Dear Shareholders,

The financial crisis that started in the USA in 2008 spread to the world in 2009 and turned into an economic crisis. Unemployment spread worldwide reaching very high levels despite all precautions taken on a global level. The incentive measures and recovery packages applied in developed economies in particular resulted in large scale budget deficits and public debts. However, the effect of the crisis on developing countries was less and recovery in these countries was faster.

Although slowly, world economy started to recover in 2010 and economic growth was approximately 5 %. Developing countries were the growth engines in world economy in 2010 with a growth ratio of 7,1 % while the growth ratio in developed countries was only around 3 %. Unemployment in developed countries maintained its high level in 2010 with a rate of 9 % in the USA and an average of around 8,5 % in the EU countries. It seems that developed countries will be struggling with unemployment, budget deficits and public debts for quite some more time.

Although the Turkish economy shrank by 4,7 % in 2009, it succeeded a growth of approximately 8 % with the rapid growth in 2010. The rapid increase in private consumption and investments were the driving powers of this growth. With the impact of the serious increase in demand, imports attained US$ 177,2 billion and exports US$ 120,9 billion. As a result, the foreign trade deficit reached US$ 56,3 billion while the current accounts deficit was at the level of US$ 48,5 billion and hence 6,4 % of the GDP. Direct foreign investments materialized at US$ 7,1 billion, a level close to that of 2009. The increasing rate of unemployment as a result of the economic shrinkage in 2009 decreased to 11,9 % as a result of the serious growth of 2010. The TL 39,6 billion budget deficit was far below the level expected and the ratio of the budget deficit to the GDP fell to 3,6 %. The budget deficit was at a very low level despite the rapid growth. Inflation at this period reflected an increase of 6,4 %.

Growth on a global level is estimated to slow down and materialize around the level of 4,2 % in 2011. At this same period, the growth in Turkish economy is estimated to be around 5 %.

The Turkish construction sector was seriously affected by the global economic crisis just as other countries in the world and real estate stocks increased considerably due to the decrease in housing demand. Surplus supply continued in 2010 and the recovery in demand could not deplete stocks. Housing sales in Turkey in general decreased by 32,8 % in 2010. The said conditions forced construction companies to be more reserved in starting new projects.

2011 will be a year in which existing stocks will be sold and new projects will come into effect. Our company is maintaining its efforts towards developing new projects and these will be started when the economic conjuncture is most appropriate.
With best regards to your esteemed committee.

Board of Directors

Muallim Naci Cad. No : 69 34347 Ortaköy-İISTANBUL-TURKEY
Phıne: (212) 227 52 00    Fax : (212) 261 84 31,   227 04 27