TURKEY

Corporate Credit Rating Non- Financial Sector Update Holding

BİLKENT HOLDİNG A.Ş. Long Short Term Term F i n a n c i a l D a t a 2015* 2014* 2013* 2012* 2011* Total Assets (000 USD) 975,818 1,217,508 1,137,320 1,193,773 2,148,941

Total Assets (000 TRY) 2,837,288 2,823,280 2,427,382 2,122,051 4,059,135 Foreign Currency BBB- A-3 Equity (000 TRY) 1,796,447 1,781,449 1,422,566 1,329,173 1,065,936 Local Currency BBB- A-3 Sales (000 TRY) 1,772,904 1,515,536 1,621,697 1,183,632 2,558,399

International Outlook Stable Stable Net Profit (000 TRY) 37,485 321,774 82,984 415,746 47,482

Local Rating A+ (Trk) A-1 (Trk) Net Profit Margin (%) 2.11 21.23 5.12 35.12 1.86 ROAA (%) 1.71 13.00 4.01 14.02 2.70 Outlook

National Stable Stable ROAE (%) 2.70 21.31 6.64 36.18 9.36

Sponsor Support 4 Equity / Total Assets (%) 63.32 63.10 58.60 62.64 26.26

Stand Alone AB NWC / T. Assets (%) 26.79 21.31 26.19 23.53 9.66

Foreign Currency BBB- - Debt Ratio (%) 36.68 36.90 41.40 37.36 73.74 Local Currency BBB- - Asset Growth Rate (%) 0.50 16.31 14.39 -47.72 30.11 FC Stable - Sovereign* Outlook *End of year and adjusted figures LC Stable Overview

*Assigned by Japan Credit Rating Agency, JCR on October 7, 2016 Bilkent Holding (hereinafter the Holding, the Group or the Company), one of Turkey’s largest and leading private sector corporations, was established in Ankara in 1986 to gather group companies under the Group Head: Sevket GÜLEÇ/ +90 212 352 56 73 Holding roof. Bilkent Group’s origins date further back to the establishment of the construction firm Dilek [email protected] İnşaat in 1968 and of Tepe Ağaç and Meteksan in 1969. Currently, the Holding steers operations within a wide range of industries including construction and construction materials, furniture production and retail, Net Profit Margin Equity / Total Assets printing and paper, real estate, tourism and hotel management, defense and security, fitness, and airport (%) (%) management services and maritime transportations. Bilkent Holding’s extensive experience and long-term 35.1 50 200 21.2 track record associated with high technology based quality services have led to its respected domestic 62.6 58.6 63.1 63.3 1.9 5.1 2.1 26.3 and international reputation. As a result, the Holding’s operations spread overseas to the Middle East, North Africa, Turkic Republics and Eastern Europe through the activities of its subsidiaries, affiliates and 0 0 joint ventures.

ROAA (%) ROAE (%) The Holding’s qualified shareholder (99.99%), Bilkent University, was founded in 1984 by prominent 36.2 14.0 13.0 50 scholar İhsan Doğramacı with the aim of creating a center of excellence in higher education and research. 20 21.3 4.0 9.4 6.6 The University has graduated more than 37,000 alumni and currently has approximately 13,000 students 2.7 1.7 2.7 in nine faculties and two four-year professional schools. Furthermore, approximately 40% of Bilkent 0 0 University's students benefits from a variety of grants. To realize its establishment purpose, the Holding Debt Ratio (%) NWC / T. Assets (%) regularly grants donations to the University in line with this purpose. In this sense, the Holding is 73.7 100 23.5 26.2 26.8 50 distinguished from other holdings by its shareholder profile and instituting drive. 37.4 41.4 36.9 36.7 21.3 9.7 Continuity of high debt service coverage capacity, cash equity injection, solid liquidity position, 0 0 remarkably low indebtedness level, internal resources generation power and sustainable operations are 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 the main supporting factors of the affirmation of all ratings and their outlooks.

Strengths Constraints  Continuing production power and highly sustainable nature of operations  Upward tendency in COGS to total sales with the exception of 2014,  Consistent profit generation despite fluctuation in sales and net profit figures depressing profit and profit margins year by year  Existence of high level of non-performing receivables and low collection  Strong financial profile and high debt service coverage capacity rates, despite limited new inflow to the fully provisioned NPLs book  Well-capitalized balance sheet structure strengthened via steady cash equity  Tenacity of high geopolitical risks in the nearby region, the failed coup injection and internally generated resources through largely recurring income attempt of 2016 and subsequent developments and increasing terrorist components from differentiated operational fields activities harboring a potential that could evolve towards a regional war, which can lead to the deterioration of investment perception and operating  Solid liquidity position and notable low indebtedness level providing a strong environment in which the Group operates buffer against incidental external shocks  Upside risks via a weakening TRY and downside risks to growth negatively  Risk mitigation due to geographic and business portfolio diversity impacting profit margins and debt-servicing capabilities of the real sector  Sound international standing resulting from its own reputation along with that increases the risk level in the market collaboration with leading local and international players  Heavy debt burden and high financial expenses of affiliate IDO, coupled  Competitive edge and significant market presence in the airport and sea with the potentıal of new transportation lines such as the Izmit Gulf Bridge transportation industry with its affiliates and Avrasya Tube passage to depress revenues and subsequently rolling back overall Holding profit  Presence of a highly qualified administration team  Valuable contributions to society through investments in education, science  Further improvement needs in compliance level with Corporate Governance and technology along with a unique shareholder structure Practices, despite notable progress

Publication Date: December 13, 2016 “Global Knowledge supported by Local Experience” Copyright © 2007 by JCR Eurasia Rating. 19 Mayıs Mah., 19 Mayıs Cad., Nova Baran Plaza No:4 Kat: 12 Şişli-İSTANBUL Telephone: +90.212.352.56.73 Fax: +90 (212) 352.56.75 Reproduction is prohibited except by permission. All rights reserved. All information has been obtained from sources JCR Eurasia Rating believes to be reliable. However, JCR Eurasia Rating does not guarantee the truth, accuracy and adequacy of this information. JCR Eurasia Rating ratings are objective and independent opinions as to the creditworthiness of a security and issuer and not to be considered a recommendation to buy, hold or sell any security or to issue a loan. This rating report has been composed within the methodologies registered with and certified by the SPK (CMB-Capital Markets Board of Turkey), BDDK (BRSA-Banking Regulation and Supervision Agency) and internationally accepted rating principles and guidelines but is not covered by NRSRO regulations. http://www.jcrer.com.tr Holding

1. Rating Rationale effectiveness, leverage, FX risk and liquidity only apply to the investor companies consolidated under methods other JCR Eurasia Rating has affirmed Bilkent Holding’s Long-Term than the equity method and exclude all companies National Local Rating as “A+ (Trk)”, which donates a high consolidated under the equity method. investment grade, along with a “Stable” outlook. In addition, the Holding’s Long Term International Local and Foreign Bilkent Holding, which holds Parent Company status, carries Currency grades have been affirmed at the country ceiling of out its investments via a total of 31Companies: “BBB-” as a reflection of the Holding’s diversified and sizeable operation lines and international presence. 24 Subsidiaries 4 Joint ventures Ratings provided by JCR Eurasia Rating for Bilkent Holding 3 Jointly Controlled A.Ş. are based principally on (i) the Company’s year-end consolidated independent audit reports prepared in conformity with Turkish Financial Reporting Standards (TFRS), 4 joint venture companies have been consolidated into the (ii) JCR Eurasia Rating’s own studies and records, (iii) financial statements via the equity method, 24 through full information and clarifications provided by the Holding and (iv) consolidation and 3 jointly controlled companies via partial non-financial figures. Additionally, for the sector analyses, consolidation (full list of companies into which the Company statistics from TUIK, the Maritime Affairs and Communications invested has been provided on the basis of consolidation in Directorate General of Merchant Marine, UNCTAD and the appendix supplied at the end of the report). various other sources have been utilized. The scope of the ratings prepared in line with Partial Integrity In the assignment of the Holding’s ratings, quantitative and Rating Report of Investor Holding Companies (PIRR) principles qualitative assessments have been taken into consideration is limited to the parent company and group companies such as; (i) solid liquidity position and conservative stance in the consolidated fully or partially and do not include those circumstances increasing volatility and vagueness, (ii) good consolidated via the equity method. capitalization level, (iii) significantly lower indebtedness level associated with high debt service coverage capacity , (iv) asset Consequently, Istanbul Deniz Otobüsleri Sanayi ve Ticaret quality, (v) risk mitigation through diverse income channels A.Ş., TAV Havalimanları Holding A.Ş., TAV Yatırım Holding stemming from the wide range of activities and locations, (vi) A.Ş. and Bitu Turizm ve İnşaat Yatırım A.Ş., were consolidated robust market position through partnership with leading local by the equity method starting from FY2013 and the financial and foreign firms in strategic sectors, (vii) established results of FY2012 were also restated. Resultantly, a reputation in Turkey and the international arena, (viii) unique noteworthy contraction in the financial statements at the end shareholder structure and purpose of establishment, (ix) of FY2012 was derived principally from the alteration of the continuous operating profit and maintenance of internal consolidation methods of those affiliate companies. resource generating capability supporting sustainability, (x) amplification of equity through constant cash equity injection, As seen the chart below, pursuant to its establishment purpose, (xi) efforts to further improve risk management practices, (xii) Bilkent Holding’s granted donations reached USD 705.8mn commitment to development and society as well as (TRY 1,231.9mn), of which 650.2mn went to Bilkent University expectations about the future and growth strategies. and USD 55.6mn to the İhsan DOĞRAMACI Foundations.

The consolidated structure of Bilkent Holding A.Ş., the investor DONATIONS company that commands control of the unified structure, formed the basis of the rating. However, the scope of this Year USD EQUIVELANT TRY rating report was limited to the investor company of Bilkent Holding A.Ş. and all other consolidated companies integrated 2005 27,797,419 37,298,577 into the financial statements via techniques other than that of 2006 41,411,857 58,208,506 the equity consolidation method and does not include the 2007 45,789,323 53,330,824 analysis of group companies that have been consolidated 2008 136,559,449 206,518,855 under the equity method. 2009 62,146,926 93,574,626 2010 107,198,982 165,729,626 In the consolidation transactions carried out in accordance with 2011 67,192,530 126,919,970 the equity method, assets, liabilities, revenues/expenses and 2012 53,356,954 95,626,970 non-cash liabilities belonging to the affiliates are not displayed in the financial tables of the parent company. The 2013 51,798,351 110,537,681 consolidated financial tables prepared in line with this method 2014 73,346,468 170,083,124 do not include detailed data that could form the basis of 2015 39,231,997 114,070,955 consolidated risk analysis and contain the aggregate accounts Total 705,830,256 1,231,899,715 of financial information belonging to group companies consolidated partially or fully via methods other than the In accordance with Higher Education Law No 2547, article 56 equity method as well as the financial information belonging and additional article 7, these donations were counted as to the major investor parent company. As such, the risk analysis, direct expenses in the financial statements. In order to rating results and scope of rating for fiscal structures regarding calculate actual financial performance indicators, in the fields of asset quality, off balance sheet transactions, particular profit, we, as JCR Eurasia Rating, have added the Bilkent Holding A.Ş. & Its Subsidiaries 2

Holding above donation values into that year’s assets as “Other Current at the end of FY2015. EBITDA figures were adjusted through Asset” and into total liabilities as “Equity”. Therefore, assets eliminating one-off transactions and revaluation differences, size and profit figures were calculated higher in an amount which do not generate cash flows. The adjusted EBITDA equivalent to the arranged donations from the figures stated margin in FY2015 was 4.90%, below the required levels. in the audited financial statement. Pursuant to the significant contraction in profit, fundamental profitability indices of return on assets and equity ratios The Fundamental Rating Considerations of the assigned exhibited notable decreases to 1.71% and 2.70% from ratings are as follows; 13.0% and 21.31% in FY2014, correspondingly. Notwithstanding the fluctuation in profitability ratios over the Strong Financial Profile reviewed period, the Holding incessantly achieved a reasonable profit from its activities. The equity to total assets ratio is one of the key measurement indicating strength and financial health of a company. The Although Non-Performing Receivables Increased and Stayed Holding’s ratio was 63.32% at the end of FYE2015 and at High Level, Having Restricted effect on Assets Quality remained on the higher side. In the last five-year period, the paid capital increased from TRY465mn to 763.2mn through At the end of FY2015, the Holding’s non-performing steady cash equity injections of an annual average of TRY receivables portfolio deteriorated to TRY 107.1mn from TRY 59.6mn and supported the equity base growth in addition to 91.1mn and the NPLs ratio augmented to 24.69% from generated internal fund resources. 20.67% FYE2014. In FY2015, TRY 16.5mn non-performing receivables, of which TRY 11.1mn stemmed from translation Short and long term liabilities constituted 15.39% and 21.29% differences, were incorporated to the impaired receivables of total assets, respectively, as of FYE2015. When eliminating portfolio and the slight contraction in total receivables from advances received and deferred income from liabilities, which TRY 440.9 to TRY 433.8mn supported the increase in the NPL do not require cash or repayment, total liabilities decreased to ratio. Although the NPL currently remained at a high level and TRY 445.7mn and the equity to liabilities would be 3.02x repressed the assets quality to a certain extent, fully provision (FYE2014:2.79x). and low level of new NPL inflows contribute to asset quality and signifies the management success despite the low The Holding’s net working capital was TRY 760.2mn and collection performance. increased from TRY 601.5mn at FYE2014. The NWC to total assets ratio materialized at 26.79%, up from the previous Furthermore, while the Holding’s non-performing receivables year’s level of 21.31%. Additionally, the Holding’s operating book as a proportion of its equity and assets increased cash flow hiked to TRY 280.9mn from TRY -14.47mn FYE2014. slightly to 5.96% and 3.77% from 5.12% and 3.23%, Accordingly, those ratios and figures specify a solid, a well- respectively, the figures remained at reasonable levels. capitalized company that maintains its production power. Diversified Business Lines and wide Geographical Reach Solid Liquidity Position Alleviating Risk Concentration

The Holding had a net cash position of TRY 236.7mn as of FYE Bilkent Holding A.Ş., one of the most prominent, pioneering 2015 (cash and cash equivalents minus short term financial and largest conglomerates in Turkey, has carried out business debts), up from the previous figure of TRY 86.6mn. activities in 19 countries on three continents through its Furthermore, Debt to EBITDA and DSCR ratios was 2.78x and subsidiaries, affiliates and joint venture businesses. Its leading 108.56% at the end of FY2015, signifying a very high debt business activities are based in Turkey, MENA countries, the service capacity coupled with solid liquidity level. Above all, Balkan States and Turkic Republics. Although its activities are the Holding’s cash and cash equivalents (TRY 326.2mn) widely dispersed, they are concentrated in seven major exceeded its total financial debt (TRY 183.5mn) at the end of sectors; Construction, Furniture & Retail, Printing & Paper, FY2015. Services, Real Estate Management, Airport and Marine Transportation sectors, some of which carry a strategic Reasonable Profitability Indicators importance.

Operational Atmosphere Harboring Uncertainties In FY2015, while the Holding’s revenues increased by 16.98% YoY, principally stemming from the remarkable growth in The efforts to re-structure the public sector along with the construction income, the principal activity revenues contracted administrative and economic activities of the private sector by 8.45% due to higher enlargement of cost of sales. following the failed coup attempt on 15 July, rising domestic Additionally, the adjusted net profit remarkably regressed to tensions and combat against terrorist activity, the potential TRY 37.5mn from TRY 321.8mn FYE2014, due to incurred other for the military intervention in nearby geography stemming losses from investment activities and share of loss of equity- from geopolitical risks to evolve into regional war and accounted investees. While the negative revaluation relatively low level of growth accompanied by the fall in differences of investment properties amounting to TRY 20.8mn investor appetite brought about by the pressures exerted on rolled back the profit level in FY2015, positive revaluation international fund flows due to FED’s monetary policies, the differences of investment properties amounting to TRY devaluation of the Turkish Lira against other currencies on the 124.9mn contributed to the profit level in FYE2014. international exchange markets and volatility lead to erosion Accordingly, the Holding’s EBITDA decreased to TRY 86.8mn

Bilkent Holding A.Ş. & Its Subsidiaries 3

Holding in the debt repayment capacity of the real sector companies pertaining to possible increase in uncertainty level, (iv) the and as such increase risks. level of profit generated in the future, (v) downside risks to growth and complications in accessing external fund resources Self-reputation along with Partnership with Locally and deriving from outflow of funds and tightening financing Internationally Renowned Players Leading to Sound conditions following the alteration of monetary policies of the International Stance FED, (vi) potential risks and countermeasures, (vii) and disruption of political and economic stability. As one of the leading conglomerates in Turkey, Bilkent Holding earned a sound international standing owing largely to its Conversely, (i) upgrades in Turkey’s sovereign ratings, (ii) technology based service approach with emphasis on quality improvement in asset quality, (iii) remarkable growth in and timely delivery of landmark projects. Its flagship company, revenues, profit and profitability indicators, (iv) progress in Tepe İnşaat, has built a solid reputation in the industry and was corporate governance principal’s implementation and ranked 248th (2014:217th) on the World’s 250 International compliance level, (v) progress in the domestic and global Constructor List in 2015. Its completed construction area financial and political climates, (vi) and ability to manage surpassed 12mn sqm, including housing, malls, commercial additional risks combined with the growth of the Holding and buildings, healthcare facilities, education facilities, power increase in market influence are factors that can contribute to plants and industrial facilities, hotels and holiday villages, any future positive changes in ratings and outlook status. transportation structures, military facilities and others. Through its joint ventures in IDO and TAV Havalimanları, Bilkent Holding 3. Sponsor Support and Stand Alone is the market leader in airport operating services and maritime transportation services in cabotage lines. TAV Yatırım Holding Bilkent Holding’s Sponsor Support Note has been determined is also a global brand in airport construction activities. While considering the financial strength, non-financial positions and the Akfen Group is a well-known local partner of the Bilkent support willingness of the ultimate shareholder, Bilkent Group, Souter, Sera and Aeroports de Paris Management are University, which holds a 99.99% interest of the Holding. The its foreign partners. University offers education opportunities to approximately 13k students, nearly 40% of which benefit from a variety of Significant Proceeds Anticipated to be Collected from Botaş in endowments. Each year, Bilkent Holding provides funds to FY2017 Bilkent University under the donation title to contribute to the activities of Bilkent University. In the last eight years, the Disputes between Botaş and Tepe İnşaat regarding the Holding transferred a total donation of TRY 1,083mn and the “Stations” and “Lot A” in the construction of the Baku-Tblisi- University provided nearly TRY 585mn cash equity injection Ceyhan Pipeline project has moved into the judicial process. in the same period. Although the University has the willingness The legal proceedings are supervised by the International and propensity to supply equity or liquidity to the Holding, Court of Arbitration and were concluded in favor of the the established unique structure has restricted its supportive Company. The collection process from the relevant parties is competence. Regarding the above factors, the Sponsor ongoing. The management states that approximately USD Support Note of the Holding has been affirmed at “4”, 105.6mn is expected to be collected from Botaş in the denoting limited external support. beginning of FY2017. When the collection transactions are finalized, Tepe İnşaat and the Holding will enjoy better On the other hand, even if the shareholders do not provide liquidity and profitability ratios. any assistance, the Holding is expected to manage its balance sheet risks successfully considering its established 2. Outlook internal resource generation capacity through diversified business operations, remarkably low debt level, good JCR Eurasia Rating has affirmed the “Stable” outlooks on the capitalization, high liquidity profile, strong market presence, Short and Long Term National and International Ratings long operational track record associated with extensive perspectives of Bilkent Holding, in view of (i) good know-how and innovative products, competitive edge, risk capitalization level providing strong buffer to absorb management practices, senior management’s skill & incidental losses, (ii) favourable asset quality, (iii) solid liquidity experience and favorable asset quality, on condition that the position, (iii) maintaining earning and production powers economic and political stability continues both in Turkey and supported by diversified clientele and business mix, (iv) high its operational environments. In this sense, we, as JCR Eurasia debt service coverage coupled with notable low indebtedness Rating, have affirmed the Stand Alone Note of the Holding level, (v) solid market presence, (vi) growth strategy towards as “AB”, which indicates a strong and credible institution that technology-oriented and production-based fields, (vii) has a high level of capacity to meet the commitments. continuity of growth in Turkey, and (viii) risk management approach and practices, along with expectation of no further 4. Company Profile deterioration in the operating environment and continuity of a. History political stability.

Key considerations which would constrain the ratings and Bilkent Holding A.Ş. was established in 1986 by Bilkent outlook status are (i) the sovereign rating level of Turkey, (ii) University in Ankara to provide financial support to the deterioration in asset quality and profitability ratios, (iii) University. However, the Holding’s foundation goes back to growing worries in international politics particularly relating to the 1960’s with the foundation of Dilek İnşaat ve Ticaret A.Ş. Turkey’s neighboring countries and in domestic politics In 1968, Dilek İnşaat ve Ticaret A.Ş. was established by İhsan

Bilkent Holding A.Ş. & Its Subsidiaries 4

Holding

DOĞRAMACI to operate in the field of the Group’s core and proportionally methods, respectively. Those companies competency sector of construction. Subsequently, in 1969, the operate primarily in the fields of construction & construction Holding’s flagship company in the construction sector, Tepe materials, manufacturing, printing & paper, furniture & retail, İnşaat Sanayi A.Ş., was established under the name of Tepe tourism, sports centers, energy, insurance, defense industry, Ağaç Metal ve Makina San. Ltd. Şti. Group companies were airport construction & services, sea port transportation, techno gathered under the management of Bilkent Holding’s umbrella park services, private security, catering and other services. All Group companies are listed in the table at the end of the in 1986. report. In addition, details of the consolidated subsidiaries, jointly controlled entities and joint ventures of the Group are b. Organization & Employees listed in the table below. As JCR Eurasia Rating has not presently analyzed the independent risk level of each of The Board of Directors of the Holding is comprised of 5 these companies, no opinion regarding their creditworthiness members and none of them are independent. The Holding’s has been formed. Executive Committee, which comprises 6 members, performs its duties as support for management operations of the Board. Type of Consolidated Subsidiaries and Affiliates Partnership The Holding has grouped its activities under six lines: Contracting and Project Group, Corporate Services Group, 1.Subsidiary Meteksan Savunma San. A.Ş. Retail and Tourism Group, Shared Services Group, Real Estate 2.Subsidiary Bilan Bilkent Ankara Tepe Otel İşletmeciliği A.Ş. Management and Subsidiaries. As of January 2015, a staff of (Former Tepe Finansal Kiralama A.Ş.) 3.Subsidiary Bilenerji Bilkent Enerji Üretim San. ve Tic. A.Ş. 18,883 was employed by the Holding and its subsidiaries. 4.Subsidiary Bilintur Bilkent Turizm İnşaat Yatırım ve Tic. A.Ş. c. Shareholders 5.Subsidiary Bilsigorta- Bilkent Sigorta Aracılık Hizmetleri A.Ş. 6.Subsidiary Dilek İnşaat ve Tic. A.Ş. Bilkent University has a 99.99% share of the Holding with the 7.Subsidiary Meteksan Matbaacılık ve Teknik San. Tic. A.Ş. remaining 0.01% share owned by the İhsan Doğramacı 8.Subsidiary Sports International Bilkent Fitness ve Spor Merkezleri A.Ş. Foundations. 9.Subsidiary Tepe Emlak Yatırım İnşaat Tic. A.Ş.

10.Subsidiary Tepe Home Mobilya ve Dekorasyon Ürünleri Tic. A.Ş. Shareholders Share % Structure 11.Subsidiary Tepe İnşaat San. A.Ş. 2015 2014 2013 2012 12.Subsidiary Tepe Güvenlik A.Ş. Bilkent Üniversitesi 99.9998560 99.9998560 99.9998560 99.9998560 13.Subsidiary Tepe Prefabrik İnş. San. Tic. A.Ş. İhsan Doğramacı 0.0000480 0.0000480 0.0000480 0.0000480 Vakfı 14.Subsidiary Bilbak Bilkent İnşaat Ticaret ve Bakım Hizmetleri A.Ş. hsan Do ramacı İ ğ 0.0000320 0.0000320 0.0000320 0.0000320 Sağlık vakfı 15.Subsidiary Bildes Bilkent Destek Hizmetleri ve Ticaret A.Ş. hsan Do ramacı İ ğ 0.0000320 0.0000320 0.0000320 0.0000320 16.Subsidiary Tepe Savunma ve Güvenlik Sistemleri San. A.Ş. Eğitim Vakfı İhsan Doğramacı 17.Subsidiary Tepe Servis ve Yönetim A.Ş. 0.0000320 0.0000320 0.0000320 0.0000320 Bilim ve Araştırma 18.Subsidiary Tepe Betopan Yapı Malzemeleri San. Ve Tic.A.Ş Vakfı Total 100.00 100.00 100.00 100.00 19.Subsidiary Seçkin Gıda San. Ve Tic. Ltd.Şti. Paid Capital TRY 763,170,000 743,950,000 653,102,307 633,950,000 20.Subsidiary Bilintur Kültür Turizm Yatırım Gıda Besicilik Makin eve Tic. A.Ş. 21.Subsidiary BCC Toplu Yemek Hizmetleri A.Ş. Bilkent University was founded in 1984 by prominent scholar 22.Subsidiary Tepe Türkmen İnşaat ve Tic. A.Ş. İhsan Doğramacı with the aim of creating a centre of 23.Subsidiary Ankara Teknoloji Geliştirme Bölgesi Kurucu ve İşletici A.Ş. excellence in higher education and research. Bilkent University 24.Subsidiary Tepened Investments is the first private non-profit university in Turkey. The University has graduated more than 37,000 alumni and currently has 1.Jointly Controlled Tepe-Mesa Partnership about 13,000 students in nine faculties and two four-year 2.Jointly Controlled Hyper Foreign Trade Holland N.V. professional schools. Furthermore, approximately 40% 3.Jointly Controlled Tepe – Tesan Adi Ortaklığı of Bilkent University's students benefit from a variety of grants. 1.Joint Venture TAV Havalimanları Holding A.Ş. The University has an academic staff of over 1,000, of which approximately one third are from 40 different countries. 2.Joint Venture TAV Yatırım Holding A.Ş. Enriching academic life with its excellence mission, Bilkent 3.Joint Venture İDO İstanbul Deniz Otobüsleri San.ve Tic. A.Ş. University also promotes a wide range of social and cultural 4.Joint Venture Bitu Turizm ve Inşaat Yatırım A.Ş. events. According to the Quacquarelli Symonds World University rankings report for 2016-17 lists, Bilkent University Introductory information about the 19 subsidiaries and 3 joint is placed in the group of universities ranked 411- 420 and is ventures entities under the conglomerate roof of Bilkent Turkey’s highest-ranked university. Holding A.Ş. is outlined as follows.

d. Subsidiaries & Affiliates

24 subsidiaries, 4 joint ventures and 3 jointly controlled entities are included in consolidation through the fully, equity and

Bilkent Holding A.Ş. & Its Subsidiaries 5

Holding

A. Contracting and Project Group in the fields of laser technologies, microwave & millimeter wave systems, RF, underwater acoustic technologies and Tepe İnşaat Sanayi A.Ş, Tepe Prefabrik İnş.San.Tic.A.Ş., simulation technologies in cooperation with Bilkent Meteksan Matbaacılık ve Teknik Sanayi Ticaret A.Ş and University. The Company is a member of the Defence Meteksan Savunma Sanayi A.Ş. are gathered under this group. Industry Manufactures Association and is listed with the Construction is the Group’s oldest and foremost operating lines, Undersecretariat of Defense Industry. Meteksan Savunma with operations dating back to the 1960s. At the end of takes part in technology weighted critical projects to FY2015, the total revenue of the construction group was TRY provide the needs of the Turkish Army. As of FYE2015, 487.3mn (FY2014: TRY 295.1mn) and consisted of 27.48% revenues from the defense industry projects was TRY (FY2014:19.47%) of Bilkent Holding’s consolidated revenue. 61.1mn, up from the previous year’s figure of TRY 55.9mn Sales and profit figures of the construction sector are and gross profit was TRY 15mn. fluctuated in a wide range due to nature of the sector. Meteksan Matbaacılık ve Teknik Sanayi Ticaret A.Ş, founded Tepe İnşaat Sanayi A.Ş. was established in 1969 under the in 1969, became one of the first private enterprises in the name of Tepe Ağaç Metal ve Makina Sanayi. With over forty printing industry to produce paper, paperboard and years of sector know-how, the company gained experience carbonless paper. Meteksan Matbaacılık is one of the most through various construction segments and achieved success in prominent printing companies in Turkey, having a yearly the international arena and is currently one of the leading capacity to produce 10,000 tons of printing, 12,000 tons of innovative institutions in the construction industry. As the notebooks and 5,000 tons of digital printing. At FYE2015, the flagship company of the Holding, it provides high quality Printing and Paper Group’s total revenue and gross profit services in every step of infrastructure and superstructure figures were TRY 143.3mn and TRY 54mn respectively and projects in Turkey and a large international geography contracted by 21.31% and 39.79% compared to the ranging from the Balkans to the Middle East, North Africa, CIS previous year’s figures of 182.2mn and 89.7mn, respectively. Countries and Russia. The Company has executed projects in The Company’s contribution to the Holding’s total revenue and different sectors extending from the construction of airports, gross profit were 8.08% and 17.34% (FYE2014:12.02% residences, universities, hospitals and military plants to and 26.48%) It should also be noted that, Meteksan shopping malls and pipeline projects. Some of the company’s Matbaacılık’s sales are highly concentrated on a single distinctive projects include the Atatürk Airport International powerful customer, harboring uncertainty regarding sales Terminal, Ankara Esenboğa Airport, İş Bankası Headquarters sustainability. Complex, Turkish Armed Forces Rehabilitation and Care B. Real Estate Management Center, Kanyon Project, Narcity Tower & Homes, Bilkent Housing Project, Tepe Prime, Sulaimaniye State University, Tepe Emlak İnşaat Yatırım A.Ş. was established in 1996 for Bilkent University Campus as well as the Tepe Nautilus and property appraisal and real estate management. The main Forum Ankara Shopping Centers. operation field of the company are land development & planning, investment planning, architectural, electrical, Key Financials Based Solo Figures mechanical and interior design as well as decoration (000 TRY) 2015 2014 Change % projects, leasing of shopping and business center units, and Assets 1,680,703 1,852,991 -9.30 shopping and business center management (technical, Liabilities 317,551 518,051 -38.70 commercial, financial, and administrative). Up to date, the Equity 1,363,152 1,334,939 2.11 Net Sales 435,457 49,076 787.31 company has developed several shopping center projects Gross Sales Profit 59,974 12,060 397.30 with a total construction area of 800,000 square meters and Profit 37,828 30,417 24.36 a 20,000-capacity car park on a total plot area of 1.5mn square meters.

Up to date construction area of the completed projects of the Tepe Emlak, one of the leading companies of the Holding, company is 12.1mn square meters. Projects with a construction undertook shopping center investment in various regions of area of 614k square meters are on-going. Furthermore, Turkey jointly with leading European companies such as completed contracts amounted to over USD 8bn through Metro AG and Carrefour. Completed major investment operations in Turkey and abroad. Tepe İnşaat has built a solid projects in the shopping center sector include Bilkent Center reputation in the in the industry and was ranked 248th Shopping Mall, Tepe Nautilus Shopping Mall, Tepe Prime (2014:217th) on the World’s 250 International Constructor List Avenue, Gaziantep, Kartal, Adana and Konya M1 Shopping in 2015. Centers, CarrefourSA Maltepepark Shopping Center, Forum Ankara Outlet Shopping Center, Forum Bornova Shopping Accordingly, above figures indicate well capitalized, strong, Center, Forum Trabzon and Kayseri Shopping Center. Tepe reputable and healthy firm. Emlak operates the Ankara Bilkent Center and Istanbul Tepe Nautilus Shopping Malls and executes Tepe Prime Avenue Tepe Prefabrik İnş.San.Tic.A.Ş. was one of the first enterprises and also provides leasing services for the commercial areas producing prefabricated construction materials, house of some recently completed joint projects. containers and steel frame buildings. The company was founded in 1977. Revenues and gross profit from renting activities in FY2015 were TRY 99.9mn and TRY 90.8mn respectively and Meteksan Savunma Sanayi A.Ş., established in 2006 as an accounted for 29.17% (FYE2014:19.84%) of the Group’s investment of Bilkent Holding and Bilkent University, operates total gross profit.

Bilkent Holding A.Ş. & Its Subsidiaries 6

Holding

Ankara Teknoloji Geliştirme Bölgesi Kurucusu ve İşletici A.Ş. accounted for 11.04% (FY2014:17.20%) of the Holding’s (Bilkent Cyberpark) was established in 2001 to house R&D gross profit. companies to create high value-added innovative products. Bilkent Cyberpark operates in 13 buildings with a total indoor Bilintur Bilkent Turizm İnşaat Yatırım ve Ticaret A.Ş. was area of 102,117 square meters on a total area of 39 hectares, established in 1988 and is organized into three operation offering a wide range of technical activities. Bilkent Cyberpark divisions; hotel services, catering services and tourism. These was the first technology development zone in Turkey to obtain services are carried out by Bilkent Hotel and Conference an ISO 9001 Certification and houses Turkey's largest Center, Bilintur Catering Centre and Bilkent Culture Initiative nanotechnology labs and research centers. (BKG) divisions, respectively.

C. Retail and Tourism Group Bilkent Hotel and Conference Center, based in the capital city of Ankara, has offered accommodation, party settings, Bilkent Fitness ve Spor Merkezi A.Ş. (Sports International), weddings and other ceremonies as well as receptions for established in 1993 as a Turkish and American partnership, almost 20 years. It has a capacity of 235 rooms with a 398 operates in the business of fitness, providing fitness and sports bed capacity and 20 meeting rooms in addition to offering services to its clients since 1995. It provides service in a all other hotel facilities to its clients. 193,667 m² area, 67,467 m² of which is indoor and 126,200 m² outdoor with 35 tennis courts (26 outdoor and 9 indoor), 8 Bilkent Culture Initiative (BKG) squash courts, and 18 swimming pools. The Company provides regular income to the Holding. As of FYE2015, revenue from First private company of Turkey, operating commercial areas sport activities was TRY 41.8mn and gross profit was TRY of 117 museum and ruins, which belongs to the Ministry of 12.4mn, decreased by 26.97% compared the previous year’s Culture and Tourism following 2009 under the title of BKG. gross profit figure of TRY 17mn. Operating right of those stocks will be ended in FYE2016 and the company will not make a new deal. Bilkent Sigorta Aracılık Hizmetleri A.Ş. was established in 1989 to provide insurance services to its Group companies and their D. Corporate Services Group employees. Since 2005, it has also provided services to customers who are outside the Group. The Company offers Tepe Savunma ve Güvenlik Sistemleri Sanayi A.Ş. (Tepe high-quality insurance services to its customers through nearly Defence) was founded in 1993 to respond to the security 20 insurance agencies. needs of the Holding and other group firms. Tepe Savunma, is one of the leading companies in Turkey, offers services to Tepe Betopan Yapı Malzemeleri San. Tic. A.Ş. produced the nearly 400 corporate customers in different cities of Turkey first cement-bonded particle boards formed through the with over 10k staff force. combination of two primary construction materials cement and wood in Turkey. In the second quarter of 2014, the Company Provided services sit on three main pillars; Physical Security, commenced producing fiber cement in its new factory building. Ships & Port Security and Money Transfer & Negotiable The company has a current production capacity of 110.000 m3 paper transportation. Currently security services being (67,000 m3 betopan and 42,000 m3 fiber cement) per year. carried out at public & private companies, banks, shopping malls, universities, hospitals, ports, hotel, industrial dwelling Tepe Home Mobilya ve Dekorasyon Ürünleri Sanayi Ticaret and other similar establishments. Tepe Savunma is granted A.Ş., one of Turkey’s largest furniture and housewares retailers, with SO 9001 Certification and Responsible of Recognised was founded in 1997 as a subsidiary of the Holding. Security Organisation (RSO) licence given by the authority of Pioneering the concept of a wide range of home and office the Undersecretariat of Maritime Affairs. furniture in the same showroom, the company currently operates 35 stores in Turkey and one in North Cyprus through Tepe Güvenlik A.Ş. was established in 2011. The company a total indoor sales area of 126,000 square meters. The provides security services to over 30,000 subscribers company offers approximately 40,000 products ranging from nationwide through its Alarm Monitoring Centre. The home and office furniture to textile and kitchen accessories. The Company is ranked second in terms of number of subscribers. company manufactures home and office furniture in its two manufacturing plants, in Ankara and Eskişehir, with a total Tepe Servis ve Yönetim A.Ş. was incorporated in 2008 to closed area of 104,400 square meters, while providing provide services in integrated facility management including kitchenware and accessories from local and foreign markets. administration, cleaning, security, technical support and With the advantages of flexible computer-aided repayment and gardening maintenance services, etc. Trough manufacturing systems, the company is able to customise its Tepe Call Center, located in Ankara and Trabzon, provides products and meet changing customer needs, strengthening its qualified services to its business partners with an experienced presence in the market. staff. The Tepe Servis Card was set up initially to meet the meals and ready food needs of the employees of the Group. Due to the restructuring operations effects, contraction in net Bilintur Catering Centre was established in 1993 to provide revenue of Tepe Home also continued in 2015 and food services to Bilkent University’s students and academic materialized to TRY 121.1mn from TRY 153.5mn at FYE2014 staff. The Company’s current activities are listed as (FY2013:169.9mn) and accounted for 6.83% institutional catering, boutique catering and restaurant-café (FYE2014:10.13%) of the total revenue of the Holding. Tepe management. Home’s gross profit was TRY 34.4mn (FY2014:58.3mn), which

Bilkent Holding A.Ş. & Its Subsidiaries 7

Holding

E. Shared Services Group 29.49%) of total passenger traffic and 65.97% (FYE2014: 67.53%) of total transportation vehicles in Turkey’s cabotage Bilkent Enerji Üretim Sanayi ve Ticaret A.Ş. (Bilenerji) was lines. IDO is the beneficiary of 35 ports for 30 years in the founded in 1993 to meet the electricity needs of Bilkent Marmara Sea. The remaining time of concession is 25 years. University and Bilkent Holding Companies. It was the first model for the generation of electricity on a university campus The Information of Measurement 2015 2014 and the provision of an uninterrupted supply of electricity and IDO heating/process steam needs of the University and Group companies. The Company initiated the generation of electricity The Number of Port Piece 35 35 in 1995 with its first gas turbine of 4.5 MW and total capacity The Number of Lines Piece 15 17 was later increased to approximately 36.5 MW. The Carrying Vehicles Piece 8,604,468 8,216,450 Number of Person 47,377,389 47,501,612 Bilbak Bilkent İnşaat Ticaret ve Bakım Hizmetleri A.Ş. was Passengers Carried established in 1991 to support staff and provide maintenance Passenger services to many companies as well as universities. Since Capacity Car Capacity September 2011, the company provides building construction Vessel Type Piece services. The Sea Bus 24 10,285 - The Fast Ferry 9 7,132 1,354 F. Subsidiaries /Associates (Jointly controlled) The Conventional 20 19,034 1,519 Ferry TAV Havalimanları Holding A.Ş., Turkey’s leading brand in the Service Boat 2 - - global airport operations, has been publicly traded on the Total 55 36,451 2,873 Borsa Istanbul (BIST) with a ticker of TAVHL since 2007 with a current free float of 40.56%. The Company operates the As seen in the above figures, there were no major alterations Istanbul Ataturk, Ankara Esenboga, Izmir Adnan Menderes, in 2015 compared to the previous year regarding the Alanya Gazipasa and Bodrum Milas airports in Turkey, the company’s performance. While the number of carried Tbilisi and Batumi airports in Georgia, the Monastir and vehicles by IDO demonstrated an increase, the number of Enfidha-Hammamet airports in Tunisia, the Skopje and Ohrid carried passengers presented a slight reduction. In addition airports in Macedonia, the Madinah Airport in Saudi Arabia to the competition in the Eskihisar-Topçular ferry boat line, and the Zagreb Airport in Croatia. The Company provided IDO’s most profitable and revenue generating line, and services to approximately 780k aircrafts and 102 million BUDO’s operations in the Kabataş-Mudanya boat line which passengers in 2015. The Holding also operates in a variety of impeded the growth phase of IDO’s activities, the opening of fields such as ground services, duty free shops, catering, the İzmit Gulf Bridge in July 2016 is expected to have a information, security and operating services through its significant influence on the Eskihisar-Topçular line. Thus, the subsidiaries of Havaş, ATÜ Duty Free, TAV Information magnitude of the negative impact of the İzmit Bay Bridge on Technologies, BTA Catering, TAV Security and TAV Operation the Eskihisar-Topçular line will be measured in 2016. Services Co. The Company also operates the duty-free, food and beverage and other commercial areas at the Riga Airport In order to retain a significant role in the public transportation in Latvia. As of FYE2015, total assets, liabilities, equity, sector in Turkey as the leading operator in sea transportation revenue and net profit figures of the TAV Holding were TRY as well as reducing the effects of disadvantages of 10,506mn, 7,922mn, 2,585mn, 3,026mn and 605mn, competition, the Ro-Ro transportation services on the respectively. Bilkent Holding’s share in the Company’s net Ambarlı–Topçular line, which will serve truck and trailers assets and net profit were TRY 208.3mn and 48.7mn drivers, was initiated and first trip was made on 16th respectively. November 2015. 2,314 vehicles used the service until the end of FY2015. Furthermore, IDO has signed a contract with TAV Yatırım Holding A.Ş., a specialized airport contractor, also Borusan Lojistik, which is the leading organization in operates in the aviation and car-parking fields. According to ‘integrated logistics services’, aiming for an annual traffic of the Engineering News Record (ENR), the Company is the world's 100k for 5 years on the İDO’s Eskihisar-Topçular conventional 82th largest contractor. At FYE2015, total assets, liabilities, ferry line. Following the completion of the process, during the equity, revenue and net profit figures of the TAV Yatırım were last 4.5 months of 2015, 61,408 trips were realized. TRY 3,033mn, 2,682mn, 351mn, 2,673mn and 38.8mn respectively. Bilkent Group’s shares in TAV Yatırım Holding A.Ş. At FYE2015, the Company’s consolidated revenues were TRY was 24.22% as of FYE2015. 611.2mn and increased by 9.76% on a YoY basis. Although the Company gained an operating profit of TRY 211.9mn in İstanbul Deniz Otobüsleri Sanayi ve Ticaret A.Ş. (IDO), FYE2015 (FYE2014: TRY 151mn), it faced a loss of TRY Istanbul’s Fast Ferry and Sea Bus Company provides passenger 233.6mn due to substantial financial expenses of TRY 459.6m and vehicle transportation on urban and inter-city sea routes principally stemming from the deprecation of TRY against the through Sea Bus, Fast Ferryboat, Conventional Ferry and Fast main foreign currencies. As of June 30, 2016, IDO recorded Ferry Lines with its fleet of 55 vessels (24 sea buses, 20 ferries, revenue and net profit figures of TRY 277.6mn and TRY 9 fast ferryboats and 2 service boats) in the Marmara Sea. 23mn, respectively. IDO is the largest maritime transporting company with over 47mn passengers and approximately 8.6mn vehicles transported in 2015 and accounts for 28.94% (FYE2014:

Bilkent Holding A.Ş. & Its Subsidiaries 8

Holding

e. Corporate Governance statements, efficiency of the operations, and compliance with legislation. Internalization of corporate risk management Although Bilkent Holding is not a publicly listed company and implementations and progress in efficiency of the committees is not obligated to fully comply with international accepted will contribute to the proactive and comprehensive risk best practices of corporate governance principles coupled with management culture in the future. the fact that it is not enforced by any particular public authority or professional organization, a high compliance level In line with its establishment purpose, the Group has granted is essential given its large scale and established presence in a significant portion of its endangered internal resources to both Turkey and overseas countries. Bilkent University to contribute to education, science and cultural & economic development of society. Thus, the Holding The Holding’s corporate webpage is the primary hub for is placed in a unique position in the scope of social information. Mission, vision, shareholders, Board of Directors, responsibility. Executive Committee, detailed background info about the founder, detailed information about activities, occupational Despite recent notable progress in this field, further Health and Safety Policy, environmental, quality policies, improvements are required in order to comply with General Assembly meeting minutes and the Articles of internationally accepted best Corporate Governance Association are disclosed to the public via its web site. In Practices. addition, employee profiles, recruiting processes, performance evaluations, career development and corporate awareness f. The Company & its Group Strategies and communication with employees are detailed under the ‘Human Resources’ section. On the other hand, the shortcomings The Holding’s main business strategy aims to maximize the of the Holding’s website such as the absence of periodic efficiency of the current operations through restructuring & audited financial reports though given summarized figures, optimization and expand into high value added, liquidity annual activity reports with the exception of FY2014, generating and profitable areas with an emphasis on the organizational chart, code of ethics, disclosure, profit dividend sustainability and the steadiness of the revenue streams. and corporate governance policies should also be disclosed to the public via the website to increase the compliance level with In this regard, the Holding evaluates high-tech and production internationally accepted best corporate governance practices. oriented business opportunities and fosters its existing technology investments, supported by the innovation The Holding’s Board of Directors consists of 5 members, one of capabilities inherent in the University. Furthermore, the which has executive status and none are independent. It is management of the Holding expects to achieve greater considered that the Board Members have high qualifications in efficiency and better liquidity & profitability ratios instead of terms of education, professional and managerial experience absolute asset & sales growth owing to several improvements to administer their duties with the Board successfully carrying in organizational structure and operational processes. out its responsibilities. 5. Stability of the Sectors BOARD MEMBERS ABDULLAH ATALAR CHAIRMAN The activities of the Holding are rather diverse but have been summarized by JCR Eurasia Rating under 7 major sector ALİ HAYDAR KURTDARCAN BOARD MEMBER-CEO categories. ŞERMİN SAVAŞÇI BOARD MEMBER ERDAL EREL BOARD MEMBER A. Construction & Contracting A. KÜRŞAT AYDOĞAN BOARD MEMBER The share of construction sector within the global economy is In 2005 and onwards, the Holding has commenced an estimated to be between 10% and 12% in 2014, whereas organizational restructuring process to comply with corporate its share within the Turkish economy was 5.5% (2015: 5.7%) governance practices. In this regard, Audit, Risk Management in the same year. Hence, the construction sector’s share within and Nominations Committees are formed with participation of the Turkish gross domestic product (GDP) was below that of Board Directors and senior executives. Establishment of the its global average in 2014. Construction sector experiences Corporate Governance Committee is currently underway. faster growth in developing countries compared with developed countries due to the relatively more vibrant Internal Audit Directorate and Strategic Planning & Risk economic environment and faster growth rates of developing Management Directorate are the main units dealing with risk economies. By 2025, the share of the construction sector is management activities. To increase the compliance level of expected to reach 16-17% of GDP for developing corporate governance, a separate corporate risk management economies and approximately 10% in developed economies. department has been formed under the Strategic Planning & Risk Management Directorate to establish the corporate risk Although the global construction sector’s growth rate management infrastructure of companies operating in the generally mimics the global economic growth rate, the sector Holding and to carry out risk management activities in grew slower than the Turkish economy in 2014 and 2015. accordance with international standards. The Internal Audit Although Turkish GDP grew by 2.9% in 2014, the construction Department provides assurance and reports to the Board with sector grew by 2.2%. In 2015, construction sector growth respect to the integrity and accuracy of the financial slowed even more and, while the Turkish GDP grew by 4%

Bilkent Holding A.Ş. & Its Subsidiaries 9

Holding during this period, sector growth remained at 1.7%. Despite decreased by 11.2% in 2014. In 2015, it exhibited an 8.4% the fact that the outlook of the sector is generally dependent growth. On the other hand, although private sector on the Turkish economic prospects, the weak growth rate of the construction expenditures had decreased by 0.7% in 2013, sector in 2015 was mainly the result of uncertainties associated they increased by 9.6% in 2014 followed by a slight with the general election results and geopolitical and regional decrease of 1.2% in 2015. The growth picked up in 1Q2016 conflicts arising around Turkey and its impact on investment to 6.6%, even though the outlook is still pressured for the year decisions. onwards.

However, as one of the main growth engines of the Turkish economy, the construction sector contributes to economic output Another important contribution to the construction sector is not only through principal sector revenues but also through provided by the mega projects proposed by the Turkish more than 150 subsectors including cement, ceramics, wood Government. These projects are expected to make a and glass. Hence, the cumulative contribution of the sector to significant contribution to the sector’s growth during the the Turkish economy is more than the sole construction figures following years. reflect. The Turkish construction sector also has a significant presence FYE2015 statistics show the sector employing around 2 million in neighbouring countries and the wider international market people, approximately 7.2% of the total Turkish workforce, through overseas contracting projects. In 2014, Turkish underlying the sector’s importance for the Turkish economy. contractors undertook 322 new projects around the world Seasonally and calendar adjusted employment index figures with a total construction volume of USD 27bn. It is observed of the Turkish Statistical Institute reflect that the average that the construction volume of 2014 was below that of 2012 employment in 2015 increased by 2.5% compared with 2014. and 2013 volumes mainly due to the shrinkage of Iraq, Libya, Syria and Russia markets, which accounted for the vast GDP Sector majority of total contract volume, as a result of the economic 23.50 and political conflicts as well as security concerns in these regions. Turkish contractors completed 2015 with USD 22.4bn 18.50 new projects. However, escalating conflicts and tensions 18.3 marked a sharp drop in 2016, reducing the new business 13.50 11.5 9.2 origination to USD 2.8bn as of 1H2016. 8.50 7.4 8.8 4.0 4.8 2.1 2.9 3.50 6.6 Total Contracting Projects Volume by Turkish 4.2 Companies Abroad (USD bn) 2.2 1.7 -1.50 0.6 2010 2011 2012 2013 2014 2015 Q12016 29.7 30.2 Source: TUIK 27.0 23.4 23.0 22.4 20.2 From the graph presented above, it is observed that during strong economic growth periods the sector grows faster than the economy, but when economic growth slows down sector 2.8 growth slumps more than the economy. Hence, the slowdown of the construction sector growth rates after 2010 can be 2009 2010 2011 2012 2013 2014 2015 Q12016 attributed to the general slowdown of the macroeconomic growth rate of Turkey. Source: Turkish Contractors Association, (*) January – August 2015

Public and Private Construction Expenditure Growth As of FY2015, 32% of the total foreign contracting volume Rates of Turkish companies belonged to airports, 15% to power plants, 13% to petrochemical plants, and 9% to railroads and 35.0 30.2 Sector Public Private 9% to residential projects. Considering the on-going political and economic conflicts in the Middle East and North Africa 25.0 16.7 regions, Turkish contractors are expected to be faced with additional pressures for finding new markets around these 15.0 11.5 9.6 7.4 8.4 6.6 8.2 regions in 2016. Furthermore, due to the decrease in energy 2.8 prices, the feasibility of new power plant projects is also 5.0 0.6 2.2 1.7 1.6 negatively affected, which will further hamper the new construction projects. Hence, projected contracting volume for -5.0 -0.1 -0.7 -1.0 -1.2 FY2016 is not expected to exceed that of the FY2015 volume. -15.0 -11.2 2011 2012 2013 2014 2015 Q12016 With 40 Turkish companies listed in the “Top 250 Source: Turkish Statistical Institute International Contractors 2016 List” (2015: 43 Turkish companies were listed) compiled annually by the Engineering As can be observed from the graph, although public sector News Record Magazine, Turkey was ranked 2nd after China construction expenditures increased by 30.2% in 2013, it (having 62 companies in the list).

Bilkent Holding A.Ş. & Its Subsidiaries 10

Holding

Statistics obtained from the Turkish Institute for Statistics (TUIK) growth of the domestic construction market is expected to be reveal that construction permits decreased by 9.54%, 14.27%, concentrated in big and branded projects and the 8.45%, and 12.159% in number of buildings, floor area, value competition in the sector is expected to be high due to the and number of flats, respectively in FY2015 compared to the large number of companies operating in the sector. The previous year’s figures. Moreover, occupancy permits combined projects that include residential, office, retail and recorded decreases of 8.56%, 5.41%, 4.70% respectively in entertainment spaces are expected to be the main attractors the same fields, while the value increased by 21.99%. of construction sector demand in 2016.

TURKISH CONSTRUCTION SECTOR's BUILDING PERMITS Construction projects regarding the health sector are (New building and additions) expected to increase in 2016 with robust public and private Number investments in the sector as well. Due to the ongoing regional of Floor Area Number of unrest within and around Turkey, Turkish construction Year Buildings (m2) Value - (000 TRY) Flats companies with overseas operations will need to find new 2010 139,422 176,429,366 101,794,139 907,451 markets to replace their existing regional markets. Political 2011 101,900 123,621,864 81,177,868 650,127 instability in the Middle East is a factor putting downward 2012 104,151 152,952,913 104,257,399 750,922 pressure on the sector as well. 2013 121,266 175,167,417 126,412,904 837,282 2014 137,632 218,772,514 173 429 278 1,009,730 In addition to the factors listed above, continuous investment 2015 124,500 187,562,826 158,772,576 887,007 in public infrastructure in line with the plans of the General 2015 1H 91,281,259 429,409 Directorate of Highways, the General Directorate of State 2016 1H 67,720 104,079,720 92,271,091 499,053 Hydraulic Works and the Housing Development Administration of Turkey are another important contribution to the sector’s growth and development in the long-term. Third TURKISH CONSTRUCTION SECTOR's OCCUPANCY PERMITS Istanbul Airport (expected to be the largest airport in the (Completed or partially completed new buildings and additions) world with respect to customer capacity), Third Bosphorus Number Bridge, Kanal Istanbul, Istanbul-Izmir Highway and Izmit Gulf of Floor Area Number Year Buildings (m2) Value - (000 TRY) of Flats Bridge are the most important of these infrastructure projects. 2010 82,407 85,281,468 101,794,139 429,755 Furthermore, the Turkish Banking Sector’s support for the 2011 101,900 123,621,864 81,177,862 650,127 Turkish contractors is expected to continue in 2016. The 2012 94,750 103,877,581 69,053,134 546,672 increase in the overall population by an average of 1.2% a 2013 117,619 137,810,938 94,316,004 721,152 year combined with increases in per capita income and new 2014 120,268 151,016,151 97,840,178 767,401 household formation as a result of new marriages and 2015 109,971 142,840,697 119,352,938 731,289 immigration into large urban centers are the other factors that drive the sector’s growth performance. 2015 1H 68,549,467 355,190

2016 1H 52,735 69,479,990 60,729,468 349,573 As of FYE2015, the short-term (with less than 1-year maturity)

Despite the ongoing unrest in neighboring countries, increasing and long-term debt of the construction sector was USD 10.3bn terrorist activities and failed coup attempt, the total housing and USD 23.8bn, respectively. Since short-term debt is unit sales figure of 1, 289,320 as of FYE2015, indicates solid significantly affected by the changes in exchange rates, demand. diversification of the source of financing for the construction sector is also expected in the long-run. With the diversification efforts, limiting the increases in bank debts, increasing public Housing Sales Figures offerings and equity financing as well as encouraging the Year Total Houses Sold development of lease certificates is expected. 2010 607,098 2011 708,275 Despite the modest outlook noted for the sector in the medium and long-term, it suffers from several shortcomings in a 2012 701,621 number of areas. These include the large share of informality 2013 1,157,190 within the sector, the relatively short maturity of housing loans, 2014 1,165,381 increasingly short contract terms and difficulties inherent in the 2015 1,289,320 financing of new housing projects resulting from high leverage. On the other hand, the technical know-how, As construction sector growth mimics the growth rate of the experience, high-quality human resources and its economy hyperbolically and a significant change in international reach are among the sector’s major strengths. macroeconomic growth rate is not expected for 2016, the Sources: Turkish Contractors Association, the Association of Real Estate construction sector growth is expected to be in line with the Investment Companies and TÜİK, BRSA 2015 growth rate. Considering the outlook and the main trends of the sector in 2016, domestic residential and commercial real B. Maritime Passenger and Vehicle Transportation estate markets are expected to continue their growth with support from the demographic structure of Turkey (young A substantial portion of the passenger and vehicle transport population with a high propensity to spend), rapid activities on cabotage lines are carried out in the Marmara urbanization and increasing demand from foreign citizens. The

Bilkent Holding A.Ş. & Its Subsidiaries 11

Holding region. The number of carried vehicles and passengers through value by producing new modular furniture designs, cost cabotage lines were 13,042,399 and 163,723,544, effective production, economies of scale by new investments, respectively, at FYE2015. Between 2003 and 2015, carried marketing on brand value and developing know-how. vehicles and passengers figures recorded a growth of approximately 110% and 64%, respectively. As the world’s 14th largest exporter, Turkey has more room to go forward in the global furniture industry. Utilization of Amount of Vehicles Carried Amount of Passengers Year raw materials within the borders of the country, Turkey has a in Cabotage Line Carried in Cabotage Line strong value added potential. In that manner, the companies 2003 6.219.645 99.825.813 should develop appealing designs in high-value markets, 2004 6.900.922 112.816.094 2005 6.961.643 122.661.230 strong brand awareness worldwide, and international quality 2006 7.773.689 135.348.554 standards. Such approach would increase the visibility of the 2007 8.161.999 149.824.929 Turkish Government’s 2023 projections of USD 16bn export 2008 8.866.797 151.645.639 2009 9.315.772 159.194.370 volumes in wood and wood products and a 1.6% share of the 2010 9.400.735 155.172.103 global market. 2011 10.402.917 156.968.095 Sources: ITC-International Trade Center, Turkey republic of Ministry of 2012 10.710.645 159.076.921 Science, Industry and Technology General Industry Directorate and Turksat. 2013 11.318.561 164.426.997 2014 12.166.505 161.048.004 D. Printing and Paper 2015 13.042.399 163.723.544

The worldwide paper industry has a sector value of USD IDO carried 47,377,389 (FY2014: 47,501,612) passengers 1,270bn as of FYE2015, 6% down compared to 2014 and 8,604,468 (FY2014: 8,216,450) vehicles in 2015, which figures. The contraction in the sector is expected to continue accounted for 65.97% (FYE2014: 67.53%) of total carried along 2016 mainly caused by decline in overall sales. The vehicles and 28.94% (FYE2014: 29.49%) of total passengers main obstacles of the sector may be summarized as decline in cabotage lines of Turkey. Compared to the previous years, of pulp (unprocessed dough and used for paper production) both the vehicles and carried passengers market shares in the market, shifting from printed papers to digitized continued to exhibit a slight contraction. material, and price sensitivity of raw materials.

C. Furniture and Retail China and Brazil are the key manufacturers of paper pulp in Worldwide furniture production has doubled in the last 10 the world. Since 2012, pulp prices continue to exhibit a years and reached USD 437bn of market value as of 2015. declining trend in these countries due to the declining demand The sector exhibits a steady growth and it is expected that and currency volatility. The fall of prices are about 2% on a total market value will reach to USD 1,000bn by the year yearly average between the years 2012 and 2015. 2050. Overall furniture sales displayed 3.3% growth in 2014. Growth is mainly fueled by South American, East European and Thanks to rapid moving technology, digitization has Russian markets. China is the leader in production and exports skyrocketed in recent years. End-user paper products are in the furniture sector. In 2014, the total amount of exports was losing ground against digital material and it directly effects USD 177.5bn and China generated the one-third of this demand for consumable paper. On the other hand, paper amount. Germany and Italy are other important producers in boards are compensating the diminishing demand since e- furniture industry. Businesses are small and medium sized in commerce leads more cardboard boxes to be used in smaller Turkish furniture sector. Players are fragmented that causes scales but larger numbers. Another positive indicator for each business to have limited resources to increase investments. paper sector is increasing demand for hygiene products According to 2014 data, over 20k companies are operating (toilet paper etc.) fueled by the increase in population as well in furniture production and sales business in Turkey and employ as education level. 165k staff. Increase in population, growth in income per capita and the urbanization trend of the population lead demand in housing as well as furniture. Thus, the inclining trend of housing Turkey is not a key player in the arena of worldwide paper and construction sector displays a parallel increase in furniture production. However, the trend of demand and production industry. Although the domestic trend is getting high, Turkey still positively differentiated from the world. Paper production stands as net exporter in the sector. Turkey produces roughly displays a steady growth for years. As of December 2015, USD 20bn value of furniture while the consumption was around paper board production presented a 30% increase and USD 14bn. hygiene paper production exhibited a 65% increase compared to 2010. During the same period, total revenue of Turkish furniture sector promises several opportunities in the paper products almost doubled in domestic market and sector since the domestic sector has an inclining demand trend tripled in exports. and producers are well-experienced in production techniques. Nevertheless, the sector suffers from several problems in terms Turkish paper market is exposed to high production costs that of increasing export. Main obstacles of Turkish furniture stands as an obstacle for Turkey to be active in the worldwide manufacturers are lack of high-end design, branding, lack of market. Raw materials such as lumber and cellulose are capital intensive companies, energy prices, and off-the-record expensive compared to Asian countries. In addition, energy sales. Additionally, higher price competition within certain prices are high enough to decrease profitability of paper clusters in the market increase the pressure on the profitability sector since 25% of production cost is electricity cost. of the domestic companies. Turkish market can increase added Moreover, recycling is an important factor for decreasing

Bilkent Holding A.Ş. & Its Subsidiaries 12

Holding costs in paper production but the recycling ratio of Turkish The defense industry in Turkey is led by a couple of major market is quite low at 40%. Nevertheless, production is limited companies, Aselsan, aerospace producer TAI, Havelsan and in the country and the demand for paper products are 1.8 Roketsan while there are many other SME’s that contribute to times larger than domestic supply. the sector and develop valuable projects. According to the data by Defense News, a leading publisher of military news, Although Turkey struggles to compete with other countries, it Aselsan and TAI improved their rankings to 62nd and 72nd still has room to move forward in domestic market compared places in 2015 from 67 and 78 in 2014. to the European countries, whose paper consumption per capita Sources: Undersecretariat of Defense Industry, Defense and Aerospace is twice that of Turkey’s figure of USD 75. ROAA ratio for the Manufacturer’s Association, Defense News. sector was around 4% in 2014 and bank loans reached TRY F. Catering 8bn as of January 2016, Non-performing loans in paper production business was 1.96% as of January 2016, that is One of the fastest growing sectors in the global economy, the below the average of all production sectors. The numbers catering sector’s outlook depends on several dynamics such indicate a potential sustainable growth in the sector. as the growth in disposable income per capita, availability of Considering the net importer status of the sector in domestic effective distribution channels, cost profile of the raw food market, continuous growth in paper production business is materials and corporate profits. A highly-fragmented sector possible in with the subsidies and master planning backed up where no companies have a dominant market share, catering by internal decision makers. spending as share of nominal GDP trends between 0.20% and 0.80%. The size of Turkey’s catering market is estimated E. Defense Industry at around USD 6-7bn according various industry organizations. Global military spending increased by about 1% in real terms in 2015, reaching USD 1,676 billion. Over the last decade, The growing population and relatively commensurate growth after reaching its peak in 2009, 2.62%, the share of military in the work force and middle class is the main driver of the spending in global GDP gradually declined to 2.28% in 2015. catering sector. However, increasing food and meat prices United States represents 36% of total global defense and a competitive market structure erode company profits. spending followed by China, Saudi Arabia, Russia, and United On the other hand, an increase in outsourcing catering Kingdom. Defense spending increased sharply in least services instead of providing “in-house” in order to transfer developed countries in Middle East and North Africa, while operational risks and burden regarding regulatory issues and showing a decline in North America and Western Europe. health concerns bolstered the sector growth.

Turkey’s defense spending stood around USD 14bn Catering companies with sound business volume, customer corresponding to 1.9% of its total GDP in 2015. Turkish base and financial structure certified by independent Defense Industry expanded to over USD 5bn with a USD inspection agencies gain an advantageous position. The 1.66bn export while employing a workforce over 30,000. On average price of agricultural products has risen considerably the other hand, between 2011 and 2015, Turkey has become due to several factors such as draught and import 6th largest arms importer in the world. Sector’s R&D spending, dependency of inputs (seeds, fertilizers, chemicals, which is the by far highest in Turkey exceeded USD 1,000mn equipment) accentuated by the depreciation of TRY. The in 2015 of which around 35% was met through private rising costs are exacerbated by the inability of many catering companies. A total of 75 R&D projects were carried out in firms to reflect the increasing costs to the prices, which are 2015. Additionally, the number of patents in the industry predominantly determined and fixed on a yearly basis with reached 59 in 2014. the customers.

Turkey’s strategic plan to reduce its dependency on military The sector generates a majority of its revenues from import through channeling its spending to domestic producers corporate services, education, healthcare, seniors center and has been gradually achieved through structural reforms. defense, respectively. Increasing per capita income profile in Around half of the spending of Turkish Armed Forces was met emerging markets provide robust new business and organic by local enterprises, research companies and universities. growth thanks to outsourcing dynamics. Turkey is experiencing Instability in the neighborhood and increasing security threats a persistent sub-par economic growth of around 3% in the lead to significant defense spending which attracts investors to past periods, failing to boost the income growth of the the sector. individuals significantly.

Aselsan, TAI, Havelsan and Roketsan are the leading major The labor intensive structure of the catering sector has an enterprises in the Turkish defense industry along with many important effect on employment. However, the sector faces other SME’s which contribute to the sector to benefit from challenges in hiring skilled and qualified workers largely due lucrative opportunities. Defense industry in Turkey is capable to working conditions, seasonality, low wages and SMEs of producing satellite, unmanned air vehicle, training aircrafts, dominated sector. battle ships, armored vehicles and missile systems thanks to Overall, despite certain challenges faced by the catering Government’s sound strategy and reforms. Subsidies and sector in Turkey, the market is expected to grow in the guidance provided by Government to the private sector medium term, underpinned by the growing population and underpinned the industry in line with the long-term projections. the operational efficiencies to be derived from outsources food services.

Bilkent Holding A.Ş. & Its Subsidiaries 13

Holding

G. Private Security consolidation method, the Holding’s asset base growth performance does not likely reflect its actual performance. The private security services in Turkey are regulated by the Key financial statements of those jointly controlled private security Law no: 5188, which came into force on 10 companies are given in Annex1. June, 2004 and contributed to the sector’s exponential growth in the last ten years to a total of approximately USD 3bn in Throughout the last five-year period, the Holding’s asset size. The sector employed a workforce of 245.358 as of size contracted by 9.06% in aggregate terms due to October, 2015. According to the data provided by the Private noteworthy shrinkage in FY2012, which derogated the Security Department set up under the Turkish National Police, cumulative growth rate. In addition to the alteration of the 245,358 security officers were employed by 1,369 private consolidation method, the sale of the Holding’s 18% of joint security service providers. shares in TAV Havalimanları A.Ş. and 20.3% of joint shares in TAV Yatırım A.Ş. in FY2012 contributed to the contraction. Statistic on Private Security Services 2014 2015* Conversely, the equity growth was 78.70% in the same Companies 1,330 1,369 period. Generated internal funds and equity injection supported the growth of the equity. Educational Institutions 514 473

Allowed Premises for Private Security 67.199 69.248 ANNUAL CUMULATIVE Awarded Certificates 1.186.070 1.256.366 Asset Growth Rates (%) Issued Security Officer ID Card 682.323 739.876 30.11 40.00 30.00 Employed Private Security Officers 233.457 245.358 30.11 16.31 14.39 20.00 Alarm Monitoring Centres 321 343 0.50 10.00 0.00 *As of October, 2015 -10.00 -9.06 -31.98 -9.51 -20.00 The growing Turkish private security sector provides lucrative -22.20 -30.00 -40.00 opportunities for large scale companies with strong market -50.00 reputation and capital structure and attracting the investment -47.72 -60.00 of foreign companies. In total operations in Turkey, Securitas, 2011 2012 2013 2014 2015 a prominent Sweden based company in private security solutions employs in around 11k staff in over 2k services points ii. Indices Relating to Profitability where Danish ISS PROSER employs over 28k personnel in over

5k services points. Tepe Savunma, is also among the leading The Holding’s revenues increased by 16.98% YoY to TRY private security solution providers with approximately 12k 1,773mn at FYE2015, mainly derived from the notable staff force. growth of 65.10% in construction revenues. Income from On the other hand, domestic small scale companies, with weak construction activities exhibits variation year by year in financial structure are faced with fierce competition due to accordance with the completion level of construction. fragmented structure of the sector. Concerning the segment of operations, the largest contributors

to the revenues of the Holding were construction, security Legal statute, regulations and standards of the private security services and printing operations with rates of 27.48%, sector differ greatly among countries, even for EU member- 27.35% and 8.08%, respectively, in 2015. On the other hand, states. Central issues prevalent in the Turkish market are lack the largest contributions to the gross profit were made by of qualified personnel, bottom wages, and low occupational renting, printing and Dösim services in descending order standards along with the weak supervision of the public and (29.17%, 17.34% and 11.420% respectively). inadequate accountability of the operating companies. Source: Turkish National Police Department of Private Security Granted donations to Bilkent University were treated as 6. Financial Analysis expense items in its income statement which confers tax advantages (funds generated by the Holding’s Group a. Financial Indicators and Performance companies are pooled to provide funding for Bilkent University). In order to evaluate Bilkent Holding’s actual i. Indices Relating to Size operational performance, we, as JCR Eurasia Rating,

At FYE2015, the Holding’s assets were TRY 2,837mn and classified donations as “Other Current Assets” into that year’s stayed flat compared to the previous year’s figure of TRY assets and “Equity” into total liabilities. When the effects of 2,823mn. On the other hand, the Holding‘s asset size donations on the profit and loss accounts were adjusted, the contracted by 19.85% YoY on a USD basis. Holding’s loss figure at TRY 76.6mn in FYE2015 turned to a net profit of TRY 37.5mn.

The jointly controlled companies; İstanbul Deniz Otobüsleri At FYE2015, share of loss of equity-accounted investees (TAV Sanayi ve Tivaret A.Ş., TAV Havalimanları Holding A.Ş. and TAV Yatırım Holding A.Ş., gigantic firms in their respective Havalimanları Holding A.Ş., TAV Yatırım Holding A.Ş., İDO operation fields in Turkey, were consolidated by the equity İstanbul Deniz Otobüsleri San.ve Tic. A.Ş. and Bitu Turizm ve method starting from FY2013 and the financial results of İnşaat Yatırım A.Ş.) was TRY 15.1mn, while the previous FY2012 were re-stated as accordingly. Stemming from the year’s share of profit was TRY 42.4mn. Among the equity-

Bilkent Holding A.Ş. & Its Subsidiaries 14

Holding accounted investees, IDO experienced a sizeable net loss of At FYE2015, the Holding’s interest coverage ratio tumbled to TRY 233.6mn due to the heavy debt burden and financial 207.97% from 1,344.65% FY2014 due to the absence of expenses principally derived from deprecation of TRY in other income from investment activities compared to the FY2015 and the Group’s profit was pulled down by TRY previous year. Interest coverage ratios above 150% specify 71.2mn. Accordingly, the Holding’s income downed by equity- a company’s high capability to encounter its interest accounted investees amounting to TRY 15.1mn due to total expenses. The ratio of the Holding in 2015 was considerably contribution of TRY 58.1mn by TAV Holding and TAV Yatırım. above the desired level.

According to the audited financials dated 30 June 2016, IDO’s Interest Coverage Ratio 2 (%) net sales, gross profit and net profit figures were TRY 277.6mn, 1,600.00 107.4mn and 23mn, respectively. In the event that a similar 1344.65 1,400.00 performance continues for the rest of the year, the Holding’s 1,200.00 944.34 2016 year ending profit will be positively affected. 1,000.00 800.00 In FY2015, despite the growth of 16.98% in revenues, the 600.00 Holding’s net profit figure contracted significantly by 88.35% 494.16 400.00 on a YoY basis, principally stemming from an increase in cost of 200.00 116.98 207.97 sales, other losses from investment activities and share of loss of 0.00 equity-accounted investees. While the contribution to net profit 2011 2012 2013 2014 2015 from other income/loss from investment activities and share of profit/ loss of equity-accounted investees components was TRY Overall, the Holding has maintained the production power 223.3mn in the previous year, loss from those components in and generated adequate operating income to sustain its FY2015 was TRY 26.2mn, materially reducing net profit. Thus, operations as well as realizing its unique purposes. the return on assets and equity ratios, fundamental profitability and performance indicators, decreased markedly to 1.71% b. Funding and Adequacy of Capital and 2.70% from 13.00% and 21.31%, respectively. The Holding encounters its funding necessities predominantly ROAA (%) ROAE (%) through its sizable equity, bank loans, trade payables, other payables, deferred income largely composed of advances received stemming from construction activities and tax liabilities 36.18 40.00 35.00 along with generated cash flows through its activities. 30.00 21.31 25.00 The financial liabilities of the Holding were TRY 183.5mn as of 20.00 FYE2015 and immaterial compared to the equity level. It should 14.02 15.00 also be born in mind that 42.82% of total liabilities 6.64 10.00 9.36 13.00 (FYE2014:38.61%) were derived from advances received and 2.70 5.00 2.70 4.01 1.71 deferred income components that do not require cash outflows. 0.00 2011 2012 2013 2014 2015 Other Liabilities (%) Trade Payables (%) Financial Liabilities (%) It is also noted that the Holding recorded other operating Resource Distribution % income of TRY 65.3mn in FY2015 following the winning of the tax case. However, this transaction’s positive effect was offset 100% 20.02 90% largely due to provisioning expenses amounting to TRY 67mn. 80% 10.96 54.44 51.57 70% 62.10 67.98 In FY2015, cost of sales to total sales ratio increased to its 60% 50% highest level at 82.43% during the reviewed period. 40% 20.39 23.89 69.02 30% 21.22 14.39 20% Cost of Sale / Total Sale (%) 25.18 24.55 16.68 17.63 10% 0% 2011 2012 2013 2014 2015 82.43 83.00 82.00 80.44 81.00 The Holding’s total liabilities were TRY1,041mn and stayed 79.01 80.00 flat compared to FYE2014. Due to limited growth in the 77.70 77.65 79.00 equity base, the equity to total liabilities ratio remained at 78.00 the previous year’s level. Same circumstance was valid for the 77.00 76.00 debt ratio. 75.00 2011 2012 2013 2014 2015

The Holding’s interest coverage ratio fluctuated over the reviewed period along with incomes stemming from one-off income components and other income from investment activities. Bilkent Holding A.Ş. & Its Subsidiaries 15

Holding

477.6k of receivables was written off as expected to be Debt Ratio (%) Equity / Liabilities (%) uncollectable. Although the NPL’s current level remained high

170.99 172.60 200.00 and repressed the asset quality to a certain extent, full 167.64 provisioning and low level of new NPL inflows with the 141.57 150.00 exception of translation differences contribute to the asset quality and signifies the management success despite the low 73.74 100.00 collection performance. 37.36 41.40 36.90 36.68 50.00 35.61 Non-performing Receivables / T. Receivables (%) 0.00 2011 2012 2013 2014 2015 30.35 35.00 30.00 22.66 24.69 The Holding’s adjusted equity was TRY 1,796mn as of 20.67 25.00 FYE2015 and remained flat compared to the previous year’s 20.00 figure of TRY 1,781mn. Additionally, the paid in capital accounted for 42.48% (FYE2014: 41.76%) of equity. 15.00 10.00 5.00 Equity+Minority Interest / Total Resources (%) 7.68 Total Liabilities / Total Resources (%) 0.00 2011 2012 2013 2014 2015

100% 90% As of FYE2015, the non-performing receivables book of the 26.26 80% Holding as a proportion of its equity was 5.96%, slightly up 70% 58.60 62.64 63.10 63.32 60% from the previous year’s level of 5.12%, but remained at 50% reasonable levels. 73.74 40% 30% 37.36 41.40 36.90 36.68 20% The off-balance sheet commitments and contingencies to 10% 0% equity and assets ratios demonstrated a significant increase 2011 2012 2013 2014 2015 to 62.16% and 39.35%, respectively, in FY2015 compared to the previous year’s figures. Despite the increases, level of As of FYE2015, the Holding’s equity composed 63.32% of the off-balance sheet liabilities was far from the stressful level on total resources while short and long term liabilities comprised the activities. 15.39% and 21.29%, respectively. Even though these levels specify a solid and a well-capitalized company, when Off balance Sheet Commitments Contingencies / T.Assets (%) eliminating advances received and deferred income from Off balance Sheet Commitments Contingencies / Equity (%) liabilities, which are not required as cash or repayment, the 300.00 equity to liabilities would be 3.02x (FYE2014:2.79x). 243.84 200.00 Short Term Liabilities / Total Assets (%) Long Term Liabilities / Total Assets (%) Equity+Minority Interest / Total Assets (%) 62.16 100.00 35.18 34.55 28.66 62.64 63.10 63.32 70 58.60 64.03 39.35 60 22.03 20.25 18.08 0.00 50 2011 2012 2013 2014 2015 44.56 40 29.18 21.24 23.72 21.29 30 Holding assets largely consisted of non-current assets with a 20.11 26.26 20 share of 57.82%, slightly up from the previous year’s level of 20.15 17.26 13.18 15.39 10 54.97%. As one of the largest and most prominent Holdings 0 in Turkey, its wide-spread activities necessitate substantial 2011 2012 2013 2014 2015 fixed assets.

7. Risk Profile & Management c. Asset Quality a. Risk Management Organization & Its Function- At FYE2015, the Holding’s non-performing receivables General Information portfolio increased by 17.51% from TRY 91.1mn to TRY 107.1mn and the NPLs ratio increased to 24.69% from The Holding is exposed to market (including foreign currency 20.67% at FYE2014. It is also noted that a slight contraction in risk, interest rate risk and price risk), liquidity, credit and total receivables to TRY 433.8mn from TRY 440.9 supported operational risks from its operations and use of financial the increase in the NPL ratio. In FY2015, TRY 16.5mn of non- instruments. Its risk management objectives and policies are performing receivables, in which TRY 11.1mn stemmed from to identify, measure, monitor and manage risks through translation differences, were incorporated to the impaired optimization of the debt and equity balance in order to receivables portfolio while TRY 52.9k was collected and TRY protect its capital for the continuation of its activities and to Bilkent Holding A.Ş. & Its Subsidiaries 16

Holding maximize the support to Bilkent University as well as supporting c. Market Risk profitable and sustainable growth. In the scope of market risk, Bilkent Holding is principally The Board of Directors has the overall responsibility for exposed to FX, interest rate risk and equity prices. Foreign establishing and supervising the Group’s risk management currency risks arise principally from the use of financial framework. Risk management activities are performed by the instruments. As of FY2015, the Holdings total foreign currency related departments under the policies and written principles position in relation to total assets and equity was -4.49% and approved by the Board of Directors. -7.09%, respectively. The Holding had net short positions principally in Euro and USD. Due to the FX risk exposure, the The Holding has set up the Corporate Risk Management Holding’s net profit/loss and equity statements indicated a Department, which operates under the Strategic Planning & variance of (+/-) TRY 12.7mn as of FY2015, assuming an Risk Management Directorate, to establish the corporate risk increase or decrease of 10% in exchange rates against TRY management infrastructure of companies operating in the and that all other variables remain constant. The management Holding company and to carry out risk management activities manages its FX risk through the approved policy. Accordingly, in accordance with international standards. As the the Holding’s FX risk exposure stood at an acceptable range. management stated that under the risk management activities; Risk Inventory, Consolidated Risk Map, Risk Management Total Foreign Currency Position / Total Assets (%) Manuel, Risk Management Duties & Responsibilities and Total Foreign Currency Position / Equity (%) Organization, Sector & Company outlook Report and 40.00 15.95 Corporate Risk Management Report comprise the major 20.00 outputs. -0.40 6.34 9.99 -7.09 0.00 -0.23 4.00 -4.49 -20.00 The Internal Audit Department, consisting of a workforce of 7, -19.01 provides assurance and reports to the Board with respect to -40.00 the integrity and accuracy of the financial statements, -60.00 efficiency of the operations, and compliance with legislation. -72.38 -80.00 2011 2012 2013 2014 2015 Furthermore, Audit, Risk Management and Nominations Committees are formed with participation of Board Directors As of FY2015, the Holding’s interest bearing financial and senior executives. Establishment of the Corporate liabilities were 6.47% (FY2014: 6.16%) of total assets, which Governance Committee is currently underway. Internalization is considered a significantly low level. From this perspective, of corporate risk management implementations and progress the impact of interest rate movements does not result in a in the efficiency of the committees will contribute to the significant alteration in the Holding’s financials. When interest proactive and comprehensive risk management culture in the rates increase or decrease by 50 basis points where all other future. variables remain constant, the Holding’s profit would be subject to an alteration TRY (+/-) only 144.7k. Additionally, b. Credit Risk the management makes continuous efforts to establish their liabilities with compatible rates and terms due the solid Bilkent Holding manages its credit risk by monitoring credit financial strength and high capability that enable the Holding exposures, limiting transactions and assessing the to restructure loans in more favorable terms according to the creditworthiness of the counterparties and establishing credit changing conditions of financial market. limits for each customer. These limits are annually reviewed and approved by the Management. Credit risk arises principally d. Liquidity Risk from; trade & other receivables, time & demand deposits in banks and financial investments. As of FYE2015, the Bilkent Holding manages its liquidity risk through the Company’s maximum credit risk exposure was TRY 934.6mn, continuous monitoring of cash flows matching maturities and corresponding to 32.94% and 52.03% of the Holding’s total amounts of the financial assets & liabilities and maintaining assets and equity, respectively. When excluding the the availability of an adequate number and high quality of receivables from related parties and regulated financial lenders along with a satisfactory level of cash and cash markets, those ratios would be 11.51% and 18.19%, equivalents is retained for daily operations. The Holding respectively, and indicate low credit exposure. meets its liquidity needs from cash outflows and trade payables generated by its business activities along with bank At FYE2015, the non-performing receivables increased to TRY loans and equity. 107.1mn from TRY 91.1mn. The growth was principally supported by translation differences. While the limited inflow The Holding’s net working capital hiked to TRY 760.2mn at to NPLs book and full provisioning policy contribute to asset FYE2015 from the previous year’s figure of TRY 601.5mn. quality and specify the efficiency of risk management, on the Over the reviewed period, the holding sustained its high other hand, the low collection rate and enduring presence of levels and comfortable liquidity positon and ample net non-performing receivables designate the remarkably lower working capital tended to further increase. quality of those non-performing receivables.

Bilkent Holding A.Ş. & Its Subsidiaries 17

Holding

14001 Environmental Management System standard as well Net Working Capital - TRY as ISO 9001 and ISO 22000 certifications. 760,240 800,000 8. Budget 635,686 601,515 700,000 499,329 600,000 392,242 500,000 Within the framework of projections and budgeting activities 400,000 in FY2016, Bilkent Holding projected TRY 1.74bn of 300,000 consolidated revenues (affiliate figures are not included). 200,000 Considering the FYE2015’s consolidated revenue of TRY 100,000 1,773mn the revenue projection is easily achievable and 0 consistent with its past performance. 2011 2012 2013 2014 2015 In the assessment of the target and realization of FY2015 Although the coverage of net working capital to long-term results, the holding fell short of assets growth, consolidated liabilities decreased but preserved its sound level in 2015, net revenue and pre-donation profit targets. working capital to non-current assets and equity ratios displayed a remarkable increase compared to the previous year. The current levels of net working capital coverage were markedly high and ensure great comfort to the liquidity management.

Net Working Capital / Long Term Liabilities (%) Net Working Capital / Non-current Assets (%) Net Working Capital / Equity (%)

161.66 180.00 160.00 136.34 129.96 125.83 140.00 120.00 100.00 80.00 49.82 41.75 38.76 46.34 60.00 36.80 40.00 44.69 42.32 21.68 37.57 33.77 20.00 15.80 0.00 2011 2012 2013 2014 2015

Above all, the Holding’s cash and cash equivalents (TRY 326.2mn) surpassed its total financial debt (TRY 183.5mn) at FYE2015.

e. Operational, Legal Regulatory & Other Risks

The Holding implemented occupational safety, environment and quality polices as well as risk management applications to minimize operational risks and their potential impacts. The Group attaches importance to ascertain compliance with laws and regulations. In this regard, corporate risk management department executes the risk management activities determining, analysing and prioritizing risks as well as standardizing business process. Along with human resources polices, internal control departments run by its duties according to the several control processes to intercept possible lossess.

As of FYE2015, the Holding made provisions amounting to TRY 18.4mn (FYE2014: TRY 26.3mn) for lawsuits, stemming principally from employees, filed against the Holding and Group companies.

The Holding is exposed to a significant operational risk due to the labor intensive and diversified business lines in wide geograhpy. In this regard, the effectiveness of the corporate risk management department and procedures along with the internal audit activities is indispensible. Risk management and internal audit depertments’ efficiency increase is expected for the upcoming periods. The Holding companies received the ISO

Bilkent Holding A.Ş. & Its Subsidiaries 18

Holding

(Year-end) (Year-end) (Year-end) (Year-end) (Year-end) (Year-end) (Year-end) (Year-end) As % of As % of As % of BİLKENT HOLDİNG A.Ş. 2015 2015 2015 2014 2014 2013 2013 2012 2015 2014 2013 2015 2014 2013 BALANCE SHEET - ASSET USD TRY TRY TRY TRY TRY TRY TRY Assets Assets Assets Growth Growth Growth (Converted) (Original) (Average) (Original) (Average) (Original) (Average) (Original) (Original) (Original) (Original) Rate Rate Rate I. CURRENT ASSETS 411,642,825 1,196,892,678 1,234,071,258 1,271,249,838 1,211,299,037 1,151,348,236 1,038,658,701 925,969,166 42.18 45.03 47.43 -5.85 10.41 24.34 A. Liquid Assets 112,197,329 326,224,954 272,520,800 218,816,645 203,949,446 189,082,246 235,168,064 281,253,882 11.50 7.75 7.79 49.09 15.73 -32.77 B. Marketable Securities 93,495,690 271,848,069 193,952,891 116,057,712 161,847,726 207,637,740 169,190,631 130,743,521 9.58 4.11 8.55 134.24 -44.11 58.81 1.Bond 0 0 0 0 0 0 0 0 n.a n.a n.a n.a n.a n.a 2.Share Certificates 0 0 0 0 0 0 0 0 n.a n.a n.a n.a n.a n.a 3.Other 93,495,690 271,848,069 193,952,891 116,057,712 161,847,726 207,637,740 169,190,631 130,743,521 9.58 4.11 8.55 134.24 -44.11 58.81 4.Provision for Decrease in Value of Marketable 0 0 0 0 0 0 0 0 n.a n.a n.a n.a n.a n.a Securities(-) C. Trade Receivables & Leasing 81,474,766 236,896,031 279,166,540 321,437,049 302,119,267 282,801,485 206,203,136 129,604,787 8.35 11.39 11.65 -26.30 13.66 118.20 1.Customers & Notes Receivables 81,474,766 236,896,031 279,166,540 321,437,049 302,119,267 282,801,485 206,203,136 129,604,787 8.35 11.39 11.65 -26.30 13.66 118.20 2.Other Receivables 0 0 0 0 0 0 0 0 n.a n.a n.a n.a n.a n.a 3.Doubtful Trade Receivables 9,092,766 26,438,127 23,933,666 21,429,204 21,458,230 21,487,255 16,349,076 11,210,896 0.93 0.76 0.89 23.37 -0.27 91.66 4.Provision for Doubtful Trade Receivables (-) -9,092,766 -26,438,127 -23,933,666 -21,429,204 -21,458,230 -21,487,255 -16,349,076 -11,210,896 -0.93 -0.76 -0.89 23.37 -0.27 91.66 5.Rediscount on Notes Receivables (-) 0 0 0 0 0 0 0 0 n.a n.a n.a n.a n.a n.a D. Due from Related Parties (Net) 12,693,611 36,907,943 49,990,294 63,072,644 45,823,249 28,573,854 27,796,976 27,020,098 1.30 2.23 1.18 -41.48 120.74 5.75 E. Other Receivables 21,063,699 61,244,812 34,342,455 7,440,098 7,793,356 8,146,614 8,656,578 9,166,541 2.16 0.26 0.34 723.17 -8.67 -11.13 1.Other Receivables 21,063,699 61,244,812 34,342,455 7,440,098 7,793,356 8,146,614 8,656,578 9,166,541 2.16 0.26 0.34 723.17 -8.67 -11.13 2.Other Doubtful Receivables 14,220,837 41,348,506 38,568,000 35,787,493 36,673,525 37,559,556 35,759,977 33,960,398 1.46 1.27 1.55 15.54 -4.72 10.60 3.Rediscounts on other Notes Receivable (-) 0 0 0 0 0 0 0 0 n.a n.a n.a n.a n.a n.a 4.Provision for Other Doubtful Receivables (-) -14,220,837 -41,348,506 -38,568,000 -35,787,493 -36,673,525 -37,559,556 -35,759,977 -33,960,398 -1.46 -1.27 -1.55 15.54 -4.72 10.60 F. Live Assets (net) 0 0 0 0 0 0 0 0 n.a n.a n.a n.a n.a n.a G. Inventories (Net) 42,542,849 123,697,587 208,142,422 292,587,256 254,950,462 217,313,667 187,991,066 158,668,464 4.36 10.36 8.95 -57.72 34.64 36.96 H. Contract Progress Income (net) 0 0 0 0 0 0 0 0 n.a n.a n.a n.a n.a n.a I. Deferred tax Assets 0 0 0 0 0 0 0 0 n.a n.a n.a n.a n.a n.a J. Other Current Assets 48,174,880 140,073,282 195,955,858 251,838,434 234,815,532 217,792,630 203,652,252 189,511,873 4.94 8.92 8.97 -44.38 15.63 14.92 1.Other Current Assets 48,174,880 140,073,282 195,955,858 251,838,434 234,815,532 217,792,630 203,652,252 189,511,873 4.94 8.92 8.97 -44.38 15.63 14.92 2.Provision for Other Current Assets (-) 0 0 0 0 0 0 0 0 n.a n.a n.a n.a n.a n.a II. NON-CURRENT ASSETS 564,175,061 1,640,395,406 1,596,212,822 1,552,030,238 1,414,032,240 1,276,034,242 1,236,058,212 1,196,082,181 57.82 54.97 52.57 5.69 21.63 6.68 A. Trade Receivables & Leasing 6,102,175 17,742,685 15,441,345 13,140,005 17,344,302 21,548,598 23,609,706 25,670,813 0.63 0.47 0.89 35.03 -39.02 -16.06 1. Customers & Notes Receivables & Leasing 6,102,175 17,742,685 15,441,345 13,140,005 17,344,302 21,548,598 23,609,706 25,670,813 0.63 0.47 0.89 35.03 -39.02 -16.06 2. Other Receivables 0 0 0 0 0 0 0 0 n.a n.a n.a n.a n.a n.a 3. Doubtful Trade Receivables 13,523,416 39,320,684 36,623,993 33,927,302 34,272,160 34,617,017 31,954,132 29,291,246 1.39 1.20 1.43 15.90 -1.99 18.18 4. Provision for Doubtful Trade Receivables (-) -13,523,416 -39,320,684 -36,623,993 -33,927,302 -34,272,160 -34,617,017 -31,954,132 -29,291,246 -1.39 -1.20 -1.43 15.90 -1.99 18.18 5. Rediscount on Notes Receivables (-) 0 0 0 0 0 0 0 0 n.a n.a n.a n.a n.a n.a B. Due from Related Parties (Net) 806,771 2,345,767 20,506,989 38,668,211 28,768,528 18,868,844 18,306,339 17,743,833 0.08 1.37 0.78 -93.93 104.93 6.34 C. Other Receivables 3,722,478 10,823,477 9,286,423 7,749,369 7,468,459 7,187,548 6,815,076 6,442,604 0.38 0.27 0.30 39.67 7.82 11.56 1.Other Receivables 3,722,478 10,823,477 9,286,423 7,749,369 7,468,459 7,187,548 6,815,076 6,442,604 0.38 0.27 0.30 39.67 7.82 11.56 2.Other Doubtful Receivables 0 0 0 0 0 0 0 0 n.a n.a n.a n.a n.a n.a 3.Rediscounts on other Notes Receivable (-) 0 0 0 0 0 0 0 0 n.a n.a n.a n.a n.a n.a 4.Provision for Other Doubtful Receivables (-) 0 0 0 0 0 0 0 0 n.a n.a n.a n.a n.a n.a D. Financial Fixed Assets (net) 115,836,363 336,805,809 299,067,213 261,328,617 242,242,247 223,155,876 206,989,302 190,822,728 11.87 9.26 9.19 28.88 17.11 16.94 1. Long Term Securities (net) 1,841,920 5,355,566 6,285,310 7,215,053 7,883,053 8,551,052 18,537,375 28,523,697 0.19 0.26 0.35 -25.77 -15.62 -70.02 2. Affiliates (NET) 113,994,443 331,450,243 292,781,904 254,113,564 234,359,194 214,604,824 188,451,928 162,299,031 11.68 9.00 8.84 30.43 18.41 32.23 3. Subsidiaries (NET) 0 0 0 0 0 0 0 0 n.a n.a n.a n.a n.a n.a 4.Other Financial Fixed Assets (NET) 0 0 0 0 0 0 0 0 n.a n.a n.a n.a n.a n.a E. Tangible Assets 115,533,903 335,926,375 337,003,358 338,080,340 346,788,613 355,496,886 320,612,339 285,727,792 11.84 11.97 14.65 -0.64 -4.90 24.42 F. Other Fixed Assets 322,173,371 936,751,293 914,907,495 893,063,696 771,420,093 649,776,490 659,725,451 669,674,411 33.02 31.63 26.77 4.89 37.44 -2.97 TOTAL ASSETS 975,817,886 2,837,288,084 2,830,284,080 2,823,280,076 2,625,331,277 2,427,382,478 2,274,716,913 2,122,051,347 100.00 100.00 100.00 0.50 16.31 14.39

Bilkent Holding A.Ş. & Its Subsidiaries 19

Holding

(Year-end) (Year-end) (Year-end) (Year-end) (Year-end) (Year-end) (Year-end) (Year-end) As % of As % of As % of BİLKENT HOLDİNG A.Ş. 2015 2015 2015 2014 2014 2013 2013 2012 2015 2014 2013 2015 2014 2013 BALANCE SHEET-LIABILITIES+EQUITY USD TRY TRY TRY TRY TRY TRY TRY Assets Assets Assets Growth Growth Growth 0 (Converted) (Original) (Average) (Original) (Average) (Original) (Average) (Original) (Original) (Original) (Original) Rate Rate Rate I. SHORT TERM LIABILITIES 150,176,481 436,653,136 553,194,139 669,735,142 592,698,744 515,662,345 471,151,423 426,640,500 15.39 23.72 21.24 -34.80 29.88 20.87 A. Financial Liabilities 30,797,184 89,545,892 77,815,595 66,085,297 92,756,890 119,428,483 100,344,087 81,259,691 3.16 2.34 4.92 35.50 -44.67 46.97 B. Trade Payables 50,124,056 145,740,705 180,583,849 215,426,992 224,484,781 233,542,569 193,687,612 153,832,655 5.14 7.63 9.62 -32.35 -7.76 51.82 C. Due to Related Parties 1,075,829 3,128,079 2,786,484 2,444,888 4,735,989 7,027,089 4,525,239 2,023,388 0.11 0.09 0.29 27.94 -65.21 247.29 D. Other Financial Liabilities 0 0 0 0 256,350 512,699 722,837 932,975 n.a n.a 0.02 n.a -100 -45.05 E. Advances Received 24,332,228 70,748,386 161,593,167 252,437,947 148,286,239 44,134,530 53,498,790 62,863,049 2.49 8.94 1.82 -71.97 471.97 -29.79 F. Contract Progress Ongoing Construction 0 0 0 0 0 0 0 0 n.a n.a n.a n.a n.a n.a Contracts (net) G. Deferred Tax Liabilities 1,199,806 3,488,557 2,867,095 2,245,632 1,122,816 0 0 0 0.12 0.08 n.a 55.35 n.a n.a H. Provisions for Liabilities 6,317,587 18,369,017 22,316,321 26,263,624 13,131,812 0 0 0 0.65 0.93 n.a -30.06 n.a n.a I Other Liabilities 36,329,791 105,632,500 105,231,631 104,830,762 107,923,869 111,016,975 118,372,859 125,728,742 3.72 3.71 4.57 0.76 -5.57 -11.70 II. LONG TERM LIABILITIES 207,796,218 604,188,283 488,142,045 372,095,806 430,624,991 489,154,175 427,695,832 366,237,488 21.29 13.18 20.15 62.37 -23.93 33.56 A. Financial Liabilities 32,320,250 93,974,359 100,853,390 107,732,420 117,218,377 126,704,334 122,062,056 117,419,778 3.31 3.82 5.22 -12.77 -14.97 7.91 B. Trade Payables 1,386,954 4,032,707 4,821,374 5,610,041 6,052,339 6,494,637 7,147,538 7,800,438 0.14 0.20 0.27 -28.12 -13.62 -16.74 C. Due to Related Parties 5,084,411 14,783,433 14,812,736 14,842,039 14,489,407 14,136,775 26,571,687 39,006,599 0.52 0.53 0.58 -0.39 4.99 -63.76 D. Other Financial Liabilities 0 0 0 0 0 0 0 0 n.a n.a n.a n.a n.a n.a E. Advances Received 104,427,109 303,632,263 189,216,166 74,800,069 135,494,721 196,189,372 121,024,075 45,858,777 10.70 2.65 8.08 305.93 -61.87 327.81 F. Contract Progress Ongoing Construction 0 0 0 0 0 0 0 0 n.a n.a n.a n.a n.a n.a Contracts (net) G. Deferred Tax Liabilities 31,303,986 91,019,471 92,516,419 94,013,366 85,185,394 76,357,421 76,426,893 76,496,364 3.21 3.33 3.15 -3.18 23.12 -0.18 H. Provisions for Liabilities 15,395,467 44,763,860 35,976,794 27,189,728 25,165,004 23,140,280 24,064,355 24,988,429 1.58 0.96 0.95 64.64 17.50 -7.40 I Other Liabilities (net) 17,878,040 51,982,190 49,945,167 47,908,143 47,019,750 46,131,356 50,399,230 54,667,103 1.83 1.70 1.90 8.50 3.85 -15.61 TOTAL LIABLITIES 357,972,699 1,040,841,419 1,041,336,184 1,041,830,948 1,023,323,734 1,004,816,520 898,847,254 792,877,988 36.68 36.90 41.40 -0.09 3.68 26.73 F- EQUITY 617,845,187 1,796,446,665 1,788,947,897 1,781,449,128 1,602,007,543 1,422,565,958 1,375,869,659 1,329,173,359 63.32 63.10 58.60 0.84 25.23 7.03 a) Prior year's equity 600,864,615 1,747,073,955 1,563,227,409 1,379,380,862 1,349,724,454 1,320,068,046 1,163,964,432 1,007,860,818 61.58 48.86 54.38 26.66 4.49 30.98 b) Equity (Added from internal & external 1,415,699 4,116,285 25,017,606 45,918,927 11,124,009 -23,670,910 -63,604,687 -103,538,463 0.15 1.63 -0.98 -91.04 -294 -77.14 resources at this year) c) Minority Interest 2,672,695 7,771,128 21,073,151 34,375,173 38,780,135 43,185,096 26,145,205 9,105,313 0.27 1.22 1.78 -77.39 -20.40 374.28 h) Profit & Loss 12,892,178 37,485,297 179,629,732 321,774,166 202,378,946 82,983,726 249,364,709 415,745,691 1.32 11.40 3.42 -88.35 287.76 -80.04 TOTAL LIABILITY 975,817,886 2,837,288,084 2,830,284,080 2,823,280,076 2,625,331,277 2,427,382,478 2,274,716,913 2,122,051,347 100.00 100.00 100.00 0.50 16.31 14.39 USD Rates 1=TRY 2.9076 2.3189 2.1343 1.7776

Bilkent Holding A.Ş. & Its Subsidiaries 20

Holding

BİLKENT HOLDİNG A.Ş. 2015 2014 2013 INCOME STATEMENT TRY I. Principal Activity Revenues 327,757,570 358,007,760 337,305,137 A. Sales Revenues (Net) 1,772,904,109 1,515,536,433 1,621,696,925 1.Domestic Sales 1,787,170,777 1,535,070,123 1,639,871,236 2.Export Sales 0 0 0 3.Sales Deductions (-) -14,266,668 -19,533,690 -18,174,311 B. Cost of Sales (-) -1,461,487,490 -1,176,819,579 -1,304,451,893 C. Service Revenues (net) 0 0 0 D. Other Revenues from Principal Activities 16,340,951 19,290,906 20,060,105 1.Interest 9,269,787 7,546,189 11,922,160 2.Divident 7,071,164 11,744,717 8,137,945 3.Rent 4.Other 0 0 0 GROS PROFIT & LOSS FROM PRINCIPAL ACTIVITIES 327,757,570 358,007,760 337,305,137 Activities Expenses (-) -214,207,018 -203,716,437 -196,536,292 NET PROFIT & LOSS FROM PRINCIPAL ACTIVITIES 113,550,552 154,291,323 140,768,845 Income & Profit from Other Activities 72,198,403 215,899,783 8,503,935 Expenses & Losses from Other Activities (-) -102,999,726 -23,900,966 -58,027,868 Financing Income 254,785 20,951,066 21,097,775 Financing Expenses (-) -34,718,713 -25,852,646 -21,053,299 OPERATING PROFIT & LOSS 48,285,301 341,388,560 91,289,388 Net Monetary Position Profit & Loss (+/-) 0 0 0 Discontinued Operations 0 0 0 PRETAX PROFIT & LOSS 48,285,301 341,388,560 91,289,388 Taxes (-/+) -10,800,004 -19,614,394 -8,305,662 NET PROFIT FOR THE PERIOD 37,485,297 321,774,166 82,983,726 Total Income 1,875,964,916 1,791,211,878 1,689,533,051 Total Expense -1,827,679,615 -1,449,823,318 -1,598,243,663 INCOMES OR EXPENSES FOR THE PERIOD 48,285,301 341,388,560 91,289,388

Bilkent Holding A.Ş. & Its Subsidiaries 21

Holding

BİLKENT HOLDİNG A.Ş. FY FY FY FINANCIAL RATIOS % 2015 2014 2013 I. PROFITABILITY 1. ROAE - Pre-tax Profit / Equity (avg.) 2.70 21.31 6.64 2. ROAA - Pre-tax Profit / Total Assets (avg.) 1.71 13.00 4.01 3. Total Income / Equity (avg.) 104.86 111.81 122.80 4. Total Income / Total Asset 66.28 68.23 74.27 5. Net Profit & Loss Principal Activities / Total Assets (avg.) 11.58 13.64 14.83 6. Financial Expenses / Inventories Ratio 16.68 10.14 11.20 7. Return on Long Term Sources 1.65 15.83 4.60 8. Gross Profit Margin = Gross Sales Profit / Net Sales Income 18.49 23.62 20.80 9. Operating Margin = Net Profit & Loss Principal Activities / Net Sales Income 6.40 10.18 8.68 10. Net Profit Margin = Net Profit / Net Sales Income 2.11 21.23 5.12 11. Cost of Sales / Net sales Income 82.43 77.65 80.44 12. Activities Expenses / Net Sales Income 12.08 13.44 12.12 13. Financing Expenses / Net Sales Income 1.96 1.71 1.30 14. EBIT / Net Sales Income 4.68 24.23 6.93 15. Interest Coverage Ratio 1 = Pretax Profit + Financing Expenses/Financing 239.08 1,420.52 533.61 16.Expenses Interest Coverage Ratio 2 = Net Profit + Financing Expenses /Financing Expenses 207.97 1,344.65 494.16 17. Financing Expenses / T. Assets (avg.) 1.23 0.98 0.93 18. Financial Liabilities / T. Assets 6.47 6.16 10.16 II. LIQUIDITY 1. (Liquid Assets + Marketable Securities) / T. Assets 21.08 11.86 16.34 2. (Liquid Assets +Marketable Securities) / T. Liabilities 57.46 32.14 39.48 3. Liquid Assets / Equity 33.29 18.80 27.89 4. Current Ratio 274.11 189.81 223.28 5. Acid Test Ratio 213.70 108.52 138.90 6. Cash Ratio 136.97 50.00 76.93 7. Inventories / Current Assets 10.33 23.02 18.87 8. Inventories / Total Assets 4.36 10.36 8.95 9. Inventories Dependency Ratio -130.50 114.45 54.73 10. Short Term Receivables / Total Current Assets 27.99 30.83 27.75 11. Short Term Receivables / Total Assets 11.81 13.88 13.16 III. CAPITAL and FUNDUNG 1. Equity / Total Assets 63.32 63.10 58.60 2. Equity / Liabilities 172.60 170.99 141.57 3. Net Working Capital/T. Resources 26.79 21.31 26.19 4. Equity Generation/Prior Year’s Equity 0.24 3.33 -1.79 5. Internal Equity Generation/Prior Year’s Equity 2.15 23.33 6.29 6. Tangible Assets/Total Assets 11.84 11.97 14.65 7. Financial Fixed Assets/(Equity +Long Term Liabilities) 14.03 12.13 11.67 8. Minority Interest/Equity 0.43 1.93 3.04 IV. EFFICIENCY 1. Net Profit Margin Growth -90.04 314.92 -85.43 2. Net Sales Growth 16.98 -6.55 37.01 3. Equity Growth 0.84 25.23 7.03 4. Asset Growth 0.50 16.31 14.39 5. Inventories Turnover 702.16 461.59 693.89 6. Days Inventories Utilization 51.98 79.07 52.60 7. Receivables Turnover 601.78 474.40 705.66 8. Days' Accounts Receivable 60.65 76.94 51.72 9. Efficiency Period 112.64 156.01 104.33 10. Payables Turnover 788.27 510.47 649.51 11. Days’ Payments in Accounts Payables 46.30 71.50 56.20 12. Cash Turnover Cycle 66.33 84.51 48.13 13. Current Assets Turnover 143.66 125.12 156.13 14. Net Working Capital Turnover 260.39 244.99 285.76 15. Tangible Assets Turnover 526.08 437.02 505.81 16. Fix Assets Turnover 111.07 107.18 131.20 17. Equity Turnover 99.10 94.60 117.87 18. Assets Turnover 62.64 57.73 71.29 V. ASSET QUALITY 1. Non-Performing Receivables / Total Receivables 24.69 20.67 22.66 2. Non-Performing Asset / Total Assets 28.07 31.59 32.79 3. Financial Fixed Assets / Non-Current Assets 20.53 16.84 17.49 4. Total Foreign Currencies Position/Assets -4.49 4.00 -0.23 5. Total Foreign Currencies Position/Equity -7.09 6.34 -0.40 VI. INDEBTEDNESS 1. Debt Ratio 36.68 36.90 41.40 2. Short Term Liabilities/Total Assets 15.39 23.72 21.24 3. Long Term Liabilities/Total Assets 21.29 13.18 20.15 4. Long Term Liabilities/(Equity+ Long Term Liabilities) 25.17 17.28 25.59 5. Fixed Assets/Liabilities 157.60 148.97 126.99 6. Fixed Assets/(Long Term Liabilities +Equity) 68.33 72.07 66.75 7. Short Term Liabilities/ T. Liabilities 41.95 64.28 51.32 8. Short Term Financial Liabilities/Short Term Liabilities 20.51 9.87 23.26 9. Tangible Assets/Long Term Liabilities 55.60 90.86 72.68 10. Financial Liabilities/Total Liabilities 17.63 16.68 24.50 11. Off Balance Liabilities/(Assets +Off Balance Liabilities) 28.24 15.31 16.84 12. Off Balance Liabilities/(Equity +Off Balance Liabilities) 38.33 22.28 25.68

Bilkent Holding A.Ş. & Its Subsidiaries 22

Holding

Share% Type of Consolidated Subsidiaries and Affiliates Activity Partnership 2015 2014 2013 Bilkent Holding A.Ş. 1.Subsidiary Meteksan Savunma San. A.Ş. Defense Systems software 36.1 47.0 47 - Meteksan Sualtı Akustik Sistem Teknolojieri A.Ş. ** Underwater acoustics system and vehicle design - 48.0 48

2.Subsidiary Bilan Bilkent Ankara Tepe Otel İşletmeciliği A.Ş. Hotel Administration 100 100 100 (Former Tepe Finansal Kiralama A.Ş.) 3.Subsidiary Bilenerji Bilkent Enerji Üretim San. ve Tic. A.Ş. Production of electricity from natural gas 80.5 78.0 78 Hotel Administration, Catering, 4.Subsidiary 100 100 100 Bilintur Bilkent Turizm İnşaat Yatırım ve Tic. A.Ş. Management of museums and ruins 5.Subsidiary Bilsigorta- Bilkent Sigorta Aracılık Hizmetleri A.Ş. Insurance services 100 100 100 6.Subsidiary Dilek İnşaat ve Tic. A.Ş. Construction 100 100 100 7.Subsidiary Meteksan Matbaacılık ve Teknik San. Tic. A.Ş. Printing Press 99.9 99.9 99.9 8.Subsidiary Sports International Bilkent Fitness ve Spor Merkezleri A.Ş. Fitness and health center 98.8 93.8 93.8 9.Subsidiary Tepe Emlak Yatırım İnşaat Tic. A.Ş. Property appraisal and management of real estate 100 100 100 10.Subsidiary Tepe Home Mobilya ve Dekorasyon Ürünleri Tic. A.Ş. Sale of Furniture and home decoration products 100 100 100 11.Subsidiary Tepe İnşaat San. A.Ş. Construction 100 100 100 12.Subsidiary Tepe Güvenlik A.Ş. Sale and services of security systems 100 100 100

13.Subsidiary Tepe Prefabrik İnş. San. Tic. A.Ş. Production of prefabricated containers 100 100 100 14.Subsidiary Bilbak Bilkent İnşaat Ticaret ve Bakım Hizmetleri A.Ş. Construction 100 100 100 15.Subsidiary Bildes Bilkent Destek Hizmetleri ve Ticaret A.Ş. Personnel services 100 100 100 16.Subsidiary Tepe Savunma ve Güvenlik Sistemleri San. A.Ş. Security systems and services 100 100 100 17.Subsidiary Tepe Servis ve Yönetim A.Ş. Property management, support and security services 100 100 100 18.Subsidiary Tepe Betopan Yapı Malzemeleri San. Ve Tic.A.Ş Production of construction materials 100 100 100 - Alipsan Kağıt Makinaları San. ve Tic. A.Ş. * Printing Press - 99.9 99.9 19.Subsidiary Seçkin Gıda San. Ve Tic. Ltd.Şti. Catering 100 100 100 20.Subsidiary Bilintur Kültür Turizm Yatırım Gıda Besicilik Makin eve Tic. A.Ş. Catering 100 100 100 21.Subsidiary BCC Toplu Yemek Hizmetleri A.Ş. Catering 100 100 100 22.Subsidiary Tepe Türkmen İnşaat ve Tic. A.Ş. Construction 55 55 55 23.Subsidiary Ankara Teknoloji Geliştirme Bölgesi Kurucu ve İşletici A.Ş. Management of technology development area 16.0 16.0 16 24.Subsidiary Tepened Investments Investment activities 100 100 - 1.Jointly Controlled Tepe-Mesa Partnership Construction 50 50 - 2.Jointly Controlled Hyper Foreign Trade Holland N.V. (Proportionally Consolidated) Foreign Trade 50 50 50 3.Jointly Controlled Tepe – Tesan Adi Ortaklığı (Proportionally Consolidated) Construction 60 60 60 TAV Havalimanları Holding & TAV Yatırım Holding (Accounted by equity method ) 1.Joint Venture TAV Havalimanları Holding A.Ş. Airport Administration 8.06 8.06 8.06 2.Joint Venture TAV Yatırım Holding A.Ş. Construction 24.2 24.2 24.2

İDO İstanbul Deniz Otobüsleri San.ve Tic. A.Ş. (Accounted by equity method) 3.Joint Venture İDO İstanbul Deniz Otobüsleri San.ve Tic. A.Ş. Sea Transportation 30 30 30 Bitu Turizm Inşaat Yatırım A.Ş.

(Accounted by equity method) 4.Joint Venture Bitu Turizm ve Inşaat Yatırım A.Ş. Tourism 51 51 -

*Merged with Meteksan Savunma Sanayi A.Ş.in 2015 **Merged with Meteksan Matbaacılık ve Teknik Sanayi Ticaret A.Ş. in 2015

Bilkent Holding A.Ş. & Its Subsidiaries 23

Holding

Type of Other Subsidiaries and Affiliate Companies Partnership Bilkent Holding A.Ş. Companies 1 Affiliate • Travelex Turkey 2 Subsidiary • Tepe İş Sağlığı ve Güvenliği A.Ş. TAV Havalimanları Holding Companies 1 Affiliate • ATÜ Latvia 2 Affiliate • ATÜ Turizm İşletmeciliği A.Ş. 3 Affiliate • ATÜ Georgia Operation Services LLC 4 Affiliate • ATÜ Tunisia 5 Affiliate • ATÜ Macedonia 6 Affiliate • BTA Georgia LLC 7 Affiliate • BTA Havalimanları Yiyecek ve İçecek Hizmetleri A.Ş. 8 Affiliate • BTA Makedonia Dooel Petrovac 9 Affiliate • BTA Tunisie Sarl 10 Affiliate • BTA Unlu Mamuller A.Ş. 11 Affiliate • Batumi Airport LLC 12 Affiliate • TAV Uluslararası Yatırım A.Ş. 13 Affiliate • TAV Latvia 14 Affiliate • Havaş Havalimanları Yer Hizmetleri A.Ş. 15 Affiliate • Nort Hub Services SIA 16 Affiliate • TAV Batumi Operations LLC 17 Affiliate • TAV Bilişim A.Ş. 18 Affiliate • TAV Esenboğa Yatırım Yapım ve İşletme A.Ş. 19 Affiliate • TAV Gazipaşa Yatirim, Yapım ve İşletme A.Ş. 20 Affiliate • TAV Georgia Operations Llc 21 Affiliate • TAV Gözen Havacılık İşletme ve Ticaret A.Ş. 22 Affiliate • TAV İstanbul Terminal İşletmeciliği A.Ş. 23 Affiliate • TAV İşletme Hizmetleri A.Ş. 24 Affiliate • TAV Havacılık A.Ş. 25 Affiliate • TAV Macedonia Dooel Skopje 26 Affiliate • TAV Özel Güvenlik Hizmetleri A.Ş. 27 Affiliate • TAV Tunisie SARL 28 Affiliate • TAV Tunisie Operation Services SARL 29 Affiliate • TAV Tunisie Operation Services Plus SARL 30 Affiliate • TAV Urban Georgia LLC 31 Affiliate • TGS Yer Hizmetleri A.Ş. 32 Affiliate • TAV Ege 33 Affiliate • HAVAŞ Europe Helsinki 34 Affiliate • HAVAŞ Europe Stockholm 35 Affiliate • HAVAŞ Germany 36 Affiliate • TAV İşletme Macedonia 37 Affiliate • BTA Denizyolları 38 Affiliate • Tibah Development 39 Affiliate • Tibah Operation 40 Affiliate • Aviator Netherlands B.V 41 Affiliate • TAV Aviation Minds Eğitim ve Danışmanlık Hizmetleri A.Ş. 42 Affiliate • BTU Lokum Şeker Gıda Sanayi ve Tic. A.Ş. 43 Affiliate • BTU Gıda Satış ve Paz. A.Ş. 44 Affiliate • Saudi Havaş Ground Handling Services Limited 45 Affiliate • TAV Milas BodrumTerminal İşletmeciliği A.Ş. 46 Affiliate • TAV Germany Operation Services GmbH 47 Affiliate • BTA Tedarik Dağıtım ve Ticaret A.Ş. (BTA Tedarik) 48 Affiliate • BTA Yiyecek İçecek İşletme Danışmanlık Ticaret A.Ş. 49 Affiliate • Tunisia Duty Free S.A. (ATÜ Tunus Duty Free) 50 Affiliate • Saudi ATÜ Trading Limited Co. (Saudi ATÜ) 51 Affiliate • ATÜ Mağazacılık İşletmeleri A.Ş. 52 Affiliate • ATÜ Uluslararası Mağaza yiyecek ve İçecek İşletmeleri A.Ş. 53 Affiliate • Saudi BTA Airports Food and Beverages Serv.Ltd (BTA Medine) 54 Affiliate • ATU Americas LLC (ATU Amerika) 55 Affiliate • TAV Latvia Operation Services GmbH

TAV Yatırım Holding Companies 1 Affiliate • TAV Havacılık A.Ş. 2 Affiliate • TAV Tepe Akfen Yatırım İnşaat ve İşletme A.Ş. 3 Affiliate • TAV Park Otopark Yatırım ve İşletmeleri A.Ş. 4 Affiliate • Riva İnşaat Turizm Ticaret İşletme Pazarlama A.Ş.

Bilkent Holding A.Ş. & Its Subsidiaries 24

Holding

TAV AIRPORTS HOLDING COMPANIES (FYE2015)

Established % of % of Subsidiaries / Joint Ventures Core Business and place of share voting activity capital rights

TAV İstanbul Terminal İşletmeciliği A.Ş. (“TAV İstanbul”) Istanbul Airport Terminal Services Turkey 100.00 100.00

TAV Esenboğa Yatırım Yapım ve İşletme A.Ş. (“TAV Esenboğa”) Ankara Airport Terminal Services Turkey 100.00 100.00

TAV Ege Terminal Yatırım ve İşletme A.Ş. (“TAV Ege”) Izmir Airport Terminal Services Turkey 100.00 100.00

TAV Tunisie SA (“TAV Tunisia”) Airport Operator Tunisia 67.00 67.00 TAV Batumi Operations LLC (“TAV Batumi”) Airport Management Services Georgia 76.00 100.00

TAV Urban Georgia LLC (“TAV Tbilisi”) Airport Operator Georgia 80.00 80.00

Batumi Airport LLC Airport Operator Georgia - 100.00

TAV Macedonia Dooel Petrovec (“TAV Macedonia”) Airport Operator Macedonia 100.00 100.00

TAV Gazipaşa Yapım, Yatırım ve İşletme A.Ş. (“TAV Gazipaşa”) Airport Operator Turkey 100.00 100.00 Havaş Havaalanları Yer Hizmetleri A.Ş. (“HAVAŞ”) Ground Services Turkey 100.00 100.00

SIA TAV Latvia Commercial Area Operator Latvia 100.00 100.00

BTA Havalimanları Yiyecek ve İçecek Hizmetleri A.Ş. (“BTA”) Food & Beverage Services Turkey 66.66 66.66 BTA Georgia LLC (“BTA Georgia”) Food & Beverage Services Georgia 66.66 66.66

BTA Tunisia SARL (“BTA Tunisia”) Food & Beverage Services Tunisia 66.66 66.66

BTA Macedonia Dooel Petrovec (BTA Makedonya) Food & Beverage Services Macedonia 66.66 66.66 BTA Unlu Mamülleri Pasta Üretim Turizm Gıda Yiyecek Food & Beverage Services Turkey 66.66 66.66 İçecek Hizmetleri San. ve Tic. A.Ş. (“Cakes & Bakes”) Maintenance, Operations Turkey 100.00 100.00 TAV İşletme Hizmetleri A.Ş. (“TAV İşletme”) and Special Salon Services TAV Georgia Operation Services LLC (“TAV İşletme Georgia”) Lounge Service Georgia 99.99 99.99

TAV Tunisie Operation Services SARL (“TAV İşletme Tunisia”) Lounge Service Tunisia 99.99 99.99

TAV Tunisia Operation Services Plus SARL (“TAV İşletme Tunisia”) Lounge Service Tunisia 99.99 99.99

TAV Bilişim Hizmetleri A.Ş. (“TAV Bilişim”) Software and System Services Turkey 100.00 100.00

TAV Özel Güvenlik Hizmetleri A.Ş. (“TAV Güvenlik”) Security Services Turkey 100.00 100.00

ATÜ Turizm İşletmeciliği A.Ş. Duty Free Services Turkey 49.98 50.00

ATÜ Georgia Operation Services LLC (“ATÜ Georgia”) Duty Free Services Georgia 49.98 50.00

TAV Macedonia Operation Services Dooel (“TAV İşletme Macedonia”) Lounge Services Macedonia 99.99 99.99 North Hub services Finland OY (“HAVAŞ Europe Helsinki”) Ground Services Finland 66.67 66.67 North Hub services Stockholm Ab (“HAVAŞ Europe Stockholm”) Ground Services Sweden 66.67 66.67

HAVAŞ Germany Gmbh (“HAVAŞ Germany”) Ground Services Germany 66.67 66.67

BTA Deniz Yolları ve Limanları Yiyecek ve İçecek Hizmetleri Tic.A.Ş. Food and Beverage Services Turkey 33.33 50.00 Tibah Airports Development Company Limited (“Tibah Development”) Airport Operator Saudi Arabia 33.33 33.33 Tibah Airports Operation Limited (“Tibah Operation”) Airport Operator Saudi Arabia 51.00 33.33

ATÜ Tunisia SARL (“ATÜ Tunisia”) Duty Free Services Tunisia 49.98 50.00 ATÜ Macedonia Dooel Petrovec Duty Free Services Macedonia 49.98 50.00

AS Riga Airport Commercial Development Duty Free Services Latvia 49.98 50.00

TAV Gözen Havacılık İşletme ve Ticaret A.Ş. (“TAV Gözen”) Private Hangar Management Turkey 32.40 32.40 TAV Uluslararası Yatırım A.Ş. (TAV Uluslararası Yatırım) Airport Operator Turkey 100.00 100.00

TGS Yer Hizmetleri A.Ş. (“TGS”) Ground Services Turkey 50.00 50.00 North Hub services SIA (“HAVAŞ Europe”) Ground Services Latvia 100.00 100.00

TAV Akademi Eğitim ve Danışmanlık Hizmetleri A.Ş. Education Services Turkey 100.00 100.00 Havaalanları Yocu Taşımacılığı A.Ş. (HYT İzmir) Bus Services Turkey 100.00 100.00 Havaalanları Taşımacılık ve Ticaret A.Ş. (HYT Samsun) Bus Services Turkey 100.00 100.00

Havaalanları Araç Kiralama ve Yolcu Taşımacılığı A.Ş. (HYT Muğla) Bus Services Turkey 100.00 100.00 Saudi Havaş Ground Handling Services Limited Ground Services Saudi Arabia 66.66 66.66

Bilkent Holding A.Ş. & Its Subsidiaries 25

Holding

UTB Lokum Şeker Gıda Sanayi ve Tic. A.Ş. Food and Beverage Services Turkey 33.99 51.00

UTB Gıda Satış ve Paz. A.Ş. Food and Beverage Services Turkey 26.66 40.00 Aviator Netherlands B.V Holding Nederland 100.00 100.00

TAV Aviation Minds Eğitim ve Danışmanlık Hizmetleri A.Ş. Education Services Turkey 51.00 51.00 TAV Milas Bodrum Terminal İşletmeciliği A.Ş. Bodrum Airport Terminal Services Turkey 100.00 100.00

TAV Germany Operation Services GmbH (TAV İşletme Germany) Lounge Service Germany 100.00 100.00 BTA Tedarik Dağıtım ve Ticaret A.Ş. (BTA Tedarik) Food and Beverage Services Turkey 66.66 66.66

BTA Yiyecek İçecek İşletme Danışmanlık Ticaret A.Ş. Food and Beverage Services Turkey 66.66 66.66 Tunisia Duty Free S.A. (ATÜ Tunus Duty Free) Duty Free Services Tunisia 14.98 39.98 Saudi ATÜ Trading Limited Co. (Saudi ATÜ) Duty Free Services Saudi Arabia 49.99 50.00

ATÜ Mağazacılık İşletmeleri A.Ş. Duty Free Services Turkey 50.00 50.00

ATÜ Uluslararası Mağaza yiyecek ve İçecek İşletmeleri A.Ş. Duty Free Services Turkey 51.15 51.17 Saudi BTA Airports Food and Beverages Serv.Ltd (BTA Medine) Food and Beverage Services Saudi Arabia 55.55 66.00 ATU Americas LLC (ATU Amerika) Duty Free Services USA 37.49 37.49

TAV Latvia Operation Services GmbH Lounge Service Latvia 100.00 100.00 TAV Havacılık A.Ş. Airline Taxi Services Turkey 100.00 100.00

Bilkent Holding A.Ş. & Its Subsidiaries 26

Holding

Annex-1

The investments are consolidated using the equity Ownership Share % method 2015 2014 2013 TAV Havalimanları Holding A.Ş. 8.06 8.06 8.06 TAV Yatırım Holding A.Ş. 24.22 24.22 24.22 İDO İstanbul Deniz Otobüsleri Sanayi Ticaret A.Ş. 30.00 30.00 30.00 Bitu Turizmve İnşaat Yatırım A.Ş. 51.00 - -

P/L for the period TRY Assets TRY (000.000) Sources TRY (000.000) Equity TRY (000.000) The investments are consolidated using the (000.000) equity method 2015 2014 2013 2015 2014 2013 2015 2014 2013 2015 2014 2013 TAV Havalimanları Holding A.Ş. 10,506 7,466 6,949 7,922 5,362 5,110 2,585 2,103 1,839 605 621 335 TAV Yatırım Holding A.Ş. 3,033 2,318 2,145 2,682 2,075 1,965 351 244 180 39 51 54 İDO İstanbul Deniz Otobüsleri Sanayi Ticaret A.Ş. 1,785 1,635 1,600 1,659 1,547 1,524 126 88 76 -234 -66 -235 Bitu Turizm ve İnşaat Yatırım A.Ş. 26 24 2 -2 Total 15,350 11,419 10,694 12,287 8,984 8,599 3,064 2,435 2,095 408 606 154

Parent's shares The investments are consolidated using P/L for the period TRY Assets TRY (000.000) Sources TRY (000.000) Equity TRY (000.000) the equity method (000.000) 2015 2014 2013 2015 2014 2013 2015 2014 2013 2015 2014 2013 TAV Havalimanları Holding A.Ş. 847 602 560 638 432 412 208 170 148 49 50 27 TAV Yatırım Holding A.Ş. 735 562 520 650 502 476 85 59 44 9 12 13 İDO İstanbul Deniz Otobüsleri Sanayi 536 491 480 498 464 457 38 26 23 -71 -20 -70 Ticaret A.Ş. Bitu Turizmve İnşaat Yatırım A.Ş. 13 0 0 12 0 0 1 0 0 -2 0 0 Total 2,131 1,655 1,560 1,798 1,398 1,345 332 255 215 -15 42 -30

Assets TRY (000.000) (**) Sources TRY (000.000) (**) Equity TRY (000.000) (**)

2015 2014 2013 2015 2014 2013 2015 2014 2013 A * 2,723 2,653 2,317 1,041 1,042 1,005 1,682 1,611 1,312 B 2,131 1,655 1,560 1,798 1,398 1,345 332 255 215 B/A (%) 78.26% 62.38% 67.33% 172.72% 134.17% 133.83% 19.74% 15.83% 16.39% A: Parent Company B: The amount of main partners in The Companies consolidated by the equity method (*) Audited figures (**): Excluding elimination processes

Bilkent Holding A.Ş. & Its Subsidiaries 27

Holding

P/L for the period (Before Tax) TRY Sales TRY/(000.000) The investments are consolidated using the equity method (000.000) 2015 2014 2013 2015 2014 2013

TAV Havalimanları Holding A.Ş. 3,026 2,648 2,595 846 773 475

TAV Yatırım Holding A.Ş. 2,673 2,161 1,620 31 59 60

İDO İstanbul Deniz Otobüsleri Sanayi Ticaret A.Ş. 611 557 507 -233 -65 -234

Bitu Turizm ve İnşaat Yatırım A.Ş. 2 -4

Total 6,312 5,366 4,722 640 767 301

Parent's Share The investments are consolidated using the equity P/L for the period (before Tax) TRY Sales TRY/(000.000) method (000.000) 2015 2014 2013 2015 2014 2013

TAV Havalimanları Holding A.Ş. 244 213 209 68 62 38

TAV Yatırım Holding A.Ş. 648 523 392 8 14 15 İDO İstanbul Deniz Otobüsleri Sanayi Ticaret A.Ş. 183 167 152 -70 -20 -70

Bitu Turizm ve İnşaat Yatırım A.Ş. 1 -2

Total 1,076 903 753 4 56 -17

The investments are consolidated using the equity ROAA ROAE method 2015 2014 2013 2015 2014 2013

TAV Havalimanları Holding A.Ş. 9.41% 10.03% 7.97% 36.08% 36.67% 30.63%

TAV Yatırım Holding A.Ş. 1.17% 2.63% 3.44% 10.51% 27.73% 41.43%

İDO İstanbul Deniz Otobüsleri Sanayi Ticaret A.Ş. -13.57% -4.04% -15.18% -217.03% -79.91% -259.81% Bitu Turizm ve İnşaat Yatırım A.Ş. -15.64% - - -204.55% - -

2015-The movement table of investments are consolidated using the equity method (TRY/000.000)

P/L for the Other The new 2014 Dividend 2015 2015 Changes investments TAV Havalimanları Holding A.Ş. 169 49 -35 25 208 TAV Yatırım Holding A.Ş. 58 9 17 - 85 İDO İstanbul Deniz Otobüsleri Sanayi Ticaret A.Ş. 26 -71 83 - 38 Bitu Turizm ve İnşaat Yatırım A.Ş. - -2 3 - 1 Total 254 -15 68 25 332

Bilkent Holding A.Ş. & Its Subsidiaries 28

Holding

COMPERATIVE FINANCIAL FIGURES

BİLKENT HOLDİNG ALARKO HOLDİNG AKFEN HOLDİNG TEKFEN HOLDİNG İTTİFAK HOLDİNG

(000 TRY) 2015 2014 2013 2015 2014 2013 2015 2014 2013 2015 2014 2013 2015 2014 2013

ROAE (%)* 2.10% 20.09% N/A -9.83% 2.63% N/A 2.20% -0.69% N/A 9.09% 2.85% N/A 14.63% 2.71% N/A

ROAA (%)* 1.32% 12.26% N/A -5.62% 1.40% N/A 0.93% -0.33% N/A 3.51% 1.16% N/A 4.76% 0.93% N/A

Current Assets 1,196,893 1,271,250 1,151,348 942,852 1,035,453 1,280,640 1,268,047 564,851 423,947 3,713,282 3,255,170 3,291,454 636,054 541,647 489,964

Non-Current Assets 1,640,395 1,552,030 1,276,034 1,231,943 1,240,399 1,325,336 2,902,219 3,342,575 2,968,657 1,912,773 1,700,312 1,405,966 672,018 573,031 511,840

Total Assets 2,837,288 2,823,280 2,427,382 2,174,795 2,275,851 2,605,976 4,170,266 3,907,426 3,392,604 5,626,055 4,955,482 4,697,420 1,308,072 1,114,679 1,001,804

Short Term Liab 436,653 669,735 515,662 302,100 413,417 828,419 1,087,750 720,603 493,177 2,889,548 2,277,766 2,326,434 570,009 544,292 443,826

Long Term Liab 604,188 372,096 489,154 637,892 551,562 478,081 1,346,703 1,515,117 1,136,555 651,372 681,652 448,789 308,181 211,515 187,089

Total Liabilities 1,040,841 1,041,831 1,004,817 939,992 964,979 1,306,500 2,434,453 2,235,720 1,629,732 3,540,920 2,959,418 2,775,223 878,190 755,807 630,915

Total Equity 1,796,447 1,781,449 1,422,566 1,234,803 1,310,873 1,299,476 1,735,813 1,671,706 1,762,872 2,085,135 1,996,064 1,922,197 429,881 358,872 370,889

Total Revenue 1,772,904 1,515,536 1,621,697 505,447 964,051 1,261,229 197,060 119,252 111,446 3,888,172 4,474,755 3,846,036 972,694 967,756 993,360

Net Profit 37,485 321,774 82,984 -125,134 34,282 184,246 37,465 -11,863 -73,173 185,466 55,909 -64,261 57,696 9,890 -2,245

Debt Ratio 36.68% 36.90% 41.40% 43.22% 42.40% 50.13% 58.38% 57.22% 48.04% 62.94% 59.72% 59.08% 67.14% 67.80% 62.98%

Equity to Assets 63.32% 63.10% 58.60% 56.78% 57.60% 49.87% 41.62% 42.78% 51.96% 37.06% 40.28% 40.92% 32.86% 32.20% 37.02%

*ROAA: Net Profit / Total Assets (Average) *ROAE: Net Profit / Total Equity (Average)

Bilkent Holding A.Ş. & Its Subsidiaries 29

Holding

The Previous Rating Results Issued by JCR Eurasia

October 18, 2011 October 15, 2012 November 07, 2013 October 30, 2014 December 10, 2015 Short- Long-Term Short-Term Long-Term Long-Term Short-Term Long-Term Short-Term

Term

Foreign currency BB B BB B BBB- A-3 BBB- A-3 BBB- A-3

Local currency BB B BB B BBB- A-3 BBB- A-3 BBB- A-3

International Outlook Stable Stable Stable Stable Stable Stable Stable Stable Stable Stable

Local Rating A- (Trk) A-1(Trk) A- (Trk) A-1(Trk) A (Trk) A-1(Trk) A (Trk) A-1(Trk) A+ (Trk) A-1(Trk)

Outlook Stable Stable Positive Stable Stable Stable Positive Stable Stable Stable National

Sponsor Support 4 - 4 4 - 4 4

Stand-alone AB - AB AB - AB AB

Foreign currency BB - BB- - BBB- - BBB- - BBB-

Local currency BB - BB- - BBB- - BBB- - BBB-

FC Stable - Stable - Stable - Stable - Stable

Sovereign* Outlook LC Stable - Positive - Stable - Stable - Stable (*):Affirmed by JCR on June 28, (*):Affirmed by JCR on May 23, (*):Affirmed by JCR on July 11, (*):Affirmed by JCR on August 28, (*):Assigned by JCR on February 21,2011 2012 2013 2014 2015

Senior Analyst Şevket GÜLEÇ Şevket GÜLEÇ Şevket GÜLEÇ Şevket GÜLEÇ Şevket GÜLEÇ

Bilkent Holding A.Ş. & Its Subsidiaries 30