Do ufl Otomotiv Annual Report 2006

Transcription

1 page 103 Do ufl Otomotiv Annual Report 2006 Corporate Governance Principles Compliance Report Information on the Capital Structure and Shareholding Information on Do ufl Otomotiv Stocks General and Administrative Activities Amendments to the Articles of Association in the Reporting Period Dividend Distribution Proposal Audit Report

2 page 104 Do ufl Otomotiv Faaliyet Raporu 2006 Corporate Governance Principles Compliance Report Corporate Governance Principles as published by the Capital Markets Board of Turkey have been implemented in parallel with the explanations hereinbelow at Do ufl Otomotiv Servis ve Ticaret Anonim fiirketi (Do ufl Otomotiv Service and Trade Corporation) in the fiscal year ended 31 December SECTION I - SHAREHOLDERS Shareholders Relations Unit Relations with shareholders are carried out by the Investor Relations Department in our Company. Investor Relations Department Department Director Mr. zzet Berk Ça dafl Investor Relations Manager Ms. dil Bora Phone : Fax : investorrelations@dogusotomotiv.com.tr ibora@dogusotomotiv.com.tr Shareholders Exercise of their Right to Obtain Information All queries and applications received from the shareholders during the reporting period have been responded to by phone or without any discrimination. Phone calls were received from over 100 different individuals and information has been provided to the same individuals upon request at different times during In addition, 150 written applications (by and fax) were received, upon which the requested information was provided to related parties. During the reporting period, 97 one-on-one meetings and 2 teleconferences with multiple participants were held to provide information to 169 individual and corporate investors and shareholders. All necessary information that the shareholders will need is made available on Do ufl Otomotiv website and regularly updated. The Company s articles of association contain no provisions stipulating the appointment of a Special Auditor as an individual right. In 2006, shareholders did not request appointment of a Special Auditor. Information on General Assembly Meetings In 2006 fiscal year, our Company held an Ordinary General Assembly Meeting concerning the activities in In the meeting held on 27 March 2006 at 11:00 a.m. at Hyatt Regency Hotel at the address Taflk flla Caddesi No:1 Taksim, stanbul, from out of the 110,000,000 shares corresponding to a total share capital of TRY 110,000,000.-, none was represented personally, and 72,172,300 shares corresponding to a share capital of TRY 72,172,300.- were represented in proxy. Stakeholders and media representatives participated in the said General Assembly Meeting. The invitation for the meeting, in the manner set forth by the Law and the Articles of Association and including the agenda, was made within due time by announcements published in the Turkish Trade Registry Gazette dated 10 March 2006 and no. 6510, and in national editions of Sabah and Radikal newspapers dated 10 March In order to facilitate participation in the General Assembly Meeting, the invitation was announced in nationally circulated newspapers. Minutes of the General Assembly Meeting are accessible at all times by our shareholders on our website and are also made available for examination at the Company headquarters. Voting Rights and Minority Rights The Company s all share certificates are bearer certificates and grant no rights for participating in the Company profit or voting privilege.

3 page 105 Do ufl Otomotiv Faaliyet Raporu 2006 Dividend Distribution Policy and Timing Our Company publicly disclosed its dividend distribution policy explained hereinbelow and covered in our articles of association via the Public Offering Circular and Prospectus. Based on this policy: Net Profit of the Company: Net profit of the Company is the Company s revenues generated from its ordinary activities and extraordinary revenues and profits less the expenses incurred in relation to such activities, depreciation and extraordinary expenses, less corporate tax and similar compulsory taxes and funds. Net profit, less previous years losses, if any, is distributed in the below order and manner: First Legal Reserves: Pursuant to Article 466 of the Turkish Commercial Code, 5% of the net profit shall be set aside as first legal reserve until it reaches 1/5th of the paid-in capital of the Company. First Dividend: A first dividend shall be set aside in the ratio and in the amount taking into consideration Article 15 of the Capital Market Law and in accordance with the relevant Capital Markets Board (CMB) regulations. However, minimum 50% of the attributable profit that might arise in the balance sheets of 2004, 2005, 2006, 2007 and 2008 shall be distributed in cash or in share certificates added to the share capital pursuant to applicable legislation. Dividends to be Distributed to Board Members: After the deductions mentioned above shall have been made, the General Assembly may distribute an amount up to 4% of the attributable profit to the chairman and the members of the Board of Directors, without prejudice to the amount of first dividend. Dividends to be Distributed to the Personnel: After the deductions mentioned above shall have been made, the General Assembly may distribute an amount up to 4% of the attributable profit to the personnel, without prejudice to the amount of first dividend. Second Dividend: After the amounts mentioned above shall have been deducted from the net profit, the remaining portion may either be distributed, in part or in whole, as second dividend, or may be set aside as extraordinary reserves. Second Legal Reserve: Second legal reserve shall be set aside pursuant to Article 466, paragraph 3 of the Turkish Commercial Code. Principles Related to Distribution: i. Unless the legal reserves that are legally stipulated shall have been set aside and unless the first dividend determined for shareholders in the articles of associations shall have been distributed in cash and/or in share certificates in accordance with the means allowed and requirements imposed by the Capital Market regulations; the provisions of applicable legislation shall be fully adhered to, which stipulate that it may not be decided to set aside further reserves, to carry over profit to the following year or to distribute dividends to privileged shareholders, holders of participating shares, founder s shares and ordinary bonus certificates, to the members of the board of directors and to officers, janitors and workers, to foundations established for various purposes and to such persons and/or establishments. ii. Dividends are distributed equally to all shares existing as of the fiscal year, irrespective of their dates of issue and acquisition. iii. Regulations that are already or will in the future be issued by the Capital Markets Board of Turkey in relation to dividend distribution shall be abided by.

4 page 106 Do ufl Otomotiv Annual Report 2006 Corporate Governance Principles Compliance Report Transfer of Shares The Company s articles of association contain no provisions restricting the transfer of shareholding interests. SECTION II- PUBLIC DISCLOSURE AND TRANSPARENCY Do ufl Otomotiv Disclosure Policy The Company formulated a disclosure policy as stated in Section II, Article of Corporate Governance Principles. The aim of the policy is to ensure necessary information flow in line with public disclosure and transparency criteria in a timely, accurate, complete, intelligible, interpretable, and easily accessible manner. The disclosure policy is carried out and coordinated to cover organization of meetings open to public, execution of relations with investors and shareholders and keeping the customers informed. The Company s disclosure policy is executed by the Chairman, Mr. Aclan Acar, or person(s) to be authorized thereby. The Company regards implementations oriented towards individual, corporate investors and shareholders, in addition to those geared towards its principal shareholders as a whole. In keeping with Corporate Governance Principles, the disclosure policy of the Company is erected on the foundations of following the capital market regulations and carrying out the relations with capital market institutions, responding to information queries of shareholders and investors, ensuring exercise of shareholding rights, as well as providing information flow particularly in relation to General Assembly matters employing various means including the website and ensuring necessary coordination related thereto. The Company holds periodic biannual meetings for keeping the investors informed; at these meetings, the performance of the market in our sectors, the Company s share in the market, sales figures and revenues, periodic and cumulative profit/loss data are disclosed to our investors. In order to enable our individual and corporate investors and shareholders to acquire in-depth knowledge of the Company s activities, information has been offered during visits to the showroom and logistic center. In addition, the Company s major projects and other information that needs to be disclosed are shared with our investors through mass media. All kinds of information relating to meetings are also made accessible on our website. The Ordinary General Assembly Meeting is convened every year in March and all work necessary to facilitate participation of our shareholders in the General Assembly are recorded. The Company s annual reports are prepared in a form and content in compliance with legal regulations and made available in printed form, as well as on the Internet. Periodic financial statements and reports, which are drawn up in accordance with the CMB legislation and IFRS, are first submitted to the Istanbul Stock Exchange (ISE), published and then made available on the Internet. The financial reports are also delivered to establishments, enterprises or persons at request. The Company has an active and up-to-date website accessible at Disclosure of Material Events In 2006, the Company made 38 material event disclosures. Additional information was provided in one occasion during the reporting period. The Company shares are not quoted on overseas stock markets. Company Website and Its Content Within the scope of public disclosure, the Company posts trade register information, the latest shareholding structure, the board of directors, privileged shares, the latest version of the articles of association, annual reports, material event disclosures, informative presentations for investors, periodical financial statements and reports, prospectuses and public offering circulars, agendas, lists of participants and minutes of general assembly meetings, and form for proxy voting on its website accessible at Disclosure of Non-corporate Ultimate Shareholder(s) Having a Controlling Interest There are no non-corporate shareholders in the Company. However, non-corporate shareholders after eliminating the effects of indirect ownership have been disclosed in the public offering prospectus issued in 2004, and there is sufficient public awareness that makes it unnecessary to make further disclosures on this matter.

5 page 107 Do ufl Otomotiv Annual Report 2006 Public Disclosure of Those Who May Have Access to Insider Information The list of those who can have access to insider information is publicly disclosed in the organization chart contained under the organization chart heading in the annual report. SECTION III - STAKEHOLDERS Keeping Stakeholders Informed Do ufl Otomotiv Group stakeholders, namely the customers, shareholders, employees, suppliers, governmental and social milieu, are informed on topics that are of relevance to them. The process of informing occurs through making available Disclosure of Material Events made to the ISE, the minutes of general assemblies convened, reports of independent auditors and financial statements, presentations made to individual and corporate investors and reports drawn up about the company by third parties, by publishing the same in the press and posting them on our website. The employees are informed on the Company-related issues via the intranet developed specifically for them. In addition, queries or requests received by phone are taken into consideration and relevant information is provided thereon. Stakeholder Participation in Management The work is ongoing in terms of addressing the Corporate Governance Principles with regard to stakeholder participation in management. Human Resources Policy Based on our awareness that our greatest asset is our employees who enable us to achieve our objectives, as Do ufl Otomotiv Group, our basic policy in Human Resources is to ensure human-oriented, fair and objective management at every level adhering to corporate principles, culture and strategies. Within the framework of Do ufl Otomotiv Group strategy briefly stated as Be Sizable, Be Close, Be Creative, the target is to provide all employees working for our Group with all kinds of development opportunities necessary for them to be equipped to further leverage our position in the sector, and enable them to carry the name of our Group to the very top by standing out from amongst competitors, moving based on a shared synergy along the path leading to the target, with the we understanding which is one of our core values. While supporting personal development of our team members with constant training, the Human Resources policy focuses on recruiting the right person in the right position and on hiring individuals who are well-matched with the corporate values and strategy, already specialized and are willing to specialize in their respective fields, recognize that it is a privilege to belong to Do ufl community, have high potential, and are not reactive but proactive. The Human Resource needs are determined with consideration of the impact of the economic conjuncture across the world and the requirements and changes resulting from the national economic status as affected by such impact or from its own internal dynamics. In this regard, it presents great importance to employ and develop employees who are able to cope with the rapidly evolving trends, and new strategies and targets set, who are resistant against uncertainties, and have high self-motivation. It is our priority target to allocate the necessary sources to achieve improvement in capturing the opportunity to work with colleagues who are able to capitalize on the opportunities facing the entities or establishments in a business world where continuous change is the key attribute, who are able to see the whole system, and possess a broad perspective. We give utmost importance to being a practicer of this notion. The Human Resources and Training Department is a central organization set up for the purpose of executing and guiding recruitment, leaving, career planning, personnel and payroll affairs, performance management, promotions and reassignments, training and development for the companies under the Automotive Group, as well as the coordination of the recruitment process for the entire authorized dealer network. By virtue of recruitment, departure, training, promotion and reassignment functions carried out by the Human Resources and Training Department, the fundamental rights and responsibilities of employees and rules regarding attire have been put into writing,

6 page 108 Do ufl Otomotiv Annual Report 2006 Corporate Governance Principles Compliance Report communicated to the employees and made available for access by all employees on the intranet. Furthermore, our employees feedbacks are sought in various topics via the questionnaires section on the intranet. All results are shared with the employees again via the intranet. A suggestion encouragement system is run again on the intranet which serves to addressing the employees suggestions. Pioneering for open communication, priority is given to our own employees for any vacancy occurring in Do ufl Otomotiv Group organization and such vacancies are communicated on the Career Opportunities section on the intranet. Employees who feel they are fit for the vacant position posted in this section are able to apply directly. All applications received are evaluated by our Recruitment Team and candidates who do not meet the criteria are informed. Candidates meeting the respective criteria are included in the recruitment assessment process by the HR Recruitment Team upon informing the relevant line managers. Acting as a leader in fair and objective management, Do ufl Otomotiv Group companies put in place a remuneration system built upon work families grouped according to the functions each position belongs to. In this implementation called the band system, employees with similar tasks receive similar compensation. Career changes, new hires and employees leaving the Group are communicated to our employees on a monthly basis. Information on Relations with Customers and Suppliers CRM Customer Relations Management Unit A CRM-Customer Relations Management Unit has been set up at our Company. The Unit works to ensure close communication with our customers, monitors and records our relations with customers and develops initiatives that will enhance the customer loyalty/profitability. The principal responsibilities of the CRM Unit include the following: Ensuring adoption of the concept of working with a customer-focus as a corporate culture across the entire organization; Taking all necessary action to ensure that data related to customers are kept accurately, up-to-date and accessible, Planning and implementing customer contact and communication models on the basis of CLC (Customer Life Cycle), Categorizing the customers according to their values and needs, drawing up investment plans in accord with different value segments, and designing different service models suiting different needs, Conducting customer research, evaluating the results and planning appropriate next steps, Planning and taking necessary action to ensure and to constantly enhance customer satisfaction and customer loyalty across the entire customer base of Do ufl Otomotiv, Conducting and reporting Customer Satisfaction Market Research (CSS, CSI, DSS, NPS, Mystery Shopper), Coordinating, and following-up, communication with customers by , sms, direct mailing, and the web, in line with the requests received from dealers and brands. Customer Complaint Management There is a Customer Relations and Operations Department in the Company to assure customer satisfaction. In addition to assuring customer satisfaction, the Department also works to enhance customer retention and loyalty, records and analyzes customer complaints/requests about our products and services received by phone, fax, or post, and gets back immediately to relevant customers with necessary responses. In performing these tasks, utmost speed and attention are tried to be achieved with a view to provide the customers with a service that is beyond their expectations. In addition, our call center offers ing, telemarketing and launch services along with all the services mentioned above. The Department also supervises and provides guidance to the supplier firm providing our customers with on-the-road assistance.

7 page 109 Do ufl Otomotiv Annual Report 2006 Relations with Suppliers Supplier companies are assessed based on a scoring system built upon objective and measurable criteria. Supplier companies are selected based on documentary evidence supporting their capability to fulfill purchasing terms and product/service specifications and their adequacy to sustain the same in a consistent and reliable fashion. A lean and sustainable relationship is the basic principle adopted in our relations with suppliers, which are shaped in accord with our quality policies. Social Responsibility Traffic is Life Do ufl Otomotiv initiated a series of social responsibility activities with a view to create an elevated level of overall responsibility, awareness and perception about traffic among the Turkish people and particularly in the young generation. The very high ratio of children hurt in various ways in traffic accidents is the fact underlying Do ufl Otomotiv s efforts to instill a sense of responsibility and to educate the Turkish society on traffic, starting from early ages. Gathered under a unified roof with the slogan Traffic is Life, these social responsibility activities give a new direction to traffic education. Attracting the spotlight by virtue of having succeeded in directly reaching 1.5 million children with such organizations as Music Contest with Traffic Theme and the Rear Seat Belongs to Me within the scope of the activities commenced in December 2004, Do ufl Otomotiv aims to reach a large audience and achieve enhanced awareness in the society with its advertising campaign. Do ufl Otomotiv-Volkswagen Training Lab, Samand ra At the Do ufl Otomotiv Volkswagen Training Lab opened in Samand ra Industrial and Vocational School, Do ufl Otomotiv provides training and employment opportunities to 18 students every year. The educational topics taught at the lab include safety at work, introduction to VW and Do ufl Group, petrol engines, diesel engines, basic electrical and current diagrams, measurement technique, ELSA and literature information, heating/ac and brake systems, etc. Commenced from the sophomore year onwards, these lessons are taught by three teachers who are and will continue to be trained by Do ufl Otomotiv along with Do ufl Otomotiv technical trainers. SECTION IV BOARD OF DIRECTORS Structure and Formation of the Board of Directors, Independent Board Members The members of the Board of Directors are Aclan Acar, Tanju Özenç, Hayrullah Murat Aka, Hasan Hüsnü Güzelöz, Özlem Denizmen Kocatepe, Süleyman Kadir Tu tekin and Cem Yurtbay. The Chairman is Aclan Acar. Although there are no independent members on our Company s Board of Directors, the Board is constituted by individuals possessing the required qualifications in line with the legal regulations. The Company s strategic goals, operational results and performance indicators are monitored by the Board of Directors in regular monthly meetings. Qualifications of Board Members In the election of our Company s Board members, the qualifications set forth in Section IV, Articles 3.1.1, and of the IFRS Corporate Governance Principles are observed and the members are elected in accordance with the relevant provisions of the Turkish Commercial Code. Mission, Vision and Strategic Goals of the Company Do ufl Otomotiv undertook detailed work in 2006 to create its vision, mission and corporate strategies. The strategies that will guide Do ufl Otomotiv s activities in the coming years have been set by carefully blending international comparative analyses and local experiences with an extensive participation from across the organization.

8 page 110 Do ufl Otomotiv Annual Report 2006 Corporate Governance Principles Compliance Report Our Vision: To provide innovative service beyond expectations. Our Mission: Do ufl Otomotiv is a reliable automotive company operating with a customer-focus, having an insight into its sector and the expectations of its shareholders, defining new expectations and aiming to satisfy them at the optimum level, possessing creative manpower, making the best of technology, targeting to offer efficient and profitable service throughout the automotive value chain. Our Strategy: BE SIZABLE BE CLOSE BE CREATIVE Our fundamental corporate strategies are spelled out as follows: BE SIZABLE; As Do ufl Otomotiv, achieving systematic, productive and profitable expansion in its field of activity and growth in added value in every aspect of the value chain in Turkey and in international markets Ensuring career development of its human resource to ensure, and at the same time as a result of, fast and systematic evolution of this growth BE CLOSE; Acquiring an insight into the expectations of our customers in the first place and of all our shareholders in general, leveraging our relations with them to perfection beyond their expectations in the fastest manner possible Establishing efficient systems that will enable Do ufl Otomotiv to reach operational excellence in terms of productivity and profitability and as such, closely monitoring and analyzing financial and operational status BE CREATIVE; Creating differentiation and competitive edge through constant innovations based on a participative approach to product development, customer service and business concept Developing actions and methods that will render the business leaner, faster, cheaper again with participation and teamwork in process improvement Risk Management and Internal Control Mechanism Formulating internal audit and risk management policies and strategies and overseeing their operation ultimately fall under the functions of the Board of Directors. Financial risks are monitored by the Financial Coordination Department and reported to the Board of Directors and the Audit Committee. Operational risks are managed by brand managers on the principle of compliance with company policies based on the findings of the Internal Audit Department. The Board of Directors assigned the Audit Committee consisting of Board members with the execution of auditing function. The Audit Committee performs its activities under the Audit Committee Guidelines. Accordingly, there is an Internal Audit Department auditing internal control mechanisms, which operates under DOAfi Audit Department Regulation drawn up in line with International Internal Audit Standards. The Internal Audit Department reports the findings from the audits and matters requiring action, at least on a quarterly basis and as and when necessary. In addition, the internal audit reports issued are kept in an environment that can be readily accessed by the Board of Directors at all times. Authority and Responsibilities of Board Members and Executives The duties and powers of the Company s Board Members and executives are spelled out in articles 12 and 13 of the articles of association. Operating Principles of the Board of Directors Board of Directors meetings are set at the start of each year and communicated to participants. The Board meets at least monthly and the meetings dates are circulated to all members in advance of such meeting.

9 page 111 Do ufl Otomotiv Annual Report 2006 The Board secretariat prepares a draft agenda based on input from the Chairman and sends it to other Board members. Upon consideration by the Chairman of Board members suggestions to add or change agenda items, the agenda is finalized. The issues discussed in the Board meeting are entered into minutes and kept on file. Board members can express opposing views on any issue and enter their commentaries in related resolutions. There are no independent members on the Company s Board of Directors. Prohibition on Doing Business or Competing with the Company The Company adopted the arrangements to be made parallel to Articles 334 and 335 of the Turkish Commercial Code and based on the relevant General Assembly resolution with regard to whether or not to implement the prohibition on doing business or competing with the Company for the Company s Board of Directors during the reporting period, and regarding the issues relating to conflicts of interest that may result from the Board members doing business and competing with the Company. Code of Ethics In keeping with the importance Do ufl Otomotiv Group attaches to corporate governance principles and ethical values, the Human Resources and Training Coordination Department prepared the Ethical Principles Procedure setting forth the codes of conduct regulating Do ufl Otomotiv employees relations with customers, suppliers and other firms and people that have a commercial relation with the Company, and the media, as well as their responsibilities and time and resource utilization. The Procedure was published with an announcement and made available on the intranet accessible by all employees. The Disciplinary Regulation spells out in writing the behaviors conflicting with the ethical principles covered in the Procedure, contradicting with the laws, the value judgments of the society and of our Company, as well as those infringing the rights of employees or customers, and hurting the Company and/or individuals. The penal sanctions applicable in the case of such behaviors are also described therein. The said Regulation prepared by the Human Resources and Training Coordination Department was published with an announcement and made available on the intranet, accessible by all employees. Number, Structures and Independence of the Committees under the Board of Directors The Committees, their members and presidents set by the Board of Directors are presented below: Audit and Risk Committee: Murat Aka (President), Süleyman Tu tekin (Member) Dealer Development Committee: Cem Yurtbay (President) Logistics Committee: Süleyman Tu tekin (President) Human Resources Committee: Tanju Özenç (President) Strategic Planning, Business Development and Investor Relations Committee: Özlem Denizmen Kocatepe (President) Legal Committee: Hasan Güzelöz (President), Murat Aka (Member) Corporate Governance Committee: Aclan Acar (President) Overseas Brand Communication and Management of Governmental Relations: Aclan Acar (President), Tanju Özenç (Member) Remuneration of the Board of Directors Dividend payments can be made to the Company s Board of Directors in accordance with the relevant provisions of the articles of association, if and to the extent approved by the General Assembly.

10 page 112 Do ufl Otomotiv Annual Report 2006 INFORMATION ON THE CAPITAL STRUCTURE AND SHAREHOLDING No changes occurred in the Company s issued share capital during the reporting period. From amongst our shareholders, Do ufl nflaat ve Ticaret A.fi. sold its 3,350,000 shares corresponding to 3.045% the Company s share capital on 28 June 2006, and its 13,200,000 shares corresponding to 12% of the Company s share capital on 12 December 2006 to Do ufl Holding A.fi., again a shareholder in the Company. As a result of this transaction, the interest held in our Company s share capital by Do ufl nflaat ve Ticaret A.fi. declined from 45.34% to 30.29%, whereas Do ufl Holding s interest therein rose from 19.96% to 35.00% by virtue of these two share purchases. The Company s most recent shareholding structure after these changes is presented below. 31 December December 2006 Shareholding Interest Number of Shares Shareholding Interest Number of Shares (%) (Million) (%) (Million) Do ufl nflaat , ,319 Publicly Held , ,950 Do ufl Holding , ,505 Katalonya Other Total , ,000 The Company did not distribute any profits in 2001, 2002 and However, on 19 March 2004, the Company merged with Do ufl Otomotiv Holding A.fi., Do ufl Motor Servis ve Ticaret A.fi., Do ufl A r Vas ta Servis Ticaret A.fi. and Genpar Otomotiv Ticaret A.fi., upon which dividend payments were made from extraordinary reserves. It was decided to make a dividend distribution in the amount of TRL 53,000,000,000,000 at the Extraordinary General Assembly held on 23 March 2004 and prior to the public offering of the Company s stocks. The date of the distribution was 31 March 2004, and because there were no non-corporate shareholders at such date, a net dividend of TRL 481,8 was paid for each share of TRL 1,000 (the distribution was not subject to withholding tax, therefore gross and net dividends were equal to one another). Out of the year-end 2004 profit, the Company paid dividends in the amount of TRY to legal entities and TRY to real persons (after 10% Income Tax deduction) per each share of TRY The dividends distributed out of the 2005 profit was TRY per each share of TRY 1.00 for legal entities and TRY per each share of TRY 1.00 for real persons (after 10% Income Tax deduction). INFORMATION ON DO Ufi OTOMOT V STOCKS Reuters symbol: DOAS.IS Bloomberg symbol: DOAS The initial public offering of Do ufl Otomotiv shares was carried out in 2004 and the Company s shares are traded at stanbul Stock Exchange Market (ISE) under "DOAS.IS" symbol. Performance * Closing Price (TRY) weeks Highest (TRY) (02 May 2006) weeks Lowest (TRY) (28 June 2006) 4.32 Monthly % change Quarterly % change Semiannual % change Annual % change * figures as at 31 December Source: Garanti Yat r m

11 page 113 Do ufl Otomotiv Annual Report 2006 DOAS.IS Price and Volume (million USD) /04 07/04 09/04 10/04 11/04 01/05 02/05 03/05 05/05 06/05 07/05 09/05 10/05 11/05 01/06 02/06 03/06 05/06 06/06 07/06 09/06 10/06 11/06 01/07 02/07 Volume Price GENERAL AND ADMINISTRATIVE ACTIVITIES In 2006, the sales quantities attained in the total market declined 14% in all the markets our brands are active, whereas the year-on drop in the Company s sales quantity was 10.8%. Sales Units Passenger Cars 50,068 51,503 42,741 Volkswagen 33,094 32,049 27,619 Audi 4,297 4,705 4,956 Porsche SEAT 5,546 6,570 4,572 Skoda 7,002 8,026 5,374 Light Commercial Vehicles 26,984 33,163 32,062 Volkswagen 26,984 33,163 31,947 Skoda 115 Heavy Commercial Vehicles 2,027 2,475 2,908 Scania 1,837 2,073 2,099 Krone Total 79,079 87,141 77,711 Source: ODD (Association of Automotive Distributors) wholesales and TA D (Association of Commercial Vehicle Importers) data / Do ufl Otomotiv Total Market Passenger Cars 452, , ,325 Light Commercial Vehicles 244, , ,670 Heavy Commercial Vehicles 28,829 33,305 33,393 Trailer Market 4,952 3,990 5,450 Source: ODD (Association of Automotive Distributors) wholesales and TA D (Association of Commercial Vehicle Importers) data / Do ufl Otomotiv The Company s revenues generated from sales as computed in accordance with IFRS accounting principles are presented below Net Sales (TRY) 2,307,345 2,449,384 2,527,200

12 page 114 Do ufl Otomotiv Annual Report 2006 Import amounts by years are presented below: Imports (Excluding Skoda, EURO) 1,061,042,867 1,238,805,290 1,219,072,143 Information on Senior Executives, 2006 Board Memebers: Name & Surname Aclan Acar Tanju Özenç Cem Yurtbay Hasan Hüsnü Güzelöz Murat Aka Özlem Denizmen Kocatepe Süleyman Tu tekin Function Chairman Vice Chairman Member Member Member Member Member Employees Involved in the Management: Name & Surname Position Academic Background Emir Ali Bilalo lu Audi and Porsche Brand General Manager MSc Tolga Senyücel Scania, Krone and Meiller Brand General Manager Business Administration / MBA zzet Berk Ça dafl Finance, Budget Planning, Risk Management and Engineering of Business Investor Relations Coordinator Administration / Business Administration MBA, PhD Tuba Köseo lu Human Resources and Training Coordinator Translation and Interpretation Birgül Ak Karacahisarl VW Passenger Cars Brand General Manager Business Administration Economics / MBA Vedat Uygun VW Commercial Vehicles Brand General Manager Mechanical Engineering / MBA Bahad r smail Gören Katalonya Oto Brand General Manager Business Administration Zafer Baflar Do ufl Oto Pazarlama ve Ticaret A.fi. Business Administration General Manager Mustafa Ali Barut General Manager, Operations Business Administration Mustafa Karabay r Acting General Manager, Logistics Services Civil Engineering / Geological Engineering Bekir Sedat Yavuz Dogus Auto Egypt General Manager Civil Engineering / MSc Giovanni Atilla Gino Bottaro Bentley & Lamborghini Brand General Manager International Trade / Mechanical Engineering Mustafa Tu rul Denizaflan DOD Brand General Manager Economics Osman Mehmet Sindel Strategic Marketing and Business Administration Corporate Communication Coordinator

13 page 115 Do ufl Otomotiv Annual Report 2006 Employees Involved in the Management: Functions in the Partnership Academic in the Past Reason for Name & Surname Former Position Background 5 Years New Position Change Erhan Ergün General Manager, Mechanical General Manager Departed from Logistic Services Engineering the Group Saffet Üçüncü General Manager, Mechanical Coordinator Departed from Do ufl Motor Sports; Engineering / the Group Do ufl Otomotiv Industrial Group After-Sales Engineering Services and Operation Management Coordinator Bekir Sedat Yavuz Do ufl Oto Civil Director Dogus Auto Appointment Kartal Regional Director Engineering Egypt General as General Manager Manager Giovanni Atilla Do ufl Oto Maslak International Director Bentley & Appointment Gino Bottaro Regional Director Trade / Lamborghini as General Mechanical Corporate Manager Engineering Communication Coordinator Osman Mehmet Sindel GÖSAfi Assistant Business Assistant Strategic Marketing & Transfer General Manager Administration General Corporate within Manager Communication the Group Coordinator Mustafa Ali Barut Garanti Sigorta Economicss Assistant General Transfer Assistant General General Manager within Manager Manager Operation the Group DO Ufi OTOMOT V GROUP Actual Actual Actual PermanentOutsourced TotalPermanentOutsourced TotalPermanentOutsourced Total VW PASSENGER CARS VW COMMERCIAL VEHICLES VW COMMERCIAL MISR SCANIA/KRONE/MEILLER SCANIA & VW MARINE ENGINES AUDI/PORSCHE BENTLEY/LAMBORGHINI LOGISTIC SERVICES SUPPORT SERVICES DEALER MANAGEMENT POOL MANAGEMENT AND LEGAL PERMANENT STAFF DO Ufi OTOMOT V SERVICE KATALONYA DOD DO Ufi OTO ,014 DO Ufi OTOMOT V GROUP1, ,356 1, ,565 1, ,694

14 page 116 Do ufl Otomotiv Annual Report 2006 AMENDMENTS TO THE ARTICLES OF ASSOCIATION IN THE REPORTING PERIOD The Company made amendments to certain articles in its articles of association, namely to the Objective and Scope due to its new lines of business, and to the relevant articles due to conversion to TRY. The amended headings and articles are presented below in former and new versions. Article 3 OBJECTIVE AND SCOPE: FORMER VERSION The Company is incorporated to engage in the importation of any and all kinds of vehicles used in land transportation and off-road activities, heavy construction equipment used in building and infrastructure constructions, various vehicle engines and parts including yacht motors used in marine transportation; in the partial or full manufacturing, assembly, importation, maintenance and servicing of, and spare parts manufacturing for, vehicles, machinery and equipment used in agriculture and military fields; in acting as the agent, representative of all kinds of products in the automotive industry, as well as the marketing and distribution thereof, importation, exportation, sales and assembly of spares therefor, as well as in undertaking the maintenance and trading of the said. In order to conduct these activities and achieve its objective and scope, the Company may carry out the below mentioned transactions: a) Establishing or building or otherwise procuring and operating all kinds of factories, plants, workshops and warehouses, as well as service stations, sales shops and offices necessary to realize its objective and scope; b) Importing and purchasing, or procuring by leasing or otherwise, raw and semi-finished or finished materials and parts necessary for the units to be manufactured and assembled, as well as all kinds of installations, machinery, parts, equipment, tools and gadgets for the factories, plants, workshops, service stations, warehouses and other business places to be established by the Company; c) Carrying out all kinds of ordinary and commercial and financial and industrial transactions and acts, and entering into business undertakings related to its objective and scope; in brief, engaging in importation and exportation; d) Engaging in all kinds of commercial agency business, all kinds of transportation in and out of the country, customs clearance, brokerage and representation activities related to its scope, e) Setting up, building or causing to be built, renting, operating stores, galleries, service stations, and spares sales offices in order to carry out marketing and distribution activities; f) Acquiring general agency status and entering into all kinds of related agreements. On condition that they be related with the scope of the Company, acquiring the status of agency, consultant, representative, and granting the status of agency, consultant, representative to domestic and foreign companies, g) Entering into patent, patent right, trademark, know-how agreements in relation to its scope; purchasing, letting, renting, and selling, if necessary, the same; Article 3 OBJECTIVE AND SCOPE: NEW VERSION The Company is incorporated to engage in the importation of any and all kinds of new and used vehicles used in land transportation and off-road activities, heavy construction equipment used in building and infrastructure constructions, various vehicle engines and parts including yacht motors used in marine transportation; in the partial or full manufacturing, assembly, importation, maintenance and servicing of, and spare parts manufacturing for, vehicles, machinery and equipment used in agriculture and military fields; in acting as the agent, representative of all kinds of products in the automotive industry, as well as the marketing and distribution thereof, importation, exportation, sales and assembly of spares therefor, as well as in undertaking the maintenance and trading of the said; organizing events related to motor sports, rewarding the successful participants, importing and exporting automotive industrial products and spares related to the same; purchasing, and procuring by leasing for importing and exporting of all kinds of equipment, machinery, apparatus, tools and gadgets for the service stations and workshops it will set up. In order to conduct these activities and achieve its objective and scope, the Company may carry out the below mentioned transactions: a) Establishing or building or otherwise procuring and operating all kinds of factories, plants, workshops and warehouses, as well as service stations, sales shops and offices necessary to realize its objective and scope; b) Importing and purchasing, or procuring by leasing or otherwise, raw and semi-finished or finished materials and parts necessary for the units to be manufactured and assembled, as well as all kinds of installations, machinery, parts, equipment, tools and gadgets for the factories, plants, workshops, service stations, warehouses and other business places to be established by the Company; c) Carrying out all kinds of ordinary and commercial and financial and industrial transactions and acts, and entering into business undertakings related to its objective and scope; in brief, engaging in importation and exportation; d) Engaging in all kinds of commercial agency business, all kinds of transportation in and out of the country, customs clearance, brokerage and representation activities related to its scope, e) Setting up, building or causing to be built, renting, operating stores, galleries, service stations, and spares sales offices in order to carry out marketing and distribution activities; f) Acquiring general agency status and entering into all kinds of related agreements. On condition that they be related with the scope of the Company, acquiring the status of agency, consultant, representative, and granting the status of agency, consultant, representative to domestic and foreign companies, g) Entering into patent, patent right, trademark, know-how agreements in relation to its scope; purchasing, letting, renting, and selling, if necessary, the same;

15 page 117 Do ufl Otomotiv Annual Report 2006 h) Provided that it is in compliance with applicable legislation, establishing new companies with domestic or foreign companies and firms, which are or will be established, participating in companies and ventures already established, if so deemed useful for the realization of its objective and scope. Purchasing share certificates or interests and selling the same, when necessary, provided that it shall not act as a broker. Issuing all kinds of capital market instruments within the terms and provisions of legal legislation. Entering into loan agreements provided that it shall not act as a broker and securities portfolio manager. i) Entering into secured or unsecured long, medium or short term loans in or out of Turkey and issuing capital market instruments abroad in accordance with applicable legislation. j) Acquiring, selling when necessary-, constructing or causing the construction of, and leasing real property necessary for the Company s activities; creating mortgage over the real property; creating mortgage over the same in favor of banks or legal or real persons as collateral for the debts of other Persons and companies, provided that necessary disclosures within the scope of material events as required by the Capital Markets Board of Turkey are made so as to keep the investors informed; k) Creating mortgage and suretyship in favor of third parties, provided that necessary disclosures within the scope of material events as required by the Capital Markets Board of Turkey are made so as to keep the investors informed. It may have mortgages revoked, pledge its movables, and acquire and have revoked mortgage, pledge or real rights in favor of the Company over the goods and real properties owned by others as and when necessitated by the businesses and undertakings assumed. In addition to the foregoing business activities and transactions, should it be wished to embark in the future upon other kinds of business activities which shall be deemed beneficial and necessary for the Company, provided that it is in compliance with applicable legislation, the same shall be laid before the General Assembly for its approval upon the proposal of the Board of Directors, and the Company shall be able to be engaged in the business activities it wishes, after such approval. However, in order for execution of such a resolution, which is of the nature of an amendment to the articles of association, the required permissions shall be obtained from the Capital Markets Board of Turkey and the Ministry of Industry and Trade as well as from other relevant authorities, and necessary registration and promulgation procedures shall be consummated. h) Provided that it is in compliance with applicable legislation, establishing new companies with domestic or foreign companies and firms, which are or will be established, participating in companies and ventures already established, if so deemed useful for the realization of its objective and scope. Purchasing share certificates or interests and selling the same, when necessary, provided that it shall not act as a broker. Issuing all kinds of capital market instruments within the terms and provisions of legal legislation. Entering into loan agreements provided that it shall not act as a broker and securities portfolio manager. i) Entering into secured or unsecured long, medium or short term loans in or out of Turkey and issuing capital market instruments abroad in accordance with applicable legislation. j) Acquiring, selling when necessary-, constructing or causing the construction of, and leasing real property necessary for the Company s activities; creating mortgage over the real property; creating mortgage over the same in favor of banks or legal or real persons as collateral for the debts of other Persons and companies, provided that necessary disclosures within the scope of material events as required by the Capital Markets Board of Turkey are made so as to keep the investors informed; k) Creating mortgage and suretyship in favor of third parties, provided that necessary disclosures within the scope of material events as required by the Capital Markets Board of Turkey are made so as to keep the investors informed. It may have mortgages revoked, pledge its movables, and acquire and have revoked mortgage, pledge or real rights in favor of the Company over the goods and real properties owned by others as and when necessitated by the businesses and undertakings assumed. In addition to the foregoing business activities and transactions, should it be wished to embark in the future upon other kinds of business activities which shall be deemed beneficial and necessary for the Company, provided that it is in compliance with applicable legislation, the same shall be laid before the General Assembly for its approval upon the proposal of the Board of Directors, and the Company shall be able to be engaged in the business activities it wishes, after such approval. However, in order for execution of such a resolution, which is of the nature of an amendment to the articles of association, the required permissions shall be obtained from the Capital Markets Board of Turkey and the Ministry of Industry and Trade as well as from other relevant authorities, and necessary registration and promulgation procedures shall be consummated.

16 page 118 Do ufl Otomotiv Annual Report 2006 Article 6 SHARE CAPITAL FORMER VERSION The Company s share capital is TL 110,000,000,000,000.- (one hundred and ten trillion TL). The entirety of this capital is divided into 110,000,000,000 bearer shares, each with a value of TL 1,000. The Company s capital is fully paid-in. The Board of Directors may propose to the General Assembly to increase the capital through issuing bearer share certificates in accord with the provisions of the Turkish Commercial Code, Capital Market Law and applicable legislation. Article 6 SHARE CAPITAL: NEW VERSION The Company s share capital is TRY 110,000,000.- (one hundred and ten million TRY). The entirety of this capital is divided into 110,000,000 bearer shares, each with a value of TRY 1.-. The Company s capital is fully paid-in. The Board of Directors may propose to the General Assembly to increase the capital through issuing bearer shares in accord with the provisions of the Turkish Commercial Code, Capital Market Law and applicable legislation. Article 7 SHARE CERTIFICATES: FORMER VERSION All of the Company s share certificates are bearer certificates. The transfer of share certificates is governed by the Turkish Commercial Code, Capital Market legislation and the provisions of other applicable legislation. The Company s Board of Directors shall be authorized to issue share certificates in denominations of various sizes representing more than one share. Article 14 AUDITORS AND THEIR TERMS OF OFFICE FORMER VERSION The General Assembly shall elect one auditor from amongst shareholders or non-shareholders, for a term of office of one year. Auditors are obliged to perform the duties listed in Articles of the Turkish Commercial Code. Article 7 SHARE CERTIFICATES: NEW VERSION All of the Company s shares are bearer certificates. The transfer of shares is governed by the Turkish Commercial Code, Capital Market legislation and the provisions of other applicable legislation. While the nominal value of each share was TL 1,000.-, the same was converted into TRY 1.- within the scope of the law no amending the TCC. Due to this conversion, the total number of shares decreased, and 1 share of TRY 1.- shall be given in return for 1,000 shares each with a value of TL 1, The shareholders rights arising from the shares they hold are reserved in the face of the said conversion. The shares representing the capital are tracked in dematerialized form within the principles of dematerialization. Article 14 AUDITORS AND THEIR TERMS OF OFFICE NEW VERSION The General Assembly shall elect at least one auditor from amongst shareholders or non-shareholders, for a term of office of 3 years. Auditors are obliged to perform the duties listed in Articles of the Turkish Commercial Code.

17 page 119 Do ufl Otomotiv Annual Report 2006 DIVIDEND DISTRIBUTION PROPOSAL DO Ufi OTOMOT V SERV S VE T CARET ANON M fi RKET BOARD OF DIRECTORS RESOLUTION Meeting No : 2007/ Meeting Date : 15 March 2007 Meeting Place : Company Headquarters The Board of Directors held a meeting chaired by Aclan Acar and discussed the following issues: It has been unanimously resolved to propose to the General Assembly at the Company s 2006 Ordinary General Assembly Meeting to be convened on 29 March 2007 that the year 2006 profit, which is computed within the scope of the balance sheet and income statement drawn up in accord with International Reporting Standards as per the Capital Markets Board of Turkey communiqué, Serial: XI No: 25, be allocated as follows in line with the distribution of profit principle set forth in Article 24 of the Company s articles of association, pursuant to the CMB legislation, Turkish Commercial Code (TCC) provisions and our articles of association, that the remaining profit be transferred to the extraordinary reserves account and retained, and that the date of profit distribution be set by the Board of Directors, provided that such date shall not be any later than 31 May Net Profit for the Period 21,992, Profit from Affiliates, Subsidiaries and Partnership under Joint Management whose General Assemblies did not decide to distribute profit (-) 8,134, I. Legal Reserve (-) 1,577, Donations in the Period (+) 1,288, Attributable Net Profit for the Period 13,568, Dividends to Shareholders (Cash) (TRY Gross / TRY Net per each share in the amount of TRY 1.00) 50% 6,787, II. Legal Reserves 128, Board of Directors

18 page 120 Do ufl Otomotiv Annual Report 2006 Audit Report Audit Report To the General Assembly of Company Name : Do ufl Otomotiv Servis ve Ticaret A.fi. Headquarters : Büyükdere Caddesi, Do ufl Grubu Binalar No: 65 Maslak / STANBUL Registered Capital : ,-TRY Paid-up Capital : ,-TRY Field of Activity : Automotive Imports and Sales Statutory Auditors names, surnames and terms of office, and whether they are shareholders or employees of the Company Number of Board of Directors meetings participated in, and number of Board of Auditors meetings held : Murat NAN Alp K NAY Three years They are not shareholders or employees of the Company. : 3 Board of Directors meetings were participated in. 5 Board of Auditors meetings were held. Scope, dates and conclusion of the examination made on the accounts, books and documents of the Company Number and results of the cash counts held in the Company s pay desk pursuant to Article 353, paragraph 1, subparagraph 3 of the Turkish Commercial Code Dates and results of the examinations made pursuant pursuant to Article 353, paragraph 1, subparagraph 4 of the Turkish Commercial Code : In the audits performed on biannual basis, it was established that the transactions are duly carried out in compliance with the Turkish Commercial Code, the provisions of applicable legislation, the Company s articles of association, and the resolutions of the General Assembly and the Board of Directors. : Pursuant to Article 353, paragraph 1, subparagraph 3 of the Turkish Commercial Code, the pay desk of the Company was checked and counted four times and it was established that the cash holdings conformed to the records : Pursuant to Article 353, paragraph 1, subparagraph 4 of the Turkish Commercial Code, assets of the Company were were audited each month and it was established that they conformed to the records Complaints and irregularities received We have received no irregularities or complaints since the and the actions taken in relation thereto date we were appointed as statutory auditors on 27 March We have examined the accounts and transactions of Do ufl Otomotiv Servis ve Ticaret A.fi. for the period 01 January December 2006 with respect to their compliance with the Turkish Commercial Code, the Company s articles of association, and other applicable legislation, as well as generally accepted accounting principles and standards. In our opinion, the attached balance sheet drawn up on 31 December 2006, the contents of which we acknowledge, fairly and accurately presents the Company s financial status on the date and the income statement for the period 01 January December 2006 fairly and accurately presents the operating results for the period. The suggestion on profit distribution is found to be in compliance with the laws and the Company s articles of association. We hereby submit the balance sheet and income statement for your approval and the acquittal of the Board of Directors for your voting. Respectfully yours, Murat NAN Alp K NAY

19 page 121 Do ufl Otomotiv Annual Report 2006 CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2006 TOGETHER WITH INDEPENDENT AUDITOR S REPORT

20 page 122 Do ufl Otomotiv Annual Report 2006 INDEPENDENT AUDITOR S REPORT Baflaran Nas Ba ms z Denetim ve Serbest Muhasebeci Mali Müflavirlik A.fi. a member of PricewaterhouseCoopers BJK Plaza, Süleyman Seba Caddesi No: 48 B Blok Kat 9 Akaretler Befliktafl stanbul-turkey Telephone +90 (212) Facsimile +90 (212) To the Board of Directors of Do ufl Otomotiv Servis ve Ticaret A.fi. 1. We have audited the accompanying consolidated financial statements of Do ufl Otomotiv Servis ve Ticaret A.fi. and its subsidiaries (together, the Group ) which comprise the consolidated balance sheet as of 31 December 2006 and the consolidated income statement, consolidated statement of changes in equity and consolidated cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory notes. Management s responsibility for the financial statements 2. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor s responsibility 3. 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 whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion 4. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of 31 December 2006, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards. Baflaran Nas Ba ms z Denetim ve Serbest Muhasebeci Mali Müflavirlik A.fi. a member of PricewaterhouseCoopers Murat Sancar, SMMM Partner stanbul, 13 March 2007