of the Fund established as per the temporary article no. 20 of the Social Security Law No. 506, is accepted and approved by the Turkish Parliament at 17 April 2008 and enacted at 8 May 2008. A part of Garanti Banks non-performing loan portfolio amounting YTL 29,682 thousand is sold to a local asset management company at a sale price of YTL 8,733 thousand. The sale price is fully recognized as income at 3 April 2008, as the sold receivables were fully provisioned in Garanti Banks financial statements previously. It is resolved that the Articles 15, 16 and 45 of the Articles of Association of Garanti Bank will be amended, and the head office of Garanti Bank is authorized to file necessary applications with the Banking Regulatory and Supervisory Agency, the Capital Market Board of Turkey and the other relevant official authorities in order to conclude the above-mentioned process and execute any and all operations related thereto. On 8 May 2008, Garanti Bank obtained a club term loan of Euro 181 million with a maturity of one year with the participation of 31 banks from 15 countries. On 18 March 2008, Dou Holding has established Dou Elence Pazarlama ve Kltr Hizmetleri Anonim irketi. On 2 April 2008, Dou naat has established Dou EOOD in Bulgaria. On 8 May 2008, Dou naat has established Dou Enerji retim ve Ticaret Anonim irketi.

Dou Group Annual Report 2007

202
Appendix I

>Dou Holding Anonim irketi and its Subsidiaries


Supplementary Information Convenience Translation to US Dollar 31 December 2007
The US Dollar ("USD") amounts shown in the consolidated balance sheet and consolidated statement of income on the following pages have been included solely for the convenience of the reader. For the current years consolidated financial statements, USD amounts are translated from YTL consolidated financial statements using the official YTL exchange rate of 1.1647 YTL/USD prevailing on 31 December 2007. For the prior years consolidated financial statements, US Dollar amounts are translated from YTL consolidated financial statements using the official YTL exchange rate of 1.4056 YTL/USD prevailing on 31 December 2006. Such translation should not be construed as a representation that the YTL 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.

Dou Group Annual Report 2007

203
Appendix I.1

>Dou Holding Anonim irketi and its Subsidiaries


Consolidated US Dollar Balance Sheet As at 31 December 2007
Amounts translated into thousands of USD for convenience purposes only
2007 Assets Property and equipment Intangible assets Investments in debt securities Investments in equity securities Investment property Other non-current assets Deferred tax assets Total non-current assets Inventories Accounts receivable Due from related parties Other current assets Banking loans and advances to customers Banking loans and advances to banks Financial assets at fair value through profit or loss Cash and cash equivalents Total current assets Total assets Equity Paid-in capital Capital stock held by subsidiaries Share premium Fair value reserves Translation reserve Hedging reserve Revaluation surplus Retained earnings Total equity attributable to equity holders of the Company Minority interest ahenk Family Others Total minority interest Total equity Liabilities Long-term bank borrowings Deferred tax liabilities Other non-current liabilities Total non-current liabilities Short-term bank borrowings Short-term portion of long-term bank borrowings Banking deposits from banks Banking customers deposits Obligations under repurchase agreements Accounts payable Due to related parties Taxes payable on income Other current liabilities Total current liabilities Total liabilities Total equity and liabilities 1,923,415 863,635 4,627,660 44,466 542,207 1,357,668 94,996 9,454,047 309,007 657,122 23,028 310,924 10,783,644 1,310,053 153,157 946,487 14,493,422 23,947,469 2006 1,382,721 120,903 2,747,841 28,344 25,139 613,852 44,888 4,963,688 346,240 545,445 9,950 142,397 5,491,430 460,700 76,596 1,167,785 8,240,543 13,204,231

1,725,931 -46,068 136,816 40,651 3,476 6,906 709,713 1,629,223 4,206,648

1,430,131 (38,172) 113,368 21,528 3,258 572 268,063 908,891 2,707,639

73,276 108,953 182,229 4,388,877

51,147 81,818 132,965 2,840,604

2,292,328 49,653 154,032 2,496,013 1,001,126 868,770 632,083 10,682,745 2,229,320 593,627 5,084 42,851 1,006,973 17,062,579 19,558,592 23,947,469

1,140,211 21,248 68,102 1,229,561 585,026 319,059 286,286 5,782,792 963,339 488,266 126,000 24,375 558,923 9,134,066 10,363,627 13,204,231

Dou Group Annual Report 2007

204
Appendix I.2

>Dou Holding Anonim irketi and its Subsidiaries


Consolidated US Dollar Income Statement For the Year Ended 31 December 2007
Amounts translated into thousands of USD for convenience purposes only
2007 4,878,661 (3,477,371) 1,401,290 (624,151) (142,145) (64,970) (32,840) 182,813 719,997 298,817 (386,653) (87,836) (21,879) 2,365 612,647 (60,764) 551,883 2006 3,758,749 (2,717,019) 1,041,730 (475,251) (117,271) (29,304) (6,958) 49,410 462,356 452,423 (459,400) (6,977) (5,137) 1,078 451,320 (113,204) 338,116

Revenues Cost of revenues Gross profit Administrative expenses Selling, marketing and other distribution expenses Impairment losses Trading gain, net Other operating income, net Results from operating activities Finance income Finance expense Net finance expense Other expense Share of profit of equity accounted investees Profit before income tax Income tax expense Profit for the period Attributable to: Equity holders of the Company Minority interest -ahenk Family -Others Profit for the period

534,986 16,897 5,553 11,344 551,883

334,378 3,738 (1,392) 5,130 338,116

Dou Group Annual Report 2007

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