2011 Annual Report IN 2011, AKFEN CarriED OUT THE LARGEST INVESTMENT PROGRAM IN ITS HISTORY. TODAY, WE ARE MOVING FORWARD INTO A BriGHT FUTURE WITH GREAT CONFIDENCE. 2011 Annual Report CONTENTS INTRODUCTION 14 A General Overview of Akfen Holding and the Year 2011 16 Milestones OPERATIONS 24 Fields of Activity 26 Message from the Chairman 30 Akfen Holding’s Sectors of Operation and its Position within These Sectors 72 Important Developments at Akfen Holding CORPORATE STRUCTURE 76 Shareholding Structure 77 Board of Directors and Committees 78 Management 80 Management Team 82 Subsidiaries and Affiliates 84 Management Team 85 Subsidiaries and Affiliates Capital and Share Ratios 86 Employees by Entity FINANCIAL RESULTS 88 Financial Statements 88 Akfen Holding’s Summary Consolidated Balance Sheet for Year-End 2011 and 2010 88 Akfen Holding’s Consolidated Net/Gross Debt as of December 31, 2011 88 Akfen Holding’s Consolidated Net/Gross Debt as of December 31, 2010 89 Akfen Holding’s Summary Consolidated Income Statement for Year-End 2011 and 2010 89 Akfen Holding’s Summary Consolidated Cash-Flow Statement as of Year-End 2011 and 2010 89 Akfen Holding’s Comparative Turnover and EBITDA Statement as of Year-End 2011 and 2010 IMPORTANT DEVELOPMENTS WITHIN THE PERIOD 90 General Assembly 91 Extraordinary General Assembly 92 Amendments to the Articles of Association 93 Important Decisions by the Board of Directors 94 Dividend Distribution 94 Other Important Developments IMPORTANT DEVELOPMENTS AFTER THE PERIOD-END 98 General Assembly 98 Extraordinary General Assembly 98 Amendments to the Articles of Association 98 Important Decisions by the Board of Directors 98 Dividend Distribution 98 Other Important Developments INVESTMENTS 104 Akfen Holding’s Investments 105 Incentives to Investments POLICIES 106 Dividends 106 Investment 107 Finance 107 Risk Management CAPITAL MARKETS INSTRUMENTS 110 Shares 110 Bonds AKFEN HOLDING’S INTERNAL AUDIT AND RISK MANAGEMENT SYSTEMS, CORPORATE SOCIAL RESPONSIBILITY, CORPORATE GOVERNANCE COMPLIANCE REPORT, ANNEX: TEXT OF AMENDMENTS TO THE ARTICLES OF ASSOCIATION, INFORMATION DISCLOSURE POLICY, CODE OF ETHICS, AUDITORS’ REPORT, INDEPENDENT AUDITOR’S REPORT AND FINANCIAL Statements AKFEN HOLDING’S STORY IS ONE OF GROWTH AND SOUND INVESTMENTS. Since its establishment in 1976, the Holding has based its investment strategies on profound foresight; it closely monitors world economic trends to enter profitable areas with high growth potential. In 2011, the Holding won the tenders for Medina Airport, Izmir Adnan Menderes Airport and İDO through its subsidiaries, thereby initiating the largest investment program in its history and achieving stunning success. One of the top business groups in Turkey with a robust management structure, a strong human resources base and a commitment to transparency policy, Akfen Holding continues to grow by multiplying the riches of Turkey. 1997 2011 ANNUAL REPORT 2/3 TAV was established as a joint venture between Tepe-Akfen-Vie to operate ESTABLISHMENT OF TAV and construct airports; it won the Build-Operate-Transfer tender for the Istanbul Airport International Terminal. 2005 2011 ANNUAL REPORT 4/5 MERSİN Akfen Holding won the tender PORT TENDER AWARDED for the operation concession of TO AKFEN the Mersin Port. 2007 2011 ANNUAL REPORT 6/7 In March 2007, Akfen REIT’s first hotels, Ibis Hotel Zeytinburnu and Novotel Zeytinburnu, began operations in AKFEN REIT Istanbul. OPENS ITS FIRST HOTELS Inaugurated in April, Ibis Hotel Eskişehir and Mercure Hotel Girne also opened their doors in 2007. 2009 2011 ANNUAL REPORT 8/9 AKFENHES COMMENCED Akfen’s first river-type, renewable ENERGY hydroelectric power plant project, GENERATION Sırma HEPP, went into service. OPERATIONS 2011 ANNUAL REPORT 10/11 2010 Akfen Holding went public on May 14, 2010. On November 24, the Holding raised its free-float rate to 28.26%. AKFEN GOES PUBLIC The Holding carried out Turkey’s first and largest private sector bond issue, worth TL 100 million. 2011 2011 ANNUAL REPORT 12/13 The Holding was awarded the İDO TENDER privatization tender for İDO and İDO WON was transferred to the Akfen subsidiary TASS. INTRODUCTION A GENERAL overvıew OF AKFEN HOLDING AND THE YEAR 2011 Having established its first company in 1976, Akfen gained holding status in the year 1999. Akfen Holding invests in, manages and coordinates its subsidiaries and affiliates active in industries such as airport management and operations, construction, port operations, marine transport, water distribution and waste water services, energy and real estate. Following its inception, Akfen Holding operated primarily as a contractor for infrastructure construction. After winning the 1997 tender for Atatürk Airport International Terminal Build-Operate-Transfer Model (“BOT”), the Holding moved beyond contractorship and eventually became one of Turkey’s top infrastructure investment holdings by applying the investment planning model adopted for airports to many other infrastructure investments in Turkey. As of December 31, 2011, Akfen Holding had seven subsidiaries in which it has a direct stake and seven other subsidiaries controlled via joint ventures. The Group’s consolidated financial statements as of December 31, 2011 include Akfen Holding and its subsidiaries, as well as shares in affiliates and joint ventures. Akfen Holding controls all the direct and/or indirect subsidiaries under the umbrella of the Group either directly through stocks with controlling votes and/or via shares held by Hamdi Akın. The Group has joint ventures with such well-renowned national and international corporate enterprises as Tepe İnşaat Sanayi A.Ş. (“Tepe”), PSA International (“PSA”), Souter Investments LLP (“Souter”) and Kardan N.V. (“Kardan”). Akfen Holding also has a mutually exclusive framework agreement with the leading global hotel chain ACCOR S.A. (“Accor”), related to the construction of Novotel and Ibis brand hotels in Turkey. General Overview of the Year 2011 AKFEN • The share transfer of İDO Istanbul Deniz Otobüsleri Sanayi ve Ticaret A.Ş. (“İDO”), privatized with the block sales method was HOLDING: completed in June 2011. • On September 28, 2011, talks began with interested investors with regard to the shares of TAV Havalimanları Holding A.Ş. (“TAV Airports”) and TAV Yatırım Holding A.Ş. (“TAV Investment”), to assess any strategic alternatives. • The Holding established a consortium with Autostrade Per l’Italia SPA, Doğuş Holding A.Ş. and Makyol İnşaat Sanayi Turizm ve Ticaret A.Ş. to participate in the tender for the Privatization of Highways and Bridges to be held by the Privatization Administration in November 2011. • On December 26, 2011, the Holding issued bonds worth TL 80 million, raising its total bond volume to TL 180 million. TAV Airports Holding • In euro terms, consolidated operational revenue increased 12% (“TAV AIRPORTS”): and consolidated EBITDA rose 21%. • The General Assembly will propose a dividend distribution in cash of 0.25 TL per share from the profit for the year 2011. • TAV Airports Holding won the tender for the leasing of the operation rights of DHMİ (Turkish State Airports Authority), Izmir Adnan Menderes Airport’s current International Terminal, CIP, Domestic Terminal and auxiliaries on November 17, 2011 by making the highest bid. 2011 ANNUAL REPORT 14/15 • TAV Airports and its partners Al Rajhi and Saudi Oger signed a contract with the Saudi civil aviation authority GACA for the first airport privatization in Saudi Arabia - the build-operate-transfer project for Medina Airport. Mersin International • Turnover increased 12% and EBITDA rose 20% in US dollar Port Operations terms. (“MIP”): • MIP’s EBITDA margin exceeded 58%. TAV Investment Holding • As of end-2011, business in progress of TAV Airports increased (“TAV INVESTMENT”): 80% to reach US$ 1,650 million as a result of the acquisition of the Medina and Izmir projects. Akfen HEPP Investments • In 2011, eight river-type hydroelectric power plants and Energy Production commenced energy generation with an overall installed (“HEPP 1”): capacity of 125 MW. Akfen HEPP Investments • Excluding the Çatak project, of which construction has yet and Energy Production to begin, the installed capacity of the HEPP-2 projects under construction stands at 95.2 MW; the energy generation (“HEPP 2”): capacity stands at 401.3 GWh/year. These power plant investments are planned to be completed by the end of 2012. Akfen Energy • The planned natural gas-based electricity generation facilities Investments Holding known as the Combined Natural Gas Power Plant to be constructed in Mersin will have an installed power capacity of (“AKFEN 450 MW. The Company acquired the tract of land, obtained ENERGY”): the license and later filed an application to boost total installed capacity to 570 MW. Akfen Real Estate • The Company offered 29.41% of its shares to the public in May Investment Trust 2011. (“AKFEN REIT”): • The Ibis Hotel Yaroslavl in Russia with a capacity of 177 rooms started operations on September 8, 2011. İDO Istanbul Sea Buses • In July 2011, İDO initiated a “dynamic pricing” scheme along the lines of its objectives for restructuring and increased (“İDO”): revenue generation. • Complete with its assets and liabilities, TASS was transferred to İDO at the General Assembly for Merger held on December 26, 2011 in accordance with the Turkish Commercial Code and applicable legislation. Akfen Environment • The Holding’s subsidiary Akfen Water Güllük secured long-term and Water Investment, refinancing. Construction,