Dogus Group Annual Report 2011

DOĞUŞ GROUP ANNUAL REPORT 2011 01

INTRODUCTION

Under an orchestra; skilled musicians, unified combination of melodies, well-tuned instruments present the best music. Success comes when top

players perform the same rhapsody within harmony.

Doğuş Group companies, operating in seven different business sectors, all have their distinctive characteristics and

high value for the Group. Well-managed Group companies are just like well-tuned instruments of an orchestra played by musicians with artistic excellence, i.e., the highly skilled managers and qualified employees. Each brings out its best at the right time, at the right dose, each being strong and pioneer; just like the instruments with unique sounds. It is

perfect, it is rhythmic, and it is disciplined.

As the conductor of a great orchestra, Doğuş Holding works hard to keep this harmony in order to maintain and further develop the Group’s remarkable performance over

the years.

Doğuş Group’s utmost objective: Perfect outcome for all its stakeholders.

In order to achieve this, Doğuş Holding provides the necessary framework, strategies, support and inspiration

and ensures that every step is taken in line with the Group’s vision and mission. Doğuş Group aims to maintain its

sustainable growth and maximum contribution to economic, social and environmental development both in Turkey and in

the regions where it operates.

02 DOĞUŞ GROUP ANNUAL REPORT 2011


Doğuş Group; An Orchestra In

Harmony…

Doğuş Group companies,

operating in seven

different business sectors,

all have their distinctive

characteristics and high

value for the Group. Each

brings out its best at the

right time, at the right

dose, each being strong

and pioneer; just like the

instruments in an orchestra

with unique sounds.


Xxxxxx

Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxx

Doğuş Group Structure

Corporate Responsibility

Banking&Financial Services

Automotive Construction Media


Tourism&Services Real Estate Energy

Doğuş Energy

Artvin HEPP

D Energy

D-TES Electricity

Whole Sale Co.


Operational Map

Romania Garanti Bank Romania-Headquarters & 76 Branches SC Motoractive Credit SA Ralfi IFN SA Domenica Credit SA

Bulgaria Doğuş Construction&Trade Inc.

The Netherlands GBI-Headquarters

UK Garanti Bank-Representative Office Doğuş Int.

Germany Garanti Bank-Representative Office GBI Branch

Luxembourg Garanti Bank-Branch

Morocco Doğuş Construction&Trade Inc.

Switzerland GBI-Representative Office D-Auto Suisse SA-Lausanne Doğuş SA-Geneva

Malta Garanti Bank-Branch

Libya Doğuş Construction&Trade Inc.

Turkish Republic of Northern Cyprus Garanti Bank-4 Branches

Ukraine GBI-Representative Office Doğuş Construction&Trade Inc.

Dubai Doğuş Management Services Ltd.

Croatia D-Marin Mandalina Marina


China Garanti Bank-Representative Office

Kazakhstan Doğuş Construction&Trade Inc.

Russia GarantiBank Moscow-Headquarters Garanti Bank-Representative Office


Despite the challenges faced by the global economy in 2011, Turkey managed to achieve

one of the most successful budgetary performances in recent years. With its strong financial

structure and future-oriented vision, Doğuş Group also attained a successful performance and

completed the year with very satisfactory results.

Financial and Operational Highlights

Key Financial Indicators (TL thousand)

2008 2009 2010 2011

Total Assets 37,894,960 42,923,044 49,285,930 51,147,438

Total Shareholders’ Equity 5,556,161 6,728,866 7,701,796 9,864,793

Revenues 6,950,442 7,819,616 8,654,592 9,929,164

Net profit for the year 437,145 782,887 966,015 2,691,764

Gross Profit 1,982,175 2,667,310 2,744,273 2,551,956

EBITDA 1,177,524 1,329,406 1,667,054 3,737,556

Principal Performance Ratios (%)

2008 2009 2010 2011

Gross Profitability 29 34 32 26

Net Profitability 6 10 11 27

Ebitda Margin 17 17 19 38

ROA-Return on Assets 1 2 2 5

ROE-Return on Group Equity 8 12 13 27

Total Assets by Segment 2011 Total Revenue by Segment 2011

Financial Services 76%

Tourism 3%Tourism 2%

Media 3%

Construction 7%

Automotive 51%

Others 1%

Automotive 4%

Others 12%

Construction 2%Media 3%

Financial Services 36%


Total Assets (TL thousand)

Total Shareholders’ Equity (TL thousand)

Total Revenues (TL thousand)

Net Profit for the Year (TL thousand)

2008

2008

2008

2008

2009

2009

2009

2009

2010

2010

2010

2010

2011

2011

2011

2011

37,8

94,9

605,

556,

161

6,95

0,44

243

7,14

5

42,9

23,0

446,

728,

866

7,81

9,61

678

2,88

7

49,2

85,9

307,

701,

796

8,65

4,59

296

6,01

5

51,

147,

438

9,86

4,79

3

9,9

29,1

64 2

,691

,764

• In all of its lines of business, the Group’s consolidated revenues reached TL 9,929,164 thousand in value while its EBITDA

amounted to TL 3,737,556 thousand.

• The Group’s total assets increased to TL 51,147,438 thousand in 2011.

• The Group’s consolidated shareholders’ equity in 2011 reached TL 9,864,793 thousand, up from the previous year’s level of

TL 7,701,796 thousand.


Consolidated Financial Information by Segments*

(TL thousand)

Banking and Finance 2008 2009 2010 2011

Segment Assets 30,315,689 35,448,062 41,046,879 38,847,053

Total Interest and

Commission Income 3,799,009 4,159,785 3,845,431 3,581,705

Automotive 2008 2009 2010 2011

Segment Assets 1,706,271 1,357,552 1,586,373 1,918,829

Revenue 2,203,512 2,367,988 3,682,815 5,118,152

Construction 2008 2009 2010 2011

Segment Assets 917,068 1,183,397 1,212,757 1,068,310

Revenue 582,410 673,299 621,694 646,326

Tourism and Services 2008 2009 2010 2011

Segment Assets 1,152,612 1,207,860 1,494,482 1,696,527

Revenue 151,247 161,600 194,981 218,992

Media 2008 2009 2010 2011

Segment Assets 397,535 417,591 449,463 1,505,245

Revenue 172,356 173,601 244,809 273,680

Others 2008 2009 2010 2011

Segment Assets 3,405,785 3,308,582 3,495,976 6,111,474

Revenue 41,908 283,343 64,862 90,309

* Financial information is provided from Doğuş Holding IFRS Report segment note, due to comparability purposes reclassifications have been made in 2009.


Corporate Profile

126 companies, over 30,000

employees

For more than 60 years, Doğuş Group

has taken its place among the leading

business conglomerates of Turkey and

is a corporate leader in the region.

Doğuş Group is active in seven core

businesses:

• financial services

• automotive

• construction

• media

• tourism and services

• real estate

• energy

With 126 companies and over

30,000 employees, Doğuş Group has

created strong customer loyalty while

building brand value with its high-tech

infrastructure.

A key actor in the Turkish economy

with strong global recognition

Doğuş Group always provides its

services based upon the principles of

customer satisfaction and trust. As a

result of this approach, the Group has

created reputable brands with global

standards and has been representing

Turkey worldwide. Its name is a source

of attraction for the international

investors who are interested in Turkey.

The Group has contributed to this

process by creating a synergy with

global giants including the following:

BBVA (Banco Bilbao Vizcaya Argentaria,

S.A.) in finance, Volkswagen AG

and TÜVSÜD in automotive, CNBC,

MSNBC and Condé Nast in media

and Hyatt International Ltd. and HMS

International Hotel GmbH (Maritim) in

tourism.

Doğuş Group plays a significant role

in the Turkish economy with the high

level of employment it creates, the

taxes it pays and the total business

volume it generates within the country.

A model management style and

corporate citizenship

Doğuş Group utilizes a management

style that is both customer-focused

and productivity-centered. It is not

only formed through material gains,

but embodies a strong corporate

citizenship approach that is at the

center of all business practices of the

Group whilst benefiting the entire

society. Doğuş Group implements

social responsibility projects, especially

in the area of education, with a

particular focus on children and the

future.

Doğuş Group Values

Group companies share a set of

core values based on integrity,

understanding, excellence, creativity,

unity and responsibility. These values,

a part of the Group’s beliefs and

convictions since the very beginning,

continue to guide and drive business

decisions made by each company

within Doğuş Group.

A regional focus

Doğuş Group continues contributing

to Turkey’s ongoing process of

transformation and innovation. Utilizing

its global perspective, world-class

brands and noteworthy partnerships,

the Group’s vision, particularly with

regard to services, is a valuable asset

to Turkey.

The Group is able to maximize the

value of its brands by utilizing the

highest quality human resources and

the most advanced technology to

maintain the high standards that have

made it a regional leader in the service

sector.

Thanks to its experience and network combined with the customer-focused and productivity-centered management approach, Doğuş Group is among the pioneers of transformation and innovation in Turkey.


Doğuş Holding and its Functions

Doğuş Holding

It is the mission of Doğuş Holding to

fulfill steering, coordination, control and

audit functions, as well as to generate

value for the Group and its companies,

monitor activities of the Group

companies on behalf of the shareholders,

and perform the financial audit and

administer control systems. Doğuş

Holding aims to create competitive

companies that put regional growth at

the focal point of their operations.

In the management of its subsidiaries,

Doğuş Holding is committed to fulfilling

the following responsibilities:

• Updating the Group’s strategy along

with the changing investment climate

and steering the Group companies in

line with the predetermined strategy,

• Ensuring generation of sufficient

financial resources to realize the

Group’s long-term vision, and their

optimum utilization,

• Formulating and managing corporate

initiatives so as to enable the Group

to adapt in the quickest manner

possible to the developing and evolving

business environment,

• Leading the creation and

management of strategic alliances and

corporate partnerships,

• Providing communication among

the Group companies and identifying

opportunities that will result in synergy,

• Coordinating and consolidating the

financial and corporate reporting of the

Group companies,

• Ensuring optimum use of technology,

knowledge and human resources

across the Group,

• Formulating and maintaining

corporate values and communicating

them within and outside the Group,

• Instilling an awareness of social

responsibility and corporate citizenship,

• Implementing the ERM-Enterprise

Risk Management approach to assure

that the business risks undertaken by

the Group companies are in compliance

with the shareholders’ risk appetite.

Holding Functions

Corporate Communications

The Corporate Communications

Department is responsible for Doğuş

Group’s reputation management through

the means of strategic communications

tools, media relations, social responsibility

projects and sponsorship activities.

The Department is also responsible

for the coordination of the internal

communications among Doğuş Group

companies and the preparation of the

Group’s external communication tools

including the annual report, corporate

citizenship report and the Group’s

website.

Investments

The Investments Department is

responsible for undertaking business

opportunities in new sectors and in

sectors Doğuş Group operates. It

figures out domestic and regional

investment opportunities that are

in line with the Group’s strategy

and changes in the global economy.

Department responsibilities include

providing thorough analysis of

business opportunities and closing

deals for the projects approved by

Doğuş Holding Board. The Department

is also responsible for monitoring the

projects after the successful initiation,

to ensure timely and efficient return for

each business development project.

Strategy

The Strategy Department is responsible

for determining short, medium and

long-term business strategies in line with

Doğuş Group’s vision. The department

oversees the strategic planning efforts by

spearheading tools, processes and systems

that can be used by Group companies. It

manages business development projects

and seeks investment opportunities

to create competitive advantage for

the Group. It administers research and

constantly analyzes global and domestic

changes to sharpen the Group’s strategic

action capability. The Department also

establishes and coordinates Group-

wide initiatives to enhance corporate

development and synergy across

companies within the Group.

Finance and Financial Reporting

The Finance Department is responsible

for relations with local and foreign financial

institutions, parallel to the financing

needs of Doğuş Holding and other Group

companies (excluding the finance sector),

cash flow and asset management,

coordination of market risks as well as

rating process management, and project


finance requirements of non-financial

segment of Doğuş Group.

The Financial Reporting Department is

majorly responsible for the preparation

of the consolidated actual and budget

financial statements, management

reports and projections in accordance

with International Financial Reporting

Standards and monitoring and reporting

of deviations from business line

budgets. Group Planning and Budgeting

Process is monitored. Group Reporting

System convergence projects are also

carried out by Financial Reporting.

Financial Affairs and IT

The Financial Affairs and IT Department

is responsible for assistance and

support services under information

technologies and financial transactions

for Doğuş Group, its tax liabilities, as

well as the subsidiary relations and its

financial activity compliance.

Human Resources

The Human Resources Department

is responsible for the management

of Doğuş Holding human resources

processes in line with corporate values

and strategies. The main activities

of Human Resources Department

are; search and selection, training

and development, organizational

development, employee relations,

compensation and benefits

administration, performance

management and improvement

systems. The Department is also

responsible for establishing the

communication platform among the

other Doğuş Group companies and

providing human resources consultancy

services for non-Garanti branded

companies of Doğuş Group.

Internal Audit

The Internal Audit Department is

responsible for the performance of

financial, operational and IT audits at

Doğuş Group companies in accordance

with its annual risk-based audit plan.

Also the department tracks all internal

audit findings and coordinates follow-

up to ascertain that appropriate action

is taken. The results are periodically

reported to the Audit Committee.

Lean Management

The Lean Management Department is

responsible for coordinating the lean

transformation within Doğuş Group.

Through a series of activities such

as training, value stream mapping

studies, action workouts and kaizen

projects, the division helps management

and employees to understand lean

management principles and invigorate

business performance of the entire

Group. It leads and reports the results

of process optimization studies that

help the Group increase its competitive

advantage and profitability through

increased efficiency, quality and

customer satisfaction.

Legal Affairs

The Legal Affairs Department is

responsible for the legal representation

of Doğuş Holding and other Group

companies under its responsibility, and

for ensuring that all kinds of contracts

and legal processes are handled in line

with the company’s best interests and

with no legal risk.

Office of the Chairman

The Office of the Chairman is in charge

of the tasks that are related to the

Chairman’s business activities. The

responsibilities of the department

include economic research, protocol

services, event management and

media relations of the Chairman as

well as the coordination of internal

and external affairs with third parties,

including economic and financial

institutions, business partners,

universities, NGOs, official institutions

and the governmental authorities.

Risk Management

The Risk Management Department’s

primary function is to assure that the

risks and opportunities of Doğuş Group

are managed successfully so that the

shareholder values are protected.

Risks monitored by the Department

include financial, strategic, legal risks

and operational risks. The Department

works closely with the Group

companies and risk management

departments to obtain accurate

information to assess the risks and

evaluate the risk taking process. In

accordance with the predetermined

risk management guidelines, the

Department regularly prepares risk

reports and makes recommendations

to the CEO, Risk & Audit Committee

and the Board of Directors.

Tax Affairs

The Tax Affairs Department is

responsible for assistance and

support services for Doğuş Group

as well as its subsidiaries regarding

tax laws and procedures such as tax

disputes, incentives, M&A, transfer

pricing, training and tax planning and

structuring to avoid international double

taxation. The Department also joins

to the meetings of the Tax Council

and the other related associations to

support tax legislation process.


Corporate Risk Management and Internal Audit

Doğuş Group acts proactively in terms of risk management to ensure that its business operations in different regions are not negatively affected as a result of risks including currency, commodity, interest, counterparty. Risk Management and Internal Audit departments within each sector create awareness for different types of risks and ensure that appropriate control mechanisms are applied.

2011 was a tough year for world

economies and especially for EuroZone

countries. Debt crisis deepened the

doubts towards the future of the global

financial system. Tsunami disaster in

Japan and the consequent fire in the

Fukushima nuclear facility have been

jeopardy not only for the environment,

but also for the international business

world. Many countries revised their

approach towards new investments

on the grounds of environmental and

technological risks, thereafter. Turkey,

standing resistant against the fragile

financial conditions in Europe, was

shaked by Van earthquake and the

government officials decided to speed

up implementing urban transformation

plans.

There is no doubt that such occurances

-financial crisis, catastrophic events

or other losses that may affect both

tangible and intangible assets- create

their own business environment which

needs to be effectively controlled

with the guidance of different risk

management tools and practices.

Increasing regulations like the new

Commercial Code also make it

essential for companies to have a solid

risk management and control system to

ensure viability and sustainable growth.

Doğuş Group, with diverse business

operations in different regions and

countries, has already been cognizant

of the fact that it has to monitor

and make provisions for various

risks including interest, currency,

counterparty, commodity and new

investment risks, in light of recent

developments. That’s how Doğuş

Group could succesfully maintain its

operations and continue investments in

different areas.

Regarding Doğuş Group’s risk

management activities, 2011 was a

successful year and Risk Management

practices both in group and company

levels, improved collaborately,

increasing risk awareness and creating

a group-wide risk management culture.

These efforts also strengthened the

“Corporate Governance” vision of our

shareholders and top management.

The Doğuş Holding Risk Management

department established the Enterprise

Risk Management (ERM) system in

2006 in line with the aforementioned

approach. Risk Management

activities are conducted by a realistic

organizational structure and it is fully

supported with the commitment of

top level management, so that the

Group keeps holding its pioneer role in

risk management activities in Turkish

business environment.

In 2010, by the Risk Committee

decision, Group companies created

their own Risk Management

departments. Now, the Doğuş

Holding Risk Management works

even more closely with the Group

Risk Management departments to

establish a standardized ERM system

and obtain accurate information to

assess and evaluate the risk taking

processes. In addition to establishing

an independent reporting infrastructure

for companies, group-wide awareness

for different types of risks and risk

management strategies is ensured by

periodical risk roundtables, workshops,

dashboards and reports throughout the

organization.

ERM is applied in all Group companies

so that all risk is managed effectively

within the Group in accordance with

the predetermined risk management

strategy, framework and the risk

model. ERM is implemented based

on an internal framework employing

internationally accepted standards

and best practices from around the

world. This framework is customized


according to the needs and structure of

the Group’s businesses.

The Risk and Audit Committee, which

functions under the Board of Directors,

is also responsible for assessing the

risk appetite of the shareholders.

Additionally, the Committee provides

guidance to adjust risk levels where

needed. Each sector has its own risk

committee.

Internal Audit is an independent

department designed to add value and

improve Doğuş Group’s operations. It

helps Doğuş Group to accomplish its

objectives by bringing a systematic,

disciplined approach to evaluate and

improve the effectiveness of risk

management, control and governance

processes.

The Internal Audit department of

Doğuş Holding A.Ş. is responsible

for performing financial, operational

(process) and IT audits at Doğuş

Group companies in accordance with

its annual risk-based audit plan. The

Department tracks all internal audit

findings and coordinates follow-up

to ascertain that appropriate action

is taken. The results are periodically

reported to the Risk and Audit

Committee of Doğuş Holding A.Ş. The

Risk and Audit Committee monitors

and reviews the scope, extent and

effectiveness of the activity of the

Internal Audit Department of Doğuş

Holding A.Ş. and receives report which

includes updates on audit activities,

progress of the Group audit plan,

the results of the audits, the action

plans to address these areas, and

resource requirements of the Internal

Audit Department. The Internal Audit

team consists of a combination of

qualified professionals in different

audit disciplines and with relevant

experience in the business processes

under review.

In 2010, each sector within the Doğuş

Holding A.Ş. started to establish its

own Internal Audit department. The

Internal Audit Department of Doğuş

Holding A.Ş. works closely with the

Internal Audit Departments of various

sectors to improve the effectiveness of

control environment within companies.


Doğuş Group’s Approach Toward its Stakeholders

Doğuş Group’s stakeholder relations are shaped by the Group’s principles of transparency, accessibility and equality. Besides integrating the high ethical standards in its own businesses, Doğuş Group requires all of its stakeholders to stick to these internationally-accepted standards.

Transparency and Accountability

Doğuş Group adheres to strict business

ethics that include transparency and

accountability in an environment where

all players, from large corporations

to individual customers and from

employees to society in general are

affected by each other’s actions. In

all of its operations and business

activities, Doğuş Group has fully

integrated globally-accepted principles

of responsible business conduct. The

stakeholders have been informed of

these actions.

Upholding these principals and high

ethical standards is not limited to its

own business dealings; the Group

also requires that the same approach

is followed by all stakeholders, both

national and international level. Doğuş

Group embraces the principle of “not

being involved” with any party that acts

contrary to globally-accepted standards

and that cannot provide reliable

disclosures with regards to its actions.

Much attention is paid by Doğuş

Group to the disclosure of its financial

and non-financial information to its

shareholders, employees, customers,

national and international business

partners, suppliers, existing and

potential investors of its publicly-floated

companies and the public at large.

The Group makes all relevant information

available on its website, and informs

the public about its corporate strategy,

activities and new fields of investment

via Annual Reports and periodic press

releases and conferences.

The Group’s financials are drawn

up quarterly in accordance with

International Financial Reporting

Standards (IFRS). Independent semi-

annual and year-end audit reports are

shared with the public.

All Doğuş Group affiliated companies

listed on the İstanbul Stock Exchange

(ISE) have their individual Investor

Relations departments that are able

to effectively manage the flow of

information to their stakeholders in line

with national regulations. The fields

of activity and performance of the

Group’s publicly-floated companies are

disclosed in conformity with principles

of their respective companies by

the Capital Markets Board of Turkey

(SPK). In terms of public disclosure

requirements, the ISE Material Event

disclosures are the responsibility of the

Holding’s Finance Department.

Ethical Principles

Strict compliance with the Code

of Conduct and Standards is a key

principle for Doğuş Group. As such,

actions that violate the Company’s

Code of Conduct are subject to

disciplinary measures. As a participant

to the United Nations Global Compact

since April 2007, the Group has

reaffirmed its commitment to fight

corruption both internally and in other

areas that might fall within its sphere

of influence.

Ethical principles are spelled out and

documented in procedures under the

following headings:

• time and resource utilization at the

companies,

• relations with customers,

subcontractors, suppliers of goods and

other companies and individuals with

whom the company has commercial

interactions,

• the acceptance of gifts, invites, aids

and donations,

• relations with the media,

• actions that can result in conflict of

interest,

• safeguarding of information

pertaining to the companies, personal

information, professional misconduct,

security and harassment.


Credit Ratings

Doğuş Holding can instantly be recognized based on the ratings given by international rating agencies. The Group has become well-known for both its quality of management and the global principles of corporate governance it supports.

Transparency and accountability are

the two key components of Doğuş

Group’s management approach.

Consequently, Doğuş Holding has been

rated by two of the major international

rating agencies; Standard & Poor’s

and Moody’s since 2000 and 2006

respectively.

Doğuş Holding can be instantly

recognized based on the ratings given

by international rating agencies. The

Group has become well-known for

both its quality of management and

the global principles of corporate

governance it supports.

Doğuş Holding Ratings as of May 4, 2012 is as follows;

Doğuş Holding A.Ş. Ratings

Standard & Poor’s Rating Outlook

Long-term Counterparty Credit Rating BB Stable

Short-term Counterparty Credit Rating B

Moody’s Rating

Corporate Family Rating - Domestic Currency Ba3 Positive

Probability of Default Rating Ba3


Dear Stakeholders,

We left behind a challenging year for

global economy. 2011 was a year

in which we witnessed continuous

turbulence in world markets mostly

stemming from the sovereign debt crisis

in the Eurozone. During this period of

increased risks for the world economy,

the Turkish economy backed by its

strong growth figures for the last two

years, has proven that it has come out

of the global crisis honourably thanks to

its successful fiscal performance.

While the European economy is

showing signs of recovery in a slow

pace, it will be inevitable for the

emerging economies to be negatively

affected, as well. But Turkey is a very

promising emerging market with its

significant growth potential and young

population, hence I strongly believe

that Turkey will remain as an attractive

growth centre for investors. Cautious

targets and prudent policies, along

with comprehensive, medium-term

and large-scale structural reforms have

formed the dynamics of the credible

long-term prospects for Turkey while

helping to maintain investor confidence

and assist in weathering possible

adverse global developments.

2011 was a year that Doğuş Group successfully maintained its operations and continued investments in various areas. As Doğuş Group, we have focused on efficiency and achieved successful results in all of our businesses while creating value for our shareholders.

Message from the Chairman


Although the global economic

conditions and sectoral outlook were

not very favourable due the European

debt crisis, 2011 was a year that Doğuş

Group successfully maintained its

operations and continued investments

in various areas. As Doğuş Group,

we have focused on efficiency and

achieved successful results in all of our

businesses while creating value for our

shareholders. I strongly believe that our

performance will be remarkable with

new investment opportunities going

forward as the markets normalize.

In line with changing global landscape,

we recently went through a change in

our partnership structure in the Garanti

Bank. In 2011, the process of selling

Garanti shares to BBVA was completed

successfully. This strategic partnership

between BBVA and Garanti Bank

has been a great step to reformulate

our business strategy. BBVA has a

significant presence in Latin America

and we create an inspiring synergy

through their extensive experience

with SMEs and our technology and

banking products. In the present

conjuncture, Garanti succeeded in

completing 2011 as the most profitable

bank within the sector, through the

right steps it has taken and thanks

to the forward-looking policies it has

pursued. Operating in every stage

of the automotive value chain and

representing leading global brands,

Doğuş Otomotiv left a successful

year behind in terms of number

of vehicle sales and profitability.

Doğuş Construction has been further

expanding and diversifying its portfolio

based on its notable national and

international experience in the sector

while seeking business opportunities

in potential markets as well. Doğuş

Media Group broadened its operations

in all means from TV to magazines,

radios, digital & print media and

expanded its portfolio with the addition

of new brands such as Star-Turkey’s

first privately-owned TV channel and

another magazine of the Condé Nast

Group, GQ Turkey. Doğuş Tourism

and Retail Group expanded its tourism

investments with the acquisition of

Swissôtel Göcek (renamed it D-Marin

Resort Göcek) and the renovation

of D-Hotel Maris. With the new

investments in marina business,

D-Marin Marinas Group’s vision is to

become a regional leader in the sector.

Following the opening of D-Gym in

2009, our new investment in the well-

being industry, D-Life, Healthy Living

and Detox Center, has brought a new

breath to the sector. Our companies in

the real estate sector, Doğuş REIT and

Doğuş Real Estate aims to increase the

value of their investment portfolios by

means of achieving a stable growth.

Doğuş Energy has been closely

monitoring privatization initiatives in

various regions of the country and

the renewable energy regulations and

expanding its presence in hydroelectric

energy production as a renewable and

clean energy source in line with its

environmentally friendly focus.

Doğuş Group is very well positioned

to sustain this momentum from 2011

and we will continue to improve our

services to the market, converged

products, team-work and strong brand

name. The year 2012 will of course

present new challenges, nevertheless I

am confident that as Doğuş Group, we

will continue to rise to these challenges

and deliver a performance that meets

the expectations of both our customers

and our shareholders.

I express my heartfelt thanks to our

valuable employees for their keen,

attentive and dedicated efforts and

contributions as well as to all our

customers, economic and social

stakeholders, and to our national and

global esteemed partners for their

support and confidence on our way to

success.

Ferit F. Şahenk

Chairman of the Board of Directors

Doğuş Group


Ferit F. ŞAHENK

Chairman of the Board of Directors

Ferit F. Şahenk is the Chairman of

Doğuş Group and also the Chairman

of Garanti Bank. Formerly, he served

as the founder and Vice President

of Garanti Securities, CEO of Doğuş

Holding and Chairman of Doğuş

Otomotiv. Mr. Şahenk is an Executive

Board Member of the Foreign

Economic Relations Board (DEİK)

of Turkey. Following his term as the

Chairman of the Turkish-American

Business Council of DEİK, he is

currently chairing the Turkish-German

Business Council and serving as

Vice-Chairman of Turkish-United Arab

Emirates Business Council of DEİK. An

active member of the World Economic

Forum and the Alliance of Civilizations

Initiative, he is on the Regional

Executive Board for Massachusetts

Institute of Technology (MIT) Sloan

School of Management for Europe,

Middle East, South Asia and Africa. Mr.

Şahenk is a Board Member of Endeavor

Turkey as well. Mr. Şahenk holds a

Bachelor’s degree in Marketing and

Human Resources from Boston College

and is a graduate of the “Owner/

President” Management Program at

Harvard Business School.

Süleyman SÖZEN

Vice Chairman

Süleyman Sözen is a graduate of

Ankara University Faculty of Political

Sciences and has worked as a Chief

Auditor at the Ministry of Finance

and the Treasury. Since 1981, he

has served in various positions in

the private sector, mainly in financial

institutions. Sözen has been serving

on the Board of Directors of various

Doğuş Holding and Garanti affiliates

since 1997. He holds a Certified Public

Accountant license.

Hüsnü AKHAN

CEO of Doğuş Group

Hüsnü Akhan was born in Birecik/

Şanlıurfa on the 23rd of January,

1953. He completed his primary and

secondary education at Birecik High

School. Hüsnü Akhan is a graduate

of Middle East Technical University,

Department of Business Administration

and earned his Master’s degree in

Economics from University of Miami

(USA). Akhan served at various positions

of the Central Bank of the Republic of

Turkey. He served as Representative at

London Office and Assistant General

Manager at the Foreign Relations

Department of the Central Bank of the

Republic of Turkey.

He joined Doğuş Group in 1994. After

serving as the Executive VP responsible

for Treasury, Operations and Foreign

Relations at Garanti Bank, he was

assigned as the General Manager of

Körfezbank in 1998. Akhan was a board

member of Doğuş Holding and CFO

during 2001-2005. Since January 2006,

he has been a board member of Doğuş

Holding and the CEO. Additionally, he

currently serves as the Chairman of

the Board for Doğuş Real Estate and

Doğuş D-Marin Marinas Group, as a

Deputy Chairman for Doğuş Tourism,

Doğuş Construction and TÜVTURK and

as a board member for GarantiBank

Moscow, GarantiBank International N.V.

and Doğuş Energy.

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 Doğuş Group in 1990 and has

held various managerial positions in

finance, retail and automotive sectors.

He has served as the Chairman of

Garanti Insurance, the Garanti Pension

Members of the Board of Directors

Doğuş Holding’s Board of Directors consists of eleven members including its Chairman and convenes as the Group’s business requires.


Company and Tansaş. Since January

2006, he serves as the Chairman of the

Board of Directors for Doğuş Otomotiv.

He is a member of the Board of

Directors of Doğuş Holding.

Ahmet KURUTLUOĞLU


Ahmet Kurutluoğlu obtained his

undergraduate degree from Faculty

of Law, his MBA degree from the

Business Administration Faculty

and his Master’s degree in Labour

Legislation from the Faculty of Law,

Istanbul University. He joined Doğuş

Group in 1981 and has served as a

Legal Consultant for Doğuş Holding

and Doğuş Construction. He currently

serves as a member of the Board of

Directors for Doğuş Holding and as the

Chief Legal Consultant of the Group.

Erman YERDELEN


Erman Yerdelen was born in İstanbul

and graduated from high school also

in İstanbul. He has visited Münster

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 received his Master’s

degree in 1996 from Marmara

University, İstanbul. After various

managerial posts in the private sector,

in 1992, he became the Chairman of the

Board of Turkish Airlines. He participated

in the founding of NTV News Channel

in 1996 and has been acting as its

Chairman of the Board since 1996. He

is also a member of Doğuş Holding

Board of Directors representing Doğuş

Media Group. Mr. Yerdelen speaks both

English and German.

Gönül TALU


Gönül Talu is a graduate of Istanbul

Technical University with a master of

sciences degree in civil engineering. He

joined Doğuş Group in 1969 and has held

various managerial positions in Doğuş

Construction. Since 1991, he serves as

the CEO and the Chairman of the Board

of Directors for Doğuş Construction.

He is also a member of the Board of

Directors for Doğuş Holding.

Muhsin MENGÜTÜRK


Prof. Dr. Muhsin Mengütürk is a

member of the Board of Directors

of Doğuş Holding. He served as the

Chairman of the Capital Markets Board

of Turkey from 1997 to 2000 and he

has held numerous executive roles in

the finance sector. Prior to 1990, he

taught at Bosphorus University and

Istanbul Technical University (İTÜ). Prof.

Mengütürk is a graduate of American

Robert College in İstanbul where he

completed his undergraduate degree in

Mechanical Engineering. He received

his MS and PhD at Duke University,

again in Mechanical Engineering.

Sadi GÖĞDÜN


Sadi Göğdün graduated from Istanbul

Graduate School of Economics and

Commercial Sciences and obtained

his PhD in economics and commercial

sciences. He joined Doğuş Group in

1976 and has worked as a member of

the Board in various companies of the

Group. Further, he served also as the

member of the Board of Garanti Bank.

Currently, he serves as a member of the

Board of Directors of Doğuş Holding and

Doğuş Construction Companies.

Şadan GÜRTAŞ


Şadan Gürtaş is a graduate of Anadolu

University, Faculty of Economic and

Commercial Sciences. He has joined

Doğuş Group in 1968 and currently

serves as a member of the Board of

Directors of Doğuş Holding.

Yücel ÇELİK


Yücel Çelik is a graduate of Ankara

University, Faculty of Political Sciences.

He had served in the finance sector

prior to joining Doğuş Group in 1974

with Garanti Bank. Between 1983-

2006, he was a member of the Board

of Directors for the Garanti Bank and

its subsidiaries. Currently, he serves as

a member of the Board of Directors for

Doğuş Holding.


Two oversight committees support

the work of Doğuş Holding Board

of Directors: The Risk and Audit

Committee and the Human Resources

Coordination Committee. In addition,

the Group has a Legal Advisory

Council.

Legal Advisory Council

• Evaluates law-related issues pertinent

to Doğuş Group,

• Identifies important matters within

these issues and,

• Specifies the legal processes to be

followed and the measures to be taken

in all such matters.

The Risk and Audit Committee

The Risk and Audit Committee was

established to assist and advise the

Board of Directors. The Committee

consists of three Board members

elected by the Board and meets

regularly a week prior to the Board

meetings. The Committee’s major

responsibilities are described

respectively;

Risk Management responsibilities of

the Committee are;

• Ensuring that a functional risk

monitoring system transmits important

issues to the Board,

• Reviewing regular information

flow from the Group companies

and evaluating risk assumed in the

Group strategies, business plans,

budgets and investments. It also

evaluates managerial actions to

address risk along with the general risk

management processes within each

company,

• Review of the Group risk levels

to ensure that they are in line with

predetermined levels of shareholder

risk preferences and,

• Advising the Board of Directors in

determining risk plans and actions

taken with regards to risk management

within the Group.

Audit responsibilities of the Committee

are;

• Overseeing the efficacy of actions

taken by Group companies in response

to the results of financial, operational,

and information technology audits

performed by the Doğuş Holding

Internal Audit Department,

• Evaluating the efficacy of the

internal control processes of the

Group companies and advising on

ways to improve the internal control

environment,

• Overseeing the efficacy of financial

control and internal audit activities

within the Group,

• Overseeing the security, efficiency

and effectiveness of the information

systems used by Doğuş Group

companies and reviewing and

approving their contingency plans and,

• Assisting the Board of Directors to

ensure that the business activities of

the Group companies are in compliance

with the requirements of applicable

laws and regulations.

The Human Resources Coordination

Committee

The Human Resources Coordination

Committee was established to assist

the Board of Directors with human

resources management practices at

Doğuş Group companies.

The Committee is made up of Human

Resources Managers from Doğuş

Group companies and convenes a

minimum of two times a year as

agreed upon in advance by the Board

of Directors.

The major responsibilities of the

Committee include:

• Carrying out human resources

practices within the Group companies

and know-how sharing,

• Arranging work groups relevant to the

planned issues,

• Sharing information about potential

candidates from within the Group and

possible vacant positions and,

• Developing common projects to

increase employee commitment.

Committees Subject to the Board of Directors


Despite the ever-present risk of crisis, we have maintained uninterrupted growth and reached new milestones. Our excellent forecasting ability, robust stance, and future-oriented vision have allowed us to continue to invest successfully, totalling US$ 1,180 million in 2011.

Message from the CEO

Dear Stakeholders,

2011 has been a challenging year for

the global economy. With the onset of

the crises sweeping across Europe in

2011, it has become clear that finding

solutions to these problems cannot

be put off any longer. Despite this

pessimistic conjuncture, Turkey has

achieved one of the most successful

budgetary performances in recent years

by maintaining rigorous fiscal discipline.

At Doğuş Group, we also had a very

successful year in 2011. Despite the

ever-present risk of crisis, we have

maintained uninterrupted growth and

reached new milestones. Our Group

grew by 4% in total assets and 15% in

revenues. Our contribution to Turkey’s

total tax revenue realized as 2% and

we expect a similar trend in 2012.

Furthermore, parallel to last year, we

also plan to hire an additional 2,000

people, thus reaching an employee base

of around 32,000.

Our excellent forecasting ability, robust

stance, and future-oriented vision

have allowed us to continue to invest

successfully totalling US$ 1,180 million

in 2011. Our merger with BBVA, our


winning bid for the construction of the

Üsküdar-Ümraniye-Çekmeköy metro line

and our acquisition of Star are among

various initiatives we realized in 2011.

In 2011, we completed the process

which had begun in 2010 of selling

the Garanti shares to BBVA under the

principle of equal partnership upon

fulfilling all the regulatory requirements.

This allowed us to take a strategic step

forward towards becoming a regional

banking powerhouse. We have created

a synergistic structure combining BBVA’s

growth plans in the region with the vast

experience and know-how of Garanti

Bank. In 2012, we will continue to

pursue our strategic regional expansion

plans while maintaining our organic

growth strategy in the Turkish market.

In 2011, Turkey’s automotive industry

broke its all-time record by selling

864,000 vehicles. At Doğuş Otomotiv,

we increased our market share to 12.6

percent with a sales volume of 112,399

including the heavy commercial vehicles.

We managed to improve not only our

revenues, but also our profitability.

In construction, after submitting the

winning bid for the construction of the

Otogar-Bağcılar metro line, we once

again trounced the competition, gaining

sole rights for the construction of the

Üsküdar-Ümraniye-Çekmeköy metro line

after having outbid six rival consortia.

Among our other projects are the Sofia

Metro Extension project, which is still

in progress, and the Bucharest Metro

Line project, for which we became one

of the four companies who obtained

preliminary qualification. Last but not

the least, in Ukraine, the Kiev Boryspil

State International Airport which is

undertaken by a joint venture led by

Doğuş Construction is about to be

completed. Concerning the international

projects, we are closely following

the current situation and prospective

projects in the Middle East. Meanwhile,

we are also interested in highway

privatization in Turkey and are thus

following developments very closely.

2011 has been a year of high activity

for Doğuş Media Group due to the

restructuring efforts in this sector. We

have cleared the way for a generation

of broader synergies in our Group by

relocating all our media operations

to Doğuş Center, Maslak located in

İstanbul. With the addition of Star

-Turkey’s first privately-owned TV

channel- to our thematic TV channel

portfolio as a nationwide entertainment/

soap opera channel, the value chain in

our media sector has been completed.

We expect Doğuş Media Group’s share

in the advertising market to double

for the next three years due to the

acquisition of Star. In addition, our

business partnership with the Turkish

branch of the Condé Nast Group, which

started with the initiation of Turkish

Vogue, will continue with the launch

of another magazine of the Group, GQ

Turkey, in March 2012.

As changes in tourism and services

industry bring new opportunities

with them, we are expanding our

investments in this sector. The

acquisition of Swissotel Göcek was

the most recent investment we made

in the tourism industry in 2011. We

have renamed the hotel D-Marin Resort

Göcek and we will open it to the public

without making any changes to its

capacity until 2013. In 2011, we also

completed the renovation of the D-Hotel

Maris, which occupies a magnificent

spot on the Hisarönü Bay. The hotel will

open its doors to guests in 2012 with

a fresh concept, 200 guest rooms, and

a villa. Furthermore, in 2012, we will

expand the number of guest rooms

available at our Hotel Grand Azur in

Marmaris, to 320, and we also plan

some renovation works at the hotel.

One of the industries on the rise is the

marina business. Under the D-Marin

Marinas Group, we are currently

operating with four marinas; D-Marin

Turgutreis, D-Marin Didim, D-Marin

Göcek in Turkey and D-Marin Mandalina

in Sibenik, Croatia. D-Marin Mandalina

will soon be ready to accept 80 mega

yachts over 30 meters up to 100

meters in its new extension dedicated

The communities where we do business are one of the most important stakeholders for Doğuş Group. We promise to make the community a better place, and we hold on to that promise through our responsible investments and community engagement practices.


only to super yachts with all necessary

infrastructure. We plan to complete

this extension in the first quarter of

2012 and it will be the only mooring

facility reserved for mega yachts in the

region supported with all high level

infrastructure. In addition, we will add

new marinas to our portfolio in Croatia

and also in Greece in 2012. We also

plan to begin the construction of the

Dalaman Marina in 2012. As a final

point, D-Marin Marina Management

Company, established by our Group in

2012, will utilise the knowledge and

expertise coming from its experience

in the marina sector to provide

management and consultancy services

to marinas under the Doğuş Group

umbrella, as well as marinas across

the world. With new investments

and initiatives in this arena, we aim to

become a stronger player in the marina

industry across the Mediterranean.

One of the areas towards which we

have recently directed our attention

is the well-being industry, since

service expectations of the new

breed of consumers are increasing as

they become more conscious of the

importance of healthy living. Following

D-Gym, our first investment in this

industry, we created a new and different

concept with D-Life Healthy Living and

Detox Center. Before long, we began

to have difficulty meeting the rising

demand at our present locations. In

2012, we are planning to launch a new

concept whereby we will combine

D-Life and D-Gym under the same roof.

In the next two years, we will develop

our value chain by opening two new

detox and spa centers, where our

guests will be able to stay overnight, in

İstanbul and Bodrum.

Regarding the real estate sector, we

made a big splash with the İstinyePark

and Gebze Center shopping malls,

where we created a concept that

appeals not only to local shopping

enthusiasts, but also to those who

come from abroad. We are considering

similar shopping mall projects in

other locations. We also started the

renovation of an existing office building

in Ayazağa where we will soon be

relocating our head office. Construction

of a new commercial office building in

Maslak is also on our agenda in 2012.

In energy, in a relatively short period

of time, we have created a portfolio

with an energy-generating capacity of

1 GW. Within our current portfolio, we

have Artvin Hydroelectric Power Plant

(332 MW), in which D Energy holds

100% share, Boyabat Hydroelectric

Power Plant (513 MW) and the Aslancık

Hydroelectric Power Plant (120 MW), in

which we hold a 34% and 33% shares

respectively. The construction phase of

the Boyabat HEPP will be completed in

late 2012. In line with our organic growth

strategy, our main goal is to maintain our

position as one of the top three players

in the Turkish energy industry. We

are also following privatizations in the

energy industry very closely.

Our Group will also begin to operate in

two new industries in 2012. The first

of these two is the food and beverage

industry. We are getting ready to enter

the industry by combining different

concepts. We aim to raise the bar

by creating a portfolio of restaurants

that appeals to a variety of different

income segments and audiences and

also by contributing to the very much

needed reform in the food and beverage

industry through reorganization of the

sector standards.

For the second new industry, we signed

a cooperation agreement with South

Korea’s SK Group concerning some

Internet-based applications. We expect

this cooperation, which began in the

field of e-commerce, to spill over into

other technology-oriented areas, thus

expanding its scope. In addition, keen

on entering the information technologies

and e-marketing sector, Doğuş Group

will continue its investments in this field

with new companies and partnerships.

At Doğuş Group, we produce for, and

share with the society. We promise to

make the world a better place, and we

hold on to that promise through our

responsible investments and community

engagement practices that comprises

of a combination of CSR projects,

philanthropy, and sponsorships. We

will maintain our firm commitment to

sustainability and social awareness in all

our operations in 2012.

On behalf of Doğuş Group, I would like

to thank all our valuable employees,

our qualified business partners and

our cherished shareholders, for their

keen and dedicated efforts, persistent

support and trust which have rendered

our Group’s success. I would also like

to take this opportunity to thank our

esteemed customers to whom we are

glad to serve in the best possible way.

Hüsnü Akhan

Chief Executive Officer

Doğuş Group


Financial Services

Timpani, trampet, drums,

crotales and xylophone...

Different yet alike... All are

members of the percussion

family, conducting their

duties in harmony. Like these

instruments, each enterprise

operating under the Doğuş

Group Financial Services

acts in harmony, creating

synergy with its ultimate

goal; to contribute socially

and economically wherever

it operates.



With its dynamic business model and edge in technological innovation, Garanti continues to

differentiate itself and facilitate the lives of its customers. Its custom-tailored solutions and the

wide product variety play a key role in reaching US$ 62 billion cash and non-cash loans.

Financial Highlights

Financial Highlights (TL thousand)

Finance 2008 2009 2010 2011

Segment Assets 98,188,338 115,607,637 135,802,715 162,138,835

Net interest income 3,508,057 5,433,151 5,214,406 5,235,893

Net fees and commission income 1,500,989 1,855,063 1,910,832 2,130,603

Gross Profit Margin 41.4% 54.6% 57.2% 52.9%

Income from operations(*) 2,542,065 4,125,711 4,504,777 4,505,841

Income from operations margin 21.0% 30.9% 36.2% 32.4%

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

Total Assets Net Interest Income

2008 20082009 20092010 20102011 2011

98,1

88,3

38

3,50

8,05

7

115,

607,

637

5,43

3,15

1

135,

802,

715

5,21

4,40

6

162,

138,

835

5,23

5,89

3


With an established history of 65 years and total consolidated

assets reaching US$ 90 billion, Garanti Bank is Turkey’s second

largest private bank.

Garanti Bank


Garanti operates in every segment of

the banking sector including corporate,

commercial, SME, retail, private and

investment banking. Garanti is an

integrated financial services group

together with its eight financial

subsidiaries providing services in

pension and life, leasing, factoring,

securities, and asset management as

well as international subsidiaries in the

Netherlands, Russia and Romania.

Garanti provides a wide range of

financial services to its 11 million

customers through an extensive

distribution network of 907 domestic

branches; 7 foreign branches in

Cyprus, Luxembourg and Malta; 4

international representative offices

in Moscow, London, Düsseldorf and

Shanghai; reaching 3,300 ATMs; an

award-winning Call Center; and the

state-of-the-art internet and mobile

banking platforms built on cutting-

edge technological infrastructure.

Garanti commands a pioneering

position in all lines of business through

the profitable and sustainable growth

strategy it has pursued since the day

of its establishment. Its competent

and dynamic human resources, unique

technological infrastructure, customer

centric service approach, innovative

products and services offered with

strict adherence to quality carry

Garanti to a leading position in the

Turkish banking sector.

Following the best practices in

corporate governance, Garanti is

jointly controlled by two powerful

companies, Doğuş Holding Co. and

Banco Bilbao Vizcaya Argentaria S.A.

(BBVA), under the principle of equal

partnership. Garanti’s organizational

capabilities and shareholder value

maximization focus foster its

successful performance.

With its dynamic business model

and edge in technological innovation,

Garanti continues to differentiate

itself and facilitate the lives of its

customers. Its custom-tailored

solutions and the wide product variety

play a key role in reaching US$ 62

billion cash and non-cash loans. The

high asset quality attained through

advanced risk management systems

and established risk culture place

Garanti apart in the sector.

Garanti is committed to improve the

value-add it creates not only for its

customers and shareholders, but also

for all its stakeholders and the society.

Within this context, Garanti’s long-

term support in the areas of culture,

arts, environment, education, and

sports reflects its commitment as well

as its keen sensitivity to sustainability.

Activities in 2011

Garanti’s consolidated net income

reached TL 3 billion 397 million

926 thousand in 2011. The Bank’s

commitment to sustainability was

proven with its track record of

delivering an average of 25% return

on equity in the last 5 years. Garanti

reinforced its solid stance with the

remarkable performance achieved

in 2011. The Bank delivered a ROAE

(Return On Average Equity) of 20% in

2011.

Garanti, with its 68 new branch

openings in 2011 aiming to provide

greater access to and convenience

for its customers, continued to be

the driver of the economy by its

uninterrupted support. Garanti’s assets

increased by 19% in 2011, reaching TL

162 billion 138 million 835 thousand;

while the support provided to the

economy through cash and non-cash

lending reached TL 114 billion 891

million 189 thousand. Expanding its

cash loans by 30% in 2011, Garanti

increased its share of loans in assets,

by 480 basis points, to 57% of assets.

Garanti, with its disciplined growth

target, did not pursue market share

increasing efforts based purely on


pricing competition and in this respect,

has been selective in terms of growth

so as to manage the increasing

pressure on margins in an effective and

balanced manner. Garanti sustained

its leadership in consumer loans

including credit cards and preserved

its leadership position as the largest

lender in mortgages in Turkey. General

purpose lending expanded by 44%

in 2011 resulting in increased market

share of 40 basis points year on year,

which in turn, further reinforced the

Bank’s market position.

Garanti sustained its sound asset

quality in 2011. Collections normalized

but remained still strong and the

nominal non-performing loan (NPL)

stock declined by 9% versus sector’s

3% increase, which is a clear evidence

of the Bank’s success in collections

since 2008. Garanti’s NPL ratio

decreased from 3.5% in 2010 to 2.3%

in 2011.

Garanti stands out with its well-

diversified and solid funding structure.

In 2011, customer deposits increased

by 18% as compared to 2010 and

rapid expansion of the customer base

continued. As a natural consequence

of Garanti’s successful business

model, which has been solidified

through the Bank’s effective strategy

to capture wider customer base,

high demand deposit levels were

maintained. As of the end of 2011,

the share of demand deposits in total

deposits increased to 22%.

In 2011, Garanti sustained its strong

capitalization ratios due to high

internal capital generation capability.

As of year-end 2011, the Bank’s

consolidated capital adequacy ratio

stood at 15.8%. Free funds grew by

more than 20% on an annual basis,

and the Bank funded around 1/5 of its

assets through free funds.

Despite global uncertainties,

regulatory pressures and lower

interest rates, Garanti with its dynamic

balance sheet management, had

another successful year in 2011. The

Bank, prioritizing its customer-oriented

banking strategy, managed to grow

refraining from irrational competition.

Even though Garanti gained market

share in many areas in 2011, the Bank

displayed a distinguished pricing policy

both on loan and deposit products

and recorded the lowest contraction

in loan deposit spread among peers.

With its continuous improvement

culture and its visionary moves that

lead the sector, the Bank contained

its OPEX growth below inflation

while expanding its branch network,

and despite the challenges in 2011,

Garanti recorded the highest net

income among Turkish banks.

Garanti continued its corporate social

responsibility projects in 2011 as

well. At the core of its activities,

there has been its investments in

culture&arts and its activities related

to sustainability. Garanti’s long-lasting

support to culture and arts entered a

new phase with the opening of SALT

Beyoğlu and SALT Galata. Aiming to

create an institution that will serve

Turkey’s cultural and intellectual life

for many years to come, three cultural

institutions were merged under a

single roof, SALT. Recognizing that

investing in sustainability is one of its

key responsibilities for a more livable

world that will be able to cater to the

needs of future generations, Garanti

disclosed its carbon footprint in 2011,

as it has done for the last 2 years, and

qualified to be in the global reporting

system of the Carbon Disclosure

Project, CDP 2011 Global 500 Report.

Garanti was honored with numerous

national and international awards

also in 2011 with its competent

human resources capable of making

a difference, its state-of-the-art

technological infrastructure, its

customer centric products and


services and its applications created

with the synergy driven by its superior

customer relationship management

solutions.

Future Plans

Positive economic data from the US

and the radical steps taken by EU

toward the resolution of the debt

crisis alleviate the worries about the

global economy. However, the risks

are yet to be eliminated. Possibility

of global stagnation is a risk that

cannot be ignored. Most certainly, the

developments in the world will affect

Turkish economy and the banking

sector alike.

The ongoing high growth of the

Turkish economy for the past two

years is expected to decelerate

in 2012. Together with the macro

prudential measures taken by the

CBRT and the BRSA, we expect

moderate growth in the banking

sector as well in the year ahead.

Garanti will continue its successful

margin management, prudent risk

management and commitment to

efficiency during 2012, and the aim to

grow in a sustainable and profitable

manner.

As always, Garanti’s target is the

same: To earn the appreciation

of all its stakeholders through its

financial performance and corporate

governance endeavors.


Successfully integrating Garanti Bank’s customer-oriented,

innovative and high quality service approach into its activities as

a “global boutique bank,” GBI remains as the trusted bank of its

customers while adding value to international trade.

Established in 1990 in Amsterdam,

GarantiBank International N.V. (GBI)

operates in the Netherlands, as well

as in Germany, Turkey, Switzerland

and Ukraine via its branches and

representative offices. GBI, a

wholly-owned subsidiary of Garanti

Bank, furnishes innovative, sector and

country-specific financial solutions to

its customers worldwide in the areas

of trade finance, private banking,

structured finance, corporate and

commercial banking.

2011 Activities

Having distinguished itself from the

banks with broad networks in the

countries it operates by fast and

reliable services, GBI continued to

strengthen its capital structure in

2011. Despite the impacts of the

global financial crisis that subsequently

struck Europe, the Bank maintained

its competitive position through a

customer-oriented approach and its

strategy of dynamic balance sheet

management.

GBI’s year-end Capital Adequacy Ratio

increased to 19.1%, 17.4% of which

consists of share capital. Maintaining

its high asset quality amid the debt

crisis conditions in Europe, GBI’s NPL

ratio again remained below 2% at

the end of 2011. Posting a net profit

of EUR 53.6 million* in 2011 with

a year-over-year increase of 14%,

GBI completed another successful

profitable year.

In 2011, GBI secured a one-year

syndicated loan of EUR 200 million

with the participation of 18 banks from

8 countries, exceeding the targeted

amount of EUR 150 million with the

demand from the banks. The loan

agreement was signed in Amsterdam

on July 5.

In August 2011, Moody’s reconfirmed

GBI’s long-term deposits rating of

Baa1. The rating, which reflects the

Bank’s strong financial standing,

sustainable profitability, successful

position in international trade and

commodity finance, high asset quality,

and solid funding profile, is four

notches higher than Turkey’s sovereign

rating.

Projections for 2012

In 2012, GBI will focus on its

inherently low-risk main activities of

Trade Finance, Private Banking and

Structured Finance, sustaining its

prudent strategy. While commission

income is expected to remain strong

owing to increasing contribution of

Private Banking, Structured Finance

and Cash Management operations,

the Bank aims to further diversify its

areas of activity. Having set a target

cost-income ratio of 37% for 2012, GBI

is planning a balance sheet growth of

10% by sustaining the profitability of

its core activities.

Dividend retention policy will continue

in the coming years based on the

estimation that Dutch Central Bank

(DNB) will exert increased pressure on

capital adequacy depending on the risk

exposures in the emerging markets

including Turkey.

Offering the best tailor-made solutions

to its customers in a prompt manner

will remain GBI’s main objective in

2012.

* Based on Dutch GAAP standards.

GarantiBank International N.V


Garanti Bank SA keeps rising in Romania with its innovative and

customer-oriented approach.

Garanti Bank SA, which has brought

a breath of fresh air into the banking

sector and strengthened its position

in Romania, continues to introduce

“firsts” that make life easier for its

customers by extending its portfolio of

products and services. With its vision

of becoming an international player,

Garanti serves as an active financial

services group with Garanti Bank SA,

Garanti Leasing, Garanti Mortgage and

Garanti Consumer Finance.

2011 Activities

Offering services as a licensed bank

since May 2010 and expanding its

operations upon solid foundations,

Garanti Bank SA increased its market

share in 2011, which was an intense

year.

Building on a strong foundation

and being among Top 10 banks in

Romania, Garanti Bank SA responds

to its customers’ needs through its

innovative products and superior

technology. The Bank offers advanced

and comprehensive banking services

from SME to Retail, Commercial and

Internet banking across the country

with a population estimated at 20

million.

With total consolidated assets worth

EUR 1.7 billion, the Bank increased its

market share to 1.75% and climbed

to 13 th place in Romania where it

operates with a 98% geographic

coverage.

Having introduced many novelties in

the Romanian banking sector, Garanti

Bank SA was named the “Most

Dynamic Bank” by the Finmedia media

group in 2011.

Turkey’s leading Internet banking

service, “Garanti Online” replicated its

success in Romania and received the

“Best Bill Payment & Presentment”

award from Global Finance magazine

and the “e-payments” award from

e-Finance magazine.

Romania’s first international chip-

based card with a reward program,

Bonus Card, was presented with the

“Best Promotion” award by No Cash

magazine and the “Best Innovative

Banking Product” award by the

Business Arena magazine. In addition,

the “Credimed” product was selected

the “Best Product of the Year for

Physicians” by ‘Coleguil Medicilor’

organization, while the loan product

offered to SME customers was named

the “Best Banking Product” by Piata

Financiara magazine.


Garanti Bank SA will pursue its

activities in 2012 with the aim of

introducing many firsts to the sector,

differentiating itself through offering

products and services combined with

its technological edge and creating

value for its customers.

Garanti Bank SA


GarantiBank Moscow

With its ability to adapt to challenging market conditions and

strict adherence to service quality, GarantiBank Moscow, aims to

realize its growth plans and maintain high customer satisfaction

by capitalizing on opportunities and building new relationships.

GarantiBank Moscow (GBM) holds

full-scale banking license. Some facts

about GBM are given below:

• Operations started in Russia in 1996,

• One of the 78 foreign banks

operating in the country,

• Active in the core businesses of

corporate and commercial banking,

• Serves Russian firms from various

sectors, major Turkish companies

active in the Russian market, and large-

scale Turkish tourism establishments in

Russia,

• Among ~500 commercial customers

in its portfolio, 83% is constituted by

resident companies and 17% by non-

residents,

• Pursues activities with one branch

and 81 employees.

Economic Developments

The Russian economy is estimated

to have grown 4.3% and registered

the lowest inflation rate of its history

at 6.1% in 2011. The Russian Central

Bank recently narrowed the interest

rate corridor, reducing the differential

to 1.5% between the overnight deposit

rate, i.e. the basic interest rate in the

market, and the repurchasing rate that

funds the market. The Central Bank

intends to switch to inflation targeting

regime as of 2012; as a result, the

country’s currency ruble is expected to

fully free-float.

After having gained value on the basis

of the euro/dollar basket until August,

ruble started depreciating thereafter

with the accelerated European debt

crisis and the increased risks of global

recession. While the capital outflow

amounted to US$ 38 billion in 2010, the

figure more than doubled and reached

US$ 84 billion in 2011. Nevertheless,

foreign currency reserves that stood in

the region of US$ 479 billion at year-

end 2010 rose to US$ 499 billion at

year-end 2011, driven by the relatively

higher oil and other raw material prices.

The Central Bank stated that the

liquidity required by the market will be

mainly supplied through repurchase

transactions, and declared they see

no need to re-introduce the non-

collateralized loans utilized during the

financial crisis of 2008-2009.

While the Russian economy still

projects a growth rate of 3.5 to 4%

in 2012 after attaining around 4%

expansion in 2010 and 2011, the

growth rate will likely to be shaped by

the global economic developments

owing to the Russian economy’s

dependence particularly on raw

material prices and integration with the

worldwide financial system.

2011 Activities

Scene to an over-competitive

environment resulting from the

intensive activities of leading public

banks to increase their shares in the

market, 2011 bore a negative impact on

the margins and prospects of Russian

private-sector banks and banks backed

by foreign capital.

GarantiBank Moscow was affected

by these conditions at the minimum

extent owing to its ability to adapt to

changing conditions, and pursued its

operations with a cautious approach

and a balance sheet with high asset

quality, in line with its sustainable

profitability target.

In keeping with the lending policy

adopted, GBM kept concentrating on

real sector companies that have strong

shareholding structures, relatively

low leverage, strong cash generation

capability, strict financial discipline and

a sound management in 2011.


In line with the target of recapturing

the pre-crisis levels in the lending

portfolio, which had been intentionally

narrowed down during the crisis

period, new customer relationships

were established with large-scale

companies enjoying high credibility. In

2011, the Bank continued to witness

the positive impact of these new

relationships on volumes that had been

revived from the last quarter of 2010.

Having downsized its assets by 60%

and cash lending portfolio by 78%

during the crisis, GBM finished 2011

with an asset size of US$ 389 million.

With the support of relationships with

existing and potential customers, GBM

targets to achieve US$ 500 million in

asset size at year-end 2012.

During 2011, the Bank kept ruble

and US$ denominated private sector

bonds issued by companies with

high credibility in its balance sheet.

A great majority of these bonds that

make up the portfolio are accepted

by the Russian Central Bank for repo

operations. Investments were made

in 2011 in the ruble-denominated

Russian Sovereign bonds owing to

their attractive returns, which had lost

the investors due to their low returns

in the pre-crisis period. Capitalizing

on the advantage resulting from

price movements, GBM disposed of

some of the securities in its portfolio

and invested in other new securities

presenting attractive returns.

With the impact of further increased

competition and contracted margins in

the sector particularly in 2011, GBM’s

pre-tax profit for the reporting period

stood in the region of US$ 9.5 million.


Anticipating tough market conditions

to persist through 2012, GBM aims to

sustain and even further upgrade its

current performance via its analysis

skill and capability to easily adjust to

changing market conditions.


Providing corporate finance, research

and capital markets brokerage services

to its domestic and foreign clients,

Garanti Securities remains as Turkey’s

most preferred brand in corporate

finance and brokerage services with its

highly experienced team characterized

by teamwork and custom-designed

solutions. With the in depth coverage

on Turkish macro economy, equities

and fixed-income securities, Garanti

Securities continues to provide

investment recommendation that

outperform the market.

Corporate Finance

Named the best investment bank in

Turkey by Global Finance every year

since 2007, Garanti Securities executed

corporate finance advisory transactions

reached total of US$ 23 billion, value

to date.

• Garanti Securities led three public

offerings in 2011:

o Sole Domestic Bookrunner of

Migros Ticaret A.Ş.’s US$ 510

million equity offering executed by

accelerated bookbuilding method,

o Sole Domestic Coordinator and

Bookrunner of Bizim Toptan Satış

Mağazaları A.Ş.’s US$ 250 million

initial public offering,

o Sole International Bookrunner of

Bimeks Bilgi İşlem ve Dış Ticaret

A.Ş.’s US$ 57 million initial public

offering.

• Total of 11 bill and bond offerings

with a total value of TL 4.4 billion

issued in 2011,

• The following services have been

provided under advisory activities in

2011:

o Mandated by the Privatization

Administration and SDIF as the

sell-side advisor for the privatization

of Başkent Natural Gas and Kümaş

Magnesite, respectively,

o Buy-side advisor to a consortium

in the privatization of motorways

and bridges by 25-year transfer of

operating rights. The privatization

process is expected to be completed

in 2013,

o As a sell-side advisor successfully

completed the sale of a company

in the energy sector, and the

privatization of Mazıdağı Phosphate

Facilities.

Garanti Securities aims to preserve its

strong performance of 2011 in 2012

and offer advisory services in the major

transactions.

Private Equity

In 2011:

• Garanti Securities Private Equity

team advised in the sale of Mey İçki

Sanayi ve Ticaret A.Ş., one of the

biggest private equity investments and

the biggest private equity sale ever in

Turkey,

• Aiming to add value both to the

companies it will invest in and also to

the Turkish economy; Garanti Securities

signed an agreement with the

US-based Cerberus Capital

Management L.P. (“Cerberus”) in

October, 2011, as a result of its efforts

spent toward pursuing activities in

the private equity segment. Under the

agreement, an initial US$ 400 million

will be made available in total to be

invested in Turkish businesses. Garanti

Securities and Cerberus intend to

increase their joint fund size to US$ 1

billion next year.

Target equity ticket size is US$ 50

million to US$ 250 million; however,

Garanti Securities and Cerberus will

also consider investments outside this

range. Investments will be focused

on companies within Turkey, with

no restrictions imposed in terms of

sectors.

Garanti Securities

Garanti Securities’ strong presence in corporate finance

and brokerage services with its experienced team,

robust infrastructure and long-standing relationships with

institutions further strengthen Garanti.


Investment opportunities will also be

tapped in surrounding countries where

Turkish companies have significant

economic relationships and which

present high investment potential.

International Institutional Sales

Following the restructuring of

the International Institution Sales

Department, significant rises have been

attained since mid-2010 in cumulative

trading volume and commission

income. In 2011, the Department’s

trading volume augmented by 33%,

while revenues increased by a

significant 63% year-on-year.

Within the frame of marketing

activities, the two-day investment

conference was held in London on May

11-12, 2011. The conference attracted

34 executives from 19 companies, 46

asset managers from 31 funds, and

hosted total of 215 meetings.

The International Institutional Sales

Department targets to increase its

trading volume and commission

income in 2012. The focal points of

the Department in the year ahead will

be achieving increased efficiency in

DMA (Direct Market Access), TurkDEX

markets, and creating synergy with

the Corporate Finance Department to

generate revenues on various products

including initial and secondary public

offerings.

Research

The Research Department, besides

providing periodical, sectoral and

thematic reports, fundamental and

technical analyses to retail and

corporate clients, extends support in

corporate projects including public

offerings, M&A projects and asset

sales. The Department publishes

recommendation and strategy reports

on stocks traded on the ISE, as well

as macro economy and fixed income

securities. The scope of research on

equities encompasses Turkey’s leading

sectors, financial institutions that steer

the ISE and industrial companies.

Reports drawn up by Garanti Securities’

experienced research team are

delivered to the extensive client base,

investment centers and international

corporate investors across the world.

The team’s portfolio recommendations

consistently outperform the ISE-100

index by an average of 25% each

year since 2006. The equity portfolio

constituted based on the research

team’s recommendations outperformed

the ISE-100 index by 16% in 2011.

Operations

Garanti Securities Operations

Department with its qualified and

experienced team, modern technical

infrastructure, and strong software

support, provides operational and

clearing services to head office and

agency customers.


Garanti Asset Management offers

efficient solutions for its individual

and corporate customers’ needs

in mutual fund, pension fund and

discretionary portfolio management,

as well as in alternative investments

management.

Garanti Asset Management

continues to be one of the best asset

management companies in Turkey

through its customer-centric approach,

disciplined risk control and service

quality. The Company carries out

activities that fully overlap with its

stakeholders’ interests since 1997 and

responds to constantly evolving and

diversifying investor demands through

the most current methods.

In 2011, which was characterized

by intensive competition resulting

from the highly volatile and low-

interest market environment, Garanti

Asset Management displayed a

sustainable performance with its strong

professional team.

As of December 2011, Garanti Asset

Management was managing 24 mutual

funds of Garanti Bank, 3 mutual funds

of Garanti Securities, 15 pension funds

of Garanti Pension and Life, and the

Garanti Investment Trust portfolio.

Assets under management amounted

to TL 7.1 billion.

Mutual Funds

Garanti Asset Management sustained

its successful performance in mutual

funds through its proactive strategies

and effective collaboration with Garanti

Bank branches that make up its primary

delivery channel.

• Funds under management amounted

to TL 4.3 billion at the end of the year,

• 3rd among 53 asset management

companies with 14.5% market share

5.9% market share in Type A funds and

14.8% in Type B funds.

Pension Funds

Having a major role in the

establishment of long-term investing

habits, pension funds maintained

their sustainable growth performance

in 2011, and grew by 19% and

increased their weight in the market

share. Pension funds managed by

Garanti Asset Management continued

to outperform the sector in 2011

and reached the assets under

management volume of TL 2.3 billion

with a 28% annual growth rate. The

market share reached 16.2% with a

1.12% increase.

Discretionary Portfolio Management

Garanti Asset Management continues

to strengthen its presence in individual

and corporate discretionary portfolio

management with its efficient

marketing efforts coupled with its

approach focusing on customer

satisfaction.

According to December 2011 data

published by the Capital Markets

Board, the overall discretionary

portfolio management market achieved

a volume of TL 5.3 billion, whereas

Garanti Asset Management’s AUM

volume reached TL 418 million.

Alternative Investment Products

The upward trend of the demand for

alternative investment products in the

recent years continued in the low-

interest rate environment of 2011.

As of 31 December 2011, there were

111 Income Guaranteed and Capital

Protected Funds in the sector. Garanti

Asset Management has a 5% market

share with 7 funds worth of TL 179

million under its management.

Launched in 2009 as a key novelty for

qualified investors, Istanbul Hedge

Garanti Asset Management

Garanti Asset Management, the first asset management company in Turkey, preserves its leader position as an exemplary service provider possessing all the competencies required by contemporary asset management, with its products and services tailored with sectoral developments deployed through fast and effective processes.


Fund is still managed by Garanti Asset

Management.

In a low-interest rate investment

atmosphere, even more investors are

leaving their habits of investing savings

in short-term financial assets, and

turning to investment facilities that rely

on professional support and unbiased

information. In the process, direction

of corporate investors’ funds into

capital markets is critical both for the

progress of markets and for sustainable

macroeconomic development.

As investor habits undergo

transformation, Garanti Asset

Management will continue to expand

its product range, to evaluate medium

and long-term funds via its experienced

team, and to channel funds to the

national economy in the near future

where stronger demand in capital

markets, increased interest in new

products and alternative investment

instruments will continue.

Projecting that PPS will continue to

grow in its sound pace and support

Turkish economy in the medium-term,

Garanti Asset Management will carry

on with its innovative efforts in this

respect.


2011 Activities

After registering the all-time high

business volume in 2007, the Turkish

leasing sector has started shrinking

since 2008 owing to the impact of the

global crisis. For Garanti Leasing, 2011

marked the second highest business

volume attained by the Company after

the sector’s and Garanti Leasing’s

record business volumes of 2007.

Leaving behind a successful year,

Garanti Leasing continued to make

a difference in the sector with its

competent employees, robust technical

infrastructure, customer diversity, and

customer risk distribution in its balance

sheet structure. Garanti Leasing’s

ability to successfully cater to its

customer’s diverse needs is warranted

by its flexibility and agility under

changing market conditions.

Standing as the sector’s unbeatable

leader in the number of contracts for

ten years, Garanti Leasing consolidated

its leadership in 2011 with 2,916

leasing contracts and 20% market

share in the number of contracts. While

the overall sector’s y-o-y growth in the

number of contracts was 44%, Garanti

Leasing achieved 46% growth. The

Company posted US$ 860.6 million in

business volume with a y-o-y growth of

84% that exceeded the sector’s figure

of 54% by far.

Distinguished from its peers with

its high funding ability and broad

borrowing portfolio in international

markets, Garanti Leasing, in 2011:

• was assigned BBB- in local and

foreign currency by Fitch Ratings,

which indicates “investment grade,”

with a “stable” outlook. The Company

was issued a national credit rating of

AAA (tur),

• received a “positive” outlook and a

long-term foreign currency rating of BB

from S&P.

Through its convention appearances in

2011, Garanti Leasing supported new

customer acquisition with the solutions

co-developed with vendors specifically

for conventions, and the flexible

repayment option that is adjustable

according to clients’ cash flows.


In 2012, the Company will continue

to cooperate with vendors and to

introduce innovative and competitive

solutions tailored for relevant sectors.

The Company’s 2012 targets include

expanding the customer base so

as to further spread the customer

risk distribution, thus preserving

profitability.

Garanti Filo

Established in 2007 to be engaged

in operational leasing, Garanti Filo

successfully maintains high levels in

customer satisfaction with the flexible

and suitable solutions offered based on

the agreements with service provider

companies.

Continuing to grow in 2011, Garanti

Filo purchased more than 2,300 new

vehicles to reach a fleet size of 7,500

vehicles, and increased its total assets

to US$ 135 million.

Garanti Leasing

The only Turkish leasing company rated both by Standard and

Poor’s (S&P) and Fitch Ratings, Garanti Leasing continues to

surpass sector averages on the back of its quality services that

make a difference for its clients.


Active since 1990 and retaining its

pioneering position in the sector with its

customer-driven, innovative and dynamic

approach, Garanti Factoring addresses

a customer base mainly made up of

enterprises with extensive supplier and

vendor networks, exporters, importers,

and SMEs.

Garanti Factoring provides, in a single

package, the financing, guarantee and

collection management products required

by both the domestic and international

trade. 34.82% of the Company’s shares

are trading on the ISE National Market.

The Company facilitates rapid conversion

of receivables from credit sales of the

SMEs across the country into cash at

optimum terms, adding the superior

quality service of “Garanti.” The

buyer limits created allow financing at

competitive interest rates for supplier

SMEs in return for their high quality

receivables.

Garanti Factoring differentiates itself

from the competition in Turkey with its

membership in two major international

factoring chains, FCI (Factors Chain

International) and IFG (International

Factors Group). The Company effectively

uses correspondent factoring companies

all over the world in international

transactions, thus allowing faster

and easier realization of its clients’

open account sales. Through these

international collaborations, Garanti

Factoring provides its customers with

credit information on their buyers,

thus making foreign trade safer for its

clientele.

2011 ActivitiesFor Garanti Factoring, 2011 was a year of

intense restructuring of processes and

organization. Backed by Garanti Bank’s

extensive branch network, the Company

operated with the objective of providing

tailor-made, optimum solutions for needs

in a timely manner. Garanti Factoring

completed the year with 3,506 customers

and 33,512 transactions translating into a

business volume of US$ 3.1 billion.

As foreign trade volume in Turkey grows

rapidly, so does the need for foreign-

trade financing. Garanti Factoring

delivers fast and effective solutions

for its customers’ needs, using export

factoring and international supplier

financing structures.

Garanti Factoring, the sector’s leader in

import factoring transactions, continues

to extend support to its customers

in their international procurements.

Having intermediated imports worth

more than US$ 202 million in 2011,

Garanti Factoring products and services

are frequently preferred by export

companies abroad.

Thanks to the efforts of the expert

team of Garanti Factoring, Commercial

Collections Management achieved

a gradually expanding volume and

significant weight in the product portfolio.

Maintaining constant contact with the

buyers, the call team supports the

customers in minimizing overhead costs,

as well as in making comprehensive

evaluations by providing up-to-date

reports on the performance of buyers

regularly. Experienced and expert

Commercial Collections Management

Team shortens the collection time of

the customers’ receivables and reduces

financing costs, thus enhancing customer

satisfaction and loyalty.

Projections for 2012In 2012, Garanti Factoring targets to

increase its growth momentum in a

sustainable and healthy fashion. The

Company will work towards capturing

leadership in every field it is engaged

by improving collaboration with Garanti

Bank’s nationwide branch network.

In keeping with this vision, the Company

will focus on the financing of SME

receivables and increase its market share

in this segment, along with its presence

in the financing of export receivables.

With the experienced and expert

Commercial Collections Management

Team, the customer portfolio receiving

collection service will be expanded.

Garanti Factoring

“Turkey’s Most Admired Factoring Company,” Garanti Factoring distinguished itself in factoring transactions both on the national and international platforms with its competent team, vast knowledge in product development and consultancy, and operational transaction speed.


2011 Activities

Drawing on its experience in

bancassurance, its continuously

upgraded technological infrastructure,

product diversity and qualified people,

Garanti Pension and Life, once again,

outperformed the sector and sustained

its rapid growth trend in 2011:

• Garanti Pension was the most

profitable company in the sector in

2011 with TL 113 million of net profit,

• It ranked first in the sector with a

technical profit figure of TL 109 million

generated from private pension and life

insurance sector activities,

• With a net increase of 74 thousand

participants, the company reached

20.4% market share in number of

pension participant and became the

leader,

• With the total number of participants

reaching up to 529 thousand, the

Company has an overall 20% market

share,

• Highest increase in the pension fund

size with an amount of 511 million, the

Company has brought its annual market

share to 22%, which enabled Garanti

to acquire a 1.1 percentage points rise

in its market share in pension funds;

much above any of its competitors,

• The Company has 16.4% market

share with TL 2.3 billion in total funds

under its management,

• Premium production of TL 240

million in life insurance translated

into a market share of 9.1%, mainly

driven by production in risk life and

unemployment products realized

through Garanti Bank branches and

alternative distribution channels.

Garanti Pension introduced new

products to the sector in 2011:

• Production through alternative

distribution channels was added

further diversity with the telemarketing

project,

• Infrastructure initiatives carried out in

the Call Center and after-sales services

resulted in capacity increase, which

in return enabled faster and more

efficient services to customers,

• In efforts to enhance customer

satisfaction, pension sales processes

were simplified and customer service

became faster.


Aiming to add value to individuals

and organizations it cooperates with,

ensure sustainability of its solid

performance, and continue its financial

achievements, Garanti Pension will be

shaping the sector in the year ahead

through its innovative products, while

focusing on the fundamental target of

the Company, gaining market share.

Garanti Pension and Life

Leading the pension and life insurance sectors, Garanti

Pension and Life had yet another successful year with its

creative products, services and campaigns, combined with its

superiority in alternative distribution channels.


Established by Garanti Bank in 1999

on the vision of developing systems

that will replace cash, Garanti Ödeme

Sistemleri A.Ş. (Garanti Payment

Systems) offers commercial and virtual

cards, marketing and e-commerce

services including chip-based, multi-

branded and co-branded card programs.

As the fastest and most active service

provider in the Turkish credit card

market, Garanti has been standing out

in payment systems for many years as

the brand that makes a difference with

its products and services developed in

line with financial dynamics, as well as

relying on detailed analysis of customer

habits and needs, combined with its

marketing oriented team and superior

technology. Garanti Payment Systems

effectively capitalizes on all these

assets and designs special products

catering to diverse needs of users from

different segments.

The product portfolio of Garanti

Payment Systems includes:

• Bonus Card, the credit card for

customers who like smart shopping in

every segment,

• Flexi Card for customers who wish to

pay only for properties that are actually

used,

• Money Visa Card earning extra points

called “money” in addition to “bonus”

points, besides instant discount at

checkout and free surprise shopping

chance,

• Golden Bonus that saves “gold” as

you spend, which also serves as an

investment tool through gold coins for

customers who wish to save up and

even invest while shopping,

• Shop&Miles that earns miles from

purchases and flights, provides

discount on dining expenses, and

makes life easier and more enjoyable

with its travel and concierge

consultancy service for customers who

frequently travel abroad and incur high

entertainment and restaurant expenses

in and out of Turkey,

• American Express Centurion Line

as a global brand that offers high

standards for customers who incur

high entertainment expenses abroad,

provides up to 20% discount on

restaurant and hotel expenses, wins

exclusive gifts through MR points,

and offers international reliability and

comfort with travel, concierge and

insurance services,

• Bonus American Express that combines

the world’s most prestigious credit card

American Express with Turkey’s most

beneficial credit card Bonus,

• Paracard for customers who prefer

to use debit or prepaid card instead of

cash for shopping,

• Esparacard, a local prepaid card for

use in shopping in Eskişehir, the first to

use contact-free payment technology

(Trink) and M/Chip Advance for

transportation,

• Bonus Trink for customers who don’t

want to carry change, also available

in the form of watches, key fobs and

stickers as well as a regular plastic

card,

• BonusluAvea, a first in the world, for

customers who wish to pay for their

shopping with contactless debit or

credit card using their mobile phones,

with NFC technology,

• Cep-T Paracard, a prepaid card with a

SIM-based secure service that starts a

new era in the field of mobile financial

services and collects bonus points,

earns free minutes for mobile phones,

loads minutes/money onto mobile

phones, and transfers money,

• Environmentally Friendly Bonus for

customers who wish to protect the

nature while spending,

• Fenerbahçe, Galatasaray and Beşiktaş

Bonus for customers who want to

support their team,

• Reflected Bonus for women

customers,

Garanti Payment Systems

Reshaping shopping habits through numerous “firsts” it has

introduced to the sector, Garanti Payment Systems stands

out with its exemplary products, successful figures and

implementations across the world.


• Transparent Bonus that is

differentiated with its three corners and

see-through design,

• Retiree Bonus exclusive to the

retirees,

• Business card portfolio consisting

of Bonus Business Card, Shop&Miles

Business Card, Joint Card, Corporate

Card, Fleet Card, Ekin Card, Corporate

Travel Card and American Express

Business Card for customers who

prefer to make payments on behalf

of their companies in a secure and

easy manner as well as for those with

diverse needs.

Providing Kolay Vezne (Easy Teller),

Ödeme Noktası (Payment Point), and

Card Application Point services to

merchants, Garanti Payment Systems

provides e-commerce and e-tailing

services via garantialisveris.com. The

Company also offers various payment

solutions including dial-up POS, ADSL

POS, Mobile POS and Virtual POS.

Besides, Garanti is the only bank in

Turkey that accepts VISA, MasterCard,

American Express, JCB, CUP, Diners

and Discover cards.

2011 Activities

Leader in the number of plastic and

total credit cards once again in 2011,

Garanti continues to achieve high

customer satisfaction on the back

of its most favored card portfolio

domestically and internationally, and

the highest issuing volume generated

through this portfolio. Garanti kept

pioneering the debit card market with

Paracard, the most frequently preferred

debit card in shopping.


A provider of high quality service

for over a decade via its subsidiary

engaged in payment systems, Garanti

targets to achieve cashless society by

2023 in Turkey. Garanti will continue

to expand the market in this parallel,

to introduce special products tailored

to customer needs, and to make a

difference through its campaigns.

Another goal is to increase total

turnover from TL 138 billion to TL 160

billion.


Established in October 2007, Garanti

Konut Finansmanı Danışmanlık Hizmetleri

A.Ş. (Garanti Mortgage) continues to

make a difference in the sector with

its trademark “Garanti, the Mortgage

Expert,” and pursues operations with a

team of 76 experts in mortgages.

Standing out with its product variety, the

importance attached to delivery channels,

and superior service quality, Garanti

Mortgage offers the best mortgage

options and repayment schedules to its

customers via its expert team.

Garanti is the “most recognized bank in

mortgage,” on the back of:

• Having the Turkey’s widest range of

mortgage products,

• Offering service by expert portfolio

managers who have completed

mortgage expertise certification

program,

• Serving with a variety of products via

alternative delivery channels including

the call center, Internet and mobile

banking, in addition to its branches.

Garanti also aims to finalize loan

applications quickly and to ensure

customer satisfaction through

improvement projects carried out at all

phases of the process.

2011 Activities

Maintaining its leadership position also

in 2011, Garanti continued to turn its

customers’ homeownership dreams

into reality. In a period characterized

by severe competition, the mortgage

loans increased by 15% reaching to

TL 9.7 billion. Based on the December

2011 report of FINTURK, the finance

map of Turkey, Garanti claimed the first

spot in nine cities in mortgage loan

disbursements, and ranked in the top

three in 36 cities.

Garanti Mortgage introduced two new

mortgage loan products during 2011:

• The Bridge Loan is designed for

customers who wish to sell their

current house and move to another

one without waiting for the selling

transaction to be completed,

• 100% Mortgage is designed

for customers who already own a

house and wish to purchase another

one. 100% Mortgage enables the

customers to get higher amount of

loans via collateralizing their first house.

Another initiative in 2011 that was

introduced to improve service quality

was the launch of the suggestion/

complaint infrastructure. With the

system, branches are able to instantly

convey suggestions or complaints to

relevant units at Garanti Mortgage.

2011 Highlights:

• Set up in April 2008 and providing

service to 950 people on average per

day via the expert team of 13 agents,

Turkey’s first mortgage call center 444

EVİM (HOME) meets customer needs

with 20 seconds average response

time,

• Time measurement was carried

out at stations involved in the

lending process, and weaknesses or

improvement areas in the process

were identified, followed by necessary

actions for betterment,

• Administrative and technological

upgrades introduced to the survey

process and automated issuing of

related documents by the system

shortened the process and helped it

run more smoothly. Specific expertise

training programs to staff employed in

branches and other delivery channels

continued, so that the customers can

get the support they require in any step

Garanti Mortgage maintains its leadership in the sector

and responds to customer needs quickly with its

wide product portfolio and capability to effectively use

alternative delivery channels.

Garanti Mortgage


of the process from the Bank,

• Countrywide training conferences

organized for real estate agencies were

carried on,

• Campaigns addressing different

sectors and professions continued.

Within the frame of campaigns

organized for members of Oyak

(Turkish Armed Forces Assistance and

Pension Fund), Polsan (Assistance

and Maintenance Fund for the Police),

İlksan (Healthcare and Social Assistance

Fund for Primary School Teachers),

and Eğitimsen (Education and Science

Workers’ Union), facilities were provided

for these customer groups to enable

them to become homeowners that best

suited to their preferences, and thereby

getting the opportunity to expand the

lending portfolio,

• Involved in nearly 120 ongoing

resident projects during the reporting

period, Garanti continued to offer loan

facilities to its customers wishing to

buy homes from the project phase, on

the basis of cooperations established

with developers,

• Created in 2009 with the support of

Garanti, the Mortgage Expert, REIDIN

Real Estate Index remained the most

closely monitored real estate index in

Turkey.


Intending to shorten the time from

the loan application to the lending

stage through improvements, Garanti

Mortgage will further improve its

service quality on the back of products

and implementations that make a

difference, and remain the sector’s

leading mortgage company in 2012.

Garanti Mortgage aims to keep

reaching customers through alternative

delivery channels also in 2012; the

Company will combine its expertise in

this aspect with speed and reinforce its

image as “the most recognized bank in

mortgage.”


Garanti Technology (GT) provides

technology infrastructure, software

development, internet applications,

integration, systems management,

security management, project

management and office application

services as well as consultancy

services in these areas, to companies

engaged primarily in banking and

financial services, as well as in

automotive, construction, media and

tourism sectors.

Having the technological architecture

providing real-time, uninterrupted

system resources, an infrastructure

executing millions of on-line

transactions, and an operational control

system ensuring perfect operability of

the system 24/7, GT operates as a full-

scale IT Center.

GT manages all of the hardware and

communication software with its

strong communications backbone,

infrastructure-based video and data

communications services, and design

and engineering activities at global

standards, while providing field support

services at more than 4,000 points via

its countrywide locations.

Having adopted a corporate governance

style based on the ITIL process model

and built on Design-Operate-Support

principles, Garanti Technology makes

a difference with its activities that add

creativity and quality to technology.

The Company creates value for the

organizations it serves through projects

developed in accordance with quality

standards including COBIT and ISO, in

an effort to produce the solution that

best fits business requirements.

2011 Activities

Application Projects:

• One-Stop-Shop application has been

developed, which allows car buyers to

apply for an auto loan at dealers,

• Electronic transfer of bid bonds

and reference letters to the Public

Procurement Authority has been

enabled,

• Customer Limit application allowed to

proactively offer customers credit lines

based on income modeling,

• SME Mass Lending Process has been

introduced,

• Risk follow-up has been rendered

healthier by way of monitoring the

concentration of customer cheques and

promissory notes received as collateral,

• Guaranteed Payment application

has been designed as a new trade

finance product, which takes deferred

payments under the Bank’s guarantee

at the time of the trade, and is cashed

if no funds are available in the buyer’s

account on the due date,

• Guaranteed Account has been

introduced whereby a demand

account can be opened with a

single application with the option

to apply also for Internet Banking

and Telephone Banking, debit and

credit cards, E.L.M.A. account, and

bill payment linked to an overdraft

account,

• Savings Account has been launched,

which allows retail customers having

difficulty in saving due to limited funds

or lack of habit, to save up in small

amounts and to withdraw cash in

emergencies without worrying about

losing interest income due to early

withdrawal,

• Spend and Save product has been

developed, which uses the credit card

as the payment instrument, and the

amount to be invested in customer’s

Savings Account is calculated as a

percentage of the account statement

balance set by the customer,

• Student Account has been added to

the product portfolio, which regularly

transfers money from the parents’

Garanti Technology

As a creator of many technological firsts in the Turkish financial services sector,

Garanti Technology (GT) has a crucial role in the introduction of numerous

novelties to Garanti customers. GT makes it possible for its customers to utilize

state-of-the-art technology optimally for their needs, giving them a competitive

advantage and continues to lead the sector with its uninterrupted investments.


account to the children’s accounts,

with the option of regular payment and

additional allowance transfer,

• OTASS (Automated Bond Trading

System) and Garanti Bank (GB)

integration has been realized

through the transfer of Treasury repo

transactions conducted at OTASS to

the GB system and transfer of security

tradings executed on the GB system

to OTASS,

• Development has been completed

for the small branch model of 4+1

people,

• Revamped exports module has been

launched,

• Simple Click application has been

developed for easy sales of insurance

products from branches,

• Facility has been provided for making

the payments by credit card for social

security, tax and restructured public

debts,

• Centralization has been provided

for the preparation of branches’ tax

returns and making payments,

• Charge and commission definitions

have been made according to different

criteria through the new pricing matrix,

in line with the target of increasing

commission income,

• Human Resources (HR) application

running on different platforms has

been redesigned to gather all HR

processes on a single platform,

• The new Internet branch Garanti

Direct went live, which offers

advanced self-service banking

experience including personalized

finance management, transaction

flagging, advanced search, online help

and chat, and e-mail communication

with the customer representative,

etc.,

• Blackberry and iPad applications

have been developed for e-trader,

• A new ATM menu has been

introduced that offers ease-of-use for

retirees,

• Garanti Bank’s debit, prepaid and

credit cards have been defined on

the “Mobile Financial Services”

application available on Turkcell mobile

phone lines; the initiative allows

money transfers from one card to the

other or from the card to the mobile

phone number, as well as topping-up.

Targeting to reach non-bank customers,

the product also gives the chance to be

part of the Bonus reward program and

to earn minutes in purchases without

being a Garanti customer,

• Functions used by MCD Telecom

company on their own special devices

have been supported by P.O.S.

terminals of Garanti Bank, aiming to

generate commission income for the

Bank through transactions to be carried

out,

• Cep-t Cüzdan application has

been co-developed by Garanti Bank

and Turkcell in view of the global

developments in the mobile field,

which facilitates payment and banking

transactions via mobile phones,

• Card embossing has been outsourced

for cost saving purposes,

• Proactive Attrition project has been

carried out, which scores credit card

customers according to certain criteria

to measure the risk of attrition, with

the objective of taking necessary

counter-action.

System and Network Projects:

• Transaction performance has been

improved by 25% in mainframes

through the use of zNext technology,

• After increasing the response

speed in queries by 10 times upon

transition to Oracle Exadata V1 in

data warehouse platforms in 2009,

Exadata V2 upgrade in 2011 increased

system efficiency further. With the

upgrade, compression is tripled using

only half of the hardware components

(1/3 database size versus V1 and 10

times more compression as compared

with raw data) and response time

is shortened, while back-up time is

reduced by 50%,

• Centralized password management

has been launched for protection of

admin passwords for servers, network

equipment and other systems in a

central, electronic safe and for their

secure retrieval when necessary,

• Lines of offsite ATMs have been

backed-up using 3G technology,

• Live broadcast portal Garlive has

been developed.

Garanti Technology continued to

virtualize servers during 2011; the

energy saved through 1007 servers

hosted on 60 physical servers is

equivalent to planting more than 63

thousand trees.


In 2012, Garanti Technology will

keep contributing critical competitive

advantage to Garanti Bank, its

subsidiaries and other Doğuş Group

companies with the innovative and

creative products, services and

applications developed. GT will

preserve its leadership in the sector

by constantly investing in up-to-date

technology, uninterrupted processing

capability, infrastructure security, cost

efficiency and energy saving.


Automotive

Just like the strings in an

orchestra, the automotive

sector is one of the leading

industries of Doğuş Group.

With the world’s most

admired brands under its

portfolio and high quality

services it offers to its

customers, Doğuş Otomotiv

delivers a distinctive

performance every year that

is praised by millions.



Almost all the brands distributed by Doğuş Otomotiv surpassed their sales targets in 2011, increasing their volume/turnover and consolidating its market position.



2008 2009 2010 2011

Total Assets 1,443,678 1,219,008 1,499,369 1,905,092

Revenue 2,144,139 2,129,485 3,428,300 4,808,253

Cost (1,853,052) (1,827,658) (2,943,411) (4,211,309)

Gross Profit Margin (%) 13.6 14.2 14.1 12.4

EBITDA 38,366 96,087 222,395 260,066

EBITDA Margin (%) 1.8 4.5 6.5 5.4

Total Assets Revenue

2008 20082009 20092010 20102011 2011

1,44

3,67

8

2,14

4,13

9

1,21

9,00

8 2,12

9,48

5

1,49

9,36

9

3,42

8,30

0

1,90

5,09

2

4,80

8,25

3


Despite the environment of uncertainty throughout the world, Doğuş Otomotiv once again concluded a year with record figures with its 14 distinguished brands and over 80 models, thanks to its performance above sector standards in each ring of the automotive value chain.

Doğuş Otomotiv

Doğuş Otomotiv in 2011

A total of 864,439 passenger and light

commercial vehicles were sold in

Turkey in 2011, a successful year for the

automotive sector with an increase of

13.61% in total sales on previous year.

Turkey’s high growth rate, economic

stability and suitable credit conditions

have been the fueling factors for this

growth in the sector. The growth in the

automobile and light commercial vehicle

market has been especially high during

the first two quarters, but dropped in

accordance with expectations with

the third quarter. Increase in foreign

currency prices and additional taxes

imposed on vehicles over 1600 cc led to

a slower market realization especially in

the fourth quarter.


Total Vehicles Wholesales (Units)

2009 2010 2011

Passenger Cars 39,236 61,331 81,720

Volkswagen 26,752 39,822 55,550

Audi 6,251 9,656 12,064

Porsche 247 390 442

Bentley 8 14 10

Lamborghini 9 4 6

SEAT 2,568 5,113 6,059

Skoda 3,401 6,332 7,589

Light Commercial 10,601 24,018 26,361

Volkswagen 10,601 24,018 26,361

Heavy Commercial 1,142 3,501 4,318

Scania 800 2,500 2,929

Krone 208 556 817

Meiller 134 445 572

TOTAL 50,979 88,850 112,399

Doğuş Otomotiv / Value Chain 2011


Despite these negative developments

a historical record was broken in

2011, and Doğuş Otomotiv reached

its highest sales performance since

its establishment, succeeding to go

beyond the 100,000 units level. The

company reached its turnover and

sales targets, growing above the

sector average and thus increasing its

market share. Holding one of the most

valuable brand portfolios in the world

as a distributor, Doğuş Otomotiv has

combined the resultant competitive

advantage with its vision of “creative

service beyond expectations” and

its “customer satisfaction”oriented

operational goal, thereby consolidating

its market position in 2011 and

receiving numerous awards for it.

In 2011, Doğuş Otomotiv proved once

again that it was the leading company

of the Turkish automotive sector with:

• 112,399 vehicles sold (including

heavy commercial vehicles),

• Representing 14 of the strongest

automotive brands of the world,

• Over 80 different models offered to

its customers in a wide product range,

• 15,659 second-hand vehicle sales,

• Close to 2000 employees,

• Over 500 customer contact points,

• A total vehicle park of nearly 900,000

vehicles,

• 469,823 square meters of covered

sales and service area (for all brands

and dealers), and

• Over 750,000 service entries.

Sales success

Almost all the brands distributed by

Doğuş Otomotiv surpassed their

sales targets in 2011, increasing their

volume/turnover and consolidating

its market position. Volkswagen

Passenger Car, the driver of the Group,

has increased its own sales by 40%

in a passenger car market that grew

by 16.4% on previous year, thus

exhibiting a performance well above

the market. Volkswagen thus became

the 4th most selling automobile brand

in Turkey; similarly, Audi reached

its highest sales figure in 2011 with

12,064 units, another important

success. Porsche increased its sales

points in Turkey to six with the new

showroom in Bursa added to the ones

in İstanbul, Ankara, Antalya, and İzmir;

it broke a new record in 2011 with 442

units sold. With an increase in sales

by 19% and 20% respectively, SEAT

and Skoda also grew above the market

average.

There were important increases in

light and heavy commercial vehicles as

well in 2011. With an increase of 9.8%

in sales, Volkswagen Commercial

Vehicles increased its share in the

light commercial vehicle market to

9.7% and in the imported commercial

vehicle market to 23.5%. Scania

sold 2929 units of heavy commercial

vehicles weighing 16 tonnes and

above, growing 17% on previous year

and breaking a new historical record.

Besides passenger and commercial

vehicles, there have been important

sales and turnover successes in 2011

in businesses such as trailer, damper,

cooling system, and industrial and

marine engines, which Doğuş Otomotiv

offers the market through import and

manufacturing.

New launches

Besides sales figures, 2011 was a lively

year with respect to new models and

engine choices as well. Continuously

renewing itself and its technology

with its vision of “the world’s most

innovative automotive brand,”

Volkswagen Passenger Car launched

its New Jetta model with the slogan

“Prestige Has Changed Shape” and its

New Tiguan model, introduced during

Fashion’s Night Out.

Audi has considerably expanded its

product range during the last three

years, and with the Audi Q3, it has

offered a unique choice to customers in

search of a model that looked like an off-

road vehicle but was suitable for driving

in the city. As for Porsche, it made a

big leap in 2011 by introducing its New

Panamera Diesel, Panamera Hybrid, and

Cayman R models. 2011 was a year of

exciting innovations for Lamborghini and

Bentley as well. Bentley Continental GT

and Lamborghini Aventador LP 700-4

were launched this year and attracted

a lot of interest among high luxury

segment automobiles.


Skoda presented its sporty Fabia RS

model in March 2011 to the Turkish

consumers.

Volkswagen Commercial Vehicle

had two important launches in 2011.

Volkswagen Amarok, the first pickup

vehicle by a European manufacturer

featuring innovative technology, high

safety standards and fuel efficiency

along with comfort and ergonomics,

entered showrooms in May and took

the 2nd place in its segment with a

20.1% market share, an excellent

performance. Crafter, Volkswagen

Commercial Vehicle’s representative in

the big class light commercial vehicle

segment, was totally streamlined in

2011 and put on market in September.

“Excellent” service

Throughout 2011, Doğuş Otomotiv

continued its efforts to maintain the

continuity of customer satisfaction and

to improve its After Sales Services,

which it sees as one of the most

important tools in pursuing that goal.

The company has been presented a

number of international awards and its

success was recognized as a result of

these efforts.

At the Service Quality Award

competition, the fourth of which was

organized this year by Volkswagen AG,

two Volkswagen Authorized Services

from Turkey were placed among the

top 100 authorized services throughout

Europe. Similarly, Doğuş Otomotiv-Audi

repeated its success of the recent years

at the Twin Cup and came in first for

service and technical areas throughout

the world, bringing the Audi Twin Cup to

Turkey once again.

In the 2011 IACS survey conducted

by SEAT S.A. to measure after sales

customer satisfaction, Doğuş Otomotiv-

SEAT was one of the three brands in

Turkey to have increased its customer

satisfaction in the Turkish market. In

2011, the champion of the “Top Service

People” awards, which determine the

most successful employees among all

the Authorized Services in the world,

was the Service Manager of AVEK

Automotive, one of Doğuş Otomotiv

-SEAT’s authorized services.

Besides these accomplishments,

many brands offered to customers by

Doğuş Otomotiv were presented with

a number of awards throughout the

year. The Otohaber magazine gave 9

awards to Audi and named it the most

successful brand, while Skoda’s Superb

Combi model was given the “Star of the

Year” award by the Ekovitrin magazine.

In addition, Thermo King Turkey was

honored with the best trailer distributor

in the world award by OEM for its

successful track record in 2011; it was

also named “Krone Best Trailer Brand

in 2011” by Stuttgarter Verlags Euro

Transport-Media (ETM), and Volkswagen

Commercial Vehicle was the brand

with highest image in Turkey in a brand

image and awareness survey conducted

in the bigger markets in Europe.

A “Turk” in Switzerland

D-Auto Suisse was opened in

Lausanne, Switzerland in 2009 as a

Porsche dealer, which has preserved its

secure place in the fiercely competitive

Swiss market in its second year. In

2011, a year full of various events,

D-Auto Swiss has successfully sold

146 new vehicles and also displayed

an impressive performance in its after

sales services.

Leader in the Second-Hand Market

The first and biggest used-car

corporate brand in Turkey, DOD

broke its own sales record in 2011

with 15,659 vehicles sold, continuing

its leadership and shaping the

sector with its new projects and

infrastructure work. Famous for

its innovations in the second-hand

market, DOD continued to introduce

innovations in 2011. The “outlet”

system, already in place in the US

for many years, has been introduced

in Turkey for the first time and the

Şekerpınar Outlet, sprawling over

an area of 3,000 m2, was opened

in 2011, allowing over 100 vehicles

-different brands, models, and makes-

to be exhibited simultaneously.

In 2011, DOD increased the frequency

of its auctions and turned them into

an almost weekly tradition, developing

the special ProDOD membership

system for professional buyers and

sellers; the infrastructure, visuals and

content of the DOD website have been

completely renewed and the site has

been enriched with new functions,

securing its place as the reference

site for those who want to buy or sell

second-hand vehicles.

TÜVTURK – The Guarantee of Safe

Driving

In 2011, TÜVTURK grew in all its fields

of activity, especially in exhaust gas

emission measurement services, and

its turnover has increased by 22%,

from TL 605 million to TL 739 million.

TÜVTURK completed the periodic


inspection of 6.1 million vehicles in

2011, a 12% increase on the previous

year; the number of exhaust gas

emission measurement stations has

increased from 176 to 193, and has

measured the emission rates of 1.5

million vehicles.

Corporate Social Responsibility

Strongly present in all the links of the

automotive value chain and boasting a

12.6% market share in the automotive

sector with its nearly 2000 employees,

Doğuş Otomotiv continued its social

responsibility projects in 2011 as part

of fulfilling its duties towards society,

people, and the public life spaces. The

Corporate Social Responsibility Report

of the company has been upgraded to

Type B, thus carrying its leadership in

the automotive sector one step further,

after having been the first company in

the sector to prepare a Corporate Social

Responsibility Report the previous

year. Doğuş Otomotiv uses its power

especially to create social change in

traffic safety, an issue closely linked to its

sector’s field of activity. Doğuş Otomotiv

has carried out various projects since

2004 aiming to raise awareness about

traffic safety as part of its corporate

social responsibility platform entitled

“Traffic is Life!”, and these efforts have

continued unabated in 2011.

Awards

Doğuş Otomotiv participated with its

“Traffic is Life!” projects in the “CSR

Solutions Marketplace”, which is

organized by Turkish Corporate Social

Responsibility Association to have

companies, which have internalized

corporate social responsibility as part

of their corporate culture, share their

solutions with the public. The first

company to have prepared a corporate

social responsibility report in the

Turkish automotive sector, Doğuş

Otomotiv received CSR Market Place

Jury’s Special Award and Internal

Social Responsibility Practice Award by

Turkish CSR Association of Turkey for

“Traffic is Life!” Employee Trainings

- “First Aid Approach after Traffic

Accidents Training” and “Safe Driving

Techniques Training”.

Projects Continue…

Doğuş Otomotiv continues to send

messages to the public concerning

traffic safety by using the “Traffic

is Life!” logo along with corporate

logos in all its sponsorships ranging

from sports to art and education, in

sales and marketing, and all brand

communications. As part of the

“Traffic is Life!” project, various

communication platforms such as

television, radio, outdoor and printed

press, as well as social media are

actively used to raise the public’s

awareness regarding traffic safety.

Facebook, Twitter and the corporate

website for “Traffic is Life!” are used

to share messages with the public on

traffic safety, and Doğuş Otomotiv

collaborates with Virgin Radio for

its radio messages. The radio spots

about traffic safety, broadcasted on

Virgin Radio, constitute only one of

the projects by “Traffic is Life!”. Work

continues unabated with the “Traffic

is Life!” social responsibility platform,

the aim being to create high social

awareness on traffic safety and a

culture that is keen on mutual respect

and responsibility in traffic.


Construction

Obua is the base of an

orchestra, it starts the

music and leads other

instruments to join in the

magical flow of rhythm.

Established in 1950, Doğuş

Construction Group has

undertaken prestigious

construction projects all of

which contributes uniquely

to the Group...




2008 2009 2010 2011

Total Assets 902,102 1,279,349 1,246,622 1,161,899

Revenue 590,050 706,007 715,644 895,900

Cost (508,848) (633,784) (640,096) (774,296)


EBITDA 69,476 68,941 91,544 119,587

EBITDA Margin (%) 11.8 9.8 12.8 13.3

Doğuş Construction, which ranks among the most reputable construction companies since its

establishment in 1950, has completed 170 sizable projects worth approximately US$ 12 billion until

today. Currently, the total value of the projects, in which Doğuş is involved, is US$ 4,494 million

and the share of Doğuş in these projects is US$ 3,533 million.



2008 20082009 20092010 20102011 2011

902,

102

590,

050

1,27

9,34

9

706,

007

1,24

6,62

2

715,

644

1,16

1,89

9

895,

900


Doğuş Construction is one of the

leading companies of its sector due

to its mega project perspective and

its infrastructure and superstructure

projects undertaken both in Turkey

and in the international market. Doğuş

Construction, which ranks among the

most reputable construction companies

since its establishment in 1950, has

completed 170 sizable projects worth

approximately US$ 12 billion until

today. The works performed so far

include 19 dams and HEPPs with a total

electricity production capacity of 3,000

megawatts, 1,150 km of roads including

415 km of motorways, 2,000,000 m2

of building construction, infrastructure

works, bridges, more than 96,000 m

of tunnels and diversion tunnels, ports,

marinas, irrigation projects, sewerage

systems, office buildings, shopping and

leisure centers, residential and industrial

buildings.

Currently, the total value of the

projects, in which Doğuş is involved,

is US$ 4,494 million and the share

of Doğuş in these projects is US$

3,533 million. Doğuş takes part in the

execution of various prestigious rail

mass transportation system and rail

projects individually and as part of the

joint ventures or consortia that are

established with the participation of

international construction companies in

local and international markets.

Doğuş values long-term strategic

partnership and alliances with reputable

global companies in the industry

to share the risks in the projects

and to extend its field of activities.

Doğuş’s strategy involves growing

in the current markets, in which it

is operational and seeking business

opportunities within potential markets

to ensure sustainability, maximizing

profitability while maintaining liquidity

and minimizing risks. As a part of its

vision to diversify its portfolio, airport

projects are among the fields which

Doğuş has added to its portfolio and

expects to grow in. Building projects,

environmental and industrial projects

and ports and marine structures are

also the fields where Doğuş seeks for

business opportunities to expand within

the local and international markets.

For more than 60 years, with its experience and know-how

combined with modern technologies, Doğuş Construction has

completed many infrastructure and superstructure projects in

Turkey and abroad successfully.

Doğuş Construction

Ongoing Projects

As of 31.12.2011 Expected Project Doğuş’s Values Share (US$ million) (US$ million)

Domestic Projects 3,281 2,604Otogar-Kirazlı-Başakşehir

Metro Mass Transportation 1,355 678

Boyabat Dam and HEPP 626 626

Artvin Dam and HEPP 570 570

Üsküdar-Ümraniye-Çekmeköy

Metro Construction and Electromechanical Works 730 730

International Projects 1,213 929Bulgaria

Sofia Metro Extension Project - Route II, LOT 1 228 228

Ukraine

Boryspil State International Airport Development Project 455 171

Libya Sirte University Complex, Construction of Section 1 435 435

Sirte University Complex, Construction of Library 95 95

Total 4,494 3,533


Doğuş Construction’s current projects,

in domestic and international markets,

are as follows:

Domestic Projects• Otogar-Kirazlı-Başakşehir Metro Mass

Transportation System and E&M works

• Boyabat Dam and HEPP

• Artvin Dam and HEPP

• Üsküdar-Ümraniye-Çekmeköy Metro

Construction and E&M works

The Otogar-Kirazlı-Başakşehir Metro is a

mass transportation rail system project

that covers construction and electro-

mechanical work and the delivery of

rolling stock. The single-track length

of the 16 station twin-tunnel system

will be 47.4 km in total. It starts from

the intercity bus terminal (Otogar)

and extends through Bağcılar, Kirazlı

and then divides into two branches

and reaches both the Olympic Village

and Başakşehir residential area. It

constitutes a considerable part of

İstanbul’s railway systems network.

Four Tunnel Boring Machines (TBM)

were utilized in the construction of the

twin tunnels; the circular cross-section

of the TBM is 6.5 meters while the New

Austrian Tunneling Method (NATM) is

7.8 meters. This project is executed by

Gülermak-Doğuş Joint Venture.

The Boyabat Dam and HEPP project

is being constructed as a concrete

dam on the Kızılırmak River by Doğuş

Construction for energy generation.

With an installed capacity of 513 MW

and at a height of 195 meters from

the foundation to the crest at a length

of 262 meters, this dam is planned to

generate 1.5 billion kWh per year when

it is fully commissioned.

Artvin Dam and HEPP, an arch concrete

gravity dam on the Çoruh River with the

purpose of energy generation, had been

awarded to Doğuş Construction in 2010

and the actual construction commenced

in the first quarter of 2011. The power

generation capacity of the dam is 1 billion

kWh per year and it has the installed

capacity of 332 MW, with the height of

180 meters starting from foundation and

crest length of 278 meters.

Doğuş has been recently awarded a

new project titled Construction and

Electromechanical Works of İstanbul

Üsküdar-Ümraniye-Çekmeköy Metro

Project, a very large transportation

project of the Metropolitan Municipality

of İstanbul.

International Projects• Bulgaria-Sofia Metro Extension

Project-Route II, LOT 1

• Ukraine-Boryspil State International

Airport Development Project

• Libya-Sirte University Complex,

Construction of Section 1

• Libya-Sirte University Complex,

Construction of Administrative Building

and Central Library

Doğuş Construction undertakes the

3.8 km Sofia Metro Extension Project

LOT 1 section in Bulgaria. The project

comprises a tunnel with an inner

diameter of 8.43 meters and four metro

stations.

In Ukraine, Doğuş Construction is

involved in the construction of Kiev

Boryspil State International Airport

which comprises 185,000 m2 of apron

pavement, 60,000 m2 of roads and a

surface car park, 1.3 km of viaduct and

an international passenger terminal

building of 83,500 m2. The project is

undertaken by a joint venture led by

Doğuş Construction.

With numerous infrastructure and

superstructure work completed in Libya

in the past, Doğuş Construction has


been awarded the construction contract

for the first phase of the Sirte University

Complex. The complex includes an

area of 218,000 m2 and encompasses

five service buildings and nine faculty

buildings.

Libya-Sirte University Complex,

Construction of Administrative

Building and Central Library project, is

another important part of the project

and includes the construction of two

administrative buildings, and a central

library with a total area of 26,400 m2.

2011: Delivering the quality and expanding the core competenciesIn 2011, the whole industry recovered

after the liquidity crises sparked by

mortgage foreclosures and constraints

in the loan market. However, the

industry has been hugely affected

in a negative way from Arab spring,

specifically from the developments in

Libya. All the projects in Libya have

been temporarily suspended and

companies operating in Libya were

forced to look for alternative markets

and sectors to operate their businesses.

In this respect, Doğuş Construction

focuses more on certain countries in the

Gulf Cooperation Council (GCC).

Doğuş Construction has been recently

awarded to sign the contract for

the construction of the “Üsküdar –

Ümraniye – Çekmeköy Metro Project”

as a sole contractor. With this project,

Doğuş has strengthened its position

as one of the leading companies in the

metro construction business line.

Utilizing its mega project approach

and its long-standing experience,

the company continued to grow on

the basis of sound and sustainable

profitability. In addition to increasing

its profitability in its sector, Doğuş

Construction has gained a more

dynamic structure; uninterruptedly

continuing on the path toward achieving

its goal of being stable in the markets

where it is operational.

Making a considerable contribution to employment Thanks to the engineering applications

requiring different areas of expertise,

Doğuş Construction offers employees

a wide range of career opportunities in

various locations and cultures, helping

to construct large scaled projects in

domestic as well as global markets.

The company currently employs around

6,500 people in domestic as well as

international projects. The competencies

of organizational commitment, desire

to succeed, team work, openness

to development and change, quality

orientation and self-reliance among

Doğuş Construction’s employees come

to the forefront as a feature integral to

their overall success.

Acting in line with the understanding

that the success of its projects is

directly linked to the success of its

employees, Doğuş Construction creates

a trusted working environment that

provides the opportunity for technical,

personal and executive development to

its employees.

Quality, Occupational Health and Safety, EnvironmentDoğuş Construction adheres to Quality,

Occupational Health and Safety,

Environmental Management Systems

that were designed based on the

best superior global standards. All of

these three management systems are

certified by the LRQA (Lloyd’s Register).

Risk ManagementThe Board of Doğuş Construction

established a Risk Committee in


2009 to have a better view over risks

and implement the enterprise-wide

risk management process within

the Construction Group. The Risk

Committee is accountable to the

Board and advises the Board on risk

management, aiming to manage

risks in a more systematic manner

and foster a risk culture within the

company. The management of the

Company has the overall responsibility

for the establishment and oversight of

the risk management framework.

Risk management vision of Doğuş

Construction is defined as, identifying

and monitoring risks and opportunities

that would impact the corporate

objectives, managing risks and

uncertainties in the most effective

and efficient manner and in line with

the shareholders’ risk appetite, and

proactively implementing the most

appropriate responses to the risks.

Doğuş Construction’s risk management

policies and procedures are established

to identify and analyze the risks faced

by the company, to set up appropriate

risk tolerance limits and controls,

and to monitor risks, responses,

and adherence to such limits. Risk

management policies and systems are

reviewed regularly to reflect changes

in market conditions and Doğuş

Construction’s activities.

Internal AuditThe Internal Audit Department has been

assigned to perform audit activities in

projects since early 2011.

Internal auditing is an independent,

objective assurance and consulting

activity constituted to add value to

and improve organization’s operations.

It helps organization accomplish its

objectives by bringing a systematic,

disciplined approach to evaluate and

improve the effectiveness of risk

management, internal controls and

governance processes.

Internal audit activities are performed

based on an annual audit plan and by

utilizing a risk-based audit approach in

accordance with International Internal

Audit Standards.

Cost Management as a Sub-section of Doğuş Information System (DIS)Doğuş Construction has been using its

“Cost Management” as a sub-section

of Doğuş Information System since

2007. Cost Management enables

both activity and resource based cost

and productivity analyses at all levels

within the company. It places Doğuş

Construction in a special position

with regards to the assessment and

measurement of profitability and

performance in respect of internal

processes while bringing improvement

to productivity indicators. Within Cost

Management, planned and actual data

are compared and real-time tables,

graphical and interactive chart reports

are produced for the evaluation of

performance of ongoing projects.


Teknik Mühendislik ve Müşavirlik A.Ş.

Teknik Mühendislik is involved

with projects including motorways,

highways, railways, dams, hydroelectric

power plants, irrigation projects,

water and sewerage system projects

and industrial plants. Regarding

construction, it provides;

• Any and all engineering, consultancy

and technical services,

• Planning and feasibility assessments,

technical and economical surveys,

research and laboratory testing, drilling

and similar studies, assistance in

finding more rational and developed

methods and implementation of such

for these draft projects, and

• Business management services.

Teknik Mühendislik continues to

successfully complete all projects it

has undertaken with experienced and

trained key personnel and technological

equipment as it has since its

establishment.

Established in 1984 within Doğuş Construction Group, Teknik Mühendislik offers thorough engineering, consultancy and technical services.


Ayson’s fields of activity include all

types of bored and pre-cast concrete

piles, prefabricated vertical drains

(wick drains), sand drains, jet grout

columns, stone columns, impervious

walls, retaining walls, pre-stressed

anchoring with steel strands, sheet

piling, bolting, soil nails, grouting works,

shotcreting, exploratory drilling, water

well drilling, drainage wells, foundation

explorations, soil improvement works,

deep excavation supporting systems,

ventilation shafts, and excavation work,

including preliminary studies for all of

these operations and evaluation through

in-situ tests.

Ayson also offers a wide range marine

structure services that include: jetties,

dolphins, ferry terminal ramps and

breakwaters. Recently, the company

added viaduct construction, steel

superstructure construction and tunnel

construction to its field of activities.

Ayson has successfully completed

more than 53,450 tons of grouting,

1,143,500 meters of bored piling and

513,000 meters of anchoring work in

projects it has undertaken so far.

Some major projects in Turkey and

overseas are as follows;

Within the scope of the Boyabat Dam

and HEPP being constructed as a

concrete dam on the Kızılırmak River

by Doğuş Construction, Ayson has

executed downstream cofferdam

injection works totaling 810 cubic

meters and a drilling length of 10,800

meters. Currently, Ayson is also

constructing the injection gallery tunnels,

2,625 meters in total, for the same

project. The injection work at these

tunnels with a total drilling length of

200,000 meters has been undertaken

and is being executed paralleling the

progress of dam body construction.

Within the scope of Artvin Dam and

HEPP, an arch concrete gravity dam

on the Çoruh River being constructed

by Doğuş Construction, Ayson has

undertaken all the derivation, variant and

relocation tunnel construction works.

The tunnels are 15 km. long in total;

and, 1,273,000 m3 excavation,

192,000 m3 concreting works will be

executed. Ayson also has undertaken

bored piling, grouting and soil

investigation works in the same project.

Ayson Geoteknik ve Deniz İnşaat A.Ş.

As a Doğuş Construction Group Company specialized in geotechnical works, Ayson has provided top level technical service to many local and international enterprises since its establishment in 1977.


Ayson has also served to Enerjisa in

2011 first by undertaking the grouting

works in the Suçatı HES, a RCC dam,

which has already been in service for

a while and secondly by executing

the bored piling works in Adana

Kavşakbendi HEPP.

Ayson has completed work on four

stations for the Sofia Metro Extension

Project LOT 1 Section, which is 3.8

kilometers in length in Bulgaria. The

project is consisted of diaphragm walls,

prestressed anchor constructions,

bored pile constructions and other

relevant geotechnical works.

In Ukraine, Ayson has served as

geotechnical supervisor for the Kiev

Boryspil State International Airport

Project made up of 22,000 meters of

bored pile construction, 12 nos static

axial compressive load tests, 14 nos

high-strain integrity tests and 505 nos

low-strain integrity tests.

In 2009, Ayson established an

integrated management system with

Quality, Occupational Health and Safety

and Environmental Management

Systems and earned certificates

from the LRQA. These management

systems were established utilizing

ISO 9001:2008, ISO 14001:2004 and

OHSAS 18001:2007 standards and

managed by a highly qualified technical

staff with 35 years of experience.

Laboring under the slogan of “do

it once, do it perfectly”, Ayson has

attracted high praise from local and

foreign employers and consultants for

the quality of the work it performs.

Project Name and Project Project Estimated

Description of Works Client Location Value (US$) Start Date Completion Date

Boyabat Dam Project Doğuş Cons. Co. Boyabat 27,303,691 03.12.2008 15.02.2012

Grouting, Piling Works

Artvin Dam Project Doğuş Cons. Co. Artvin 69,237,257 07.03.2011 30.06.2014

Tunnel Construction,

Site Investigation,

Grouting, Piling Works

Suçatı Dam Project Enerjisa Maraş 329,268 16.06.2011 28.12.2011

Grouting Works

Kavşakbendi Dam Project Age Cons. Co. Adana 224,480 12.07.2011 05.01.2012

Piling Works

Kavşakbendi Dam Project Age Cons. Co. Adana 6,453,261 15.02.2012 30.02.2014

Grouting Works

İkisu Dam and HES Project Ic İçtaş Giresun 275,090 15.02.2012 15.05.2012

Site Investigation Works

Ayson Geoteknik ve Deniz İnşaat A.Ş. Projects in Progress

US$ 103,823,047 Total Project Value


Media

Doğuş Media Group

acts as a pioneer with

the innovative ways and

means it has introduced

to the communication

sector in Turkey. With

its rich portfolio that

is continuously being

extended, the Media

Group not only offers a

comprehensive content

to its audience but also a

break for relaxation and

fun. The business line

preserves its distinctive

mark and elevates its

significant role within the

Doğuş Group orchestra.



The total advertising market increased by 23% in 2011, and Doğuş Media Group has protected its share in active markets around 8.3%.



2008 2009 2010 2011

Total Assets 455,875 471,380 502,659 1,505,103

Revenue 181,766 182,688 254,127 280,695

Cost (147,378) (178,853) (224,873) (298,639)

Gross Profit Margin (%) 18.9 2.1 11.5 (6.4)

EBITDA (22,822) (57,802) (58,246) (152,271)

EBITDA Margin (%) (12.6) (31.6) (22.9) (54.2)


2008 20082009 20092010 20102011 2011

455,

875

181,

766

471,

380

182,

688

502,

659

254,

1271,

505,

103

280,

695


Doğuş Media Group has made

significant progress with created/

acquired brands and built upon

global alliances with partners like

CNBC, National Geographic, NBA,

Virgin Radio and Conde Nast/

Vogue.

The Group has broadened its

operations from TV to magazines,

radios, digital and print media and

has become the leading media

organization providing thematic

content to the public. Currently,

with 1,381 employees (891 male

and 490 female), Doğuş Media

Group is one of the largest

companies in media industry.

Doğuş Media Group fosters public

trust with its professionalism and

quality-focused business dealings.

The sense of belonging it creates

for consumers also gives rise

to expectations of continuous

progress and distinction.

The close bonds developed with

consumers by Doğuş Media Group

(the Media Group) also have had an

impact on advertisers, leading them

to prefer the Media Group brands

for promotion.

Always staying one step ahead in

its advertising practices, Doğuş

Media Group generates custom-

Operating at all branches of media and consistently strengthening its presence by following latest trends, Doğuş Media Group reaches to millions of people through its innovative, informative and entertaining broadcasts on its TV channels, radio stations and web portals; as well as through its outstanding periodicals and books.

Doğuş Media Group

2008 10.0%

2009 10.4%

2010 10.4%

2011 10.0%

Media Group Market Shares

TV Channels

2008 12.5%

2009 15.0%

2010 20.2%

2011 22.8%

Radio Stations

2008 6.2%

2009 8.1%

2010 15.5%

2011 17.5%

Magazine

2008 4.6%

2009 4.6%

2010 3.0%

2011 2.6%

Internet


tailored solutions for customers who

wish to be associated with the Media

Group’s brand equity and differentiate

themselves from the competition.

Advertisers are offered various

media solutions and a high level of

efficiency.

Activities in 2011 Doğuş Media Group expanded its

portfolio in 2011 with the acquisition of

the new TV channel Star and with the

launch of Kral Pop radio and Kral Pop TV.

The total advertising market increased

by 23% in 2011, and Doğuş Media

Group has protected its share in active

markets around 8.3%.

Doğuş Media Group’s TV channels

have protected their market share

around 10% despite the growing

competition in the market. The

acquisition of Star TV will double the

Group’s market share for the next three

years according to the projections.

In terms of radio stations, Doğuş

Media Group increased its market

share by 2.6% to 22.8% with the

launch of Kral Pop. Doğuş Media

Group’s magazines also increased

their market share by 2% to 17.5%.

Doğuş Media Group has a market share

of approximately 3% in the Internet

segment and in 2011; Doğuş Media

Group successfully organized the

second New Media Order Conference

with the participation of expert guests

from all over the world.

Another important activity in 2011 was

the moving of Doğuş Media Group to

its new premise. The Group’s multiple

brands, all influential agents of change,

now takes new residency under one

roof. The newly renovated building,

a shimmering vision of modernist

urbanity, literally reflects Doğuş Media

Group’s ideals: recognizable modernity,

heroic authorship and the capacity to

embrace the new and radical.

Technological InfrastructureThe uplink system that enables satellite

distribution of Doğuş Media Group’s

TV and radio programming consists of

eight live-broadcasting vehicles, four

in İstanbul, three in Ankara and one

in Diyarbakır. The Group has a total

of 218 NTV transmitters, two in the

Turkish Republic of Northern Cyprus,

206 Star transmitters, two in the

Turkish Republic of Northern Cyprus,

64 CNBC-e transmitters, 130 NTV Spor

transmitters, 45 NTV Radio transmitters,

38 Kral FM transmitters, 38 Virgin

Radio transmitters, 28 Kral Pop Radio

transmitters and one transmitter for

each; NTV Spor Radio, Capital Radio,

Radio Eksen and Radio Voyage.

Star TV HD broadcasts on D-Smart

platform whereas NTV Spor HD

broadcasts on Digiturk.

AwardsDoğuş Media Group has been honoured

as the recipient of around 765 awards

(between the years 2001-2011)

so far for its broadcasts and social

responsibility campaigns. Of these

awards earned during 2011, a total

of 80 have been granted by various

ministries, organizations, associations

and foundations, professional chambers,

universities and high schools.

Future PlansAdaptation and improvement of Star TV

towards Doğuş Media Group’s goals

and vision will be the main objective

in 2012. There will be a second launch

of Star in fall. With new programming

formats, new names and marketing

activities, the Group aims to strengthen

the existing brands’ market position

and expand its market share.

The launch of GQ Turkey with Condé

Nast in March will be another endeavor

for 2012. GQ is the best selling

men’s magazine in the world and was

established in the US in 1932. The

magazine became a part of Condé

Nast Publications 32 years ago and is

currently published in 20 countries and

in 12 different languages.


Doğuş Media Group - Brands

TV CHANNELS

NTVNTV began

broadcasting in

1996-the first

24-hour news channel in Turkey. In

January 1999, it became a member

of Doğuş Media Group family. The

success of NTV changed the Turkish

media industry and started the era of

thematic TV channels. NTV primarily

broadcasts national and global news

as well as quality documentaries and

programs on economy, culture and the

arts, lifestyles and, of course, sports.

NTV aims to bring accurate news and

analyses to its audience uninterruptedly

and in an unbiased manner. The quality

of its content and impartial editorial

approach has made NTV a prestigious

brand and the name NTV synonymous

with “reliable news.” NTV’s broadcasts

on health, education, and the

environment, along with other special

projects are concrete examples of its

social responsibility approach.

In addition to NTV’s Head Office in

İstanbul, the latest developments in

Turkey are monitored by NTV from its

offices in other cities; Ankara, İzmir and

Diyarbakır. Reporters and news agencies

scour the entire country for the latest

happenings. For international news, NTV

relies on its office in Brussels, reporters

in major cities including Washington

D.C., Paris, Strasbourg, Berlin, Athens,

Lefkosia, Baghdad and Tehran as

well as worldwide well-known news

corporations - Reuters, ENEX, APTN,

and the BBC.

STARStar TV started

broadcasting under

the name of “Magic

Box” on the 5th of May

1990 in Liechtenstein.

In September 1990

with the German satellite “Eutelsat,” it

started its official broadcasting; changed

its name as “Interstar” in 1992, and at

last became Star TV.

Star TV joined Doğuş Media Group on

4th of November 2011 and a new era

has started. The Group nurtured and

renewed Star’s virtual image, design and

content with its experienced professional

team and its innovative vision.

Star’s mission has been “entertainment

for everyone” and the Channel has

always had a colourful and intimate

brand perception. Sticked to this

mission, Doğuş Media Group evolved

this objective as a “high quality

entertainment for everyone.” The

Group aims to raise the standards of

Turkish TV networks with Star.

CNBC-eCNBC-e is an example

of the successful fusion

of the economy and

entertainment under the same brand. It

was established on October 16, 2000, as

a result of co-operation with the world’s

leading business channel CNBC and the

Group’s entertainment channel Kanal e.

CNBC-e has two different programming

formats; its day-time format comes from

the American channel CNBC while its

content is derived from Doğuş Media

Group. During the day, CNBC-e targets

business professionals and individual

investors enabling real-time access to

economy and market data.

The evening line-up sees CNBC-e

become an entertainment channel

offering award-winning films,

worldwide popular TV series, dramas

and important events in their original

language with Turkish subtitles.

CNBC-e cooperates with the giants

of the industry such as HBO, WB,

MGM, Paramount, Buena Vista, Sony

Columbia and Fox.

Surveys show that CNBC-e viewers

tend to be well-educated, selective

city-dwellers who care about

creativeness and are seeking to raise

their living standards.

NTV SporLaunched in

March 2008,

NTV Spor is

a dedicated TV channel producing

sports-related programming 24 hours

a day. Using NTV’s expertise in news

and sports broadcasting NTV Spor is

regarded as a sports platform where

fans can catch up on everything related

to sports 24/7.

From the very beginning, NTV Spor

aimed to provide up-to-date, impartial

sports news combined with rich content

and a dynamic programming format.

Most programming on NTV Spor is

either live or tape-delay sporting events,

national and global sports news, sports-

related documentaries and TV shows

with special guest appearances by

major sports figures. NTV Spor holds

official broadcasting rights to large

sporting events from various sports

branches such as; La Liga, NBA, FA Cup,

Wimbledon, WTA, Eurobasket 2011,

Euroleague, UEFA Euro 2012 and 2014

FIFA World Cup qualifying matches.


Only six months after it was launched,

NTV Spor was ranked second among

all thematic TV channels. NTV Spor

started terrestrial broadcast in the

beginning of 2010.

e2One of the steps that

Doğuş Media Group

took into the TV industry

was the e2 TV channel,

established in December 2006.

Offering extraordinary entertainment,

e2’s content consists of talk shows and

TV series.

With a loyal, highly involved and

selective audience, e2 differentiates

itself as a niche entertainment TV

network, bringing uncommon TV

characters and celebrities to the screen.

e2 has three broadcasting slots; at

daytime, at primetime and at midnight:

• At daytime, popular daily shows

such as Martha Stewart and The Ellen

DeGeneres are broadcasted dubbed in

Turkish.

• At primetime, e2 welcomes audiences

who enjoy prime entertainment such as

The Tonight Show with Jay Leno and

Conan O’Brien.

• At midnight, e2 presents the most

popular award-winning dramas and

series including Breaking Bad, Treme

and Come Fly with Me.

NBA TVNBA TV was launched

by the Media Group

on August 1, 2004. Its

content includes live

basketball games, news

from the NBA, special features and

interviews. Broadcasting at least one

live basketball game every day with

Turkish narration and commentary, NBA

TV offers fans the opportunity to watch

the greatest stars from the world of

basketball.

Kral TV Turkey’s first music

TV station, Kral TV

is the leader in its

category with its

music video clips and programs.

From arabesque to Turkish folk music

to Turkish classical music, Kral TV

broadcasts all genres of Turkish music

fulfilling an important need in the music

television sector. The best video clips

of all Turkish music genres and the best

artists are on Kral TV 24 hours.

Kral Pop TVKral Pop TV, the heart

of popular music,

airs all the hit Turkish

songs parallel to Kral

Group’s second radio station Kral Pop

Radio.

Kral Pop TV, which features shows

such as Kral POP Fans, Story of an

album, 0 Kilometer, Artist of the Day,

magazine News, Story of a concert, Kral

is Everywhere, Kral Pop Local, Kral Pop

Chart and Kral Pop Diary, is one step in

front of its competitors because it airs

clips of famous artists for the first time

exclusively.

INTERNET

ntvmsnbc.com“Turkey’s News

Portal” ntvmsnbc

was founded on

15th of May, 2000 via partnership with

the world’s most visited news portal,

MSNBC. This partnership merges

MSNBC’s technological know-how with

NTV’s news experience and network.

The content of ntvmsnbc is prepared

and developed by its own editors in

an impartial and an unbiased manner.

Providing news on a wide range of

subjects, ntvmsnbc caters to the daily

news needs of readers with various

subjects from national to international

news; latest developments in breaking

news along with detailed reports on

special events.

With the restructuring of ntvmsnbc

based on the web 2.0 technology in

February 2009, it serves the users with

a modern interface and infrastructure full

of user friendly multimedia elements.

Oley.comOley.com started

operating as a

“virtual dealer” in

June 2009 within

the DMG structure.

As a legal sports

betting site, Oley.com provides its

members with betting opportunities for

various sports including horse racing,

as well as National Lottery. Hosting

many famous sports authorities within

its structure; Oley.com has started its

operations by enabling the posting of

previously selected betting coupons,

special videos and content. It has now

become a platform for its members

to share their betting choices and

evaluations. Oley.com provides its users

with the latest news and developments

on upcoming games and competitions.

While members are preparing their bets,

they can also follow up on live scores

through the web site.

Oley.com combines fast, reliable,

high-quality services and the most


up-to-date contents with the valuable

insights from the famous sports

authorities. Oley.com, which set out

with a mission to be a trustworthy,

user friendly and innovative website,

now has over 300,000 members.

NTVSpor.netNTVSpor.net

is the official

website of

NTV Spor, Turkey’s leading sports

channel. The content of the website

is put together by a professional and

experienced staff and takes advantage

of the powerful content and experience

of NTV Spor.

NTVSpor.net, the leading sports portal

of Turkey, was set up right before

the World Cup in 2006. NTVSpor.net,

which was active as a sports page on

ntvmsnbc.com until June 2010, was

launched with its new interface and

content on the first day of the World

Cup in June 2010.

The website, which shows over 100

million pages a month and serves

approximately 350 thousand single users

each day, has 500 thousand members

through the portal and over 1 million

followers on Facebook and Twitter.

NTVSpor.net exceeds more than 5

times the users of its closest competitor

through the portal and social networks.

NTVSpor.net also provides its members

with access live coverage from NTV

Spor television and NTV Spor radio

through its pages, thus providing a

service its rivals cannot compete with.

NTVSpor.net has been downloaded as

an application more than 500 thousand

times on mobile platforms such as

iPhone, iPad and Ovi and is the leader

in this category in Turkey.

The website which provides online

games such as Fantasy Football and

Football Tycoon has over 300 thousand

active game members; it is also

number one in sports gaming.

RADIO STATIONS

NTV RadyoLaunched in

November

2000, NTV

Radyo carries

out an important

mission in the area of news

broadcasting including economy,

sports, lifestyle, art and culture.

NTV Radyo reaches its audience from

46 centers with news every day. After

midnight and at the weekends, NTV

Radyo becomes the address of music

and talk show programs.

Virgin RadioOne of the most

prestigious members

of the Virgin Group

and associated with

its founder Sir Richard

Branson, Virgin Radio was

launched under Turkey’s biggest radio

group; Doğuş Media Group in 2009.

Turkey’s most well-known radio

programs are produced by Turkey’s

most famous programmers Geveze and

Bay J. Every weekday, Geveze Show

is on air between 6:30 am -10 am, Bay

J is on air between 6 pm - 8 pm.

With its entertaining and dynamic

profile, Virgin Radio plays the latest

contemporary hits in urban, pop-rock,

R&B, hip-hop and dance music. “Ten Hits

in a Row” delivers ten songs, one after

the other without commercial breaks.

Besides music and entertainment,

Virgin Radio meets with its audiences

by creative projects and events. Virgin

Radio became a partner of NBA and

was the official Turkish radio of NBA

Turkey in 2010. In 2011, Virgin Radio

made a similar collaboration with

Turkey Tennis Federation and was the

sound of WTA Championships.

Kral FMTurkey’s most

listened radio

station Kral FM

was launched in

1992 and became

a member of the Doğuş Media Group

in June 2008. Kral FM plays the best

of Turkish Pop, Turkish Folk, Turkish

Classical, Arabesque-Fantasy as well as

Turkish Rock. The radio station is also

dedicated to the delivery of daily news

and the latest developments in Turkey.

Kral FM reaches its listeners via 37

transmitters and has one of largest

radio communities in Europe.

Kral Pop With the acquisition of

Kral TV and Kral FM in

2008, Doğuş Media Group

had become a prominent

member of the music

industry. One of the latest

attempts of the Group is the launch of

the new national radio station: Kral Pop.

“The King of Turkish Pop: Kral Pop”

broadcasts the best examples of

Turkish pop music from past to present

and new songs for the first time. From

the first day, Kral Pop has attracted

the attention of music industry and

listeners. In addition to its playlist, radio

has famous DJs such as Çelik, Eftelya,

Erkan Eroğlu, Merih, Muzo and Onur.


In addition to its terrestrial broadcast,

Kral Pop is also available via

www.kralpop.com.tr, iPad, iPhone and

Nokia applications. The Radio aims to

become number one in its genre.

Radyo EksenLaunched in

November 2000,

Radyo Eksen

delivers a wide range of quality music,

from indie to country and from hard-

rock to modern-rock. Its broadcasting

philosophy is based on the reflection

of urban life in modern music. The

“Less talk, more music” approach has

created an audience of Radyo Eksen

lovers in a very short period of time,

making it a loved brand.

Besides all, Radyo Eksen has played a

major role as a media sponsor of big

organizations between 2008-2012:

Devotchka, Gutter Twins, Helldorado,

Judas Priest, Moby, Paul Weller, Mark

Knopfler, Metallica, U2, James, Rock’n

Coke, One Love Festival, İstanbul Jazz

Festival, !F, IKSV Film Festival.

Radyo Eksen also collaborates with

İstanbul’s most well-known venues

like Babylon, Ghetto, Garajistanbul and

Otto. Radyo Eksen broadcasts on 96.2

FM in İstanbul and live on the Internet

and via satellite.

NTV Spor RadyoLaunched in

September 2009,

NTV Spor Radyo

broadcasts from İstanbul on the 87.7

FM frequency (on different frequencies

in several cities around Turkey) and

also live over the Internet and satellite.

Broadcasting in tandem with NTV Spor

TV channel, NTV Spor Radyo delivers

the voices of famous names in Turkish

sports to its listeners. In addition to

these joint-broadcasts, NTV Spor

Radyo also presents its unique shows

covering football, basketball, volleyball,

tennis, motorsports, betting and

horse-racing completed with viewer

comments.

Capital RadioCapital Radio was

initially launched

as a CHR

(Contemporary Hit

Radio) station in Ankara and re-launched

in March 2011 by Doğuş Media Group

as a foreign-music radio channel. As of

January 2012, Capital Radio broadcasts

live over the internet, mobile application

Sipru RD, TuneIn application and by

satellite.

Radyo VoyageLaunched in

January 2009, Radio

Voyage is Turkey’s

first and only New Age, Ambient and

world music radio station. Radio Voyage

takes its listeners on a voyage through

Ambient, New Age, Avant Classical,

Gregorian Pop, World Music and Ethnic

Jazz, letting them discover new sounds

and music of these genre. Radio Voyage

broadcasts on the 107.4 FM frequency

in İstanbul and live via Internet and

satellite sources.

PERIODICALS

VogueVogue, a Condé

Nast Publications

magazine, leads

and inspires the

fashion world since 1892; and it reaches

millions of people in the 19 countries it is

published in. There has been a long wait

for Vogue in the Turkish market. The

magazine was finally launched by Doğuş

Media Group in March 2010.

The editor-in-chief of Vogue Türkiye is

Seda Domaniç. The magazine does not

only inform its readers of new trends

but also decides what fashion is. Vogue

Türkiye is courageous, avant-garde and

innovative with its shoots. Anything

that is exciting finds place in the pages

of Vogue Türkiye. Most important of

all, from the covers to fashion shoots,

portraits to style tips, the magazine

creates its original content. Vogue

Türkiye has a selective and unique

perspective; an elegant style with

women at its center; and a glamorous

visuality by which it covers fashion,

beauty and lifestyle since the first day

it was published.

National GeographicWith a history

dating back to

1888, over 60

million readers worldwide, National

Geographic is more than just a magazine;

it is also one of the most prestigious

brands in the world. The magazine’s

Turkish edition debuted in 2001; each

month it presents to its readers a fresh

array of fascinating features and original

articles about geography, science,

exploration, history and more.

National Geographic KidsPublished since

1975, National

Geographic Kids

was launched in

Turkey by Doğuş Media Group in 2004.

The aim of this magazine is twofold:

to entertain and simultaneously equip

children with knowledge via its high

quality content and visuals.


CNBC-e BusinessHaving first

launched five years

ago, a completely

redesigned CNBC-e Business debuted

on the newsstands with its March

2011 issue. “There’s life in business”

is the magazine’s new motto. While the

team behind the redesigned CNBC-e

Business focuses on producing

editorial that has transformed the title

into an important reference publication,

the new perspective also allows them

to import the colorful aspects of its

readers’ lifestyles.

The magazine’s main goal is to remind

readers that music, movies, sports

and other aspects of popular culture

can also boast of having their own

individual economies and parameters,

as much as countries and companies

do. CNBC-e Business proves its

commitment to this goal with

consistent analyses of these alternative

industries and supports its editorial

with eye-catching images and graphics.

Interviews with industry leaders,

portrait looks at key players, various

studies on individual industries,

financial news from around the world,

success stories, failures as well as

winning trends, technology, and even

fashion is part of the magazine’s

editorial mix. Lifestyle of its readers is

an important part of CNBC-e Business

with dedicated articles each month.

With support from the CNBC-e

television channel, CNBC-e Business

magazine continues on its quest with

contributions from important opinion

leaders such as Mahfi Eğilmez, Selim

Atalay and Osman Müftüoğlu.

Robb ReportThe Robb Report

joined Doğuş

Media Group

in 2008, as Turkey’s first magazine

focused on the luxury market. Its

mission is to become an exclusive

guide for high net worth individuals

who are passionate about celebrating

life. From yachts and automobiles to

jewelry, priceless watches, fashion and

premiere vacation spots, Robb Report

readers can have all the elements for

a luxurious lifestyle. This magazine

covers both the latest products and

original styles from world-renowned

luxury brands.

Motor Boat & YachtingEurope’s bestselling

yachting magazine,

Motor Boat &

Yachting was first published in Turkey

in December 2007 by Doğuş Media

Group. With content support from

the Yachting World, the world’s first

sailing magazine, Motor Boat &Yachting

brings detailed information and tips on

boating and life on the seas, tests and

interviews to sea-going aficionados

every month.

NTV TarihNTV Tarih is

a monthly

popular history

magazine. Its original and insightful

content is based on independent

academic research and conveyed in a

simple language.

The magazine analyzes events

according to their specific historical

context, and opens new windows

to the material conditions, everyday

life, social relations and practices of a

variety of historical periods.

NTV Tarih contributes a refreshing

scientific approach both to past events

and the current debates that are related

to them.

The mission of NTV Tarih is to

inform readers, to contribute to the

development of a sense of history

and to increase awareness about the

preservation of all historical, cultural

and environmental values, be they

national or international.

NTV PublicationsEver since

March

2007, NTV

Publications has offered a new

perspective in reading and thinking.

While acting as a reference for subjects

such as history, science, the arts,

photography, politics, nature and the

environment, NTV has also covered the

fields of cooking, children books and

graphic novels. Expanding its product

line every month, NTV Publications has

become an important and prestigious

brand in the public eye in only four

years with its bestselling non-fiction

titles.

In addition to presenting the readers

outstanding foreign books with fluent

translations, NTV has also encouraged

local projects with books on the

historical and cultural heritage of Turkey

as well as its natural treasures.


Tourism and Services

Doğuş Group’s operations

in the tourism and services

sector bring serenity,

pleasure, and elegance to

thousands of people who

seek to get away from

the routine and enjoy the

harmonious side of life.



In the tourism and services sector, Doğuş Group operates with Doğuş Tourism and Retail Group, D-Marin Marinas Group, D-Gym and D-Life, and Körfez Havacılık.

Financial Highlights*

Financial Highlights (TL thousand)*

2008 2009 2010 2011

Total Assets 1,303,369 1,375,150 1,709,170 1,821,355

Revenue 157,124 167,738 211,256 232,152

Cost (87,550) (94,572) (125,296) (120,545)


EBITDA 14,456 13,349 (17,009) 6,345

EBITDA Margin (%) 9.2 8.0 (8.1) 2.7

* Figures are based on standalone financial statements of Doğuş Tourism and Retail Group and D-Marin Marinas Group.


2008 20082009 20092010 20102011 2011

1,30

3,36

9

157,

1241,

375,

150

167,

7381,

709,

170

211,

256

1,82

1,35

5

232,

152


Doğuş Tourism and Retail Group was

established in 1976 and owns six

five-star hotels, a travel agency, Antur

and the Arena Giyim retail company,

the creator of the In-formal brand. The

Group also has contracts with some of

the world’s leading luxury brands.

Hotel facilities of Doğuş Tourism and

Retail Group include operated hotels;

the Park Hyatt Istanbul – Maçka Palas

and Grand Hyatt Istanbul, MARITIM

Hotel Club Alantur – Alanya, MARITIM

Hotel Grand Azur – Marmaris as well

as owned hotels D-Hotel Maris and

D-Marin Resort Göcek. Finally, Rixos

Downtown is operated by Rixos Group

under rent agreement.

The Group secures its high level of

international services quality through

global cooperation with Emporio

Armani, Gucci and Loro Piana in the

fashion industry and with Emporio

Armani Ristorante, Hyatt International

(Europe Africa Middle East) LLC, HMS

International Hotel GmbH (MARITIM) in

the tourism sector.

2011: Tourism

Turkey enjoyed a real “golden year” in

tourism. Targets were reached in 2011

by 30 million tourists and US$ 25 billion

revenue generation. Turkey came 7th in

the world in number of tourists and 9th

in income.

Turkey’s geographical location has

been contributory in the country’s

success regarding its tourism industry,

to the extent that it enables attracting

visitors from Europe, the Middle East,

Asia and Africa, without imposing

an overbearing load on the total

cost of their holidays. Turkey enjoys

year-round sunshine, permitting an

extended holiday season and the

expansion of its market, to include

consumers in quest of winter sun and

sports tourism options. Indeed, in

addition to summer vacation tourism,

other forms of tourism such as skiing,

trekking and health tourism are also

becoming increasingly popular in

Turkey. This natural endowment has

been extremely beneficial for Turkey’s

tourism industry. Moreover, advances

in travel technologies which have

shortened flight times, have further

enhanced Turkey’s comparative

advantages and enabled the country

to gain increased recognition as a

convenient short-haul destination for

European tourists.

Doğuş Tourism and Retail Group is a pioneer in the sector with its owned and operated hotels serving in international standards as well as the prestigious brands and stores bringing luxury to fashion lovers. Strengthening its position with global co-operations, the Group continues to create value for Turkey.

Doğuş Tourism and Retail Group

DTRG - 2011 Hotels Revenues (TL thousand)

Grand Hyatt

(GHI)

58,21549,232

45,031

14,15114,920

11,954

14,50913,401

12,241

11,58211,083

9,124

16,50614,490

12,621

12,62810,954

10,002

Park Hyatt

(PHI)

Grand Azur

(GA)

Alantur

(ALA)

Aldiana

(ALD)

Paradise

(APA)

Actual Budget Last Year

2010 – 2011 Full Year Occupancy

Occupancy 11 Occupancy 10

90%

74%

73%

54%

57% 60%

56%

71%72% 76%

89%78%76%

80%70%60%50%

40%30%

20%

10%

0%GHI PHI GA ALA ALD APA

2010 – 2011 Full Year Average Rate

Avarage Rate 11 Avarage Rate 10

700%

600%

500%

400%

300%

200%

100%

0%GHI PHI GA ALA ALD APA

630

490433

322219

177 148

185271

222 208266


Having gained greater access to broader

tourist markets in recent years, Turkey

now hosts a large and diverse mix of

foreign visitors each year. According

to the most recent official data that

was published by the Turkish Statistical

Institute on February 1st, 2011, tourism

revenue increased by 10.6 % in 2011.


performed a successful year as the

occupancy rate of rooms increased by

3% in 2011, room rate increased by

TL 84, total hotel revenue generated

TL 26,618 thousand higher as well.

Activities in 2011

Swissotel Göcek has been taken over

from Turkon Holding and the hotel’s

name is changed as D-Marin Resort

Göcek. The hotel has 57 comfortable

rooms with views of the Göcek village,

its own beautiful lush manicured

gardens or the mountains. The hotel

facilities include a waterfront restaurant

and bar, on and off-site meeting

facilities, an outdoor pool and access to

Göcek’s only private beach. The hotel

will be operated by Doğuş Tourism and

Retail Group in 2012.

Arena Giyim opened a boutique in Didim

D-Marin Shopping Complex in 2010. The

Company is also going to open an In-

Formal store in D-Hotel Maris in 2012.

Bodrum Armani Caffé and Shop were

closed, yet, a new Emporio Armani

store was opened in Ankara and

Emporio Armani Ristorante concept

was launched at İstinyePark in 2011. A

new opening will take place in Bağdat

Caddesi in İstanbul in the second half

of 2012.

Awards

Park Hyatt Istanbul – Maçka Palas,

Maritim Hotel Club Alantur, Maritim

Hotel Grand Azur have achieved a

Tripadvisor rating of 4,5 and been

awarded a certificate of excellence for

the year of 2011.

Maritim Hotel Club Alantur is also

appreciated by the visitors of Zoover,

which is the largest independent

holiday review website in Europe.

Maritim Hotel Club Alantur has also

been awarded by TUI Nordic for

excellent performance generating the

most satisfied customers in the all

inclusive category.

Future Plans

Doğuş Tourism and Retail Group set

its future strategies in line with those

of Doğuş Group, striving to become

a regional leader and to continue

expanding in the sector. Doğuş Tourism

and Retail Group will continue to

reflect its growth-oriented investment

philosophy on its financial results and

operations in coming years as well.

In accordance with this philosophy;

new enterprises have been realized:

under the newly developed D-Hotel

project, D-Hotel Maris has been

under construction and will be re-


opened in 2012 season with its new

concept. Maritim Grand Azur Hotel is

also under construction; a new spa

center, lobby and plus 30 rooms and

a la carte restaurant will be added

to the inventory in 2012 season.

Furthermore, retail business is going

to be formatted as an umbrella of

additional brands like Hublot and

Porsche Design.

ANTUR TURİZM A.Ş.

Antur Turizm

A.Ş. (Antur), a

member of IATA,

ASTA, IFTAA and

TURSAB, was established in 1966

to provide incoming and outgoing

ticket sales, hotel reservations, tour/

conference organizations and car/

aircraft rental services.

Antur owns a five-star hotel in Alanya

along the Mediterranean coast,

140 km. east of Antalya. Only 5 km. from

Alanya’s city center, the Maritim Hotel

Club Alantur welcomes its guests with

350 rooms and suites, all built recently.

The hotel, with its 60,000 m2 garden and

pool area resides directly on the beach

in an area known as the ‘Turkish Riviera’

and offers its guests a place to relax or

be entertained in addition to a number of

sport facilities available on the site.

DATMAR TURİZM A.Ş.

Datmar Turizm

A.Ş. owns two

five-star holiday

villages, Aldiana

Side and the Paradise Side Beach

Hotel in Side, both managed by Aldiana

GmbH until 2011. Datmar Turizm A.Ş.

will be sold to Diana Tourism and legal

procedures will be finalized in 2012.

D OTEL MARMARİS TURİZM İŞL.TİC.

VE SAN. A.Ş.

D Otel owns the

five-star resort

D-Hotel Maris,

the 1st directly operated hotel of Doğuş

Tourism and Retail Group. D-Hotel

Maris is located in a unique reservation

area of beautiful Datça Peninsula and

lies high on the hillside surrounded

by breathtaking views, crystal clear

sea and five beautiful natural beaches

awarded with Blue Flag. The hotel

offers 200 spacious luxurious rooms,

suites, a duplex presidential suite and a

villa with a choice of impressive views.

The Spa Center was designed by ESPA.

GARANTİ TURİZM YATIRIM VE

İŞLETME A.Ş.

Garanti Turizm

Yatırım ve

İşletme A.Ş. was

established in 1988 and invested in a

five-star luxury hotel. The Maritim Hotel

Grand Azur is situated in Marmaris

approximately 100 km. from Dalaman

airport. The Hotel has 287 bedrooms

and a 610-bed capacity, with 93% of

the bedrooms commanding a view

of the Aegean Sea. The Hotel also

has a conference area which is able

to accommodate 350 people and 2

seminar rooms with seating for 40

people.

VOYAGER MEDITERRANEAN TURİZM

ENDÜSTRİSİ VE TİCARET A.Ş.

Voyager

Mediterranean

Turizm Endüstrisi

ve Ticaret

A.Ş. owned the Sheraton Voyager

Antalya Hotel, Resort & Spa, which

was managed by Starwood Hotels

& Resorts Worldwide Inc. until

31.12.2010. The building was rented to

and has been operated by Rixos Group

as of 01.01.2011.

GÖKTRANS TURİZM VE TİCARET A.Ş.

Göktrans Turizm

ve Ticaret A.Ş.

owns the Grand

Hyatt Istanbul,

a five star facility managed by Hyatt

International (Europe Africa Middle

East) LLC, located in Taksim, in the

heart of İstanbul.

Grand Hyatt Istanbul is located in

the center of the city’s business

district, just a five-minute walk from

the Bosphorus and Taksim Square.

Renovated in 2003, Grand Hyatt

Istanbul has 360 Rooms including

102 king, 159 deluxe king, 71 Grand

Club rooms with special amenities,

22 suites (12 with kitchenettes),

3 rooms for disabled guests and 7 fully

furnished luxury apartments. The Grand

Club rooms offer VIP accommodation,

separate check-in and checkout facilities,

a private lounge and boardrooms. A

total of 1,507 m2 of function space

with 13 renovated meeting rooms

including a ballroom are equipped

with high-tech essentials like “Easy

Meet Unit” smart walls. The award-

winning Italian restaurant Spazio serves

creative Italian cuisine with a large

selection of local and international

wines. Agora Restaurant, famous for

its rich open buffets, serves local and

international cuisine with both buffet

and a la carte options. Other outlets

include the Mezzanine Lounge & Bar

and the Library Bar. Fully renovated and

redesigned, the Gaia Fitness Center &

Spa is an exclusive area offering


4 specially designed treatment rooms,

a fitness studio and an exercise room

for yoga and pilates classes.

ARENA GİYİM SANAYİ TURİZM VE

TİCARET A.Ş.

Incorporated in

1997, Arena Giyim

Head Offices are

based in İstanbul.

The Company initially secured the

franchises for Emporio Armani and

Gucci, opening their first boutiques

in one of İstanbul’s most prestigious

locations, the historical Maçka Palas

Building.

Arena Giyim also initiated a multi-

brand fashion retail project under the

‘In-formal’ name. The first store was

opened in the D-Marin Turgutreis

Marina Shopping Complex; boutique’s

philosophy is to present prestigious

labels to fashion conscious clientele

with exclusive service standards in a

very unique surrounding.

The newest Emporio Armani, Armani

Jeans and Gucci boutiques and Emporio

Armani Caffé were opened in 2007

at İstinyePark, one of İstanbul’s most

prominent shopping malls. In addition

to these new boutiques, Arena Giyim

also secured the franchise of Loro Piana

the same year, a well-known name for

cashmere fashions. Loro Piana boutique

was opened in the fashionable Nişantaşı

district of İstanbul in 2007 and moved to

İstinyePark in 2010. Moreover, world’s

first Emporio Armani Ristorante concept

was opened at the end of 2011 in the

place of Emporio Armani Caffé.

The historic Maçka Palas building,

owned by Arena Giyim, has been

converted into a 90-room boutique

hotel under the Park Hyatt Istanbul

– Maçka Palas Hotel brand name.

Ideally located in trendy Nişantaşı, the

hotel uniquely combines the historic

architecture of an art deco building with

an innovative interior design. Housing

the existing Emporio Armani and Gucci

boutiques, the hotel is also within

walking distance to many other upscale

designer fashion houses, as well as

ultra-trendy bars and restaurants. There

are 90 generously sized deluxe rooms

averaging 59 m2, including

7 Park Suites, one Executive Suite,

one Diplomatic Suite and a Presidential

Suite. The residential top-floor suites

offer a private terrace. Each guestroom

features a grand bathroom clad in local

fossilized limestone offering 5 different

bathing experiences; 25 of the rooms

include an authentic Turkish bath,

complete with heated stone seat.

Arena Giyim is the proprietor of the

famous Reina Nightclub, operated by

a third party and located in a stunning

location on the Bosphorus.

Arena Giyim which aims to be one of

the foremost luxury retailers operating

most important leader brands under its

roof in Turkey, is under a restructuring

process. 2012 is going to be the year

of restructuring its current stores,

systems and human resources

while improving standardization and

operational productivity as well as

integrating new brands to its portfolio.


D-Marin Marinas Group

The marinas under the sector leading D-Marin Marinas Group

continue to be popular destinations for existing yachters as well

as being the new routes of newcomer sailors.

Maritime tourism has made a major

stride in the second half of the

twentieth century in developed

coastal states and the Mediterranean

in particular. All countries expecting

revenue from yacht tourism have

initially made investments in marinas.

The human and yacht traffic that was

generated led to the development of a

society geared towards tourism.

Doğuş Group believes that marina

operations have a very high growth

potential in Turkey and in the region.

While the economic and social

developments in our age have enabled

increasing numbers of people to

travel; a shortening of the working

week, extension of holidays as well

as an increase in welfare and a rising

interest in yachting have led Doğuş

Group to develop marinas that would

cater not only to yachts but to establish

integrated tourism facilities catering to

yachters and their associates.

D-Marin Marinas Group started its

operations in 2003 with its first marina,

D-Marin Turgutreis. In 2009, D-Marin

Didim Marina commenced operations

as the second marina in the chain, and

furthermore, in 2010 an agreement

concerning the Port Göcek Marina was

signed and it joined to the D-Marin

Marinas Group as D-Marin Göcek

Marina. The start of construction of

the fourth marina in Dalaman-Turkey

is among the plans for 2012. Last but

not the least, D-Marin Marinas Group

began co-operating with NCP Group for

the operation of Marina Mandalina in

Sibenik-Croatia in 2009.

D-Marin Marinas Group is holding

16% of the marina berthing capacity

among the certified marinas in Turkey.

As of 2011 year end, D-Marin Marinas

Group’s total berthing capacity in Turkey

and Croatia totalled 2,806 with 1,856 in

water slips and 950 dry dock berths. In

April 2012, Marina Dalmacija, which is

the largest marina in Croatia, and Marina

Borik joined D-Marin Marinas Group. As

of March 2012, 80 additional berthing

places exclusively for mega yachts

entered service. With the addition of

Marina Dalmacija and Marina Borik, and

Marina Mandalina Mega Yacht Marina,

D-Marin Marinas Group’s total berthing

capacity increased to 4,836.

With the aim of leading the market

and playing an important role in the

improvement of the marina sector,

D-Marin Marinas Group is set to utilize

every investment opportunity in the

sector both in Turkey and abroad.

D-Marin Marina Management

Company, established in 2012, will

utilise the knowledge and expertise

coming from its experience in the

marina sector to provide management

and consultancy services to marinas

under the Doğuş Group umbrella, as

well as marinas across the world.

D-Marin Marinas Group is actively

evaluating acquisition or development of

prestigious marinas in the Mediterranean

and the Adriatic regions in order to

establish a market leader marina network.


D-MARİN TURGUTREİS

Economic

and social

developments

in our century

resulted in more and more people

to travel for pleasure and cruising.

Increasing interest in the beauty of

the sea helped building of integrated

tourism centers by the sea which include

marinas. In this frame, D-Marin Turgutreis

is designed to be not only a marina but

also an integrated tourism center, which

serves through its systematic service

units to native and foreign guests, to its

region and country in return.

In line with Doğuş Group’s mission and

vision, D-Marin Turgutreis Marina gives

the utmost priority to providing the

best service possible and anticipates

becoming the sector leader for marina

operations all around Europe.

D-Marin Turgutreis has a unique

infrastructure which enables the marina

to provide excellent services to its

customers thus making it the best and

the first marina in Turkey giving bilge

and savage collection service to yachts.

D-Marin Turgutreis Marina has a berthing

capacity for 550 yachts afloat and 150

yachts in dry dock. Turgutreis Marina

has a mooring capacity for yachts

between 8 and 50 meters in length. The

marina reached full occupancy in 2009

and still continues with full occupancy

without compromising service quality

and approach. Since its inauguration,

D-Marin Turgutreis is providing a wide

range of high quality technical, social and

administrative services to yachts and

yacht owners.

In 2011, 7th D-Marin Turgutreis

International Classical Music Festival

which is listed in EFA (European

Festivals Association) hosted a total of

17,500 audiences in D-Marin Turgutreis.

In addition, 8th International Bodrum

Boat Show was also organized in the

marina that resulted in record number

of visitors. Besides, the marina hosted

several exhibitions by various artists and

other events throughout the season.

As the host of the first Boat Show in

Marinas in Turkey and the first open air

Classical Music festival held in a marina

since 2003 and 2004 respectively, D-Marin

Turgutreis Marina has demonstrated

its success by receiving many awards

and certificates. Received from FED

(Foundation for Environmental Education),

the Company has held the Blue Flag since

2004 and Five Gold Anchors flag from

TYHA (The Yacht Harbour Association)

waves from its flag pole. The marina

was the recipient of the Best Marina

Investment award in 2004 and, for three

consecutive years starting from 2007, was

awarded as the Best Marina Operation

in the Skalite awards organized by SKAL

International Club - Turkey Branch. The

marina was also found worthy of the Best

Harbor Operation in 2009.

During 2011, the financial turmoil

created adverse effects in the tourism

sector. The sector had lower results in

comparison with 2010 but thanks to

the qualified employees and adaption

of different operational parameters,

D-Marin Turgutreis Marina concluded

the year with satisfactory results.


D-MARİN DİDİM

With berthing

capacity of 576

yachts and 600

in dry dock,

D-Marin Didim is the largest marina in

Turkey and can handle yachts from 8 to

70 meters.

The Marina has two travel lifts, 400

tons and 75 tons, respectively, a 100

tones capacity trailer and two 15 by

60 meter hangars and with a dry park

area of 70,000 m2. D-Marin Didim is

the largest marina in the region. There

are 36 well-equipped technical shops

in the dry park area able to provide full

maintenance services throughout the

year for D-Marin Didim’s yachtsmen.

The marina offers a shopping and

entertaining center including brand-

name stores, restaurants, cafeterias

and bars. These options greatly

enhance Didim’s tourism, economy

and social life. In addition to first

quality service and comfort, D-Marin

Didim offers a private beach, fitness

center, tennis court and a swimming

pool. D-Marin Didim Marina is a port of

entry with ferryboat services for cruises

to the Greek Islands. The marina is able

to provide the best berthing capacity,

the largest dry park area all set in a

pastoral location. Also transportation

from/to Bodrum and İzmir Airports is

available for international direct flights.

Didim Marina presents a modernized

marina infrastructure in addition to

its high quality service and customer-

oriented marina employees.

D-Marin Didim is a member of TYHA

(The Yacht Harbour Association)

and PYA (Professional Yachtmen’s

Association). The Marina has held the

Blue Flag since 2010 and Five Gold

Anchors flag from TYHA. The Marina

was the recipient of the Best Marina

Investment award in 2010. D-Marin

Didim was also awarded ‘The Best

Marina in Turkey’ by SKAL International

in 2011.

In 2011, Didim Marina became home

to Turkish Sailing Federation 2011

Optimist and Laser Championship held

between 22-29 October. Over 500

young sportsmen and women raced

with 300 optimists, 120 laser and 20

radials. Within the seven days of the

championship, the racers had the

opportunity to complete all 15 races

with good wind.

Aside from offering high quality service

and comfort to yachtsmen and crew,

the Marina contributes to the social

life in Didim and surrounding regions

with the “D-Marin Didim Summer

Concerts.” A total audience of around

40,000 participated in the two concerts

that took place in the summer of 2011.

“D-Marin Didim Summer Concerts” will

continue with other famous stars with an

increasing number of audiences in 2012.

D-Marin Didim Marina is the first

marina in the East Mediterranean which

provides full mega yacht services

regarding the existing yacht mix and all

related services. Berthing capacity for

mega yachts over 30 m. is 38.

With these attributes, D-Marin Didim

aims to be the best marina of choice

and catamaran center in the Aegean

and Mediterranean coastal areas of

Turkey. The Marina’s longer term

target involves becoming the best

marina along the entire Mediterranean

coastline.


D-MARİN MANDALİNA-SIBENIK

CROATIA

At the end of

2011, Marina

Mandalina

was renamed

as “D-Marin

Mandalina.” Being joint owners of

the Marina with Nautical Center Prgin

(Ncp) company, the D-Marin Marinas

Group also assumed sole responsibility

for the management of the D-Marin

Mandalina-Sibenik Croatia in 2009.

Situated in the scenic coastal town of

Sibenik on Croatia’s Dalmatian Coast,

D-Marin Mandalina features 350 in-

water slips and 50 dry-dock berths on

land, accommodating vessels up to

280 feet in length.

Mega Yacht Marina, the construction

of which was initiated in September

2010, started to be operative as of

March 2012 with 80 additional mooring

places; 16 of which are designed for

mega yachts over 165 feet. Minimum

mooring yacht size is planned as

68 feet in this area. The site will

be supported with additional and

adequate storage facilities as well as

luxurious toilet and shower units.

D-Marin Mandalina is one of the

best candidates for hosting mega

sailing yachts due to the adequate

sea depth available within the basin.

The neighbouring yacht refit shipyard

facility offers highly qualified technical

support for yachts as well.

D-Marin Mandalina engaged in

intensive marketing activities in 2011.

Among these were participation to

Dusseldorf Boat Show in January, a

visit to Holland in March, participation

in MYBA Show held in Genova in May

and Silver Sponsorship in Superyacht

Cup Palma in June. The Marina’s

EBITDA rate, which was 41% in 2010,

was recorded as 43% in 2011.

In 2011, D-Marin Mandalina was

awarded with Five Gold Anchors by

The Yacht Harbour Association as a

proof of quality assured berthing.

Sibenik, where the marina is located

is chosen as the “world’s number one

sailing destination” by the National

Geographic magazine, the town is

noted especially for its UNESCO

protected cathedral and two national

parks – the waterfalls of Krka and the

Kornati archipelago.


D-MARİN GÖCEK

D-Marin Göcek

Marina is

located in the

town of Göcek,

22 km. far from Dalaman Airport. It has

380 berthing capacities available for

up to 45-meter yachts. The boatyard

has 75 tons of travel lift and 38 tons of

boatmover. The marina has 150 boat-

capacity on land. In addition, there are

three sheds for the technical service

needs in the storage area.

In addition to its technical superiorities

and high quality service, D-Marin

Göcek Marina has also been built

and managed with an environmental

friendly perspective.

From the beginning of the

construction phase of D-Marin Göcek

and whilst carrying out its operations,

D-Marin Marinas Group has attached

importance to preserving the structure

of the nature where the marina is

built. The wavebraker and pontoons

in the marina are floatable and the

wavebraker is the first one of its kind

in Turkey.

D-Marin Göcek Marina is a member

of the Yacht Harbour Assocation and

it has Five Gold Anchors. The marina

also has the Blue Flag.

In 2011, the Marina went through

some renewals. Car parking area was

renewed, 1,000 tones of water reservoir

was completed, all CCTV cameras and

fire signal system were also renewed.

D-Marin Göcek Marina continued to

contribute to social life too. Three

regattas and paint exhibitions were held

in the Marina in the past year.

In 2011, the Marina was visited by

1,706 yachts and the boatyard was

used by 321 boats. All rental units of

the Marina are currently full.


D-Gym

In order to meet the increasing demand, D-Gym plans to welcome its prospective members with more centers in the near future.

D-Gym, as one of the investments

of Doğuş Group in the tourism and

retail sector, aims to bring corporate

class quality to the sports and fitness

industry. D-Gym started operations on

October 15, 2009 within Doğuş Center,

Maslak, the financial district of İstanbul

surrounded by business centers as well

as residential compounds. The 4,500 m2

complex aims to spread the message

of “Change in Exercise Habits, Change

in Quality of Life, Change for the

Individual”.

D-Gym is focused on quality while

maximizing customer comfort and

providing complete satisfaction and

aims to provide personalized, high-

quality customer service with its skilled

and experienced trainers. Offering its

members a large, comfortable training

facility filled with the latest fitness

equipment, D-Gym appeals to business

professionals, working or residing in

Maslak and nearby neighbourhoods.

D-Gym, the most comprehensive and

technologically advanced health club

in Turkey, features; state-of-the-art

cardiovascular and weight training

areas in three different categories,

private training, group exercise classes,

multi-purpose studios, a Pilates studio,

a spin studio, Nutritional Counseling,


full-service SPA providing various

skincare and massage services, a

Turkish Bath, saunas, steam rooms,

a relaxation lounge and an indoor

swimming pool. D-Café, located within

D-Gym welcomes members and

non-members, and offers a tempting

menu that combines local and seasonal

ingredients to create healthy menu.

D-Gym provides all the expertise and

equipment needed to promote an array

of healthy habits with special emphasis

on a healthy athletics routine.

Open on weekdays between 06:30 am

– 10:00 pm and on weekends between

08:00 am – 08:00 pm, D-Gym was

designed as a facility to meet all needs

of the individual who wishes to live a

healthier and a more fulfilling life.

In order to meet the increasing demand,

D-Gym plans to welcome its prospective

members with more centers in the near

future.


D-Life

Designed on a total area of

approximately 2,000 m2 in İstanbul’s

central district Ulus, D-Life Healthy

Living and Detox Center invites

healthy lifestyle enthusiasts to the

new address of renewal. The center

aims to be the new address of those

who wish to physically, spiritually

and mentally renew themselves

and adopt healthy nutrition as their

lifestyle by getting purified from the

adverse effects of city life. D-Life,

which is based upon the customer

oriented management approach

of Doğuş Group, offers services

to its customers in a friendly and

trustworthy manner.

D-Life incorporates various services

such as liquid feast for certain

periods, intestine cleansing via colon

hydrotherapy and colema therapy as

well as cleaning the blood with ozone

and SPA services such as sauna and

massage in addition to applications

including yoga, meditation, breath and

energy exercises.

Operating in Ulus for the time being,

D-Life sets sight on extending its

detox and renewal activities with more

centers to be opened in the upcoming

period.

With the motto “Your lifetime companion for a healthy life”, D-Life offers comprehensive cleansing, detox and nutrition programs for a healthy body, mind and soul.


Körfez Havacılık Turizm ve Ticaret A.Ş.,

under the affiliation of Doğuş Group,

was formed in 2007 and in May 2008

received its Operating Certificate

(AOC) from the Turkish Civil Aviation

Authority. Körfez’s fleet, comprising

of one Gulfstream 450 aeroplane, one

Hawker 900XP aeroplane and one Bell

407 helicopter, is authorised to operate

commercial flights both domestically

and internationally.

The Company’s main operations centre

is at the General Aviation Apron of

Istanbul Ataturk Airport. Körfez has

its own special hangar in which the

aircrafts are based and where our

experienced technical personnel

perform regular maintenance. When

necessary, maintenance is performed

at authorised service centres under the

observation of the Company’s team of

experts.

Körfez Havacılık possesses over 12

years of civil aviation experience and are

also qualified instructors (TRI) on the

aircraft they fly.

The Company has established and

applies a Quality Management

System (ISO 9001:2008) for Air Taxi

Management.

Körfez Havacılık

Körfez Havacılık operates commercial flights both domestically and internationally with its professional flight crew that possess over 12 years of civil aviation experience and are also qualified instructors.


Real Estate

Like a piano playing smooth

flowing rhythms, Doğuş

Group in the real estate

sector presents distinctive

and characteristic projects

where customer satisfaction

is always at the forefront.



In the real estate sector, Doğuş Group operates with three companies; Doğuş REIT, Doğuş Real Estate and also with Doğuş Turizm Sağlık Yatırımları ve İşletmeciliği San. ve Tic. A.Ş. which owns 42% of the İstinyePark Shopping Mall.


*** Financial information about Doğuş Turizm Sağlık is prepared on a standalone basis. The Company is 90% shareholder of D-Otel Maris and D-Marin Göcek which operate in the tourism and services sector.

** From IFRS Report

Financial Highlights (TL thousand)*

Doğuş REIT 2008 2009 2010 2011Segment Assets 201,851 177,084 176,386 189,327

Revenues 8,717 41,699 10,174 12,411

Cost of Revenues (1,880) (31,405) (1,855) (1,894)

Gross Profit Margin (%) 78 25 82 85

EBIT 35,470 5,427 9,003 10,683

EBITDA 36,064 5,518 9,080 10,832

EBITDA Margin (%) 407 13 89 87

Net income 29,054 2,980 9,711 13,205

Financial Highlights (TL thousand)***

Doğuş Turizm Sağlık 2008 2009 2010 2011Segment Assets 863,524 851,830 1,032,825 1,412,331

Revenues 39,633 262,942 47,620 59,207

Cost of Revenues (4,726) (154,593) (4,198) (5,008)

Gross Profit Margin (%) 88 41 91 92

EBIT 142,671 94,487 72,121 241,363

EBITDA 142,671 94,487 72,326 241,626

EBITDA Margin (%) 360 36 152 408

Net income 117,901 84,685 66,246 201,676

Financial Highlights (TL thousand)**

Doğuş Real Estate 2008 2009 2010 2011Segment Assets 345,006 448,940 633,481 700,106 Total Equity 293,198 323,582 420,013 505,140 Net Rental income (318) 136 1,396 22,343 Other Operating income 87,791 39,375 139,302 126,335EBIT 83,155 35,808 109,654 137,257 EBITDA 83,188 35,882 109,779 137,369 EBITDA Margin (%) 82 93 75 137Net income 61,501 26,929 85,389 85,128 ROA (%) 18 6 13 12ROE (%) 21 8 20 17

* From CMB Report and Annual Report


Real Estate Investment Trust (REIT)

Companies started to operate in Turkey

for the first time in 1995, as a result of

the regulations prepared by the Capital

Markets Board. Two years later, they

became publicly listed in the İstanbul

Stock Exchange (ISE).

On July 25, 1997, the Company began

operating as the third REIT on the

Stock Exchange under the title Osmanlı

REIT. At that time, it had a registered

capital of TL 5 trillion and a paid-in

capital of TL 250,000 and was listed on

the ISE 100 index.

At the end of 2001, as a result of

the merger between Osmanlı Bank

and Garanti Bank - both belonging to

Doğuş Group, 51% of the Company’s

shares were transferred to Garanti

Bank, making it a financial subsidiary of

the Bank; its name was changed into

Garanti REIT. By the end of 2005, the

Company’s registered capital and paid-

in capital reached TL 500 million and TL

93.78 million, respectively.

As of December 1, 2006, the

shareholder structure of Doğuş-GE

REIT changed when Garanti Bank

sold 50% of its shares to GE Capital

Corporation and 50% to Doğuş Holding

A.Ş. Doğuş Holding A.Ş. and GE Capital

Corporation each hold 25.5% of the

shares, while 49% of the shares are

publicly held. Shares are listed on the

İstanbul Stock Exchange, National 100

and ISE-GMYO industrial indices; their

ticker symbol in the national market is

DGGYO.

Following the letter of intent signed

on 15.09.2010, a Share Purchase and

Sale Agreement has been entered

into effect by and between the parties

Doğuş Holding and General Electric

Capital Corporation on 12.11.2010 for

Supported by the new partnership structure and together with

the global experience and wealth funds of Doğuş Group, Doğuş

REIT aims to be among the leader real estate investment

companies in Turkey.

Doğuş REIT


sale of all of the shares with nominal

price TL 23,913,900 (25.5% of the

company capital) owned by General

Electric Capital Corporation at Doğuş-

GE Gayrimenkul Yatırım Ortaklığı A.Ş.

to Doğuş Holding in consideration

of US$ 28,000,000. As of January

03, 2011, the parties fulfilled the

necessary applications for the purpose

of obtaining the approvals of relevant

public authorities for completion

of the shares’ transfer and closing

procedures. Currently, the Company’s

commercial title is Doğuş REIT.

Vision

Supported with the new partnership

structure, Doğuş REIT aims to be one

of the leader investing and developing

companies in Turkey; together with the

global experience and wealth funds of

Doğuş Group, which shelters finance,

construction and real estate specialties.

Mission

Doğuş 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 concurrently providing the highest

customer satisfaction in the projects

developed.

Highlights from Properties Portfolio

Doğuş REIT portfolio includes Doğuş

Center, Maslak located in İstanbul and

the 2000 Plaza located in Antalya.

Doğuş Center, Maslak

Doğuş Center, Maslak broke new

ground in Turkey by exclusively hosting

large stores and offering a unique store

mix. This mix includes car showrooms

and service areas, a supermarket, a

fitness center and food court. Located

in İstanbul’s main business center,

Maslak and exclusively featuring big

stores known as “big boxes,” Doğuş

Center, Maslak offers a high-quality

of interior design and equipment

unlike its foreign counterparts. The

main reason behind this choice is that

Maslak-Levent area is Turkey’s banking

and finance center where educated

white-collar personnel are working.

The center is also easily accessible: it

is quite close to the coast road, TEM

and E5 highways, the junctions of both

bridges that cross the Bosphorus, and

the new underground station (Metro

Station).

Doğuş Center, Maslak also offers

significant benefits to the brands

included in its store mix. Such brands

are usually unable to find adequately

large and cost-effective spaces in

downtown malls and forced to move

to outskirts of the city, which results

in an inability to attract their target

audience. Doğuş Center, Maslak


offers such stores the opportunity

to occupy large spaces in Maslak in

the heart of the city. Total space of

the center is 63,202 m2, with stores

occupying 47,508 m2. Closed parking

space has a capacity of 788 vehicles

and there is also an open parking area.

Construction of Doğuş Center, Maslak

Project was completed in November

2006.

Value of building having 82.67% share

in company portfolio is TL 151,838,000

in accordance with expertise report

dated November 16, 2011 prepared

by Taksim Kurumsal Değerleme ve

Danışmanlık A.Ş. with Capital Markets

Board (SPK) license.

Antalya / Centrum, Shopping Center,

“Antalya 2000 Plaza”

Antalya 2000 Plaza is an office and

shopping center building located in

Recep Peker Street, where urban

rents have the most value and vehicle

and pedestrian traffic is very dense.

It offers 92 independent sections and

other sections of 9,000 m2 for offices,

shopping area, bazaars, cinemas and

fast food restaurants. 56.8% of the

building was included in the company’s

portfolio in 2000.

Value of building having 3.68% share

in company portfolio is TL 6,755,000

current value in accordance to

expertise report dated November

16, 2011 prepared by Taksim

Kurumsal Gayrimenkul Değerleme ve

Danışmanlık A.Ş.

Future Plans

In accordance with its strategic target

of investing in architecturally original

and financially reasonable housing

development projects with a certain

conceptual approach in metropolitan

areas, Doğuş REIT will continue to

seek and evaluate new investment

opportunities.

Doğuş REIT

Portfolio Breakdown 2011

Doğuş Center, Maslak 87.8%

Cash & Equivalents 8.8%

Antalya 2000 Plaza 3.4%


Doğuş Real Estate

By analyzing the market expectations, regional characteristics, customer needs and demands comprehensively, Doğuş Real Estate provides maximum benefit through its investments in a wide range of portfolio including residential projects, commercial centers, hotels, wellness centers and hospitals.

Doğuş Real Estate Investment and

Management Company whose shares

are 100% held by Doğuş Group was

founded in 2006. Since its foundation,

its goal is to be the most valuable

company in the sector without

sacrificing from trust, respectability,

honesty and the understanding of high

quality service with its expert staff on

real estate development, construction

management, sales and marketing

fields. The mission of Doğuş Real

Estate is to raise its investments in

years with a steady growth and reach

the maximum customer satisfaction by

transferring its professionalism to the

real estate projects.

The fact that Turkey is one of the

countries that reached the highest

values of growth during 2010-2011

among the countries of OECD and

G20 affected the demands of the

investors in the positive way. Doğuş

Real Estate is closely monitoring the

dynamics of the real estate sector

throughout Turkey and proceeding its

work on developing projects including

residential and commercial buildings

as well as hospitals, wellness centers

and logistics facilities by utilizing the

large real estate portfolio owned and

invested by Doğuş Group.

Doğuş Real Estate, which holds 13

assets all over Turkey today, continues

its work with great care in order to

make the best use of these assets.

Targets:

• Focusing on unconditional customer

satisfaction,

• Reflecting the corporate identity and

the different points of views to its all

projects,

• Creating places that provide high

living standards,

• Becoming the most valuable and

respectable company of the sector.


Principles:

• Trust,

• Respectability,

• Honesty,

• Fulfilling the responsibilities of today

and next generations,

• Maintaining high quality service,

• Providing permanent institutional

competitive advantage,

• Keeping team work at the forefront.

Completed Projects

Gebze Center Shopping Mall

The construction of Gebze Center

Shopping Mall, all investment of which

was made by Doğuş Real Estate,

started in August 2008.

The Shopping Mall was opened in

September 2010, and since then it

has added value to the region in both

financial and social terms. It showed

a great deal of increase in the number

of its visitors and its endorsement

performance. In one year, the number

of visitors turned out to be more than

expected and reached 9 million and the

endorsement growth rate increased by

41%. In this success, the main factors

were that the mall is the only shopping

mall project in the region that was

planned at the right time and the right

place, it has a strong combination of

diversified shops, and a zone reserved

for recreation activities.

Gebze Center is almost 100% full. 120

of the 127 shops that are placed on an

area of 59,000 m2 have already been

rented. Kiosk rentals and demands in

order to rent the vacant shops continue

to come as well.

The activities that took place in 2011

in line with marketing strategies were

planned as long-term projects that add

value to the customers while creating

a loyal customer group and increasing

the sales of the retailers.

With the “1st Book Days in Gebze” in

2011 that was awarded as “Marketing

Campaign of the Year” by AMPD, the

number of visitors increased by 22%.

Also, with the civil society initiative

called “April 23rd Kids Center” in which

around 2000 kids participated and with

Kral FM/TV Studio at which there are

live shows with celebrities every week,

the number of visitors has continued to

increase.

In addition to these, there were

revenue-oriented fairs too; conceptual

fairs such as the furniture festival

and the school equipment festival.

Each week, with the campaign called

“Opportunity of the Week,” certain

shops were promoted.

Along with these projects, many civil

initiative projects were carried out

such as the organizations designed

for disabled citizens and information

campaigns on raising awareness about

the environment.

In Gebze Center, which was designed

with the target of locating both the

national and the international well-

known brands under the same roof,

there is TESCO-KİPA (10,500 m2) as

the hypermarket, KOÇTAŞ (7,600

m2) as the construction market and

TEKNOSA (2,800 m2) as the electronic

market. Gebze Center offers its visitors

a wide range of products and a variety

of shopping via more than 120 shops;

from clothing to food, souvenirs

to home equipment, furniture to

stationary, jewelry to cosmetics and

white goods to textile.

D-Life Ulus Project

The D-Life Healthy Living and Detox

Center project, on a 1,500 m2 enclosed

area and 560 m2 outdoor area in Ulus,

İstanbul was completed in April 2011.

Ongoing Projects

Ayazağa Doğuş Group Office

Building Renovation Project

Renovation of a 12,147 m2 existing

building in a land of 6,880 m2 in

Ayazağa, İstanbul where the project

development and management works

started in December 2011, is ongoing.

The project is planned to be completed

in September 2012.

Maslak Office Building Project

The project is in Maslak, İstanbul and

has 42,000 m2 closed area in a 4,725

m2 land. Ongoing project development

and management works are at the

“official approval” stage.

Grand Hyatt Hotel Restaurant

Renovation Project

The project management service to

renovate the main restaurant of the

Grand Hyatt Hotel in Taksim, İstanbul

started in October 2011 and will be

completed in May 2012.

D-Hotel Maris Renovation Project

The project management works to

renovate the hotel in Marmaris, Muğla

with 200 rooms on a land of 156,000

m2 started in March 2011 and will be

completed in March 2012.

Doğuş Center, Etiler Building

Renovation Project

The project development and


management works of the trade

complex having 9,000 m2 construction

site started in January 2012 and

planned to be completed in the last

quarter of 2012.

Bodrum Cennet Bay Atami Hotel

Renovation Project

The project development and

management works of 8,200 m2 hotel

building in a 11,250 m2 land in Bodrum,

Muğla started in December 2011 and it

is planned to be completed in the first

quarter of 2013.

Ortaköy Building

The renovation works of Doğuş

Catering Group’s office building in

Ortaköy, İstanbul will be completed in

February 2012.

Future Plans

The future plan of Doğuş Real Estate

is to raise its investments in years for

a steady growth and provide maximum

customer satisfaction by carrying the

Doğuş brand and its professionalism to

the real estate projects.

Doğuş Real Estate also aims to

manage its completed projects

effectively, in order to get the highest

performance in terms of income and

prestige.

Gebze Center Shopping Mall Data

Opening date : September 03, 2010 Land area : 61,000 m2

Total construction area : 140,000 m2 Total rental area : 59,000 m2

Car park capacity : 1,500 vehiclesHypermarket : 10,500 m2

Construction market : 7,600 m2

Electronic market : 2,800 m2

Total terrace area : 1,250 m2

Shops : 23,100 m2

Cafe&Restaurant : 4,800 m2

Entertainment area : 6,200 m2

Performance indicators in 2011

Total endorsement : 194,268,000 TLTotal number of visitors : 8,999,000 peopleTotal number of vehicles : 1,990,000 vehiclesMonthly basket average : 21.66 TL/personMonthly endorsement/m2 average : 283.50 TL/m2

Total rental income : 21,225,000 TLOccupancy rate : 98%

Doğuş Real Estate

Portfolio Breakdown 2011

Investment Property 92%

Cash & Others4%

Trading Property

4%


Since its opening in September 2007,

İstinyePark is working non-stop with

its 300 stores to offer the best service

to its visitors. The shopping mall

provides a vast selection thanks to its

270,000 m2 construction area,

87,000 m2 store area, 3,600 units

carpark and wide range of stores.

İstinyePark offers viable alternatives to

a wide scale of visitors from all ages

and backgrounds.

The shopping mall features both indoor

and outdoor space. With its giant glass

dome and glass ceilings, the mall

brings the sun in and gives its visitors

the perfect harmony of indoor comfort

and outdoor airiness.

İstinyePark was built in line with the

belief that a shopping mall should provide

the highest standarts in service and

presentation as well as in architectural

details and technical solutions. The

visitors of İstinyePark can experience the

joy of sitting under the shade of a tree or

the comfort of chit-chatting with a local

shopkeeper, together with the ultimate

pleasure of watching a movie in a state-

of-the-art theater or the fullfillment of

living an active city life. All is possible

under one roof.

Doğuş Group also operates with İstinyePark in the real estate sector since September 2007 under a partnership between Doğuş Turizm Sağlık Yatırımları ve İşletmeciliği San. ve Tic. A.Ş. and Orta Gayrimenkul Yatırım Yönetim A.Ş. The ownership of the two companies on İstinyePark is 42% and 58% respectively and Doğuş Turizm Sağlık is owned and managed by Doğuş Holding A.Ş.

İstinyePark


Energy

The sound of the

trumpet is produced by a

vibration of air happening

simultaneously with the

vibration of the player’s

lips. With its remarkable

investment portfolio that

keeps it among the key

players in the sector, Doğuş

Energy vibrates perfectly in

the Doğuş Group orchestra,

playing an important part in

Turkey’s future.



The Energy Sector

The electricity sector in Turkey is

characterized by strong growth,

low usage per capita and on-going

liberalization in the market. To maintain

the continuity of the economic,

sociological, technological progress and

expansion of Turkey, the energy sector

must adapt and keep up with the latest

developments in this industry.

The installed capacity reached 53

GW at the end of 2011. According to

the TEIAS projections, it is estimated

that the sector needs an increase

of approximately 100% of installed

capacity in order to meet an estimated

increase of 6.5-7.5% CAGR in demand

for the next decade, which is expected

to be undertaken by the private sector.

From this perspective, the share of

private sector in Turkey’s installed

capacity is expected to increase every

year.

The demographics of Turkey and

its strong economic growth dictate

that the energy sector will require an

investment of US$ 130 billion by 2020,

mainly by utilities.

D Energy

D Energy develops and grows through

strategic and profitable enterprises

to maintain optimal generation

portfolio and its infrastructure with

clean energy sources. It consistently

acts in accordance with current

social, economic and geographical

developments and maintains its

environmentally friendly focus.

The Energy Business Line was founded

within Doğuş Holding in 2005 to

monitor all developments concerning

and pertaining to the energy sector,

both within Turkey and throughout the

region. It is responsible for formulating

and generating strategies for all

energy and infrastructure investments

within Doğuş Group. Taking necessary

measures and creating profitable

business enterprises are ultimate goals

of this organization.

In terms of generation sector which is

based on renewable energy sources, D

Energy is one of the leading companies

in the private sector with its 1 GW

installed capacity.

D Energy has designated new

investment projects and privatizations

for the generation of electricity as well

D Energy

D Energy aims to generate electricity from clean, renewable and domestic energy sources which will meet the increasing energy demand in the best way possible. The Company grows through its strategic and profitable ongoing investments.


as the operation of these assets and

energy trading as its core areas of

business.

Ongoing Investments

Considering growing energy

dependence of Turkey, benefiting

from domestic and renewable energy

sources carries strategic importance

for the country. In addition, renewable

sources are playing key role by

supporting endeavors for decreasing

carbon emission level. To that extent,

hydroelectric energy, which is a

domestic, renewable and clean energy

source, has started to assume greater

importance in Turkey as stated in

the strategic paper declared by State

Planning Agency.

D Energy based its investment

strategies on this premise. Within

the current portfolio, that has 1 GW

licensed installed capacity, Artvin

Hydroelectric Power Plant (332 MW), in

which D Energy holds 100% share, is

the latest investment of the company

after the Boyabat Hydroelectric

Power Plant (513 MW), in which it

holds a 34% share, and the Aslancık

Hydroelectric Power Plant (120 MW),

in which it holds a 33% share. Total

amount of investments of these three

projects exceeds US$ 2,200 million.

Construction of Artvin Hydroelectric

Power Plant was started in December

2010. US$ 800 million is going to be

invested for the project, which is fully

owned by D Energy and located on

Çoruh reservoir in the north eastern

side of the country. Once the project

is completed, in 2015, it will generate

more than 1 billion kWh of electricity

per year with its 332 MW installed

capacity and will be one of the leading

hydroelectric power plants in Turkey.

With US$ 1,200 million of investment,

Boyabat Hydroelectric will be

operational by the second half of 2012

with its 513 MW installed capacity

and will generate 1.5 billion kWh of

electricity per year. The project has

begun to hold the water at the end

of 2011 and will have the greatest

installed capacity among hydroelectric

power plants that are owned by the

private sector within Turkey.

US$ 200 million will be invested for the

run on river type Aslancık Hydroelectric

Power Plant with an installed capacity

of 120 MW and the project is expected

to be operational by 2013.

Artvin and Boyabat hydroelectric power

plants, which compose 87% of total

capacity under construction invested

by D Energy, are designed to benefit

from peak hours. They will both help

the company to maximize its profit and

serve the country by stabilizing spot

market electricity prices in peak hours.

D Energy believes that the significance

of electricity trading will increase

every year. From this perspective, the

company has also 25% share in the

D-TES Electric Power Trading Company

which was founded in 2003.

Future Plans

D Energy closely monitors privatization

initiatives, green and brown field

projects in various regions of the

country in order to optimize its

portfolio. D Energy will continue

to operate in the areas of energy

generation and will focus on electricity

trading activities. In addition, D Energy

is developing investment plans on

prospective projects to have optimal

generation portfolio, and aims to build

an additional of 2 GW, mainly from

renewable and conventional resources.



In the Doğuş Group

orchestra, corporate

responsibility is just like

a french horn, a crucial

actor with a strong effect,

however barely noticed

by the audience compared

to other instruments. It

supports the music and adds

its own flair while the tune is

reaching its finest peak. Well-

aware of its responsibilities

towards the society and the

environment, Doğuş Group

has deeply buried the notion

of corporate responsibility

within its culture since its

inception in 1951.




Corporate Social Responsibility Projects

Doğuş Holding

Child Development

Doğuş Kids (Doğuş Çocuk)

Established in December 2004, Doğuş

Kids is the social responsibility platform

of Doğuş Group and it is based on

the perspective that our future will

be largely shaped by today’s children

and child development. We believe

that this perspective should be given

utmost importance by all players today,

including the business sector.

Contributing to the development of

young children, through education,

entertainment activities and projects

since its inception, Doğuş Kids aims

to create a more conscious and

responsible society in the areas of child

development, education and culture

and arts.

With this objective in mind, Doğuş Kids

engages in partnerships with other

institutions including non-governmental

organizations, international

organizations, state and governmental

bodies. All of these other institutions

share the Doğuş Kids’ vision of

cultivating social change through our

children.

Doğuş Kids Symphony Orchestra

The “Doğuş Kids Symphony

Orchestra” was established in 2006 as

Turkey’s first national, and permanent,

children’s symphony orchestra. The

Orchestra is comprised of conservatory

students between 11 and 18 years

of age from different regions of

Turkey, and introduces the wonder of

symphonic music to Turkish children as

performed by their peers.

In 2011, Doğuş Kids Symphony

Orchestra performed 4 concerts with

“Symphonic Cabaret”, which is a

musical comedy. It was particularly

written for Doğuş Group by Gani

Müjde, famous screenplay writer

and joined by young actors Serhan

Arslan and Sinan Çalışkanoğlu. The

“Symphonic Cabaret” concerts took

place in Ankara, Eskişehir and İstanbul

reaching a total audience of over

3,500. Furthermore, aside from this

project, the Orchestra also performed

2 concerts, one in the Ayvalık Antique

Theatre and the other in the Çeşme

Castle with the world renowned

Turkish pianist Fazıl Say and reached

another total audience of 3,500.

In addition, in 2011, the book “The

Music Calls You” in which the story

behind the establishment of the Doğuş

Kids Symphony Orchestra was told by

Dr. Erdal Atabek, Social Psychologist

and Mentor of the Orchestra, was

also republished specially for April

23, 2011, the National Sovereignty

and Children’s Day in Turkey. The

proceeds of the book have been

donated to the TOHUM Autism

Foundation. Furthermore, Dr. Atabek

participated in TÜYAP Book Fair in

November 2011 and a seminar was

organized with his participation on the

relationship between music and child

development.

Doğuş Kids Symphony Orchestra

Website

Having reached its target member

number of 100,000 in less than

5 years, the Doğuş Kids website

was replaced by the Doğuş Kids

Symphony Orchestra website as of

July 2010. The Doğuş Kids Symphony

Orchestra website aims to create a

communication platform among the

orchestra members and furthermore,

it aims to inform and educate young

people on classical music.

The communities where we do business are important stakeholders for Doğuş Group. We promise to make the community a better place, and we are committed to that promise. Our community engagement comprises of a combination of CSR projects, philanthropy, employee volunteerism and awareness campaigns, in addition to sponsorships.


Education

Send Me to School Campaign

(Baba Beni Okula Gönder)

Since 2006, Doğuş Holding has been

providing scholarship for the education

of 50 female students on an annual

basis, through its support to the Send

Me to School campaign, a joint effort

with the Milliyet newspaper, together

with the Association in Support of

Contemporary Living (ÇYDD).

Financial Literacy

Para Durumu (First financial literacy

initiative of Turkey that reaches out

to masses)

Financial literacy is an individual’s

ability to make informed judgements

and effective decisions about the use

and management of his/her money.

Thus, financially literate consumers

manage their income, save and invest

wisely and avoid fraudulent practices.

The term has gained much importance

all around the world, since each

‘person’ and ‘household’ is the base of

economic sustainability in a country.

Para Durumu is the first private media

and interaction based financial literacy

initiative of Turkey, which reaches out

to masses via several channels: the

TV show started out in CNBC-e for the

first year, and then transferred to

A Haber, where it airs twice a week at

7 pm, prime time. It also pages on the

highest circulated national newspaper

Posta and also on Hürriyet and is

broadcasted at the highest rated radio

channel Kral FM. Para Durumu is also

broadcasted on the daily morning show

of Capital Radio and published on the

monthly women’s magazine ELELE.

Para Durumu actively uses social media

channels via Facebook and Twitter

and also operates a very popular

blog+internet site: www.paradurumu.tv

Para Durumu has soon become an

address where people seeked out

to solve and be guided for personal

finance problems, financial product

questions, saving for a house, budget

decisions, investment choices, credit

card issues, and ‘making it through’

problems. It has become a popular (and

only) venue for people to “talk money”

in public.

The initiative is recognized as a

Financial Literacy initiative of Turkey by

OECD.

Among the activities that make Para

Durumu an outstanding initiative are:

• The initiative reaches out to youth

(University students) via physical

meetings as well. In 2010-2011, it

visited 12 universities across the

country where average participation

was 1,000 students. It also visited

high-schools and elementary schools in

different parts of Turkey meeting with

200 young female students between

ages 15-18 in Şanlıurfa and bringing

them along to Harran University, which

was their first visit to a university.

These special programs were

presented as a model for financial

education to the Republic of Turkey

Ministry of National Education.

• Para Durumu runs special projects

with “children” (Elementary school

students). The initiative organized

a six week project with Lütfi Banat

Elementary School, where students

were taught how to use and manage

money, make investments in the

environment, health, education. The

special program was presented as a

model for financial education to the

Republic of Turkey Ministry of Family

and Social Policies.

• Para Durumu launched a new

personal finance education movement

for “women” with the cooperation

and support of the Republic of Turkey

Ministry of Family and Social Policies

as well as the İstanbul Metropolitan

Municipality. The project aims to

educate 20,000 women in İstanbul

to make them financially literate until

June 2013. The project has a special

significance, as İstanbul is a major

city in the world that is on its path to

become one of the ‘World Financial

Centers.’ After the completion of this

first phase of the movement, education

model developed by Para Durumu will

be carried further and become a nation-

wide education plan, which will be

taught at various municipality centers

across Turkey.

• Para Durumu encourages women

entrepreneurs. Mrs. Denizmen is the

official ‘Personal Finance’ educator

of KAGİDER (Women Entrepreneurs

Association of Turkey) and attends

TOBB (The Union of Chambers and

Commodity Exchanges of Turkey)

Women Entrepreneurship meetings.

Para Durumu educates the trainers

of AÇEV (The Mother Child Education

Foundation), which is a Turkish non-

governmental organization that has

vast research, program development,

program implementation and advocacy

experience in early childhood, parenting

education and women literacy/

empowerment.

• Para Durumu opts to bring about

personal finance education to

government employees (3 Million

people in Turkey).


It also organizes seminars with

different profession groups including

police officers, teachers and doctors.

It is currently in dialogue with the

Government Personnel Department in

bringing about a web-based financial

education program that reaches out to

3 million state employees.

• Para Durumu aims to be a catalyst

to bring about “national strategy”

on financial literacy in Turkey. This

requires efforts on research, policy,

practice and coordination in general.

For this, Mrs. Denizmen has been

regularly visiting top executives of

Republic of Turkey Ministry of National

Education, Republic of Turkey Ministry

of Family and Social Policies, Ministry

of Economy and financial regulatory

institutions such as Capital Markets

Board, İstanbul Stock Exchange, Inter

Card Center, Credit Bureau, Banking

Regulatory Institution, the Central Bank

of the Republic of Turkey.

In line with these efforts, by the end

of 2011, Capital Markets Board was

appointed by the National Economic

Stability Committee headed by the

Deputy Prime Minister of Turkey,

Mr. Ali Babacan as the government

institution responsible for the Financial

Literacy issues in Turkey.

• Para Durumu brought “The

Best Volunteer” award to Özlem

Denizmen, by The Corporate Volunteer

Association, which is founded to

help establish corporate employee

volunteering in the corporate cultures

of companies in Turkey.

• Para Durumu is appointed as a

member of the Advisory Committee

and jury for the Child & Youth Finance

International, an organization that aims

to provide financial education and

access to 100 million children in 100

countries.

• Özlem Denizmen, who spearheads

this initiative, received international

honors as well, with the recognition

of the ‘sustainable change’ Para

Durumu brings about to Turkish

household economy. The White House

Entrepreneurship Summit, Global

Clinton Initiative, World Economic

Forum, OECD are among the

institutions which acknowledged these

efforts thru their rewards.

The Ayhan Şahenk Foundation

Since its inception in 1992, The

Ayhan Şahenk Foundation has been

undertaking initiatives in education,

health and the environment as well

as offering social aid to those in

disadvantaged areas. As in previous

years, the Foundation has continued

to implement significant projects in

2011 for the benefit of our people

and community with a responsible

perspective to help our government in

fulfilling its social welfare duty.

Education

In 2011, The Ayhan Şahenk

Foundation and Doğuş Holding

supported the “Kızlarımız Okullaşıyor”

(Girls Go to School) campaign led

by the Governorship of Şanlıurfa,

by building a 24 classroom high

school and a 200 student dormitory

for female students in Şanlıurfa. By

supporting this project, the Foundation

aims to help female students get

secondary level education and

thereby contribute to the creation

of equal opportunities in education.

The Foundation completed the

construction of both buildings before

the 2011/2012 school year and

presented them to the use of the

Ministry of National Education of

Turkey.

Health

In 2011, the number of people who

benefited from the “Mobile Healthcare

Units” project totaled 17,910, thereby

reaching a cumulative number of

394,220 patients, since the initiation

of the project in 1997. The project has

been implemented by means of fully

equipped modern health units designed

particularly to render service in the

fields of “Visual Health-Ophthalmology,”

“General Health-Internal Medicine”

and “Children’s Health-Pediatrics.”

Health services including the laboratory

work-ups are free of charge to all

patients with limited financial income,

and also to children attending primary

schools in underserved districts taking

precedence.

Environment

In the context of Ayhan Şahenk Forests

of Endearment Project (Ayhan Şahenk

Sevgi Ormanları) which was founded

with the aim of leaving a healthy

and habitable environment for future

generations, 540,000 trees have been

planted to date in the forest areas that

were demolished through fires, mining,

or erosion.

In 2011, the Foundation continued to

provide its maintenance support to

Ayhan Şahenk Forests of Endearment


planted in Marmaris, Bodrum, Niğde

and İstanbul without interruption, in

line with a protocol signed with the

Ministry of Environment and Forestry.

The maintenance support involved

repairing fences and gates, as well as

tending to plants and replacing dead

ones with fresh plants.

Social Aid

As a part of the Foundation’s ongoing

commitment to provide social aid to

the underprivileged, the Ayhan Şahenk

Foundation provided clothing to 1,000

students and food supplies to 2,500

poor families in 2011. During the month

of Ramadan in 2011, the Foundation

served “iftar” dinners to approximately

2,500 people per day, hosting 51,000

people in total.

Furthermore, the Foundation also

extended its support to the victims

of the Van earthquake of October 23,

2011, which caused loss of many lives

and mass physical destruction in the

area. In order to support the provision

of basic human needs in the region,

the Foundation donated urgent needs

including 200 tents, 4,000 blankets,

500 pairs of shoes, 50 catalytic stoves,

baby food and clothes in cooperation

with Turkish Red Crescent (Kızılay) and

Disaster Coordination Center (AKOM).

In addition, the Foundation established

a food tent in Erciş in cooperation with

Doğuş Holding, the worst affected area

in the city, and served food for 1,700

people per day for a month.

For detailed information about the

foundation and its projects:

www.ayhansahenkvakfi.org.tr

Banking and Financial Services

Education

Teachers Academy Foundation

(Öğretmen Akademisi Vakfı)

Garanti, recognizing the role education

plays in upgrading the overall well-being

of the society, set up a foundation

in 2008, an initiative exhibiting its

sensitivity in this aspect and its long-

term commitment. The objectives of

the Teachers Academy Foundation

include, among others, supporting the

personal and professional development

of teachers who educate future

generations. In this context a five-

year protocol has been signed with

the Ministry of National Education

in relation to the Foundation’s first

project, ‘’Öğretmenin Sınırı Yok’’ (No

Limits in Teaching) which seeks to

contribute to the current education

model, supporting analytical thinking

and research. Through the project

that is formulated to provide teachers

with training activities on personal and

professional development, 100,000

elementary school teachers, directors

and superintendents will receive face-

to- face training. The project started in

April 2009 with pilot runs in five cities,

and reached around 48,000 teachers

in 68 cities by the end of 2011. The

aim is to spread the project across the

country.

Community Volunteers Foundation

(TOG)

Since 2003, Garanti has been the main

sponsor of TOG, a foundation that

acts toward achieving social harmony,

solidarity and change through the

involvement and leadership of youth.

Since 2006, Garanti Pension and

Life has supported several children’s

education and personal development

projects carried out by the Community

Volunteers Foundation. Granting the

Foundation a specific percentage of

its monthly sales, Garanti Pension

and Life supports many projects

carried out by the young Community

Volunteers, including help to school

repairs in villages, helping street

children, helping younger children

whose parents have limited means

in their preparation for university

exams, teaching literacy, and offering

computer courses. Garanti Pension

and Life plans to continue and increase

its support in this field.

“Deniz Yıldızları” (Sea Stars) Project

The Deniz Yıldızları (Sea Stars) Project

has been supported by the donations

of Garanti employees, customers, and

friends since 1998. Every year 2,500

students receive education at the

campus in Darıca, which includes a

primary school and four vocational and

technical high schools.

Garanti Pension and Life “Back to

Study: Educating, not Employing

Children” Project

Since 2010, aiming to lure students

working on the street back to the

school on a full time basis, Garanti

Pension and Life has carried out İşimiz

Okumak (Back to Study: Educating,

not Employing Children) project, in

collaboration with İstanbul Province

National Education Directorate and

Bosphorus University. As a part of the

project, about 2,500 children at 26

primary schools in İstanbul were taught


at their individual schools to enhance

their achievements and increase their

loyalty to school.

In addition, nearly 400 Garanti Pension

employee volunteers participated in

school activities on weekends and

provided educational support in foreign

language and other courses. They also

joined personal development activities

with the children such as acting,

dancing, painting, photography and

chess. Furthermore, Garanti Pension’s

volunteers organized activities such as

basketball, cinema, national park and

museums visits. The interaction set up

between children and volunteers was

remarkable.

Since the beginning of the project,

8% of the students stopped working

completely. Having achieved a very

significant success by taking many

children off the streets, Garanti

Pension chiefly intends to spread the

project to other schools to let more

children benefit from the project.

Support to Cappadocia Vocational

School

Since 2008, Garanti Pension and Life

has been supporting the education

programs held by the banking and

insurance department of Cappadocia

Vocational School and preparations of

the students for the Individual Pension

Licensing Exam, and is contributing

to the development of the students

towards being prepared for business

life.

Garanti Pension and Life managers

have been lecturing students on

“Life Insurance” and “The Individual

Pension System” since the 2008-2009

academic year. Garanti Pension and

Life also supports students in their

preparation for business life by offering

summer practice and job opportunities.

The company maintained its support to

the school in 2011.

Garanti Technology-Support to Hacı

Yakup Primary School-Düzce

Aware of its responsibilities to

community and education, Garanti

Technology has aimed at meeting

various educational needs since the

2009-2010 academic year, making

common cause with the Ayhan Şahenk

Foundation. Garanti Technology has

been giving financial support to 25

students at Hacı Yakup Primary School

in Gölyaka, Düzce during the past 3

years and will maintain its support for

another 5 years.

Health

Support to the Mobile Healthcare

Units Project

Since 2005, Garanti Pension and Life

has been a permanent supporter of

the “Mobile Healthcare Units Project”

carried out by the Ayhan Şahenk

Foundation. The Project has been

implemented by means of modern

health vehicles designed particularly

to render service in the fields of

“Visual Health”, “General Health” and

“Children’s Health.”

Women

Supporting Women Entrepreneurs

Garanti, the first private bank in

Turkey providing services specific

to women entrepreneurs, supports

entrepreneurial women in terms of

encouragement, training and funding.

Garanti Bank, in cooperation with

the Ekonomist magazine, organized

the fifth edition of “Turkey’s Women

Entrepreneur Competition.”

“Send Me to School” (Baba Beni

Okula Gönder) Project

Since 2006, Garanti has annually

been providing scholarship for the

education of 100 female students

through its support to the “Send Me

to School” project, a joint effort of

Milliyet newspaper and the Association

in Support of Contemporary Living

(ÇYDD).

Customers

Garanti Anatolian Meetings (GAS)

In 2002, Garanti initiated a series

of conferences, known as Garanti

Anatolian Meetings, to bring together

SMEs and local administrators from

all around Turkey. Paving the way for

professionals and experts to discuss

changing economic and market

conditions, evaluate regional and

international opportunities, explore

potential areas of business, and find

regional solutions in cooperation with

local businesses and officials, these

meetings gathered more than 25,000

SMEs in 56 different cities so far.

Women Entrepreneur Gatherings

In 2007, in collaboration with Women

Entrepreneurs Association of Turkey

(KAGİDER), a small-scale training

event was held for 100 women. From

2008 onwards, the context and scope

of these events expanded; Women

Entrepreneur Gatherings are held


annually in 5 cities across Turkey, where

training is provided on fundamental

topics, to enable women to create new

opportunities for their businesses and

establish networks. Moreover, women

get a chance to meet with role models

who share their experiences, and gather

tips about marketing, management,

technology, future trends and EU

integration. As of 2011, 2,500 women

had participated in 15 cities.

Garanti Pension Hobby Clubs Project

In 2008, Garanti Pension and Life

initiated the Hobby Clubs Project with

the purpose of keeping customers

happy by providing pleasant moments

not only after their retirement but

also during the accumulation phase.

Currently, the Project covers 19

different hobbies ranging from arts to

sports and is implemented with the

participation of 200 partners, all of

which are the leading institutions in

their fields.

Garanti Pension and Life members

participating in Hobby Clubs benefit

from discounts up to 50% on

hobby courses, training and hobby

equipment they use in their different

hobby fields. The Hobby Clubs

website, hobimlemutluyum.com,

gives members the opportunity to

discover the different aspects of their

hobbies and share their thoughts

and accomplishments with other

members. New events are organized

every month to allow members the

chance to develop their social lives and

communities concurrently.

Art and Culture

SALT

Garanti, via its own cultural and

artistic institutions, provides solid

support to culture and the arts in

Turkey, and takes on “sustainable”

initiatives in these areas. Garanti Bank’s

successful cultural institutions Ottoman

Bank Museum, Platform Garanti

Contemporary Art Center and Garanti

Gallery have been restructured as a

single autonomous organization. The

new institution is founded on a “Two

Buildings, One Program” idea, and

called SALT.

SALT explores critical and timely

issues in visual and material culture,

and cultivates innovative programs for

research and experimental thinking.

Assuming an open attitude and

establishing itself as a site of learning

and debate, SALT aims to challenge,

excite and encourage its visitors to

offer critique and response.

SALT’s activities are distributed

between two landmark buildings

located no more than a fifteen-

minute walk apart, and also shared

via saltonline. The first building,

SALT Beyoğlu, is on the pedestrian

street İstiklal Caddesi, and shares

its audience with a cluster of private

cultural institutions, galleries and

organizations. SALT Beyoğlu’s program

and circulation interiors are mostly

occupied by exhibition and event

spaces. The second building, SALT

Galata, is the former 19th century

Imperial Ottoman Bank headquarters

designed by Alexandre Vallaury. SALT

Galata houses a specialized, public

library and archive; spaces dedicated

to research, workshops, an exhibition

and conference hall; as well as the

Ottoman Bank Museum.

The architectural renovation of both

buildings was undertaken by Mimarlar

Tasarım/Han Tümertekin, with specific

interiors commissioned to six design

and architecture offices from Turkey

in an effort to underscore SALT’s

desire to advocate new experimental

environments for living and working.

Automotive

Education

Doğuş Otomotiv and Local

Vocational High Schools Cooperation

Şişli Industrial Vocational High

School students are provided with

internship at Doğuş Oto Maslak while

Samandıra Industrial Vocational High

School students do their internship at

Doğuş Oto Kartal. During their 4 year

education, the developments of the

students studying at these schools

are monitored regularly by a training

supervisor in Doğuş Oto. Depending

on their development process, each

student is placed in various positions,

the ones not placed continue with their

graduate education.

vdf’s Support to Education

vdf has been supporting education

through its contributions to the

Community Volunteers Foundation.

The company also donates its disused

IT office equipment and computers

to the Association in Support of

Contemporary Living (ÇYDD) and


to other educational institutions. In

2011, vdf donated 4 printers to the

association and 30 computers to the

Ertuğrul Gazi Anatolian High School.

LeasePlan Turkey’s Support to

LeasePlan ChildPlan

LeasePlan has created LeasePlan

ChildPlan, an umbrella for all social

activities aimed at supporting

disadvantaged children in developing

countries and LeasePlan Turkey has

been supporting the activities of the

platform in Turkey.

In 2011, on behalf of every employee

participating in İstanbul Marathon,

LeasePlan Turkey donated money to

LeasePlan ChildPlan. LeasePlan Turkey

employees also supported the Van

earthquake victims by donating money

to construct a prefabricated house.

Health and Safety

“Traffic is Life!”

Doğuş Otomotiv social responsibility

projects are combined under one

single heading, “Traffic is Life!”,

focusing on the traffic issue, in order

to raise public awareness on traffic

safety since 2004.

In line with the aim of creating

social awareness and cultural

change, Doğuş Otomotiv continues

its social responsibility projects in

order to create public consciousness

concerning traffic safety. As part of

this main theme, the slogan and logo

of “Traffic is Life!” have been used

since 2004 as the social responsibility

platform under which all corporate

projects are gathered to raise the

awareness of drivers and pedestrians

alike. All activities carried out to

create a positive change in the target

group regarding traffic culture have

been stepped up in 2011. The target

group is divided into 3 segments;

(1)Doğuş Group employees, (2)

children and youth and (3)public. The

corporate spokespeople of Doğuş

Otomotiv have continued to support

the cause, and the activities carried

out as part of the “Traffic is Life!”

platform have been structured so as

to reach and benefit all segments of

the public. All activities are created

with an integrated approach and the

360-degree communications method is

used to reach a wide audience.

Employee TrainingFollowing a strategy of creating traffic

safety awareness by starting with

Doğuş Otomotiv employees and

reaching the rest of the public, new

training programs have been prepared

on the targeted subjects together with

academicians specialized on those

titles.“First Aid Approach after Traffic

Accidents Training” and “Safe Driving

Techniques Training” have been rolled

out for all Doğuş Otomotiv employees

in 2011. During these training sessions

attended by the employees of all Doğuş

Group companies active in different

sectors, first aid techniques to be

applied after traffic accidents have

been taught in theory and practice. The

“Safe Driving Techniques Training”

was given at the Istanbul Park F1 track,

again covering theory and practice,

with the aim of improving the driving

skills of 1,114 Doğuş Group employees;

employees who spent longer hours

driving were offered “Advanced Driving

Techniques Training.”

By the Employee Training programs,

2 awards in the Internal Social

Responsibility Practice category were

given to Doğuş Otomotiv by Corporate

Social Responsibility Association after

the CSR solutions were examined by

the Evaluation Institution formed by

CSR Europe and various organizations

in Europe focusing on corporate social

responsibility.

Authorized Dealer Employee Training and Informing CustomersDoğuş Otomotiv aims to train employees

to act responsibly in traffic and to

volunteer to be role models; for this

purpose, a traffic safety training program

has been prepared for Authorized

Dealers and shared online with all their

employees, more than 500 of whom

completed the program. Doğuş Otomotiv

also aims at communicating directly with

its customers and reaching the broader

public through its Authorized Dealer

network, which already has high traffic

safety awareness. In addition, the vehicle

delivery procedures are being renewed.

Trained Authorized Dealer employees

have communicated directly to 53,000

customers about traffic safety during

the vehicle purchasing process, giving

them correct and useful information on

the subject; this procedure is now part of

business processes.

Employee Volunteering and Traffic Safety FilmsAs part of employee volunteering,

Doğuş Otomotiv employees continue

to take part in 3 short films, available


on social media, to raise public

awareness regarding traffic safety.

Traffic Safety Training for ChildrenAs a result of the cooperation since

2011 between Doğuş Otomotiv and

Turkish Science Center Foundation,

which is located in Şişli and visited by

400 children daily on average, a Traffic

Safety Exhibition has been opened for

primary school children, with the aim

of informing them on traffic safety

issues and raising their awareness.

Another training intended for Doğuş

Group employees is the traffic safety

awareness training for children. During

the 2011 Doğuş Fair Day, trainers gave

the children a wide-range training on

the special course, covering traffic

lights and signs, using safety belts

and zebra crossings for traffic safety.

The children also learned the specially

written Traffic Pledge.

High School Slogan Competition in collaboration with Doğuş Media GroupWith the permission of İstanbul

National Education Administration,

Doğuş Otomotiv is collaborating

with Virgin Radio and visiting high

schools to increase the traffic safety

awareness of high school students.

Students who pass the mini-test on

traffic safety propose traffic safety

slogans, and the writers of the three

selected slogans enter the slogan

competition live on radio.

Digital MediaA professional web site

www.trafikhayattir.com is created to

keep the public updated about the

activities by adding important content

related to “Traffic is Life!”. Social

media pages, such as Facebook,

Twitter are created to connect instantly

with vast network of audience in order

to interact and share helpful traffic

information and events.

Traffic Responsibility Action

Traffic Responsibility Action, which is

supported by TÜVTURK, arose from

efforts to ensure the support of private

sector corporations and individuals,

along with the public institutions and

organizations, to various solutions

to the problems suffered in traffic,

underscoring the principle of personal

responsibility. On this basis, Traffic

Responsibility Action is a corporate

social responsibility project aimed at

target groups with general training and

awareness-raising activities.

The project stems from the fact that

it is possible to produce durable and

sustainable solutions to maintain

safety of life in traffic only through the

participation of the stakeholders of

the issue. The project is coordinated

by the Ministry of Transport, Maritime

Affairs and Communications and with

the contribution of several stakeholders

comprising of other governmental

bodies, public institutions, the

academia and NGOs.

All the activities carried out in the

development and execution phase of

the project have been presented for

the consideration of the stakeholders

during the Stakeholder Meetings

held on May 4, 2010, July 15, 2010,

December 23, 2010, April 6, 2011 and

January 30, 2012; the project has been

structured in line with their ideas and

suggestions.

Traffic Responsibility Action is

executed through three subprojects:

a) Safe Vehicle Action’s target audience

is commercial vehicle drivers in

particular

b) Responsible Citizen Action’s target

audiences are university students and

the public, and

c) Bosom Buddies Action’s target

audiences are teachers, students and

their parents.

Traffic Responsibility Action started in

May 2010. Safe Vehicle Action reached

nearly 170,000 individuals in the field

activities and 3,000 commercial vehicle

drivers at the training seminars in 36

cities.

Responsible Citizen Action reached

2,500 teachers and instructors working

in Public Training Centers in 25 cities.

The courses are carried out at Public

Training Centers; the total number

reached this way is over 50,000.

Additionally, Responsible Citizen Action

reached 712 university students at the

seminars in 6 universities.

Within the scope of Bosom Buddies

Action, two seminars were held in

December 2010 for representative

teachers from 36 cities. This project

continues; it anticipates reaching 3,200

teachers, over 100,000 students,

200,000 parents and 6,000 school bus

drivers in 300 schools.

Following the main introductory

films, ‘Kaza’ (The Accident) and ‘Göz

Yumma’ (Don’t Condone) of Traffic


Responsibility Action, a total of 8 films

were made for three subprojects.

Films were broadcasted on 25 national

television channels more than 16,500

times. Celebrities supported the

project on television and radio stations

in particular on NTV Radyo, NTV Spor

Radyo, N101, Kral FM, NTV, CNBC-e

and e2. Traffic Responsibility Action

pages on social networks such as

Twitter and Facebook have had over

43,000 likes.

Two web pages were developed within

the scope of the project:

www.trafikhareketi.org updates the

knowledge on traffic, and

www.candostlarihareketi.com

for primary school students.

Additionally, since May 4, 2010, over

2 million materials and before the

holiday of the Feast of Sacrifice, one

million Safe Vehicle Cards and 124,000

posters were distributed all over the

country thanks to the efforts of the

stakeholders.

The business community, organized

under the platform meeting by Traffic

Responsibility Movement on December

13, 2011, came together to contribute

to increasing traffic safety, and create

a declaration that will guide these

efforts. Aviva Insurance, BP, Brisa, Ceva

Logistics, Doğuş Otomotiv, Goodyear,

Michelin, Renault Mais, Temsa Global,

Tofaş, Toyota, Turkey Petroleum and

TÜVTURK representatives shared their

experiences and exchanged ideas about

their work in the field of traffic safety.

The initiative, started in the coordination

of the Ministry of Transport, Maritime

Affairs and Communications, is open to

all private sector enterprises sensitive to

safety of life in traffic.

In 2012, Traffic Responsibility Action will

continue with activities in other cities.

Accessibility

TÜVTURK - Count Us in Too!

“Count Me Too In Transport,

Communication and Life!” (Ulaşımda,

İletişimde, Hayatın İçinde Ben de

Varım!) is a project initiated by the

Turkish Ministry of Transport, Maritime

Affairs and Communications. It is

based on the belief that those disabled

individuals can work despite their

disadvantages, and therefore both they

and their families might hold on to life

more firmly.

TÜVTURK contributes to this

meaningful project of high spiritual

values by saying ‘Count us in too!’.

TÜVTURK has offered job opportunity

for disabled citizens at the TÜVTURK

Call Center. In addition to those

who come to work, TÜVTURK has

made the necessary hardware

and substructure accessible for

new candidates, and created an

environment where individuals are

able to provide call-center services

from their own homes. The fact that

victims of traffic accidents answer the

questions about the services provided

at TÜVTURK vehicle inspection

stations, and make a contribution

to the traffic safety, however

indirectly, assigns a special sense and

significance to this service.

In line with its employment policy for

the Call Center, TÜVTURK gives priority

to employing individuals with any kind

of disability due to a traffic accident.

Following the participation of TÜVTURK

in “Count Me Too In Transport,

Communication and Life!” project,

such employment has accelerated;

currently, TÜVTURK Call Center

employs 85 individuals, including 60

customer representatives who work

from home.

Since the date when TÜVTURK decided

to expand the scope of the project

all over the country, new employees

have joined the Call Center staff from

different cities. During the recruiting

procedure, candidates with clear voices

and smooth diction were determined

through phone interviews first, and

then trainers were sent to their cities,

where they gave theoretical training

regarding vehicle inspection. The

second phase of the training involved

visits to inspection stations; with

the participation of local business

associates, theoretical training was

reinforced by on-site observations

and inspections. Following instruction

on the computer and communication

substructure, the candidates were

ready to answer initial questions and

become employed within the body of

TÜVTURK Call Center.

Currently, 56 disabled employees from

16 cities all over the country answer

nearly 250,000 calls monthly along with

other 40 customer representatives.

TÜVTURK believes it sets an example

for all corporations on solutions for

facilitating the employment of the

disabled.


Construction

Health and Safety

Local and international occupational

health and safety requirements are

meticulously enforced in every phase

of construction work. Compliance

with project-specific and general

environmental and labor safety

requirements of each project is

key to the high service quality

offered by Doğuş Construction to

its clients. Accordingly, employees

are continuously provided training

courses to keep up with the changing

requirements in the areas of Quality,

the Environment, Occupational Health

and Safety Management Systems.

Doğuş Construction is certified by

Lloyd’s Register (LRQA) with ISO

9001:2008 Quality Management,

OHSAS 18001:2007 Occupational

Health & Safety Management, and

ISO 14001:2004 Environmental

Management systems.

Environment

The preservation of the environment

is of great importance in the projects

executed by Doğuş Construction.

Particular care is taken to protect

natural resources, to minimize negative

environmental impacts and to adopt

necessary mitigation measures. To

this end, Doğuş Construction is in

full compliance with the applicable

environmental laws and regulations.

Morocco, Argana – Amskroud

Motorway Project

The Argan tree is an endemic species,

unique to Southern Morocco, and the

fruits resemble olives. The oil from the

Argan fruit is one of the most valuable

plant oils in the world, containing an

abundant amount of Vitamin E. The

absorption rate of the oil is very high

and it is used as a cream to nourish the

skin and to delay the aging process.

The Argan tree exists only in the south-

western area of the Moroccan State.

This tree is an endangered species

and under protection. Accordingly, in

collaboration with the Moroccan Forest

Administration, the Morocco, Argana -

Amskroud Project team chose to build

the required depots only where there

were the minimum number of trees.

The project team compensated for any

potential damage to wildlife by using

the depot areas to grow Argan trees

in an area of 75 hectares, as identified

by the Moroccan Ministry of Forestry.

In this way, the project team aims to

protect the wildlife and the natural

resources which represent a valuable

forest to the country.

Sinop – Boyabat (Via Tunnel)

Motorway Project

Along the projected route, there are

5 different areas (total length of 8.8

km.) where terrain observations and

drillings were accomplished. To reduce

damage to forests, steep-sloped high

cutting excavations were eliminated.

Further, in geologically stratified flysch

beds, “heel fillings” were built to form

the motorway platform and to reduce

the potential risk of landslip from

hydraulic underground movements.

Finally, where the motorway route

is constructed near villages and

neighbourhoods, high cuttings were

reduced in order to conserve the

forest and to prevent landslip risk in

settlements.

In the context of the project,

excavations were completed in the

Gökırmak Stream borrow pit and

stream material was gathered to be

used in the motorway fillings. Further

to a correspondence between the

project administration and the Turkish

Republican Motorways, the borrow

pit excavations were backfilled with

the top layer of soil (i.e., organic

layer) which was removed from the

motorway route. With this method, the

Stream’s flora was replenished.

Where the motorway runs parallel to

the Stream in the project, the Stream

bed was modified to prevent soil

erosion.

Boyabat Dam and HEPP Construction

Project

The Natural Wastewater Treatment

Plant that Doğuş implemented under

the title of Boyabat Dam and HEPP

Project was performed adopting the

principles of protecting natural resources,

minimizing negative environmental

impacts and placing emphasis

particularly on taking measures that are

in the direction of decreasing existing

negative impacts. The construction of

this natural treatment system, where

natural flora is used, is quite simple and

economical. These systems are based

on the principle of filtering wastewater in

basins using natural materials available

in the environment, and the treatment

of water with wetland plants that are


grown, which are small imitations of

the natural structure. Wetlands are

capable of using solar energy in the

environment and renewing themselves.

They form a wild life habitat, providing

living space for several species, and

ensure that the natural balance of the

atmosphere is protected by consuming

carbon dioxide and generating oxygen.

They have high capacity of treatment

since they can eliminate organic

materials, suspended solids, nutrients,

toxic materials, heavy metals and

biological components. In consideration

of the fact that the treatment system,

with no commissioning cost, is very

inexpensive in terms of investment

and is an environment and human

friendly investment. It aims to increase

the environmental awareness of the

local community with this type of

environmentally friendly projects.

Indeed, it may be appropriate to refer to

this technology as “Living Machine” since

the treatment procedure is performed by

several aquatic living beings.

Community

Renovation of Dere Cuma Mosque

The 400-year-old historical Cuma

Mosque that was recognized during

the construction of Sinop-Boyabat Road

(with Tunnel Crossing) was renovated

by Doğuş Construction and opened with

a ceremony subsequently.

This historic structure in the village of

Boyalıca, which had sunk into oblivion;

was rediscovered and brought back

to life by Doğuş Construction during

the construction of the 55 km Sinop-

Boyabat Road (with Tunnel Crossing)

that connects the Black Sea Region to

Central Anatolia Region. The mosque,

which had been providing service to

neighbouring villages for centuries only

on Fridays until quite recently, was

revived because of the Boyabat Road

(with Tunnel Crossing) that passes right

in front of the mosque.

Media

Environment

Doğuş Media’s reputation as a green

leader has been bolstered by becoming

the first company in Turkey’s media

sector to report its carbon footprint in

2009. NTV has built on green success

by releasing this report.

This follows the success of their award-

winning ‘Green Screen’ lineup, which

since 2008 has promoted environmental

programs on NTV. The ‘Green Screen’

project aims to raise public awareness

on environmental issues, responding

to questions and correcting common

misconceptions about issues such as

global warming, renewable energy,

organic diets, and green holidays.

Doğuş Media Group is proud to report

that it has reduced its carbon impact by

32.2% per employee and by 14.17%

per TL 1 million turnover from 2009 to

2010. The Group’s total carbon footprint

measured just over 20,000 tonnes CO2

in 2010. The carbon footprint measured

the organisation’s gas and electricity

use, and also business and commuter

travel for its 1,500 employees.

To progress their commitment to

environmental sustainability, Doğuş

Media Group has set the bold goal of

becoming a ‘carbon neutral’ company,

using the internationally-recognised

PAS 2060 standard for carbon

neutrality. In the short-term, the group

will continue its sustainability program

of awareness raising activities to

reduce GHG emissions in collaboration

with all stakeholders.

Tourism and Services

Education


maintains its support to Ayhan Şahenk

Alantur Primary School in Alanya

Kestel, which was built by the Group

in 1985 and extended in 2005 with the

addition of 8 extra classrooms.

Other social initiatives of Doğuş Tourism

and Retail Group include fundraising

support to “Make a Wish” (Bir Dilek Tut)

Foundation at the Grand Hyatt Hotel.

Grand Hyatt also supports other non-

profit organizations and universities with

its services.

Real Estate

Community

Doğuş REIT intends to contribute

to the social, cultural, artistic and

economic development of communities

in which it operates. The company

has been implementing several social

responsibility projects to achieve this.

The most significant example of these

projects is the company’s support to

the Dudullu Cultural Center with the

aim of contributing to the social and

cultural development of the area, in

parallel with the Evidea Residential

Project in Çekmeköy.


Doğuş Real Estate has also initiated

various civil society initiatives to produce

high quality products and services, to

be sensitive to environmental problems,

to take public’s wishes and complaints

into consideration, to observe and have

respect for the employees’ personal

rights, to provide the participation

of the employees in decisions, and

contribute to social, cultural and

educational development of the areas

under its operation. Acting on these

basic principles, various civil society

initiatives, organizations and events

were organized during 2011 in Gebze

Center Shopping Mall, which is one

of the most important projects of the

company:

• A slide show of District Police

Department on security issue was held

on January 15-16.

• 1st Gebze Book Days exhibition

opened on January 19 with the guest

of honor Yalvaç Ural together with

the participation of Gebze District

Governor, Mayor, District National

Education Director and President for

Chamber of Commerce.

• International Culture Festival with

AIESEC Kocaeli representation was

held on February 27.

• In collaboration with the Çanakkale

War Museum, the items from the

museum used during the war were

opened for the visitors of Gebze Center

free of charge.

• University Presentation Days project,

organized in cooperation with the

Gebze Municipality, was realized on

April 14-15; and 17 universities and

approximately 6,140 students in total

attended the events.

• On April 23, shopping center was

transferred entirely to children and

Children’s Center Project was realized.

Approximately 80 student groups were

brought from Lithuania, Guinea and

TRNC; and shows were presented at

the center.

• ‘Sensitivity Days’ were organized for

the disabled citizens on May 30 - April 1.

• The exhibition of Çayırova Disabled

Society was opened on May 14 and

various rehabilitation centers’ shows

were presented at the event.

• A parade was held on June 5, on

World Environment Day in cooperation

with the Gebze Municipality, from

Eskihisar to Gebze Center with the

participation of store employees

and management; and at the same

time stands related to environmental

consciousness were set up in the

Shopping Center.

• Stands organized by Gebze District

Governor’s Office were set up inside

the Shopping Center for Aid to Somali.

• In addition, a joint aid stand was set

up and an aid campaign was organized

together with Red Crescent for a

month for the earthquake in Van.

• A joint Blood Donation Campaign

was organized with TÜMSİAD (All

Industrialists and Businessmen

Association) and with Private Yüzyıl

Hospital on October 30.

• A photograph exhibition of Gebze Art

of Photography Association, consisting

of portraits and sceneries from nature

was held on November 3-13.

• Favorite songs of Mustafa Kemal

Atatürk, the Founder of the Turkish

Republic, were broadcasted via the

general sound system inside the

Shopping Center on November 10,

Atatürk Commemoration Day.

• A photograph exhibition was held

within the scope of Teachers’ Day on

November 24, depicting the lives of

the teachers who passed away in the

earthquake in Van.

• An art exhibition of Gebze Çolakoğlu

Girls’ Vocational High School on “Book

Love” was opened on December 17.

Corporate Sponsorship Projects

Doğuş Holding

Art and Culture

D-Marin Turgutreis International

Classical Music Festival

Doğuş Group continues to contribute

to and provide support for the

development of classical music. The

Group strives to ensure its access to

a wider section of the population and

help Turkish artists produce world-class

pieces. Since 2005, Doğuş Group has

been organizing the D-Marin Turgutreis

International Classical Music Festival

in Bodrum. This Festival highlights

the support that is required for the

development of diverse forms of music.

D-Marin Turgutreis International

Classical Music Festival is a member

of the European Festivals Association

(EFA) which is the umbrella organization

for festivals across Europe. For

more than 50 years, the Association

has grown into a dynamic network

representing more than 100 music,

dance, theatre and multidisciplinary

festivals, national festival associations

and cultural organizations from about 40

(mainly European) countries.


In 2011, on its 7th anniversary, the

Festival took place on July 9-10 & 12-13,

hosted many gifted artists and well-

known orchestras from Turkey and other

countries, including the world-renowned

Turkish pianist Fazıl Say and famous

cellist Mischa Maisky. The proceeds

obtained from the Festival was donated

to the TOHUM Autism Foundation to

be used for educational materials at the

Foundation’s private school for children

with autism and for the training of

teachers specialized in this area.

The Festival has already constituted

a loyal audience of its own which

constantly increases each year. In

2011, a total of 17,500 audiences

followed the festival, which was

joined with nearly 200 artists at seven

concerts during four days.

Presidential Symphony Orchestra

of Turkey-Symphony on Campus

Project

The Presidential Symphony Orchestra

of Turkey, which was established

in 1826, has been one of the few

special orchestras in the world that

has managed to survive to date. In

November 2007, Doğuş Group signed

an agreement, with the Ministry of

Culture and Tourism, to become the

main sponsor of the Orchestra for

a period of 3 years and to start the

“Technical Betterment Project” of

the concert building of the Orchestra.

The renovation work was completed

in less than a year, by October 2008,

covering the renovation of the entire

inner building and the concert hall, the

landscaping as well as the renewal of

the orchestral and office furniture.

In line with its main sponsorship of the

Presidential Symphony Orchestra of

Turkey, which was renewed in early

2012 for another 3 years, Doğuş Holding

initiated a new corporate sponsorship

project in 2009: “Symphony on

Campus.” The objective of this project

is to take the orchestra on a tour,

covering state universities in Anatolian

cities where the orchestra has never

visited, to promote classical music

among university students and regional

communities. In 2009 and 2010,

the project covered the universities

of Konya-Selçuk, Niğde, Gaziantep,

Kars-Kafkas, Erzurum-Atatürk, Rize,

Giresun and Trabzon-Black Sea Technical

Universities reaching a total audience of

nearly 8,000.

In 2011, the project was planned

between October 22-29 with 6 concerts

in 5 cities in the regions of Middle and

Southeastern Anatolia. However, the

concerts were cancelled due to the

national mourning after the terrorist

attacks in the Hakkari region of Turkey.

The project will continue, covering more

regions and universities, in 2012.

Leyla Gencer Voice Competition

Since 2006, Doğuş Holding and Garanti

Bank have been the sponsors of the

Leyla Gencer Voice Competition.

This international voice competition

was started by Ms. Gencer herself

in 1995, and it has supported several

young opera singers, from all over

the world, through their career paths.

The 7th Biennial Leyla Gencer Voice

Competition will be held in İstanbul on

September 20, 2012.

Santral İstanbul

In cooperation with İstanbul Bilgi

University, Doğuş Group became

the strategic founding partner of the

International Modern Art Museum

and Cultural Center, Santral İstanbul

in 2006. Opened in September 2007,

Santral İstanbul, the first power station

of the Ottoman Empire, has recently

turned into one of the main attractions

in İstanbul in terms of culture & arts.

Environment

Since 2007, Doğuş Holding has been

one of the corporate members of

the DenizTemiz Turmepa Foundation.

DenizTemiz Foundation was founded

on April 8, 1994 by leading business

institutions and the marine sector with

the aim of protecting the seas and

the 8,333 kilometer coast line that

stretches from Hopa to the İskenderun

region around most of Turkey.

Banking and Financial Services

Art and Culture

Garanti Jazz Green

Garanti, aiming to broaden and spice up

music lovers’ horizons in the genre of

jazz, is among the leading sponsors of

jazz music in Turkey, extending long-

term support with the slogan “Garanti

Jazz Green.” Garanti has, for the past

14 years, been the main sponsor of

the International Istanbul Jazz Festival,

organized by the Istanbul Foundation

for Culture and Arts (IKSV). Supporting

Babylon, Istanbul Jazz Center, Tamirane,

Salon IKSV, Romeo&Juliet, Ghetto, Nublu

Istanbul and Nardis Jazz Club concerts,

Garanti has been creating opportunities to

listen to worldwide famous jazz artists.

Istanbul Museum of Modern Art

Garanti Bank sponsors the education

program of İstanbul Modern,

Turkey’s first and only modern and

contemporary art museum. The


program aims to play a central role in

raising creative, literate and inquisitive

individuals who are actively involved

in the arts, and also in supplementing

classroom education. Through the

ongoing Garanti-sponsored İstanbul

Modern training programs, over

300,000 children and teenagers have

received training to date.

The Lycian Way

Garanti sponsored a way-marking

system according to international

standards along the Lycian Way, a

500 km long-distance trail stretching

from Fethiye to Antalya, and further

contributed to tourism in the region by

publishing a guidebook for the Lycian

Way in 2006.

Garanti Mini Bank Children’s Film

Festival

Garanti has been the main sponsor of

Turkey’s first film festival for children,

the Garanti Mini Bank Children’s Film

Festival, organized by the Turkish

Foundation of Cinema and Audiovisual

Culture (TÜRSAK). The festival, which

started six years ago in İstanbul, has,

for the last two years, expanded to

Anatolia, reaching children in İzmir,

Urfa, Mardin, Diyarbakır, Adıyaman,

Ordu and Kars.

Sports

Basketball

A long-time supporter of basketball - a

game 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 Turkish National

Women’s Basketball Team since 2005.

Garanti was also a main sponsor of

2010 FIBA World Championship that

took place in Turkey.

12 Giant Men Basketball Schools

Project

Since 2002, Garanti has supported

the 12 Giant Men Basketball Schools

(12 DABO) which were initiated

in cooperation with the Turkish

Basketball Federation in an effort to

inculcate basketball culture in young

children, and help basketball become

a commonly played game and reach

a broad base in Anatolia. At 12 DABO

schools, 40,000 youngsters have

received basketball training in 65

centers to date.

Equestrian Sports

Believing that the discipline and

aesthetics inherent in equestrian sports

coincide perfectly with its service

notion, Garanti Masters Private Banking

has undertaken sponsorships of various

equestrian competitions and events

since 2005. Additionally, the business

line is the official sponsor of the Turkish

Equestrian Federation since 2008

Football

In order to contribute to improvement

in football, and broadening the scope

of its commitment to support sports,

Garanti became one of the main

sponsors of the Turkish National

Men’s Football Team in 2008. Garanti

extended the range of its support to

football and became a prime sponsor

of the Garanti Beach Football League

that has been organized by the Turkish

Football Federation (TFF) since 2006.

Environment

WWF-Turkey (World Wildlife

Foundation Turkey)

Garanti Bank has been the main

sponsor of the WWF-Turkey since

1992, thereby helping the conservation

of natural resources and creating

enhanced public awareness of

environmental issues.

Automotive

Art and Culture

TIM Show Center

Since 2006, Doğuş Otomotiv sponsors

TIM Show Center, the first venue

in Turkey authorized by “Cultural

Entrepreneurship Certificate” granted

by the Ministry of Culture and

Tourism of Turkey. TIM hosts stage

to top quality performing arts events,

national and international meetings

and conferences, movie premiers,

concerts, exhibitions, company events,

new product launches and contests.

Sports

Darüşşafaka Ayhan Şahenk Sport

Complex

Since 2006, Doğuş Group has

supported the Darüşşafaka Ayhan

Şahenk Sport Complex facilities

located in Maslak, İstanbul, at the

Darüşşafaka High School, one of the

most prominent and influential schools

in Turkey. The Darüşşafaka Center is

a multi-purpose center with the ability

to host various cultural activities in

addition to sports events to world-

class standards. Doğuş Group will

continue to support the complex in the

forthcoming years.



Akis Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi

6 April 2012

This report includes 2 pages of independent auditors’ report and 148 pages of consolidated financial statements together with their explanatory notes and 4 pages of supplementary information.

Doğuş Holding Anonim Şirketi and its Subsidiaries

Consolidated Financial Statements

As at and for the Year Ended

31 December 2011

With Independent Auditors’ Report


Doğuş Holding Anonim Şirketi and its Subsidiaries

Table of Contents

Independent Auditors’ Report

Consolidated Statement of Financial Position

Consolidated Statement of Comprehensive Income

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

Appendix: Supplementary Information - Convenience Translation to US Dollar


Independent Auditors’ Report

To the Board of Directors of Doğuş Holding Anonim Şirketi

We have audited the accompanying consolidated financial statements of Doğuş Holding Anonim Şirketi and its subsidiaries (“the Group”), which comprise the consolidated statement of financial position as at 31 December 2011, and the consolidated state-ments of comprehensive income, changes in equity, and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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 ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonable-ness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Akis Bağımsız Denetim ve SerbestMuhasebeci Mali Müşavirlik A.Ş.Kavacık Rüzgarlı Bahçe Mah.Kavak Sok. No: 29Beykoz 34805 İstanbul

Telephone +90 (216) 681 90 00Fax +90 (216) 681 90 90Internet www.kpmg.com.tr

Akis Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş.

a Turkish corparation and a member firm of the KPMG network of independent

member firms affilated with KPMG International Cooperative, a Swiss entity.


Basis for Qualified Opinion

As at 31 December 2011, the accompanying consolidated statement of financial position includes a general provision amounting to TL 107,775 thousand provided by the Group management in line with conservatism principle considering the circumstances which may arise from any changes in the economy or market conditions, and TL 27,216 thousand of such provision has been recognised as expense in the current period.

Qualified Opinion

In our opinion, except for the effects on the consolidated financial statements of the matter described in the Basis for Qualified Opinion paragraph, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2011, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards.

Other Matter

Our audit was made for the purpose of forming an opinion on the consolidated financial statements taken as whole. The supple-mentary information included in Appendix I is presented for the purposes of additional analysis and is not a required part of the basic consolidated 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 consolidated financial statements. Accordingly, we do not express an opinion on this supplementary information.

İstanbul, Turkey6 April 2012


Doğuş Holding Anonim Şirketi and its SubsidiariesConsolidated Statement of Financial Position

As at 31 December 2011Currency: Thousands of Turkish Lira (“TL”)

Notes31 December

201131 December

2010

Assets

Property and equipment 15 3,938,717 3,310,288

Intangible assets 16 1,610,889 1,114,392

Investments in debt securities 17 7,815,877 9,067,893

Investments in equity securities 18 54,554 73,144

Accounts receivable 22 8,793 13,741

Banking loans and advances to customers 25 12,650,050 12,476,609

Banking loans and advances to banks 26 1,203,379 1,375,606

Financial assets at fair value through profit or loss 27 45,526 108,718

Investment property 19 1,903,086 1,528,750

Other non-current assets 20 388,699 423,740

Deferred tax assets 14 157,012 237,683

Assets held for sale 7 30,573 33,218

Total non-current assets 29,807,155 29,763,782

Inventories 21 676,069 562,477

Accounts receivable 22 1,781,831 1,888,425

Due from related parties 40 256,134 126,791

Other current assets 24 2,471,415 1,551,887

Investments in debt securities 17 794,881 3,143,254

Banking loans and advances to customers 25 9,116,509 8,513,765

Banking loans and advances to banks 26 2,444,856 1,591,059

Financial assets at fair value through profit or loss 27 55,051 133,554

Cash and cash equivalents 28 3,679,314 2,010,936

Assets held for sale 7 64,223 - -

Total current assets 21,340,283 19,522,148

Total assets 51,147,438 49,285,930

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


Doğuş Holding Anonim Şirketi and its SubsidiariesConsolidated Statement of Financial Position (continued)

As at 31 December 2011Currency: Thousands of TL

Notes31 December

201131 December

2010EquityPaid-in capital 2,055,292 2,055,292Capital stock held by subsidiaries (98,755) (98,755)Share premium 159,350 159,350Fair value reserve 11,912 484,725Translation reserve 45,446 3,368Hedging reserve (8,066) (7,859)Revaluation surplus 1,060,279 1,086,198Legal reserves 284,281 270,507Retained earnings 6,355,054 3,748,970

Total equity attributable to owners of the Company

9,864,793 7,701,796

Non-controlling interestsŞahenk Family 106,621 100,291Others 243,448 178,668Total non-controlling interests 350,069 278,959

Total equity 29 10,214,862 7,980,755

LiabilitiesLoans and borrowings 30 5,831,709 6,278,608Bonds payable 31 384,019 - -Subordinated liabilities 32 266,870 295,764Deposits 35 404,006 385,622Obligations under repurchase agreements 36 286,123 - -Accounts payable 37 318,168 - -Deferred tax liabilities 14 200,443 155,889Other non-current liabilities 33 807,205 687,244Total non-current liabilities 8,498,543 7,803,127

Loans and borrowings 30 4,657,559 3,699,103Bonds payable 31 512,203 - -Subordinated liabilities 32 1,871 - -Deposits 35 21,629,065 23,429,175Obligations under repurchase agreements 36 2,525,166 3,548,767Accounts payable 37 1,400,695 1,141,354Due to related parties 40 6,819 61,912Taxes payable on income 14 32,589 99,279Other current liabilities 38 1,668,066 1,522,458Total current liabilities 32,434,033 33,502,048

Total liabilities 40,932,576 41,305,175

Total equity and liabilities 51,147,438 49,285,930



Doğuş Holding Anonim Şirketi and its SubsidiariesConsolidated Statement of Comprehensive Income

For the Year Ended 31 December 2011Currency: Thousands of TL

Notes 2011 2010

Revenues 9,929,164 8,654,592

Cost of revenues (7,377,208) (5,910,319)

Gross profit 9 2,551,956 2,744,273

Administrative expenses 10 (1,189,808) (1,153,172)

Selling, marketing and distribution expenses (242,626) (204,878)

Impairment losses, net 11 (273,490) (89,106)

Trading gain, net 27 176,956 95,746

Other income 12 2,674,216 221,444

Other expense 12 (241,575) (188,363)

Result from operating activities 3,455,629 1,425,944

Finance income 349,174 476,239

Finance expense (640,346) (581,656)

Net finance costs 13 (291,172) (105,417)

Share of profit of equity accounted investees 8,003 17,667

Profit before income tax 3,172,460 1,338,194

Income tax expense 14 (436,552) (321,423)

Profit for the year 2,735,908 1,016,771

Other comprehensive income

Revaluation of property and equipment (5,335) (16,570)

Change in fair value of available-for-sale financial assets (561,781) 114,201

Change in translation reserve 42,078 (43,520)

Effective portion of changes in fair value of cash flow hedges (207) 367

Income tax on other comprehensive income 14 102,262 3,007

Other comprehensive (expense)/income for the year,

net of income tax(422,983) 57,485

Total comprehensive income for the year 2,312,925 1,074,256

Profit attributable to:

Owners of the Company 2,691,764 966,015

Non-controlling interests 29 44,144 50,756

-Şahenk Family 8,312 8,069

-Others 35,832 42,687

2,735,908 1,016,771

Total comprehensive income attributable to:

Owners of the Company 2,267,796 1,028,131

Non-controlling interests 45,129 46,125

-Şahenk Family 6,060 6,571

-Others 39,069 39,554

2,312,925 1,074,256


132 DOĞUŞ GROUP ANNUAL REPORT 2011D

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DOĞUŞ GROUP ANNUAL REPORT 2011 133D

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62


Doğuş Holding Anonim Şirketi and its SubsidiariesConsolidated Statement of Cash Flows

For the Year Ended 31 December 2011Currency: Thousands of TL

Notes 2011 2010Cash flows from operating activities Profit for the year 2,735,908 1,016,771 Adjustments for: Impairment losses 11 273,490 89,106 Fair value change in investment property 6 and 12 (266,214) (189,540) Provision for and reversal of employee severance indemnity, net 6 and 33 41,449 15,918 Depreciation and amortisation 15 and 16 281,928 241,110 Technical reserves relating to insurance operations 6 5,369 3,719 Gain on sales of property and equipment 12 (17,718) (1,692) Loss from written-off property and equipment, and inventory 6 and 12 44,487 - - Loss from deconstruction process of a hotel building 6 and 12 27,331 - - (Gain)/loss on partial sales of proportionately consolidated joint venture 8 (2,163,189) 24,311 Fair value gain on trading property transferred to property and equipment 6 and 12 (51,830) - - Gain on sales of investment in equity securities 12 and 18 (57,862) - - Bargain purchase gain recognised on acquisition 8 (1,758) (1,500) Share of profit of equity accounted investees 6 (8,003) (17,667) Change in accrued interest expense, net 6 56,576 113,359 Provision for taxes on income 14 249,793 357,278 Deferred tax expense/(credit) 14 186,759 (35,855) Warranty provision expense 6 and 12 39,498 31,154

1,376,014 1,646,472Changes in operating assets and liabilities Change in deposits 4,341,604 4,312,506 Change in banking loans and advances to banks (655,675) (506,779) Change in balances with the Central Bank (1,046,225) 478,206 Change in banking loans and advances to customers (7,283,915) (6,410,138) Change in financial assets at fair value through profit or loss 122,704 (61,521) Change in other assets (135,265) (1,004,572) Change in inventories (149,425) (90,569) Change in accounts receivable (23,636) (364,479) Change in due from related parties (127,992) (116,040) Change in obligations under repurchase agreement (129,466) 481,901 Change in accounts payable 351,659 266,893 Change in bonds payable 948,296 - - Change in due to related parties (56,589) 58,442 Change in other liabilities 343,989 87,950

(2,123,922) (1,221,728) Interest paid (1,486,649) (1,584,759) Interest received 3,027,217 3,195,857 Taxes paid 14 (316,652) (324,042) Warranties paid (30,514) (28,550) Employee termination indemnity paid 33 (10,159) (13,744)Net cash (used in)/provided from operating activities (940,679) 23,034

Cash flows from investing activities Acquisition from non-controlling interest in a consolidated subsidiary 8 (55,010) - - Acquisition of a subsidiary 8 (266,361) (126,333) Acquisition of additional interest in previously proportionately consolidated joint ventures with change in control 8 (46,873) - - Proceeds from partial sale of proportionately consolidated joint venture 2,833,275 72,255 Proceeds from sales of investment in equity securities 77,867 - - Acquisitions of investment property 19 (76,595) (40,003) Increase in investments in debt securities (324,583) (2,085,471) Acquisition of property and equipment and intangible assets 15 and 16 (975,449) (706,894) Proceeds from sale of property and equipment 78,066 39,204 Increase in interest in consolidated subsidiaries (12,700) (34,126) Decrease in interest in consolidated subsidiaries 8,767 28,225 Acquisition of additional interest in jointly control entities - - (28,745)Cash flows provided/(used in) investing activities 1,240,404 (2,881,888)

Cash flows from financing activities Dividend paid (71,040) (34,081) Change in short-term loans and borrowings, net 1,741,681 306,404 Change in long-term loans and borrowings, net 464,181 1,670,936 Change in subordinated liabilities 34,737 (3,647)Cash flows provided by financing activities 2,169,559 1,939,612

Net increase/(decrease) in cash and cash equivalents 2,469,284 (919,242) Cash and cash equivalents at 1 January 2,562,163 3,481,405Cash and cash equivalents at 31 December 28 5,031,447 2,562,163



Doğuş Holding Anonim Şirketi and its SubsidiariesNotes to the Consolidated Financial Statements

As at and for the Year Ended 31 December 2011

Notes to the consolidated financial statementsNotes Description Pages1 Reporting entity 1362 Basis of preparation 1423 Significant accounting policies 1444 Determination of fair values 1715 Financial risk management 1736 Operating segments 1887 Assets held for sale 1958 Acquisitions and disposal of ownership interest in jointly controlled entities 1969 Revenues and cost of revenues 20310 Administrative expenses 20311 Impairment losses, net 20412 Other income/expenses 20413 Net finance costs 20514 Taxation 20615 Property and equipment 21316 Intangible assets 21517 Investments in debt securities 22118 Investments in equity securities 22319 Investment property 22420 Other non-current assets 22521 Inventories 22522 Accounts receivable 22523 Due from/due to customers for contract work 22624 Other current assets 22725 Banking loans and advances to customers 22826 Banking loans and advances to banks 23027 Financial assets at fair value through profit or loss 23128 Cash and cash equivalents 23229 Capital and reserves 23230 Loans and borrowings 23431 Bonds payable 23832 Subordinated liabilities 23933 Other non-current liabilities 23934 Retirement benefit obligation 24135 Deposits 24536 Obligations under repurchase agreements 24637 Accounts payable 24738 Other current liabilities 24739 Commitments and contingencies 24840 Related party disclosures 25141 Financial instruments 25442 Use of estimates and judgments 26943 Group enterprises 27244 Significant events 27345 Subsequent events 275

Appendix: Supplementary information


Doğuş Holding Anonim Şirketi and its SubsidiariesNotes to Consolidated Financial Statements

As at and for the Year Ended 31 December 2011Currency: Thousands of TL

1 Reporting entity

Doğuş Holding Anonim Şirketi (“Doğuş Holding” or “the Company”) was established in 1975 to invest in and coordinate the activities of companies operating in different industries, including banking and finance, automotive, construction, tourism, media, real estate and energy and is registered in Turkey.

Doğuş Holding is owned and managed by the members of Şahenk Family. As at 31 December 2011, the principal sharehold-ers and their respective shareholding rates in Doğuş Holding are stated in note 29.

The address of the registered office of Doğuş Holding is as follows:

Eski Büyükdere Caddesi Oycan Plaza No: 1534398 Maslak/ İstanbul-Turkey

As at 31 December 2011, Doğuş Holding has 81 (31 December 2010: 72) subsidiaries (“the Subsidiaries”), 36 (31 December 2010: 42) joint ventures (“the Joint Ventures”) and 8 (31 December 2010: 9) associates (“the Associates”) (referred to as “the Group” or “Doğuş Group” herein and after). The consolidated financial statements of Doğuş Group as at and for the year ended 31 December 2011 comprises Doğuş Holding and its subsidiaries and the Group’s interest in associates and jointly controlled entities. As explained in more detail in note 2, Doğuş Holding holds controlling interest directly or indirectly via other companies owned and/or exercising the control over the voting rights of the shares held by the members of Şahenk Family, in all its subsidiaries included in the Group.

The Group operates partnerships and has distribution, management and franchise agreements with internationally recognised brand names, such as Banco Bilbao Vizcaya Argentaria S.A. (“BBVA”), Volkswagen AG, Volkswagen Finance AG, Audi AG, Porsche AG, Bentley Motors Limited, Seat SA, Scania, Krone, Meiller Fahrzeug&Maschinenfabrik-GMBH&Co KG, Lamborghi-ni S.p.A., Thermo King, Rixos, Neckerman Reisen, Hyatt International Ltd., HMS International Hotel GMBH, Emporio Armani, Guccio Gucci Spa, CNBC, Condé Nast New Markets Europe/Africa NC (Vogue), Loro Piana and Aldiana GMBH.

The number of employees of the Group at 31 December 2011 is approximately 29,000 (31 December 2010: 28,000).

As explained in more detail in note 6, The Group is organised mainly in Turkey under five core operating segments:

• Banking and finance• Construction• Automotive• Tourism• Others




1 Reporting entity (continued)

The subsidiaries, the joint ventures and the associates included in the consolidation scope of Doğuş Holding, their country of incorporation, nature of business and their respective operating segments are as follows:

1.1 Entities in banking and finance segment

Below entities are first consolidated under Türkiye Garanti Bankası Anonim Şirketi (“Garanti Bank”); then proportionately consolidated under the Group in accordance with IAS 31 “Interests in Joint Ventures”.

Joint ventures Nature of businessCountry of

incorporationDomenia Credit IFN S.A. (“Domenia”) Mortgage Romania

G Netherlands B.V. (“G Netherlands”) (formerly, named Doğuş GE B.V.)

Finance The Netherlands

Garanti Bank Banking Turkey

Garanti Bank International NV (“GBI”) Banking The Netherlands

Garanti Bank Moscow (“GB Moscow”) Banking Russia

Garanti Bank S.A. Banking Romania

Garanti Bilişim Teknolojisi ve Ticaret Anonim Şirketi (“Garanti Bilişim”) (1)

IT services Turkey

Garanti Diversified Payment Rights Finance Company (“Garanti DPR”) Special purpose entity for securitisation transaction

Turkey

Garanti Emeklilik ve Hayat Anonim Şirketi (“GEHAŞ”) Life insurance Turkey

Garanti Faktoring Hizmetleri Anonim Şirketi (“Garanti Faktoring”) Factoring Turkey

Garanti Filo Yönetimi Hizmetleri Anonim Şirketi (“Garanti Filo”) (1) Fleet management Turkey

Garanti Finansal Kiralama Anonim Şirketi (“Garanti Leasing”) Leasing Turkey

Garanti Hizmet Yönetimi Organizasyon ve Danışmanlık Anonim Şirketi (“Garanti Hizmet”)

Service activities for fund management and operations

Turkey

Garanti Holding B.V. (formerly, named D Netherlands Holding B.V.) (3) Holding company The Netherlands

Garanti Konut Finansmanı Danışmanlık Hizmetleri Anonim Şirketi (“Garanti Konut”) (2)

Mortgage marketing Turkey

Garanti Kültür Anonim Şirketi (“Garanti Kültür”) (1) Cultural activities Turkey

Garanti Ödeme Sistemleri Anonim Şirketi (“GÖSAŞ”) Credit card operational services

Turkey

Garanti Portföy Yönetimi Anonim Şirketi (“Garanti Portföy”) Fund management Turkey

Garanti Yatırım Menkul Kıymetler Anonim Şirketi (“Garanti Yatırım”)

Brokerage and investment banking

Turkey

Garanti Yatırım Ortaklığı Anonim Şirketi (“Garanti Yatırım Ortaklığı”)

Portfolio management Turkey

Motoractive IFN S.A. (“Motoractive”) Leasing Romania

Ralfi IFN S.A. (“Ralfi”) Consumer finance Romania

T-2 Capital Finance Company (“T-2 Capital”) Special purpose entity for subordinated debt transactions

Turkey

(1) These companies are subsidiaries of Garanti Bank and are operating in businesses other than banking and/or finance. They are included within the “bank-ing and finance” segment for the purposes of Doğuş Holding’s consolidated financial statements since Garanti Bank owns their controlling interests.

(2) This company is not consolidated in the accompanying consolidated financial statements as it does not currently have material operations compared to the consolidated performance of the Group.

(3) In August 2011, Leasemart Holding B.V., a proportionately consolidated joint venture of the Group, was merged under Garanti Holding B.V..





1.2 Entities in construction segment

Below entities are first consolidated under Doğuş İnşaat ve Ticaret Anonim Şirketi (“Doğuş İnşaat”); then consolidated under the Group.

Subsidiaries Nature of businessCountry of

incorporationAyson Geoteknik ve Deniz İnşaat Anonim Şirketi (“Ayson”) Drilling TurkeyAyson Hydro Gradenje d.o.o. (“Ayson Hydro”) A non-operating company CroatiaAyson Sondaj Limited Ukraine (“Ayson Sondaj”) A non-operating company UkraineDoğus Insaat ES Construction MoroccoDoğus Insaat d.o.o. A non-operating company CroatiaDoğus Maroc SARL Construction MoroccoDoğuş EOOD Construction BulgariaDoğuş Hoteli Sibenik d.o.o. (“Doğuş Hoteli Sibenik”) Construction development CroatiaDoğuş İnşaat Construction TurkeyDoğuş İnşaat Limited (Ukraine) (“Doğuş İnşaat Limited”) A non-operating company UkraineDoğuş Mandalina Razvitak d.o.o. (“Doğuş Razvitak”) Construction development CroatiaDoğuş Poland SP. Z.O.O. (“Doğuş Poland”) A non-operating company PolandDoğuş Sibenik Razvitak Marina d.o.o. (“Sibenik Razvitak”) Construction development CroatiaTeknik Mühendislik ve Müşavirlik Anonim Şirketi (“Teknik Mühendislik”)

Civil engineering Turkey


incorporationDoğuş Alarko YDA İnşaat (“Doğuş Alarko”) Construction TurkeyDoğuş Polat Adi Ortaklığı (“Doğuş Polat”) Construction TurkeyGülermak-Doğuş Adi Ortaklığı (“Gülermak Doğuş”) Construction TurkeyKazakhistan Joint Venture (“Doğuş Prestige”) Construction KazakhistanYapı Merkezi-Doğuş-Yüksel-Yenigün-Belen Adi Ortaklığı (“YMDYYB”)

Construction Turkey

1.3 Entities in automotive segment

Below entities are first consolidated under Doğuş Otomotiv Servis ve Ticaret Anonim Şirketi (“DOAŞ”); then consolidated under the Group.


incorporationDOAŞ Automotive distribution TurkeyDoğuş Auto Mısır JS A non-operating company EgyptDoğuş Auto Mısr LLC A non-operating company EgyptD-Auto Suisse SA Automotive retail SwitzerlandDoğuş Oto Pazarlama ve Ticaret Anonim Şirketi (“Doğuş Oto”) Automotive retail TurkeyDoğuş Sigorta Aracılık Hizmetleri Anonim Şirketi (“Doğuş Sigorta”)

Insurance agency Turkey





1.3 Entities in automotive segment (continued)


incorporationKrone-Doğuş Treyler Sanayi ve Ticaret Anonim Şirketi (“Krone Doğuş”) (1)

Production Turkey

Meiller Doğuş Damper Sanayi ve Ticaret Limited Şirketi (“Meiller Doğuş”) (1)

Production Turkey

TÜVTURK Kuzey Taşıt Muayene İstasyonları Yapım ve İşletim Anonim Şirketi (“TÜVTURK Kuzey”) (1)

Vehicle inspection station Turkey

TÜVTURK Güney Taşıt Muayene İstasyonları Yapım ve İşletim Anonim Şirketi (“TÜVTURK Güney”) (1)


TÜVTURK İstanbul Taşıt Muayene İstasyonları Yapım ve İşletim Anonim Şirketi (“TÜVTURK İstanbul”) (1)


Associates Nature of businessCountry of

incorporationLeaseplan Otomotiv Servis ve Ticaret Anonim Şirketi (“Leaseplan”)

Operational leasing Turkey

LPD Holding Anonim Şirketi (“LPD Holding”) Operational leasing TurkeyVDF Faktoring Hizmetleri Anonim Şirketi (“VDF Faktoring”) Factoring TurkeyVDF Sigorta Aracılık Hizmetleri Anonim Şirketi (“VDF Sigorta”)

Agency/brokerage Turkey

VDF Servis Holding Anonim Şirketi (“VDF Servis Holding”) Holding company TurkeyVolkswagen Doğuş Tüketici Finansmanı Anonim Şirketi (“VDF Tüketici”)

Consumer finance Turkey

Yüce Auto Anonim Şirketi (“Yüce Auto”) Automotive distribution Turkey

(1) These companies are proportionately consolidated joint ventures of Doğuş Holding.

1.4 Entities in tourism segment


incorporation

Antur Turizm Anonim Şirketi (“Antur”)Hospitality and travel agency

Turkey

Arena Giyim Sanayi ve Ticaret Anonim Şirketi (“Arena”) Hospitality, clothing, retail and cafe

Turkey

Anadolu Göcek Marina Turizm Yatırımları Anonim Şirketi (“D Marin Göcek”)

Marina management Turkey

D Otel Göcek Turizm Yatırımları ve İşletmeciliği Anonim Şirketi (“D Otel Göcek”) (formerly, named DO-ÇA Tekstil Temizleme ve Ticaret Anonim Şirketi)

Hospitality Turkey

D Otel Marmaris Turizm İşletmeciliği Ticaret ve Sanayi Anonim Şirketi (“D Otel”)

Hospitality Turkey

Datmar Turizm Anonim Şirketi (“Datmar”) Hospitality TurkeyDoğuş Dalaman Marina İşletmeleri Turistik ve Ticaret Anonim Şirketi (“Doğuş Dalaman”) (1)

A non-operating company Turkey

Doğuş Didim Marina İşletmeleri ve Ticaret Anonim Şirketi (“Doğuş Didim”)

Marina Turkey

Doğuş Hoteli d.o.o. (“Doğuş Hoteli”) Hotel management and investment

Croatia

Doğuş Marina Hoteli d.o.o. (“Doğuş Marina Hoteli”) (formerly, named NCP Hoteli d.o.o)

Hotel management Croatia

Doğuş Marina Mandalina d.o.o. (“Doğuş Marina ”) Marina management and investment

Croatia





1.4 Entities in tourism segment (continued)


incorporationDoğuş Marina Upravljanje d.o.o. (“Doğuş Upravljanje”) Marina management and

investmentCroatia

Doğuş Sibenik Upravljanje Marina d.o.o. (“Sibenik Upravljanje”) Marina management and investment

Croatia

Doğuş Turgutreis Marina İşletmeleri Turistik ve Ticaret Anonim Şirketi (“Doğuş Turgutreis”)

Marina management Turkey

Garanti Turizm Yatırım ve İşletme Anonim Şirketi (“Garanti Turizm”)

Hospitality Turkey

Göktrans Turizm ve Ticaret Anonim Şirketi (“Göktrans Turizm”) Hospitality Turkey

NCP Marina Mandalina d.o.o. (“NCP Marina Mandalina”) Marina Croatia

Şahintur Şahinler Otelcilik Turizm Yatırım İşletmeciliği Anonim Şirketi (“Şahintur”)


Voyager Mediterranean Turizm Endüstrisi ve Ticareti Anonim Şirketi (“Voyager”)

Hospitality Turkey

(1) Doğuş Dalaman was established to build and operate yachting marina in seaside resort towns in Mediterranean coasts of Turkey. However, Doğuş Dalaman

has not yet started its operations and accordingly was noted as non-operating.

1.5 Entities in other segment


incorporationA Yapım Televizyon Programcılık Anonim Şirketi (“A Yapım”) Media Turkey

D Enerji Üretim ve Yatırım Anonim Şirketi (“D Enerji”) Energy Turkey

Doğuş Araştırma Geliştirme ve Müşavirlik Hizmetleri Anonim Şirketi (“Doğuş Arge”)

Investing Turkey

Doğuş Bilgi İşlem ve Teknoloji Hizmetleri Anonim Şirketi (“Doğuş Bilgi İşlem”) (1)

Software development Turkey

Doğuş Enerji Üretim ve Ticaret Anonim Şirketi (“Doğuş Enerji”) Electricity generation Turkey

Doğuş Finance Ukraine A non-operating company Ukraine

Doğuş Gayrimenkul Yatırım ve İşletme Anonim Şirketi (“Doğuş Gayrimenkul”)

Real estate development Turkey

Doğuş Gayrimenkul Yatırım Ortaklığı Anonim Şirketi (“Doğuş GYO”) (formerly, named Doğuş-GE Gayrimenkul Yatırım Ortaklığı Anonim Şirketi)

Real estate investment fund Turkey

Doğuş Grubu İletişim Yayıncılık ve Ticaret Anonim Şirketi (“Doğuş İletişim”)

Media Turkey

Doğuş Investment A non-operating company Ukraine

Doğuş International Limited (“Doğuş International”) Construction equipments England

Dogus Management Services Limited (“Dogus Management”) (1) Business and financial investments

Dubai

Doğuş Media Group GmbH (“Doğuş Media”) (1) Media Germany

Doğuş Nakliyat ve Ticaret Anonim Şirketi (“Doğuş Nakliyat”) A non-operating company Turkey

Doğuş SA A non-operating company SwitzerlandDoğuş Sağlıklı Yaşam ve Danışmanlık Hizmetleri Ticaret Anonim Şirketi (“Doğuş Sağlıklı Yaşam”) (formerly, named D Tay Sağlıklı Yaşam ve Danışmanlık Hizmetleri Ticaret Anonim Şirketi)

Healthcare counseling Turkey

Doğuş Spor Kompleksi Yatırım ve İşletme Anonim Şirketi (“Doğuş Spor”)

Sports activities Turkey

Doğuş Telekomünikasyon Hizmetleri Anonim Şirketi (“Doğuş Telekom”)






1.5 Entities in other segment (continued)


incorporation

Doğuş Turizm Sağlık Yatırımları ve İşletmeciliği Sanayi ve Ticaret Anonim Şirketi (“Doğuş Turizm”)

Real estate development Turkey

Doğuş Uydu Haberleşme ve Teknik Hizmetler Anonim Şirketi (“Doğuş Uydu”)

Media Turkey

Doğuş Yayın Grubu Anonim Şirketi (“Doğuş Yayın Grubu”) Media TurkeyDoğuş Yeme İçme Hizmetleri Anonim Şirketi (“Doğuş Yeme İçme”) (formerly, named Doğuş Hava Taşımacılığı Anonim Şirketi)


Doğuş Yeni İnternet Reklam ve Pazarlama Hizmetleri Anonim Şirketi (“Doğuş Yeni”) (1)

Online marketing and advertising

Turkey

Doğuş E Alışveriş ve Ticaret Anonim Şirketi (“Doğuş E Alışveriş”) (1)

Online shopping Turkey

Enformasyon Reklamcılık ve Filmcilik Sanayi ve Ticaret Anonim Şirketi (“Enformasyon”)

Media Turkey

E Elektronik Bahis Oyunları Anonim Şirketi (“E Elektronik”) Lottery TurkeyE2 Radyo ve Televizyon Yayıncılığı Anonim Şirketi (“E2 Radyo”) (1)

Media Turkey

Genoto Otomotiv Pazarlama ve Ticaret Anonim Şirketi (“Genoto”)


HD-E Radyo ve Televizyon Yayıncılığı Anonim Şirketi (“HD-E”) (1)

Media Turkey

Işıl Televizyon Yayıncılık Anonim Şirketi (“Star TV”) (2) Media Turkeyİkibinondokuz Radyoculuk ve Sanat Organizasyonu Ticaret Anonim Şirketi (“2019 Radyo”)

Media Turkey

İstinye Park Gayrimenkul Yatırım ve İşletme Anonim Şirketi (“İstinye Park Gayrimenkul”)

Shopping mall administration

Turkey

Kapital Radyo ve Televizyon Yayıncılığı Anonim Şirketi (“Kapital Radyo”)

Media Turkey

Körfez Havacılık Turizm ve Ticaret Anonim Şirketi (“Körfez Hava”)

Transportation Turkey

Kral Pop Medya Hizmetleri Anonim Şirketi (“Kral Pop”) (1) Media TurkeyN Radyo Televizyon ve Yayıncılık Anonim Şirketi (“N Radyo”) Media TurkeyNTV Avrupa Yayıncılık Anonim Şirketi (“NTV Avrupa”) Media TurkeyNTV Batı Medya Hizmetleri Anonim Şirketi (“NTV Batı”) (1) Media TurkeyNTV Radyo ve Televizyon Yayıncılığı Anonim Şirketi (“NTV Radyo”)

Media Turkey

Sititur Turizm Yatırım ve Danışmanlık Hizmetleri Anonim Şirketi (“Sititur”)


Tansaş Gıda ve Sanayi Turizm Anonim Şirketi (“Tansaş Gıda”) A non-operating company TurkeyYonca Radyo ve TV Yayıncılık Anonim Şirketi (“Yonca Radyo”) Media Turkey


incorporationAslancık Elektrik Üretim Anonim Şirketi (“Aslancık”) Electricity generation TurkeyBoyabat Elektrik Üretim ve Ticaret Anonim Şirketi (“Boyabat”) Electricity generation TurkeyD Tes Elektrik Enerjisi Toptan Satış Anonim Şirketi (“DTes”) Energy Turkey

Associates Nature of businessCountry of

incorporationİstinye Yönetim Hizmetleri Anonim Şirketi (“İstinye Yönetim Hizmetleri”)

Shopping mall administration

Turkey

(1) Established in 2011. See note 43.

(2) Acquired in 2011. See note 8.




2 Basis of preparation

(a) Statement of compliance

Doğuş Group entities operating in Turkey maintain their books of account and prepare their statutory financial statements in Turkish Lira (“TL”) in accordance with the Accounting Practice Regulations as promulgated by the Banking Regulatory and Supervision Agency (“BRSA”) applicable to Garanti Bank, Turkish insurance legislation and accounting principles applicable to insurance business, and accounting principles per Turkish Uniform Chart of Accounts and per Capital Market Board of Turkey applicable to entities operating in other businesses.

Doğuş Group’s foreign entities maintain their books of account and prepare their statutory financial statements in accordance with the generally accepted accounting principles and the related legislation applicable in the countries they operate.

The accompanying consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”).

The consolidated financial statements were authorised for issue by Doğuş Holding’s management on 6 April 2012. The Doğuş Holding’s General Assembly and the other reporting bodies have the power to amend the consolidated financial statements after their issue.

(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 material items in the consolidated statement of financial position:

• derivative financial instruments are measured at fair value,• available-for-sale financial assets are measured at fair value,• non-derivative 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 TL which is Doğuş Holding’s functional currency. All financial information presented in TL has been rounded to the nearest thousand, except when otherwise indicated.

(d) Use of estimates and judgments

The preparation of consolidated financial statements in conformity with IFRS requires management to make judgments, 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.




2 Basis of preparation (continued)

(d) Use of estimates and judgments (continued)

Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statements is included in the following notes:

Note 17 – Investment in debt securitiesNote 25 – Banking loans and advances to customersNote 27 – Financial assets at fair value through profit or lossNote 35 – Deposits

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are included in the following notes:

Note 4 – Determination of fair valuesNote 14 – Taxation (utilisation of tax losses) Note 16 – Intangible assetsNote 34 – Retirement benefit obligationNote 39 – Commitments and contingenciesNote 41 – Financial instruments

(e) Comparative information

The accompanying consolidated financial statements are presented comparatively to give a true and fair view of financial performance of the Group.

Certain comparative amounts have been reclassified to conform with the current year’s presentation as summarised below:

Amount reported Restated amount Statement of financial position as at 31 December

2010Effect of

reclassificationas at 31 December

2010

Current assetsInventories 565,144 (2,667) 562,477Other current assets 1,549,220 2,667 1,551,887

2,114,364 - - 2,114,364Non-current assetsOther non-current assets 456,958 (33,218) 423,740Assets held for sale - - 33,218 33,218

456,958 - - 456,9582,571,322 - - 2,571,322

Non-current liabilitiesLoans and borrowings 6,271,098 7,510 6,278,608Other non-current liabilities 694,754 (7,510) 687,244

6,965,852 - - 6,965,852Current liabilitiesLoans and borrowings 3,689,316 9,787 3,699,103Other current liabilities 1,532,245 (9,787) 1,522,458

5,221,561 - - 5,221,56112,187,413 - - 12,187,413




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.

(a) Basis of consolidation

The accompanying consolidated financial statements include the accounts of the parent company, Doğuş Holding, its subsidiaries, joint ventures and associates on the basis set out in sections below. The financial statements of the entities included in the consolidation have been prepared as at the date of the consolidated financial statements.

(i) Business combinations

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that currently are exercisable.

The Group measures goodwill at the acquisition date as:

• the fair value of the consideration transferred; plus • the recognised amount of any non-controlling interests in the acquiree; plus• if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree; less• the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts generally are recognised in profit or loss.

Transactions costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss.

(ii) Acquisitions of non-controlling interests

Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore no goodwill is recognised as a result. Adjustments to non-controlling interests arising from transactions that do not involve the loss of control are based on a proportionate amount of the net assets of the subsidiary.

(iii) Subsidiaries

Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.




3 Significant accounting policies (continued)

(a) Basis of consolidation (continued)

(iii) Subsidiaries (continued)

The table below sets out all consolidated subsidiaries and shows shareholding structure of these subsidiaries at 31 December:

Direct and indirect ownership interest held by Doğuş Holding

and its subsidiaries

Ownership interest through shares held by

Şahenk Family

Proportion of ownership interest

Proportion of effective interest of Doğuş Holding

and its subsidiaries2011 2010 2011 2010 2011 2010 2011 2010

A Yapım 97.00 97.00 - - - - 97.00 97.00 96.93 96.87Antur 97.13 96.38 2.86 3.60 99.99 99.98 96.97 96.18Arena 99.99 99.98 0.01 0.02 100.00 100.00 98.66 97.78Ayson 70.00 70.00 - - - - 70.00 70.00 66.61 66.61Ayson Hydro 100.00 100.00 - - - - 100.00 100.00 66.61 66.61Ayson Sondaj 100.00 100.00 - - - - 100.00 100.00 66.61 66.61D Enerji 99.64 99.85 0.36 0.15 100.00 100.00 99.64 99.85D Otel 100.00 100.00 - - - - 100.00 100.00 100.00 100.00D Otel Göcek 99.35 87.27 0.65 12.73 100.00 100.00 98.90 85.55Datmar 99.59 99.57 0.41 0.43 100.00 100.00 99.16 98.98Doğuş Sağlıklı Yaşam 100.00 98.60 - - - - 100.00 98.60 100.00 98.60DOAŞ 74.23 73.78 - - - - 74.23 73.78 72.02 71.56Doğuş Arge 92.72 92.70 7.28 7.30 100.00 100.00 92.71 92.69Doğuş Auto Mısr JS 100.00 100.00 - - - - 100.00 100.00 72.03 71.57Doğuş Auto Mısr LLC 99.00 99.00 - - - - 99.00 99.00 71.31 70.86Doğuş Bilgi İşlem 100.00 - - - - - - 100.00 - - 87.05 - -Doğuş Dalaman 100.00 100.00 - - - - 100.00 100.00 100.00 100.00Doğuş Didim 100.00 100.00 - - - - 100.00 100.00 100.00 100.00Doğuş E Alışveriş 100.00 - - - - - - 100.00 - - 99.93 - -Doğuş Enerji 100.00 100.00 - - - - 100.00 100.00 99.64 99.84Doğuş EOOD 100.00 100.00 - - - - 100.00 100.00 92.46 92.46Doğuş Gayrimenkul 97.52 97.52 2.48 2.48 100.00 100.00 97.52 97.52Doğuş GYO (1) 91.55 33.96 - - - - 91.55 33.96 87.38 30.05Doğuş Finance Ukraine 100.00 100.00 - - - - 100.00 100.00 92.46 100.00Doğuş Yeme İçme 100.00 100.00 - - - - 100.00 100.00 100.00 100.00Doğuş Hoteli 100.00 100.00 - - - - 100.00 100.00 100.00 100.00Doğuş Hoteli Sibenik 100.00 100.00 - - - - 100.00 100.00 100.00 100.00Doğuş Investment 100.00 100.00 - - - - 100.00 100.00 92.46 99.92Doğuş İletişim 100.00 100.00 - - - - 100.00 100.00 99.93 99.86Doğuş İnşaat 92.46 92.46 7.54 7.54 100.00 100.00 92.46 92.46Doğus Insaat d.o.o. 100.00 100.00 - - - - 100.00 100.00 92.46 92.46Doğus Insaat ES 100.00 100.00 - - - - 100.00 100.00 92.46 92.46Doğuş İnşaat Limited 100.00 100.00 - - - - 100.00 100.00 92.46 92.46Doğuş International 100.00 100.00 - - - - 100.00 100.00 92.71 92.69Doğuş Razvitak 100.00 100.00 - - - - 100.00 100.00 92.46 92.46Doğuş Management 100.00 - - - - - - 100.00 - - 100.00 - -Doğuş Marina 100.00 100.00 - - - - 100.00 100.00 100.00 100.00Doğuş Marina Hoteli 90.00 62.50 - - - - 90.00 62.50 90.00 62.50Doğus Maroc SARL 100.00 100.00 - - - - 100.00 100.00 92.46 92.46Doğuş Media 100.00 - - - - - - 100.00 - - 99.93 - -






(iii) Subsidiaries(continued)



Ownership interest through shares held by Şahenk Family

Proportion ofownership

interest



D Marin Göcek 100.00 100.00 - - - - 100.00 100.00 100.00 100.00Doğuş Nakliyat 89.73 89.73 0.77 0.77 90.50 90.50 89.69 89.69Doğuş Poland 100.00 100.00 - - - - 100.00 100.00 92.46 92.46Doğuş Oto 100.00 100.00 - - - - 100.00 100.00 73.08 72.64Doğuş SA 100.00 100.00 - - - - 100.00 100.00 95.19 95.18Doğuş Sigorta 99.00 99.00 1.00 1.00 100.00 100.00 87.25 87.06Doğuş Spor 100.00 100.00 - - - - 100.00 100.00 100.00 100.00Doğuş Telekom 100.00 100.00 - - - - 100.00 100.00 100.00 100.00Doğuş Turgutreis 100.00 100.00 - - - - 100.00 100.00 98.13 97.58Doğuş Turizm 100.00 100.00 - - - - 100.00 100.00 100.00 100.00Doğuş Upravljanje 100.00 100.00 - - - - 100.00 100.00 100.00 100.00Doğuş Uydu 100.00 100.00 - - - - 100.00 100.00 98.67 98.63Doğuş Yayın Grubu 100.00 100.00 - - - - 100.00 100.00 99.93 99.86Doğuş Yeni 100.00 - - - - - - 100.00 - - 100.00 - -D-Auto Suisse SA 100.00 100.00 - - - - 100.00 100.00 72.03 71.59E Elektronik 100.00 100.00 - - - - 100.00 100.00 99.93 99.86E2 Radyo 100.00 - - - - - - 100.00 - - 99.93 - -Enformasyon 97.00 97.00 - - - - 97.00 97.00 96.93 96.87Garanti Turizm 100.00 100.00 - - - - 100.00 100.00 98.81 98.78Göktrans Turizm 100.00 100.00 - - - - 100.00 100.00 99.60 99.22Genoto 100.00 100.00 - - - - 100.00 100.00 98.47 98.44HD-E 100.00 - - - - - - 100.00 - - 99.93 - -Istinye Park Gayrimenkul 100.00 100.00 - - - - 100.00 100.00 100.00 100.00

Kapital Radyo 97.00 98.89 - - - - 97.00 98.89 96.93 98.75Körfez Hava 100.00 100.00 - - - - 100.00 100.00 100.00 100.00Kral Pop 100.00 - - - - - - 100.00 - - 99.93 - -N Radyo 97.00 97.00 - - - - 97.00 97.00 96.93 96.86NCP Marina Mandalina (1) 76.00 40.00 - - - - 76.00 40.00 76.00 40.00

NTV Avrupa 98.98 98.98 - - - - 98.98 98.98 98.91 98.84NTV Batı 100.00 - - - - - - 100.00 - - 99.93 - -NTV Radyo 97.00 97.00 - - - - 97.00 97.00 96.93 96.87Sibenik Upravljanje 100.00 100.00 - - - - 100.00 100.00 100.00 100.00Sibenik Razvitak 100.00 100.00 - - - - 100.00 100.00 100.00 100.00Sititur 100.00 100.00 - - - - 100.00 100.00 100.00 100.00Star TV 100.00 - - - - - - 100.00 - - 99.93 - -Şahintur 100.00 100.00 - - - - 100.00 100.00 100.00 100.00Tansaş Gıda 90.00 90.00 - - - - 90.00 90.00 90.00 90.00Teknik Mühendislik 99.70 99.70 - - - - 99.70 99.70 98.58 98.58Voyager 99.10 99.08 0.90 0.92 100.00 100.00 99.08 99.06Yonca Radyo 97.00 97.00 - - - - 97.00 97.00 96.93 96.872019 Radyo 97.00 97.00 - - - - 97.00 97.00 96.93 96.87

(1) Proportionately consolidated as joint venture as at 31 December 2010. See note 8.






(iv) Loss of control

On the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

(v) Associates (Equity-accounted investees)

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity. Investments in associates are accounted for using the equity method and are initially recognised at cost. The cost of investments includes transaction costs.

The consolidated financial statements include the Group’s share of profit and loss and other comprehensive income of associates, after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases.

When the Group’s share of losses exceeds its interest in an associates, the carrying amount of that interest, including any long-term interests that form part thereof, is reduced to zero, 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.

The table below sets out the associates and shows the shareholding structure of these associates at 31 December:



Ownership interest through shares held by Şahenk Family

Proportion of ownership

interest



İstinye Yönetim Hizmetleri 42.00 42.00 - - - - 42.00 42.00 42.00 42.00

Leaseplan 100.00 100.00 - - - - 100.00 100.00 38.31 38.14LPD Holding 49.00 49.00 - - - - 49.00 49.00 38.31 38.14VDF Faktoring (1) 100.00 100.00 - - - - 100.00 100.00 38.31 38.14VDF Tüketici 49.00 49.00 - - - - 49.00 49.00 35.57 35.35

VDF Servis Holding 49.00 49.00 - - - - 49.00 49.00 38.31 38.14

VDF Sigorta (1) 100.00 100.00 - - - - 100.00 100.00 38.31 38.14Yüce Auto 50.00 50.00 - - - - 50.00 50.00 36.01 35.78

(1) Consolidated under VDF Servis Holding.

(vi) 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 Group’s proportionate share of the enterprises’ assets, liabilities, revenues and expenses with items of a similar nature on a line-by-line basis, from the date that joint control commences until the date that joint control ceases.






(vi) Joint ventures (continued)

The table below sets out the joint ventures and shows the shareholding structure of these joint ventures at 31 December:





2011 2010 2011 2010 2011 2010 2011 2010

Aslancık 33.33 33.33 - - - - 33.33 33.33 33.21 33.28

Boyabat 34.00 34.00 - - - - 34.00 34.00 33.97 33.98

D Tes 25.00 25.00 - - - - 25.00 25.00 25.00 25.00

Doğuş Alarko 37.50 37.50 - - - - 37.50 37.50 34.67 34.67

Doğuş Polat 50.00 50.00 - - - - 50.00 50.00 46.23 46.23

Doğuş Prestige 60.00 60.00 - - - - 60.00 60.00 55.48 55.48

Domenia 100.00 100.00 - - - - 100.00 100.00 23.95 30.24

Garanti Bank (1) 24.23 30.52 0.66 0.66 24.89 30.52 23.95 30.24

Garanti Bilişim 100.00 100.00 - - - - 100.00 100.00 23.95 30.24

Garanti Faktoring 81.84 81.84 - - - - 81.84 81.84 19.60 24.75

Garanti Filo 100.00 100.00 - - - - 100.00 100.00 23.98 29.94

Garanti Holding B.V. 100.00 100.00 - - - - 100.00 100.00 23.95 30.24

Garanti Hizmet 100.00 100.00 - - - - 100.00 100.00 26.08 32.18

Garanti Konut 100.00 100.00 - - - - 100.00 100.00 23.95 30.24

Garanti Kültür 100.00 100.00 - - - - 100.00 100.00 23.95 30.24

Garanti Leasing 100.00 100.00 - - - - 100.00 100.00 23.98 29.94

Garanti Portföy 100.00 100.00 - - - - 100.00 100.00 23.95 30.24

Garanti Bank SA 100.00 100.00 - - - - 100.00 100.00 23.95 30.24

Garanti Yatırım 100.00 100.00 - - - - 100.00 100.00 23.95 30.24Garanti Yatırım Ortaklığı (2) 0.30 0.30 - - - - 0.30 0.30 0.10 0.12

G Netherlands 100.00 100.00 - - - - 100.00 100.00 23.95 30.24

GBI 100.00 100.00 - - - - 100.00 100.00 23.95 30.24

GB Moscow 100.00 100.00 - - - - 100.00 100.00 23.95 30.24

GEHAŞ 85.00 85.00 - - - - 85.00 85.00 20.33 25.68

Gülermak Doğuş 50.00 50.00 - - - - 50.00 50.00 46.23 46.23

GÖSAŞ 99.92 99.92 - - - - 99.92 99.92 23.93 30.21

Krone Doğuş 49.16 48.95 - - - - 49.16 48.95 35.68 35.30

Meiller Doğuş 49.00 49.00 - - - - 49.00 49.00 35.29 35.07

Motoractive 100.00 100.00 - - - - 100.00 100.00 23.95 30.24

Ralfi 100.00 100.00 - - - - 100.00 100.00 23.95 30.24

TÜVTURK Kuzey 33.33 33.33 - - - - 33.33 33.33 24.01 23.86

TÜVTURK Güney 33.33 33.33 - - - - 33.33 33.33 24.01 23.86

TÜVTURK İstanbul 66.40 66.40 - - - - 66.40 66.40 24.01 23.86

YMDYYB 26.00 26.00 - - - - 26.00 26.00 24.04 24.04

(1) See note 8.3(2) Although the ownership rate of Garanti Bank on this company is less than 50 percent, Garanti Bank has the controlling power on the operations and financial policies of this company.

Ownership interest through shares held by

Şahenk Family

Proportion of ownership

interest






(vii) Special purpose entities

The Group has established special purpose entities (“SPEs”) to accomplish a narrow and well defined objective such as securitisation of particular assets, or the execution of specific borrowing or lending transactions. The Group does not have any direct or indirect shareholdings in these entities. An SPE is consolidated if, based on an evaluation of the substance of its relationship with the Group and the SPE’s risks and rewards, the Group concludes that it controls the SPE. SPEs controlled by the Group were established under terms that impose strict limitations on the decision-making powers of the SPEs’ management and that result in the Group receiving the majority of the benefits related to the SPEs’ operations and net assets, being exposed to risks incident to the SPEs’ activities, and retaining the majority of the residual or ownership risks related to the SPE or their assets.

Garanti DPR and T-2 Capital are special purpose entities established for Garanti Bank’s securitisation and subordinated debt transactions, respectively. The Group does not have any shareholding interest in these companies.

(viii) 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 Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(b) Accounting in hyperinflationary economies

Until 31 December 2005, the financial statements of the Turkish entities have been restated for the changes in the general purchasing power of the Turkish Lira based on IAS 29 Financial Reporting in Hyperinflationary Economies.

Beginning from January 2006, it was declared that Turkey should be considered a non-hyperinflationary economy under IAS 29. Therefore, IAS 29 has not been applied to the accompanying consolidated financial statements since 1 January 2006.

(c) Foreign currency

(i) Foreign currency 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 the amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year.

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. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction. 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 (except on impairment in which case foreign currency differences that have been recognised in other comprehensive income are reclassified to profit or loss), a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or qualifying cash flow hedges to the extent the hedge is effective.





(c) Foreign currency (continued)

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to TL at exchange rates at the reporting date. The income and expenses of foreign operations are translated to TL at average exchange rates at the dates of the transactions.

Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve (translation reserve) in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary item receivable from or payable to a foreign operations is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and presented within equity in the translation reserve.

(iii) Hedge of net investment in foreign operation

The Group applies hedge accounting to foreign currency differences arising between the functional currency of the foreign operation and the parent entity’s functional currency (TL), regardless of whether the net investment is held directly or through an intermediate parent.

Foreign currency differences arising on the retranslation of a financial liability designated as a hedge of a net investment in a foreign operation are recognised in other comprehensive income, to the extent that the hedge is effective, and are presented within equity in the translation reserve. To the extent that the hedge is ineffective, such differences are recognised in profit or loss. When the hedged part of net investment is disposed of, the relevant amount in the translation reserve is transferred to profit or loss as a part of the profit or loss on disposal.

(d) Financial instruments

(i) Non-derivative financial assets

The Group initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets (including assets designated at fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in such transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.





(d) Financial instruments (continued)

(i) Non-derivative financial assets (continued)

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The Group classifies non-derivative financial assets into the following categories: financial assets at fair value through profit or loss, held-to-maturity financial assets and loans and receivables and available-for-sale financial assets.

Financial assets at fair value through profit or loss

A financial asset is classified at fair value through profit or loss if it is classified as held for trading or is designated as such upon initial recognition. These include investments and certain purchased loans. Financial assets are designated at fair value through profit or loss if the Group manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Group’s documented risk management or investment strategy. Upon initial recognition attributable transaction costs are recognised in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value and changes therein, which takes into account any dividend income, are recognised in profit or loss.

Held to maturity financial assets

If the Group has the positive intent and ability to hold debt securities to maturity, then such financial assets are classified as held-to-maturity. Held-to-maturity financial assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, held to maturity financial assets are measured at amortised cost using the effective interest method less and impairment losses. Held to maturity financial assets include certain banking loans and advances to banks and customers and certain debt instruments.

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. Loans and receivables comprise banking loans and advances to customers and banks, trade and other receivables, including service concession receivables, and due from related parties.

Finance lease receivables

Leases where the entire risks and rewards incident to ownership of an asset are substantially transferred to the lessee are classified as finance leases. A receivable at an amount equal to the present value of the lease payments, including any guaranteed residual value, is recognised. The difference between the gross receivable and the present value of the receivable is unearned finance income and is recognised over the term of the lease using the effective interest rate method. Finance lease receivables are included in banking loans and advances to customers.

Cash and cash 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 with original maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value. Money market placements are classified in banking loans and advances to banks.







Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale and that are not classified in any of the previous categories of financial assets. The Group’s investments in certain debt and equity instruments are classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses (see note 3(m)) and foreign currency differences on available-for-sale equity instruments (see note 3(c)(i)), are recognised in other comprehensive income and presented within equity in the fair value reserve. When an instrument is derecognised, the gain or loss accumulated in equity is reclassified to profit or loss.

Accounting for interest income and expenses for banking and finance segment is discussed in note 3 (q). Accounting for finance income and expenses for segments other than banking and finance is discussed in note 3 (t).

Service concession arrangements

The Group recognises a financial asset arising from a service concession arrangement when it has an unconditional contractual right to receive cash or another financial asset from or at the direction of the grantor for the construction or upgrade services provided. Such financial assets are measured at fair value upon initial recognition. Subsequent to initial recognition the financial assets are measured at amortised cost.

If the Group is paid for the construction services partly by a financial asset and partly by an intangible asset, then each component of the consideration received or receivable is accounted for separately and is recognised initially at the fair value of the consideration received or receivable (see also note 3(f)(ii)).

Other

Other non derivative financial instruments are measured at amortised cost using the effective interest rate method, less any impairment losses (see accounting policy 3(m)).

(ii) Non-derivative financial liabilities

The Group initially recognises debt securities issued, deposits, obligations under repurchase agreements, due to related parties, bonds payable and subordinated liabilities on the date that they are originated. All other financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.






(ii) Non-derivative financial liabilities (continued)

The Group has the following non-derivative financial liabilities: deposits, obligations under repurchase agreements, loans and borrowings, accounts and other payables, subordinated liabilities, bonds payable, due to related parties and liabilities from short-term sales of financial instruments.

Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortised cost using the effective interest method.

(iii) Derivative financial instruments including hedge accounting

The Group holds derivative financial instruments to hedge its certain risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at fair value through profit or loss.

On initial designation of the derivative as the hedging instrument, the Group formally documents the relationship between the hedging instrument(s) and hedged item(s), including the risk management objectives and strategy in undertaking the hedge transaction and the hedged risk, together with the methods that will be used to assess the effectiveness of the hedging relationship. The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, whether the hedging instruments are expected to be “highly effective” in offsetting the changes in the fair value or cash flows of the respective hedged items attributable to the hedged risk, and whether the actual results of each hedge are within a range of 80-125 percent. For a cash flow hedge of a forecast transaction, the transaction should be highly probable to occur and should present an exposure to variations in cash flows that could ultimately affect reported profit or loss. Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss as incurred. All trading derivatives in a net receivable position (positive fair value) as well as options purchased are reported as trading assets. All trading derivatives in a net payable position (negative fair value) as well as options written, are reported as trading liabilities. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below.

Cash flow hedges

When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognised in other comprehensive income and presented in the hedging reserve in equity. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss.






(iii) Derivative financial instruments, including hedge accounting (continued)

Cash flow hedges (continued)

When the hedged item is a non-financial asset, the amount accumulated in equity is included in the carrying amount of the asset when the asset is recognised. In other cases, the amount accumulated in equity is reclassified to profit or loss in the same period that the hedged item affects profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. If the forecast transaction is no longer expected to occur, then the balance in equity is reclassified in profit or loss.

Separable embedded derivatives

Changes in the fair value of separated embedded derivatives are recognised immediately in profit or loss.

Other non-trading derivatives

When a derivative financial instrument is not designated in a hedge relationship that qualifies for hedge accounting, all changes in its fair value are recognised immediately in profit or loss.

(iv) Share capital

Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

Repurchase, disposal and reissue of share capital (Treasury shares)

When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented as a deduction from total equity. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is presented in share premium.

(e) Property and equipment

(i) Recognition and measurement

The costs of items of property and equipment purchased before 31 December 2005 are restated for the effects of inflation in TL units current at 31 December 2005 pursuant to IAS 29. Property and equipment purchased after this date are recorded at their historical costs. Accordingly, items of property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any (see accounting policy 3(m)), except as explained below:





(e) Property and equipment (continued)

(i) Recognition and measurement (continued)

In 2001, the Group started to reflect the land and buildings at their fair values as appraised by independent third party appraisers. Any increase arising on the revaluation of such land and buildings is credited to other comprehensive income, and presented in revaluation surplus in equity, except to the extent that it reverses a revaluation decrease for the same asset previously recognised as an expense, in which case the increase is credited to profit or loss to the extent of the decrease previously charged. A decrease in the carrying amount arising on the revaluation of such land and buildings is charged as an expense to the extent that it exceeds the balance, if any, held in the revaluation surplus relating to a previous revaluation of that asset.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the following:

• the cost of materials and direct labour,

• any other costs directly attributable to bringing the asset to a working condition for its intended use,

• when the Group has an obligation to remove the asset or restore the site, an estimate of the costs of dismantling and removing the items and restoring the site on which they are located, and

• capitalised borrowing costs.

Cost also includes transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property and equipment. 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.

Any gain or loss on disposal of an item of property and equipment (calculated as the difference between the net proceeds from disposals and the carrying amount of the item) is recognised, net in profit or loss in “other income” or “other expense”. When revalued assets are sold, the amounts included in the revaluation surplus reserve are transferred to retained earnings.

(ii) Reclassification to investment property

When the use of a property changes from owner-occupied to investment property, the property is remeasured to fair value and reclassified as investment property. Property that is being constructed for future use as investment property is accounted for at fair value. Any gain arising on remeasurement is recognised in profit or loss to the extent that it reverses a previous impairment loss on the specific property, with any remaining gain recognised in other comprehensive income and presented in the revaluation reserve in equity. Any loss is recognised immediately in profit or loss.

(iii) Subsequent costs

Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with the expenditure will flow to the Group. Ongoing repairs and maintenance is expensed as incurred.

(iv) Depreciation

Items of property and equipment are depreciated on a straight-line basis in profit or loss over the estimated useful lives of each component. 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.





(e) Property and equipment (continued)

(iv) Depreciation (continued)

Items of property and equipment are depreciated from the date that they are installed and are ready for use, or in respect of internally constructed assets, from the date that the assets are complete and ready for use.

The estimated useful lives for the current and comparative years of significant items of property and equipment are as follows:

Description Year

Buildings 50

Furniture and equipment 4-20

Motor vehicles 5-10

Leasehold improvements are amortised over the periods of the respective leases, also on a straight-line basis.

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

Tangible assets purchased before 2005 at Garanti Bank and its subsidiaries are depreciated over their estimated useful lives on a straight line basis from the date of their acquisition. Assets acquired after this date are depreciated based on the declining balance method. For the assets acquired after 1 January 2009, the straight line depreciation method is in use. Expenditures for major renewals and improvement of tangible assets are capitalized and depreciated over the remaining useful lives of the related assets.

(f) Intangible assets

(i) Goodwill

Goodwill that arises upon the acquisition of subsidiaries and joint ventures is presented with intangible assets. For the measurement of goodwill at initial recognition, see note 3(a)(i).

Subsequent measurement

Goodwill is measured at cost less accumulated impairment losses (see accounting policy 3(m)). In respect of associates, the carrying amount of goodwill is included in the carrying amount of the investment, and any impairment loss is allocated to the carrying amount of the associates as a whole.

(ii) Service concession arrangements

Concession rights acquired by the Group have finite useful lives of 20 years and 38 years starting from 15 August 2007 and 7 December 2010 respectively, and are measured at cost less accumulated amortisation. Cost includes borrowing costs directly attributable to the acquisition of the concession rights. The Group capitalises the borrowing costs directly attributable to the acquisition, or construction of a qualifying asset as part of the cost of that asset.

(iii) Broadcasting rights

Broadcasting rights represent terrestrial broadcasting licence of Kral TV and Kral FM which are the intangible assets recognised during the acquisition of commercial and economic assets of Kral TV and Kral FM in 2008 and terrestrial broadcasting licence of Star TV which are the intangible assets recognised during the acquisition of Işıl Televizyon Yayıncılık Anonim Şirketi in 2011. Terrestrial broadcast rights have indefinite useful lives. These rights are tested for impairment annually.





(f) Intangible assets (continued)

(iv) Brand name

Brand name represents brand name of Star TV which is related to the intangible asset recognised during the acquisition of Star TV in 2011. Brand names have indefinite useful lives and are tested for impairment annually.

(v) Content library

The content library of series and movies are related to the intangible assets recognised during the acquisition of Star TV in 2011. Ownership right of these items in the content library belong to Star TV with unlimited transmission. The fair value of the content library on the acquisition date has been determined by an independent external expert. The content library is measured at cost less accumulated amortisation and any accumulated impairment losses. Useful lives of content library are five years period when content library is ready to screen on TV starting from the year 2012.

(vi) 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 any accumulated impairment losses (see accounting policy 3(m)).

(vii) 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.

(viii) Amortisation

Except for goodwill, broadcasting rights and brand name recognised in a business combination, intangible assets are amortised on a straight-line basis in profit or loss over their estimated useful lives, from the date that they are available for use.

Amortisation of service concession rights acquired by the Group is recognised in profit or loss on a straight line basis over their respective concession periods.

Amortisation of content library is based on the fair value of the asset which is acquired through business combination under scope of IFRS 3 “Business Combinations”. The amortisation period for all items in content library are five years period when content library is ready to screen on TV starting from the year 2012. Hence, amortisation charge could not be incurred for the two-months period ended 31 December 2011. Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(g) Securities borrowing and lending business

Investments lent under securities lending arrangements continue to be recognised in the statement of consolidated financial position and are measured in accordance with the accounting policy for the related assets as appropriate. Cash collateral received in respect of securities lent is recognised as liabilities to either banks or customers. Cash collateral placements in respect of securities borrowed are recognised under banking loans and advances to either banks or customers. Income and expenses arising from the securities borrowing and lending business are recognised on an accrual basis over the period of the transactions and are included in “Revenues” or “Cost of revenues”.

(h) Repurchase and resale agreements over investments

Garanti Bank and its subsidiaries enter into purchases of investments under agreements to resell (“reverse repo”) substantially identical investments at a certain date in the future at a fixed price.





(h) Repurchase and resale agreements over investments (continued)

Investments purchased subject to commitments to resell them at future dates are not recognised. The amounts paid are recognised in banking loans to either banks or customers. The receivables are shown as collateralised by the underlying security.

Investments sold under repurchase agreements (“repo”) continue to be recognised in the consolidated statement of financial position and are measured in accordance with the accounting policy for the related assets as appropriate. The proceeds from the sale of the investments are reported as “obligations under repurchase agreements”, a liability account.

Income and expenses arising from the repurchase and resale agreements over investments are recognised on an accrual basis over the period of the transactions and are included in “Revenues” or “Cost of revenues”.

(i) Investment 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.

Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use and capitalised borrowing costs.

Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss. When an investment property that was previously classified as property and equipment is sold, any related amount included in the revaluation surplus is transferred to retained earnings.

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. At 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.

Other leases are operating leases and, except for investment property, the leased assets are not recognised on the Group’s consolidated statement of financial position.

(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 moving weighted average, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. Cost of trading goods and trading properties are determined on “specific identification” basis by the entities operating in automotive and construction businesses. Trading properties comprise land and buildings that are held for trading purposes. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.





(l) Construction contracts in progress

Construction contracts in progress represent 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 (see note 3 (q)(iii)) less progress billings and recognised losses. Cost includes all expenditures related directly to specific projects and an allocation of fixed and variable overheads incurred in the Group’s contract activities based on normal operating capacity.

Construction contracts in progress is presented as part of accounts receivable in the statement of financial position for all contracts in which costs incurred plus recognised profits exceed progress billings. If progress billings exceed cost incurred plus recognised profits, then the difference is presented as deferred income in the consolidated statement of financial position.

The asset, “Due from customers for contract work” represents revenues recognised in excess of amounts billed. The liability, “Due to customers for contract work” represents billings in excess of revenues recognised.

(m) Impairment

(i) Non-derivative financial assets

A financial asset not classified as at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset, and that the loss event(s) had an impact on the estimated future cash flows of that asset that can be estimated reliably. Objective evidence that financial assets are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers in the Group, economic conditions that correlate with defaults or the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.

Available-for sale financial assets

Impairment losses on available-for-sale investment securities are recognised by reclassifying the cumulative loss that has been recognised in other comprehensive income, and presented in the fair value reserve in equity, to profit or loss. The cumulative loss that is reclassified from other comprehensive income and recognised in profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss previously recognised in profit or loss. Changes in cumulative impairment losses attributable to application of the effective interest method are reflected as a component of interest income. If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However, any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognised in other comprehensive income.

For an investment in unquoted equity instruments carried at cost because their fair value cannot be measured reliably, impairment losses may not be reversed.

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 rates. Short-term balances are not discounted.





(m) Impairment (continued)


Loans and receivables and held-to-maturity investments (continued)

Loans and receivables are presented net of specific and portfolio basis allowances for uncollectibility. Specific allowances are made against the carrying amounts of loans and receivables that are identified as being impaired based on regular reviews of outstanding balances to reduce these banking loans and receivables to their recoverable amounts. In assessing the recoverable amounts of banking loans and receivables, the estimated future cash flows are discounted to their present value. Portfolio basis allowances are maintained to reduce the carrying amount of portfolios of similar banking loans and receivables to their estimated recoverable amounts at the reporting date. The expected cash flows for portfolios of similar assets are estimated based on previous experience and considering the credit rating of the underlying customers and late payments of interest or penalties. Increases in the allowance account are recognised in profit or loss. When a banking loan is known to be uncollectible, all the necessary legal procedures have been completed, and the final loss has been determined, the loan is written off directly. If, in a subsequent period, the amount of impairment loss decreases and the decrease can be linked objectively to an event occurring after the write down, the write-down or allowance is reversed through profit or loss.

Financial assets remeasured to fair value

The recoverable amount of an equity instrument is its fair value. The recoverable amount of debt instruments and purchased loans remeasured to fair value is calculated as the present value of the expected future cash flows discounted at the current market rate of interest.

Where an asset remeasured to fair value is impaired, the write-down is recognised in profit or loss.

If, in a subsequent period, the amount of impairment loss decreases and the decrease can be linked objectively to an event occurring after the write-down, the write-down is reversed through profit or loss.

(ii) Non-financial assets

The carrying amounts of the Group’s non-financial assets, other than investment property, inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill and intangible assets with indefinite lives are tested annually for impairment. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit (“CGU”) exceeds its recoverable amount.

The recoverable amount of an asset or CGU 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 or CGU. 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 CGUs. Subject to an operating segment ceiling test, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis.





(m) Impairment (continued)

(ii) Non-financial assets (continued)

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(n) Assets held for sale or distribution

Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale or distribution rather than through continuing use, are classified as held for sale or distribution. Immediately before classification as held for sale or distribution, the assets, or components of a disposal group, are remeasured in accordance with the Group’s accounting policies. Thereafter generally the assets, or disposal group, are measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets and investment property, which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale or distribution and subsequent gains and losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

Intangible assets and property and equipment once classified as held for sale or distribution are not amortised or depreciated. In addition, equity accounting of associates ceases once classified as held for sale or distribution.

(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, a jointly controlled entity, has a defined benefit plan (“the Plan”) for its employees namely Türkiye Garanti Bankası Anonim Şirketi Memur ve Müstahdemleri Emekli ve Yardım Sandığı Vakfı (“the Fund”). The Fund is a separate legal entity and a foundation recognised by an official decree, providing pension and post-retirement medical benefits to its all qualified employees. This benefit plan is funded through contributions of both by the employees and the employer as required by Social Security Law numbered 506 and these contributions are as follows:

2011Employer % Employee %

Pension contributions 15.5 10.0Medical benefit contributions 6.0 5.0

2010Employer % Employee %

Pension contributions 15.5 10.0Medical benefit contributions 6.0 5.0

This benefit plan is composed of a) the contractual benefits of the employees, which are subject to transfer to Social Security Foundation (“SSF”) (“pension and medical benefits transferable to SSF”) (see note 34 (i)) and b) other excess social rights and payments provided in the existing trust indenture but not transferable to SSF and medical benefits provided by Garanti Bank for its constructive obligation (“excess benefits”) (see note 34 (ii)).





(o) Employee benefits (continued)

(i) Defined benefit plan (continued)

Pension and medical benefits transferable to SSF

As discussed in note 34, Garanti Bank expects to transfer a portion of the obligation of the Fund to SSF. This transfer will be a settlement of that portion of the Fund’s obligation. Final legislation establishing the terms for this transfer was enacted on 8 May 2008. Although the settlement will not be recognised until the transfer is made, Garanti Bank believes that it is more appropriate to measure the obligation as the value of the payment that would need to be made to SSF to settle the obligation at the date of the statement of financial position in accordance with the Temporary Article 20 of the Law No.5754: “Law regarding the changes in Social Insurance and General Health Insurance Law and other laws and regulations” (“the New Law”).

The pension disclosures set out in Note 34, therefore reflect the actuarial assumptions and mortality tables specified in the New Law, including a discount rate of 9.80 percent. The pension benefits transferable to SSF are calculated annually by an independent actuary, who is registered with the Undersecretariat of the Treasury.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are directly charged to profit or loss.

Excess benefits not transferable to SSF

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.

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 TL 2.73 thousand and TL 2.52 thousand at 31 December 2011 and 2010, respectively.

International Financial Reporting Standards require actuarial valuation methods to be developed to estimate the entity’s obligation under defined benefit plans. The principal statistical assumptions used in the calculation of the total liability in the accompanying consolidated financial statements at 31 December were as follows:

2011 2010% %

Discount rate 4.3-4.7 4.66Turnover rate to estimate the probability of retirement 1.0-8.00 1.0-9.00





(p) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

(i) Warranties

A provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical warranty data and a weighting of all possible outcomes against their associated probabilities.

The warranties on automobiles sold by the Group are issued by the main producers (Volkswagen, Audi, Porsche, Seat, Scania, Krone) where the Group acts as an intermediary between the customers and the producer. The claims of customers to the Group are recognised as warranty expense in profit or loss. The Group recognises the amount claimed from the producers as warranty income and offset against warranty expense. The Group incurs the cost that is not paid by the manufacturers. Accordingly, the Group recognises the estimated liability for the difference between possible warranty claims of customers and possible warranty claims from producers based on historical service statistics.

(ii) Onerous contracts

A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognises any impairment loss on the assets associated with that contract (see note 3 (m)(ii)).

(q) Revenue and cost recognition

(i) Banking and finance business

Fees and commission income: Fees and commission income and expenses that are integral to the effective interest rate on a financial asset or liability are included in the measurement of the effective interest rate. Other fees and commission income, including account servicing fees, investment management fees, sales commission, placement fees and syndication fees, are recognised as the related services are performed. When a loan commitment is not expected to result in the draw-down of a loan, loan commitment fees are recognised on a straight-line basis over the commitment period. Other fees and commission expenses relate mainly to transaction and service fees, which are expensed as the services are received.

Interest income and expense: Interest income and expense are recognised on an accrual basis in profit or loss, taking into account the effective yield of the asset or an applicable floating rate. Interest income and expense include the amortisation of any discount or premium or other differences between the initial carrying amount of an interest bearing instrument and its amount at maturity calculated on an effective interest rate basis.

Trading gain/(loss), net: Trading gain/(loss) includes gains and losses arising from disposals of financial assets at fair value through profit or loss and available-for-sale and from trading derivatives.





(q) Revenue and cost recognition (continued)

(ii) Insurance business

Premium income: For short-term insurance contracts, premiums are recognised as revenue (earned premiums), net of premium ceded to reinsurer firms, proportionally over the period of coverage. The portion of premium received on in-force contracts that relates to unexpired risks at the reporting date is recognised as the reserve for unearned premiums that are calculated on a daily pro-rata basis. Premiums are shown before deduction of commissions and deferred acquisition cost, and are gross of any taxes and duties levied on premiums. For long-term insurance contracts, premiums are recognised as revenue when the premiums are due from the policyholders. Premiums received for long-term insurance contracts with discretionary participation feature (“DPF”) are recognised directly as liabilities.

Unearned premium reserve: Unearned premiums are those proportions of the premiums written in a period that relate to the period of risk subsequent to the reporting date for all short-term insurance policies. In accordance with the incumbent legislation on the computation of insurance contract liabilities, unearned premium reserve set aside for unexpired risks as at the reporting date has been computed on daily pro-rata basis. The change in the provision for unearned premium is recognised in profit or loss in the order that revenue is recognised over the period of risk.

Claims and provision for outstanding claims: Claims are recognised in the period in which they occur, based on reported claims or on the basis of estimates when not reported. The claims provision is the total estimated ultimate cost of settling all claims arising from events, which have occurred up to the end of the accounting period. Full provision is accounted for outstanding claims, including claim settlements reported at the period-end. Incurred but not reported claims (“IBNR”) are also provided for under the provision for outstanding claims.

Liability adequacy test: At each reporting date, asset-liability adequacy tests are performed to ensure the adequacy of the contract liabilities, net of related deferred acquisition cost. In performing these tests, current best estimates of future cash flows are used. Any deficiency is immediately charged to profit or loss.

Income generated from pension business: Revenue arising from asset management and other related services offered by one of the Group’s proportionately consolidated insurance joint venture are recognised in the accounting period in which the service is rendered. Fees consist primarily of investment management fees arising from services rendered in conjunction with the issue and management of investment contracts where the company actively manages the consideration received from its customers to fund a return that is based on the investment profile that the customer selected on origination of the instrument. These services comprise the activity of trading financial assets in order to reproduce the contractual services. In all cases, these services comprise an indeterminate number of acts over the life of the individual contracts.

Mathematical provisions: Mathematical provisions are the provisions recorded against the liabilities of the proportionately consolidated insurance joint venture to the beneficiaries of long-term life, health and individual accident policies based on actuarial assumptions. Mathematical provisions consist of actuarial mathematical provisions for long term insurance contracts, saving portion of the saving life products classified as investment contracts and related profit sharing reserves.






(ii) Insurance business (continued)

Actuarial mathematical provisions are calculated as the difference between the net present values of premiums written in return of the risk covered by the insurance joint venture and the liabilities to policyholders for long-term insurance contracts based on the basis of actuarial mortality assumptions as approved by the Republic of Turkey Prime Ministry Undersecretariat of Treasury, which are applicable for Turkish insurance companies.

Profit sharing reserves are the reserves provided against income obtained from asset backing saving life insurance contracts. These contracts entitle the beneficiaries of those contracts to a minimum guaranteed crediting rate per annum or, when higher, a bonus rate declared by the insurance affiliate from the eligible surplus available to date.

Mathematical provisions are presented under other non-current liabilities in the accompanying consolidated financial statements.

(iii) Construction contracts

Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and can be measured reliably. As soon as the outcome of a construction contract can be estimated reliably, contract revenue is recognised in profit or loss in proportion to the stage of completion of the contract. Contract expenses are recognised as incurred unless they create an asset related to future contract activity.

The stage of completion is assessed by reference to the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a contract is recognised immediately in profit or loss.

(iv) Commissions

When the Group acts in the capacity of an agent rather than as the principal in a transaction, the revenue recognised is the net amount of commission made by the Group.

(v) Rental income

Rental income from investment property is recognised as revenue on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease. Rental income from other property is recognised as other income.

(vi) Service concession arrangements

Inspection revenues and cost of revenues

Inspection revenues constitute fees charged to the customers for services rendered in the Vehicle Inspection Stations (“VIS”) through sub-operators. Such inspection fees are recognised as revenue in profit or loss at the date the service is provided. Until 15 August 2010, the cost of inspection revenues constitutes sub-operators’ share for their sub-operating activities which constitutes 63 percent of the inspection revenues and payments to the State for its share as provided in the Concession Agreement which constitutes 30 percent of the inspection revenues. After 15 August 2010, State share has increased to 40 percent as provided in the Concession Agreement and consequently, sub-operators’ share has decreased to 53 percent while the Group companies share has remained the same.






(vi) Service concession arrangements (continued)

Revenues from sub-operation fees and cost of revenues

The sub-operation fees are the payments made by the sub-operators to the Group for their use of the sub-operation rights in the manner and conditions set out in sub-operation agreements. The sub-operation fees are initially recognised as unearned revenue in the statement of financial position and then transferred to the profit or loss in the periods from the starting date of operations in the VIS until the end of the concession period. The sub-operation fees constitute a profit margin plus various costs of the Group to prepare the vehicles inspection stations for their intended use. Such costs represent the cost of the concession right paid by the Group and all other relevant expenditures including station construction, testing equipment, preparation of station personnel, setting-up sub-operation systems and related borrowing costs that are altogether considered as the cost of sub-operation fees.

Profit derived from the sub-operation fees is recognised in profit or loss from the starting date of operations in the vehicle inspection stations until the end of the concession period on a straight line basis.

Cost of sub-operation fees including depreciation expense of property and equipment of the vehicle inspection stations that are in operation and the amortization expense of the concession right, and the related station personnel expenses, among others are recognised as expense in the period in which the economic benefits associated with those cost items are consumed or expired.

(vii) Other businesses

Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sale is recognised.

Transfers of risks and rewards vary depending on the individual terms of the contract of sale. Revenue from services rendered is recognised in profit or loss in proportion to the stage of completion of the transaction at the reporting date.

(viii) Research and development costs

Expenditure on research activities is recognised in profit or loss when incurred.

(ix) Dividend income

Dividend income is recognised on the date that the Group’s right to receive payment is established, which in the case of quoted securities is the ex-dividend date.





(r) Government grants

Government grants are recognised initially as deferred income at fair value when there is reasonable assurance that they will be received and that the Group will comply with the conditions associated with the grant and are then recognised in profit or loss as other income on a systematic basis over the useful life of the asset. Grants that compensate the Group for expenses incurred are recognised in profit or loss as other income on a systematic basis in the same periods in which the expenses are recognised.

(s) Leases

(i) 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.

(ii) Determining whether an arrangement contains a lease

At inception of an arrangement, the Group determines whether such an arrangement is or contains a lease. The following two criteria must be met for a “lease”:

• the fulfilment of the arrangement is dependent on the use of a specific asset or assets; and • the arrangement contains a right to use the asset(s).

At inception or upon reassessment of the arrangement, the Group separates payments and other consideration required by such an arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Group concludes for a finance lease that it is impracticable to separate the payments reliably, an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. Subsequently the liability is reduced as payments are made and an imputed finance charge on the liability is recognised using the Group’s incremental borrowing rate.

(t) Finance income and finance costs

Finance income comprises interest income on funds invested, foreign currency gains, and gains on derivative instruments that are recognised in profit or loss. Interest income is recognised as it accrues, using the effective interest method.

Finance costs comprise interest expense on borrowings, foreign currency losses, and losses on derivative instruments that are recognised in profit or loss.

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

Foreign currency gains and losses are reported on a net basis as either finance income or finance cost depending on whether foreign currency movements are in a net gain or net loss position.

(u) Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.





(u) Income tax (continued)

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted by the reporting date.

In determining the amount of current and deferred tax the Group takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Group to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity.

A deferred tax asset is recognised for unused tax losses, tax credits and deductable temporary differences, to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Deferred taxes related to fair value measurement of available for sale assets and cash flow hedges are charged or credited to equity and subsequently recognised in profit or loss together with the deferred gains that are realised.

Deferred taxes related to revaluation surplus reserve are recognised in other comprehensive income in revaluation surplus on a net basis.

(v) Indemnification assets

Initial recognition

Indemnification assets are an exception to the recognition and measurement principles of IFRS 3. An acquirer recognises indemnification assets at the same time and measures them on the same basis as the indemnified item, subject to contractual limitations and adjustments for collectibility, if applicable.

The Group has the right to reimburse the provision for litigation and claims brought through the acquisition of Star TV to Alp Görsel İletişim Anonim Şirketi, the previous shareholder of Star TV, when such legal cases end against the favor of the Group and create a possible cash outlow.





(v) Indemnification assets (continued)

Subsequent measurement

Subsequent to initial recognition, the acquirer continues to measure an indemnification asset on the same basis as the related indemnified asset or liability and the revision in measurement of the provision due to the subsequent information will be recognized through the profit or loss in contrary of the effect leading the net effect on the consolidated profit or loss be equal to zero whereas the decreasing effect on the asset and liability side on the consolidated statement of financial position will be the same.

The initial and subsequent accounting for indemnification assets recognised at the acquisition date applies equally to indemnified assets and liabilities that are recognised and measured under the principles of IFRS 3 and those that are subject to exceptions to the recognition or measurement principles of IFRS 3.

If the amounts recognised by an acquirer for an indemnified liability and a related indemnification asset recognised at the acquisition date do not change subsequent to the acquisition and ultimately are settled at the amounts recognised in the acquisition accounting, then there will be no net effect on profit or loss providing that those amounts are the same.

(w) Items held in trust

Assets, other than cash deposits held by Garanti Bank and its subsidiaries in fiduciary or agency capacities for its customers and government entities, are not included in the accompanying consolidated statement of financial position, since such items are not under the ownership of Garanti Bank.

(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).





(y) Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are reviewed regularly by the CEO (“Chief Executive Officer”) and BOD members to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

(z) De-merger/ Spin off

Economically a de-merger represents a division of an entity into separate parts. The result of a de-merger is that the same shareholders own the same group of businesses; the shareholders structure and their ownership interests are identical both before and after the de-merger. In the absence of further guidance in IFRS, the Group has accounted the de-merger via book values.

(µ) 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 2011, and have not been applied in preparing these consolidated financial statements. The following standards and amendments are expected to affect the consolidated financial statements of the Group:

• Amendments to IAS 1 Presentation of Items of Other Comprehensive Income require that an entity present separatelythe items of other comprehensive income that would be reclassified to profit or loss in the future if certain conditions are met from those that would never be reclassified to profit or loss. The amendments are effective for annual periods beginning on or after 1 July 2012.

• IFRS 10 Consolidated Financial Statements supersedes IAS 27 (2008) and SIC-12 Consolidation-Special Purpose Entities and becomes effective for annual periods beginning on or after 1 January 2013.

• IFRS 11 Joint Arrangements supersedes IAS 31 and SIC-13 Jointly Controlled Entities-Non-Monetary Contributions by Venturers and becomes effective for annual periods beginning on or after 1 January 2013.

• IFRS 12 Disclosure of Interests in Other Entities contains the disclosure requirements for entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities and becomes effective for annual periods beginning on or after 1 January 2013.

• IFRS 13 Fair Value Measurement replaces the fair value measurement guidance contained in individual IFRSs with a single source of fair value measurement guidance and becomes effective for annual periods beginning on or after 1 January 2013.

• IAS 27 Separate Financial Statements (2011) supersedes IAS 27 Consolidated and Separate Financial Statements (2008) and becomes effective for annual periods beginning on or after 1 January 2013.

• IAS 28 Investments in Associates and Joint Ventures (2011) supersedes IAS 28 Investments in Associates (2008) and becomes effective for annual periods beginning on or after 1 January 2013.

• IFRS 9 Financial Instruments could change the classification and measurement of financial assets and becomes effective for annual periods beginning on or after 1 January 2015.

The Group does not plan to adopt these standards early and the extent of the impact has not been determined yet.




4 Determination of fair values

A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

(a) Property and equipment

The fair value of property and equipment recognised as a result of a business combination is the estimated amount for which a property could be exchanged based on market values. The market value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably.

The Group reflects land and buildings at their fair values as appraised by independent third party appraisers. The fair values of land and buildings are determined based on the discounted cash flow method, depreciable replacement cost or market prices for similar items.

(b) Intangible assets

The fair values of intangible assets, which comprise the broadcasting rights, concession rights for marina management, customer relationship and brand names acquired in business combinations, are based on the discounted cash flows expected to be derived from the use and eventual sale of the assets.

(c) Investment property

External, independent valuation companies, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued, values the Group’s investment property portfolio every year. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably and willingly.

In the absence of current prices in an active market, the valuations are prepared by considering the aggregate of the estimated cash flows expected to be received from renting out the property. A yield that reflects the specific risks inherent in the net cash flows then is applied to the net annual cash flows to arrive at the property valuation.

Valuations reflect, when appropriate; the type of tenants actually in occupation or responsible for meeting lease commitments or likely to be in occupation after letting vacant accommodation, the allocation of maintenance and insurance responsibilities between the Group and the lessee; and the remaining economic life of the property. When rent reviews or lease renewals are pending with anticipated reversionary increases, it is assumed that all notices and when appropriate counter-notices have been served validly and within the appropriate time.

(d) Inventories

The fair value of inventories acquired in a business combination is determined based on its estimated selling price in the ordinary course of business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventories.




4 Determination of fair values (continued)

(e) Investments in equity and debt securities

The fair value of financial assets at fair value through profit or loss, held-to-maturity investments and available-for-sale financial assets is determined by reference to their quoted bid price at the reporting date. The fair value of held-to-maturity investments is determined for disclosure purposes only.

(f) Trade and other receivables

The fair value of trade and other receivables, excluding construction work in progress, is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. The fair value is determined for disclosure purposes or when such assets are acquired through a business combination.

(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.

Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Group entity and counterparty when appropriate.

(h) Non-derivative financial 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 Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risks, and the Group’s management of capital. Further quantitative disclosures are included throughout these consolidated financial statements.

Risk management framework

Enterprise Risk Management (“ERM”) efforts have been initiated by Doğuş Group since 2006 and these efforts have been executed by Doğuş Holding Risk Management Department. Risk Management activities are conducted by a realistic organizational structure and it is fully supported with the commitment of top level management, so that the Group is pioneer in risk management activities in Turkish business environment.

In 2010, by the Risk and Audit Committee decision, Group companies created their own Risk Management departments. Now, Doğuş Holding Risk Management works even more closely with the Group companies’ Risk Management departments to establish a standardized ERM system and obtain accurate information to assess and evaluate the risk taking processes. In addition to establishing an independent reporting infrastructure for Group companies, group-wide awareness for different types of risks and risk management strategies is ensured by periodical risk roundtables, workshops, dashboards and reports throughout the organization.

ERM is applied in all Group companies so that all risk is managed effectively within the Group in accordance with the predetermined risk management strategy, framework and the risk model. ERM is implemented based on an internal framework employing internationally accepted standards and best practices from around the world. This framework is customized according to the needs and structure of the Group’s businesses.

ERM activities are executed throughout the Group in the following fields:

• Determining risk management standards and policies,

• Developing group-wide culture and capabilities,

• Conducting risk analysis of existing and potential investments,

• Creating an executive reporting channel of new investments,

• Determining risk levels, limits and action plans,

• Supporting the implementation of these action plans,

• Enhancing strategic processes with a risk management approach.

Doğuş Holding’s CEO has the ultimate responsibility for ERM and Doğuş Holding’s Risk Management Department is under the supervision of Doğuş Holding’s CEO and the Risk and Audit Committee which functions under the Board of Directors.

The Risk and Audit Committee is responsible for assessing the risk appetite of the shareholders. Additionally, this committee provides guidance to adjust risk levels where needed. Each sector has its own risk committee.




5 Financial risk management (continued)

(a) Overview (continued)

Risk management framework (continued)

Furthermore, internal audit activities performed by Doğuş Holding Internal Audit Department are also implemented on a risk-based perspective, and the risk management performance is assessed throughout the organization with well defined key performance indicators.

(b) Risk management framework for the corporate segments

(i) Automotive

Corporate Risk Management, which was established to define the uncertainties affecting DOAŞ; to manage the DOAŞ’s risk-taking profile and provide reasonable assurance to reach its corporate goals; has an effective structure, which is influenced by employees, top management and the Board of Directors and utilised in terms of setting strategies and applied throughout the organization. The Risk Management Committee, an ancillary to and appointed with full responsibility by the Board of Directors is tasked with advising on and coordinating the risk management praxis. Risks that are handled in terms of likelihood, impact and process are classified as financial, operational, strategic and external risks. The Board of Directors and the Audit and Risk Committee are briefed by Executive Board Presidency within the context of risk management by means of which all the risks that are monitored as per their contents by the related departments and General Directorate of Financial and Administrative Affairs. The department systematically audits and monitors processes and control activities corresponding to own targets defined which rely upon the audit plan that is risk-based and annually approved by the Board of Directors. The Audit and Risk Committee, constituted from the members of the Board of Directors and the Executive Committee, acts in compliance with the Audit and Risk Committee Charter. This committee assists the Board of Directors’ oversight role in accounting, auditing, internal control system and financial reporting applications.

(ii) Construction

Risk organization

The Board of Doğuş İnşaat has established a Risk Committee in 2009 to have a better view over risks and implement the enterprise-wide risk management process within the construction group. The Risk Committee shall be accountable to the Board and shall advise the Board on risk management, aiming to manage risks in a more systematic manner and foster a risk culture within the company. The management of the company has the overall responsibility for the establishment and oversight of the risk management framework. In January 2010, Doğuş İnşaat Risk Management Department has been established and assigned to managing risk management processes.

Risk management vision

Risk management vision of Doğuş İnşaat is defined as, identifying and monitoring risks and opportunities that will impact the corporate objectives, managing risks and uncertainties in the most effective and efficient manner and in line with the shareholders’ risk appetite, and proactively implementing the most appropriate response to risk.

Risk policies and procedures

Doğuş İnşaat’s risk management policies and procedures are established to identify and analyze the risks faced by the company, to set up appropriate risk limits and controls, and to monitor risks, responses, and adherence to such limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and Doğuş İnşaat’s activities.

Risks are identified and managed at three levels: i) corporate level ii) business process level and iii) project level. Risks are discussed at monthly Risk Committee meetings with management and monitored by regular reports.





(b) Risk management framework for the corporate segments (continued)

(iii) Media

The Board of Directors has overall responsibility for establishment and oversight of the Media’s risk management framework. In January 2010, Internal Audit and Risk Management Department was established with the decision of the Board. This will strengthen focus on corporate risk management throughout the Media by developing methodology as well as centralizing risk management operations.

(iv) Tourism

Doğuş Tourism Group has started to develop a risk management process to strengthen the internal controls and focus on risk assessment at the strategic level of the business. Within this perspective, Doğuş Tourism Group has selected an internationally accepted internal control model and built a framework to operationalise the selected model in the organization.

The risk management framework consists of five interrelated components derived from the way management runs the business process: control environment, risk assessment, control activities, information and communication and monitoring.

(v) Real Estate, Energy and Marina

Doğuş Holding’s Risk Management Department gives support to ensure the application of risk management processes in the Real Estate, Energy and Marina businesses.

(c) Risk management framework for the banking and finance segment

Developing risk management policies and strategies, and controlling these functions are among the responsibilities of Garanti Bank Board of Directors. Consequently, the Risk Management Department, which carries out the risk management activities and works independently from executive activities, report directly to the Board of Directors of Garanti Bank.

Garanti Bank’s Board of Directors monitors the effectiveness of the risk management system through the audit committee, other related committees and senior management.

The senior management is responsible for applying risk policies, principles and application procedures approved by the board of directors, ensuring timely and reliable reporting to the Board of Directors about the important risks identified, assessing internal control, internal audit and risk reports prepared for departments and either eliminating risks, deficiencies or defects identified in these departments or taking the necessary precautions to prevent those and participating in determination of risk limits.

Garanti Bank’s risk management policy is established on its maintainable long term, value adding growth strategy. This policy is measuring risks with the methods in compliance with its activities and international standards, and optimal allocation of economic capital to business lines considering the risk-return balance.

The risk management system consists of all the mechanisms related to establishment of standards, information flow, determination of the compliance with standards, decision making and applications processes; which were put into practice by the Board of Directors of Garanti Bank in order to monitor, control and change when deemed necessary the risk-return structure and the future cash flows of Garanti Bank and its subsidiaries and the quality and the level of related activities.

The risks are measured with the internationally accepted methodologies in compliance with local and international regulations, Garanti Bank’s structure, policy and procedures. The risks are assessed in a continuously developing manner. Garanti Bank, through its training and management standards and procedures, aims to manage those risks effectively. At the same time, studies for compliance with the international banking applications, such as Basel II, are carried out.





(c) Risk management framework for the banking and finance segment (continued)

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 periodically reviews the current written policies and implementation procedures regarding management of each risk encountered in its activities.

Garanti Bank has purchased an integrated software system to place better risk management and Basel II applications in order to support and improve risk management activities. Garanti Bank aims to establish the Basel II applications in line with the BRSA’s roadmap.

(i) Audit Committee

The Audit Committee consists of two members of the Board of Directors of Garanti Bank who do not have any executive functions. The Audit Committee, which was established to assist the Board of Directors of Garanti Bank in its auditing and supervising activities, is responsible for:

• Monitoring the effectiveness and adequacy of Garanti Bank’s internal control, risk management and internal audit systems, operation of these systems and accounting and reporting systems in accordance with applicable regulations and the integrity of resulting information;

• Performing the preliminary studies required for the election of independent audit firms and regularly monitoring their activities;

• Ensuring that the internal audit functions of subsidiaries are performed in a consolidated and coordinated manner.

(ii) Liquidity Risk Management Committee

The Liquidity Risk Management Committee is responsible for:

• Determining the excess liquidity that Garanti Bank holds in foreign currencies;• Periodically monitoring the liquidity report and early-warning parameters;• Determining the stress level of Garanti Bank; monitoring internal and external factors that might affect Garanti Bank’s

liquidity in case of a liquidity crisis;• Ensuring that the action plan aligned with the Liquidity Crisis Plan is properly implemented;• Determining measures required by Garanti Bank’s customer confidence, cost of funding and key liquidity increasing

strategies, and ensuring internal communication and coordination with regard to the implementation of committee decisions.

(iii) Other committees

Market, credit and operational sub-risk committees have been established in order to facilitate exchange of information and views with the relevant units of Garanti Bank and to promote the use of risk management and internal audit systems within Garanti Bank.

(iv) Derivative financial instruments

Garanti Bank and its subsidiaries enter into a variety of derivative financial instruments for hedging and risk management purposes. This note describes the derivatives used. Further details of the objectives and strategies in the use of derivatives are set out in the sections of this note on non-trading activities. Details of the nature and terms of derivative instruments outstanding at the reporting dates are set out in Note 41. 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.





(c) Risk management framework for the banking and finance segment (continued)

(iv) Derivative financial instruments (continued)

A description of the main types of derivative instruments used is set out below:

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, bond, equity index, interest rate options, not only vanilla options but also exotic 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.

(v) 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 reporting date from financial instruments held or issued for trading purposes is represented by the fair value of instruments with a positive fair value at that date, as recorded on the consolidated statement of financial position. Notional amounts disclosed in the notes to the consolidated financial statements do not represent the amounts to be exchanged by the parties to derivatives and do not measure the exposure to credit or market risks. The amounts to be exchanged are based on the terms of the derivatives.

The risk that counterparties to trading instruments might default on their obligations is monitored on an ongoing basis. In monitoring credit risk exposure, consideration is given to trading instruments with a positive fair value and to the volatility of the fair value of trading instruments. To manage the level of credit risk, Garanti Bank and its subsidiaries deal with counterparties of good credit standing, enter into master netting agreements whenever possible, and when appropriate, obtain collateral. Master netting agreements provide for the net settlement of contracts with the same counterparty in the event of default.

Garanti Bank and its subsidiaries are subject to credit risk through their trading, lending, hedging and investing activities and in cases where they act as intermediaries on behalf of customers or other third parties or issues guarantees.

Credit risk associated with trading and investing activities is managed through Garanti Bank’s market risk management process.

Garanti Bank and its subsidiaries’ primary exposures to credit risk arise through their loans and advances. The amount of credit exposure in this regard is represented by the carrying amounts of these assets on the consolidated statement of financial position. Garanti Bank developed a statistical-based internal risk rating model for its credit portfolio of corporate/commercial/medium-sized companies. This internal risk rating model has been in use for customer credibility assessment since 2003 and is currently being reviewed and updated. 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 consolidated statement of financial position. In addition, Garanti Bank and its subsidiaries are exposed to off statement of financial position credit risk through guarantees issued (Note 41).

The risk that counterparties to both derivative and other instruments might default on their obligations is monitored on an ongoing basis. To manage the level of credit risk, Garanti Bank and its subsidiaries deal with counterparties of good credit standing, enter into master netting agreements whenever possible, and when appropriate, obtain collateral.

Concentrations of credit risk (whether on or off statement of financial position) that arise from financial instruments exist for groups of counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions.

Impaired loans

Impaired loans are those which Garanti Bank determines that it is probable that it will be unable to collect all principal and interest due according to the contractual terms of the loan agreement due to lack of assets, high debtness ratio, insufficient working capital and/or equity of the customer.





(d) Credit risk (continued)

(i) Banking and finance segment (continued)

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.

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 Bank’s policy is to require suitable collateral to be provided by certain customers prior to the disbursement of approved loans. Garanti Bank and its subsidiaries currently hold collateral against banking loans and advances to customers in the form of mortgage interests over property, other registered securities over assets and guarantees. Collateral generally is not held over banking loans and advances to banks, except when securities are held as part of reverse repurchase and securities borrowing activity. Collateral usually is not held against investment securities, and no such collateral was held at 31 December 2011 and 2010.

Approximately 74 percent (2010: 71 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 83 percent (2010: 83 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 Group’s receivables from customers and investment securities.

Accounts receivable

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer of the segments other than banking and finance. The demographics of the Group’s customer base, including the default risk of the industry and country in which customers operate has an influence on credit risk. Since the Group operates in construction, automotive, media, real estate and tourism businesses, geographically the concentration of credit risk for the Group’s entities operating in the mentioned businesses are mainly in Turkey.

Majority of accounts receivable in the automotive business segment is 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 company’s standard payment and delivery terms and conditions are offered.





(d) Credit risk (continued)

(ii) Other corporate segments (continued)

Accounts receivable (continued)

In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are a dealer, tourism agency, retail or end-user customer, geographic location, industry, aging profile, maturity and existence of previous financial difficulties. The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of accounts receivable. The component of this allowance is a specific loss component that relates to individually significant exposures.

The Group establishes an allowance for impairment losses that represent its estimate of incurred losses in its receivables portfolio. The Group sets impairment for its receivables if there is objective evidence that the Group will not be able to collect all amounts due. The amount of the provision is the difference between the carrying amount and the recoverable amount, being the present value of all cash flows, including amounts recoverable from guarantees and collateral discounted based on the original effective interest rate of the originated receivables at inception.

Guarantees

In general terms, the Group’s policy is to provide guarantees to its Group entities in terms of sureties, letters of guarantee in the nature of the businesses that each entity operates.

(e) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.


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’s approach to managing liquidity is to ensure, as for as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Garanti Bank’s reputation. Funds are raised using a broad range of instruments including deposits, syndications, securitisations, bonds issuance, other funding sources and share capital. This enhances funding flexibility, limits dependence on any one source of funds and generally lowers the cost of funds. Garanti Bank strives to maintain a balance between continuity of funding and flexibility through the use of liabilities with a range of maturities. Liquidity risk is continuously assessed through identifying and monitoring changes in funding required for meeting business goals and targets set in terms of the overall strategy. In addition, a portfolio of liquid assets is held as a part of Garanti Bank’s liquidity risk management strategy.

Exposure to liquidity risk

The calculation method used to measure Garanti Bank’s compliance with the liquidity limit is set by BRSA. Currently, this calculation is performed on a bank only basis. In November 2006, BRSA issued a new communiqué on the measurement of liquidity adequacy of banks. The legislation requires the banks to meet minimum 80 percent liquidity ratio of foreign currency assets/liabilities and minimum 100 percent liquidity ratio of total assets/liabilities on a weekly and monthly basis effective from 1 June 2007.





(e) Liquidity risk (continued)


Exposure to liquidity risk (continued)

Garanti Bank’s liquidity ratios for 2011 and 2010 are as follows:

2011 First Maturity Bracket (Weekly) Second Maturity Bracket (Monthly)

FC FC + TL FC FC + TL

Average (%) 135.89 148.57 94.32 109.14

2010 First Maturity Bracket (Weekly) Second Maturity Bracket (Monthly)

FC FC + TL FC FC + TL

Average (%) 123.99 203.09 89.16 129.40

Garanti Bank’s banking subsidiary in the Netherlands is subject to a similar liquidity measurement, however the Dutch Central Bank does not impose limits, rather monitors the banks’ overall liquidity position to ensure there is no significant deterioration in the liquidity of banks operating in the Netherlands.

Garanti Bank’s banking subsidiary in Russia is subject to three levels of liquidity requirement; instant liquidity of minimum 15 percent, current liquidity of minimum 50 percent and long-term liquidity of maximum 120 percent.

Garanti Bank’s banking subsidiary in Romania calculates the liquidity ratio as a ratio of total effective liquidity in local currency equivalent to total necessary liquidity in local currency equivalent which should be greater than 1.


Typically, the Group entities operating under other corporate segments ensure that they have sufficient cash on demand to meet expected operational expenses in terms of the relevant characteristics of the businesses they operate, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

For the entities operating under automotive business segment, risk of funding current and potential requirements is mitigated by ensuring the availability of adequate number of creditworthy lending parties. Entities operating under automotive business segment, in order to minimize liquidity risk, hold adequate cash and available line of credit (including factoring capacity).

(f) Market risk


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 trading gain/(loss), net.

Garanti Bank and its subsidiaries manage their use of trading instruments in response to changing market conditions.





(f) Market risk (continued)


Market risks arising from trading transactions are measured by internal risk measurement model using (“VaR”) methodology. In the VaR calculations, trading and available-for-sale portfolios are taken into account. VaR is calculated by three different methods, namely historical simulation, Monte Carlo simulation and parametric method. Garanti Bank takes the historical VaR results as the basis for the internal management of market risk and determination of limits. The calculations made according to other two methods are used for comparison and monitoring purposes. In the VaR calculation, one year historical market data set is used, and 99 percent confidence interval and one-day retention period are taken into account. In order to test the reliability of the VaR model, back tests are performed. Stress tests and scenario analysis are also applied in order to reflect the effects of prospective severe market fluctuations in the VaR calculations.

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 capital requirement for general market risk and specific risks is calculated using the standard method defined by the “Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks” as set out by the BRSA and reported monthly.

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 TL, the consolidated financial statements are affected by currency exchange rate fluctuations against TL.

Garanti Bank finances a significant portion of its net investment in foreign operations with borrowings in the same currencies as the relevant measurement currencies to mitigate its currency risk. Currency swaps are also used to match the currency of some of its other borrowings to the measurement currencies involved.

Garanti Bank and its subsidiaries’ transactional exposures give rise to foreign currency gains and losses that are recognised in profit or loss. These exposures comprise the monetary assets and monetary liabilities that are not denominated in the measurement currency of Garanti Bank involved.

The short positions in the consolidated statement of financial position of Garanti Bank and its subsidiaries are hedged by currency swaps, forward contracts and other derivatives entered into to manage these currency exposures. In respect of monetary assets and liabilities in foreign currencies that are not economically hedged, Garanti Bank and its subsidiaries ensure that their net exposures are kept to an acceptable level by buying and selling foreign currencies at spot rates when considered appropriate.







Interest rate risk

Garanti Bank and its subsidiaries’ operations are subject to the risk of interest rate fluctuations to the extent that interest-earning assets (including investments) and interest-bearing liabilities mature or reprice at different times or in differing amounts. In the case of floating rate assets and liabilities, Garanti Bank and its subsidiaries are also exposed to basis risk, which is the difference in repricing characteristics of the various floating rate indices, such as the deposit rate and libor and different types of interest. Treasury activities are aimed at optimizing net interest income, given market interest rate levels consistent with Garanti Bank’s business strategies.

Asset-liability risk management activities are conducted in the context of Garanti Bank’s sensitivity to interest rate changes. In general, as common in current economic environment, the consolidated financial statements are liability sensitive because its interest-earning assets have a longer duration and reprice slightly less frequently than interest-bearing liabilities. This means that in rising interest rate environments, margins earned will narrow as liabilities reprice. However, the actual effect will depend on a number of factors, including the extent to which repayments are made earlier or later than the contracted dates and variations in interest rate sensitivity within repricing periods and among currencies.

Interest rate derivatives are primarily used to bridge the mismatch in the repricing of assets and liabilities. This is done in accordance with the guidelines established by Garanti Bank’s Assets and Liabilities Management Committee.

Some assets have no defined maturities or interest rate sensitivities and are not readily matched with specific liabilities. Those assets are funded through liability pools based on the assets’ estimated maturities and repricing characteristics.

Part of Garanti Bank’s return on financial instruments is obtained from controlled mismatching of the dates on which interest receivable on assets and interest payable on liabilities are next reset to market rates or, if earlier, the dates on which the instruments mature.

The interest rate risk of the statement of financial position is monitored with methods such as static duration, gap and sensitivity analysis.







Interest rate risk (continued)

As a part of the duration-gap analysis, Garanti Bank-only sensitivity analysis for a +/-1 point change in the present values of interest sensitive statement of financial position items excluding trading and available-for-sale portfolios and for a +/-5 point change in the foreign currency exchange rates used for foreign currency position and derivative transactions is provided in the table below:

31 December 2011 31 December 2010Sensitivity analysis for TL interest rates:

Stress applied Change in

portfolio valueChange in

portfolio value(+) 1 % (31,222) (37,608)(-) 1 % 32,209 38,627Sensitivity analysis for FC interest rates:

Stress applied Change in

portfolio valueChange in

portfolio value(+) 1 % (73,641) (69,815)(-) 1 % 81,376 77,117

Sensitivity analysis for FX rates:

Stress applied Change in foreign exchange result

Change in foreign exchange result

(+) 5 % (1,626) (3,035)(-) 5 % 4,641 9,378

There are internal limits set to manage interest rate risk for non-trading portfolios approved by the Board of Directors of Garanti Bank. The structural interest rate risk limit is calculated based on the present value change in interest rate sensitive assets and liabilities, except trading portfolio, resulting from stress test applied as predefined point increase for interest rates. The single transaction limits are defined for asset-liability management dealers.

The consolidated value at market risks as at 31 December calculated as per the statutory consolidated financial statements of Garanti Bank and its subsidiaries prepared for BRSA reporting purposes within the scope of “Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks” published in Official Gazette no.26333 dated 1 November 2006, are as follows:

2011 2010Average Highest Lowest Average Highest Lowest

Interest rate risk 935,196 1,028,913 711,156 1,115,381 1,223,507 977,637Common share risk 40,324 69,461 23,079 66,874 74,878 58,730Currency risk 314,560 566,340 130,602 206,543 269,571 142,162Option risk 256,533 447,599 100,670 115,609 149,499 68,664Commodity risk 4,281 14,059 - - - - - - - -Total value at risk 1,550,894 2,126,372 965,507 1,504,407 1,717,455 1,247,193







Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Currency 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 USD, but also Euro, Swiss Francs (“CHF”), Sterling (“GBP”), Libyan Dinar (“LYD”), Japanese Yen (“JPY”), Croatian Kuna (“HRK”), Romanian Leu (“RON”) and Ukranian Hryvnia (“UAH”). The currencies in which these transactions primarily are denominated are TL, Euro and USD.

In respect of other monetary assets and liabilities denominated in foreign currencies, the Group ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.

The Group is exposed to currency risk through the impact of rate changes on the translation of foreign currency denominated payables and bank borrowings from financial institutions. Such risk is monitored by the Board of Directors and limited through taking positions within approved limits as well as using derivative instruments where necessary.

To minimize risk arising from foreign currency denominated statement of financial position items, the Group sometimes utilises derivative instruments as well as keeping part of its idle cash in foreign currencies.

(g) Operational risk


Operational risk expresses the probability of loss that may arise from the overlook of faults and inconsistency with the established rules due to the deficiencies in Garanti Bank and its subsidiaries’ internal controls, manner of the management and the personnel that are not in coherence with time and conditions, deficiencies in the bank management, faults and problems in information technology systems and disasters such as earthquake, fire, flood or terror attacks.

The operational risk items in Garanti Bank are determined in accordance with the definition of operational risk by considering Garanti Bank’s whole processes, products and departments. The control areas are set for operational risks within Garanti Bank and all operational risks are followed by assigning the risks to these control areas. In this context, appropriate monitoring methodology is developed for each control area that covers all operational risks and control frequencies are determined.

Currently, the value at operational risk is calculated according to the basic indicator approach as per the Article 14 of “Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks” as pronounced by BRSA.

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.





(g) Operational risk (continued)


Capital management – regulatory capital

BRSA sets and monitors capital requirements for Garanti Bank as a whole. The parent company and individual banking operations are directly supervised by their local regulators. In implementing current capital requirements, BRSA requires the banks to maintain a prescribed ratio of minimum 8 percent of total capital to total value at credit, market and operational risks. Garanti Bank and its subsidiaries’ consolidated regulatory capital is analysed into two tiers:

• Tier 1 capital, which includes paid-in capital, share premium, legal reserves, retained earnings, translation reserve and non-controlling interest after deductions for goodwill and certain cost items.• Tier 2 capital, which includes qualifying subordinated liabilities, general impairment allowances and the element of the fair value reserve relating to unrealised gain/loss on assets classified as available-for-sale.

Banking operations are categorised as either trading book or banking book, and risk-weighted assets are determined according to specified requirements that seek to reflect the varying levels of risk attached to assets and off-statement of financial position exposures.

Garanti Bank’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The impact of the level of capital on shareholders’ return is also recognised and Garanti Bank recognises the need to maintain a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by a sound capital position. There have been no material changes in the Garanti Bank’s management of capital during the period.

Garanti Bank and its individually regulated operations have complied with externally imposed capital requirements throughout the period.

Garanti Bank’s and its subsidiaries’ regulatory capital position on a consolidated basis as at 31 December is as follows:

2011 (*) 2010 (*)

Tier 1 capital 4,316,469 4,530,106Tier 2 capital 519,057 711,899Deductions from capital (19,176) (32,137)Total regulatory capital 4,816,350 5,209,868

Value at credit, market and operational risks 30,563,181 28,835,831

Capital ratios (%)Total regulatory capital expressed as a percentage of total value at credit, market and operational risks 15.76 18.07Total tier 1 capital expressed as a percentage of total value at credit, market and operational risks 14.12 15.71

(*) The amounts are presented in terms of proportionate ownership interest of the Group.





(g) Operational risk (continued)


Hedging

Due to Garanti Bank and its subsidiaries’ overall interest rate risk position and funding structure, its risk management policies require that it should minimize its exposure to changes in foreign currency rates and manage interest rate, credit risk and market price risk exposure within certain guidelines. Derivative financial instruments are used to manage the potential earnings impact of interest rate and foreign currency movements. Several types of derivative financial instruments are used for this purpose, including interest rate swaps and currency swaps, options, financial futures, forward contracts and other derivatives. The purpose of the hedging activities is to protect Garanti Bank and its subsidiaries from the risk that the net cash inflows will be adversely affected by changes in interest or exchange rates, credit ratings or market prices. Garanti Bank and its subsidiaries enter into transactions to ensure that they are economically hedged in accordance with risk management policies. In the accompanying consolidated financial statements, hedge accounting is applied for the cases where hedge accounting relationship is evidenced.

Garanti Bank entered into various interest rate swap transactions in order to hedge its certain cash flow and fair value exposures on floating/fixed rate assets and liabilities, through converting its floating/fixed rate income/payments into fixed/floating rate income/payments. The following table includes certain characteristics of the swap transactions outstanding as at 31 December:

2011

Notional amountFixed payer

rate % Floating payer rate %Fixed payment

frequency MaturityUSD 6.6 million 3.35 3-month libor + 0.40 Quarterly 2012USD 35.9 million 6.25 6-month libor + 2.61 Semi-annual 2021USD 47.9 million 6.25 6-month libor + 2.61 Semi-annual 2021USD 35.9 million 6.25 6-month libor + 2.61 Semi-annual 2021

2010

Notional amountFixed payer

rate % Floating payer rate %Fixed payment

frequency MaturityUSD 16.6 million 3.35 3 month libor + 0.40 Quarterly 2012

Garanti Bank has applied fair value hedge accounting for the fixed rate eurobonds issued in 2011 with a total face value of USD 119.8 million (Group share) with maturity of 10 years and maturity date of 20 April 2021 which were priced at 6.375 percent originally and had a coupon rate of 6.25 percent, by designating interest rate swaps with the same face value amount and conditions.

(ii) Other corporate segmentsDue to the Group’s overall interest rate risk position and funding structure, its risk management policies require that it should minimize its exposure to changes in interest rate. Derivative financial instruments are used to manage the potential earnings impact of interest rate and foreign currency movements. Several types of derivative financial instruments are used for this purpose, including interest rate swaps and currency swaps, options, financial futures, forward contracts and other derivatives. The purpose of the hedging activities is to protect the Group from the risk that the net cash inflows will be adversely affected by changes in interest rates.




6 Operating segments

The Group has five reportable segments, as described below, which are largely organised and managed separately according to nature of products and services provided, distribution channels and profile of customers.

Almost each entity included in the Group operates in one specific industry. Accordingly, all the financial statement components of an entity concerned are considered related only to its specific industry.

The Group’s main business segments are as follows:

Banking and finance: Entities operating in the banking and finance segment are mainly involved in retail banking, insurance, leasing and factoring businesses.

Construction: Entities operating in the construction segment are mainly involved in the constructions of buildings, infrastructure and related civil engineering businesses.

Automotive: Entities operating in the automotive segment are exclusively involved in the importation, distribution and retailing of Volkswagen, Audi, Seat, Porsche, Bentley, Scania, Lamborghini, Krone and Meiller brand motor vehicles and spare parts and after sales services, and vehicle inspection services in Turkey.

Tourism: Entities operating in the tourism segment are involved in hotel and marina investments, hotel management, ticket sales, hotel reservation, and tour/conference organisation services.

Others: Entities operating in other operations segment are mainly involved in media, real estate, energy and several service businesses. Doğuş 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, Luxembourg, Switzerland, Germany, Romania, Morocco, Ukraine, Bulgaria, Libya and Croatia. In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of the assets.

As at and for the years ended 31 December, total geographical sector risk concentrations, both on and off statement of financial position, are presented below:

2011

Banking loans and advances to customers Total assets

Total liabilities

Non-cash loans

Capital expenditure

Turkey 20,042,038 41,163,234 28,982,331 4,236,994 1,451,488

Romania 781,961 1,276,670 310,707 54,599 5,307

The Netherlands 228,693 573,543 901,588 76,923 565

Malta 150,386 1,346,785 102,736 35 - -

Switzerland 117,951 120,600 666,240 199,499 - -

Russia 111,600 452,611 114,416 23,537 167

USA 65,726 648,367 1,800,826 164,321 - -

United Kingdom 61,295 2,008,426 4,125,353 46,390 - -

Germany 7,593 535,425 1,331,830 27,142 12

Others 199,316 3,021,777 2,596,549 421,781 74,63021,766,559 51,147,438 40,932,576 5,251,221 1,532,169




6 Operating segments (continued)

6.1 Geographical segments (continued)

2010

Banking loans and advances to customers Total assets

Total liabilities

Non-cash loans

Capital expenditure

Turkey 19,331,172 43,312,172 29,885,552 3,937,477 792,724

Romania 868,237 1,047,576 234,350 16,216 18,310

The Netherlands 284,850 527,369 819,271 74,046 499

Malta 109,782 333,771 482,006 53 - -

Switzerland 106,855 166,997 349,518 160,170 3,126

Russia 78,294 434,990 89,394 15,807 10,321

United Kingdom 53,168 1,718,479 3,926,039 63,482 - -

USA 25,166 476,874 1,868,807 225,815 - -

Germany 3,555 406,151 1,302,329 28,407 37

Others 129,295 861,551 2,347,909 362,299 - -

20,990,374 49,285,930 41,305,175 4,883,772 825,017

6.2 Major customers

As at 31 December 2011 and 2010, there is not any single external customer which comprises more than 10 percent of the Group’s consolidated revenue.


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6.4 Interests in joint ventures

As explained under accounting policy 3a, interests in joint ventures are proportionately consolidated in the accompanying consolidated financial statements.

As at 31 December, the Group’s share in the assets and liabilities of the joint ventures using the proportionate consolidation method is as follows:

2011Banking

and finance Construction Automotive Tourism Other

Total assets 38,847,053 281,251 475,548 - - 661,647Total liabilities 34,190,398 179,271 375,078 - - 434,195

2010Banking

and finance Construction Automotive Tourism Other

Total assets 41,046,879 468,473 499,792 28,913 296,793Total liabilities 35,843,896 326,928 398,718 12,805 150,735

For the years ended 31 December, the Groups’ share in the profit or loss of the joint ventures using the proportionate consolidation method is as follows:

2011

Banking and finance Construction Automotive Tourism Other

Profit/(loss) for the year 878,480 (10,725) (5,939) (369) (41,534)

2010

Banking and finance Construction Automotive Tourism Other

Profit/(loss) for the year 1,035,458 15,614 438 (4,357) (1,521)





6.5 Non-cash (income)/expenses other than depreciation

Non-cash (income)/expenses other than depreciation for the year ended 31 December 2011 were as follows:

2011

Banking and

finance Construction Automotive Tourism Others TotalProvision for loans and lease receivables 193,507 - - - - - - - - 193,507

Written-off non-current receivables - - - - - - - - 145,307 145,307

Accrued interest and other accruals (24,319) 3,575 22,975 (1,917) 56,262 56,576Loss from written-off property and equipment, and inventory - - 44,487 - - - - - - 44,487Provision for and reversal of employee severance indemnity 24,814 3,718 6,208 1,065 5,644 41,449

Warranty provision expense - - - - 39,498 - - - - 39,498

Impairment in tangible assets - - - - 8,389 2,919 22,780 34,088Loss from deconstruction process of a hotel building - - - - - - 27,331 - - 27,331

Provision for general banking risk 27,216 - - - - - - - - 27,216

Amortisation of other intangible assets 3,274 85 18,225 394 2,442 24,420

Provision for doubtful receivables - - - - 592 427 7,323 8,342Insurance technical reserves and provisions 5,369 - - - - - - - - 5,369Fair value change in investment property - - - - - - (7,382) (258,832) (266,214)Recoveries of loan and lease receivables losses (134,095) - - - - - - - - (134,095)Fair value gain on trading property transferred to property and equipment - - - - - - - - (51,830) (51,830)

Reversal of impairment in tangible assets (11,386) - - - - - - - - (11,386)

Recoveries of doubtful receivables - - - - (161) (225) (1,037) (1,423)

Others 13,194 - - - - - - (1,260) 11,934

97,574 51,865 95,726 22,612 (73,201) 194,576





6.5 Non-cash (income)/expenses other than depreciation (continued)

Non-cash (income)/expenses other than depreciation for the year ended 31 December 2010 were as follows:

2010

Banking and

finance Construction Automotive Tourism Others Total

Provision for loans and lease receivables 242,113 - - - - - - - - 242,113

Accrued interest and other accruals 95,372 14,268 (30,228) 4,527 29,420 113,359

Impairment in tangible assets - - - - - - 42,552 - - 42,552

Warranty provision expense - - - - 31,154 - - - - 31,154

Amortisation of other intangible assets 3,671 - - 19,731 283 2,217 25,902

Provision for and reversal of employee severance indemnity 2,406 1,231 2,453 5,612 4,216 15,918

Insurance technical reserves and provisions 3,719 - - - - - - - - 3,719

Provision for doubtful receivables - - - - 247 110 2,144 2,501

Recoveries of loan and lease receivables losses (195,137) - - - - - - - - (195,137)

Fair value change in investment property - - - - - - - - (189,540) (189,540)

Reversal of impairment in tangible assets (3,008) - - - - (256) - - (3,264)

Recoveries of doubtful receivables - - - - - - (692) (718) (1,410)

Others 996 - - - - - - 755 1,751

150,132 15,499 23,357 52,136 (151,506) 89,618




7 Assets held for sale7.1 Non-current portion of assets held for sale

As at 31 December, non-current portion of assets held for sale comprised the following:

2011 2010

Non-current assets held for sale 30,573 33,218

30,573 33,218

As at 31 December 2011, TL 30,573 thousand (31 December 2010: TL 31,459 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 according to the Turkish Banking Law. This three-year period can be extended by a legal permission from the regulators. In case of real estate held for sale, this requirement is valid only if the legal limit on the size of the real estate portfolio that a bank can maintain is exceeded. Currently, as Garanti Bank is within this legal limit, it is not subject to the above requirement.

Impairment losses provided on real estate held for sale were determined based on the appraisals of independent appraisal firms. As at 31 December 2011, real estate held for sale has been impaired by TL 2,870 thousand (31 December 2010: TL 3,891 thousand).

As at 31 December 2011, the rights of repurchase on various tangible assets held for sale amounted to TL 1,502 thousand (31 December 2010: TL 1,903 thousand).

7.2 Disposal group held for sale

On 22 November 2011, the Group and Diana Otel Yatırımları ve İşletmeciliği Anonim Şirketi (“Diana Otel”) signed a pre-share sales agreement. According to this agreement, the Group has decided to sell its shares in Datmar, one of tourism segment subsidiaries, to Diana Otel. Following the commitment of the Group’s management, two touristic premises located in Side, Antalya, namely Aldiana Side (a holiday village) and Paradise Side Beach (an apart hotel) have been presented as a disposal group held for sale in the accompanying consolidated financial statements. Before classification as held for sale, assets in the disposal group have been measured in accordance with applicable IFRSs.

At 31 December, the disposal group comprised the following assets:

2011 2010

Property and equipment (*) 64,223 - -

64,223 - -

(*) As at 31 December 2011, property and equipment classified as held for sale comprise buildings amounting to TL 61,538 thousand, furniture and equipment amounting to TL 2,654 thousand and motor vehicles amounting to TL 31 thousand.

Cumulative income recognised in other comprehensive income

As at 31 December 2011, accompanying consolidated financial statements comprise revaluation surplus, net of tax amounting to TL 25,936 thousand related with disposal group classified as held for sale.




8 Acquisitions and disposal of ownership interests in jointly controlled entities8.1 Acquisition of additional interests in Doğuş GYO

According to share purchase agreement dated 12 November 2010, the Group decided to purchase shares with nominal value of TL 23,914 thousand in Doğuş-GE Gayrimenkul Yatırım Ortaklığı Anonim Şirketi (“Doğuş GE”), which was previously a proportionately consolidated joint venture with a proportion of effective interest of 30.05 percent held by the Group, representing 25.5 percent of the share capital from General Electric Capital Corporation for a consideration of USD 27,885 thousand (equivalent to TL 42,876 thousand). On 3 January 2011, the share transfer was finalised with a closing agreement and the Group obtained control by acquiring the additional 25.5 percent of shares in Doğuş GE.

The following summarises the major classes of consideration transferred and identifiable assets acquired and liabilities assumed at the acquisition date:

Consideration transferred Cash paid 42,876Total consideration 42,876

Identifiable assets acquired and liabilities assumed Investment property 6,505Property and equipment 104,822Intangible assets 7Other non-current assets 332Accounts receivables 10Other current assets 1,146Cash and cash equivalents 10,560Accounts payable (618)Other current liabilities (326)Total net identifiable assets 122,438

Bargain purchase gainBargain purchase gain has been recognised as a result of the acquisition as follows:

Total consideration transferred 42,876Non-controlling interest based on their proportionate interest in the recognised amounts of the assets and liabilities of the acquiree 77,804Less: Value of net identifiable assets (122,438)Bargain purchase gain (1,758)Cash consideration transferred 42,876Cash and cash equivalents acquired (10,560)Net cash outflow arising on acquisition 32,316

The bargain purchase gain arising from the difference between consideration transferred and the recognised amounts of identifiable assets acquired and liabilities assumed at the acquisition date is recognised under other income in profit or loss.




8 Acquisitions and disposal of ownership interests in jointly controlled entities (continued)

8.1 Acquisition of additional interests in Doğuş GYO (continued)

Subsequent to this transaction, in February 2011, the Group has purchased further additional shares from the publicly traded shares in İstanbul Stock Exchange with a total nominal value of TL 29,577 thousand representing 31.54 percent of the share capital of Doğuş GE for a total consideration of TL 55,010 thousand. Under IFRS 3, acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore no goodwill is recognised as a result. The adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary. Accordingly the effect of this transaction is recognised as an equity transaction in the accompanying consolidated financial statements.

Group’s ownership interest at 3 January 2011 97,234

Effect of increase in Group’s ownership interest (Note 29.4) 55,207

Retained earnings (197)

The Group’s ownership interest after the transaction 152,244

8.2 Acquisition of additional interests in NCP Marina Mandalina

According to share purchase agreement dated 20 June 2011, the Group decided to purchase shares with a nominal value of HRK 36 thousand (equivalent to Euro 5 thousand and TL 24 thousand) in NCP Marina Mandalina, which was previously a proportionately consolidated joint venture with a proportion of effective interest of 40 percent held by the Group, representing 36 percent of the share capital from an individual shareholder for a consideration of Euro 7,200 thousand (equivalent to TL 16,914 thousand). On 7 July 2011, the share transfer was finalised and the Group obtained control by acquiring the additional 36 percent of shares in NCP Marina Mandalina.

The following summarises the major classes of consideration transferred and the recognised amounts of identifiable assets acquired and liabilities assumed at the acquisition date:

Consideration transferred

Cash paid 16,914

Total consideration 16,914

Identifiable assets acquired and liabilities assumed Property and equipment 48,245Intangible assets 47Other non-current assets 23Accounts receivables 2,290Due from related parties 1,351Inventories 23Cash and cash equivalents 2,357Accounts payable (1,926)Due to related parties (1,496)Other current liabilities (137)Loans and borrowings (17,616)Deferred tax liabilities (6,013)Total net identifiable assets 27,148





8.2 Acquisition of additional interests in NCP Marina Mandalina (continued)

Goodwill

Goodwill has been recognised as a result of the acquisition as follows:

Total consideration transferred 16,914Non-controlling interest based on their proportionate interest in the recognised amounts of the assets and liabilities of the acquire 10,862Less: Value of net identifiable assets (27,148)Goodwill 628

Cash consideration transferred 16,914Cash and cash equivalents acquired (2,357)Net cash outflow arising on acquisition 14,557

8.3 Partial disposal of interest in Garanti Bank

On 1 November 2010, Doğuş Holding and BBVA signed a share purchase agreement. On 22 March 2011, according to this agreement, 26,418,840,000 shares in Garanti Bank representing 6.29 percent of the share capital of Garanti Bank owned by Doğuş Holding has been transferred to BBVA for a consideration of USD 2,067 million including USD 5 million late payment interest (equivalent to TL 3,243,467 thousand). The approvals of BRSA, Capital Market Board, Republic of Turkey Prime Ministry Undersecretariat of Treasury, The Central Bank of Spain, The Dutch Central Bank, The National Bank of Romania and European Commission have been obtained between the period of 1 November 2010 and 22 March 2011.

In addition, on 1 November 2010, Doğuş Holding and BBVA signed a shareholders’ agreement which was effective from the date of completion of aforementioned share purchase agreement. This new shareholders’ agreement has replaced the previously signed shareholders’ agreement between GE Araştırma Müşavirlik Anonim Şirketi and Doğuş Holding dated 22 December 2005. According to the new shareholders’ agreement, Doğuş Holding and BBVA are the two equal joint venturers of Garanti Bank.

Gain arising from this share sale transaction amounting to TL 2,163,189 thousand (after partial disposal of goodwill previously recognised as a result of acquisition of 4.65 percent shares from GE Araştırma Müşavirlik Anonim Şirketi in Garanti Bank in December 2007) is recognised under other income in profit or loss in the accompanying consolidated financial statements.

Following this share sale transaction, the proportion of effective interest of Doğuş Holding and its subsidiaries in Garanti Bank decreased to 23.95 percent from 30.24 percent. Items in the consolidated statement of comprehensive income of Garanti Bank has been proportionately consolidated with the previous effective interest of 30.24 percent till this share sale date in the accompanying consolidated statement of comprehensive income for the year ended 31 December 2011.





8.4 Acquisition of Star TV

On 17 October 2011, the Group and Doğan Yayın Holding Anonim Şirketi (“Doğan Yayın”) signed a share purchase agreement. According to this agreement, the Group has decided to purchase total 391,500 thousand shares in Işıl Televizyon Yayıncılık Anonim Şirketi (“Star TV”) representing share capital with a total nominal value of TL 391,500 thousand from Doğan Yayın for a consideration of USD 327,000 thousand. Upon approval of Competition Board and other regulatory authorities, on 3 November 2011, the share transfer has been finalised with a closing agreement. Accordingly, Radio and Television Supreme Council (“RTÜK”) approved the share transfer.

Pre-acquisition carrying amounts were determined based on the applicable IFRSs immediately before the acquisition. The values of assets, liabilities and contingent liabilities recognised on acquisition are their estimated fair values and have been determined on a provisional basis.

Under IFRS 3, intangible assets recognised arising from the acquisition of Star TV are stated below:

“Star TV” brand name 232,429Broadcasting license 140,407Content library (movies and series) 20,365Total intangible recognised on acquisition 393,201

The fair value of above mentioned intangible assets arising from the acquisition has been determined provisionally pending completion of an independent valuation.

The following summarises the major classes of consideration transferred and the recognised amounts of assets acquired and liabilities assumed at the acquisition date:

Consideration transferred

Cash paid 267,481

Notes payable (Note 37) 328,753

Total consideration 596,234

Identifiable assets acquired and liabilities assumed Property and equipment 9,594Intangible assets 394,005Accounts receivables 39,624Other current and non-current assets 12,614Inventories 4,140Cash and cash equivalents 1,120Accounts payable (15,221)Loans and borrowings (13,520)Other current and non-current liabilities (44,072)Deferred tax liabilities (16,788)Total net identifiable assets 371,496





8.4 Acquisition of Star TV (continued)

Goodwill


Total consideration transferred 596,234Non-controlling interests based on their proportionate interest in the recognised amounts of the assets and liabilities of the acquiree 287Less: Value of net identifiable assets (371,496)Less: Indemnification asset (*) (32,756)Goodwill 192,269


(*) The Group has the right to reimburse the provision for litigation and claims brought through the acquisition of Star TV to Alp Görsel İletişim Anonim Şirketi, the previous shareholder of Star TV, when such legal cases end against the favor of the Group and create a possible cash outlow.

The goodwill is mainly attributable to the synergies expected to be achieved from integrating Star TV into the Group’s existing media business.

If new information is obtained within one year from the acquisition date about facts and circumstances that existed at the acquisition date identifies adjustments to the above amounts, or any additional provisions that existed at the acquisition date, then the acquisition will be revised.

8.5 Acquisitions in 2010

8.5.1 Acquisition of D Otel

According to share transfer agreement dated 27 October 2009, the Group decided to purchase Kartal Otel Marmaris Turizm İşletmeciliği Ticaret ve Sanayi Anonim Şirketi (“Kartal Otel”) from Turkon Holding Anonim Şirketi. On 4 March 2010, the share transfer was finalised with a closing agreement and the Group obtained control by acquiring 100 percent of shares and voting rights in Kartal Otel. On 10 March 2010, Kartal Otel changed its legal name as D Otel Marmaris Turizm İşletmeciliği Ticaret ve Sanayi Anonim Şirketi. The following summarises the major classes of consideration transferred and the recognised amounts of assets acquired and liabilities assumed at the acquisition date:


Identifiable assets acquired and liabilities assumed Property and equipment 79,787Intangible assets 41Inventories 140Other current assets 4,137Deferred tax liabilities (467)Accounts payable (487)Other current liabilities (5,500)Employee severance indemnity (364)Total net identifiable assets 77,287





8.5 Acquisitions in 2010 (continued)

8.5.1 Acquisition of D Otel (continued)

Bargain purchase gain

Bargain purchase gain has been recognised as a result of the acquisition as follows:

Total consideration transferred 75,787Less: Value of net identifiable assets (77,287)Bargain purchase gain (1,500)

The bargain purchase gain arising from the difference between consideration transferred and the recognised amounts of assets acquired and liabilities assumed at the acquisition date is recognised under other income in profit or loss.

8.5.2 Acquisition of D Marin Göcek

According to share transfer agreement dated 27 October 2009, the Group has decided to purchase D Marin Göcek from Turkon Holding Anonim Şirketi. On 7 December 2010, the share transfer was finalised with a closing agreement and the Group obtained control by acquiring 100 percent of shares and voting rights in D Marin Göcek.

Pre-acquisition carrying amounts were determined based on the applicable IFRSs immediately before the acquisition. The values of assets, liabilities and contingent liabilities recognised on acquisition are their estimated fair values.

Under IFRS 3, customer relationships amounting to TL 1,890 thousand and concession rights amounting to TL 20,454 thousand have been recognised as intangible assets arising from the acquisition of D Marin Göcek.

The fair value of the customer relationships and concession rights acquired is based on the multi-period excess earnings method.

The following summarises the major classes of consideration transferred and the recognised amounts of assets acquired and liabilities assumed at the acquisition date:


Identifiable assets acquired and liabilities assumed Property and equipment 15,318Intangible assets 22,358Deferred tax assets 1,066Inventories 30Accounts receivable 1,609Cash and cash equivalents 4,321Accounts payable (362)Other current liabilities (3,795)Employee severance indemnity (176)Total net identifiable assets 40,369





8.5 Acquisitions in 2010 (continued)

8.5.2 Acquisition of D Marin Göcek (continued)

Goodwill


Total consideration transferred 54,867Less: Value of net identifiable assets (40,369)Goodwill 14,498


8.5.3 Acquisition of additional interests in jointly control entities

On 27 May 2010, Doğuş Holding has sold its interest in Garanti Holding B.V. (formerly named as D Netherlands Holding B.V.), established in the Netherlands, presenting 100 percent ownership, at a price of Euro 53.5 million to its proportionately consolidated joint venture Garanti Bank. Garanti Holding B.V. is the shareholder of G Netherlands (formerly named as Doğuş GE B.V.) directly, and Garanti Bank S.A. (formerly named as GE Garanti Bank S.A.), Motoractive, Ralfi and Domenia, all resident in Romania, indirectly through G Netherlands.

Subsequent to this transaction, Garanti Bank has participated in G Netherlands’s Euro 71.7 million capital increase by restricting the other shareholder and purchased an additional 20.1 percent share (equivalent to 6.08 percent share adjusted for the percentage ownership held by the Group) in G Netherlands. The difference between consideration transferred on transaction and net asset value of 6.08 percent share of G Netherlands amounting to Euro 1,372 thousand (equivalent to TL 2,637 thousand) has been recognised as goodwill in consolidated financial statements of the Group.

As per the decisions made at the Board of Directors’ meeting of Garanti Holding B.V. held on 16 December 2010; Leasemart Holding B.V., a Netherlands-based company, was acquired by Garanti Holding B.V. from GE Capital Corporation for a consideration of Euro 46.4 million (equivalent to Euro 14,028 thousand adjusted for the percentage ownership held by the Group). The difference between consideration transferred and net asset value of Leasemart Holding B.V. on the transaction date amounting to Euro 7,691 thousand (equivalent to TL 15,760 thousand) has been recognised as goodwill in consolidated financial statements of the Group. Following these share purchase transactions, the percentage of shares owned indirectly by the Group in G Netherlands increased to 30.24 percent as at 31 December 2010.




9 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:

2011 2010Banking and finance segmentBanking operations:Interest income 2,876,917 3,109,725Interest expense (1,542,616) (1,521,452)Fees and commission income 646,548 679,861Fees and commission expense (212,673) (232,893)Net operating income 1,768,176 2,035,241Insurance operations:Technical gain 58,240 55,845Technical loss (28,137) (8,617)Net technical gain 30,103 47,228Gross profit for banking and finance segment 1,798,279 2,082,469Other corporate segmentsNet revenues 6,347,459 4,809,161Cost of revenues (5,593,782) (4,147,357)Gross profit for other industrial segments 753,677 661,804Total gross profit 2,551,956 2,744,273

10 Administrative expenses

For the years ended 31 December, general and administrative expenses comprised the following:

2011 2010Personnel expenses 639,568 642,966Depreciation and amortisation 143,586 125,180Rent expenses 67,824 63,298Taxes and duties other than taxes on income 47,210 47,549Provision for employee severance indemnity 41,648 15,950Telecommunication expenses 38,528 47,236Electronic data processing expenses 27,563 26,853Insurance expenses 21,613 21,561Utility expenses 17,612 22,190Gasoline expenses 10,240 11,523Research and development expenses 7,152 10,172Stationery expenses 5,318 5,704Others 121,946 112,990

1,189,808 1,153,172




11 Impairment losses, net

For the years ended 31 December, impairment losses, net comprised the following:

2011 2010Provision for banking loans and lease receivables (Note 25) 193,507 242,113Written-off non-current receivables 145,307 - -Impairment in tangible assets (Note 15) 34,088 42,552Provision for general banking risk 27,216 - -Provision for doubtful receivables (Note 22) 8,342 2,501Recoveries of provision for banking loans and lease receivables (Note 25) (134,095) (195,137)Reversal of impairment on tangible assets (Note 15) (11,386) (3,264)Recoveries of doubtful receivables (Note 22) (1,423) (1,410)Other provisions/(recoveries) 11,934 1,751

273,490 89,106

12 Other income/expense

12.1 Other income

For the years ended 31 December, other income comprised the following:

2011 2010Gain on partial disposal of proportionately consolidated joint venture (Note 8.3) 2,163,189 - -Fair value change in investment property (Note 19) 266,214 189,540Gain on sales of investment in equity securities (Note 18) 57,862 - -Fair value gain on trading property transferred to property and equipment 51,830 - -Gain on sale of property and equipment 17,718 1,692Bargain purchase gain recognised on acquisition 1,758 1,500Others 115,645 28,712

2,674,216 221,444

12.2 Other expense

For the years ended 31 December, other expenses comprised the following:2011 2010

Loss from written-off property and equipment, and inventory (*) (44,487) - -Warranty provision expense (39,498) (31,154)Loss from deconstruction process of a hotel building (**) (Note 15) (27,331) - -Loss on partial sale of proportionately consolidated joint venture - - (24,311)Others (130,259) (132,898)

(241,575) (188,363)

(*) For the year ended 31 December 2011, loss from written-off property and equipment and inventory comprise of loss arising from written-off property and equipment of Doğuş İnşaat with a net carrying value of TL 24,891 thousand and inventory amounting to TL 19,596 thousand due to the suspension of the construction project in Libya.

(**) In 2011, D Otel applied a plan for the renovation to change its concept to a luxury class hotel. Based on this plan, some parts of the Hotel Building has been displaced. The Company obtained a valuation report where replacement cost method is used. Per this report, TL 27,331 thousand displacement cost is recognized in other expense in the statement of comprehensive income.




13 Net finance costs

For the years ended 31 December, net finance costs comprised the following:

Recognised in profit or loss 2011 2010Finance incomeForeign exchange gains 254,909 449,670Interest income on bank deposits 86,387 13,779Interest income on trading securities 2,250 4,438Other interest and similar items 5,628 8,352Total finance income 349,174 476,239Finance expenseForeign exchange losses (465,853) (426,876)Interest expense on borrowings (128,968) (119,399)Other interest and similar items (45,525) (35,381) Total finance expense (640,346) (581,656) Net finance costs recognised in profit or loss (291,172) (105,417)

Interest income and interest expense recognised in profit or loss amounts included in finance income and finance expense 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”.

Recognised in other comprehensive income

Change in fair value of available-for-sale financial assets 3,658 (7,008)

Change in translation reserve 49,620 5,284

Effective portion of changes in fair value of cash flow hedges (562) 160

Income tax on other comprehensive income (732) 1,402

Finance expense recognised in other comprehensive income, net of tax 51,984 (162)

Attributable to:

Owners of the Company 50,238 (183)

Non-controlling interests 1,746 21

Finance expense recognised in other comprehensive income, net of tax 51,984 (162)

Interest income and interest expense recognised in other comprehensive income included in finance income and finance expense relate only to the segments other than banking and finance.




14 Taxation

In Turkey, corporate income tax is levied at the rate of 20 percent (31 December 2010: 20 percent) on the statutory corporate income tax base, which is determined by modifying accounting income for certain exclusions and allowances for tax purposes. According to the Corporate Tax Law, 75 percent of the capital gains arising from the sale of tangible assets and investments owned for at least two years are exempted from corporate tax on the condition that such gains are reflected in the equity until the end of the fifth year following the sale. The remaining 25 percent of such capital gains are subject to corporate tax.

There is also a withholding tax on the dividends paid and is accrued only at the time of such payments. The withholding tax rate on the dividend payments other than the ones paid to the non-resident institutions generating income in Turkey through their operations or permanent representatives and the resident institutions is 15 percent. In applying the withholding tax rates on dividend payments to the non-resident institutions and the individuals, the withholding tax rates covered in the related Double Tax Treaty Agreements are taken into account. Appropriation of retained earnings to capital is not considered as profit distribution and therefore is not subject to withholding tax.

The transfer pricing law is covered under Article 13 “disguised profit distribution via transfer pricing” of the Corporate Tax Law. The General Communiqué on disguised profit distribution via transfer pricing dated 18 November 2007 sets details about implementation. If a tax payer enters into transactions regarding sale or purchase of goods and services with related parties, where the prices are not set in accordance with arm’s length basis, then related profits are considered to be distributed in a disguised manner through transfer pricing. Such disguised profit distributions through transfer pricing are not accepted as a tax deductable for corporate income tax purposes.

In Turkey, the tax legislation does not permit a parent company and its subsidiaries to file a consolidated tax return. Therefore, provision for taxes shown in the consolidated financial statements reflects the total amount of taxes calculated on each entity that are included in the consolidation.

Under the Turkish taxation system, tax losses can be carried forward to be offset against future taxable income for up to five years. Tax losses cannot be carried back.

In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Companies file their tax returns within four months following the close of the accounting year to which they relate. Tax returns are open for five years from the beginning of the year that follows the date of filing during which time the tax authorities have the right to audit tax returns, and the related accounting records on which they are based, and may issue re-assessments based on their findings.

Investment allowance

The Temporary Article 69 added to the Income Tax Law no.193 with the Law no.5479, which became effective starting from 1 January 2006, upon being promulgated in the Official Gazette no.26133 dated 8 April 2006, stating that taxpayers can deduct the amount of the investment allowance exemption which they are entitled to according to legislative provisions effective at 31 December 2005 (including rulings on the tax rate) only from the taxable income of 2006, 2007 and 2008. Accordingly, the investment incentive allowance practice was ended as at 1 January 2006. At this perspective, an investment allowance which cannot be deducted partially or fully in three years time was not allowed to be carried forward to the following years and became unavailable as at 31 December 2008. On the other side, the Article 19 of the Income Tax Law was annulled and the investment allowance practice was ended as at 1 January 2006 with effectiveness of the Article 2 and the Article 15 of the Law no.5479 and the investment allowance rights on the investment expenditures incurred during the period of 1 January 2006 and 8 April 2006 became unavailable.




14 Taxation (continued)

Investment allowance (continued)

However, on 15 October 2009, the Turkish Constitutional Court decided to cancel the clause no.2 of the Article 15 of the Law no.5479 and the expressions of “2006, 2007, 2008” in the Temporary Article 69 related to investment allowance mentioned above that enables effectiveness of the Law as at 1 January 2006 rather than 8 April 2006, since it is against the Constitution. Accordingly, the time limitations for the investment allowances carried forward that were entitled to prior to mentioned date and the limitations related with the investment expenditures incurred between the issuance date of the Law promulgated and 1 January 2006 were eliminated. According to the decision of Turkish Constitutional Court, cancellation related with the investment allowance became effective with promulgation of the decision on the Official Gazette and the decision of the Turkish Constitutional Court was promulgated in the Official Gazette no.27456 dated 8 January 2010.

According to the decision mentioned above, the investment allowances carried forward to the year 2006 due to the lack of taxable income and the investment allowances earned through the investments started before 1 January 2006 and continued after that date constituting economic and technical integrity will be used not only in 2006, 2007 and 2008, but also in the following years. In addition, 40 percent of investment expenditures that are realised between 1 January 2006 and 8 April 2006, within the context of the Article 19 of the Income Tax Law will have the right for investment allowance exemption. New treatment on investment incentive was introduced by the Law no. 6009 “Law on the Amendment of the Income Tax Law and Certain Laws and Decree Laws” which was promulgated in the Official Gazette on 1 August 2010. The Article 5 of the Law regulates the amount of investment incentive to be benefited in calculating the corporate tax base after the cancellation of the clause no.2 of the Article of the Law no. 5479. According to the Law no. 6009, the taxpayers are allowed to benefit from the investment incentive stemming from the periods before the promulgation of the Law no. 5479 up to 25 percent of the taxable income of the respective tax period. Such change is effective including the fiscal year ending on 31 December 2011.

Tax applications for foreign branches of Garanti Bank

Turkish Republic of Northern Cyprus

According to the Corporate Tax Law of the Turkish Republic of Northern Cyprus no.41/1976 as amended, the corporate earnings (including foreign corporations) are subject to a 10 percent (31 December 2010: 10 percent) corporate tax and 15 percent (31 December 2010: 15 percent) income tax. This tax is calculated based on the income that the taxpayers earn in an accounting period. Tax base is determined by modifying accounting income for certain exclusions and allowances for tax purposes. The corporations cannot benefit from the rights of offsetting losses, investment incentives and amortisation unless they prepare and have certified their statements of financial position, statements of comprehensive income and accounting records used for tax calculations by an auditor authorised by the Ministry of Finance. In cases where it is revealed that the earnings of a corporation were not subject to taxation in prior years or the tax paid on such earnings are understated, additional taxes can be charged in the next 12 years following the related taxation period. The corporate tax returns are filed in the tax administration office in April following the end of the accounting year to which they relate. The corporate taxes are paid in two equal installments in May and October.





Tax applications for foreign branches of Garanti Bank (continued)

Malta

The corporate earnings are subjected to a 35 percent (31 December 2010: 35 percent) corporate tax. This rate is determined by modifying accounting income for certain exclusions and allowances for tax purposes. The earnings of the foreign corporations’ branches in Malta are also subject to the same tax rate that the resident corporations in Malta are subject to. The earnings of such branches that are transferred to their head offices are not subject to an additional tax. The prepaid taxes are paid in April, August and December in the related years. The prepayments can be deducted from the annual corporate tax calculated for the whole year earnings. The excess part of the corporate tax that is not covered by such prepayments is paid to the tax office in September.

Luxembourg

The corporate earnings are subject to a 21 percent (31 December 2010: 21 percent) corporate tax. This rate is determined by modifying accounting income for certain exclusions and allowances for tax purposes. An additional 5 percent of the calculated corporate tax is paid as a contribution for unemployment insurance fund. 3 percent of the taxable income is paid as municipality tax addition to corporate tax, the municipalities have right to increase this rate up to 200-350 percent. The municipality commerce tax is currently 9 percent of the taxable income. The tax returns do not include any tax payable amounts. The tax calculations are done by the tax office and the amounts to be paid are declared to tax authorities through official letters called Note. The amounts and the payments dates of prepaid taxes are determined and declared by the tax office at the beginning of the taxation period. The corporations whose head offices are outside Luxembourg, are allowed to transfer the rest of their net income after tax following the allocation of 5 percent of it for legal reserves, to their head offices.

Tax applications for foreign subsidiaries and joint ventures of the Group

The Netherlands

In the Netherlands, corporate income tax is levied at the rate of 20 percent (31 December 2010: 20 percent) for tax profits up to Euro 200,000 and 25 percent (31 December 2010: 25.5 percent) for the excess part over this amount on the worldwide income of resident companies, which is determined by modifying accounting income for certain exclusions and allowances for tax purposes for the related year. A unilateral decree for the avoidance of double taxation provides relief for resident companies from Dutch tax on income, such as foreign business profits derived through a permanent establishment abroad, if no tax treaty applies. There is an additional dividend tax of 5 percent computed only on the amounts of dividend distribution at the time of such payments. Under the Dutch taxation system, tax losses can be carried forward for nine years to offset against future taxable income. Tax losses can be carried back to 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 re-assessments based on their findings. The corporate income tax has been calculated using the nominal tax rate of 25 percent (31 December 2010: 25.5 percent) over the Dutch taxable income and 30 percent (31 December 2010: 30 percent) over the local taxable income of Germany branch of Garanti Bank.

Romania

The applicable corporate tax rate in Romania is 16 percent (31 December 2010: 16 percent). The taxation system in Romania is continuously developing and is subject to varying interpretations and constant changes, which may become rarely retroactive. In Romania, tax periods remain open for tax audits for seven years. Tax losses can be carried forward to offset against future taxable income for seven years.





Tax applications for foreign subsidiaries and joint ventures of the Group (continued)

Russia

The applicable tax rate for current and deferred tax for Garanti Bank’s consolidated subsidiary in Russia is 20 percent (2 percent federal and 18 percent regional) (2010: 20 percent). The taxation system in the Russian Federation is relatively new and is characterised by frequent changes in legislation, official pronouncements and court decisions, which are often unclear, contradictory and subject to varying interpretation by different tax authorities. Taxes are subject to review and investigation by a number of authorities, which have the authority to impose severe fines, penalties and interest charges. A tax year remains open for review by the tax authorities during the three subsequent calendar years; however, under certain circumstances a tax year may remain open for a longer period.

Egypt

As at 31 December 2011, enacted corporation tax rate is 20 percent (31 December 2010: 20 percent) for the subsidiaries registered in Egypt according to local tax law.

Switzerland

As at 31 December 2011, enacted corporation tax rate is 22.8 percent (31 December 2010: 22.8 percent) for the subsidiaries registered in Switzerland according to local tax law.

Ukraine

As at 31 December 2011, enacted corporation tax rate is 25 percent (31 December 2010: 25 percent) for the subsidiaries registered in Ukraine according to local tax law.

Morocco

The applicable corporate tax rate in Morocco is 35 percent (31 December 2010: 35 percent). Tax losses can be carried forward to offset against future taxable income for five years. Where the loss includes a claim for depreciation, that portion can be carried forward for indefinitely.

14.1 Income tax expense

Tax recognised in profit or loss

Income tax expense for the years ended 31 December comprised the following items:

2011 2010Current corporation and income taxes 249,793 357,278Deferred tax expense / (credit) 186,759 (35,855)Total income tax expense 436,552 321,423

Tax recognised in other comprehensive income

Tax recognised in other comprehensive income for the years ended 31 December comprised the following items:

2011 2010

Income tax credit on revaluation of land and buildings (Note 29.3) 13,294 31,006

Income tax credit/(expense) on available-for-sale financial assets 88,968 (27,999)

Total income tax credit recognised in other comprehensive income 102,262 3,007





14.1 Income tax expense (continued)

Reconciliation of effective tax rate

The reported income tax expense 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:

2011 2010Amount % Amount %

Reported profit before taxation 3,172,460 1,338,194Taxes on reported profit per statutory tax rate (634,492) (20.00) (267,639) (20.00) Permanent differences: Disallowable expenses (83,918) (2.65) (11,816) (0.88) Tax exempt income 342,367 10.79 17,893 1.34 General banking provision (5,443) (0.17) - - - -Current year losses for which no deferred tax asset was recognised (41,297) (1.30) (17,623) (1.32)Reversal of previously recognised tax losses (17,448) (0.55) (35,435) (2.65)Effect of different tax rates applied 43,330 1.37 (6,299) (0.47)Others, net (39,651) (1.25) (504) (0.04)Income tax expense (436,552) (13.76) (321,423) (24.02)

14.2 Taxes payable on income

In accordance with the tax legislation in Turkey, tax payments that are made in advance during the year are being deducted from the total final tax liability of the fiscal year. Accordingly, the taxation charge on income is not equal to the final tax liability appearing on the consolidated statement of financial position.

Taxes payable on income as at 31 December comprised the following:

2011 2010Taxes on income 436,552 321,423Add: Taxes carried forward 99,279 70,606Add: Current taxes recognised in other comprehensive income 6,268 (4,563)Add: Deferred taxes on taxable temporary differences (186,759) 35,855Less: Corporation taxes paid in advance (316,652) (324,042)Less: Change in joint venture rate in a proportionately consolidated joint venture due to partial disposal (6,099) - -Taxes payable on income 32,589 99,279





14.3 Deferred tax assets and liabilities

Deferred tax is provided in respect of taxable temporary differences arising between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes, except for the differences relating to goodwill not deductible for tax purposes and the initial recognition of assets and liabilities which affect neither accounting nor taxable profit.

Unrecognised deferred tax assets and liabilities

As at 31 December 2011, deferred tax assets amounting to TL 205,032 thousand (2010: TL 123,565 thousand) have not been recognised with respect to the statutory tax losses carried forward and deductible temporary differences amounting to TL 163,325 thousand and TL 41,707 thousand, respectively (2010: TL 73,954 thousand and TL 49,611 thousand, respectively). Such losses carried forward expire until 2016. 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 therefrom.

Recognised deferred tax assets and liabilities

Deferred tax assets and deferred tax liabilities at 31 December are attributable to the items detailed in the table below:

2011 2010Assets Liabilities Assets Liabilities

Revaluation on land and buildings - - (61,791) - - (75,085)Provisions 57,408 - - 42,084 - -Effect of percentage of completion method 36,554 (72,294) 22,895 (37,624)Employee severance indemnity and short term employee benefits 20,531 - - 18,542 - -Pro-rata basis depreciation expense - - (29,864) - - (8,342)Fair value gain from investment property - - (90,765) - - (45,330)Valuation difference of financial assets and liabilities 11,279 - - 21,563 - -Investment incentives 417 - - 3,616 - -Other temporary differences 48,138 (26,580) 42,195 (38,242)Subtotal 174,327 (281,294) 150,895 (204,623) Tax losses carried forward 63,536 - - 135,522 - -Total deferred tax assets/(liabilities) 237,863 (281,294) 286,417 (204,623) Set off of tax (80,851) 80,851 (48,734) 48,734Deferred tax assets/(liabilities), net 157,012 (200,443) 237,683 (155,889)

According to the Tax Procedural Law in Turkey, statutory losses can be carried forward maximum for five years. Consequently, 2016 is the latest year for recovering the deferred tax assets arising from such tax losses carried forward. The Group management forecasted to generate taxable income during 2012 and the years thereafter and based on this forecast, it has been assessed as probable that the deferred tax assets resulting from tax losses carried forward in the amount of TL 317,680 thousand (2010: TL 677,610 thousand) will be realisable; hence, such realisable deferred tax assets in the amount of TL 63,536 thousand (2010: TL 135,522 thousand) are recognised in the consolidated financial statements.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority.


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Dec

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Rev

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(106

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00- -

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ffec

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per

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983

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Valu

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Pro

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Mov

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Dec

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31

Dec

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er

Land

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Furn

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116

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(75,

315)

(117

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(30,

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- -18

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5

Leas

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or v

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232,

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973,

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482

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04,1

99)

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(124

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Less

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ula

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reci

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uar

y

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t ye

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Furn

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740,

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prov

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3- -

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60,9

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4,17

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315,

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(42,

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Net

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4(1

9,63

7)4,

973,

269




15 Property and equipment (continued)

The Group’s land and buildings are revalued for the purpose of the consolidated financial statements. Independent third party appraisers conduct the appraisals periodically on the basis of fair market value. As at 31 December 2011, the revaluation surplus, net of non-controlling interests and deferred taxes, amounting to TL 1,060,279 thousand including the fair value differences of investment and trading properties till the date of the use of property change from property and equipment and land and buildings and the fair value differences of property and equipment until reclassified as asset held for sale (31 December 2010: TL 1,086,198 thousand) was recognised in other comprehensive income, and presented in “revaluation surplus” account within the equity.

Had there been no revaluation on land and buildings, the balances of land and buildings as at 31 December would have been as follows:

Historical cost Accumulated depreciation Net Book Value

31 December 2011 1,625,126 (205,919) 1,419,20731 December 2010 1,771,106 (298,952) 1,472,154

16 Intangible assets

At 31 December, intangible assets comprised the following:

2011 2010Goodwill 785,701 677,437Intangible assets other than goodwill 825,188 436,955

1,610,889 1,114,392

16.1 Goodwill

The movements in goodwill were as follows:

2011 2010

Balance at the beginning of the year 677,437 734,763

Acquisition during the year (Note 8) 192,897 33,070

Disposals (*) (94,507) (78,633)

Adjustments for currency translation 9,874 (11,763)

Balance at the end of the year 785,701 677,437

(*) Disposal of goodwill amounting to TL 94,507 thousand for the year ended 31 December 2011 is related to the partial disposal of the interest in a proportionately consolidated joint venture, Garanti Bank (See note 8.3).

Disposal of goodwill amounting to TL 78,633 thousand for the year ended 31 December 2010 is related to the decrease in the ownership interest in G Netherlands, formerly named as Doğuş GE B.V. (a proportionately consolidated joint venture). On 27 May 2010, Doğuş Holding has sold its interest in Garanti Holding B.V., formerly named as D Netherlands (the parent company of G Netherlands), to its proportionately consolidated joint venture, Garanti Bank, and this transaction has resulted in a reduced ownership interest in G Netherlands.


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.V.




16 Intangible assets (continued)

16.1 Goodwill (continued)

Impairment testing for goodwill

The recoverable amount of goodwill related with Garanti Bank and DOAŞ are determined based on their quoted share prices.

The valuations of the fair value of equities of NTV Radyo, Enformasyon and Kapital Radyo are performed internally. The income approach (discounted cash flow method) is used to determine the fair value of equities. 6-year business plan prepared by management is used for valuation of NTV Radyo and Enformasyon, 10-year business plan prepared by management is used for valuation of Kapital Radyo.

The valuation of the fair value of equity for G Netherlands and Garanti Holding B.V. is performed by an independent valuation company. The income approach (discounted cash flow method) is used to determine the fair value of equity of G Netherlands and Garanti Holding B.V.. 7-year business plan prepared by management is used for valuation.

The valuation of the fair value of equity for Doğuş İnşaat is performed by an independent valuation company. The income approach (discounted cash flow method) is used to determine the fair value of equity of Doğuş İnşaat. 7-year business plan prepared by management is used for valuation.

The valuation of the fair value of equity for D Marin Göcek is performed by an independent valuation company. The income approach (discounted cash flow method) is used to determine the fair value of equity of D Marin Göcek. 35-year business plan prepared by management is used for valuation.

The valuation of the fair value of equity for NCP Marina Mandalina is performed by an independent valuation company. The income approach (discounted cash flow method) is used to determine the fair value of equity of NCP Marina Mandalina. 26-year business plan prepared by management is used for valuation.

The fair value of Star TV has been determined provisionally pending completion of an independent valuation.

Key assumptions used in discounted cash flow projections

Key assumptions used in calculation of recoverable amounts are average discount rates and terminal growth rates. These assumptions are as follows:

Discount rate Terminal growth rateD Marin Göcek 11.43 percent - -Doğuş İnşaat 8.41 percent 2.00 percentEnformasyon 13.24 percent 2.00 percentG Netherlands 12.00 percent 5.00 percentGaranti Holding B.V. 12.00 percent 5.00 percentKapital Radyo 15.20 percent 2.00 percentNCP Marina Mandalina 7.88 percent - -NTV Radyo 13.00 percent 2.00 percent

Discount rates used in discounted cash flows are the weighted average cost of capital (“WACC”) of the relevant entities.

As a result of the impairment testing on entity basis, no impairment loss is recognised during the year ended 31 December 2011.


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16 Intangible assets (continued)

16.2 Intangible assets other than goodwill (continued)

(a) The partnership established by the Group, Akfen Holding Anonim Şirketi and TÜV-SÜD Teknik Güvenlik ve Kalite Denetim Ticaret Limited Şirketi, obtained the right to tender vehicle inspection services for 20 years as at 20 December 2004. Following the completion of taking the advice of 1st Circuit of State, the Concession Agreement, regarding the privatisation of vehicle inspection services with the Privatisation Administration was signed on 15 August 2007, and TÜVTURK Kuzey and TÜVTURK Güney have started their operations. In 2009, Akfen Holding Anonim Şirketi transferred its shares to Test Taşıt Muayene İstasyonları Yapım ve İşletim Anonim Şirketi. As at 31 December 2011, 193 vehicle inspection stations are operating in 81 cities.

(b) See note 8.5.2.

(c) Following the tender organised by Saving Deposits Insurance Fund on 18 June 2008; the transfer of the commercial and economic assets of Kral TV and Kral FM to A Yapım Televizyon Programcılık Anonim şirketi (“A Yapım”), a consolidated entity operating in media business, was started and Competition Authority approvals were obtained. Radio Television Supreme Council approved the process and A Yapım took over Kral TV and Kral FM on 16 October 2008 and recognised the amounts paid as broadcasting rights under intangible assets.

(d) See note 8.4.




17 Investments in debt securities

At 31 December, debt securities available-for-sale and held-to-maturity comprised the following:

2011 2010

Face value

Carrying value

Interest rate

range %Latest

maturityCarrying

valueDebt and other instruments available for-sale:Government bonds indexed to consumer price index 1,976,595 2,665,191 9-25 2020 3,261,574Government bonds at floating rates (a) 1,563,230 1,599,561 7-11 2017 2,822,681Government bonds in TL 1,167,556 1,131,962 7-23 2020 640,741Discounted government bonds in TL 1,005,039 887,295 7-10 2013 509,807Bonds issued by corporations (b) 629,902 634,024 1-12 2034 896,832Bonds issued by financial institutions 243,606 246,987 3-12 2021 334,081Bond issued by foreign governments 213,099 212,197 4-11 2020 203,850Euro bonds 82,268 81,086 5-12 2034 254,831Treasury bills in TL - - - - - - - - 1,473,559Others 6,081 30,867Total securities available for-sale 7,464,384 10,428,823Debt and other instruments held-to- maturity:Government bonds in TL 520,932 485,316 18 2012 876,645Government bonds at floating rates (a) 213,999 219,537 6-9 2014 422,535Euro bonds 376,920 378,102 7-8 2036 389,090Total held to maturity portfolio 1,082,955 1,688,270Accrued interest income 63,419 94,054

Total held-to-maturity portfolio 1,146,374 1,782,324Total investments in debt securities 8,610,758 12,211,147

Current investments in debt securities 794,881 3,143,254Non-current investments in debt securities 7,815,877 9,067,893

8,610,758 12,211,147

(a) The interest rates applied on these securities are floating quarterly based on interest rates of government bond bids of the government.

(b) Bonds issued by corporations include credit linked notes with a total face value of USD 102,586 thousand (31 December 2010: USD 220,920 thousand)

and carrying value amounting to TL 194,132 thousand (31 December 2010: TL 339,979 thousand).




17 Investments in debt securities (continued)

Interest income from debt and other fixed or floating instruments is reflected in interest on securities, whereas gains and losses arising from changes in the effective portion of the fair value of cash flow hedges and available-for-sale assets are deferred as a separate component of equity.

Impairment losses provided on investment securities as at 31 December 2011 amounted to TL 29 thousand (31 December 2010: None).

Gain arising from the sale of shares in Visa and Mastercard amounting to TL 19,063 thousand is recognised under other income in profit or loss in the accompanying consolidated financial statements.

At 31 December 2011, government bonds and treasury bills include securities pledged under repurchase agreements with customers amounting to TL 3,012,448 thousand (31 December 2010: TL 3,715,407 thousand).

The following table summarises the securities that were deposited as collaterals with respect to various banking, insurance and asset management transactions:

31 December 2011 31 December 2010Face

valueCarrying

valueFace

valueCarrying

valueCollateralised to foreign banks 2,672,988 2,849,424 2,065,925 2,220,526Deposited at Istanbul Stock Exchange 1,512,702 1,691,420 2,035,551 2,604,057Deposited at central banks for repurchase transactions 694,363 808,920 492,596 500,027Deposited at Central Bank of Turkey (“CBT”) for interbank transactions 422,304 462,014 174,858 182,799Deposited at Clearing Bank (“Takasbank”) 37,899 46,881 19,989 20,445Deposited at CBT for foreign currency money market transactions 23,950 24,188 154,526 160,707Others 7,431 10,539

5,890,278 5,699,100




18 Investments in equity securities

At 31 December, the Group held equity investments in the following companies:

2011 2010

Equity accounted investeesCarrying

value% of

ownershipCarrying

value% of

ownershipVDF Tüketici 30,996 49.00 23,571 49.00Yüce Auto 8,193 50.00 7,088 50.00VDF Servis Holding 6,772 49.00 4,194 49.00LPD Holding 3,587 49.00 9,658 49.00Eureko Sigorta Anonim Şirketi (“Eureko Sigorta”) - - - - 18,218 6.05Other equity investmentsIMKB Takas ve Saklama Bankası Anonim Şirketi (“Takasbank”) 2,865 1.40 3,617 1.76Garanti Konut 750 23.85 750 30.12Doğan TV Yayıncılık Anonim Şirketi - - - - 1,767 0.29DTV Haber Görsel ve Yayıncılık Anonim Şirketi - - - - 2,593 5.19Others 1,391 1,688 - -Total 54,554 73,144

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, adjusted for the effects of inflation until 31 December 2005.

80 percent shares of a previously consolidated subsidiary, Garanti Sigorta Anonim Şirketi, owned by Garanti Bank were sold to Eureko BV on 21 June 2007. After the sale, the remaining 20 percent was reclassified to investments in equity accounted investees and accounted under equity method of accounting. Subsequent to this sale, at 1 October 2007 the legal name of the company was changed as Eureko Sigorta. On 31 May 2011, in accordance with the shareholders’ agreement dated 21 June 2007, Garanti Bank has decided to use the option regarding sale of its 20 percent shares in Eureko Sigorta to Eureko B.V. and signed a share purchase agreement with Eureko B.V.. Following the receipt of legal approvals required under the agreement, the related shares have been transferred for a consideration of Euro 16,765 thousand. Gain amounting to TL 22,222 thousand related to this sale has been recognised under other income in profit or loss in the accompanying consolidated financial statements.

On 3 June 2011, the Group sold its investments in Doğan TV Yayıncılık Anonim Şirketi and DTV Haber Görsel ve Yayıncılık Anonim Şirketi for a consideration of TL 40,000 thousand and a gain of TL 35,640 thousand related to this sale has been recognised under other income in profit or loss in the accompanying consolidated financial statements.

The summary financial information for equity accounted investees, not adjusted for the percentage ownership held is presented below:

2011

Total assets Equity

Property, equipment and

intangible assetsProfit for the year

VDF Tüketici 1,735,771 63,258 4,451 15,168Yüce Auto 61,472 16,510 450 2,493VDF Servis Holding 101,376 13,821 1,317 5,383LPD Holding 391,126 12,747 1,495 (6,266)Total 2,289,745 106,336 7,713 16,778




18 Investments in equity securities (continued)

2010

Total assets Equity

Property, equipment and

intangible assetsProfit for the year

VDF Tüketici 1,096,714 48,090 2,358 4,651Eureko Sigorta 684,688 301,223 14,790 49,376LPD Holding 308,184 19,013 837 22,439Yüce Auto 56,728 14,017 464 7,254VDF Servis Holding 28,261 8,438 1,069 2,048 Total 2,174,575 390,781 19,518 85,768

Garanti Konut was established as per the decision made during the Board of Directors meeting of Garanti Bank on 15 September 2007 to provide consultancy and outsourcing services to banks, housing finance and mortgage finance companies. Its legal registration process was completed on 3 October 2007. Garanti Bank owns 100 percent of the company shares. Share capital of Garanti Konut amounting to TL 750 thousand in total (the Group’s interest amounting to TL 180 thousand) is paid. This company is not consolidated in the accompanying consolidated financial statements as it does not currently have material operations compared to the consolidated performance of the Group; instead it is recorded under investments in equity participations and measured at cost.

At the Garanti Bank’s Board of Directors meeting held on 3 June 2009, it was decided to participate in the capital increase of Kredi Garanti Fonu Anonim Şirketi (“Kredi Garanti”) by TL 4,000 thousand (the Group’s interest amounting to TL 1,209 thousand) and to subscribe for future capital increases up to TL 4,000 thousand (the Group’s interest amounting to TL 1,209 thousand) in restructuring of the company to build a three-shareholder structure including the Turkish Union of Chambers and Commodity Exchanges (“TOBB”), the Small and Medium Size Enterprises Development Organization (“KOSGEB”) and the banks. As per this decision, Garanti Bank paid TL 2,000 thousand (the Group’s interest amounting to TL 605 thousand) of its capital commitment of TL 4,000 thousand at 15 October 2009 for the capital increase of Kredi Garanti decided on 11 September 2009. A further TL 1,000 thousand (the Group’s interest amounting to TL 240 thousand) was paid in July 2011.

19 Investment property

As at 31 December, the movement in investment property was as follows:

2011 2010Balance at 1 January 1,528,750 1,218,187Additions (*) 76,595 120,631Transfer from trading property 6,482 - -Transfer from property and equipment (Note 15) 45,760 45,377Acquired through business combinations (Note 8.1) 6,505 - -Transfer to property and equipment (Note 15) (27,220) (44,985) Fair value changes recognised in profit or loss (Note 12) 266,214 189,540Balance at 31 December 1,903,086 1,528,750

The Group obtained independent appraisal reports for each item of investment properties and stated them at their fair values.

(*) In 2010, a portion of additions amounting to TL 80,628 thousand represents transfers from advances given for investment property purchases in 2010. Additions amounting to TL 40,003 thousand represent various additions of land, buildings and construction in progress held for rental income.




20 Other non-current assetsAt 31 December, other non-current assets comprised the following:

2011 2010Accrued exchange gain on derivatives 83,027 43,998Prepaid expenses and similar items 76,633 73,193Value Added Tax (“VAT”) receivables 70,009 23,253Progress billings 46,586 46,364Advances given for property and equipment 35,235 59,799Long-term trade and other receivables 219 124,343Others 76,990 52,790

388,699 423,740

21 Inventories

At 31 December, inventories comprised the following:

2011 2010Goods in transit 363,476 296,478Trading goods 136,473 107,448Spare parts 66,931 43,687Raw materials (*) 40,834 42,486Trading property, net of impairment 28,943 45,038Finished goods - - 5,330Other inventory 39,412 22,010

676,069 562,477

(*) As at 31 December 2011 and 2010, raw materials are mainly composed of construction materials in various construction projects of Doğuş İnşaat.

22 Accounts receivable

At 31 December, accounts receivable comprised the following:2011 2010

Premiums receivable 578,127 578,613Trade receivables 256,270 278,642Factoring receivables 298,735 436,857Due from customers for contract work (Note 23) 212,305 295,157Receivables from securities lending market 176,706 - -Doubtful receivables 155,625 115,446Contracts receivable 152,611 239,821Others (*) 116,291 72,819Total accounts receivable 1,946,670 2,017,355Allowance for doubtful receivables (156,046) (115,189)Accounts receivable, net 1,790,624 1,902,166

Current accounts receivable 1,781,831 1,888,425Non–current accounts receivable 8,793 13,741

1,790,624 1,902,166

(*) As at 31 December 2011, other receivables includes indemnification asset amounting to TL 32,756 thousand (2010: none).




22 Accounts receivable (continued)

Movements in the allowance for doubtful receivables during the years ended 31 December were as follows:

2011 2010

Balance at the beginning of the year 115,189 113,186Provision for the year 8,342 2,501Acquired through business combinations 9,896 981Recoveries (1,423) (1,410)Exchange rate differences on foreign currency balances 24,042 (69)Balance at the end of the year 156,046 115,189

At 31 December 2011, the Group held letters of guarantee amounting to TL 22,649 thousand (31 December 2010: TL 64,055 thousand) as collateral for its receivables.

The Group’s exposure to credit and currency risks and impairment losses related to account receivables are disclosed in Note 41.

23 Due from/due to customers for contract work

At 31 December, the details of uncompleted contracts were as follows:

2011 2010Total costs incurred on uncompleted contracts 3,322,609 2,355,426Estimated earnings/(costs) 437,617 251,349Total estimated revenue on uncompleted contracts 3,760,226 2,606,775Less: Billings to date (3,585,445) (2,357,820)

Net amounts due from customers for contract work 174,781 248,955

Due from customers for contract work and due to customers for contract work were included in the accompanying consolidated statement of financial position under the following captions:

2011 2010Due from customers for contract work (Note 22) 212,305 295,157Due to customers for contract work (Note 37) (37,524) (46,202)

174,781 248,955




24 Other current assets

At 31 December, other current assets comprised the following:

2011 2010Reserve deposits at central banks 1,709,890 1,112,734Taxes and funds to be refunded 186,162 119,099Accrued exchange gain on derivatives 169,724 99,235Prepaid expenses and similar items 96,041 78,003Advances given for inventory 76,271 2,667Others 233,327 140,149

2,471,415 1,551,887

Reserve deposits at central banks

At 31 December 2011, 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 liabilities in TL, foreign currencies and gold taken at the rates determined by the Central Bank of Turkey. The reserve deposits do not earn interest.

The reserve deposits at the Central Bank of the Netherlands, as required by the Dutch Banking Law, are calculated as 2 percent (will be 1 percent for 2012) on all customer deposits with an original maturity less than 2 years and 2 percent (will be 1 percent for 2012) on bank deposits of non-EU banks with an original maturity less than 2 years.

The banks operating in Romania are obliged to keep minimum reserve requirements in accounts held with Romanian Central Bank (“NBR”). The reserve requirements are to be held in RON for RON liabilities and in Euro or USD for foreign currency liabilities. Currently, in line with stipulations of related legislation in force, the rates for reserve requirements are 15 percent for RON denominated liabilities with a remaining maturity less than 2 years and 20 percent for foreign currency denominated liabilities with a remaining maturity less than 2 years excluding Romanian banks’ fundings (31 December 2010: 15 percent for RON and 25 percent for foreign currency). The interest rates paid by the NBR to banks for reserve requirements are subject of permanent update, currently the rates are 1.43 percent for RON reserves, 0.65 percent for Euro reserves and 0.33 percent for USD reserves.

The reserve deposits at the Central Bank of Russia are not available for the daily business, as required by the Russian Banking Law, these reserve deposits are calculated on the basis of Russian Ruble (“RUB”) and foreign currency liabilities taken at the rates determined by the Central Bank of Russia. In accordance with the current legislation, the reserve deposit rates for RUB and foreign currency liabilities legal entities-nonresidents, including banks-nonresident (RUB and foreign currency liabilities) are 5.5 percent (31 December 2010: 2.5 percent), individuals (RUB and foreign currency liabilities) and other liabilities are 4.0 percent (31 December 2010: 2.5 percent).




25 Banking loans and advances to customers

At 31 December, outstanding loans were as follows:

2011 2010Consumer loans 6,898,738 6,751,691Service sector 2,098,814 2,151,827Energy 1,498,618 1,620,060Construction 1,368,165 1,173,433Food 1,109,975 1,025,562Transportation and logistics 1,028,575 1,063,193Metal and metal products 936,813 1,060,734Textile 833,615 843,481Transportation vehicles and sub-industry 698,815 679,346Tourism 587,412 408,258Data processing 541,453 384,217Financial institutions 515,142 421,357Agriculture and stockbreeding 438,068 338,196Chemistry and chemical product 328,970 273,812Mining 286,297 225,775Durable consumption 277,740 244,291Stone, rock and related products 264,997 281,021Machinery and equipment 205,091 216,508Electronic, optical and medical equipment 181,389 182,054Plastic products 122,056 124,671Paper and paper products 98,974 98,470Others 614,302 688,723Total performing loans 20,934,019 20,256,680Non-performing loans and lease receivables (Note 41.2) 529,110 772,044Total gross loans 21,463,129 21,028,724Finance lease receivables, net of unearned income 593,681 457,302Accrued interest income on loans and lease receivables 305,574 247,633Allowance for possible losses on loans and lease receivables (Note 41.2) (595,825) (743,285)Banking loans and advances to customers, net 21,766,559 20,990,374

Short-term banking loans and advances to customer 9,116,509 8,513,765Long-term banking loans and advances to customer 12,650,050 12,476,609

21,766,559 20,990,374

As at 31 December 2011, interest rates on loans granted to customers range between 1 percent - 53 percent (31 December 2010: 1 percent - 53 percent) per annum for the foreign currency loans and 1 percent - 26 percent (31 December 2010: 1 percent - 32 percent) per annum for the TL loans.




25 Banking loans and advances to customers (continued)

The provision for possible losses is comprised of amounts specifically identified as being impaired and non-performing loans and advances and a further portfolio-basis amount considered adequate to cover the residual inherent risk of loss present in the lending relationships presently performing in accordance with agreements made with borrowers. The amount of the portfolio basis allowance is TL 94,737 thousand (31 December 2010: TL 85,719 thousand).

Movements in the allowance for possible losses on loans and lease receivables during the years ended 31 December are as follows:

2011 2010Balance at the beginning of the year 743,285 766,570Provision for the year 193,507 242,113Write-offs (68,065) (20,572) Effect of change in joint venture rate (138,807) (38,968)Recoveries (134,095) (195,137)Exchange rate difference on foreign currency balances - - (10,721)Balance at the end of the year 595,825 743,285

The finance lease receivables are secured by way of the underlying assets. At 31 December, banking loans and advances to customers included the following finance lease receivables:

2011 2010Finance lease receivables, net of unearned income 593,681 457,302Add: Non-performing lease receivables 62,329 92,602Less: Allowance for possible losses from finance lease receivables (22,359) (32,839)Finance lease receivables, net 633,651 517,065Accrued interest on lease receivables 3,459 3,004

Analysis of finance lease receivables, grossDue within 1 year 246,324 253,169Due between 1 and 5 years 432,189 300,366Due after 5 years 52,543 39,635Finance lease receivables, gross 731,056 593,170Unearned income (97,405) (76,105)Finance lease receivables, net 633,651 517,065

Analysis of finance lease receivables, netDue within 1 year 210,758 217,213Due between 1 and 5 years 377,384 263,412Due after 5 years 45,509 36,440Finance lease receivables, net 633,651 517,065




26 Banking loans and advances to banks

At 31 December, banking loans and advances to banks comprised the following:

31 December 201131 December

2010

TLForeign

currency Total TotalLoans and advances-demand: Domestic banks 166 787 953 975 Foreign banks 32,662 595,607 628,269 403,920

32,828 596,394 629,222 404,895Loans and advances-time: Domestic banks 110,534 298,964 409,498 956,991 Foreign banks 458,554 2,138,218 2,596,772 1,592,400

569,088 2,437,182 3,006,270 2,549,391Total loans and advances-demand and time 601,916 3,033,576 3,635,492 2,954,286Placements at money markets 1,629 - - 1,629 614Accrued interest income 4,862 6,252 11,114 11,765Total loans and advances to banks 608,407 3,039,828 3,648,235 2,966,665

Short term loans and advances to banks 2,444,856 1,591,059Long term loans and advances to banks 1,203,379 1,375,606

3,648,235 2,966,665

At 31 December 2011, interest rate range were ranging between 1 percent - 15 percent per annum (31 December 2010: 1 percent - 9 percent) and 5 percent - 13 percent per annum (31 December 2010: 3 percent - 10 percent) for foreign currency time deposits and TL time deposits, respectively.

At 31 December 2011, deposits at foreign banks included blocked accounts of TL 1,911,743 thousand (31 December 2010: TL 1,775,822 thousand) held against the securitisations, funding and insurance business of Garanti Bank.




27 Financial assets at fair value through profit or loss

At 31 December, financial assets at fair value through profit or loss comprised the following:2011 2010

instruments at fair valueFace

valueCarrying

value

Interest rate

range %Latest

maturityCarrying

valueGold - - 19,253 - - - - 24,450Government bonds – consumer price index 13,524 18,401 10-49 2021 41,523Government bonds in TL 15,593 16,610 7-12 2020 24,688Discounted government bonds in TL 13,354 12,692 6-11 2013 71,687

Eurobonds 9,144 9,906 2-12 2041 2,850

Investment fund - - 7,315 - - - - 7,351

Government bonds – floating 2,575 2,631 8-21 2018 30,783

Treasury bills in TL - - - - - - - - 19,277

Others 11,974 12,348

98,782 234,957

Listed shares - - 1,795 7,315

Total 100,577 242,272

Current financial assets at fair value through profit or loss 55,051 133,554Non-current financial assets at fair value through profit or loss 45,526 108,718

Total 100,577 242,272

Income from debt and other instruments held at fair value is reflected in the consolidated statement of comprehensive income as interest income on securities. Gains and losses from derivative financial instruments and changes in fair value of other trading instruments are reflected in trading gain, net, whereas gains and losses arising from changes in the effective portion of the fair value of cash flow hedges are reflected as a separate component of equity.

Net gain from trading of financial assets is comprised of the following:

2011 2010Derivative transactions 98,087 19,082Fixed/floating securities 78,869 76,664Trading gain, net 176,956 95,746

As at 31 December 2011, financial assets at fair value through profit or loss amounting of TL 155,811 thousand (31 December 2010: TL 30 thousand) are blocked against asset management operations and securitizations.

As at 31 December 2011, government bonds and treasury bills include securities pledged under repurchase agreements with customers amounting to TL 488 thousand (31 December 2010: None).

For the year ended 31 December 2011, the impairment losses for the financial assets at fair value through profit or loss is TL 587 thousand (31 December 2010: TL 341 thousand).

Debt and other




28 Cash and cash equivalents

At 31 December, cash and cash equivalents comprised the following:

2011 2010Cash at banks 2,854,818 468,740Balances with central banks excluding reserve deposits 571,503 1,257,597Cash at branches of the Group banks 249,939 276,495Other liquid assets and cheques 1,906 7,179Cash on hand 1,148 925Total cash and cash equivalents 3,679,314 2,010,936

At 31 December, cash and cash equivalents disclosed in the consolidated statement of cash flows comprised the following:

2011 2010Cash at banks 2,854,818 468,740Loans and advances to banks and balances with central banks excluding reserve deposits with original maturity periods of less than three months 1,923,636 1,808,824Cash at branches of the Group banks 249,939 276,495Other liquid assets and cheques 1,906 7,179Cash on hand 1,148 925Cash and cash equivalents in the statement of cash flows 5,031,447 2,562,163

29 Capital and reserves

29.1 Paid in capital

As at 31 December 2011, the nominal share capital of Doğuş Holding amounted to TL 2,055,292 thousand (2010: TL 2,055,292 thousand) in the consolidated financial statements.

As at 31 December 2011 the paid-in capital of Doğuş Holding comprises 856,027,050 shares (31 December 2010: 856,027,050 shares) of TL 0.001 each.

At 31 December, the shareholding structure of Doğuş Holding based on the number of shares is presented below:

2011 2010Thousands

of shares %Thousands

of shares %Ferit Şahenk 276,671 32.32 276,671 32.32Filiz Şahenk 258,932 30.25 258,932 30.25Deniz Şahenk 147,143 17.19 147,143 17.19Doğuş Arge 87,183 10.18 87,183 10.18Garanti Turizm 39,851 4.66 39,851 4.66DOAŞ 31,381 3.67 31,381 3.67Doğuş Yeme İçme 5,264 0.61 5,264 0.61Doğuş Sigorta 4,589 0.54 4,589 0.54Antur 3,824 0.45 3,824 0.45Doğuş Turizm 765 0.09 765 0.09Others 424 0.04 424 0.04

856,027 100.00 856,027 100.00




29 Capital and reserves (continued)

29.2 Legal reserves

The legal reserves are generated by annual appropriations amounting to 5 percent of income disclosed in the Group’s statutory accounts until it reaches 20 percent of paid-in share capital (first legal reserve). Without limit, a further 10 percent of dividend distributions in excess of 5 percent of paid-in capital is to be appropriated to increase legal reserves (second legal reserve). The legal reserves are restricted and are not available for distribution as dividend unless they exceed 50 percent of share capital. In the consolidated financial statements, total legal reserves net of non-controlling interests is TL 284,281 thousand as at 31 December 2011 (31 December 2010: TL 270,507 thousand).

29.3 Revaluation surplus

For the years ended 31 December, the movements of revaluation surplus were as follows:

2011 2010Balance at the beginning of the year 1,086,198 1,081,534Revaluation decrease in land and buildings (5,335) (16,570)Transfer to retained earnings due to partial disposal of a proportionately consolidated joint venture (7,700) - -Deferred taxes on revaluation surplus 13,294 31,006Non-controlling interest portion of revaluation changes, net of deferred taxes (985) 4,631Depreciation effect on revaluation surplus of prior year (25,193) (14,403)Balance at the end of the year 1,060,279 1,086,198

29.4 Non-controlling interests

For the years ended 31 December, movements of the non-controlling interests were as follows:

2011 2010Balance at the beginning of the year 278,959 230,432Acquisition of non-controlling interests in previously proportionately consolidated joint ventures with change in control (Note 8.1 and Note 8.2) 88,666 - -Acquisition of non-controlling interest through business combinations (Note 8.4) 287 - -Acquisition from non-controlling interests in a consolidated subsidiary (Note 8.1) (55,207) - -Adjustment to non-controlling interest for share transfer of a subsidiary of a proportionately consolidated joint venture (1,028) - -Effect of a newly consolidated subsidiary of a proportionately consolidated joint venture - - 8,303Release of non-controlling interests through dividend distribution (2,804) (1,259)Effect of share capital increase 8,767 (1,409)Change in non-controlling interest in consolidated subsidiaries (12,700) (3,233)Non-controlling interest of changes in revaluation surplus 985 (4,631)Non-controlling interest of profit for the year 44,144 50,756Balance at the end of the year 350,069 278,959




29 Capital and reserves (continued)

29.5 Translation reserve

The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations. Garanti Bank had applied net investment hedge accounting for the exchange rate differences on the net investment risks on its foreign subsidiaries and its related financial liabilities denominated in foreign currencies in the previous periods. Garanti Bank prospectively discontinued this application as of 1 January 2009 within the framework of IFRIC 16 Comment on Hedges of a Net Investment in a Foreign Operation, effective for annual periods beginning on or after 1 October 2008.

30 Loans and borrowings

At 31 December, loans and borrowings comprised the following:

2011 2010Non-current liabilitiesLong term bank borrowings 5,800,088 6,271,098Finance lease liabilities 31,621 7,510

5,831,709 6,278,608

Current liabilitiesShort-term portion of long term bank borrowings 2,756,208 1,018,001Short-term bank borrowings 1,879,951 2,647,982Finance lease liabilities 21,400 9,787Factoring payables - - 23,333

4,657,559 3,699,103

As at 31 December, the Group’s total bank borrowings, factoring payables and finance lease liabilities are as follows:

2011 2010Bank borrowings 10,436,247 9,937,081Finance lease liabilities 53,021 17,297Factoring payables - - 23,333

10,489,268 9,977,711

This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings, which are measured at amortized cost. For more information about the Group’s exposure to interest rate, foreign currency and liquidity risk, see Note 41.




30 Loans and borrowings (continued)

Terms and debt repayment schedule

At 31 December, the terms and conditions of outstanding loans and borrowings were as follows:

2011Nominal Year of Face Carrying

Currency interest rate maturity value amountSecured bank borrowings USD (Libor+1.21-6.25) 2.20-6.56 2012-2025 5,605,538 5,616,978Secured bank borrowings Euro (Euribor+0.13-4.50) 1.00-5.00 2012-2022 2,261,249 2,265,336Secured bank borrowings Other 2.72-13.99 2012-2018 1,832,727 1,851,290Unsecured bank borrowings USD (Libor+1.45-2.15) 2.06-5.56 2012-2016 366,108 367,685Unsecured bank borrowings Euro (Euribor+2.50-4.70) 3.19-5.30 2012-2016 295,607 299,776Unsecured bank borrowings Other 14.50-15.00 2012 33,832 35,182Finance lease liabilities USD 6.09-11.07 2012-2015 2,748 2,748Finance lease liabilities Euro 3.91-12.42 2012-2015 6,782 6,540Finance lease liabilities Other 4.50-15.05 2012-2015 43,696 43,733

10,448,287 10,489,268

2010Nominal Year of Face Carrying

Currency interest rate maturity value amountSecured bank borrowings USD (Libor+1.21-5.75)0.5-8.15 2012-2020 4,362,465 4,336,022Secured bank borrowings Euro (Euribor+1.95-4.70)1.00-8.00 2011-2020 2,067,073 2,068,758Secured bank borrowings Other 3.00-10.73 2011 1,949,732 2,006,893Unsecured bank borrowings USD (Libor+1.45-5.50) 3.00-6.30 2011-2020 599,332 585,333Unsecured bank borrowings Euro (Euribor+0.13-4.50) 3.81-4.50 2011-2020 686,999 685,626Unsecured bank borrowings Other 3.00-14.98 2011-2017 247,459 254,449Factoring payables Other 7.53-8.84 2011 23,333 23,333Finance lease liabilities Euro 4.50-12.42 2011-2014 7,672 7,723Finance lease liabilities Other 11.50-27.00 2011 5,324 5,545Finance lease liabilities USD 6.09-11.07 2011 3,968 4,029

9,953,357 9,977,711

Redemption schedules of the Group’s bank borrowings and factoring payables according to original maturities as at 31 December are as follows:

2011 20102011 - - 3,689,3162012 4,636,159 1,788,4822013 1,248,239 823,6762014 and over 4,551,849 3,658,940

10,436,247 9,960,414

In June 2011, Garanti Bank completed a securitization (the “DPR Securitization-XIII”) transaction, arranged by SMBC Nikko Securities America Inc., WestLB AG and Wells Fargo Securities LLC in the amount of USD 53.9 million with five years maturity and by Standard Chartered Bank in the amount of Euro 12 million with five years maturity.

In December 2010, Garanti Bank completed a securitization (the “DPR Securitization-XII”) transaction, with the involvement of European Investment Bank (“EIB”) in the amount of Euro 18 million with 12 years maturity, by European Bank for Reconstruction and Development (“EBRD”) in the amount of Euro 18 million with 12 years maturity, by West LB in the amount of Euro 24 million with five years maturity.





In September 2010, Garanti Bank signed a loan agreement with EBRD (EBRD-III) in the amount of Euro 12 million which consists of 2 tranches for the financing of SMEs. The first tranche in the amount of Euro 4.8 million with five years maturity has been financed by EBRD while the second tranche in the amount of Euro 7.2 million with one year maturity by Standard Chartered Bank.

In June 2010, Garanti Bank drew a second loan tranche worth of USD 14.4 million (equivalent of Euro 12 million) with a maturity of 12 years, within the Euro 35.9 million framework agreement signed with EIB (EIB I) on 25 November 2009. The fund will be used for the financing of the investment and working capital needs of SMEs located in Turkey. In December 2009, the Bank had been granted another funding by EIB again for the financing of SME loans in the amount of USD 35.4 million (equivalent of Euro 24 million) with a maturity of 12 years.

In May 2010, Garanti Bank signed a credit agreement with EBRD (EBRD-II) for a loan in the amount of USD 14.4 million which consists of two tranches. The loan, which is funded directly by EBRD with the 5-year tranche of USD 11.5 million and by the Clean Technology Fund which is established by the International Bank for Reconstruction and Development (the World Bank) in consultation with other international financial institutions, developed and developing countries and development partners, with the 15-year tranche of USD 2.9 million, will be utilized for the financing of the energy efficiency needs of the small sized enterprises.

In December 2009, Garanti Bank signed a credit agreement with Overseas Private Investment Corporation (OPIC) for a facility for the financing of SMEs in the amount of USD 24 million with a maturity of 10 years.

In November 2009, Garanti Bank signed a credit agreement with EBRD (EBRD-I) for a facility of Euro 12 million. The facility, which is comprised of 3 tranches, will be on lent to small-sized enterprises. Euro 5.6 million of the facility is funded from EBRD’s own sources and has a maturity of five year while Euro 3.5 million of the facility is funded by the Netherlands Development Finance Company (FMO) with a maturity of three years. Euro 2.9 million of the facility is provided by a group of 6 banks from 4 countries with a maturity of one year.

In August 2008, Garanti Bank completed a securitization (the “DPR Securitization-IX”) transaction by issuance of certificates; a tranche of Euro 48 million with 10 years maturity from EIB.

In December 2007, one of Garanti Bank’s consolidated subsidiaries signed a loan agreement with EIB (EIB II) in the amount of Euro 24 million with a maturity of 5 years.

In June 2007, Garanti Bank completed a securitization (the “DPR Securitization-VIII”) transaction by issuance of certificates; three tranches of USD 132 million with 10 years maturity wrapped by Ambac Assurance Corp., Financial Guaranty Insurance Corp. and XL Capital Assurance and a tranche of USD 12 million with 8 years maturity and no financial guarantee.

In January 2007, Garanti Bank borrowed TL 104.2 million from Deutsche Bank AG, London with a maturity of ten years at 12.93 percent annual fixed interest rate through a secured financing transaction. Accordingly, Garanti Bank pledged USD 71.9 million of cash collateral to Deutsche Bank AG, London. Subsequently, Garanti Bank has entered into two more secured financing transactions with the same counterparty under the same collateral conditions and borrowed in total TL 63.7 million in two separate transactions on 28 June and 3 July 2007 with maturity of 10 years for each and pledged USD 24 million of cash collateral for each. The funding costs are 11.30 percent and 11.35 percent, respectively. The cash collaterals earn annually USD libor floating interest rate.

In December 2006, Garanti Bank completed a securitization (the “DPR Securitization-VII”) transaction by issuance of certificates: USD 95.8 million tranche with a maturity of 10 years and USD 24 million tranche with a maturity of eight years. Both of the series were issued on an unwrapped basis.





In May 2006, Garanti Bank completed a securitization (the “DPR Securitization-VI”) transaction by issuance of certificates: Euro 71.9 million with a guarantee issued by MBIA Insurance Corp. with maturity of five years, USD 71.9 million with no financial guarantee and a maturity of seven years and USD 53.9 million with a guarantee issued by Ambac Assurance Corporation with maturity of 10 years.

In November 2005, Garanti Bank completed a securitization (the “DPR Securitization-V”) transaction by issuance of certificate: USD 36 million with a guarantee issued by CIFG Inc. with a maturity of seven years, USD 59.9 million with a guarantee issued by XL Capital Assurance with a maturity of eight years and USD 29.9 million with no financial guarantee and a maturity of 8 years. The XL Capital Assurance wrapped tranche was refinanced by the issuance of unwrapped notes in April 2009, with the maturity profile of the new series being kept identical to the refinanced series.

In September 2005, Garanti Bank completed a securitization (the “DPR Securitisation-IV”) transaction by issuance of certificate: USD 35.9 million with a guarantee issued by Financial Guaranty Insurance Corp. with a final maturity of 7 years, USD 35.9 million with a guarantee issued by Financial Security Assurance with a final maturity of eight years, USD 39.5 million with a financial guarantee issued by Assured Guaranty Corporation with a final maturity of 8 years, USD 26.3 million with a financial guarantee issued by Radian Asset Assurance Incorporation with a final maturity of 7 years, USD 6 million with no financial guarantee and a final maturity of 7 years.

In May 2005, Garanti Bank completed a securitization (the “DPR Securitisation-III”) transaction by issuance of certificate: USD 71.9 million with a guarantee issued by MBIA Insurance Corporation, a final maturity of 8 years.

The DPR securitization is a way of securitizing Garanti Bank’s payment orders created via SWIFT MT 103 or similar payment orders in terms of USD, Euro and GBP accepted as derived primarily from Garanti Bank’s trade finance and other corporate businesses and paid through foreign depository banks.

As at 31 December 2011, short-term bank borrowings included various promissory notes amounting to TL 105,665 thousand in total with latest maturity of 2012 (2010: TL 65,195 thousand with latest maturity of 2011).

As at 31 December 2011, short-term bank borrowings included two one-year syndicated loan facilities to be utilized for general trade finance purposes including export and import contracts in two tranches of (i) USD 72,928 thousand and Euro 187,409 thousand, with the rates of Libor + 1.1 percent and Euribor + 1.1 percent per annum with the participation of 42 banks from 19 countries, (equivalent of TL 589,839 thousand) and (ii) USD 55,944 thousand and Euro 138,012 thousand with the rates of Libor + 1 percent and Euribor + 1 percent per annum with the participation of 30 banks from 16 countries (equivalent of TL 438,546 thousand).

Finance lease liabilities

As at 31 December 2011, finance lease liabilities are payable as follows:

2011Future minimum lease

payments Interest Present value of minimum

lease paymentsLess than one year 27,434 (6,034) 21,400Between one and five years 37,379 (5,758) 31,621More than five years - - - - - -

64,813 (11,792) 53,021





Finance lease liabilities (continued)

As at 31 December 2010, finance lease liabilities are payable as follows:

2010Future minimum lease

payments Interest Present value of minimum

lease paymentsLess than one year 10,728 (941) 9,787Between one and five years 7,438 (135) 7,303More than five years 216 (9) 207

18,382 (1,085) 17,297

31 Bonds payable

At 31 December, bonds payable comprised the following:

2011 2010Latest Interest Carrying Carrying

maturity rates % value valueBonds payable of TL 599 million 2012 7.68-10.09 489,595 - -Bonds payable of USD 120 million 2021 6.25 221,371 - -Bonds payable of USD 72 million 2016

3-month libor+2.5 129,761 - -

Bonds payable of TL 24 million 2012 8.75 22,427 - -863,154 - -

Accrued interest on bonds payable 33,068 - -

896,222 - -

Short-term bonds payable 512,203 - -Long-term bonds payable 384,019 - -

896,222 - -

In November 2011, Garanti Bank issued bills with a total face value of TL 179,625 thousand, interest rate of 10.09 percent and a maturity of 178 days.

In October 2011, Garanti Bank issued bills with a total face value of TL 179,625 thousand, interest rate of 8.10 percent and a maturity of 178 days.

In August 2011, one of Garanti Bank’s consolidated subsidiaries issued its first bills with a total face value of TL 23,950 thousand, interest rate of 8.75 percent and a maturity of 179 days.

In April 2011, Garanti Bank issued USD 120 million 10-year fixed-rate notes with a maturity date of 20 April 2021 and coupon rate of 6.25 percent and USD 72 million 5-year floating-rate notes with a maturity date of 20 April 2016 and a coupon rate of 3-month libor + 2.50 percent in the international markets.

In January 2011, Garanti Bank issued bills with a total face value of TL 239,500 thousand, interest rate of 7.68 percent and maturity of one year.

Garanti Bank and its subsidiaries repurchased some of Garanti Bank’s own Turkish Lira securities with a total face value of TL 98,423 thousand and foreign currency securities with a total face value of TL 4,482 thousand, and netted off such securities in the accompanying consolidated financial statements in the current period.




32 Subordinated liabilities

At 31 December, subordinated liabilities comprised the following:

2011 2010Latest Interest Carrying Carrying

Maturity rates % value valueSubordinated debt of USD 120 million 2017 6.95 223,323 229,663Subordinated debt of Euro 12 million 2021 Euribor+3.5 28,999 30,807Subordinated bonds payable of Euro 7 million - - - - - - 18,484Subordinated deposit 2021 4.75-6.00 9,516 9,558

261,838 288,512Accrued interest on subordinated liabilities 6,903 7,252

268,741 295,764

Short-term subordinated liabilities 1,871 - -Long-term subordinated liabilities 266,870 295,764

268,741 295,764

On 23 February 2009, Garanti Bank obtained a 12-year subordinated loan of Euro 12 million due March 2021 from Proparco (Societe de Promotion et de Participation pour la Cooperation Economique SA), a company of the French Development Agency Group, with an interest of Euribor+3.5 percent and a repayment option for Garanti Bank at the end of the seventh year.

On 5 February 2007, Garanti Bank obtained a 10-year subordinated fixed-rate notes of USD 120 million due February 2017 with a repayment option for Garanti Bank at the end of the fifth year. The fixed rate notes with Political Risk Insurance provided by Steadfast (a subsidiary of Zurich American Insurance Company) received a rating of Baa1 by Moody’s Investors Service and priced at par to yield 6.95 percent to investors for the first 5 years and then 7.95 percent annually. Garanti Bank decided to use its early repayment option. Accordingly, the debt will be repaid at 6 February 2012. The necessary permissions are obtained from the BRSA.

On 29 September 2006, one of the Group’s joint ventures issued its first floating rate note for Euro 7 million, Euro-denominated lower tier-2 capital, priced at 99.30, arranged by Deutsche Bank and traded on the alternative market in Frankfurt. This funding has been repaid before its maturity in September 2011.

As at 31 December 2011, remaining subordinated deposits of the proportionately consolidated banking joint ventures amounted to Euro 4 million (equivalent of TL 9,516 thousand) (31 December 2010: Euro 5 million, equivalent of TL 9,558 thousand).

33 Other non-current liabilities

At 31 December, other non-current liabilities comprised the following:

2011 2010Deferred income 234,126 263,961Accrued exchange losses on derivatives 124,055 73,720Long-term advances received 112,007 79,129Provision for general banking risks 107,775 108,864Reserve for severance payments 67,379 41,257Insurance business related provisions 38,197 41,821Provision for non-cash loans 30,666 33,715Others 93,000 44,777

807,205 687,244




33 Other non-current liabilities (continued)As at 31 December 2011, advances received include long-term portion of the upfront sub-operation fees amounting to TL 213,926 (31 December 2010: TL 230,359 thousand) due to the collections in cash from the sub-operators of TÜVTURK Kuzey and TÜVTURK Güney for the vehicle inspection stations that were opened before 31 December 2011.

As at 31 December 2011, a general provision amounting to TL 107,775 thousand (31 December 2010: TL 108,864 thousand) is provided by Garanti Bank in line with conservatism principle considering the circumstances which may arise from any changes in economy or market conditions under the name of provision for general banking risks.

33.1 Insurance business related provisions

2011 2010Reserve for unearned premiums, netGross 25,404 29,858Reinsurers’ share (11,589) (13,917)

13,815 15,941Provision for claims, netGross 6,030 6,513Reinsurers’ share (2,014) (2,713)

4,016 3,800Life mathematical reserves 20,366 22,080

38,197 41,821

33.2 Reserve for severance payments

For the years ended 31 December, the movements in the reserve for severance payments were as follows:

2011 2010Balance at the beginning of the year 41,257 38,543Provision for the year (Note 10) 41,648 15,950Acquired through business combinations 404 540Reversal of employee severance indemnity (199) (32)Paid during the year (10,159) (13,744)Effect of change in joint venture rate (5,572) - -Balance at the end of the year 67,379 41,257

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 enterprise’s obligation under defined benefit plans. Accordingly, the following statistical assumptions were used in the calculation of the total liability:

2011 2010% %

Discount rate 4.3-4.7 4.66Interest rate 9-10 10Expected rate of salary/limit increase 6.5 5.10The range of turnover rate to estimate the probability retirement 1.0-8.0 1.0-9.0

The computation of the liability is predicated upon retirement pay ceiling announced by the Government. As at 31 December 2011, the ceiling amount was TL 2.73 thousand (2010: TL 2.52 thousand).




34 Retirement benefit obligation

Defined benefit plan

As a result of the changes in legislation described below, Garanti Bank will transfer a substantial portion of its pension liability under defined benefit plan (“the Plan”) to SSF. This transfer, which will be a settlement of Garanti Bank’s obligation in respect of the pension and medical benefits transferable to SSF, was originally set to be within three years from the enactment of the New Law in May 2008, however, has been postponed for two years as per the decision of the Council of Ministers published on 9 April 2011 as further explained below. The actual date of the transfer has not been specified yet. However, in its financial statements for the year ended 31 December 2007, Garanti Bank 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 SSF, at the expected transfer amount prior to the date on which the transfer and settlement will occur. The expected transfer amount is calculated based on the methodology and actuarial assumptions (discount rate and mortality tables) prescribed in the New Law. As such, this calculation measures the liability to be transferred at the expected settlement amount i.e., the expected value of the payment to be made to SSF to assume that obligation. The obligation with respect to the excess benefits is accounted for as a defined benefit plan under IAS 19.

(i) Pension and medical benefits transferable to SSF

As per the provisional Article no.23 of the Turkish Banking Law no.5411 as approved by the Turkish Parliament on 19 October 2005, pension funds which are in essence similar to foundations are required to be transferred directly to SSF within a period of three years. In accordance with the Banking Law, the actuarial calculation of the liability (if any) on the transfer should be performed regarding the methodology and parameters determined by the commission established by Ministry of Labor and Social Security. Accordingly, Garanti Bank calculated the pension benefits transferable to SSF in accordance with the Decree published by the Council of Ministers in the Official Gazette no. 26377 dated 15 December 2006 (“the Decree”) for the purpose of determining the principles and procedures to be applied during the transfer of funds. However, the said Article was vetoed by the President and at 2 November 2005 the President initiated a lawsuit before the Turkish Constitutional Court in order to rescind certain paragraphs of the provisional article no.23.

Garanti Bank obtained an actuarial report regarding its obligations at 31 December 2006. This report, which was dated 12 February 2007, is from an actuary, who is registered with the Undersecretariat of the Treasury regarding this Fund in accordance with the Decree. Based on this Decree, the actuarial statement of financial position of the Fund has been prepared using a discount rate of 10.24 percent and the CSO 1980 mortality table. Based on the actuarial report, the assets of the plan exceed the amount that will be required to be paid to transfer the obligation at 31 December 2006. In accordance with the existing legislation at 31 December 2006, the pension and medical benefits within the social security limits were subject to transfer and the banks were not required to provide any excess social rights and payments.

On 22 March 2007, the Turkish Constitutional Court reached a verdict with regards to the suspension of the execution of the first paragraph of provisional article no.23 of the Turkish Banking Law, which requires the transfer of pension funds to SSF, until the decision regarding the cancellation thereof is published in the Official Gazette. The Constitutional Court stated in its reasoned ruling published in the Official Gazette numbered 26731, dated 15 December 2007 that the reason behind this cancellation was the possible loss of antecedent rights of the members of pension funds. Following the publication of the verdict, the Grand National Assembly of Republic of Turkey (“Turkish Parliament”) worked on the new legal arrangements by taking the cancellation reasoning into account. At 17 April 2008, the New Law has been accepted by the Turkish Parliament and the New Law has been enacted at 8 May 2008 following its publishing in the Official Gazette no 26870.




34 Retirement benefit obligation (continued)

Defined benefit plan (continued)

(i) Pension and medical benefits transferable to SSF (continued)

In accordance with the New Law, members of the funds established in accordance with the Social Security Law should be transferred to SSF within three years following its enactment date. The transfers are to take place within the three-year period starting from 1 January 2008. Subsequently, the transfer of the contributors and the persons receiving monthly or regular income and their right-holders from such funds established for employees of the banks, insurance and reinsurance companies, trade chambers, stock markets and unions that are part of these organizations subject to the provisional article 20 of the Social Security Law no.506 to the SSF, has been postponed for two years. The decision was made by the Council of Ministers on 14 March 2011 and published in the Official Gazette no. 27900 dated 9 April 2011 as per the decision of the Council of Ministers, numbered 2011/1559, and as per the letter no. 150 of the Ministry of Labor and Social Security dated 24 February 2011 and according to the provisional article 20 of the Social Security and Public Health Insurance Law no.5510.

On 19 June 2008, Cumhuriyet Halk Partisi (“CHP”) had applied to the Constitutional Court for the cancellation of various articles of the Law including the first paragraph of the provisional Article 20. At the meeting of the Constitutional Court on 30 March 2011, it was decided that the article 73 and the first paragraph of the provisional Article 20 added to the law no. 5510 are not contradictory to the Constitutional Law, and accordingly the dismissal of the cancellation request has been denied with the majority of votes.

Garanti Bank obtained an actuarial report dated 11 January 2012 from an independent actuary reflecting the principles and procedures on determining the application of transfer transactions in accordance with the New Law. The actuarial statement of financial position of the Fund has been prepared using a discount rate of 9.80 percent and the CSO 1980 mortality table, and the assets of the plan exceed the amount that would be required to be paid to transfer the obligation at 31 December 2011.

Garanti Bank’s obligation in respect of the pension and medical benefits transferable to SSF has been determined as the value of the payment that would need to be made to SSF to settle the obligation at the reporting date in accordance with the related article of the New Law.






(i) Pension and medical benefits transferable to SSF (continued)

The pension disclosures set out below therefore reflect the methodology and actuarial assumptions specified in the New Law. This calculation measures the benefit obligation at the expected transfer amount i.e., the estimated amount Garanti Bank will pay to SSF to assume this portion of the obligation.

The pension benefits are calculated annually, as per the calculation as at 31 December 2011, the present value of funded obligations amount to TL 21,739 thousand (2010: TL 20,711 thousand) and the fair value of the planned assets amount to TL 295,505 thousand (2010: TL 308,564 thousand).

2011 2010Present value of funded obligations - Pension benefits transferable to SSF (obligation measured at the expected transfer amount) (90,138) (95,505) - Medical benefits transferable to SSF (obligation measured at the expected transfer amount) 73,198 80,554 - General administrative expenses (4,799) (5,760)

(21,739) (20,711)Fair value of plan assets 295,505 308,564Asset surplus in the plan (*) 273,766 287,853

(*) Asset surplus in this plan will be used as plan assets of the excess benefit plan.

At 31 December, plan assets consist of the following:

2011 2010Securities 261,506 56,124Land and buildings 23,411 29,560Cash and due from banks 8,374 222,880Other 2,214 - -

295,505 308,564

(ii) Excess benefits not transferable to SSF

The other social rights and payments representing benefits in excess of social security limits are not subject to transfer to SSF. Therefore these excess benefits are accounted as an ongoing defined benefit plan.






(ii) Excess benefits not transferable to SSF (continued)

At 31 December, asset surplus on present value of defined benefit obligation is as follows:

2011 2010Present value of defined benefit obligation - Pension (63,351) (73,274) - Health (33,017) (62,068)Fair value of plan assets (*) 273,766 287,854Asset surplus over present value of defined benefit obligation 177,398 152,512

(*) Plan assets are composed of asset surplus in the plan explained in section (i).

As per the actuarial calculation performed as at 31 December 2011 as detailed above, the asset surplus over the fair value of the plan assets to be used for the payment of the obligations also fully covers the benefits not transferable and still a surplus of TL 177,398 thousand (2010: TL 152,512 thousand) remains. However, Garanti Bank’s management, acting prudently, did not consider the health premium surplus amounting TL 73,198 thousand (2010 TL 80,554 thousand) as stated above that resulted from the present value of medical benefits and health premiums transferable to SSF. However, despite this treatment, there is no excess obligation that needs to be provided against as at 31 December 2011.

2011 2010Asset surplus over present value of defined benefit obligation 177,398 152,512Net present value of medical benefits and health premiums transferable to SSF (73,198) (80,554)Present value of defined benefit obligation 104,200 71,958

The pension benefits are calculated annually by an independent actuary. Expenses recognised regarding this benefit plan in profit or loss for the years ended 31 December 2011 and 2010 are as follows:

2011 2010

Total contribution payment 32,926 38,898

32,926 38,898

Principal actuarial assumptions used at 31 December are as follows:

2011 2010Discount rates (*) 9.52 10.00Inflation rates (*) 5.06 5.10Future real salary increase rates 1.5 1.5

Medical cost trend rates40 percent

above inflation60 percent

above inflationFuture pension increase rates (*) 5.06 5.10

(*) As at 31 December, the above mentioned rates are effective rates, whereas the rates applied for the calculation differ according to the employees’ years in service.

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.






(ii) Excess benefits not transferable to SSF (continued)

The sensitivity analysis of defined benefit obligation of excess liabilities at 31 December is as follows:

2011Percentage of change in defined benefit obligation

Assumption change Pension benefits % Medical benefits % Overall %Discount rate +1% (11.9) (13.7) (12.5)Discount rate -1% 14.9 17.4 15.8Medical inflation +10% of CPI - - 8.0 2.7Medical inflation -10% of CPI - - (7.3) (2.5)

2010Percentage of change in defined benefit obligation

Assumption change Pension benefits % Medical benefits % Overall %Discount rate +1% (11.6) (14.3) (12.8)Discount rate -1% 14.5 18.5 16.3Medical inflation +10% of CPI - - 9.0 4.1Medical inflation -10% of CPI - - (7.8) (3.6)

35 Deposits

At 31 December, deposits comprised the following:

2011 2010Banking deposits from banks 741,686 849,141Banking customer deposits 21,291,385 22,965,656

22,033,071 23,814,797

Short-term deposits 21,629,065 23,429,175Long-term deposits 404,006 385,622

22,033,071 23,814,797

35.1 Banking deposits from banks

At 31 December, banking deposits from banks comprised the following:

2011 2010Payable on demand 198,156 282,381Term deposits 541,294 565,435

739,450 847,816Accrued interest expenses 2,236 1,325

741,686 849,141

At 31 December 2011, banking deposits from banks include both TL accounts in the amount of TL 161,275 thousand (31 December 2010: TL 423,424 thousand) and foreign currency denominated accounts in the amount of TL 578,176 thousand (31 December 2010: TL 424,392 thousand). As at 31 December 2011, interest rates applicable to TL bank deposits and foreign currency bank deposits varied within ranges of 6 percent - 13 percent and 1 percent - 8 percent (31 December 2010: 4 percent - 9 percent and 1 percent - 12 percent), respectively.




35 Deposits (continued)

35.2 Banking customer deposits

At 31 December, banking customer deposits comprised the following:

2011 2010Demand Time Total Total

Foreign currency 2,368,572 7,034,715 9,403,287 9,914,863Saving 700,594 6,546,592 7,247,186 8,078,974Commercial 891,863 2,858,251 3,750,114 4,420,940Public and other 703,848 83,487 787,335 454,631

4,664,877 16,523,045 21,187,922 22,869,408Accrued interest expenses 27 103,436 103,463 96,248

4,664,904 16,626,481 21,291,385 22,965,656

At 31 December 2011, interest rates applicable to TL deposits and foreign currency deposits varied between 6 percent - 13 percent (31 December 2010: 5 percent - 11 percent) and 1 percent - 8 percent (31 December 2010: 1 percent - 12 percent), respectively.

36 Obligations under repurchase agreementsThe Group’s proportionately consolidated joint ventures in banking and finance segment 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-bearing assets, depending on the prevailing interest rates. At 31 December, assets sold under repurchase agreements are as follows:

2011Carrying

value

Fair value of underlying

assets

Carrying amount of corresponding

liabilities

Range of repurchase

datesRepurchase

price

Investments in debt securities 3,012,448 3,014,193 2,810,808 Jan’12-May’14 2,833,787Financial assets at fair value through profit or loss 488 488 481 Jan’12 481

3,012,936 3,014,681 2,811,289 2,834,268Current portion of obligations 2,525,166Non-current portion of obligations 286,123

2,811,289

2010

Investments in debt securities 3,715,407 3,724,957 3,548,767 Jan’11-May’11 3,550,7063,715,407 3,724,957 3,548,767 3,550,706

Current portion of obligations 3,548,767Non-current portion of obligations - - - -

3,548,767

As at 31 December 2011, accrued interest on obligations under repurchase agreements amounting to TL 5,966 thousand (31 December 2010: TL 7,688 thousand) is included in the carrying amount of the corresponding liabilities. In general, the carrying values of such assets are more than the corresponding liabilities due to the margins set between parties, since such funding is raised against assets collateralised. The proceeds from the sales of securities under repurchase agreements are treated as liabilities and recorded as obligations under repurchase agreements. As at 31 December 2011, the maturities of the obligations varied from one day to 29 months and interest rates varied between 1 percent - 13 percent (31 December 2010: 1 percent - 5 percent, with maturities varying from one day to five months).




37 Accounts payable

At 31 December, accounts payable comprised the following:

2011 2010Trade payables 536,069 512,276Payables to insurance and reinsurance companies 568,643 562,625Notes payable (*) 339,431 1,170Payables to securities lending market 176,706 - -Due to customers for contract work (Note 23) 37,524 46,202Others 60,490 19,081

1,718,863 1,141,354

Current portion of accounts payable 1,400,695 1,141,354Non-current portion of accounts payable 318,168 - -

1,718,863 1,141,354

(*) As at 31 December 2011, consideration payable arising from the acquisition of Star TV amounting to USD 176,000 thousand (equivalent of TL 328,753 thousand using the official exchange rate prevailing on the acquisition date) is included in the notes payable (See note 8.4).

38 Other current liabilities

At 31 December, other current liabilities comprised the following:

2011 2010

Blocked accounts against expenditures of card holders 807,385 843,517

Accrued exchange losses on derivatives 182,323 105,332

Withholding taxes and duties payable 127,157 87,447

Expense accruals 116,601 142,229

Import deposits and advances received 72,961 87,415

Other short term provisions 65,278 63,437

Short-term employee benefits 49,422 65,762

Transfer orders 42,393 24,602

Deferred income 38,667 36,555

Blocked accounts 16,491 13,328

Others 149,388 52,834

1,668,066 1,522,458




39 Commitments and contingenciesCommitments and contingent liabilities are discussed separately for “segments other than banking and finance” and “banking and finance segment” in the following paragraphs.

39.1 Segments other than banking and finance

Commitments and contingent liabilities arising in the ordinary course of business for the entities operating in the “segments other than banking and finance” comprised the following items as at 31 December:

Letters of guarantee 2011 2010Given to suppliers 675,899 456,236Obtained from banks and given to government organisations 661,878 471,433Given to banks 164,952 33,239Given to customs administrations 14,913 14,458Given to others 111,526 149,406Total letters of guarantee 1,629,168 1,124,772Sureties given 68,739 55,748

The Group, as a guarantor, has given its equity holdings in some group companies with a total nominal amount of TL 524,110 thousand (31 December 2010: TL 329,106 thousand) and property equipment at an amount of TL 622,812 thousand (equivalent of USD 134,600 thousand, Euro 122,150 thousand and TL 70,056 thousand) (31 December 2010: TL 458,389 thousand, equivalent of USD 134,600 thousand and Euro 122,150 thousand) as collateral. In terms of the related borrowing agreements, one of the tourism segment consolidated subsidiaries’ profit from hotels has been attached.

Litigation and claims

On 27 April 2010, Doğuş İnşaat and its consortium partners (together as the Consortium) terminated the Marmaray CR1 Contract with DLH General Directorate of the Ministry of Transportation. The Group had recognised TL 15,405 thousand loss from the contract in cost of sales in 2010. On 13 July 2010, the Consortium submitted a Request for Arbitration to the International Chamber of Commerce (“ICC”) Secretariat, thereby commencing arbitration against process for the recovery of the loss or in connection with the contract.

39.2 Banking and finance segment

In the ordinary course of banking and finance activities, the entities included in the “banking and finance segment” undertake various commitments and incur certain contingent liabilities that are not presented in the consolidated financial statements, including letters of guarantee, acceptance credits and letters of credit.

At 31 December, commitments and contingent liabilities comprised the following items:

2011 2010Letters of guarantee 3,625,169 3,641,214Letters of credit 1,485,756 1,175,773Acceptance credits 123,474 49,625Other guarantees and endorsements 16,822 17,160

5,251,221 4,883,772

As at 31 December 2011, commitments for unused credit limits for credit cards, overdrafts, cheques and loans to customers, and commitments for “credit linked notes” amounted approximately to TL 6,585,184 thousand (31 December 2010: TL 7,105,480 thousand) in total.

As at 31 December 2011, commitments for the derivative transactions carried out on behalf of customers in the Turkish Derivatives Exchange amounted to TL 87,245 thousand (31 December 2010: TL 153,621 thousand) in total.




39 Commitments and contingencies (continued)

39.2 Banking and finance segment (continued)

As at 31 December 2011, commitments for purchases and sales of foreign currencies under spot, forwards, swaps, future rate agreements, options and forward agreements for gold trading amounted to TL 10,509,376 thousand (31 December 2010: TL 9,328,333 thousand), approximately 92 percent of which are due within a year.

The following tables summarize the contractual amounts of the forward exchange, swap, futures and options contracts, showing the details of the remaining periods to maturity. Foreign currency amounts are translated at rates ruling at the reporting date. Monetary items denominated in a foreign currency are economically hedged using foreign currency derivative contracts. All gains and losses on foreign currency contracts are recognised in profit or loss, except for contracts of cash flow hedges as stated above.

31 December 2011 Notional amount with remaining life ofUp to 1 month

1 to 3 months

3 to 6 months

6 to 12 months

Over 1 year Total

Interest rate derivativesInterest rate options - - - - - - - - 212,881 212,881 Purchases - - - - - - - - 212,881 212,881 Sales - - - - - - - - - - - -Interest rate swaps 12,385 30,593 18,787 4,685 48,870 115,320 Purchases 7,210 8,187 9,202 2,024 23,268 49,891 Sales 5,175 22,406 9,585 2,661 25,602 65,429Interest rate futures - - 120 - - - - - - 120 Purchases - - 15 - - - - - - 15 Sales - - 105 - - - - - - 105Other derivativesSecurities, shares and index options 14,559 10,975 6,195 8,961 2,690 43,380 Purchases 12,506 6,327 5,229 6,870 1,345 32,277 Sales 2,053 4,648 966 2,091 1,345 11,103Other forward contracts 55,017 13,472 2,542 113 - - 71,144 Purchases 7,623 3,236 229 - - - - 11,088 Sales 47,394 10,236 2,313 113 - - 60,056Currency derivativesSpot exchange contracts 363,714 - - - - - - - - 363,714 Purchases 146,597 - - - - - - - - 146,597 Sales 217,117 - - - - - - - - 217,117Forward exchange contracts 587,089 180,172 141,552 216,652 62,261 1,187,726 Purchases 319,465 124,905 116,488 86,749 42,472 690,079 Sales 267,624 55,267 25,064 129,903 19,789 497,647Currency/cross currency swaps 1,469,744 1,704,647 754,547 640,664 325,618 4,895,220 Purchases 544,855 201,473 338,173 413,982 91,341 1,589,824 Sales 924,889 1,503,174 416,374 226,682 234,277 3,305,396Options 963,053 673,680 794,584 1,021,894 151,209 3,604,420 Purchases 549,084 334,889 453,291 511,836 75,510 1,924,610 Sales 413,969 338,791 341,293 510,058 75,699 1,679,810Foreign currency futures - - 15,450 - - - - - - 15,450 Purchases - - 1,280 - - - - - - 1,280 Sales - - 14,170 - - - - - - 14,170Subtotal purchases 1,587,340 680,312 922,612 1,021,461 446,817 4,658,542Subtotal sales 1,878,221 1,948,797 795,595 871,508 356,712 5,850,833Total of transactions 3,465,561 2,629,109 1,718,207 1,892,969 803,529 10,509,375






31 December 2010 Notional amount with remaining life of

Up to 1 month

1 to 3 months

3 to 6 months

6 to 12 months

Over 1 year Total

Interest rate derivativesInterest rate options - - - - 985,824 - - - - 985,824 Purchases - - - - 492,912 - - - - 492,912 Sales - - - - 492,912 - - - - 492,912Interest rate swaps 8,194 39,440 9,781 6,556 3,654 67,625 Purchases 3,949 4,815 4,383 3,460 2,266 18,873 Sales 4,245 34,625 5,398 3,096 1,388 48,752Interest rate futures - - 27,579 - - - - - - 27,579 Purchases - - 27,579 - - - - - - 27,579 Sales - - - - - - - - - - - -Other derivativesSecurities, shares and index options 1,771 144,500 44,004 23,536 3,688 217,499 Purchases 1,001 83,691 22,002 11,367 1,844 119,905 Sales 770 60,809 22,002 12,169 1,844 97,594Other forward contracts 92,811 62,008 43,617 - - - - 198,436 Purchases 72,207 27,821 15,448 - - - - 115,476 Sales 20,604 34,187 28,169 - - - - 82,960Currency derivativesSpot exchange contracts 353,491 - - - - - - - - 353,491 Purchases 170,687 - - - - - - - - 170,687 Sales 182,804 - - - - - - - - 182,804Forward exchange contracts 432,466 127,460 147,098 110,781 68,731 886,536 Purchases 332,234 97,792 58,827 26,758 32,724 548,335 Sales 100,232 29,668 88,271 84,023 36,007 338,201Currency/cross currency swaps 1,825,338 671,546 771,139 777,284 316,424 4,361,731 Purchases 684,741 125,509 336,464 515,295 91,930 1,753,939 Sales 1,140,597 546,037 434,675 261,989 224,494 2,607,792Options 747,287 705,836 469,899 277,883 23,839 2,224,744 Purchases 432,646 376,066 240,419 140,384 21,995 1,211,510 Sales 314,641 329,770 229,480 137,499 1,844 1,013,234Foreign currency futures 165 4,703 - - - - - - 4,868 Purchases 165 3,605 - - - - - - 3,770 Sales - - 1,098 - - - - - - 1,098

Subtotal purchases 1,697,630 746,878 1,170,455 697,264 150,759 4,462,986

Subtotal sales 1,763,893 1,036,194 1,300,907 498,776 265,577 4,865,347

Total of transactions 3,461,523 1,783,072 2,471,362 1,196,040 416,336 9,328,333






The breakdown of outstanding commitments arising from derivatives at 31 December, by type, is as follows:

2011 2010Purchase Sale Purchase Sale

Currency swap agreements for hedging purposes 1,268,597 2,929,752 1,688,008 2,567,970Interest rate and foreign currency options 1,528,294 1,373,024 1,146,127 1,479,578Spot foreign currency transactions 146,597 217,117 170,687 182,804Forward agreements for customer dealing activities 476,608 323,477 269,199 291,957Forward rate agreements, foreign currency and interest rate futures 1,295 14,275 31,349 1,098Options for customer dealing activities 641,476 317,888 678,200 124,163Forward agreements for hedging purposes 213,470 174,170 279,136 46,243Forward agreements for gold trading 11,088 60,055 115,476 82,960Currency swap agreements for customer dealing activities 321,227 375,644 65,931 39,823Interest rate and credit default swap agreements 49,890 65,431 18,873 48,751

4,658,542 5,850,833 4,462,986 4,865,347

39.3 Commitments and contingencies applicable to the business segments

As at 31 December 2011, commitment for uncalled capital of subsidiaries amounted to TL 148,645 thousand (2010: TL 116,576 thousand).

40 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 arm’s-length basis during the normal course of business.




40 Related party disclosures (continued)

40.1 Related party balances

At 31 December, the Group had the following balances outstanding from its related parties:

2011Joint Ventures Other Total

Other non-current assets 70 - - 70Accounts receivable 141 - - 141Due from related parties 2,646 253,488 256,134Banking loans and advances to customers 1,708 - - 1,708Cash and cash equivalents 942,597 - - 942,597Long-term borrowings 293,880 - - 293,880Other non-current liabilities 83,914 - - 83,914Short-term bank borrowings 10,208 - - 10,208Short-term portion of long-term borrowings 1,444 - - 1,444Deposits - - 83,967 83,967Accounts payable 42 - - 42Due to related parties 869 5,950 6,819Letters of guarantee 210,432 - - 210,432


Accounts receivable 398 - - 398Due from related parties 7,669 119,122 126,791Banking loans and advances to customers 275 - - 275Cash and cash equivalents 230,797 - - 230,797Long-term borrowings 27,820 - - 27,820Other non-current liabilities 10,873 - - 10,873Short-term bank borrowings 28,251 - - 28,251Short-term portion of long-term borrowings 9,659 - - 9,659Deposits 28 76,112 76,140Accounts payable 61 - - 61Due to related parties 18,341 43,571 61,912Letters of guarantee 182,495 2,550 185,045

40.2 Related party transactions

For the years ended 31 December, the revenues earned and expenses incurred by the Group in relation to transactions with its related parties as summarised below:


Revenues 36,791 4,295 41,086Cost of revenues (448) - - (448)Administrative expenses (2,412) - - (2,412)Selling, marketing and distribution expenses (378) - - (378)Net finance income / (costs) 37,780 (3,778) 34,002Other income 208 - - 208

Other expense (427) - - (427)




40 Related party disclosures (continued)

40.2 Related party transactions (continued)


Revenues 29,168 3,542 32,710Cost of revenues (361) - - (361)Administrative expenses (1,969) - - (1,969)Selling, marketing and distribution expenses (302) - - (302)

Net finance income / (costs) 1,251 (3,620) (2,369)Other income 18 18Other expense (739) - - (739)

No impairment losses have been recorded against balances outstanding during the year with related parties and no specific allowance has been made for impairment losses on balances with the related parties as at 31 December 2011 (2010: None).

40.3 Transactions with key management personnel

On a consolidated basis, key management costs included in general and administrative expenses for the years ended 31 December 2011 and 2010 amounted to TL 114,297 thousand and TL 97,438 thousand, respectively.




41 Financial instruments

41.1 Liquidity risk

As at 31 December, 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:

2011

Monetary assetsUp to 1 month

1 to 3 months

3 to 12 months

Over 1 year Total

Turkish LiraInvestments in debt securities 46,421 527,690 186,533 6,533,462 7,294,106Other non-current assets - - - - - - 270,940 270,940Accounts receivable 73,240 942,708 131,164 4,764 1,151,876Due from related parties - - - - 256,037 - - 256,037Other current assets 244,622 137,483 150,899 - - 533,004Banking loans and advances to banks 89,446 13,496 73,091 432,401 608,434Banking loans and advances to customers 2,987,799 1,191,091 1,585,817 5,531,421 11,296,128Financial assets at fair value through profit or loss 13,980 7,901 12,639 34,986 69,506Cash and cash equivalents 567,416 17,866 - - - - 585,282Total TL monetary assets 4,022,924 2,838,235 2,396,180 12,807,974 22,065,313Foreign CurrenciesInvestments in debt securities 409 - - 33,828 1,282,415 1,316,652Other non-current assets - - - - - - 117,759 117,759Accounts receivable 86,839 250,747 297,133 4,029 638,748Due from related parties 28 52 17 - - 97Other current assets 1,780,617 84,736 73,058 - - 1,938,411Banking loans and advances to banks 1,834,454 127,249 307,120 770,978 3,039,801Banking loans and advances to customers 572,107 1,070,590 1,709,105 7,118,629 10,470,431Financial assets at fair value through profit or loss 19,945 - - 586 10,540 31,071Cash and cash equivalents 3,064,275 29,757 - - - - 3,094,032Total foreign currency monetary assets 7,358,674 1,563,131 2,420,847 9,304,350 20,647,002Total monetary assets 11,381,598 4,401,366 4,817,027 22,112,324 42,712,315




41 Financial instruments (continued)

41.1 Liquidity risk (continued)

2011

Monetary liabilitiesUp to 1 month

1 to 3 months

3 to 12 months

Over 1 year Total

Turkish LiraLoans and borrowings 427,068 17,145 380,961 1,080,977 1,906,151Bonds payable 183,743 - - 328,460 - - 512,203Other non-current liabilities - - - - - - 679,910 679,910Deposits 9,536,513 1,574,532 282,125 459 11,393,629Obligations under repurchase agreements 1,997,508 73 - - - - 1,997,581Accounts payable 169,047 43,292 584,656 - - 796,995Due to related parties - - - - 5,850 - - 5,850Other current liabilities 968,748 15,176 380,886 - - 1,364,810Total TL monetary liabilities 13,282,627 1,650,218 1,962,938 1,761,346 18,657,129Foreign CurrenciesLoans and borrowings 222,908 553,783 3,055,694 4,750,732 8,583,117Bonds payable - - - - - - 384,019 384,019Subordinated liabilities 63 680 1,128 266,870 268,741Other non-current liabilities - - - - - - 127,295 127,295Deposits 7,969,343 1,078,899 1,187,653 403,547 10,639,442Obligations under repurchase agreements 236,629 290,956 - - 286,123 813,708Accounts payable 516,972 60,880 25,848 318,168 921,868Due to related parties - - - - 969 - - 969Other current liabilities 45,596 71,101 186,559 - - 303,256Total foreign currency monetary liabilities 8,991,511 2,056,299 4,457,851 6,536,754 22,042,415Total monetary liabilities 22,274,138 3,706,517 6,420,789 8,298,100 40,699,544

Liquidity (gap)/position (10,892,540) 694,849 (1,603,762) 13,814,224 2,012,771






2010

Monetary assetsUp to 1 month

1 to 3 months

3 to 12 months

Over 1 year Total

Turkish LiraInvestments in debt securities 714,832 568,660 1,584,014 7,571,082 10,438,588Other non-current assets - - - - - - 190,371 190,371Accounts receivable 279,108 857,230 106,850 4,410 1,247,598Due from related parties - - - - 125,656 - - 125,656Other current assets 137,858 92,325 80,129 - - 310,312Banking loans and advances to banks 276,932 22,027 155,334 544,266 998,559Banking loans and advances to customers 2,733,073 1,406,009 1,030,846 5,497,499 10,667,427Financial assets at fair value through profit or loss 59,078 17,099 30,959 97,909 205,045Cash and cash equivalents 1,035,565 12,903 - - - - 1,048,468Total TL monetary assets 5,236,446 2,976,253 3,113,788 13,905,537 25,232,024Foreign CurrenciesInvestments in debt securities 21,518 4,138 250,092 1,496,811 1,772,559Other non-current assets - - - - - - 233,369 233,369Accounts receivable 46,681 132,882 465,674 9,331 654,568Due from related parties 25 564 546 - - 1,135Other current assets 1,142,670 21,304 77,601 - - 1,241,575Banking loans and advances to banks 587,992 118,894 429,880 831,340 1,968,106Banking loans and advances to customers 382,688 782,948 2,178,201 6,979,110 10,322,947Financial assets at fair value through profit or loss 24,115 - - 2,303 10,809 37,227Cash and cash equivalents 941,579 20,889 - - - - 962,468Total foreign currency monetary assets 3,147,268 1,081,619 3,404,297 9,560,770 17,193,954Total monetary assets 8,383,714 4,057,872 6,518,085 23,466,307 42,425,978






2010

Monetary liabilitiesUp to 1 month

1 to 3 months

3 to 12 months

Over 1 year Total

Turkish LiraLoans and borrowings 526,129 68,064 473,124 1,204,470 2,271,787Other non-current liabilities - - - - - - 442,337 442,337Deposits 11,790,825 1,301,074 168,197 56,982 13,317,078Obligations under repurchase agreements 3,078,609 47,372 - - - - 3,125,981Accounts payable 109,143 51,556 568,356 - - 729,055Due to related parties - - - - 58,691 - - 58,691Other current liabilities 1,112,276 17,114 120,257 - - 1,249,647Total TL monetary liabilities 16,616,982 1,485,180 1,388,625 1,703,789 21,194,576Foreign CurrenciesLoans and borrowings 414,242 218,944 1,998,600 5,074,138 7,705,924Subordinated liability - - - - - - 295,764 295,764Other non-current liabilities - - - - - - 244,907 244,907Deposits 7,714,921 1,529,962 924,196 328,640 10,497,719Obligations under repurchase agreements 140,724 203,309 78,753 - - 422,786Accounts payable 77,194 251,319 83,786 - - 412,299Due to related parties - - - - 3,221 - - 3,221Other current liabilities 32,355 72,598 167,858 - - 272,811Total foreign currency monetary liabilities 8,379,436 2,276,132 3,256,414 5,943,449 19,855,431Total monetary liabilities 24,996,418 3,761,312 4,645,039 7,647,238 41,050,007

Liquidity (gap)/position (16,612,704) 296,560 1,873,046 15,819,069 1,375,971






Segments other than banking and finance

The following tables are the contractual maturities of financial liabilities, including interest payments and excluding the impact of netting agreements:

31 December 2011Carrying amount

Contractual cash flows

6 months or less

6-12 months 1-2 years 2-5 years

More than 5 years

Non-derivative financial liabilitiesSecured bank borrowings 3,907,636 (4,500,683) (575,436) (888,080) (568,269) (1,264,268) (1,204,630)Unsecured bank borrowings 702,642 (725,268) (103,947) (169,649) (283,695) (167,977) - -Finance lease liabilities 53,021 (65,948) (12,482) (10,174) (19,281) (24,011) - -Accounts payable 945,729 (949,934) (312,662) (315,326) (318,168) (3,778) - -Derivative financial liabilitiesForward contracts 2,989 (14,495) (14,495) - - - - - - - -Interest rate swap used for hedging 12,571 (15,676) (2,276) (2,175) (3,894) (6,993) (338)

5,624,588 (6,272,004) (1,021,298) (1,385,404) (1,193,307) (1,467,027) (1,204,968)

31 December 2010Carrying amount

Contractual cash flows

6 months or less

6-12 months 1-2 years 2-5 years

More than 5 years

Non-derivative financial liabilitiesSecured bank borrowings 2,374,435 (2,505,056) (259,888) (97,959) (846,838) (996,158) (304,213)Unsecured bank borrow-ings

1,548,743(1,665,975) (334,366) (98,179) (561,765) (489,560) (182,105)

Finance lease liabilities 17,297 (19,375) (12,411) (3,705) (3,248) (11) - -Accounts payable 498,495 (500,642) (464,208) (36,434) - - - - - -Derivative financial liabilitiesForward contracts - - - - - - - - - - - - - -Interest rate swap used for hedging 9,521 (18,170) (2,167) (2,120) (3,941) (8,402) (1,540)

4,448,491 (4,709,218) (1,073,040) (238,397) (1,415,792) (1,494,131) (487,858)






Contractual maturity analysis of liabilities of Garanti Bank and its subsidiaries, based on their proportionate interest, according to remaining maturities

The remaining maturities table of the contractual liabilities includes the undiscounted future cash outflows for the principal amounts of Garanti Bank and its subsidiaries’ financial liabilities, based on their proportionate interest, as per their earliest likely contractual maturities.

31 December 2011

Carrying amount

Nominal principaloutflows Demand

Up to 1 month

1-3months

3-12months

1-5 years

More than 5 years

Deposits 22,033,071 21,927,342 4,868,952 12,635,572 2,582,116 1,441,986 358,691 40,025Obligations under repurchase agreements 2,811,289 2,805,323 - - 2,230,151 290,198 - - 284,974 - -Bonds payable 896,222 863,154 - - 183,562 - - 328,460 134,000 217,132Bank borrowings 5,825,969 5,755,548 - - 479,264 296,944 2,144,279 1,980,660 854,401Subordinated liabilities 268,741 261,837 - - 61 658 1,091 3,842 256,185Total financial liabilities 31,835,292 31,613,204 4,868,952 15,528,610 3,169,916 3,915,816 2,762,167 1,367,743

31 December 2010

Carrying amount

Nominal principaloutflows Demand

Up to 1 month

1-3months

3-12months

1-5 years

More than 5 years

Deposits 23,814,797 23,717,199 4,608,697 14,860,161 2,799,709 1,069,322 327,967 51,343 Obligations under repurchase agreements 3,548,767 3,541,080 - - 3,213,651 248,786 78,643 - - - -Bank borrowings 6,037,236 5,961,469 - - 601,369 190,504 1,935,301 2,176,838 1,057,457 Subordinated liabilities 295,764 288,512 - - - - - - 2,428 286,084 Total financial liabilities 33,696,564 33,508,260 4,608,697 18,675,181 3,238,999 3,083,266 2,507,233 1,394,884

41.2 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:

2011 2010Cash and cash equivalents (*) 3,678,166 2,010,011Accounts receivable 1,790,624 1,902,166Due from related parties 256,134 126,791Banking loans and advances to customers and banks 25,414,794 23,957,039Investments in debt securities 8,610,758 12,211,147Financial assets at fair value through profit or loss 100,577 242,272Other current assets (**) 2,112,941 1,352,118Other non-current assets (**) 206,822 267,495

42,170,816 42,069,039

(*) Cash on hand is excluded from cash and cash equivalents.

(**) Non-financial instruments such as advances given, taxes and funds to be refunded, VAT receivables, prepaid expenses and advances given are excluded from other current assets and other non-current assets.





41.2 Credit risk (continued)

Exposure to credit risk for segments other than banking and finance

The maximum exposure to credit risk for trade receivables at the reporting date by type of customer was as follows:

2011 2010Contract receivables 359,254 545,783End-users 157,956 52,060Advertising agencies 128,142 95,990Retailers 37,933 123,306Tourism agencies 857 - -Other 53,312 69,557

737,454 886,696

The maximum exposure to credit risk for trade receivables at the reporting date by geographic concentration was as follows:

Carrying amount2011 2010

Turkey 323,214 490,903Libya 163,116 132,536Ukraine 147,959 78,955Euro zone 88,695 106,096Morocco 9,449 979Other 5,021 77,227

737,454 886,696

Impairment losses

The aging of trade receivables at the reporting date was:

2011 2010Gross Impairment Gross Impairment

Not past due 415,075 (516) 584,151 (2,042)Past due 0-30 days 53,766 (1,799) 32,432 - -Past due 31-120 days 7,379 (1,441) 69,571 (192)Past due 121-365 days 259,514 (597) 303,115 (105,531)More than one year 157,766 (151,693) 12,616 (7,424)Total 893,500 (156,046) 1,001,885 (115,189)






Exposure to credit risk for banking and finance segment

Banking loans and advances to customers2011 2010

Individually impaired 529,110 772,044Allowance for impairment (501,088) (657,566)Carrying amount 28,022 114,478

Collectively impaired - - - -Allowance for impairment (94,737) (85,719)Carrying amount (94,737) (85,719)

Past due but not impaired 217,749 368,734217,749 368,734

Neither past due nor impaired 21,089,935 20,370,916Loans with renegotiated terms 525,590 221,965Carrying amount 21,615,525 20,592,881

Total carrying amount 21,766,559 20,990,374

At 31 December 2011 and 2010, Garanti Bank has no allowance for loans and advances to banks.

Garanti Bank developed a statistical-based internal risk rating model for its credit portfolio of corporate/commercial/medium-size companies. This internal risk rating model has been in use for customer credibility assessment since 2003 and is currently being reviewed and updated. Risk rating has become a requirement for loan applications, and ratings are used both to determine credit authorization limits and in credit assessment process.

The concentration table of the cash and non-cash loans for Garanti Bank according to the risk rating system for its customers defined as corporate, commercial and medium-size enterprises is presented below.

31 December 2011 31 December 2010

% %Above average 46 50Average 49 44Below average 5 6

100 100






Sectoral and geographical concentration of impaired loans for banking and finance segment

An analysis of concentrations of non-performing loans and lease receivables at the reporting date is shown below:

2011 2010Consumer loans 257,047 384,474Textile 41,764 59,711Metal and metal products 31,785 33,232Service sector 24,322 24,322Transportation vehicles and sub-industries 22,467 47,855Construction 21,232 35,238Agriculture and stockbreeding 18,580 30,878Food 17,877 24,731Energy 9,361 3,996Transportation and logistics 8,994 23,963Paper and paper products 7,444 9,656Durable consumption 6,976 8,660Tourism 6,325 9,349Chemistry and chemical products 3,651 19,106Others 51,285 56,873Total non-performing loans and finance lease receivables 529,110 772,044

2011 2010Turkey 428,927 673,519Romania 71,285 69,537Ukraine 16,700 15,041Russia 5,998 4,264Brazil 2,137 2,446Switzerland 1,690 5,937Others 2,373 1,300Total non-performing loans and finance lease receivables 529,110 772,044

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 customer’s current activities, assets and financial position.






The breakdown of performing cash and non-cash loans and advances to customers at the reporting date by type of collateral is as follows:

2011 2010Cash loansSecured loans: 16,271,709 15,049,554 Secured by mortgages 4,975,909 5,292,173 Secured by government institutions or government securities 836,310 770,113 Secured by cash collateral 391,652 390,885 Guarantees issued by financial institutions 99,373 66,859 Other collateral (pledge on assets, corporate and personal

guarantees, promissory notes) 9,968,465 8,529,524Unsecured loans 5,554,726 6,101,285Total performing loans, finance lease and factoring receivables 21,826,435 21,150,839

Non-cash loansSecured loans: 4,371,087 4,040,821 Secured by mortgages 390,088 533,629 Secured by cash collateral 172,534 276,456 Guarantees issued by financial institutions 19,130 10,264 Other collateral (pledge on assets, corporate and personal

guarantees, promissory notes) 3,789,335 3,220,472Unsecured loans 880,134 842,951Total non-cash loans (Note 6.1) 5,251,221 4,883,772

An estimate of the fair value of collateral held against non-performing loans and receivables at the reporting date is as follows:

2011 2010Mortgages 88,442 176,222Promissory notes and sureties 66,880 178,646Pledge assets 40,947 103,961Cash collateral 249 408Unsecured 332,592 312,807

529,110 772,044

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





41.3 Market risk

(i) Interest rate risk

Profile

As at 31 December, the interest rate profile of the Group’s interest-bearing financial instruments other than banking and finance segment was as follows:

2011 2010Fixed rate instrumentsFinancial assets 2,660,753 448,337Financial liabilities (718,731) (792,855)Interest rate swap, fixed leg (103,728) (96,090)

1,838,294 (423,312)

Variable rate instrumentsFinancial assets - - - -Financial liabilities (3,944,568) (3,147,620)Interest rate swap, variable leg 103,728 96,090

(3,887,495) (3,051,530)

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 2010.

Profit or loss Equity100 bp 100 bp

31 December 2011 increase decrease increase decreaseVariable rate instruments 2,256 (2,280) 4,149 (4,327)Cash flow sensitivity (net) 2,256 (2,280) 4,149 (4,327)

Profit or loss Equity100 bp 100 bp

31 December 2010 increase decrease increase decreaseVariable rate instruments 8,024 (8,024) 3,794 (3,994)Cash flow sensitivity (net) 8,024 (8,024) 3,794 (3,994)





41.3 Market risk (continued)

(i) Interest rate risk (continued)

The following table indicates the effective interest rates by major currencies for the major components of the consolidated statements of financial position of the Group for the years ended 31 December:

2011

USD % Euro % TL %Other

currencies %AssetsBanking loans and advances to banks 1.00-4.00 1.00-6.00 6.00-13.00 1.00-6.00Debt and other fixed or floating income instruments 2.00-11.00 3.00-8.00 6.00-21.00 7.00-11.00Banking loans and advances to customers 1.00-19.00 2.00-14.00 9.00-26.00 1.00-53.00LiabilitiesDeposits Foreign currency 1.00-7.00 1.00-8.00 - - 1.00-8.00 Bank 1.00-4.00 1.00-5.00 5.00-10.00 1.00-7.00 Saving - - - - 6.00-11.00 - - Commercial - - - - 6.00-11.00 - - Public and other deposits - - - - 10.00 - -Obligations under repurchase agreements 1.00-3.00 1.00-2.00 5.00-11.00 6.00Bonds payable 6.00 - - 8.00 - -Loans and borrowings 2.07-11.05 0.01-12.27 9.00-16.51 2.72-6.00

2010


currencies %AssetsBanking loans and advances to banks 1.00-5.00 1.00-7.00 6.00-10.00 1.00-9.00Debt and other fixed or floating income instruments 6.00-14.00 3.00 11.00 - -Banking loans and advances to customers 1.00-11.00 1.00-14.00 6.00-24.00 1.00-36.00LiabilitiesDeposits

Foreign currency 1.00-7.00 1.00-8.00 - - 1.00-12.00Bank 1.00-5.00 1.00-5.00 4.00-7.00 1.00-7.00Saving - - - - 5.00-9.00 - -Commercial - - - - 5.00-9.00 - -Public and other deposits - - - - 9.00 - -

Obligations under repurchase agreements 1.00-2.00 1.00 7.00 4.00Loans and borrowings 0.50-8.15 1.00-8.00 7.00-14.98 3.00-10.00

(ii) Currency risk

The Group is exposed to currency risk through transactions in foreign currencies and through its investment in foreign operations.

Main foreign operations of the banking and finance segment are in the Netherlands, Romania and Russia. The measurement currencies of these operations are Euro, RON and USD. As the currency in which the Group presents its consolidated financial statements is TL, the consolidated financial statements are affected by currency exchange rate fluctuations against TL.






(ii) Currency risk (continued)

At 31 December, the currency risk exposures of the Group in TL thousand equivalents are as follows:

2011


currencies %Foreign currency monetary assets

Investments in debt securities 886,653 383,349 46,650 1,316,652

Other non-current assets 30,869 31,930 54,960 117,759

Accounts receivable 297,737 215,840 125,171 638,748

Due from related parties - - - - 97 97

Other current assets 110,914 1,423,495 404,002 1,938,411

Banking loans and advances to banks and customers 8,515,829 4,336,442 657,961 13,510,232

Financial assets at fair value through profit or loss 10,023 1,825 19,223 31,071

Cash and cash equivalents 2,532,220 526,791 35,021 3,094,032

Total foreign currency monetary assets 12,384,245 6,919,672 1,343,085 20,647,002

Foreign currency monetary liabilities

Loans and borrowings 5,987,411 2,571,652 24,054 8,583,117

Bonds payable 384,019 - - - - 384,019

Subordinated liabilities 229,595 39,146 - - 268,741

Other non-current liabilities 80,385 10,175 36,735 127,295

Deposits 5,374,816 4,179,255 1,085,371 10,639,442

Obligations under repurchase agreements 720,664 54,183 38,861 813,708

Accounts payable 364,312 495,691 61,865 921,868

Due to related parties 20 9 940 969

Other current liabilities 155,412 33,455 114,389 303,256

Total foreign currency monetary liabilities 13,296,634 7,383,566 1,362,215 22,042,415

Gross statement of financial position exposure (912,389) (463,894) (19,130) (1,395,413)

Off balance sheet exposure (131,884) (416,719) 168,101 (380,502)

Net exposure (1,044,273) (880,613) 148,971 (1,775,915)







2010

USD EuroOther

currencies Total

Foreign currency monetary assets

Investments in debt securities 1,358,943 364,637 48,979 1,772,559

Other non-current assets 157,753 27,413 48,203 233,369

Accounts receivable 483,433 75,776 95,359 654,568

Due from related parties - - - - 1,135 1,135

Other current assets 522,827 631,731 87,017 1,241,575Banking loans and advances to banks and customers 7,716,973 4,165,290 408,790 12,291,053Financial assets at fair value through profit or loss 5,527 5,680 26,020 37,227

Cash and cash equivalents 580,351 359,939 22,178 962,468

Total foreign currency monetary assets 10,825,807 5,630,466 737,681 17,193,954

Foreign currency monetary liabilities

Loans and borrowings 4,925,384 2,762,107 18,433 7,705,924

Subordinated liabilities 236,574 59,190 - - 295,764

Other non-current liabilities 237,570 4,906 2,431 244,907Deposits 5,806,373 4,187,769 503,577 10,497,719

Obligations under repurchase agreements 358,934 31,058 32,794 422,786

Accounts payable 29,057 299,988 83,254 412,299

Due to related parties - - - - 3,221 3,221

Other current liabilities 115,378 54,215 103,218 272,811

Total foreign currency monetary liabilities 11,709,270 7,399,233 746,928 19,855,431Gross statement of financial position exposure (883,463) (1,768,767) (9,247) (2,661,477)

Off balance sheet exposure (1,413,390) 546,782 113,007 (753,601)

Net exposure (2,296,853) (1,221,985) 103,760 (3,415,078)

For the purposes of the evaluation of the table above, the figures represent the TL equivalent of the related hard currencies.







Sensitivity analysis

A 10 percent weakening of TL against the above currencies at 31 December would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2010.

Equity Profit or loss31 December 2011USD (169) (104,258)Euro (73) (87,988)Others (9) 14,90631 December 2010USD (9,080) (220,605)Euro (2,436) (119,763)Others (327) 10,703

A 10 percent of strengthening of TL against the above currencies at 31 December would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

41.4 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 financial assets and financial liabilities are not materially different than their recorded values except for loans and advances to customers and investment securities. These financial assets and financial liabilities include loans and advances to banks, obligations under repurchase agreements, loans and advances from banks, and other short-term assets and liabilities that are of a contractual nature. Management believes that the carrying amounts of these particular financial assets and liabilities approximate their fair values, partially due to the fact that it is a practice to renegotiate interest rates to reflect current market conditions.





41.4 Fair value information (continued)

As at 31 December 2011, the fair value of banking loans and advances to customers was TL 21,598,381 thousand (2010: TL 20,915,544 thousand), whereas the carrying amount was TL 21,766,559 thousand (2010: TL 20,990,374 thousand).

As at 31 December 2011, the fair value of investment in debt securities was TL 8,666,628 thousand (2010: TL 12,374,432 thousand), whereas the carrying amount was TL 8,610,758 thousand (2010: TL 12,211,147 thousand).

The table below analyses financial instruments carried at fair value as at 31 December, by valuation method:

2011 Level 1 Level 2 Level 3 TotalFinancial assets at fair value through profit or loss 91,505 49 9,023 100,577Accrued gains on derivatives 1,188 251,563 - - 252,751Debt and other instruments available-for-sale 6,071,525 - - 1,392,859 7,464,384Financial assets at fair value 6,164,218 251,612 1,401,882 7,817,712Accrued losses on derivatives 23 306,355 - - 306,378Financial liabilities at fair value 23 306,355 - - 306,378

2010 Level 1 Level 2 Level 3 TotalFinancial assets at fair value through profit or loss 238,164 3,582 526 242,272Accrued gains on derivatives 451 142,782 - - 143,233Debt and other instruments available-for-sale 9,610,584 77,235 741,004 10,428,823Financial assets at fair value 9,849,199 223,599 741,530 10,814,328Accrued losses on derivatives 6,967 171,774 311 179,052Financial liabilities at fair value 6,967 171,774 311 179,052

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilitiesLevel 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices)Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)

42 Use of estimates and judgments

Management discussed with the Audit Committee the development, selection and disclosure of the Group’s critical accounting policies and estimates, and the application of these policies and estimates. These disclosures supplement the commentary on basis of preparation (see note 2(d)).

Key sources of estimation uncertainty

Allowance for credit losses

Assets accounted for at amortised cost are evaluated for impairment on a basis described in accounting policy note 3(m).




42 Use of estimates and judgments (continued)

Key sources of estimation uncertainty (continued)

Allowance for credit losses (continued)

The specific counterparty component of the total allowances for impairment applies to claims evaluated individually for impairment and is based upon management’s best estimate of the present value of the cash flows that are expected to be received. In estimating these cash flows, management makes judgment about counterparty’s financial situation and the net realisable value of any underlying collateral. Each impaired asset is assessed on its merits, and the workout strategy and estimate of cash flows considered recoverable are independently approved by the credit risk function.

Portfolio-basis assessed impairment allowances cover credit losses inherent in portfolios of claims with similar economic characteristics when there is objective evidence to suggest that they contain impaired claims, but the individual impaired items cannot yet be identified. A component of portfolio-basis assessed allowances is for country risks. In assessing the need for collective loan loss allowances, management considers factors such as credit quality, portfolio size, concentrations, and economic factors. In order to estimate the required allowance, assumptions are made to define the way inherent losses are modelled and to determine the required input parameters, based on historical experience and current economic conditions. The accuracy of the allowances depends on how well these estimate future cash flows for specific counterparty allowances and the model assumptions and parameters used in determining collective allowances.

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 judgment depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument.

Critical accounting judgments in applying the Group’s accounting policies

Critical accounting judgments made in applying the Group’s accounting policies include:

Financial asset and liability classification

The Group’s accounting policies provide scope for assets and liabilities to be designated on inception into different accounting categories in certain circumstances:

• In classifying financial assets or liabilities as “trading”, the Group has determined that it meets the description of trading assets and liabilities set out in accounting policy 3(d) financial instruments.

• In designating financial assets or liabilities at fair value through profit or loss, the Group has determined that it has met one of the criteria for this designation set out in accounting policy 3(d) financial instruments.

• In classifying financial assets as held-to-maturity, the Group has determined that it has both the positive intention and ability to hold the assets until their maturity date as required by accounting policy 3(d) financial instruments.




42 Use of estimates and judgments (continued)

Critical accounting judgments in applying the Group’s accounting policies (continued)

Securitisations

In applying its policies on securitised financial assets, the Group has considered both the degree of transfer of risks and rewards on assets transferred to another entity and the degree of control exercised by the Group over the other entity:

• When the Group, in substance, controls the entity to which financial assets have been transferred, the entity is included in these consolidated financial statements and the transferred assets are recognised in the Group’s consolidated statement of financial position.

• When the Group has transferred financial assets to another entity, but has not transferred substantially all of the risks and rewards relating to the transferred assets, the assets are recognised in the Group’s consolidated statement of financial position.

• When the Group transfers substantially all the risks and rewards relating to the transferred assets to an entity that it does not control, the assets have been derecognised from the Group’s consolidated statement of financial position.

Details of the Group’s securitisation activities are given in Note 30.




43 Group enterprises

The major changes in Group enterprises during the year ended 31 December 2011 are summarised in the following paragraphs:

Establishment of new entities

• On 9 March 2011, Doğuş Yayın has established Doğuş E Alışveriş ve Ticaret Anonim Şirketi. The area of operation of the entity is private online shopping.

• On 26 July 2011, Doğuş Yayın Grubu has established Doğuş Media Group GmbH in Berlin, Germany. The area of operation of the entity is distributing Turkish-language television programs and the marketing of air time for advertisement and all related activities.

• On 8 August 2011, Doğuş Holding has established Doğuş Yeni İnternet Reklam ve Pazarlama Hizmetleri Anonim Şirketi. The area of operation of the entity is private online marketing and advertising.

• On 19 September 2011, Doğuş Holding and DOAŞ have established Doğuş Bilgi İşlem ve Teknoloji Hizmetleri Anonim Şirketi. The area of operation of the entity is software development as well as research, development and application of IT services.

• On 17 November 2011, Doğuş Yayın has established E2 Radyo ve Televizyon Yayıncılığı Anonim Şirketi. The area of operation of the entity is radio and television broadcasting activities.

• On 17 November 2011, Doğuş Yayın has established Kral Pop Medya Hizmetleri Anonim Şirketi. The area of operation of the entity is radio and television broadcasting activities.

• On 21 November 2011, Doğuş Yayın has established HD-E Radyo ve Televizyon Yayıncılığı Anonim Şirketi. The area of operation of the entity is radio and television broadcasting activities.

• On 21 November 2011, Doğuş Yayın has established NTV Batı Medya Hizmetleri Anonim Şirketi. The area of operation of the entity is radio and television broadcasting activities.

• On 30 November 2011, Doğuş Holding has established Dogus Management Services Limited in Dubai. The area of operation of the entity is business and financial investments.

Change in structure/title

• On 21 March 2011, Doğuş-GE Gayrimenkul Yatırım Ortaklığı Anonim Şirketi has changed its legal name as “Doğuş Gayrimenkul Yatırım Ortaklığı Anonim Şirketi”.

• On 27 January 2011, D Netherlands Holding B.V. has changed its legal name as “Garanti Holding B.V.”.

• On 27 January 2011, Doğuş GE B.V. has changed its legal name as “G Netherlands B.V.”.

• On 1 June 2011, D Tay Sağlıklı Yaşam ve Danışmanlık Hizmetleri Ticaret Anonim Şirketi has changed its legal name as “Doğuş Sağlıklı Yaşam ve Danışmanlık Hizmetleri Ticaret Anonim Şirketi”.

• In August 2011, Leasemart Holding B.V., a proportionately consolidated joint venture of the Group, has been merged under Garanti Holding B.V..

• On 6 December 2011, NCP Hoteli d.o.o. has changed its legal name as “Doğuş Marina Hoteli d.o.o.”.

• On 8 December 2011, Doğuş Hava Taşımacılığı Anonim Şirketi has changed its legal name as “Doğuş Yeme İçme Hizmetleri Anonim Şirketi”.

• On 23 December 2011, DO-ÇA Tekstil Temizleme ve Ticaret Anonim Şirketi has changed its legal name as “D Otel Göcek Turizm Yatırımları ve İşletmeciliği Anonim Şirketi”.




43 Group enterprises (continued)

Liquidation of entities

• On 15 March 2011, liquidation of Cappadocia Investments Limited was finalised.

• On 14 September 2011, liquidation of Doğuş Koray Romania was finalised.

• On 20 September 2011, liquidation of DG Finance Holding B.V. was finalised.

• On 19 October 2011, liquidation of Doğuş Luxembourg S.á.r.l. was finalised.

• On 14 November 2011, liquidation of DAF Araştırma Geliştirme Anonim Şirketi was finalised.

• On 23 December 2011, liquidation of Makro Sanayi Mamülleri İmalat ve Pazarlama Limited Şirketi was finalised.

• Ayson Hydro, Doğuş Auto Mısr LLC, Doğuş Auto Mısır JS, Doğuş Finance Ukraine, Doğuş İnşaat d.o.o., Doğuş Prestige, Doğuş Poland, Doğuş Investment and Doğuş Mandalina Razvitak are under liquidation as at 31 December 2011.

44 Significant events

44.1 According to share purchase agreement dated 12 November 2010, Doğuş Holding agreed to purchase shares with nominal value of TL 23,913,900 in Doğuş GYO representing 25.5 percent of the share capital from General Electric Capital Corporation for a consideration of USD 28,000 thousand. On 3 January 2011, the purchase price has been paid to the General Electric Capital Corporation and shares have been transferred to Doğuş Holding.

44.2 According to the agreement dated 24 February 2011, NTV Avrupa has acquired broadcasting right of Radyo 5 from Saving Deposit Insurance Fund.

44.3 On 1 November 2010, Doğuş Holding and BBVA signed a share purchase agreement. On 22 March 2011, according to this agreement, 26,418,840,000 shares in Garanti Bank representing 6.29 percent of the share capital of Garanti Bank owned by Doğuş Holding has been transferred to BBVA for a consideration of USD 2,067 million including USD 5 million late payment interest. The approvals of BRSA, CMB, Republic of Turkey Prime Ministry Undersecretariat of Treasury, The Central Bank of Spain, The Dutch Central Bank, The National Bank of Romania and European Commission have been obtained between the period of 1 November 2010 and 22 March 2011.

In addition, on 1 November 2010, Doğuş Holding and BBVA signed a shareholders’ agreement which was effective from the date of completion of aforementioned share purchase agreement. This new shareholders’ agreement has replaced the previously signed shareholders’ agreement between GE Araştırma Müşavirlik A.Ş. and Doğuş Holding dated 22 December 2005. According to the new shareholders’ agreement with BBVA, after five years period starting from the date of this new agreement, BBVA has the right to purchase additional 1 percent of shares held by Doğuş Holding in Garanti Bank for the average price of the last 30 days’ quoted prices.

44.4 On 7 April 2011, one of the shareholder of Garanti Bank, BBVA, has acquired 503,160,000 shares at a total nominal value of TL 5,032 thousand and increased its ownership in the Garanti Bank’s share capital to 25.01 percent. As per the agreement between Doğuş Holding and BBVA, if any of the parties acquires additional shares during the next five years following the date of the shareholders’ agreement, it is required to offer half of the acquired shares to other party, in case that other party does not accept to purchase the offered shares, usufruct rights shall be established on the voting rights of such shares in favour of other party. Accordingly, although BBVA has acquired additional shares in April 2011, this does not affect their jointly control on the Garanti Bank’s management.




44 Significant events (continued)44.5 In June 2011, “N101” radio channel brand has been changed to “Kapital” brand and the content of broadcast has

been changed from Turkish to foreign content.

44.6 According to share purchase agreement dated 20 June 2011, the Group has decided to purchase shares with nominal value of HRK 36 (equivalent to Euro 5 thousand and TL 24 thousand) in NCP Marina Mandalina representing 36 percent of the share capital from an individual shareholder for a consideration of Euro 7,200 thousand. On 7 July 2011, the purchase price has been paid to the shareholder and shares have been transferred to the Group.

44.7 In July and August 2011, Gülermak Doğuş has collected USD 275.8 million (Group share: USD 137.9 million) of its receivables from İstanbul Metropolitan Municipality and repaid USD 256 million (Group share: USD 128 million) of its bank borrowings by this collection.

44.8 In August 2011, Doğuş Holding has purchased the publicly traded shares of DOAŞ with a total nominal value of TL 935 thousand representing 253,986 shares in total.

44.9 On 26 August 2011, DOAŞ has paid a penalty fee to the government authorities amounting to TL 37,340 thousand with respect to the investigation of Turkish Competition Authority.

44.10 On 15 September 2011, Doğuş İnşaat won the tender of construction and completion of Üsküdar-Ümraniye-Çekmeköy Metro Construction Project. The terms of project are as follows:

Employer: İstanbul Metropolitan Municipality

Contract value: 563,890 thousand Euro

Doğuş İnşaat share: 100 percent

Type: Construction and completion of metro construction

Date of completion: February 2015

44.11 On 17 October 2011, the Group and Doğan Yayın signed a share purchase agreement. According to this agreement, the Group has decided to purchase total 391,500 thousand shares in Star TV representing share capital with a total nominal value of TL 391,500 thousand from Doğan Yayın for a consideration of USD 327,000 thousand. Upon approval of Competition Board and other regulatory authorities, on 3 November 2011, the share transfer has been finalised with a closing agreement. On 3 November 2011, the Group has obtained a loan amounting to USD 250,000 thousand related to this acquisition.

44.12 On 22 November 2011, the Group management has signed a pre-sales agreement with Diana Otel Yatırımları ve İşletmeciliği Anonim Şirketi to take necessary actions regarding the sales of two touristic premises located in Side, Antalya, namely Aldiana Side (a holiday village) and Paradise Side Beach (an apart hotel).

44.13 On 30 November 2011, Doğuş Holding has signed a joint venture agreement with Autostrade Per L’Italia S.P.A, Makyol İnşaat Sanayi Turizm ve Ticaret Anonim Şirketi, Akfen Holding Anonim Şirketi to jointly bid on the “Tender for the Privatization of the Operation Rights of the Motorways (Edirne-İstanbul-Ankara, Pozantı-Tarsus-Mersin, Tarsus-Adana-Gaziantep, Toprakkale-İskenderun, Gaziantep-Şanlıurfa, İzmir-Çeşme, İzmir-Aydın motorways, İzmir Ankara and Fatih Sultan Mehmet Bridge Ring Roads together with their approaching roads), the Bridges (Bosphorus and Fatih Sultan Mehmet) and Other Facilities (related service, maintenance and operation facilities, toll collecting centers and all other producers and service providers)”; to be awarded of the concession for 25 years.




45 Subsequent events45.1 On 5 January 2012 Doğuş Holding has established Doğuş Cennet Koyu Sağlıklı Yaşam Hizmetleri Ticaret Anonim

Şirketi. The area of the operation of the entity is healthcare counseling and hospitality.

45.2 On 10 January 2012, liquidation of Doğuş Investment was finalised.

45.3 The tender for Turkish Airlines Frequent Flyer Program Miles&Smiles Co-Branded Credit Card dated 16 January 2012 regarding the renewal of the agreement between Garanti Bank and Türk Hava Yolları Anonim Ortaklığı on cooperation for Frequent Flyer Program Credit Card, which is expired on 31 March 2012, has been finalized and it was announced that Garanti Bank will issue Miles&Smiles Credit Card for members of Miles&Smiles for 5 more years and accordingly, the negotiations to sign an agreement have been started.

45.4 On 24 January 2012, Doğuş Yayın has established Star Yapım ve Prodüksiyon Hizmetleri Anonim Şirketi. The area of the operation of the entity is producing radio and television programs.

45.5 On 25 January 2012, Doğuş Holding and SK Planet Co.Ltd. have signed a memorandum of understanding to establish new internet partnership in the field of e-commerce.

45.6 At the meeting of Garanti Bank’s Board of Directors held on 14 July 2011, it has been resolved to issue TL denominated bank bills up to an amount of TL 239,500 thousand (Group share) in various maturities in the domestic market. Accordingly, the related approvals were obtained, and the issuance of TL denominated bank bills amounting TL 155,675 thousand (Group share) with 176-days maturity and annual compound interest rate of 10.98 percent, and TL 83,825 thousand (Group share) with 92-days maturity and annual compound interest rate of 10.96 percent was started on 23 January 2012 and completed on 26 January 2012.

45.7 On 6 February 2012, Garanti Bank has ended its operations with T-2 Capital Finance Company, one of its special purpose entities.

45.8 On 6 February 2012, Garanti Bank has repaid the subordinated debt of USD 120 million (Group share) obtained on 5 February 2007 with a maturity of ten years and interest rate of 6.95 percent, using the repayment option. The necessary permissions were obtained from the Banking Regulation and Supervision Agency.

45.9 On 14 February 2012, Doğuş Holding has established D Marine Investment Holding Cooperation U.A. in the Netherlands. The area of the operation of the entity is marina management.

45.10 It was announced on 14 February 2012 that Garanti Bank has applied to BRSA and CMB for the issuance of bank bonds and/or debentures in TL currency with varying maturity dates, up to the aggregate amount of TL 1,198 million (Group share). In this regard, BRSA notified that the application for the issuance of bank bonds and/or debentures in TL currency up to the aggregate amount of TL 1,198 million (Group share), including all unmatured and domestically issued TL denominated bonds in the amount of TL 599 million (Group share) has been approved.

45.11 On 15 February 2012, Doğuş Holding has established D Marine Investment Holding B.V. in the Netherlands. The area of the operation of the entity is marina management.

45.12 On 17 February 2012, the Turkish Constitutional Court decided to cancel the Article 5 of the Law no. 6009 regarding investment allowance exemption for taxation and the cancelation of the article was promulgated in the Official Gazette no. 28208 dated 18 February 2012. Accordingly, taxpayers are allowed to benefit from the investment incentive without any limitation.

45.13 On 24 February 2012, Doğuş Holding and Doğuş Arge have entered into a share purchase and sale agreement to buy 40 percent of the shares of Hedef Medya Tanıtım Interaktif Medya Pazarlama A.Ş. By the approval of Competition Board, the closing has been realized on 4 April 2012.




45 Subsequent events (continued)

45.14 On 29 February 2012, Doğuş Holding has established Doğuş Perakende Satış, Giyim ve Aksesuar Ticaret Anonim Şirketi. The area of the operation of the entity is retail services.

45.15 On 12 March 2012, Doğuş Holding has established Nahita Restoran İşletmeciliği ve Yatırım Anonim Şirketi. The area of the operation of the entity is establishment and management of restaurants and cafes.

45.16 On 13 March 2012, Doğuş Yayın has established HD Yayıncılık ve Medya Hizmetleri Anonim Şirketi. The area of the operation of the entity is radio and television broadcasting activities.

45.17 On 15 March 2012, Doğuş Group has acquired 97 percent shares of Atami Turizm İşletmeciliği ve Ticaret Anonim Şirketi for a consideration of 17 million USD. The closing agreement regarding the acquisition has been signed on 15 March 2012.

45.18 Dogus Management Services Limited and Abraaj General Partner VIII Limited have entered into a Capital Commit-ment and Subscription Agreement (Abraaj Buyout Fund IV) dated on 19 March 2012 for investment purposes.

45.19 On 21 March 2012, a sales agreement has been signed between the Group and Vipindirim Elektronik Hizmetler ve Ticaret Anonim Şirketi regarding the sales of 75% ownership rights of Doğuş E Alışveriş ve Ticaret Anonim Şirketi, which is the Company for the Internet portal “enmoda”, a portal for private online shopping.

45.20 On 3 April 2012, Doğuş Yeni İnternet Reklam ve Pazarlama Hizmetleri Anonim Şirketi has changed its legal name as “Doğuş Yeni İnternet Reklam Pazarlama ve Turizm Hizmetleri Anonim Şirketi”.

45.21 On 3 April 2012, Doğuş E Alışveriş ve Ticaret Anonim Şirketi has changed its legal name as “Enmoda E Alışveriş ve Ticaret Anonim Şirketi”.


Doğuş Holding Anonim Şirketi and its SubsidiariesSupplementary Information

Convenience Translation to UD Dollar

31 December 2011

The US Dollar (“USD”) amounts shown in the consolidated statement of financial position and consolidated statement of comprehensive income on the following pages have been included solely for the convenience of the reader.

For the current year’s consolidated financial statements, USD amounts are translated from TL consolidated financial statements using the official TL exchange rate of 1.8889 TL/USD prevailing on 31 December 2011. For the prior year’s consolidated financial statements, USD amounts are translated from TL consolidated financial statements using the official TL exchange rate of 1.5460 TL/USD prevailing on 31 December 2010.

Such translation should not be construed as a representation that the TL amounts have been converted into USD pursuant to the requirements of IFRS or Generally Accepted Accounting Principles in the United States of America or in any other country.

Appendix I


Doğuş Holding Anonim Şirketi and its SubsidiariesConsolidated Statement of Financial Position

As at 31 December 2011Amounts translated into thousands of USD for convenience purposes only

31 December 2011 31 December 2010AssetsProperty and equipment 2,085,191 2,141,195Intangible assets 852,819 720,823Investments in debt securities 4,137,793 5,865,390Investments in equity securities 28,881 47,312Accounts receivable 4,655 8,888Banking loans and advances to customers 6,697,046 8,070,252Banking loans and advances to banks 637,079 889,784Financial assets at fair value through profit or loss 24,102 70,322Investment property 1,007,510 988,842Other non-current assets 205,781 274,088Deferred tax assets 83,124 153,741Assets held for sale 16,186 21,486Total non-current assets 15,780,167 19,252,123

Inventories 357,917 363,827Accounts receivable 943,317 1,221,491Due from related parties 135,600 82,012Other current assets 1,308,388 1,003,808Investments in debt securities 420,817 2,033,153Banking loans and advances to customers 4,826,359 5,506,963Banking loans and advances to banks 1,294,328 1,029,146Financial assets at fair value through profit or loss 29,144 86,387Cash and cash equivalents 1,947,861 1,300,735Assets held for sale 34,000 - -Total current assets 11,297,731 12,627,522

Total assets 27,077,898 31,879,645

Appendix I.1


Doğuş Holding Anonim Şirketi and its SubsidiariesConsolidated Statement of Financial Position (continued)

As at 31 December 2011Amounts translated into thousands of USD for convenience purposes only

31 December 2011 31 December 2010EquityPaid-in capital 1,088,089 1,329,426Capital stock held by subsidiaries (52,282) (63,878)Share premium 84,361 103,072Fair value reserve 6,306 313,535Translation reserve 24,060 2,179Hedging reserve (4,270) (5,083)Revaluation surplus 561,321 702,586Legal reserves 150,501 174,972Retained earnings 3,364,421 2,424,948Total equity attributable to owners of the Company 5,222,507 4,981,757

Non-controlling interestsŞahenk Family 56,446 64,871Others 128,883 115,568Total non-controlling interests 185,329 180,439

Total equity 5,407,836 5,162,196

LiabilitiesLoans and borrowings 3,087,357 4,061,195Bonds payable 203,303 - -Subordinated liabilities 141,283 191,309Deposits 213,884 249,432Obligations under repurchase agreements 151,476 - -Accounts payable 168,441 - -Deferred tax liabilities 106,116 100,834Other non-current liabilities 427,343 444,531Total non-current liabilities 4,499,203 5,047,301

Loans and borrowings 2,465,752 2,392,692Bonds payable 271,165 - -Subordinated liabilities 991 - -Deposits 11,450,614 15,154,706Obligations under repurchase agreements 1,336,845 2,295,451Accounts payable 741,540 738,263Due to related parties 3,610 40,047Taxes payable on income 17,253 64,217Other current liabilities 883,089 984,772Total current liabilities 17,170,859 21,670,148

Total liabilities 21,670,062 26,717,449

Total equity and liabilities 27,077,898 31,879,645


Doğuş Holding Anonim Şirketi and its SubsidiariesConsolidated Statement Comprehensive Income

For the Year Ended 31 December 2011Amounts translated into thousands of USD for convenience purposes only

2011 2010Revenues 5,256,585 5,598,054Cost of revenues (3,905,558) (3,822,975)Gross profit 1,351,027 1,775,079Administrative expenses (629,895) (745,907)Selling, marketing and distribution expenses (128,448) (132,521)Impairment losses, net (144,788) (57,636)Trading gain, net 93,682 61,931Other income 1,415,753 143,237Other expense (127,892) (121,839)Result from operating activities 1,829,439 922,344Finance income 184,856 308,046Finance expense (339,005) (376,233)Net finance costs (154,149) (68,187)Share of profit of equity accounted investees 4,237 11,428Profit before income tax 1,679,527 865,585Income tax expense (231,114) (207,906)Profit for the year 1,448,413 657,679Other comprehensive incomeRevaluation of property and equipment (2,824) (10,718)Change in fair value of available-for-sale financial assets (297,412) 73,869Change in translation reserve 22,276 (28,150)Effective portion of changes in fair value of cash flow hedges (110) 236Income tax on other comprehensive income 54,138 1,945Other comprehensive income for the year, net of income tax (223,932) 37,182Total comprehensive income for the year 1,224,481 694,861Profit attributable to:Owners of the Company 1,425,043 624,848Non-controlling interests 23,370 32,831 -Şahenk Family 4,400 5,220 -Others 18,970 27,611

1,448,413 657,679Total comprehensive income attributable to:Owners of the Company 1,200,591 665,029Non-controlling interests 23,890 29,832 -Şahenk Family 3,208 4,250 -Others 20,682 25,582

1,224,481 694,861

Appendix I.2

Documents

Dogus Group Annual Report 2011