I was so happy when he said your Dad s company made those towers. We are from Ankara. Both Dad and I were born here in Hacettepe.

Transcription

1 2010 ANNUAL REPORT

2 We are from Ankara. Both Dad and I were born here in Hacettepe. Dad and Mom met at Bilkent. Dad studied engineering and Mom studied business management. They both graduated the same year Mom works for the University and Dad works for Tepe İnşaat. He is an electrical enginneer. He says they are making great stuff. One of their projects is Tepe Prime on the Eskişehir highway. It will become a real landmark in Ankara once it is completed. Dad says they are also building huge facilities and factories. They even built an underpasss in Ankara. Oil is transported to Turkey from far away by the enormous pipelines that Tepe İnşaat builds Father really wants to buy a house in Narcity when he retires and we move to Istanbul. Mom is only too happy to do this also since her whole family is there. Speaking of Istanbul I went to Istanbul with Grandpa to visit my Aunt and Uncle during my midterm break. My Aunt lives in a wonderful house with a garden. She told us that her neighbors were celebrities! I played with cousin Arda and Tarçın in the garden. Afterwards, my Aunt took us shopping. We had so much fun. We went to my Uncle s with Grandpa later. He lives on the European side of the city in a nice house but it s not as large as my Aunt s house. We went to Kanyon and watched a 3D movie. My Uncle gave me a gift. He showed me his office on the way back home. It was in the huge, tall towers... I was so happy when he said your Dad s company made those towers.

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4 WE STRIVE TO MAKE THE COMING GENERATIONS PROUD OF US CONTENTS 2 Company Profile and Shareholding Structure 3 Vision, Mission and Corporate Values in World in Turkey 6 Construction Sector in Turkey in the year left behind 8 Bilkent Holding 11 Tepe İnşaat 12 Operations Map 14 Financial Highlights 18 Message from the Management 20 Board of Directors and Board of Auditors 21 Senior Management 22 Milestones 33 Subsidiaries and Affiliates Operations Domestic Projects International Projects Investment Projects 59 TAV Havalimanları (TAV Airports) 70 TAV İnşaat (TAV Construction) 74 İstanbul Deniz Otobüsleri (İDO) 76 Human Resources 78 Occupational Safety, Environment and Quality Policy 80 Bilkent University 87 Consolidated Financial Statements

5 As a brand name for more than 40 years, Tepe İnşaat continues to maintain its standing in its industry. During the 41 years since its establishment, Tepe İnşaat has created groundbreaking projects that began with the İş Bankası Headquarters Complex, Turkey s first smart building. It continued with Tepe Nautilus, which holds the distinction of being the largest shopping center on Istanbul s Anatolian side as well as Turkey s first thematic shopping mall. The Prime, Narcity and Narkule projects that were unveiled by Tepe İnşaat also stand out with emphasis on quality and architectural aesthetics. They meet the housing and office space needs of the economy and are considered by many to be among a select few prestigious projects undertaken in the real estate sector in recent times. Developing projects in diverse segments of the construction industry, in Turkey as well as abroad, Tepe İnşaat introduces innovations to the sector while remaining steadfast to its commitment to quality. Since the day it was established, Tepe İnşaat has been transferring the value and resources it creates to Bilkent University, Turkey s first private university and one of the country s leading educational institutions. Tepe İnşaat s primary source of motivation is the pride of contributing to Turkey s bright future. With this distinction in mind, Tepe İnşaat will focus on being successful in every project it takes part in with an approach that strictly adheres to its quality policy, has faith in its workforce and that follows contemporary needs and technological developments.

6 2 Company ProfIle and ShareholdIng Structure Taking pride in completing its 41st year, Tepe İnşaat is positioned as leader in its field with consistent success it has carried since its foundation. Since 1969, Tepe İnşaat has been active in the construction sector, one of the most important pillars of Turkish economic development. Following 40 years in this gigantic and challenging sector, the Company has proudly assumed leadership in its field with a consistent list of achievements since day one. Responding to rapidly-evolving demands of the modern world with equally rapid solutions, Tepe İnşaat considers the peak merely as the point of departure for development, success and service rather than a target. That is why Tepe İnşaat has constantly strived to go to the leading edge, toward being the best even after 41 years at the peak of its sector. As one of the most powerful and effective architects of urban transformation, Tepe İnşaat has played an important role in the development of Turkey by undertaking numerous large-scale projects such as hospitals, airport terminals, pipelines, power plants, business and shopping centers. An important source of pride for Tepe İnşaat has been its contribution to social and economic development, based on Prof. Dr. İhsan Doğramacı s philosophy to be the leading edge, toward being the best. Tepe İnşaat meets the demands of the day in its field of activity with great care and thoroughness. Striving constantly to enhance its status with the force provided by its employees efforts, support and know how, the Company considers it as a national responsibility to carry its experience, accumulated knowledge and vision beyond the region. As of December 31, 2010 Tepe İnşaat s registered capital is TL 625 million Shareholders Share Class Share of Capital (TL) Number of Shares Share % Bilkent Holding A.Ş. A Bilkent Holding A.Ş. B 536,651, ,651, Tepe Emlak Yat. İnş. A.Ş. B 83,333,406 83,333, Tepe Savunma ve Güv. Sis. A.Ş. B 4,545,181 4,545, Tepe Mobilya San. ve Tic. A.Ş B 278, , Tepe Home Mob. Dek. A.Ş. B 172, , Meteksan Matbaacılık A.Ş. B ,00308 Shareholding Structure (%) Note: As of December 31, 2010 registered capital was TL 625,000,000 and after the Ordinary General Assembly Meeting in April 2011 it was raised to TL 780,000, % Bilkent Holding A.Ş. 0.8% Other 13.3% Tepe Emlak Yat. İnş. A.Ş.

7 VIsIon, MIssIon and Corporate Values 3 Tepe İnşaat will continue to create added value to Bilkent University and Turkey with its experience and know-how, highly qualified human resources, state-of-the-art technology and a service philosophy that prioritizes customer satisfaction, as it has for the last 41 years. Vision To engage in manufacturing at world standards, adopting the principle of uncompromised quality at every stage and all details of each project. To conscientiously adopt all contemporary requirements in the employees areas of expertise utilizing their strength, support and knowledge, with the awareness that employees are a company s most valuable asset and to further advance the Company s market position with sustainable growth perspectives. Mission To generate resources for Bilkent University that allows it to develop and grow. Corporate Values Tepe İnşaat is: Focused on customer satisfaction Constantly monitors evolving customer expectations to achieve continuous customer satisfaction. Dedicated to ethical values and the law Strives for competitiveness, productivity and profitability and works to provide the best service and product quality in its field; it is totally dedicated to the laws and ethical values. Aware of its responsibilities Is cognizant of its national responsibility and major corporate goals to expand its experience, know-how and vision beyond the region.

8 The World In According to forecasts by international economics experts, the economic recovery that accelerated thanks to the support of national governments and displayed large regional variation in performance during 2010 will continue in went on the books as a year where positive financial indicators, accepted as a sign that the sun is finally setting on the global financial crisis, began to pervade the markets. Nevertheless, the concerns that emerged in the second quarter of the year regarding the sustainability of public debts of some euro zone countries such as Ireland, Spain, Portugal and Greece, demonstrated that the global recovery is still vulnerable to various risk factors. Another development that stands out with respect to the global recovery is the brilliant growth performance of the emerging markets block, led by the BRIC (Brazil, Russia, India and China) countries. Countries in this group have displayed robust growth performance and are anticipated to reach a more prominent standing in the world economy in the period ahead. The developed countries, which were at the epicenter of the financial crisis of 2009, so far had a very sluggish recovery, much slower than hoped for owing to the deterioration in their budget balances and public debt levels as well as weak domestic consumption. According to forecasts by international economics experts, the economic recovery that accelerated thanks to the support of national governments and displayed large regional variation in performance during 2010 will continue in However, as proven by the economic problems that reared their ugly heads regionally in 2010, it will be a long while before full stability is achieved in the global economic system.

9 Turkey In After contracting by 4.7% in 2009, the peak point of the global financial crisis, the Turkish economy outperformed even the most optimistic expectations and registered a growth rate of 8.9% in Turkey performed successfully even in the face of the global financial crisis thanks to its macroeconomic policies built on fiscal discipline, a balanced budget and its solid banking system. Turkey is being pointed out within the international economic circles as one of the candidates to join the emerging markets category widely referred to as BRIC (Brazil, Russia, India and China). Showing great resilience in the face of the aftershocks in the world economy in 2010 as well, Turkey once again proved that it is on a robust growth path. After contracting by 4.7% in 2009, the peak point of the global financial crisis, the Turkish economy outperformed even the most optimistic expectations and registered a growth rate of 8.9% in This performance corresponds to the highest economic growth rate among the OECD members and bears out Turkey s great potential for the future based on its dynamic economy, increasingly important geopolitical position and a favorable demographic makeup consisting mostly of young people.

10 6 ConstructIon Industry In Turkey during the Past Year Pickup in domestic consumption and a surge in private sector investments constitute the primary factors in Turkey s growth during the first half of The construction industry is of major significance for the Turkish economy and should be considered in conjunction with the other sectors that it feeds. Many other industries including Iron & Steel, Cement, Ceramics and Coating Materials, Architecture, Paint and Construction Chemicals, Lighting, Natural Stone and Marble are also directly affected by the developments in the construction sector. The growth performance of the Turkish economy in 2010, highlighted above, also had a favorable impact on the construction industry. As depicted in Table 1, the construction industry continues to be the most responsive and sensitive sector to the aggregate growth dynamic. The figures show that the construction industry is rapidly gaining back the ground it lost due to the global crisis. The pickup in domestic consumption and the surge in private sector investments constitute the primary factors in Turkey s growth during the first half of Private sector investment surged by 27.7% compared to the same period of the previous year while private consumption expenditures were up by 7.3%. The increase in private sector s fixed capital investments played a major role in this development. The significant developments recorded in 2010 from the construction industry s perspective include the momentum in public sector spending, the increase in the number of infrastructure and superstructure projects, the rise in the number of residential building permits and the growth in the volume of mortgage loans. Office and shopping center lease demands and new investments are vibrant areas in the commercial real estate sector. In addition, expansion in the mortgage loan books is the most concrete evidence of the resurgence in the mass housing sector. This expansion continued throughout the year, with a notable acceleration in the final months of the year. By the beginning of December, the volume of mortgage loans had gained 29.6% compared to the beginning of the year; it reached TL 55.2 billion while the share of mortgages within overall lending was unchanged during this last period. The forecasts call for a continuation of the strong growth momentum of 2010 into 2011, albeit at a slower pace and cautious growth in the construction industry based on the overall growth performance of the Turkish economy.

11 7 ConstructIon Industry In Turkey during the Past Year GDP and Construction Industry Growth Rates (%) Construction Sector Growth Rate GDP Growth Rate Building Permits by Building Type, (m 2 /Annual Total) 140,000, ,000, ,000,000 80,000,000 60,000,000 40,000,000 20,000,000 One dwelling residential buildings Two and more dwelling residential buildings Residences for communities Hotels and similar buildings Office buildings Wholesale and retail trade buildings Traffic and communication buildings Industrial buildings and warehouses Public entertainment, education, hospital or institutional care buildings Other nonresidential buildings

12 bilkent holding 8 The accomplishments of Bilkent as a brand are a direct result of the pursuit of excellence - maintained from day one. Bilkent Holding s foundations were laid with Dilek İnşaat (Dilek Construction), established by İhsan Doğramacı in 1968, to operate in the construction industry. This was followed by the establishment of Tepe Ağaç Metal ve Makina Sanayi (Tepe Wood Metal and Machinery Industry Co.) and Meteksan in Companies were gathered under the Bilkent Holding umbrella during the restructuring process undertaken in Since its establishment, Bilkent Holding and its subsidiaries have adopted as their primary objective the creation of steady, continuous and long-term resources jointly with partners and other stakeholders. In accordance with this principle, Bilkent Holding s priority has been to achieve quality, customer satisfaction and profitability in all sectors in which it operates. Extensively expanding the scope of its business in less than 50 years, the Holding operates in construction, furnitureretail, printing/paper, real estate and services industries while maintaining a major presence in the airport operation industry via its subsidiary companies. The Holding leverages the domestic experience gained in these sectors to expand overseas, with operations in the Middle East, North Africa, the Turkic Republics, Eastern Europe and Russia. Successfully increasing areas of business along with its geographical reach in a relatively short time, Bilkent Holding was ranked among Turkey s 50 largest and fastest growing conglomerates according to statistics published by reliable and reputable sources. The Holding s companies have maintained leading positions achieved in their respective sectors. Tepe İnşaat (Tepe Construction), Bilkent Holding s flagship company in the construction industry, develops projects in diverse segments of the construction industry with projects in Turkey as well as abroad while continuing to introduce innovations to the sector without deviating from its commitment to quality. Bilkent Holding carried the trust and brand image with the Tepe brand to the furniture and retail industries as well. Both Tepe Mobilya (Tepe Furniture), which produces custom designs tailored to customer demands to create high-level customer satisfaction and Tepe Home, which is primarily responsible for the marketing and sales operations of Tepe Mobilya products brought the megastore furniture retailing concept to Turkey and maintains its leadership in its respective sectors. Meteksan Matbaa (Meteksan Printing), operating in the printing-paper sector, has established itself as a brand in this industry thanks to its product diversity and an annual production capacity of nearly 100,000 tons. Tepe Emlak (Tepe Real Estate) has undertaken seven shopping center projects in Turkey and assumed the operation of the Ankara Bilkent Center as well as the Istanbul Tepe Nautilus shopping mall. It continues to create spaces that make the lives of individuals easier thanks to the experience it has gained since the shopping center sector first gained momentum. Another important company within Bilkent Holding is Tepe Savunma (Tepe Defense), which provides defense and security services to Turkey s leading companies. Bilintur, involved with hotel administration and catering where high quality and service excellence in the services industry are a deciding factor, is also among companies raising the bar for the Holding s success. Tepe Betopan is Turkey s largest cement board manufacturer as well as the third largest cement-bonded particleboard producer in the world; its exterior siding products are exported around the globe. In accordance with the Holding s corporate values and principles, Bilkent Holding gives operational and executive independence to companies operating under its umbrella. As a result, these companies grow in line with their respective sectors requirements, adding further strength to the Holding with the subsidiaries and partnerships they establish. The success of this strategy is validated by TAV Havalimanları

13 bilkent holding 9

14 bilkent holding 10 Holding (TAV Airports Holding) and TAV Yatırım Holding (TAV Investment Holding), joint ventures of Bilkent Holding and Akfen Holding. Bilkent s accomplishments as a brand are the result of the pursuit of excellence it has maintained since day one. With the objective of always doing the best job at every stage of its corporate and operational structure, the Holding became a pioneering institution referred to as competitive, open to development and innovation, reliable, environmentally responsible, professional and dynamic. The most important element of the Holding s ongoing pursuit of excellence is its competent human resources, possessing a sense of corporate loyalty and formed with the right person for the right job approach. Successfully achieving the financial and operational targets that it set for itself in 2010 as part of a five-year strategic plan, Bilkent Holding will continue to increase its operations and investments in industries where it has a competitive advantage and where it does the best job. The Holding believes in the importance of achieving sustainable growth to establish a solid standing in the business world in addition to successful annual performance. It will continue to pioneer the sectors where it has assumed leadership. In addition, Bilkent Holding s future plans also include venturing into new sectors that are compatible with the Holding s principles and long-term strategic targets. In accordance with this goal, the Holding will evaluate public-private partnership projects, privatizations, overseas investment opportunities and technology investment projects. With the reliable image that it created for the Bilkent brand, its leading position in many sectors, a sound financial structure and its respect for the legal regulations and moral values, Bilkent Holding will continue to grow, carrying with it the experience gained from its 40-year history into the future. Bilkent Holding Subsidiaries and Affiliates Company Name Total Capital (TL) Bilkent Holding s Share Capital (TL) Bilkent Holding s Ownership Share (%) Bilan Bilkent Ankara Tepe Otel İşletmeciliği A.Ş. 5,500, , Bilbak A.Ş. 50,000 25, Bildes A.Ş. 50,000 25, Bilen A.Ş. 50,000 49, Bilenerji A.Ş. 30,550, , Bilintur A.Ş. 40,000,000 7,000, Bilsigorta A.Ş. 150, , Dilek İnşaat A.Ş. 22,000,000 19,000, Meteksan Matbaacılık ve Tek. San. Tic. A.Ş. 62,526,000 56,415, Meteksan Matbaacılık ve Tek. San. Tic. A.Ş. 62,526, Meteksan Sualtı Akustik Sist. Tek. A.Ş. 500,000 5, Optisis İletişim ve Bilgi Teknolojileri A.Ş. 300,000 3, Sports Internatonal Bilkent Fitness ve Spor Merkezleri A.Ş. 26,000, Tepe Betopan A.Ş. 20,000, , Tepe Emlak A.Ş. 180,000,000 41,462, Tepe Home A.Ş. 61,000,000 12,227, Tepe Home A.Ş. 61,000, Tepe İnşaat A.Ş. 625,000, ,651, Tepe İnşaat A.Ş. 625,000, Tepe Mobilya A.Ş. 50,000,000 2,337, Tepe Prefabrik İnş. San. Tic. A.Ş. 6,000, Tepe Savunma A.Ş. 17,000, Tepe Servis ve Yönetim A.Ş. 2,000,000 1,039, Turkofon A.Ş. 50,000 25,

15 TEPE İNŞAAT 11 Today Tepe İnşaat holds a privileged market position in an extensive and diverse area of products and services, from project drafting and construction to landscaping and decoration. Tepe İnşaat Sanayi A.Ş., the flagship company of Bilkent Holding, is a pioneering and innovative company within the Turkish construction industry with sound financial structure, deep-seated experience and its highly respected corporate identity. Tepe İnşaat commenced operation as part of the Tepe Group, which was established by the Hacettepe University Foundation in Ankara in Following the completion of the Group s restructuring process in 1987, Tepe İnşaat began its activities under the corporate umbrella of Bilkent Holding, which is owned by Bilkent University. Tepe İnşaat has taken part in an extensive and diverse array of projects since 1969, from project drafting and construction to landscaping and decoration. Advancing a step forward in each and every one of the past 41 years, the Company reached the vast know-how and experience that it possesses today. Providing service at international standards from project drafting to delivery, Tepe İnşaat has also succeeded in creating an exclusive and significant brand value on the international stage with the projects it undertook in Turkey and abroad. Having established a presence in an extensive geographical area from Central Europe to Asia, North Africa to the Middle East, Tepe İnşaat believes it is a national duty and responsibility to expand its experience and know-how beyond Turkey s borders. Tepe İnşaat has a presence in every facet of life with the housing, shopping center, airport, hospital, educational building, industrial complex and infrastructure projects totaling 13 million square meters undertaken since its establishment. Having completed construction projects worth more than US$ 5 billion over its 41-year history, Tepe İnşaat also successfully administers investment projects that combine real estate development projects and various marketing activities in an integrated structure. Having faith in the capability of its employees at every stage, creating the best environment for teamwork and providing various training opportunities is an integral lynchpin in Tepe İnşaat s operation. This success story, has for many years, reveals the fact that personal development has an undisputable impact on corporate development. In an effort to return the value created by its quality first service approach to society and education, Tepe İnşaat always aims for the best and operates to further develop and strengthen Bilkent University, Turkey s first private university ranked among the country s most distinguished educational institutions. Acting with an awareness of social responsibility, the Company offers many young people educational opportunities and encourages new generations to safeguard and uphold national values. With superior expertise and deep-rooted experience in various segments of the construction industry, Tepe İnşaat maintains its service approach geared to constantly improving life; it adds new values to its corporate know-how with each completed project. Tepe İnşaat accepts each new company or person it serves with the goal of achieving the utmost level of customer satisfaction - an integral part of this value chain it has created. The Company is moving forward with confidence toward achieving its objectives for the future.

16 OPERATIONS MAP 12 UKRAINE ALBANIA MACADONIA TURKEY TUNUSIA LIBYA EGYPT

17 OPERATIONS MAP 13 RUSSIA KAZAKHSTAN GEORGIA AZERBAIJAN AFGHANISTAN IRAQ SAUDI ARABIA QATAR (UAE) OMAN

18 FINANCIAL HIGHLIGHTS 14 Even after 41 years leading the construction sector, Tepe İnşaat continues to pursue the best. Balance Sheet Figures (TL thousands) 2009 % 2010 % A-Current Assets 536, , B-Fixed Assets 868, , Total Assets 1,405, ,587, A-Short-term Liabilities 214, , B-Long-term Liabilities 452, , C-Shareholders Equity 738, , Total Liabilities 1,405, ,587, Income Statement Figures (TL thousands) Gross Sales 145, ,769 Sales Discounts (-) (25) (17) Net Sales 145, ,752 Cost of Sales 113, ,464 Gross Profit (Loss) from Sales 31,951 48,288 Operating Expenses (4,301) (5,139) Operating Profit (Loss) 27,650 43,149 Ordinary Revenue and Income from Other Operations 65,909 68,856 Ordinary Expense and Loss from Other Operations (57,204) (62,758) Financial Expense (64,893) (27,625) Ordinary Profit (Loss) (28,539) 21,621 Extraordinary Revenue and Income 15,229 7,365 Extraordinary Expenses and Losses (34,948) (61,796) Profit (Loss) for the Period (48,258) (32,809)

19 FINANCIAL HIGHLIGHTS 15 Total Assets (TL thousands) ,587,118 1,405,400 Shareholders Equity (TL thousands) , ,391 Net Sales (TL thousands) , ,065 Operating Profit (Loss) (TL thousands) , ,650 Extraordinary Revenue and Income (TL thousands) , ,229

20 FINANCIAL HIGHLIGHTS 16 With its large-scale housing projects, Tepe İnşaat is one of the most powerful and most influential architect FOR urban transformation. it plays an important role in Turkey s development as a result of numerous projects such as hospitals, airports, terminals, pipelines, power plants, plants, industrial strucuture, business and shopping centers. Financial Ratios Liquidity Ratios Current Ratio Acid-Test Ratio Cash Ratio Operational Ratios Receivables Turnover Rate Receivables Collection Period Current Assets Turnover Rate Net Working Capital (TL) 321,712, ,425, Net Working Capital Turnover Rate Tangible Assets Turnover Rate Total Assets Turnover Rate Shareholders Equity Turnover Rate Financial Leverage Ratios Financial Leverage Ratio Financing Ratio Ratio of Shareholders Equity to Total Assets Ratio of Short-term Debts to Total Liabilities Ratio of Short-term Debts to Total Debts Ratio of Long-term Debts to Total Liabilities Ratio Analysis in Accordance with the Public Procurement Law Current Ratio Ratio of Shareholders Equity to Total Assets Ratio of Short-term Financial Liabilities to Total Shareholders Equity

21 FINANCIAL HIGHLIGHTS 17 Current Ratio Acid-Test Ratio Cash Ratio Financing Ratio Total Assets Turnover Rate

22 MANAGEMENT S MESSAGE 18 During this period where we are facing many risks from the general economic environment that have nothing to do with our sector, Tepe İnşaat s Management is fully cognizant of its responsibilities in managing financial and operational risk present in this challenging period. for Ankara s office and luxury residence market. We are encouraged about undertaking similar prestigious projects by the interest shown in Tepe Prime and the fact that feedback from the marketing teams are much better than our project performance expectations. As Tepe İnşaat, we see this project as a residential and lifestyle center specific to Ankara where we combine our know-how in real estate management with retail store and restaurant chains featuring unique concepts. Tepe İnşaat is a subsidiary of Bilkent Holding A.Ş. that is in turn owned by Bilkent University, the first private university in Turkey conforming to international standards. It introduced many firsts to Turkey via the country s first private sector airport operator TAV, Turkey s first private sector operator in sea transportation İDO (TASS) and many companies that manufacture inputs and associated products for the construction industry. It has been working on construction contracting projects and the investment projects segment in Turkey as well as abroad for 41 years. 2010, a year where we embraced change, turned out to be successful for Tepe İnşaat. We have profitably completed both the construction and sales of our 1,306-unit Istanbul Narcity project and have reached the construction and sales stage of the Narkule project. Design work for our new housing project, which we are developing right next to Narcity as an investment project, is continuing at a frantic pace. We plan to start the construction of this 550-unit distinguished housing project that will complement Narcity and Narkule by year-end We are rapidly approaching the end of the Tepe Prime Business-Residence-Avenue project - a major milestone In line with our steady growth, we are successfully carrying on with domestic and overseas contracting projects. In Turkey, the prestigious Taurus Office-Shopping Center and Mersin Carrefour Shopping Center projects currently under construction on the Konya highway axis are part of this drive. Internationally, the Sulaimaniya University Campus project on a total area of two million square meters and the USA Embassy interim facility project in Afghanistan whose scope expanded with additional tasks during the process are moving forward within the scheduled timeline. In 2011, we plan to increase the number of countries in which we conduct business in accordance with Permanent Settlement in the Target Country that we adopted as part of our International Business Development Management. Accordingly, we are closely monitoring the newly developing markets in our related sectors with a sharp focus on global economic developments. We believe that turning points for companies are the strategies and visions set forth by managements more so than the projects that are developed. In this regard, we will continue to conduct our operations with strict adherence to transparent, principled and rational vision and management strategies that were formed in accordance with ethical values in the period ahead. We envisage that Tepe İnşaat s permanent and reliable position in its industry will be elevated to even greater heights in the future thanks to this attitude. In tune with our goal to be a global corporation, we have come a long way toward raising our information and communication infrastructure to the global sector level.

23 MANAGEMENT S MESSAGE 19 As part of this process that we also refer to as the journey to transformation as a global player in the sectors in which we operate, we are focused on strengthening our infrastructure through efforts in sector-wide standardization and systemization as well as enhancing our organizational infrastructure and business culture by undertaking unique and diverse ventures and projects jointly with distinguished and deep-rooted customers in various geographic regions. As a distinguished company in the construction industry, one of the most important driving forces of the Turkish economy, Tepe İnşaat will continue to undertake its operations in the period ahead unwaveringly with the overarching objective of being an ongoing concern and being reliable in accordance with its mission and vision to create value for the Turkish economy by engaging in production and creating employment, being the trailblazer in diverse business lines and on the a global scale, establishing a presence in various geographies, and above all, making a contribution to the Turkish education system by creating resources for its ultimate shareholder Bilkent University. We see a beautiful future for our country and our people, who are deserving of the best of everything... Abdullah Bahadır GÜNGENCİ Executive Member of the Board of Directors Ali Haydar KURTDARCAN Chairman of the Board of Directors Atila Kemal OĞUZ General Manager

24 20 Board of DIrectors and Board of AudItors* Board of Directors Ali Haydar Kurtdarcan Chairman Abdullah Bahadır Güngenci Executive Director Vahit Uğurlu* Member Önder Sezgi Member İlhan İl Member Board of Auditors Alaaddin Tabur Gürkan Özaslan Members of the Board of Directors and Board of Auditors of Tepe İnşaat Sanayi A.Ş., as determined at the Ordinary General Assembly dated April, * Board Member, Vahit Uğurlu died at August 7, 2011.

25 senior management 21 Abdullah Bahadır Güngenci Executive Member of the Board of Directors Abdullah Bahadır Güngenci was born in Ankara in 1951 and graduated from Middle East Technical University, Department of Civil Engineering in He worked on the Iraq-Turkey Crude Oil Pipeline Project from 1976 to 1977 and later took part in the construction of the Petkim Aliağa Facilities Water Treatment and Demineralization Units between 1979 and From 1980 until 1986, Güngenci was employed in Bahrain s AISCO Iron Enrichment Plant Project, in marine dredging and in the construction of the pier and the plant. His career continued at Günkay İnşaat in Turkey until he joined Tepe İnşaat Sanayi A.Ş. in 1994 as Group Coordinator for Hospital Projects. In the following years, he served as Assistant General Manager in charge of Domestic Projects and later of Infrastructure Projects. Güngenci was appointed as an executive member of the Board of Directors on April 14, He also serves on the Boards of Directors of TAV Yatırım Holding A.Ş., TAV Tepe Akfen Yatırım İnş. ve İşl. A.Ş., TAV Havacılık A.Ş., TAV İstanbul Terminal İşletmeciliği A.Ş., TAV Esenboğa Yatırım Yapım ve İşletme A.Ş., Dilek İnşaat ve Tic. A.Ş., and Antepe Sağlık ve Turizm Hizmetleri Tic. Danışmanlık A.Ş. Atila Kemal Oğuz General Manager Born in Kayseri in 1963, Atila Kemal Oğuz graduated from Yıldız Technical University, Department of Civil Engineering in 1989 and began his professional career at Ran İnşaat. Subsequently, he served as field engineer at ARGE GIM & Tepe İnşaat Partnership and Tepe Yapı San. A.Ş., Project Manager at Zafer İnşaat A.Ş., Director at Normapetus International and as General Manager at Innova İnş. ve Müt. and Eser Taah. ve San. A.Ş. Oğuz joined Tepe İnşaat Sanayi A.Ş. as the General Manager in Mustafa Kalender Assistant General Manager, Finance and Administrative Affairs Born in Mengen, Bolu in 1964, Mustafa Kalender graduated from Anadolu University, Department of Business Administration in He began his professional career at Tekgüç İnşaat and joined Tepe İnşaat in 1988 as Finance Supervisor; he later was appointed Head of Finance and Finance Manager and is currently Assistant General Manager in charge of Finance. Kalender also served as a member on Tepe İnşaat s Board of Directors from 2005 until 2010 and currently serves on the Board at TAV İşletme Hizmetleri A.Ş., TAV Gazipaşa Yatırım, Yapım ve İşletme A.Ş., TAV Özel Güvenlik Hizmetleri A.Ş., TAV Bilişim Hizmetleri A.Ş., TAV Latvia Sia, Dilek İnşaat ve Tic. A.Ş., and Antepe Sağlık ve Turizm Hizmetleri Tic. Danışmanlık A.Ş. Ali Karaca Assistant General Manager, Domestic Projects Born in Kahramanmaraş in 1964, Ali Karaca graduated from Akdeniz University, Isparta Faculty of Engineering in Until 1992, he was employed by Kür İnşaat Sanayi A.Ş. and Nazmi Kürüm İnşaat A.Ş., respectively and joined Tepe İnşaat Sanayi A.Ş. in From 1992 to 2004, Karaca worked as Field Engineer, Construction Supervisor and Project Manager. From 2004 to 2009, he served as Domestic Projects Coordinator and was appointed Assistant General Manager of Domestic Projects at the end of 2009.

26 MIlestones 22 TEPE İNŞAAT, THE FLAGSHIP COMPANY OF BILKENT HOLDİNG, IS THE LEADER OF THE CONSTRUCTION INDUSTRY THANKS TO ITS SOUND FINANCIAL STRUCTURE AND RESPECTED CORPORATE IDENTITY. Tepe İnşaat in Figures Completed Projects Construction Area (m²) Ongoing Projects Construction Area (m²) Airports 3,651,296 - Commercial and Industrial Buildings 1,735, ,400 Houses 2,388, ,500 Shopping Centers 1,152,903 57,000 Hospitals 965, ,200 Infrastructure Projects - - Prefabricated Buildings 696,244 - Education Buildings 248, ,884 Military Projects 608,047 68,387 Total 11,446,957 1,261,371 Grand Total 12,708,328 - Completed Projects (US$) 1. Housing 798,503, Hospital 392,163, Terminal 1,425,336, Commercial Buildings / Office Buildings 462,950, Shopping Center 374,489, Education Building 140,376, Touristic Building 47,726, Renovation 120,024, Sports Facilities 24,188, Prefabricated Housing / Shelter 179,367, Container 9,375, Infrastructure 411,232, Industrial 93,933, Transport 79,003,335 Total Sum of Completed Projects 4,558,672,034 Note: not have been subjected to escalation

27 MIlestones s Turkey s first foundation-owned, private university, Bilkent University was founded in October 1984 by the İhsan Doğramacı Foundation. It began its academic activity in 1986 with 386 students. The University today has nine faculties, two undergraduate colleges, three vocational schools and six institutes that provide education to 12,000 students. Bilkent graduates are among Turkey s most select human resource Bilkent Campus University lies within the boundaries of Bilkent, a city created over the course of fifteen years on the plains of Ankara.Located on 612 hectares, Bilkent is a city of science and its campus, dormitories, business and shopping centers, sports complex, concert halls, hotel and movie theaters, dam, power plant, wooded areas, symphony orchestra and excellent infrastructure are able to cater to every need. 1990s 1999 Atatürk Airport (Build-Operate-Transfer) The İstanbul Atatürk Airport International Terminal was built by a joint venture between the Tepe and Akfen Groups (TAV) and started operating in two years. A company specialized in airport construction, operation and financing, TAV today is a leader in Turkey and became dominant player in the Middle East, North Africa and the Caucasus. The Atatürk Airport New International Terminal Project was completed at a cost of US$ 397 million and commenced operations on December 22, With an additional facility launched in 2004, the annual capacity of the terminal increased from 14 million to 20 million passengers. In July 2005, TAV also assumed operations at Atatürk Airport Domestic Terminal. Covering an area of 62,500 square meters, the Domestic Terminal has been modernized to accommodate an average of 7.5 million passengers a year. The Development and Expansion Project that entered its final phase in 2010 yielded a total additional covered space of 18,770 square meters at the Domestic Terminal.

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29 MIlestones s 2000 Turkish Armed Forces Rehabilitation Center Built on a total area of 102,500 square meters and with a 400-bed capacity, this facility was established to provide rehabilitation and relaxation to army veterans. Built at a cost of US$ 132 million, the actualization of this facility was the outcome of an architectural contest. İş Bankası Headquarters Complex Turkey s first smart building, the complex is one of the most majestic high-rises in Istanbul, located in the heart of industry, commerce and culture. Built at a cost of US$ 190 million, the complex has been equipped with the 21st century s latest technology and is an important example of smart buildings, not only in Turkey but in Europe and the Middle East as well. With two towers - 52 and 36 stories respectively - İş Bankası Headquarters Complex is the highest skyscraper between Dubai and Frankfurt.

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31 MIlestones Beykoz Mansions Built on an area of 100 hectares in the Saip Molla Pasha Woods in Beykoz, Istanbul, Beykoz Villas are one of Tepe İnşaat s most prestigious projects and offers 401 mansions in perfect harmony with their natural surrounding. The whole atmosphere reflects the beautiful attributes of a truly unique life style. The historical Hunting Lodge, renovated true to its original form, serves residents with a library, billiards, game and event lounges, a spacious garden designed for large receptions and a kitchen. With a project cost of US$ 90 million, Beykoz Villas are an attractive destination for an exclusive lifestyle in Istanbul. Tepe Nautilus Shopping Center Nautilus, or lighthouse, was inspired by the seaside around Kadıköy, on the Anatolian side of Istanbul, one of the world s most beautiful coastal cities. With a market value of 150 million, Nautilus is the largest shopping center on Istanbul s Anatolian side. With its bright design, Nautilus offers visitors a comfortable shopping environment Kemer Rose Residence: Consisting of 70 blocks built on a land plot of 35,000 square meters in Kemerburgaz, its landscaping features rose gardens with unrivalled beauty. Offering a peaceful lifestyle in perfect harmony with the nature, Kemer Rose Residence also provides a wide range of amenities in its sports facilities.

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33 MIlestones The Eczacıbaşı Kanyon Project The Eczacıbaşı Kanyon Project is a stunningly modern open-air shopping center built by Tepe İnşaat in Istanbul. Kanyon hosts 160 shops, a gourmet supermarket, a street market, movie theaters, restaurants, cafeterias, bars, a sports and health center, indoor and outdoor swimming pools and open-air performance venues, residences and office buildings and shopping and amusement centers. Kanyon was built via a partnership between Eczacıbaşı and İş Real Estate on an area of 250,000 square meters in compliance with national and international earthquake regulations. The cost of the project was US$ 41 million Baku-Tbilisi-Ceyhan Crude Oil Pipeline Tepe İnşaat took part in the building of the pipeline s 277-kilometer Posof-Erzurum section and the pump stations project along the pipeline. İmranlı-Kayseri Natural Gas Pipeline Kütahya-Bilecik-Uşak Natural Gas Pipeline 2006 Narcity Housing Project Built on approximately 147,000 square meters in Maltepe, Istanbul, the Narcity complex is landscaped primarily with pomegranate trees, reflecting the Turkish name for pomegranate (nar). This complex consists of 1,283 apartments built in compliance with the latest earthquake regulations and state-of-the-art soundproofing, heat and water insulation systems. With its high-quality materials and workmanship, as well as its extensive social facilities and secure systems, Narcity Istanbul is one of Istanbul s favorite residential destinations. The US$ 200 million project was launched in January Esenboğa Airport Ankara finally has an airport that is truly worthy of its location in Turkey s capital city. Esenboğa Airport was built at a cost of 188 million and has an annual passenger capacity of 10 million. It is the only airport in Turkey to combine both domestic and international terminals under one roof. Completed one year ahead of schedule, it has became the modern face of Turkey s capital.

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35 MIlestones Bilkent Garden Homes At an investment value of US$ 52 million, this project consists of 124 twin-villas built on a 123,000 square meters. Set amid superb natural beauty, twin villas, 500 square meters each, are equipped with stateof-the-art technology. With two playgrounds for children, an observation deck, jogging tracks, swimming pool, game room, fitness center with sauna, cafeteria, tennis, basketball and volleyball courts, Bilkent Garden Homes have been designed to cater to its residents every social need. Offering an urban location while at the same time far from the hustle and bustle of the city and combining the beauty of nature with the amenities of the contemporary life, Bilkent Garden Homes has been met with great interest. The project was launched at the end of 2005 and completed at the end of All units were sold before the construction was actually completed Hacettepe University Hospitals Morphology Building and Seventh & Eighth Building Retrofits Completed in December 2008 at a cost of TL 71 million, this project has a total construction area of 28,500 square meters. As part of this project, among the most important undertakings by Tepe İnşaat for Hacettepe University, Seventh & Eighth Buildings and the Morphology Buildings were reinforced against earthquakes. The modifications in the Internal Medicine, Urology, Neurology, General Surgery, Brain Surgery and Gastrology departments, located in the Seventh Building, were completed. In addition, Biochemistry, Microbiology, emergency laboratories, Endocrinology, Geriatrics, Nephrology, Infection, Rheumatology, Hematology, Gastrology, Coronary Intensive Care departments and inpatient floor retrofits were also undertaken. The project was completed and delivered as of December 2008.

36 MIlestones Tepe Prime Project The project is comprised of Tepe Prime Business, Tepe Prime Residence and Tepe Prime Avenue and has an indoor area of 92,800 square meters. Its objective is to provide utter comfort to its dwellers and guests; it is predicted to be finished by Narkule: Built in Maltepe, Istanbul on a plot of land neighboring Narcity, the Narkule project was designed as a boutique project that will make its residents enjoy the pleasure of living in highrise buildings thanks to its modern architecture. Utilizing the slogan Some Like It High, Narkule combines its contemporary architecture with a youthful, dynamic, dignified and colorful style along with high-quality living standards with breathtaking scenery. Almost all of the108 residential units in the 27-storey Narkule project, have a splendid view of the forest, the sea and the islands.

37 SubsIdIarIes and AffIlIates 33 Company Total Capital (TL) Share Capital (TL) Participation Ratio (%) Tepe Emlak Yatırım İnş. ve Tic. A.Ş. 180,000, ,614, TAV Havalimanları Holding A.Ş. 363,281,250 94,664, TAV Yatırım Holding A.Ş. 100,500,000 46,732, Tepe Mobilya San. A.Ş. 50,000,000 41,981, Tepe Home Mobilya ve Dek. Ürn. A.Ş. 61,000,000 33,571, Ati Servicess Sa 36,074,062 16,492, Tepe Betopan A.Ş. 20,000,000 13,200, Sports International A.Ş. 26,000,000 21, Tepe Savunma ve Güv. Sist. A.Ş. 17,000,000 8,329, Bilintur A.Ş. 40,000,000 8,000, Meteksan Matbacılık A.Ş. 62,526,000 5,864,454 9 Bil Enerji A.Ş. 30,550,000 4,530, Tepe Prefabrik İnşaat Sanayi ve Ticaret A.Ş. 6,000,000 4,213, Antepe Sağlık ve Turz. Hizm. Tic. Danş. A.Ş. 3,000,000 2,975, Dilek İnşaat A.Ş. 22,000,000 2,968, Bilan Bilkent Ankara Tepe Otel İşletmeciliği A.Ş. 5,500,000 2,694, C.B. Spolka Zograniczona Odpowiedzia 7,843,277 2,221, Ankara Teknoloji A.Ş. 9,600,000 1,106, Tepe Servis ve Yönetim A.Ş. 2,000,000 1,039, Artı Döviz A.Ş. 1,500, , Meteksan Savunma A.Ş. 10,000, ,310 6 Batı Karadeniz Elektrik Dağıtım A.Ş. 1,400, , Park Villa İnşaat ve Turizm A.Ş. 500, , Tepe İnşaat ve Ticaret (Kıbrıs) Limited 145, , Hyper Foreign Trade Holland N.V. 137,019 73, Tepe Grubu United Kingdom 597,300 61, Tepe Ukrayna Ltd. 61,185 61, Tepe Stroi 61,185 61, Yenikentler Yatırım A.Ş. 170,000 5,000 3 Meteksan Sualtı Akustik Sist.Tekn.A.Ş. 500,000 5,000 1 Optisis İletişim ve Bilgi Teknolojileri A.Ş. 300,000 3,000 1 Knauf İnşaat ve Yapı Elm. A.Ş. 8,017,000 1,048 0 Bilsigorta A.Ş. 150, Bildes Bilkent Destek A.Ş. 50, Bilbak Bilkent Bak. A.Ş. 50, Esenboğa Ankara Döviz Ticareti A.Ş. 500, Dafne Ege Döviz Ticareti A.Ş. 500, Pft Sıva Sistemleri A.Ş. 150, Riva İnşaat Turizm A.Ş. 2,000, TAV Esenboğa Yatırım Yapım ve İşletme A.Ş. 241,650,

38 2010 YILI OPERATIONS FAALİYETLERİ DomestIc Projects HospItal Projects 34 With a social responsibility approach, Tepe İnşaat supports infrastructure projects that enhance public health. Construction of Gazi University Hospital s Hematology Department Commencement Date: January 2010 Total Construction Area: 3,200 square meters Delivery Date: March 2011 Client: Gazi University Rectorate As part of the construction of the Hematology Department of Gazi University s Faculty of Medicine, a service for the inpatient and outpatient treatment of leukemia patients is being built. This service will feature infection control, stateof-the-art devices and a total of 57 single rooms, including 18 rooms with HEPA filters, four rooms for intensive care facilities and 35 normal rooms. It is predicted that the project will be completed and delivered by March Gazi University Hospital Classroom & Laboratory Retrofit Work Commencement Date: December 17, 2010 Delivery Date: March 17, 2011 Client: Gazi University Rectorate The retrofit of the English Language Classrooms and Research Laboratories of Gazi University s Faculty of Medicine located in Emek, Ankara as well as the retrofit of SGK Medula System (the comprehensive medical access system of the Social Security Institute of Turkey) Units are planned for completion and delivery in March 2011.