DOĞUŞ GROUP ANNUAL REPORT

Transcription

1 ANNUAL REPORT 14

2

3 DOĞUŞ GROUP ANNUAL REPORT

4

5 CONTENTS DESCRIPTION PAGES Doğuş Group Structure 6 Operational Map 8 Financial and Operational Highlights 10 Consolidated Financial Information by Segments 12 Corporate Profile 13 Doğuş Holding and its Functions 14 Corporate Risk Management and Internal Audit 17 Doğuş Group s Approach toward its Stakeholders 19 Credit Ratings 20 Message from the Chairman 21 Members of the Board of Directors 23 Committees Subject to the Board of Directors 26 Message from the CEO 27 Financial Services 30 Automotive 48 Construction 54 Media 64 Tourism and Services 74 Real Estate 94 Energy 104 F&B 108 New Initiatives 113 Corporate Social Responsibility 127 Consolidated Financial Statements 143

6 DOĞUŞ GROUP STRUCTURE AUTOMOTIVE CONSTRUCTION MEDIA BANKING & FINANCIAL SERVICES DOĞUŞ GROUP GROUP FINANCIAL SERVICES SERVICES AUTOMOTIVE CONSTRUCTION MEDIA MEDIA TOURISM TOURISM AND

7 DOĞUŞ GROUP 2014 ANNUAL REPORT TOURISM & SERVICES AND SERVICES REAL REAL REAL ESTATE ESTATE ESTATE ENERGY ENERGY ENERGY F&B F&B NEW F&B NEW INITIATIVES INITIATIVES 7 NEW INITIATIVES CORPORATE CORPORATE RESPONSIBILIT RESPONSIBILIT Y Y

8 OPERATIONAL MAP AMERICA 1. USA d.ream Partnerships EUROPE 2. BULGARIA Doğuş Construction EODD Doğuş Construction Bulgaria Branch Doğuş Construction Representative Office 3. CROATIA D-Marin D-Hotels & Resorts 4. GERMANY Garanti Bank Representative Office GBI Representative Office Doğuş Media Group GMBH Euro.message Deutschland GMBH 5. GREECE D-Marin Partnerships 6. ITALY D-Hotels & Resorts 7. LUXEMBURG Garanti Bank Branch 8. MALTA Garanti Bank Branch 9. ROMANIA Garanti Bank Romania - Headquarters & 84 Branches SC Motoractive Credit SA Ralfi IFN SA 10. SWITZERLAND GBI Representative Office D-Auto Suisse SA Doğuş SA - Geneva 11. THE NETHERLANDS GBI Headquarters D-Marin Investments Holding BV d.ream International BV 12. TURKISH REPUBLIC OF NORTHERN CYPRUS Garanti Bank - 6 Branches 13. UK Garanti Bank Representative Office d.ream Partnerships 14. UKRAINE GBI Representative Office Doğuş Construction L.L.C. Doğuş Construction Representative Office AFRICA 15. LIBYA Doğuş Construction Libya Branch 16. MOROCCO Doğuş Construction SARL Doğuş Construction Morocco Branch DOĞUŞ GROUP FINANCIAL SERVICES AUTOMOTIVE CONSTRUCTION MEDIA TOURISM

9 DOĞUŞ GROUP 2014 ANNUAL REPORT 9 ASIA 17. AZERBAIJAN d.ream Franchise 18. CHINA Garanti Bank Representative Office d.ream Partnerships 19. IRAQ D-Auto L.L.C. 20. KAZAKHSTAN Doğuş Kazakhstan Branch Doğuş L.L.C. 21. OMAN Doğuş Construction Oman L.L.C. 22. QATAR Doğuş Construction L.L.C. 23. RUSSIA GarantiBank Moscow - Headquarters d.ream Franchises Doğuş Avenu L.L.C. - Crate and Barrel 24. SAUDI ARABIA Doğuş Construction Saudi Arabia Branch 25. THAILAND d.ream Partnerships 26. UNITED ARAB EMIRATES Doğuş Management Services Ltd. d.ream Partnerships REIDIN Headquarters AND SERVICES REAL ESTATE ENERGY F&B NEW INITIATIVES CORPORATE RESPONSIBILITY

10 FINANCIAL AND OPERATIONAL HIGHLIGHTS KEY FINANCIAL INDICATORS (TL THOUSAND) ROE RESTATED * ROE 27.3% 6.9% 6.9% 1.2% 1.2% TOTAL ASSETS TOTAL SHAREHOLDERS' EQUITY REVENUES NET PROFIT FOR THE YEAR GROSS PROFIT PROFIT BEFORE NET FINANCE COST PRINCIPAL PERFORMANCE RATIOS (%) ROE RESTATED * GROSS PROFITABILITY 25.7% 25.4% 11.7% 12.5% 11.4% NET PROFITABILITY 27.1% 6.8% 11.2% 1.5% 0.6% ROA- RETURN ON ASSETS 5.3% 1.3% 4.2% 0.6% 0.2% ROE- RETURN ON GROUP EQUITY 27.3% 6.9% 6.9% 1.2% 0.6% * Effective from 1 January 2013, the Group has adopted the new reporting standard (IFRS 11- Joint Arrangements). The proportionate consolidation method applied to the Group s interest in joint ventures is replaced by the equity method effective for annual periods beginning on or after 1 January Therefore, key financial indicators for 2012 are restated for comparative presentation. DOĞUŞ GROUP FINANCIAL SERVICES AUTOMOTIVE CONSTRUCTION MEDIA TOURISM

11 DOĞUŞ GROUP 2014 ANNUAL REPORT 11 KEY FINANCIAL INDICATORS (TL THOUSAND) BANKING AND FINANCE RESTATED * SEGMENT ASSETS TOTAL INTEREST AND COMMISSION INCOME AUTOMOTIVE RESTATED * SEGMENT ASSETS REVENUE CONSTRUCTION RESTATED * SEGMENT ASSETS REVENUE MEDIA RESTATED * SEGMENT ASSETS REVENUE TOURISM AND SERVICES RESTATED * SEGMENT ASSETS REVENUE ENERGY RESTATED * SEGMENT ASSETS REVENUE F&B RESTATED * SEGMENT ASSETS REVENUE OTHER INDUSTRIAL SEGMENTS RESTATED * SEGMENT ASSETS REVENUE * Effective from 1 January 2013, the Group has adopted the new reporting standard (IFRS 11- Joint Arrangements). The proportionate consolidation method applied to the Group s interest in joint ventures is replaced by the equity method effective for annual periods beginning on or after 1 January Therefore, key financial indicators for 2012 are restated for comparative presentation. AND SERVICES REAL ESTATE ENERGY F&B NEW INITIATIVES CORPORATE RESPONSIBILITY

12 CONSOLIDATED FINANCIAL INFORMATION BY SEGMENTS TOTAL ASSETS BY SEGMENT % Others Financial Services 26% 6% 12% F&B 6% Energy Tourism and Services Automotive Media 6% Construction 10% 6% TOTAL REVENUE BY SEGMENT 2014 Others Tourism 2% 5% F&B 3% Energy 1% 74% Automotive Media 7% Construction 8% DOĞUŞ GROUP FINANCIAL SERVICES AUTOMOTIVE CONSTRUCTION MEDIA TOURISM

13 DOĞUŞ GROUP 2014 ANNUAL REPORT 13 CORPORATE PROFILE Founded in 1951, Doğuş Group has been taking its place among the leading business conglomerates of Turkey. The Group is a corporate leader in the region. Doğuş Group is active in eight core businesses: financial services, automotive, construction, media, tourism and services, real estate, energy and F&B. In addition, the Group sustains its growth with new investments in the areas of technology, sports and entertainment. Doğuş Group utilizes a management style that is both customerfocused and productivity-centered. While it is formed through material gains, it embodies a strong corporate citizenship approach which is at the center of all business practices of the Group and which benefits the entire society. In line with this approach, the Group implements several corporate responsibility and sponsorship projects, with a special focus on child development, education, environment, culture-arts and sports. Doğuş Group always provides its services based upon the principles of customer satisfaction and trust. As a result of this approach, the Group has created reputable brands with global standards and has been representing Turkey worldwide. To become a leading regional player, the Group builds alliances with local and international partners towards its growth strategy. The Group has contributed to this process by creating a synergy with global partners including the following: BBVA (Banco Bilbao Vizcaya Argentaria, S.A.) in finance, Volkswagen AG and TÜVSÜD in automotive, CNBC and Condé Nast in media, Hyatt International Ltd. and HMS International Hotel GmbH (Maritim) in tourism, Latsis Group, Kiriacoulis Group and Adriatic Croatia International (ACI) Group in marine, and the International Azumi Group in the food & beverage industry. Standing out as a pioneer of change, Doğuş Group is always ready to adapt to the developments around the world. In line with this adaptation strategy, the Group also has the advantage of capitalizing on its broad range of experience and collaborations. By signing partnership agreements with the leading companies, Doğuş Group signals its intention to accelerate its investments throughout the world. Doğuş Group is aware of its responsibilities and acts in accordance with a vision that includes leading by example and contributing to economic development. The Group plays a significant role in the Turkish economy by creating numerous employment opportunities and generating high levels of business volume. The Group s Corporate Social Responsibility Strategy; is to support economic, social and environmental development and increase the level of prosperity by creating innovative and sustainable business models in every sector and region. Doğuş Group has more than 250 companies and around 50,000 employees. The Group has created strong customer loyalty while building brand value with its high-tech infrastructure. Doğuş Group continues contributing to Turkey s ongoing process of transformation and innovation. Utilizing its global perspective, world-class brands, and noteworthy partnerships, the Group s vision particularly with regard to services is a valuable asset to Turkey. The Group is able to maximize the value of its brands by utilizing the highest quality human resources and the most advanced technology to maintain the high standards that have made it a regional leader in the services sector. AND SERVICES REAL ESTATE ENERGY F&B NEW INITIATIVES CORPORATE RESPONSIBILITY

14 DOĞUŞ HOLDING AND ITS FUNCTIONS DOĞUŞ HOLDING It is the mission of Doğuş Holding to fulfill steering, coordination, control and audit functions, as well as to generate value for the Group and its companies, monitor activities of the Group companies on behalf of the shareholders, and perform the financial audit and administer control systems. Doğuş Holding aims to create competitive companies that put regional growth at the focal point of their operations. In the management of its subsidiaries, Doğuş Holding is committed to fulfilling the following responsibilities: Updating the Group s strategy along with the changing investment climate and steering the Group companies in line with the predetermined strategy. Ensuring generation of sufficient financial resources to realize the Group s long-term vision. Formulating and managing corporate initiatives so as to enable the Group to adapt in the quickest manner possible to the developing and evolving business environment. Leading the creation and management of strategic alliances and corporate partnerships. Providing communication among the Group companies and identifying opportunities that will result in synergies. Coordinating and consolidating the financial and corporate reporting of Group companies. Ensuring optimum use of technology, knowledge and human resources across the Group. Formulating and maintaining corporate values and communicating them within and outside the Group. Instilling an awareness of social responsibility and corporate citizenship. Implementing the ERM (Enterprise Risk Management) approach to assure that the business risks undertaken by the Group companies are aligned with shareholders risk appetite. HOLDING FUNCTIONS Corporate Communications The Corporate Communications Department is responsible for Doğuş Group s reputation management through the means of strategic communication tools, media relations, social responsibility projects and sponsorship activities. The Department is also responsible for the coordination of the internal communications among Doğuş Group companies and the Group s external communication tools including the annual report, corporate responsibility report, and the Group s website. Finance and Financial Reporting The Finance Department is responsible for relations with local and foreign financial institutions in tandem with the financing needs of Doğuş Holding and other Group companies (excluding the finance sector), cash flow and asset management, coordination of market risks as well as rating process management, and project finance requirements of the nonfinancial segment of Doğuş Group. The Financial Reporting Department is mainly responsible for the preparation of consolidated financial statements, management reports and projections in accordance with Turkish and International Financial Reporting Standards, and monitoring and reporting of deviations from business line budgets. The Group planning and budgeting process is monitored. Group Reporting System convergence projects are also carried out by the Department. Financial Affairs and Accounting The Financial Affairs and Accounting Department is responsible for organizing the accounting records in accordance with tax legislation and within the framework of a single-form accounts plan, preparing and controlling of all monthly, quarterly and annually tax returns, preparing and submitting the financial reports (quarterly P&L, balance sheet, reconciliations and other reports as required) to the authorities. The Department is liable for the approval of the invoices in line with the manual of the Company, and following up their maturity dates. It also has the responsibility of providing assistance in terms of tax accountability, relations with tax authorities, intercompany relations, and financial activity compatibility. DOĞUŞ GROUP FINANCIAL SERVICES AUTOMOTIVE CONSTRUCTION MEDIA TOURISM

15 DOĞUŞ GROUP 2014 ANNUAL REPORT 15 Human Resources The Human Resources Department is responsible for the management of Doğuş Holding human resources processes in line with corporate values and long-term strategies. The Department aims to create common language for human resources policies among the other Doğuş Group companies. The main goals of the Human Resources Department are attracting and recruiting talented individuals who will help support the Holding going forward, investing in and creating a well-educated, innovative, ethical and sensitive workforce, developing employees careers based on the future needs of the Group, enhancing practices within the Group through assignments, transfers and rotation for employee and organizational development, establishing competitive reward and recognition systems, and increasing employee motivation and commitment. The other functions of the Department are implementing organizational development policies, career planning, compensation, benefits and performance management for Doğuş Holding and some of its subsidiaries. The Department is also responsible for establishing the communication platform and providing strategic and operational human resources policies among the other Doğuş Group companies and also ensuring an environment suitable for lifelong learning. Information Technologies The IT Department is responsible for assistance and support services under information technologies of Doğuş Holding and other Group companies which are under the same IT infrastructure with Doğuş Holding. This includes installing, managing and supporting all hardware, software and other services under the IT infrastructure. IT professionals working in this capacity ensure that the network is operating properly and all employees have the ability to use IT resources. The IT Department is also responsible for information security, availability and providing a corporate perspective on information technology initiatives. Internal Audit The Internal Audit Department is responsible for the performance of financial, operational, and IT audits at Doğuş Group companies in accordance with its annual risk-based audit plan. In addition, the Department tracks all internal audit findings and coordinates follow ups to ascertain that appropriate action is taken. The results are periodically reported to the Risk & Audit Committee. Investments The Investments Department is responsible for business development activities in new sectors and in those sectors in which Doğuş Group already operates. It evaluates domestic and regional investment opportunities that are in line with the Group s strategy and developments in the global economy. Department responsibilities include providing thorough analysis of business opportunities and undertaking M&A activities of the Group for the projects approved by Doğuş Holding Board of Directors. The Department is also responsible for monitoring projects after successful initiation to ensure timely and efficient returns. Lean Management The Lean Management Department is responsible for coordinating the lean transformation within Doğuş Group. Through a series of activities, such as training, value stream mapping studies, action workouts, and Kaizen projects, the Department helps management and employees to understand lean management principles and invigorate business performance of the entire Group. It leads and reports the results of process optimization studies that help the Group increase its competitive advantage and profitability through increased efficiency, quality and customer satisfaction. Legal Affairs The Legal Affairs Department is responsible for the legal representation of Doğuş Holding and other Group companies and for ensuring that all kinds of contracts, legal processes and counseling services are handled in line with the Company s best interests and with no legal risk. Protocol The Protocol Department is responsible for the overall coordination of meetings, events and organizations in which the Chairman of Doğuş Group is involved and invited as well as the logistical coordination of protocol services and event management. This includes conducting the necessary arrangements to represent the Chairman at the national and international platforms in line with the protocol, the coordination of the official relations of Doğuş Group and the coordination of the official organizations to which the Doğuş Group Executive Board members are invited. The Protocol Department s responsibilities also include economic research, analysis and reporting on a regular and ad hoc basis, drafting AND SERVICES REAL ESTATE ENERGY F&B NEW INITIATIVES CORPORATE RESPONSIBILITY

16 statements, letters and protocol messages, preparing documents and presentations upon request of the Chairman, and managing external communications and strategic relations with the related third parties and institutions such as the World Economic Forum (WEF), Turkish Industry and Business Association (TÜSİAD) and Foreign Economic Relations Board (DEİK). Risk Management The Risk Management Department s main responsibility is to assure that the risks and opportunities of Doğuş Group are identified and risk and opportunity topics are properly measured, managed and actioned upon in order to ensure the shareholder values are sustained and enhanced. Risks monitored by the Department include financial, strategic, legal and operational risks. The Department works closely with the Group companies and their respective finance, sales, operational and other functions as well as the risk management departments in order to consider necessary risk intelligence information for assessing the risks and their due consideration in the decision making processes. The Department is also responsible for risk retention and transfer through design and procurement of corporate insurance cover with relevant insurance policies. In accordance with risk management guidelines, the Department regularly prepares risk reports, facilitates risk-based discussions in management meetings, and makes recommendations to the CEO, Risk & Audit Committee, and the Board of Directors. Social Projects The Social Projects Department is responsible for managing Doğuş Holding s social content related projects. The concentration of the projects has been focused on the topics of financial literacy and the empowerment of women, with financial literacy programs such as 3 Kumbara Financial Literacy Education Program and İSMEK (Goal Women). The Department also supports WEF Gender Parity Gap Turkish Task Force Equality at Work Platform. The Social Projects Department works in close cooperation with public authorities, NGOs and various organizations that are within the scope of the undertaken programmes. The Department aims to generate various sustainable projects that are of added value to the Turkish society. Tax Affairs The Tax Affairs Department is responsible for assistance and support services for Doğuş Group, as well as its subsidiaries, regarding tax laws and procedures such as tax disputes, incentives, M&A, transfer pricing, training and tax planning, and structuring to avoid international double taxation. The Department also participates in the meetings of the related associations such as TÜSİAD and YÖİKK to support the tax legislation process. Security and Administrative Affairs The Security and Administrative Affairs Department supports Doğuş Holding and Group companies in administrative cases including work safety, employee health, cleaning, catering, gardening, callcenter and courier services, protocol services, library and archives services, educational audit, security training services, ambulance service, transport, purchasing, common purchasing, vehicle fleet rental, technical maintenance, emergency case management, electronic security applications and project management, private security and other administrative affairs in line with the Group s vision, mission, main principles and terms. DOĞUŞ GROUP FINANCIAL SERVICES AUTOMOTIVE CONSTRUCTION MEDIA TOURISM

17 DOĞUŞ GROUP 2014 ANNUAL REPORT 17 CORPORATE RISK MANAGEMENT AND INTERNAL AUDIT Doğuş Group acts proactively in terms of risk management in order to ensure that its business operations in different industries and regions are not adversely affected as a result of market, operational, liquidity and / or counterparty risks. Risk Management and Internal Audit departments within every major sector and at the Group level, provide and maintain awareness for different types of risks, including emerging risks, and ensure that appropriate risk management mechanisms are in place. Global and local risk experiences in the last years have made effective risk management mechanisms crucial. Increasing scrutiny, as well as a push for stronger governance coming from not only regulatory bodies (including Turkish Commercial Code) but also the investing community, makes it essential for companies to have in place solid risk management and control systems for ensuring viability and sustainable growth. Doğuş Group, with diverse business operations in different regions and countries, has already been cognizant of its need to monitor and manage various risks, including not only its strategic, business and operational risks but external risks as well. As for Doğuş Group s risk management activities in 2014, it was a successful year in terms of maintaining and improving risk management practices, both at the Group level and at the Company level, and enhancing the risk culture across the Group. Risk Committee meetings are held on a regular basis and these meetings generate valuable and relevant risk information, which is discussed and escalated if deemed necessary. Risks are managed on a daily basis by various levels of management in each of the subsidiaries, and supporting risk management activities such as providing a framework for related guidance and reporting mechanisms are conducted by the risk function teams. The Group Risk Management Function works closely with the company Risk Management Departments in order to strengthen its risk culture and ERM penetration and obtain sound, timely information for assessing and evaluating the decision making processes. In addition to establishing an independent reporting infrastructure for companies and providing policies, guidance and know-how to Group companies, raising group-wide awareness for different types of risks and ERM culture is a continued undertaking facilitated by periodical risk roundtables, workshops, dashboards and reports throughout the organization. The Department is also responsible for risk retention and transfer through design and procurement of corporate insurance cover with relevant insurance policies. AND SERVICES REAL ESTATE ENERGY F&B NEW INITIATIVES CORPORATE RESPONSIBILITY

18 Every major sector has its own Risk and Audit Committee. The Committee, which functions under the Board of Directors, is also responsible for assessing risks and proposing appropriate solutions according to risk appetite of shareholders. Internal Audit is an independent department designed to improve and add value to Doğuş Group s operations. It helps the Group to accomplish its objectives by bringing a systematic, disciplined approach to evaluating and improving the effectiveness of risk management, control and governance processes. The Internal Audit Department of Doğuş Holding is responsible for performing financial, operational (process) and IT audits at Doğuş Group companies in accordance with its annual risk-based audit plan. The Department operates with a risk-based approach, tracking all internal audit findings and coordinating follow-ups to ascertain that appropriate action is taken. Results are periodically reported to the Risk and Audit Committee of Doğuş Holding, which in turn monitors and reviews the scope, extent and effectiveness of the activity of the Internal Audit Department of Doğuş Holding and receives a report. The report includes updates on audit activities, progress of the Group audit plan, the results of the audits, the action plans to address these areas, and resource requirements of the Internal Audit Department. The Internal Audit team consists of qualified professionals in different audit disciplines with relevant experience in the business processes that are under review. In addition, every major sector within Doğuş Holding has its own Internal Audit department. The Internal Audit Department of Doğuş Holding works closely with the Internal Audit departments of various sectors to improve the effectiveness of control environments within the Group companies. DOĞUŞ GROUP FINANCIAL SERVICES AUTOMOTIVE CONSTRUCTION MEDIA TOURISM

19 DOĞUŞ GROUP 2014 ANNUAL REPORT 19 DOĞUŞ GROUP S APPROACH TOWARD ITS STAKEHOLDERS Doğuş Group s stakeholder relations are shaped by the Group s principles of transparency, accessibility and equality. In addition to integrating high ethical standards in its own businesses, Doğuş Group requires from all of its stakeholders to adhere to these internationally accepted standards. TRANSPARENCY AND ACCOUNTABILITY Doğuş Group adheres to strict business ethics that include transparency and accountability in an environment where all players, from large corporations to individual customers, and from employees to society in general, are affected by each other s actions. In all of its operations and business activities, Doğuş Group has fully integrated globally-accepted principles of responsible business conduct. All stakeholders have been informed of the Group s position on these matters. Upholding these principles and high ethical standards is not limited to its own business dealings; the Group also requires that the same approach be followed by all of its stakeholders, on both national and international levels. Doğuş Group embraces the principle of not being involved with any party that acts contrary to globally-accepted standards and that cannot provide reliable disclosures with regards to its actions. Much attention is paid by Doğuş Group to the disclosure of its financial and non-financial information to its shareholders, employees, customers, national and international business partners, suppliers, existing and potential investors of its publicly floated companies, and the public at large. The Group makes all relevant information available on its website and informs the public about its corporate strategy, activities, and new fields of investment via annual reports, periodic press releases, and conferences. The Group s financial statements are drawn up quarterly in accordance with International Financial Reporting Standards (IFRS). Independent semi-annual and year-end audit reports are shared with the public. All Doğuş Group affiliated companies listed on Borsa İstanbul (BIST) have their individual Investor Relations departments that are able to effectively manage the flow of information to their stakeholders in line with national regulations. The fields of activity and performance of the Group s publicly-floated companies are disclosed in conformity with the principles of their respective companies by the Capital Markets Board of Turkey (SPK). ETHICAL PRINCIPLES Strict compliance with the Code of Conduct and Standards is a key principle for Doğuş Group. As such, actions that violate the Company s Code of Conduct are subject to disciplinary measures. As a participant to the United Nations Global Compact since April 2007, the Group has reaffirmed its commitment to fight corruption both internally and in other areas, which may fall within its sphere of influence. Ethical principles are spelled out and documented in procedures under the following headings:»» Time and resource utilization at the companies,»» Relations with customers, subcontractors, suppliers of goods and other companies and individuals with whom the company has commercial interactions,»» The acceptance of gifts, invites, aids and donations,»» Relations with the media,»» Actions that can result in conflict of interest,»» Safeguarding of information pertaining to the companies, personal information, professional misconduct, security and harassment. AND SERVICES REAL ESTATE ENERGY F&B NEW INITIATIVES CORPORATE RESPONSIBILITY

20 CREDIT RATINGS Doğuş Holding can instantly be recognized based on the ratings given by international rating agencies. The Group has become well-known for both its quality of management and the global principles of corporate governance it supports. Transparency and accountability are the two key components of Doğuş Group s management approach. Consequently, Doğuş Holding has been rated by two of the major international rating agencies - Standard & Poor s and Moody s since 2000 and 2006, respectively. Doğuş Holding is instantly recognized by its ratings from international rating agencies. The Group has become wellknown for both its quality of management and the global principles of corporate governance it supports. Doğuş Holding Ratings as of June 1, 2014 are as follows; Standard & Poor s Rating Outlook LONG-TERM COUNTERPARTY CREDIT RATING SHORT-TERM COUNTERPARTY CREDIT RATING Rating Outlook BB NEGATIVE B Moody s Rating Outlook LONG-TERM CORPORATE FAMILY RATING Ba2 STABLE PROBABILITY OF DEFAULT RATING Ba2 DOĞUŞ GROUP FINANCIAL SERVICES AUTOMOTIVE CONSTRUCTION MEDIA TOURISM

21 DOĞUŞ GROUP 2014 ANNUAL REPORT 21 MESSAGE FROM THE CHAIRMAN Dear Stakeholders, The global economy has been going through a process in which the growth differential between developing and advanced economies continues to narrow. In general, the potential output growth has also been going down on a global basis. Advanced economies led primarily by the USA are strengthening while the emerging markets are losing momentum. The developments in oil prices, appreciation of the US Dollar against major currencies and a number of geopolitical risks are also among the topics on the global economic agenda. The external financing conditions, especially related with the economic recovery process in the USA have been affecting all economies and Turkey is no exception. Despite the developments in the external financing conditions and geopolitical risks, Turkey grew by approximately 3% in 2014, which was a rebalancing year for our economy. I believe that, as an oil importing economy, our main macroeconomic indicators will continue to improve in 2015, in which our growth performance is expected to be stronger compared to Against this background, we, as Doğuş Group, delivered sound operational and financial results while continuing our strong growth process. Highlights from last year in our pre-existing business lines include the following: Despite the market conditions, Garanti Bank sustained its strong performance in 2014 with successful balance sheet management, sound and high quality asset structure, comfortable liquidity level and strong capital base. I am confident that its new ownership structure shaped recently with the BBVA, one of the important players of the international banking system, will pave the way for ongoing success. Doğuş Otomotiv showed an outstanding performance in 2014 in its 20th anniversary. While maintaining its growth trend in the fifth consecutive year in a row, Doğuş Otomotiv also increased its market share above 20% in 2014 for the first time.»» Doğuş Construction continued to undertake infrastructure projects not only in Turkey but also in the Middle East, Eastern Europe and Russia either through joint ventures or consortiums. With its highly regarded reputation, Doğuş Construction s target markets include the Gulf countries, Eastern Europe, Commonwealth of Independent States, Central and North Asia and the Sub-Saharan African countries as well. AND SERVICES REAL ESTATE ENERGY F&B NEW INITIATIVES CORPORATE RESPONSIBILITY

22 Doğuş Media Group continued its operational success and increased its market share in Its brand portfolio will be strengthened further with the inclusion of Glamour and Condé Nast Traveller publications of the Condé Nast Group. In our tourism & services business, 2014 was another year of strong performance and growth. Villa Dubrovnik and argos in Cappadocia transactions were successfully closed within the planned timeframe. In addition, we are excited with and looking forward to the opening of our new hotels Murat Reis Ayvalık and D-Resort Šibenik in Croatia. We also reinforced our position with new brands and stores in retail sector. In wellness sector, we launched D-Gym Etiler in 2014 to continue to improve the way of exercising, the quality of life and change for the better. We also developed a cooperation framework between D-Life and Chenot Group in healthy living concept. D-Life is renamed as Espace Privé Chenot D-Life İstanbul and has become the first center introducing the Chenot Method in Turkey. Doğuş Real Estate and Doğuş REIT, our real estate companies, proved once again their operational success in Our energy company DOEN Doğuş Energy continued its successful operations in the growing and developing electricity market of Turkey. We completed the Aslancık Hydroelectric Power Plant and started electricity generation in DOEN Doğuş Energy supplies electricity to B2C and B2B customers through its 220 PLUS brand. D-ream further strengthened its position in the entertainment sector with its remarkable acquisitions and partnerships including the partnership with Günaydın Restaurants in Today, d-ream is a family of approximately 7 thousand employees in 147 locations both in Turkey and abroad. Its future strategy is to focus mainly on introducing new and innovative concepts. Strongly believing in the capacity, potential and the future of Turkey, we have also been active in technology-based new initiatives, partnerships and acquisitions besides the operations and activities in our main business lines. In this regard; Our open market platform n11, our Joint Venture with the SK Group of South Korea, which brings numerous brands and stores together with millions of customers, sustained its very strong growth performance in 2014 and became the sector leader in the last quarter. Our private equity firm DGSK, the other JV in cooperation with the SK Group set up for making private equity investments in dynamic Turkish companies with high potential, made its first investment in 2014 and became a partner in Radore, which is a provider of co-location and dedicated server services. In digital marketing, we left behind a successful year of operation with euro.message, which currently covers two thirds of the Turkish market. Following our partnership with REIDIN, the leading real estate information company focusing on emerging markets, the company has been working on broadening the scope and the level of the information services in many countries at the levels offered in Turkey and the UAE. We established Doğuş Customer Systems (DMS) in 2014 with the aim of creating and sustaining the perfect customer service. As another new investment area, Crate and Barrel Holdings and Doğuş Avenu made Crate & Barrel operational with three stores in Turkey and one store in Russia via a Master Franchise Agreement, within which seven more countries in the region are also planned to be covered. Our social responsibility efforts of giving back to the society also increased in various fields (heritage, sports, youth and elder)... Our efforts in this respect continued to focus on areas like children s development, education, environment, culture-art and sports. One of our most recent initiatives that I would like to underline is our collaboration with the Acıbadem University and Boston Children s Hospital to build a reference children s hospital in Turkey to be established with the vision to serve the region as well. Believing in the great potential, dynamism and future of Turkey, we will continue to invest, expand further in our business operations and create more value and employment for our society and for our country. Also, as expanding our business internationally, our aim of becoming a regional competitive player will continue. In this respect, I would like to take this opportunity to thank first and foremost my colleagues, our esteemed customers, business partners and shareholders for their efforts, trust and contributions in our joint success. FERİT F. ŞAHENK Chairman DOĞUŞ GROUP FINANCIAL SERVICES AUTOMOTIVE CONSTRUCTION MEDIA TOURISM

23 DOĞUŞ GROUP 2014 ANNUAL REPORT 23 MEMBERS OF THE BOARD OF DIRECTORS FERİT F. ŞAHENK Chairman Ferit F. Şahenk is the Chairman of Doğuş Group and also the Chairman of Garanti Bank. Formerly, he served as the founder and Vice President of Garanti Securities, CEO of Doğuş Holding and Chairman of Doğuş Otomotiv. Mr. Şahenk is a Board Member of the Foreign Economic Relations Board (DEİK) of Turkey. Following his term as the Chairman of the Turkish-American Business Council of DEİK, he is currently chairing the Turkish-German Business Council; serving as Deputy Chairman of Turkish-United Arab Emirates Business Council and Executive Board Member of Turkish-Greek Business Council of DEIK. Mr. Şahenk is an active member of the World Economic Forum and the Alliance of Civilizations Initiative. He serves on the Regional Executive Board of Massachusetts Institute of Technology (MIT) Sloan School of Management for Europe, Middle East, South Asia and Africa and Advisory Board of the Middle East Centre of London School of Economics. Mr. Şahenk holds a Bachelor s degree in Marketing and Human Resources from Boston College. SÜLEYMAN SÖZEN Vice Chairman Süleyman Sözen is a graduate of Ankara University Faculty of Political Sciences and has worked as a Chief Auditor at the Ministry of Finance and the Undersecretariat of Treasury. Since 1981, he has held various positions in the private sector, mainly in financial institutions. Mr. Sözen holds a Certified Public Accountant license. Having served on the Board of Directors of Garanti Bank since 1997, Sözen was appointed as Vice Chairman on July 08, He serves also in subsidiaries of Garanti as the Chairman of the Board of GarantiBank International N.V. and GarantiBank Moscow. Mr. Sözen holds Chairman of the Board and Vice Chairman responsibilities in various other affiliates of Doğuş Holding. HÜSNÜ AKHAN CEO of Doğuş Group Hüsnü Akhan was born in Birecik/Şanlıurfa on the 23 rd of January, He completed his primary and secondary education at Birecik High School. Mr. Akhan is a graduate of Middle East Technical University, Department of Business Administration and earned his Master s degree in Economics from University of Miami (USA). Mr. Akhan served at various positions of the Central Bank of the Republic of Turkey. He served as Representative at London Office and Assistant General Manager at the Foreign Relations Department of the Central Bank of the Republic of Turkey. He joined Doğuş Group in After serving as the Executive VP responsible for Treasury, Operations and Foreign Relations at Garanti Bank, he was assigned as the General Manager of Körfezbank in Mr. Akhan was a Board Member of Doğuş Holding and CFO during Since January 2006, he has been a Board Member of Doğuş Holding and the CEO. Additionally, he currently serves as the Chairman of the Board of Doğuş Real Estate Investment Trust, Doğuş Energy, Doğuş Healthy Life, Körfez Aviation, Hedef Media, Doğuş Planet Electronics & Informatics Services, Pozitif Music, as Deputy Chairman of D Energy, and as the Board Member of TÜVTÜRK, IMG-Doğuş, Doğuş Construction, Doğuş Avenu, and GarantiBank Moscow. ACLAN ACAR Member Aclan Acar started his career in After working for the stateowned Halkbank for three years, he joined the Central Bank of Turkey in 1978 where he served in different departments until During this period Mr. Acar undertook several managerial responsibilities including establishing trading room, managing open market account for domestic operations, reorganizing and managing foreign exchange transactions division of money markets and treasury department of the Central Bank. Mr. Acar has been continuing his career within the Doğuş Group, one of the leading conglomerates of Turkey, since September First, he started at Garanti Bank, one of the leading private banks in the country, as the Executive Vice President in charge of Treasury and Financial Institutions. At this position, he also undertook administration of international branches and representative offices of Garanti Bank. Between period, he served as the President and Chief Executive Officer of Bank Ekspres, then owned by the Group. Following acquisition of Ottoman Bank, the oldest and one of the most respected banks of the country, by the Doğuş Group in June 1996, Mr. Acar was appointed as the President and Chief Executive Officer of the Bank. Since April 2000 he serves as a Member of Board and the Executive Committee of AND SERVICES REAL ESTATE ENERGY F&B NEW INITIATIVES CORPORATE RESPONSIBILITY

24 Doğuş Group. Between the years he served as the Chairman of Tansaş and in the meantime as the Chairman of Garanti Insurance and Garanti Pension Company. As of January 2006 he was appointed as the Chairman of Doğuş Otomotiv. Mr. Acar took his undergraduate degree from the Academy of Economics and Commercial Sciences in Ankara. Later on, he received his MS degree in Banking and Insurance from the same university. Between the years of , he attained his MA degree in Economics from Vanderbilt University, Nashville, Tennessee, USA. AHMET KURUTLUOĞLU Member Ahmet Kurutluoğlu obtained his undergraduate degree from Faculty of Law, his MBA degree from the Business Administration Faculty, and his Master s degree in Labour Legislation from the Faculty of Law, İstanbul University. He joined Doğuş Group in 1981 and has been in charge for the legal affairs as a Legal Counsel for Doğuş Holding and Doğuş Construction. Mr. Kurutluoğlu is currently a member of the Board of Directors of Doğuş Holding and in charge for the legal affairs as the Chief Legal Counsel of the Group. E. NACİ BAŞERDEM Member Naci Başerdem was born in Aksaray, Mr. Başerdem completed his primary and secondary education at Konya Anadolu Lisesi; graduated from Boğaziçi University, Economic and Administrative Sciences Faculty, Department of Business Administration in Mr. Başerdem undertook several managerial responsibilities in both banking and private sectors. He participated in the majority establishment process at NTV as Vice President. During major internal restructuring, as NTV became the Doğuş Media Group, Mr. Başerdem worked as Executive Committee Member responsible from Financial Affairs. He played an active role on restructuring and growth of Tansaş. After Tansaş, he joined Doğuş Construction Group. Then, as the General Manager he supervised the establishment and growth of German TÜVSÜD, English Bridge Point and TÜVTÜRK Vehicle Inspection Services Inc., all created under the auspices of Doğuş leadership. Mr. Başerdem, assigned to Doğuş Holding Board of Directors in October He oversees Doğuş Tourism Group as the Sector Head since 2011 July. ERMAN YERDELEN Member Erman Yerdelen was born in İstanbul and graduated from high school also in İstanbul. He has visited Münster University, Germany, where he attended the School of Business Administration. In 1966, he graduated from the Finance and Business Administration Faculty of İstanbul School of Economy and Commerce. He received his Master s degree in 1996 from Marmara University, İstanbul. After various managerial posts in the private sector, in 1992, Mr. Yerdelen became the Chairman of the Board of Turkish Airlines. He participated in the founding of NTV News Channel in 1996 and has been acting as its Chairman of the Board since then. He is also a member of Doğuş Holding Board of Directors representing Doğuş Media Group. Mr. Yerdelen speaks both English and German. GÖNÜL TALU Member Gönül Talu is a graduate of İstanbul Technical University with a Master of Sciences degree in civil engineering. He joined Doğuş Group in 1969 and has held various managerial positions in Doğuş Construction. Since 1991, he serves as the CEO and the Chairman of the Board of Directors of Doğuş Construction. He is also a member of the Board of Directors of Doğuş Holding. PROF. DR. MUHSİN MENGÜTÜRK Member Prof. Dr. Muhsin Mengütürk is a member of the Board of Directors of Doğuş Holding. He served as the Chairman of the Capital Markets Board of Turkey from 1997 to 2000 and he has held numerous executive roles in the finance sector. Prior to 1990, he taught at Bosphorus University and İstanbul Technical University (İTÜ). Prof. Mengütürk is a graduate of American Robert College in İstanbul where he completed his undergraduate degree in Mechanical Engineering. He received his MS and PhD at Duke University, again in Mechanical Engineering. DOĞUŞ GROUP FINANCIAL SERVICES AUTOMOTIVE CONSTRUCTION MEDIA TOURISM

25 DOĞUŞ GROUP 2014 ANNUAL REPORT 25 DR. SADİ GÖĞDÜN Member Sadi Göğdün graduated from İstanbul High School of Economics and Commercial Sciences and obtained his doctor s degree in economics and commercial sciences in Mr. Göğdün joined Doğuş Group in 1976 and has worked as a member of the Board in various companies of the Group. Furthermore, he served as a member of the Board of Garanti Bank. Currently, Dr. Göğdün serves as a member of the Board of Directors of Doğuş Holding and Doğuş Construction and Trade Company. ŞADAN GÜRTAŞ Member Şadan Gürtaş is a graduate of Anadolu University, Faculty of Economic and Commercial Sciences. He joined Doğuş Group in Mr. Gürtaş has been a Member of the Board of Directors of Doğuş Holding A.Ş. with his other responsibilities as the Chairman, Deputy Chairman and Board Member in other affiliates of Doğuş Group. He currently serves as the Chairman of Doğuş Turizm Sağlık Yatırımları ve İşletmeciliği Sanayi ve Ticaret A.Ş., Nahita Restoran İşletmeciliği ve Yatırım A.Ş., NTV Radyo ve Televizyon Yayıncılığı A.Ş., D Koruma ve Güvenlik Hizmetleri A.Ş., Doğuş Sigorta Aracılık Hizmetleri A.Ş., Doğuş Spor Kompleksi Yatırım ve İşletme A.Ş. He also continues to function as Deputy Chairman at Darüşşafaka Doğuş Sportif Yatırımlar ve Ticaret A.Ş., Doğuş Müşteri Sistemleri A.Ş., Doğuş Yayın Grubu A.Ş. and as the member of the Board of Directors at Doğuş İnşaat ve Ticaret A.Ş., Doğuş Sportif Faaliyetler A.Ş. YÜCEL ÇELİK Member Yücel Çelik is a graduate of Ankara University, Faculty of Political Sciences. He had served in the finance sector prior to joining Doğuş Group in 1974 with Garanti Bank. Between , he was a member of the Board of Directors of Garanti Bank and its subsidiaries. Currently, he serves as a member of the Board of Directors of Doğuş Holding. AND SERVICES REAL ESTATE ENERGY F&B NEW INITIATIVES CORPORATE RESPONSIBILITY

26 COMMITTEES SUBJECT TO THE BOARD OF DIRECTORS Two oversight committees support the work of Doğuş Group Board of Directors: The Risk and Audit Committee and the Human Resources Committee. In addition, the Group has a Legal Advisory Council. THE RISK AND AUDIT COMMITTEE The Doğuş Holding Risk and Audit Committee is in place in order to assist and advice the Board of Directors. The Committee consists of three Board Members elected by the Board. It meets regularly each week prior to Board meetings. The Committee is supported by Doğuş Holding Risk Management and Internal Audit departments through the information, reporting and views provided by these departments. Risk Management related responsibilities include: Ensuring that a functional risk monitoring system exists and issues/matters are discussed and addressed by management and when applicable, escalated to the Board, Reviewing regular information flow from Group companies and evaluating risk information as well as Group strategies, business plans, budgets and investments, Evaluating management actions along with the risk management processes within Group companies, Reviewing Group risk levels to ensure that they are in line with shareholder risk preferences, Advising the Board of Directors of risk plans and actions, Providing guidance to the Doğuş Holding Risk Management Department. Internal Audit related responsibilities include: Overseeing the efficiency of actions taken by Group companies in response to the results of financial, operational, and information technology audits performed by the Doğuş Holding Internal Audit Department, Evaluating the efficiency of the internal control processes of Group companies and advising on ways to improve the internal control environment, Overseeing the efficiency of financial control and internal audit activities within the Group, Overseeing the security, efficiency and effectiveness of the information systems used by Doğuş Group companies and reviewing and approving their contingency plans, Assisting the Board of Directors in order to ensure that the business activities of Group companies are in compliance with the requirements of applicable laws and regulations. THE HUMAN RESOURCES COORDINATION COMMITTEE The Human Resources Coordination Committee was established to assist the Board of Directors in human resources management practices at Doğuş Group companies. Comprised of Human Resources Managers from Doğuş Group companies, the Committee convenes at least twice a year as agreed upon in advance by the Board of Directors. The Major Responsibilities Of The Committee Include: Developing, implementing and sharing human resources best practices within Group companies, Arranging work groups relevant to planned issues, Sharing within the Group information about vacant positions and potential candidates, Developing common projects to increase employee engagement. THE LEGAL ADVISORY COUNCIL»» Evaluates law-related issues pertinent to Doğuş Group,»» Identifies important matters within these issues,»» Specifies the legal processes to be followed and the measures to be taken in all such matters. DOĞUŞ GROUP FINANCIAL SERVICES AUTOMOTIVE CONSTRUCTION MEDIA TOURISM