Annual Report, 2001
Transcription
Annual Report, 2001
OYAK ANNUAL REPORT 2001 1 OYAK HIGHLIGHTS 2001 2000 (BILLION TL) (BILLION TL) CHANGE (%) ACTUARIAL PROFIT TOTAL LEGAL BENEFITS PAID TOTAL SOCIAL BENEFITS PAID 594,382 55,622 53,374 217,385 42,567 46,887 173.4 30.7 13.8 RATE OF RETURN (%) NUMBER OF MEMBERS 94.9 192,937 55.4 178,727 71.3 8.0 635,999 3,453,216 18,745,643 1,267,921 305,561 5,154,101 326,661 3,020,601 9,233,815 752,476 247,230 1,635,943 94.7 14.3 103.0 68.5 23.6 215.1 16,586 12,572 31.9 79 206.3 2001 (THOUSAND USD) 475,219 44,471 42,674 A - OYAK GROUP COMPANY HIGHLIGHTS PRE-TAX PROFIT TOTAL GROSS SALES (1) TOTAL TRANSACTION VOLUME (2) TOTAL SHAREHOLDERS’ EQUITY TOTAL TAXES PAID TOTAL ASSETS TOTAL NUMBER OF EMPLOYEES 508,493 2,760,909 14,987,480 880,766 244,302 3,580,313 B - OYAK FINANCIAL INVESTMENT HIGHLIGHTS RETURN ON FINANCIAL INVESTMENTS 242 193 (1) The total of gross sales revenues for production and sales companies. (2) Total transaction volume of Oyak Bank, Oyak Menkul De¤erler and Halk Leasing. CPI INCREASE (%) USD/TL (AVERAGE) USD/TL (YEAR-END) 2001 2000 68.5 1,250,754 1,268,115 39.0 631,701 671,765 OYAK’S COMMON VALUES The common values that direct our behavior, decisions and business goals: Integrity • Transparency •Innovation • Excellence Mutual Respect • Accountability • Justice Competitiveness • Member and Employee Satisfaction OYAK ANNUAL REPORT 2001 2 CHAIRMAN’S MESSAGE Y. Selçuk Saka (Ret.) Lieutenant General Chairman Since 1961, OYAK has created added value at an increasing rate for its members while also making important contributions to Turkey’s national economy. OYAK: A forty-year-old success story Esteemed OYAK members, OYAK employees, and all our friends, I take great pleasure and pride in presenting this report of our 40th year of operation. OYAK, the Turkish Armed Forces Pension Fund, regards integrity and transparency as the foremost of its shared values. Since 1961, the Fund has created added value at an increasing rate for its members while also making important contributions to Turkey’s national economy. All of our investments, which we structure and manage taking a multi-sectoral group approach, posted successful results in 2001. The overall picture of these results is extraordinarily favorable from the standpoints of production, sales, exports, taxes, and employment. A thoroughgoing reorganization of our services wing is not only making it possible for us to provide steadily improving service but has also quickly led to an increase in our members’ satisfaction. Rising performance even under extraordinary conditions 2001 will be remembered as a year of extraordinary economic conditions. Turkey suffered serious losses in the course of the economic downturn of 2000-2001: its GNP shrank 9.4% in the latter year, its banking sector sustained the most radical changes experienced in nearly a century, there was an exceptional increase in unemployment among white-collar workers, and capacity utilization rates were down by huge margins in nearly every sector. OYAK ANNUAL REPORT 2001 3 CHAIRMAN’S MESSAGE Shocked by the terrorist attacks against the United States on September 11th, the world staggered under the resulting upheavals in its political and military balances. The terrorist acts and their ensuing developments deeply affected the global economy during the last quarter of 2001. It was in such a context that OYAK completed its 40th year of operation posting an actuarial profit of TL 594 trillion. These results, which represent a year-on increase of 173.4%, are concrete evidence that the assets under OYAK’s management can be skillfully managed even under the worst of conditions. These results reaffirm and underscore OYAK’s exceptional place among Turkey’s biggest industrial and services groups. In an extraordinary economic environment plagued by high inflation in 2001, OYAK nevertheless managed to provide its members with real earnings by paying out an average return of 94.9%. An increasingly greater contribution to the national economy as well as to its members OYAK is a company whose contributions are important not just to its members but to the national economy as well. OYAK’s subsidiaries are active in the areas of financial services, automotive, cement, foods and chemicals, and services. In 2001, they all posted successful results in terms of their sales and exports. OYAK’s subsidiaries had aggregate gross sales proceeds amounting to TL 3,453 trillion in 2001–a figure that represents a 14.3% increase over the previous year’s sales proceeds of TL 3,020 trillion. The Group’s total exports for the year were worth USD 904 million. The Group is currently providing employment for 16,586 people in its subsidiaries. Since the day it was founded, OYAK has been a trustworthy partner in every sector in which it has taken a stake. Through the ventures that it has undertaken, OYAK has led the way in bringing foreign investment into Turkey. A leading role in financial services In line with its strategic decisions, OYAK is building up its position and strength in Turkey’s financial services industry. In what is the most important step taken in this direction, in 2001 the Group acquired Sümerbank and merged it with Oyak Bank. OYAK continues to expand its presence in different branches of the financial services industry, banking being the foremost of them. The Company is determined to firmly establish its position among the sector’s leaders. Shaping the future OYAK foresees that the Turkish economy will emerge from the current economic crisis and return to the path of positive growth in a series of stages that will be spread out over 2002 and 2003. In line with this expectation, OYAK is continuing its efforts to develop its presence in a number of production sectors. At the same time, OYAK is redesigning and reorganizing all its management and work processes to accommodate an economic environment in which lower rates of inflation are the rule in order to be able to continue providing its membership with real returns as required by its social assistance mission. The principles of effectiveness and productivity make up the foundation of this effort. Conviction and determination I believe that we possess all the assets that are needed in our struggle to make OYAK a global and competitive name. The most important of those assets are our high-quality human resources, our professional management, our sound financial structure, and our national and international partnerships. And together with them all, there is our absolute belief in the value of science and our determination to make it the guide of all our activities. We are engaged in an effort to make the OYAK name synonymous with world standards of quality, originality, and trustworthiness in whatever endeavor it may become involved. In closing, I want to thank everyone who joins us in this effort. Y. Selçuk Saka (Ret.) Lieutenant General Chairman OYAK ANNUAL REPORT 2001 4 CHIEF EXECUTIVE OFFICER’S MESSAGE Þerif Coßkun Ulusoy, Ph.D. Chief Executive Officer In addition to celebrating its 40th year in 2001, OYAK also exhibited a picture of very successful financial performance under these extraordinary economic conditions. A difficult and critical year Both economically and politically, 2001 was a difficult and critical year. It was an exceptional year, one in which macroeconomic balances worsened and efforts had to be made to completely reestablish them with external support. It was also a year in which the financial sector embarked upon a process of enormous change, in which companies in different parts of the real economy suffered distress, and in which mergers and acquisitions proliferated. Not only was there a serious increase in unemployment but the country’s gross national product also shrank by a significant amount. In September of the year, terrorism became entrenched at the head of world and national agendas. The terrorist attacks on the United States that were committed on September 11th wrought deep changes in the ways that everyone perceives risk. The attacks caused far more damage to the global economy than was even initially supposed. In addition to celebrating its 40th year in 2001, OYAK also exhibited a picture of very successful financial performance under these extraordinary economic conditions. The Company posted an actuarial net profit of nearly half a billion dollars in 2001, a figure that makes it a world-class institution. But in addition to the material gains that it provided, we regard 2001 as a turning-point in OYAK’s history from the standpoint of the Company’s transparency, corporate identity, and professional management. The strategies that safeguarded OYAK Thanks to the strategies that it implemented and to the measures that it took in 2001, OYAK has emerged unwounded from the recession. It was successful in all its business activities and fulfilled its commitment to pay its members a return far in excess of expectations. The same strategies and policies also made it possible for the Company to manage its assets and investments in the best possible way. OYAK ANNUAL REPORT 2001 5 CHIEF EXECUTIVE OFFICER’S MESSAGE In the second half of 2000, the Company introduced a number of extremely important measures aimed at restricting and rationalizing its cash outflows. An important step in this process involved transferring to Vak›fbank, under a cooperative protocol agreement, loans that the Company extends to its members. These loans account for an important share of our yearly cash disbursements and securing the resources for them from outside the Company had an extraordinarily positive effect on our cash balance. This action made a big contribution towards the liquid position that we were in when the 2001 crisis hit. The comprehensive restructuring project that we introduced in 2000 for the purpose of extending effective, productive, and professional management throughout the Company has equipped OYAK with important competitive advantages and also protected the Company during the stormiest days of 2001. Thanks to its ongoing productivity and effectiveness programs and to its member-focused approaches, the Company was ready for the new market conditions when it was confronted by them. OYAK’s gains Even more important than high financial performance, OYAK’s strategies resulted in a number of important gains that will be shaping the Company’s future. In 2001, OYAK opened itself up as a company in a campaign to bring itself closer to the Turkish people and to Turkish public opinion. In the years since its founding, OYAK’s public image tended to be that of an introverted institution closed to the outside. In 2001, OYAK launched a public relations campaign that focused on company transparency and introduced itself to audiences at home and abroad. 2001 was also the first year that OYAK published an annual report that was intended for general release. Under the communications strategy that OYAK has put into effect, the public was made as knowledgeable as members about the enormous economic value that the Company implied for the Turkish economy and the great potential that it embodied. In this process, the Company developed close relations with the outside world. With the strength and support it derives from its members, in 2001 OYAK made a number of strategic growth decisions. The most important of these decisions was related to the financial services industry. The advances made in this direction in 2001 are already making the Company one of the leading players in Turkey’s financial sector. OYAK regards that sector as one of the most important axes of its future growth. The customer-focused approach has become widespread in the Company’s services wing. Projects aimed at increasing service quality were quick to achieve success and OYAK has made much progress in the direction of drawing closer to its members and providing them with more effective and modern service. The Company’s efforts to accomplish this have been made in cooperation with Turkish and foreign consultancies and the Services Unit and its service processes have been completely overhauled. The efforts are continuing without letup. OYAK is also making advances in information technology as well. A wide range of projects is being carried out on many levels to satisfy the dictates of modern technology in everything from member services to rationalization of our subsidiaries’ management. Our goal is to safeguard the long-term well-being of our members and continuously provide them with real returns by managing our subsidiaries within an entirely integrated process. The potential of change Turkey has an economy that is open to change and is dynamic in its structure. The upheavals taking place at the global level last year have increased the strategic importance of our country. In such an environment, OYAK is absolutely committed to developing the assets it has and to increasing both consolidated market share and profitability by creating bigger business volumes in those areas in which it is active. Nevertheless we must acknowledge that 2002 is going to be a very difficult year, that the level of earnings achieved in 2001 cannot be sustained to the same degree under the conditions that will prevail in 2002, and that we need to be more realistic about shaping our expectations as compared with 2001. We are on the threshold of an economic environment in which economies of scale are going to become important. The dimensions that OYAK commands are such as to give the Company significant advantages. In addition to the buying power wielded by our nearly 200,000 members, our 26 subsidiaries active in a variety of sectors supply millions of people with products and services from thousands of outlets. These numbers reveal the scope and scale of OYAK’s influence. And the reality of that is the most important factor determining the path of OYAK’s future growth. I conclude my remarks by offering my thanks and respects to our shareholders for the unstinting confidence and support that made it possible for us to create the changes in OYAK dictated by the realities of the present in 2001, to the members of the Board of Directors, and to all of the Company’s personnel for their self-sacrificing efforts to please the OYAK community. Þerif Coßkun Ulusoy, Ph.D. Chief Executive Officer OYAK ANNUAL REPORT 2001 6 THE TURKISH ECONOMY AN ASSESSMENT OF 2001 AND THE OUTLOOK FOR 2002 GNP* (TL quadrillion) 179.5 126 78 1999 2000 2001 *based on current prices Growth Rate (%) 6.1 (6.1) (9.4) 1999 2000 2001 A process of comprehensive economic transformation In the wake of the banking crisis that hit late in 2000 and the ensuing support from the IMF, in February 2001 Turkey found itself confronted with an even more serious economic crisis. These events turned the country towards an effort to permanently eliminate the basic causes of its economic anomalies and weaknesses and initiated a process of comprehensive economic transformation. The February crisis was triggered by a political spat, in response to which there was a surge in market demand for foreign currency combined with a severe shortage in Turkish lira liquidity. On February 20th, overnight interest rates shot up to 2,058% and the increasingly worsening liquidity crunch caused the payments system, centered around public-sector banks, to lock up. With the interbank market at risk of grinding to a halt, the economy’s bureaucrats frantically searched for a solution. On February 21st, the existing rule of adhering to "previously determined movements in exchange rates" was abandoned and the Turkish lira was cut loose to fend for itself. On February 22nd, the dollar rose 39.8% against the lira; on the 23rd, it increased another 12%. In just two days’ time, the Turkish lira lost 36.1% of its US dollar value. A serious slump in general economic activity It was not until the middle of May that exchange rates began to stabilize again; but because of the uncertainties and insecurities that they caused, markets became inoperable and there was a serious slump in general economic activity. The collapse experienced in the banking sector gave impetus to the spread of the economic slowdown. Transaction volumes and lending activities of every sort experienced sudden and sharp declines. In the wake of the November and February crises, the Turkish economy entered a period of deep recession. Figures now put the overall contraction in 2001 at 9.4%. Nearly every sector registered a contraction: indeed, the only one that showed any sign of growth was tourism. And because of the recession it experienced in 2001, the Turkish economy also found itself having to confront its serious problem of structurally ingrained unemployment. According to published government figures, the official unemployment rate in the last quarter of 2001 reached 10.6%. When one factors in the realities of underemployment in Turkey, this means that the actual unemployment rate probably topped 16%. One crucial issue that will need to be addressed by economic authorities as the economy begins to recover in the immediate term is certain to be that of reducing this structural unemployment. "Transition to a strong economy" Soon after the Turkish lira was set free, important changes took place in the echelons of economic management. In March, Kemal Derviß, a World Bank vice president, joined the government as a new minister of state responsible OYAK ANNUAL REPORT 2001 7 THE TURKISH ECONOMY: AN ASSESSMENT OF 2001 AND THE OUTLOOK FOR 2002 In the wake of the banking crisis that hit late in 2000 and the ensuing support from the IMF, in February 2001 Turkey found itself confronted with an even more serious economic crisis. These events turned the country towards an effort to permanently eliminate the basic causes of its economic anomalies and weaknesses and initiated a process of comprehensive economic transformation. for the economy. In May, Mr. Derviß announced the launching of the "Transition to a Strong Economy" program that had been hammered out. The biggest support for the financing of this program came from the IMF. Coming forth with its third supplementary support in just eighteen months, the Fund raised the credit limit extended to Turkey about sixteen-fold. Altogether, the supplementary credit facility totaled USD 14 billion. Even after the policy of managed exchange rates was abandoned on February 22nd, any hoped-for quick restoration of stability to markets proved to be impossible and exchange rates remained extremely volatile for quite a long time. Responding to the uncertainties provoked by the terrorist attacks in the US on September 11th, that volatility worsened with exchange rates peaking at their highest levels for the year in the second half of October. Fourth-quarter break in exchange rates and inflation In the months that followed, the upward pressure on exchange rates subsided as Turkey made clear its own attitudes towards the attacks on the US and expectations abounded that additional help would be forthcoming from international financial institutions in 2002. By the end of the first quarter of 2002, exchange rates had reverted to their pre-July 2001 levels. On the inflation front, there was a rapid surge in prices stemming from the huge rises in exchange rates and from higher costs due to increases in public-sector determined prices. At year-end 2001, the 12-month increase in the wholesale price index was 88.6% while the consumer price index was up a comparatively "modest" 68.5%. Developments in the stock of public debt As the financial system crisis ran its course, it became necessary to restructure the banking system to enable it to cope with the effects of the realization of both exchange rate and interest rate risk on the one hand and, on the other, to issue paper to cover public banks’ accumulated socalled "duty losses". As a result of these developments, there was a huge increase in the total stock of domestic public debt in 2001. As of the end of 2001, the total stock of public debt stood at USD 84.9 billion. More than half (52.6%) of that amount was the result of non-cash GDIs issued to rehabilitate the financial system and to bring the "real" liabilities ("real" because it now included public banks’ hitherto offbudget losses) under more effective management. On the foreign debt front, the ability to tap external sources of funding was limited by the crises that wracked the domestic economy. Partly because of this, the total stock of foreign debt declined about a billion dollars during the first nine months of the year and stood at USD 118.8 billion as of the end of September. Some 59% of that OYAK ANNUAL REPORT 2001 8 THE TURKISH ECONOMY: AN ASSESSMENT OF 2001 AND THE OUTLOOK FOR 2002 Imports (USD billion) 54.2 40.7 1999 40.5 2000 2001 debt belonged to the public sector with the private sector holding the other 41%. Looking at the maturity structure of this debt, it is seen that only 17.5% of it was short-term, with medium and long-term obligations making up 82.5% of the total. Maastricht targets for total public indebtedness At year-end 2001, Turkey’s gross national product (GNP) stood at TL 179.5 quadrillion. In other words, the total stock of public debt at that time was equal to 100% of GNP. The government has declared its commitment to the goal of reducing this ratio within four years’ time to the 60% level prescribed in the European Union’s Maastricht criteria. Exports (USD billion) 31.2 26.6 1999 27.5 2000 2001 The inclusion of the Maastricht criteria in the government’s programs and in the letters of intent submitted by it to the IMF is regarded as a confirmation of the government’s determination to pursue Turkey’s membership in the EU. Improvement in the foreign trade deficit Industrial output in Turkey is highly dependent on imported raw materials and semifinished goods. Because of the resulting contraction in demand and production, the slump experienced by the national economy in 2001 had the effect of significantly improving the country’s external balance. The foreign trade deficit in 2001 was down 65.1% (USD 17.4 billion) from its previous year’s level. This overall contraction is the net result of a 25.7% (USD 14 billion) decline in imports that appears to have significantly outweighed a 13.2% rise in exports. After the second wave of crisis hit in February, the Turkish lira began to lose value in real terms. This had the effect of making Turkish export goods more price attractive with the result that as of year-end 2001, the country’s exports surpassed the psychological barrier of thirty billion dollars for the first time, weighing in at USD 31.2 billion. The outlook for 2002 With the Turkish economy already reeling from the impact of two financial system crises in less than half a year, the worldwide "lockdown" that ensued in the wake of the terrorist attacks on the United States in September 11th confronted the government with an urgent need for about ten billion dollars in additional financing. In early February 2002, a new stand-by agreement was signed with the IMF under whose terms Turkey was to be provided with about sixteen billion in credit facilities over a three-year period. This agreement essentially put paid to any worries over the serviceability of the national debt. Two of the primary goals that the government has committed itself to are a thoroughgoing reform of the banking system and reducing the total stock of domestic debt, which approached 60% of GNP as of the end of 2001, to within manageable levels by means of strict fiscal policies. Two other avowed priorities are improving the public sector’s efficiency OYAK ANNUAL REPORT 2001 9 THE TURKISH ECONOMY: AN ASSESSMENT OF 2001 AND THE OUTLOOK FOR 2002 The strategies and targets for 20022004 are centered around safeguarding the economy against the possibility of still more crises and laying the foundations for sustainable growth. and effectiveness and increasing the role of the private sector in the national economy. While pursuing efforts to eliminate the structural impediments that beset the Turkish economy, the government has also set for itself the goal of reducing the 12-month rate of consumer price inflation from its 73.1% level in February 2002 to 35% by the end of the year. To achieve this goal, the Central Bank is to continue implementing a tight-monetary policy. The most recent letter of intent submitted to the IMF sets a year-on growth rate of 3%. As of this writing, market expectations are that the real growth rate will be something over 2% and that inflation will be in the 40-45% range. The materialization of these expectations as well as of the target of a non-interest budget surplus of 5.4% (an issue of critical importance insofar as the sustainability of the national debt is concerned) will be dependent on making all the cuts in expenditures that have been called for. As for the tax revenues that the budget expects, it would be more realistic to assess their plausibility together with GNP projections. Only if overshooting in inflation and undershooting in growth were to balance one another would there then be a strong possibility of achieving a 3% rate of GNP growth in 2002. The strategies and targets for 2002-2004 are centered around safeguarding the economy against the possibility of still more crises and laying the foundations for sustainable growth. The program has three basic aims that are intended to increase the economy’s resilience to shocks and to reduce its fragility in the face of crisis: i) To continue with the existing freefloating system of exchange rates and shift over to inflation-targeting in the second half of 2002 once the conditions have been created in which a significant decrease in inflation can be achieved, ii) To accelerate the restructuring of the banking system, iii) To achieve a viable position in the public debt. The internal as well as the external uncertainties in the growth target make it hard to be overly optimistic about all of this. In particular, any delays in the resumption of growth and any laxities in making effective use of social assistance projects are going to exert severe social pressure on the program and bring its sustainability into question. Taken all together, these eventualities could have the effect of limiting any rapid falls in short-term interest rates in 2002. However so long as expectations that movements in exchange rates will remain stable turn out to be true, the effect on markets will remain positive and can contribute towards achieving budget and inflation targets even if the Turkish lira does appreciate within reasonable limits throughout the year, as the government indeed expects it to. OYAK ANNUAL REPORT 2001 10 OYAK: 40 YEARS OF SUCCESS OYAK regards the continuous satisfaction and welfare of its members and employees as the reason for its own existence. In all the decisions it has made and ventures it has undertaken in the course of forty years, it has always acted with this idea in mind. 1961 OYAK is founded on 1 March 1961. The same year, the Company acquires a stake in Goodyear, Turkey. 1966 The Company successfully completes its first ventures into satisfying members’ needs for housing by turning over to them the keys to their new dwellings in Ankara and ‹stanbul. 1963 OYAK establishes Ordu Pazarlar›. These markets catering to military personnel and their dependents are the first example of a chain store operation in Turkey. The same year, OYAK expands its investments by acquiring Çukurova Çimento and Hektaß. 1978 OYAK acquires a stake in Omsan, a leading company in the transport industry. 1970 OYAK’s membership reaches 77,000. Since the year it was founded, the US dollar value of the retirement pension it pays has increased twofold. 1969 OYAK posts its first actuarial profit in just eight years since it was founded and begins paying its members dividends. The same year, the Company signs a partnership agreement with the giant automotive manufacturer, Renault, while also continuing its investments in the cement industry by acquiring stakes in Bolu Çimento, Ünye Çimento, and Mardin Çimento. 1967 OYAK founds MA‹S, its first investment in the automotive sector. The same year, it also undertakes its Oyak Sigorta (insurance) and Tukaß (canned foods) investments. 1975 The Company acquires a stake in Aselsan (electronics). 1982 Deciding to pursue growth in the food industry, the Company acquires stakes in Eti Pazarlama and Tam G›da. Oyak ‹nßaat, a construction company, is set up to better address members’ housing needs. OYAK ANNUAL REPORT 2001 11 40 YEARS OF SUCCESS 1984 Paralleling developments in Turkey’s capital markets, the Company’s brokerage house Oyak Menkul De¤erler, which was originally set up in 1982, commences operations. 1993 OYAK transfers a part of its shareholding interest in MA‹S to Renault, its French partner in the automotive sector. 1990 OYAK’s membership reaches 117,000. The Company acquires stakes in First National Bank of Boston and in Selyak (ELF). 2000 OYAK’s membership reaches 179,000. The Company is reorganized and its management principles are restructured. Radical changes are made in management positions. The Company begins cooperating with Vak›fbank in its lending services. Since the Company was founded, the US dollar value of the retirement benefits it pays its members has increased tenfold. 1994 The Company acquires full ownership of Türk Boston Bank (formerly First National Bank of Boston). 1992 OYAK acquires stakes in two privatized cement companies, Ni¤de Çimento and ‹skenderun Çimento. 1989 OYAK sets up its voluntary additional contribution retirement annuity system, which provides its members with a way to secure additional income after retirement. 1995 AXA OYAK Hayat Sigorta, a life insurance company, is set up in a joint venture with the AXA Group. The same year, OYAK’s first mutual fund is launched. 2001 OYAK’s membership reaches 193,000. The Company’s restructuring is completed. Sümerbank, YADAÞ, and Yaßar Yat›r›m are acquired and the processes of merging Sümerbank with Oyak Bank and Yaßar Yat›r›m with Oyak Menkul are begun. New projects are launched in housing construction. Mehmetçik Sigortas›, a group life insurance program for military personnel that was inaugurated in 2000, is expanded. With corporate communications and transparency becoming more and more important in OYAK, the Company publishes its first annual report for the year 2000 that is intended for general public release. 1999 All of the Company’s insurance activities are brought together under the roof of AXA OYAK Holding, a joint venture with AXA. 1998 The Ordu Pazarlar› supermarket chain is renamed and rebranded as OYPA and begins serving the general public. 1996 Türk Boston Bank is renamed Oyak Bank. OYAK members are offered three new services: Retirement Monthly Pension System, Housing Savings Fund, and Combining the Reserve Officer Service. OYAK ANNUAL REPORT 2001 12 OYAK: ACTIVITIES AND SERVICES IN 2001 Actuarial Profit (TL Billion) 594,382 OYAK completed 2001 posting an Information concerning the services actuarial profit of TL 594 trillion on all that OYAK provided its members and its activities. As of year-end, the the Company’s performance of those Company had nearly 193,000 services are summarized below. members, to whom it paid a return of 94.9%. Assistance provided to OYAK members or to their beneficiaries 217,385 2000 2001 The Company and its subsidiaries Retirement benefits: Retirement achieved satisfactory results in all their benefits are entitlements received by areas of endeavor while also members who have paid the maintaining a solid actuarial balance. Company their dues for at least ten OYAK was chosen by the business- years’ time. Interest accrues on the oriented daily Dünya as the year’s dues that accumulate during the most successful company in 2001 course of one’s membership, adding while its CEO, Coßkun Ulusoy, was to the value of a member’s account. designated "Professional Manager of Retirement benefits represent OYAK’s the Year" by two magazines, basic product, which is supported Ekonomist and Ekovitrin. by supplementary benefits depending on the Company’s financial results. A group-wide reorganization and In 2001, OYAK paid a total of restructuring undertaken in the TL 35.9 trillion in retirement benefits second half of 2000 was quick to to 3,011 of its members. produce results by significantly OYAK Headquarters, Ankara improving efficiency and effectiveness Those who have been members for at at every level in the Company. least three but fewer than ten years A member-focused approach was also and who are not yet entitled to introduced to every aspect of service receive retirement benefits are from initial design to final allowed to reclaim all the dues they presentation. The "firsts" that quickly have paid (called a "dues refund") if emerged from this effort such as the they withdraw from the system. In call center and the web portal made 2001, OYAK paid 322 members a important contributions towards total of TL 187.4 billion as dues increasing OYAK member satisfaction. refunds. In its capacity as a social security and Retirement annuity: Once they are retirement investment fund, OYAK entitled to receive retirement benefits, provides its membership with a variety one of the options that OYAK of services. In 2001, the Company paid members have is to allow some or all out a total of TL 109 trillion to of the accumulated amount to remain members under these services. with the Company and to receive OYAK ANNUAL REPORT 2001 13 ACTIVITIES AND SERVICES IN 2001 Annual Rate of Return (%) regular payment of a retirement (and their spouses and children) who annuity in lieu of it. must undergo major medical treatment. 94.9 55.4 68.5 39 2000 2001 CPI Index Number of Members 178,727 192,937 In 2001, OYAK paid a total of TL 14.2 trillion as retirement annuities. In 2001, the Company extended As of 20 October 2001, the date on 28,553 loans of both kinds amounting which the year’s last annuity payments to a total of TL 19.8 trillion. were made, the number of members taking advantage of this system was Housing loans and housing 21,667. Members can withdraw from construction: OYAK helps its the annuity system after having members become home owners by completed their third year in it. undertaking housing construction In 2001, 872 members chose to projects and by providing them with withdraw in this way and they were long-term financing and with paid a total of TL 1.5 trillion. allocations of land. Death and disability benefits: Part In 2001, OYAK handed over to of the dues paid by a member are members the keys to 240 dwellings earmarked as a risk premium that it constructed in Ankara under its payment, by means of which the Çayyolu Phase 10 project. Work member is insured against death and continues on the OYAK Zirvekent disablement. In 2001, OYAK paid out project, which is being developed TL 2.3 trillion as death benefits for with the incorporation of the most 312 members while 221 members modern techniques and facilities. received a total of TL 1.4 trillion in disability benefits. In 2001, OYAK extended TL 25.2 trillion to members in the form of 2000 2001 Social benefits provided by OYAK 2,419 housing loans. The Company to its membership also spent TL 2.7 trillion on housing Loans and extraordinary loans: construction. Loans are made available from OYAK’s resources to permanent Lump-sum loans of up to 80% of members at twice the value of their members’ reserves: To help them base monthly salary. These loans are prepare for their approaching repayable in fixed payments at terms retirement, members who have of six, nine, or twelve months at the completed at least 29 years of service member’s option. Extraordinary loans or who are to be retired within two are made available to members who years’ time for reasons of have suffered losses as a result of redundancy, can receive the natural disasters and also to members supplementary benefits and interest OYAK ANNUAL REPORT 2001 14 ACTIVITIES AND SERVICES IN 2001 Total Legal Benefits Paid (TL Billion) 55,622 42,567 components of their reserves as a Other services provided for OYAK lump-sum loan that will be set off members against their retirement entitlements. Voluntary additional contribution Such a loan cannot exceed 80% of a retirement annuity system: member’s reserve on the date it is This system provides an opportunity requested. In 2001, 281 members to secure additional income to took advantage of this option and members who have withdrawn (or were paid a total of TL 29.9 trillion. are about to withdraw) from OYAK in order to receive retirement benefits; Commissary services: OYAK to the spouses of members who have operates a commissary store in Girne joined the retirement benefit system and a wholesale outlet and storage on account of a spouse’s death; to unit in Magosa in order to provide OYAK permanent members on active members on duty and military duty who have been members for at canteens in the Turkish Republic of least ten full years; and to those who Northern Cyprus with a complete have worked for at least ten years, or range of consumer goods that are who have retired or were suitable in quality and price. In 2001, superannuated after having worked Total Social Benefits Paid the Company extended a total of TL for at least ten years, at OYAK or at a (TL Billion) 1.5 trillion in consumer credit under company in which OYAK controls the heading of commissary services. more than a 50% stake. 2000 2001 53,374 46,887 Payments under this system are made quarterly and in 2001 they included an average rate of return of 95.3%. As of December 2001, the twelvemonth rate of return stood at 87.5%. 2000 2001 OYAK ANNUAL REPORT 2001 15 ACTIVITIES AND SERVICES IN 2001 In line with its ultimate aim of providing its members with a fully-integrated service platform, OYAK opened its Call Center and updated its website with the on-line member services section being made operational. Housing Savings Fund: This fund three times the monthly salary on was set up to make it possible for which their dues payments are based. OYAK members to save up the capital During 2001, a total of TL 44.7 trillion needed to buy a home. All permanent in such credit was extended to members who have not already taken 74,102 members. out a housing loan or purchased OYAK-built housing can join this fund. OYAK Call Center: The OYAK Call The fund presently has 55,452 Center went into operation in April members and has accumulated a total 2001. Manned by six member of TL 24.3 trillion in contributions. In account officers, the center received a 2001, the rate of return secured by total of 190,000 calls in the course of the fund was 98.5%. the rest of the year. Only 3,700 (fewer than 2.0%) of these calls were OYAK mutual funds: OYAKFON-1 is about complaints or criticisms. the first mutual fund in Turkey set up by a social security institution. On-line member services: OYAKFON-1 is a Type A Variable OYAK’s website is located at mutual fund. As of 31 December www.oyak.com.tr. The content of the 2001, the fund had a total market site was updated in 2001 and the value of TL 3.8 trillion. online member services section was made operational. Members are able Vak›fbank Overdraft and Fixed- to get information and apply for a Installment Consumer Credit: variety of OYAK services and products As an alternative to borrowing from interactively over the internet. OYAK, members can also borrow from Vak›fbank up to the amount of www.oyak.com.tr OYAK ANNUAL REPORT 2001 16 OYAK: AN ASSESSMENT OF GROUP ACTIVITIES IN 2001 Total Assets (TL Billion) 5,154,101 1,635,943 2000 2001 Pre-Tax Profit* (TL Billion) 635,999 326,661 2000 2001 *For OYAK subsidiaries and affiliates A successful year for OYAK and its subsidiaries 2001 was a successful year for OYAK and its subsidiaries. At year end, the Company’s 26 subsidiaries had total assets worth TL 5,154 trillion and a pre-tax profit of TL 636 trillion. 2001, the Company purchased Sümerbank, which had recently been reconstituted by the Banking Regulation and Supervision Board by merging into it six banks that had been taken over by the Savings Deposit Insurance Fund. Financial services: A strategy for growth In 2001 OYAK made important progress in line with its macro-level strategy of pursuing growth in the financial services industry by making an acquisition that will serve as a model not only for the Turkish banking industry but for the national economy as a whole. After the completion of preparations in 2001, Oyak Bank and Sümerbank were merged on 11 January 2002 and given a new corporate identity under the name of Oyak Bank. Through its 149 branches, the new bank is at the service of both corporate and retail banking customers with a broad spectrum of products and services. Oyak Bank ranks as one of the largest banks in Turkey from the standpoint of total assets. The Company’s growth strategy in financial services is aimed at making OYAK a respected and assertive player in the banking industry. Providing both members and the general public modern, reliable, and transparent banking services using extensive and alternative channels of distribution is the bedrock on which the Company’s strategy in the sector is erected. Another important step taken by OYAK in the financial services industry in 2001 involved the acquisition of Yaßar Yat›r›m and its merger with Oyak Menkul De¤erler, forming a larger brokerage house. OYAK’s presence in financial services reaches back to the early 1990s and its stake in Türk Boston Bank, whose name was changed to Oyak Bank in 1996. Since then, the Bank has been a respected name in corporate banking in Turkey with its network of 14 branches. In keeping with its growth strategies, OYAK has taken yet another step to strengthen its presence in the financial services sector. In August OYAK acquisition of Sümerbank in the Turkish press. OYAK ANNUAL REPORT 2001 17 AN ASSESSMENT OF GROUP ACTIVITIES IN 2001 OYAK’s growth strategy in financial services is aimed at making the Company a respected and assertive player in the banking industry. Providing both members and the general public modern, reliable, and transparent banking services using extensive and alternative channels of distribution is the bedrock on which OYAK’s strategy in the sector is erected. A project aimed at making OYAK Anker Bank (Germany), Oyak Bank’s foreign subsidiary, a more effective player in international trade finance is also completed. OYAK European Finance, the Company’s financial services subsidiary in Ireland, continued to perform successfully in 2001, achieving respectable growth in the volume of its business. OYAK Portföy Yönetimi, the Group’s portfolio management company, registered significant growth in 2001. As of year-end, the Company had more than USD 92 million worth of assets under its management. The Company is currently providing portfolio management services for ten mutual funds. OYAK’s insurance subsidiaries meanwhile achieved significant increases in their premium production through an expansion of the agent network. AXA OYAK Sigorta became the first insurance company in Turkey to break the TL 200 trillion barrier in terms of premium production. AXA OYAK Hayat Sigorta, which is the other insurance subsidiary of the Company and is engaged in life insurance, once again became the author of another innovation by launching a project to provide insurance coverage for all the Turkish Armed Forces under the group life insurance concept. Under this program, the number of new policyholders in the Company’s portfolio has reached 270,364. As it pursues its strategy of expansion in the provision of financial services, OYAK is determined to continue taking advantage of investment opportunities that present themselves as Turkey’s banking sector undergoes its restructuring and to ensure that they contribute to the Company’s organic growth through acquisitions. The Company’s sound financial structure and the funds under its management offer important opportunities to achieve growth in this way. A leader in the automotive industry Despite the negative picture in the economic situation last year, OYAK’s automotive industry subsidiaries demonstrated successful performance. Oyak Renault, whose production is backed by ISO 9001 certification, produced 96,860 vehicles of which 86,287 were exported. The high export volume achieved by the Company last year once again made it the leader in the country’s passenger vehicle export segment. For OYAK, such a result is a source of pride. At a time when exports are a matter of vital importance to the national economy, OYAK encourages all its subsidiaries to expand more and more into world markets with their products and services and it is developing the strategies that are needed to accomplish this. MA‹S, the Turkish general distributor of Renault automobiles, was also the author of successful results in 2001. MA‹S once again maintained its OYAK ANNUAL REPORT 2001 18 AN ASSESSMENT OF GROUP ACTIVITIES IN 2001 Total Sales (TL Billion) 3,453,216 3,020,601 2000 2001 Total Transaction Volume (TL Billion) 18,745,643 the development of a homeownership financing model that is based on long-term mortgages. Progress in our other subsidiaries OYAK’s subsidiaries in the areas of cement, foods and chemicals, and services also continued to make good progress in 2001. Under the overall project, which has been dubbed "OYAK Contemporary Homes", model dwellings were constructed in 2001 for the purposes of analyzing the effectiveness of systems integration, testing materials, and getting members’ feedback. The results gained from this first phase will be used as inputs for the complete project, which is slated to get underway before the end of 2002. In the cement group, a reorganization is in progress that is aimed at improving effectiveness. The Company’s food industry venture Tukaß, which is Turkey’s leading producer of tomato paste, acquired two new factories in 2001 for the purposes of diversifying its product line and of increasing its production capacity. Tukaß, a very strong export performer, is looking to further expand its production of pre-cooked and dehydrated foods, processed cheeses, and canned goods. Increased attention to housing projects Housing projects have gained great importance in recent years among OYAK’s priorities. 9,233,815 2000 leadership of the domestic market with a 28.9% share, selling a total of 39,145 automobiles during the year. 2001 OYAK has identified "helping its members become the owners of suitable, prestigious, modern housing before they are of retirement age" as one of its most important goals in the 2000s. To achieve this, OYAK is currently engaged in a variety of activities on many different levels including land procurement and development, shell construction system technologies, and cost optimization. As a complementary and essential element of these activities, OYAK is also working on A contemporary approach to service that uses technology effectively OYAK’s ultimate goal is to provide its services to members on an integrated platform. In line with this, a number of important projects were completed in 2001 at the headquarters level and among the subsidiaries. The OYAK Call Center (accessible on 0312 415 6100) went into service in April 2001. The services at the center are provided by the specially trained member representatives. By the end of the year, the number of calls received reached 190,000 and the center quickly became widely known. OYAK is determined to make use of its call center as an effective channel of distribution. The Company continues to work on a broad range of projects that will make it possible to provide members with even better services. OYAK ANNUAL REPORT 2001 19 AN ASSESSMENT OF GROUP ACTIVITIES IN 2001 In 2001, OYAK renovated its website, which is located at www.oyak.com.tr, adding an interactive dimension to it as well. From the on-line member services section, members can now quickly and efficiently submit applications for OYAK’s loan service, retirement annuity system, 80% lumpsum loan service, Housing Savings Fund, and voluntary additional contribution retirement annuity system. In 2001, OYAK purchased YADAÞ, a technology firm. The Company, whose name was changed to OYAK Teknoloji, has been restructured and has begun operating under its new identity. The basic duty of OYAK Teknoloji, which employs a staff of 183, is to serve as a solution and systems integration partner whenever an OYAK subsidiary is in need of a technological solution and to respond in the most effective way possible to their individual technological needs. A transparent professional structure that keeps the public informed In the course of its ongoing transformation, OYAK’s aim is to be an institution that is both professional and transparent in everything it does. Great success has already been achieved in the reorganization that has been going on for two years and OYAK’s efforts and accomplishments have drawn the attention and admiration of Turkish public opinion as well as in international circles. Chosen the year’s Most Successful Company in 2001, OYAK has become an institution accepted as a model to be followed by the armed forces of other countries for their own retirement funds. take advantage of circumstances and turn them into the driving forces shaping OYAK’s present and future. OYAK’s basic communications strategy is to keep its members and the public at large aware of the decisions it makes and the actions it undertakes, always keeping an eye on the principles of continuity, consistency, and transparency. In much the same way, OYAK is prepared not just for 2002 but for the years beyond it as well. But the Company is also fully aware that the period immediately ahead–in which it foresees that economic stability will be achieved, that inflation will approach single-digit figures, and that there will be increasingly tougher competition among all those who supply the market with goods and services–is not going to be an easy one. It is also certain that the form of professional and effective management being introduced throughout the Company will further enhance OYAK’s ability to fulfill its basic commitments to its membership. OYAK is a company that is candid in its dealings with its members, with the 16,586 people that it employs throughout its subsidiaries, and with the entire Turkish public. Looking ahead… Social security is a business which requires for long-term strategies and vision. With this universal truth in mind, OYAK bases all its activities on longterm programs and strategies in pursuit of its mission to guarantee the well-being of its members. Both the opportunities and the challenges posed by 2001 have opened the way for the Company to achieve significant growth. OYAK readied itself for the pending crisis in line with its own expectations of its approach. As a result, it was able to With well thought out and sound business strategies and models, OYAK is a strong and well-positioned company that is ready to create added value both for its members and for the Turkish economy. OYAK ANNUAL REPORT 2001 20 Finance OYAK BANK OYAK ANKERBANK OYAK EUROPEAN FINANCE OB MENKUL DEÚERLER OYAK PORTFÖY YÖNET‹M‹ OYAK TEKNOLOJ‹ SÜMERBANK OYAK YATIRIM VE MENKUL DEÚERLER YAÞAR YATIRIM MENKUL DEÚERLER AXA OYAK HOLD‹NG AXA OYAK S‹GORTA AXA OYAK HAYAT S‹GORTA HALK LEASING OYAK ANNUAL REPORT 2001 21 OYAK BANK Oyak Bank is one of the oldest of OYAK’s ventures into financial services. In 1990, the Company took a stake in First National Bank of Boston in Turkey and in 1994 it became the Bank’s sole owner. In 1996, the Bank’s name was changed to Oyak Bank. In the years between that and 2001, Oyak Bank was an active and respected provider of corporate banking services in Turkey. For Oyak Bank, 2001 marked an important transformation and leap forward. On August 10th of that year, OYAK took over Sümerbank, an institution whose shares were then being held by the Savings Deposit Insurance Fund and which had recently been reconstituted by the Banking Regulation and Supervision Board by merging together six banks that had been taken over by the Fund. This acquisition, which was in line with the Company’s goal of pursuing growth in financial services, was followed by the efforts to merge Sümerbank into Oyak Bank in the late months of the year. The merger formally took place on 11 January 2002 and the resulting new Oyak Bank began serving both corporate, retail and commercial banking customers with a broad spectrum of products and services ranging from loans to foreign trade financing through its 149 branches. Important projects were launched throughout the bank with the aim of transforming the enhanced effectiveness and advantages of economies of scale arising from the merger into a steadily growing volume of business. Oyak Bank ranks as one of the largest banks in Turkey from the standpoint of total assets. The Bank’s goal is to become one of Turkey’s leading banks in the retail banking segment as it already is in the corporate banking segment. In keeping with its organic growth plans, in the last quarter of 2001 Oyak Bank also purchased from the Savings Deposit Insurance Fund 38 of the branches of Kentbank and Etibank that were in strategically important locations that fit into its own business plans. These new branches have been added to the Oyak Bank network. Date of establishment: 1984 OYAK’s participation: 1990 Field of activity: Banking Number of employees: 572 Number of branches: 14 (After merger: 149) OYAK’s share: 100.00% www.oyakbank.com.tr Oyak Teknoloji Another important move made in 2001 was in the area of technology. Along with its purchase of Sümerbank, OYAK also acquired YADAÞ Bilgisayar ve Yaz›l›m, a computer technology and software company. Renamed Oyak Teknoloji, the Company has been restructured and given a new mission and identity. Oyak Teknoloji is a subsidiary of Oyak Bank and employs a staff of 183. The mission of Oyak Teknoloji is to serve as a technological solution and integration partner for all of OYAK’s subsidiaries and to respond in the most effective way possible to their individual technological needs. Oyak Bank Financial Services Group Oyak Bank is the flagship company of a financial services group that includes subsidiaries engaged in banking, insurance, financial services, brokerage services, and portfolio management. Oyak Anker Bank (Germany) With its headquarters located in Koblenz, Oyak Anker Bank is at the service of German and international customers in all segments of banking OYAK’s participation: 2001 Field of activity: Banking Number of employees: 2,824 Number of branches: 135 OYAK’s share: 100.00% OYAK ANNUAL REPORT 2001 22 with a particular emphasis on trade financing and personal banking. The Bank has six branches in Germany. At year-end 2001, Oyak Anker Bank had total assets amounting to DEM 535.6 million, with DEM 461.1 million in deposits and DEM 391.4 million in loans on its books. Oyak European Finance Oyak European Finance (OEF) is a financial services company that has been serving customers since 1994. The Company’s headquarters are located in the Dublin International Financial Services Center and all its activities are subject to Irish law. OEF provides a broad range of services from consultancy to corporate and project financing. OEF had assets amounting to USD 56.4 million in 2001 and a total of USD 34.7 million in loans on its books. OB Menkul De¤erler One of the sector’s leading brokerage houses, OB Menkul De¤erler was founded in 1998. Fully authorized to trade and act as a broker in all aspects of capital markets, the Company serves a clientele of Turkish and foreign investors. OB Menkul De¤erler’s headquarters are located in ‹stanbul. The Company employs Oyak Bank branches as its agents. In 2001, OB Menkul De¤erler wrote a total of TL 442.7 trillion in business volume. Oyak Portföy Yönetimi Oyak Portföy Yönetimi is a portfolio management company whose services are targeted at corporate and individual clients. The firm is a joint venture of Oyak Bank and Oyak Yat›r›m ve Menkul De¤erler (OYAK’s brokerage house). Oyak Portföy Yönetimi currently has ten mutual funds under its management. As of year-end 2001, these ten funds had more than USD 92 million in resources that were being managed by the Company. OYAK YATIRIM VE MENKUL DEÚERLER Date of establishment: 1982 OYAK’s participation: 1982 Field of activity: Trading of capital markets instruments Number of employees: 318 Number of service points: 7 branches and 57 agencies (31.12.2001 - TL billion) Total assets: 15,537 Total equity: 7,712 Total trading volume: 15,755,281 Total taxes: 6,868 OYAK’s share: 98.18% www.oyakmenkul.com.tr Oyak Yat›r›m ve Menkul De¤erler is OYAK’s oldest financial services subsidiary. A securities brokerage house, the Company was founded in 1982. In 2001, Oyak Menkul De¤erler purchased Yaßar Yat›r›m, which had been taken over by the Savings Deposit Insurance Fund. The acquisition was formally merged into Oyak Menkul De¤erler on 31 December 2001, after which the Company began pursuing its activities under the name Oyak Yat›r›m ve Menkul De¤erler. (Oyaktel), and through its call center (Oyakborsa). The Company operates two mutual funds: the Oyak Menkul Type A Variable Fund and the Oyak Menkul Type B Liquid Fund, the latter of which went on sale in September 2001. As a result of the merger, the Company had a total trading volume worth TL 15.8 quadrillion as of the end of the year. The Company is at the service of clients through its seven branches (two each in Ankara, ‹stanbul, and ‹zmir and one in Mersin) as well as through some of Oyak Bank’s branches. In addition to these physical service outlets, the Company is successful in its use of alternative channels of distribution, providing rapid and effective service over the internet (Oyaknet), by telephone Oyak Menkul De¤erler’s acquisition of Yaßar Yat›r›m in the Turkish press. OYAK ANNUAL REPORT 2001 23 AXA OYAK HOLD‹NG At the beginning of 1999, OYAK and the French AXA Group set up AXA OYAK for the purpose of combining their joint insurance activities under a single holding company. After the holding company’s inception, OYAK and AXA transferred all their stakes in insurers in Turkey over to the Holding. AXA OYAK Holding currently controls two firms: AXA OYAK Sigorta (general insurance) and AXA OYAK Hayat Sigorta (life insurance). The Holding Company controls a 70.9% stake in AXA OYAK Sigorta, which provides insurance products in the fire, shipping, accident, engineering, legal liability, and agricultural branches. The Company has an extensive distribution network that reaches throughout Turkey. Operating from its headquarters in ‹stanbul, AXA OYAK Sigorta has nine regional offices (Ankara, ‹zmir, Adana, Bursa, Samsun, Antalya, Kad›köy, Bak›rköy, and ‹stanbul), four liaison offices (Trabzon, Denizli, Erzurum, and Diyarbak›r), a branch operation in the Turkish Republic of Northern Cyprus, and an extensive network of agents. The Company also makes use of Oyak Bank and Finansbank branches as an alternative channel of distribution. AXA OYAK was the first insurance company in Turkey to surpass the TL 200 trillion mark in premium production. A wholly owned subsidiary of AXA OYAK Holding, AXA OYAK Hayat Sigorta is an insurer that specializes in life and health insurance products. After undergoing a restructuring in 2001, the Company began using the same distribution channels employed by AXA OYAK Sigorta for its own products and services. AXA OYAK Hayat Sigorta has launched a project to provide insurance coverage for all Turkish Armed Forces personnel under the Group life insurance concept. Under this program, the number of policyholders in the Company’s portfolio reached 270,364 as of year-end. In 2001, AXA OYAK Sigorta and AXA OYAK Hayat Sigorta together handled TL 262.2 trillion worth of business, a 56% increase over the figure registered in 2000. AXA OYAK S‹GORTA Date of establishment: 1968 OYAK’s participation: 1968 Field of activity: Insurance (Non-life) Number of employees: 552 Number of service points: 372 regional headquarters and representative offices, 1,295 agencies (31.12.2001 - TL billion) Total assets: 219,864 Total equity: 66,315 Premiums collected: 212,033 Total taxes: 30,350 AXA OYAK Holding’s share: 70.92% www.axaoyak.com.tr AXA OYAK HAYAT S‹GORTA Date of establishment: 1995 OYAK’s participation:1995 Field of activity: Insurance (Life - health) Number of employees: 282 Number of service points: 7 representative offices, 344 agencies (31.12.2001 - TL billion) Total assets: 86,238 Total equity: 6,968 Premiums collected: 50,200 Total taxes: 4,450 AXA OYAK Holding’s share: 100.00% www.axaoyakhayat.com.tr HALK LEASING Halk Leasing is one of Turkey’s leading leasing companies. Combining the strength arising from its partnership structure and robust capitalization with a team of experienced professionals, Halk Leasing provides Turkish and foreign investors, private sector and public-owned companies, and industrial enterprises of every size with fast, highly advantageous leasing services, products, and support that offer customers a broad spectrum of alternatives that include currency selection, shipping, insurance, importation, and tax-relief options. In 2001, Halk Leasing wrote TL 31.6 trillion worth of business. Date of establishment: 1991 OYAK’s participation: 1991 Field of activity: Leasing Number of employees: 41 (31.12.2001 - TL billion) Total Assets: 87,804 Total equity: 10,390 Leasing income: 31,625 Total taxes: 1,302 OYAK’s share: 39% www.halkleasing.com.tr OYAK ANNUAL REPORT 2001 24 Cement ADANA Ç‹MENTO ADANA KAÚIT TORBA Ç‹MSA BOLU Ç‹MENTO ÜNYE Ç‹MENTO MARD‹N Ç‹MENTO ELAZIÚ Ç‹MENTO OYSA N‹ÚDE Ç‹MENTO OYSA ‹SKENDERUN Ç‹MENTO OYAK ANNUAL REPORT 2001 25 ADANA Ç‹MENTO Adana Çimento manufactures a variety of gray and white cements that conform to TSE standards. One of the top three companies in the Turkish cement industry from the standpoint of capacity, Adana Çimento has an annual production capacity of 2.2 million tons of clinker and a cement milling capacity of 3.9 million tons. The company has been awarded an ISO 9002 Quality System Certificate and makes sales to markets both in Turkey and abroad. Adana Çimento has four ready-mix concrete plants in Adana, another four in Mersin, and one each in Kahramanmaraß, Manavgat, and Osmaniye as well as five mobile concrete plants that can be called on to serve on site requirements in the construction of mass housing, highways, and dams. The Company also has bagging facilities in Manavgat and Kahramanmaraß as well as export-oriented storage and loading units in ‹skenderun’s Sar›seki port facilities. In 2001 Adana Çimento invested a total of TL 11.7 trillion in new projects to improve quality, and economize on energy and labor. In 2001 Adana Çimento booked USD 25.5 million as income from its exports of cement and clinker. The Company had gross sales amounting to TL 114.8 trillion. The company owns stakes in Adana Ka¤›t Torba (In 2002, OYAK acquired Iß›klar Holding’s shares and the Company’s name was changed to OYAK Ka¤›t Ambalaj) and in Ç‹MSA. BOLU Ç‹MENTO Bolu Çimento produces a variety of cements conforming to TSE-specified standards and has an annual production capacity of 1.3 million tons of clinker and 2.6 million tons of cement. Bolu Çimento has been awarded a TSE ISO EN 9002 Quality System Certificate. The Company has milling and bagging, gravel, and ready-mix concrete units in Ankara; ready-mix concrete units in Adapazar›, Bolu, Düzce and ‹zmit; and bagging and ready-mix concrete units in ‹stanbulSamand›ra, and finally a gravel unit in Bolu. The Company serves in Turkey’s Black Sea, Marmara, and Central Anatolia regions which represent a considerably large area for a cement company. Bolu Çimento secured gross sales amounting to TL 65.1 trillion in 2001. Date of establishment: 1954 OYAK’s participation: 1963 Field of activity: Manufacturing and sales of clinker, cement, ready-mix concrete Number of employees: 476 (31.12.2001 - TL billion) Total assets: 173,791 Total equity: 121,983 Gross sales: 114,772 Total exports (USD thousands): 25,539 Total taxes: 13,200 OYAK’s share: 57.00% Date of establishment: 1968 OYAK’s participation: 1969 Field of activity: Manufacturing and sales of clinker, cement, ready-mix concrete Number of employees: 286 (31.12.2001 - TL billion) Total assets: 100,143 Total equity: 66,693 Gross sales: 65,139 Total taxes: 12,793 OYAK’s share: 53.00% www.bolucim.com.tr OYAK ANNUAL REPORT 2001 26 ÜNYE Ç‹MENTO Ünye Çimento produces a variety of cements conforming to TSE standards. The Company has an annual production capacity of 600,000 tons of clinker and a cement milling capacity of 1.9 million tons. Ünye Çimento has ready-mix concrete plants located one each in Samsun, Trabzon, Rize, and Tirebolu and another at its own headquarters. There is also a company-owned pumping and bagging plant in Rize-Çayeli-Limanköy. Ünye Çimento has been awarded a TSE ISO EN 9002 Quality System Certificate. In 2001 the Company completed a precalcination unit investment which is slated to become operational at the end of March 2002. When it does, the Company’s annual production capacity of clinker will be increased from 600 thousand to 1.5 million tons. TL 20.2 trillion was spent on this precalcination unit investment in 2001 alone. The total value of the investment, which has been in progress since 1999, is more than USD 90 million, making it one of the biggest investments undertaken by the Turkish private sector in the last three years. Ünye Çimento booked gross sales amounting to TL 39.3 trillion from all its operations in 2001. Date of establishment: 1968 OYAK’s participation: 1969 Field of activity: Manufacturing and sales of clinker, cement, ready-mix concrete Number of employees: 213 (31.12.2001 - TL billion) Total assets: 157,523 Total equity: 67,948 Gross sales: 39,284 Total taxes: 3,195 OYAK’s share: 51.00% www.unyecimento.com.tr MARD‹N Ç‹MENTO Mardin Çimento produces a variety of cements conforming to TSE standards. The Company has an annual production capacity of 611,000 tons of clinker and a cement milling capacity of 1.2 million tons. Mardin Çimento sells to both domestic and export markets. Mardin Çimento has been awarded a TSE ISO EN 9002 Quality System Certificate. It operates two ready-mix concrete plants: one in Þanl›urfa and one in Diyarbak›r. Date of establishment: 1969 OYAK’s participation: 1969 Field of activity: Manufacturing and sales of clinker, cement, ready-mix concrete Number of employees: 226 (31.12.2001 - TL billion) The Company booked USD 2.6 million as export sales in 2001 and had gross sales amounting to TL 38.9 trillion as a result of all its activities. Total assets: 52,586 Total equity: 39,621 Gross sales: 38,937 Total exports (USD thousands): 2,609 Total taxes: 12,354 OYAK’s share: 51.00% ELAZIÚ Ç‹MENTO Elaz›¤ Çimento produces a variety of cements conforming to TSE standards and has an annual production capacity of 297,000 tons of clinker and a cement milling capacity of 1.2 million tons. The Company operates a single ready-mix concrete plant located in Malatya. Elaz›¤ Çimento has been awarded a TSE ISO 9002 Quality System Certificate. The Company plans to begin converting its production system over from the existing semi-dry one to a modern dry system in 2002. The preliminary work for this conversion has been completed. www.mcs.com.tr The project, whose investment cost has been budgeted at USD 16 million, is to be completed by the end of 2003. The Company had gross sales amounting to TL 25.1 trillion as a result of its operations in 2001. Date of establishment: 1954 OYAK’s participation: 1996 Field of activity: Manufacturing and sales of clinker, cement, ready-mix concrete Number of employees: 151 (31.12.2001 - TL billion) Total assets: 29,097 Total equity: 17,398 Gross sales: 25,098 Total taxes: 2,419 OYAK’s share: 35.00% www.elazigcimento.com.tr OYAK ANNUAL REPORT 2001 27 OYSA N‹ÚDE Ç‹MENTO Oysa Ni¤de Çimento produces a variety of cements conforming to TSE standards and has an annual production capacity of 413,000 tons of clinker and a cement milling capacity of 1.1 million tons. The Company operates three ready-mix concrete plants located one each in Aksaray, Karaman, and Konya-Ere¤li. to TL 20.3 trillion as a result of its operations in 2001. Date of establishment: 1967 OYAK’s participation: 1992 Field of activity: Manufacturing and sales of clinker, cement, ready-mix concrete Number of employees: 141 (31.12.2001 - TL billion) Total assets: 16,998 Total equity: 10,805 Gross sales: 20,301 Total taxes: 4,726 Awarded a TSE ISO EN 9002 Quality System Certificate, Oysa Ni¤de Çimento had gross sales amounting OYAK’s share: 10.00% OYSA ‹SKENDERUN Ç‹MENTO Oysa ‹skenderun Çimento produces a variety of cements conforming to TSE standards. The Company has an annual cement milling capacity of 936,000 tons. The Company, which has been awarded a TSE ISO EN 9002 Quality System Certificate, makes sales to both domestic and export markets. Oysa ‹skenderun Çimento also produces and sells cement-based chemical compounds for construction purposes. It has three ready-mix concrete plants located one each in ‹skenderun, Antakya, and K›r›khan. Oysa ‹skenderun Çimento secured gross sales amounting to TL 22.6 trillion as a result of its operations in 2001. Date of establishment: 1974 OYAK’s participation: 1992 Field of activity: Manufacturing and sales of cement, ready-mix concrete and construction materials Number of employees: 104 (31.12.2001 - TL billion) Total assets: 16,379 Total equity: 12,576 Gross sales: 22,554 Total exports (USD thousands): 70 Total taxes: 4,254 OYAK’s share: 13.50% www.oysa.com.tr OYAK ANNUAL REPORT 2001 28 Automotive OYAK RENAULT MA‹S OMSAN LOJ‹ST‹K OMSAN FRANCE S.A.R.L OMSAN G.M.B.H SELYAK GOODYEAR OYAK ANNUAL REPORT 2001 29 OYAK RENAULT The export leader of Turkey’s automotive sector, OYAK Renault’s activities are conducted under a license from the French automotive manufacturer, Renault. The Company has been manufacturing automobiles, engines, components, and spare parts since 1971. At its inception, OYAK Renault had an annual production capacity of 20,000 vehicles. Today that capacity has reached 700 vehicles a day and 170,000 vehicles a year. The effectiveness of OYAK Renault’s quality assurance system was acknowledged with the Company’s receipt of an ISO 9001 Certificate in 1996. A significant volume of the Company’s sales are directed to world markets and especially to western Europe. The Company’s export performance is further proof that its production quality has achieved world standards. OYAK Renault’s plants, which are located in Bursa, consist of two separate units: a body assembly line and a manufacturing line for engine and transmission elements. OYAK Renault produced a total of 96,860 vehicles in 2001. It also sold 99,003 vehicles, of which 12,601 went to the domestic market and 86,042 were shipped abroad. This highly successful export performance in 2001 was still more proof of OYAK Renault’s position as the leader of Turkey’s automotive export industry. Date of establishment: 1969 OYAK’s participation: 1969 Field of activity: Manufacturing of Renault automobiles and their spare parts Number of employees: 3,811 (31.12.2001 - TL billion) Total assets: 416,661 Total equity: 320,775 Gross sales: 937,050 Total exports (USD thousands): 670,313 Total taxes: 77,462 OYAK’s share: 47.66% www.renault.com.tr OYAK Renault registered gross sales of TL 937.1 trillion as a result of its operations in 2001. MA‹S MA‹S is the Turkish general distributor for Renault automobiles. The Company’s operations are carried out through six branches (‹stanbul, Ankara, ‹zmir, Bursa, Adana, and Diyarbak›r) and an extensive network of authorized dealerships located everywhere in Turkey. MA‹S is Turkey’s biggest automobile sales organization. The Company’s core activities are organizing the sale and after-sale services of Renault vehicles. Because of this, an important part of MA‹S’s operations consists of setting up and overseeing Renault maintenance and repair stations. MA‹S also imports Renault vehicles for sale in the Turkish market and provides their owners with the full range of spare parts and warranty services as well. Despite the severe contraction experienced in the automotive sector due to the effects of Turkey’s economic downturn in 2001, MA‹S’s perceptive strategies enabled it to increase its market share. The Company sold 39,145 vehicles last year, once again becoming the market leader with a 28.9% share. The Company had gross sales of TL 631.3 trillion as a result of its operations in 2001. Date of establishment: 1968 OYAK’s participation: 1968 Field of activity: Sales and after sales services for Renault automobiles Number of employees: 652 Number of service points: 6 branch offices and 87 authorized dealers (31.12.2001 - TL billion) Total assets: 194,836 Total equity: 84,836 Gross sales: 631,297 Total export (USD thousand): 2,331 Total taxes: 3,737 OYAK’s share: 51.00% www.renault.com.tr OYAK ANNUAL REPORT 2001 30 OMSAN LOJ‹ST‹K OMSAN Lojistik is one of Turkey’s leading transport companies, operating a 550-vehicle fleet of dry bulk carriers, automobile carriers, and cement carriage truck that work in coordination with international land, sea, and air transporters. The Company has two foreign subsidiaries, OMSAN GmbH (Germany) and OMSAN S.A.R.L. (France) as well as a liaison office in Trieste in Italy. Euteltracks satellite communications and vehicle tracking system in the operation of its fleet of environmentally friendly, modern, and powerful carriers that fully conform to EU standards. This and similar advanced systems that the Company employs in its service processes make an important contribution to the effective, rapid, and reliable service standards that OMSAN Lojistik adheres to. In 2001 OMSAN Lojistik underwent a comprehensive structural transformation as a result of which, the Company’s function-based operations were abandoned in favor of a structure based on sectors and processes. Thanks to its successfully implemented strategies, OMSAN Lojistik is not only emerging unscathed from Turkey’s recent crisis but has also significantly expanded its customer portfolio. The Company had gross sales of TL 76.1 trillion in 2001. OMSAN Lojistik has been awarded an ISO 9002 Quality Certificate. The Company subscribes to the Date of establishment: 1978 OYAK’s participation: 1978 Field of activity: Logistic services; domestic and international land, air and marine transportation Number of employees: 726 (31.12.2001 - TL billion) Total assets: 46,159 Total equity: 36,863 Gross sales: 76,059 Total exports (USD thousand): 36,489 Total taxes: 12,309 OYAK’s share: 61.60% www.omsan.com.tr OYAK ANNUAL REPORT 2001 31 SELYAK Selyak is a joint venture of ELF (France), MA‹S, and OYAK. The Company was set up to market petroleum products and related services in Turkey under the ELF trademark. It has 154 fuel stations located all over the country. The architecture of Selyak’s fuel distribution network consists of stations that are modern and that are designed to high standards of quality and safety while also fitting in with their surroundings. 22,300 sqm in Samsun and another measuring 48,800 sqm in ‹stanbulAmbarl›. In addition, Selyak also has an engine lubricant blending plant in ‹zmir-Menemen with a monthly production capacity of 3,000 tons fully conforming to European standards. Date of establishment: 1990 OYAK’s participation: 1990 Field of activity: Distribution of petroleum products and manufacturing of engine lubricants Number of employees: 141 Number of service points: 154 fuel stations (31.12.2001 - TL billion) Total assets: 68,946 Total equity: 11,470 Gross sales: 446,519 Total exports (USD thousand): 1,379 Total taxes: 56,171 OYAK’s share: 25.00% In 2001 Selyak had gross sales of TL 446.5 trillion, and registered a 2.2% share of the Turkish fuel market. The Company owns and operates Turkey’s most modern fuel storage facilities with one measuring www.selyak.com GOODYEAR Goodyear Lastikleri, Turkey’s leading tire manufacturer, is a joint venture of Goodyear (USA), OYAK, and the Koç Group. Goodyear Lastikleri’s stock has been trading on the ISE National Market since 1986. The Company has two factories, one in ‹zmit and the other in Adapazar›, in which tires are manufactured for automobiles, trucks, pickups, buses, minibuses, tractors, and heavy-duty equipment. In addition, they also produce tread rubber for use in tire-rebuilding. The Company had gross sales amounting to TL 268.4 trillion as a result of its operations in 2001, a year in which its exports were worth USD 136 million. Goodyear Lastikleri’s corporate vision is to be customers’ first preference in vehicle tires and tire-related products. In line with its philosophy of customer satisfaction, the Company’s mission is to create customer loyalty through all its channels of distribution. Date of establishment: 1961 OYAK’s participation: 1962 Field of activity: Manufacturing of outer and inner tires, and tread rubbers Number of employees: 1,479 Number of service points: 385 dealers (31.12.2001 - TL billion) Total assets: 159,454 Total equity: 19,444 Gross sales: 286,354 Total exports (USD thousand): 135,787 Total taxes: 5,220 OYAK’s share: 10.85% www.goodyear.com.tr OYAK ANNUAL REPORT 2001 32 Food - Chemicals TUKAÞ HEKTAÞ TAM GIDA ET‹ PAZARLAMA OYAK ANNUAL REPORT 2001 33 TUKAÞ Tukaß has been an OYAK subsidiary since 1967. It is one of the leading producers of canned food in Turkey. The Company produces tomato and pepper pastes, canned fruits and vegetables, ready-to-eat foods, fruit compotes, jellies and jams, ketchups, a variety of sauces, and various kinds of pickles in its modern plants located in Turgutlu, Torbal›, and Manyas. For Tukaß, 2001 was a year in which important progress was made: • Under the heading of its efforts to increase market share and lead the sector, Tukaß purchased two factories in Bal›kesir-Manyas. With these purchases, the Company has increased its tomato paste production capacity by 164% and its total production capacity by 55%. • For the purpose of shedding its traditional image of being only a tomato paste maker and of gaining recognition as a general producer of foods, the Company has added more than sixty new products to its product line. It has also developed a new corporate vision for itself and overhauled its quality policy. • Recognizing the vital importance of organization and distribution networks in the foods industry, Tukaß revamped its domestic sales organization, set up regional warehouses, and doubled the number of its dealers. • Tukaß has set up its in-house R&D Department with the goal of seeking ways to spread its production operations out over the whole year. The Company has designed and launched two new labels: "Aegean Gourmet", which is targeted at markets abroad, and "Egetom", which is directed at the domestic market. • Tukaß has revised its corporate communications strategy in line with its general, growth-focused strategies. In the advertising and promotion campaigns conducted for this purpose, audiences were introduced to Tukaß’s new identity as well as to its new lines of products. Tukaß products are marketed in Turkey and abroad through a dealership system. In addition, the Company also makes direct sales to major stores and supermarkets. Tukaß registered gross sales amounting to TL 50.3 trillion as a result of its operations in 2001. In addition to supplying the domestic market, the Company also sells its goods abroad and has been steadily improving its export performance in recent years. In 2001, Tukaß’s exports amounted to USD 16.8 million. Its products are shipped to the United States, Australia, Japan, and the United Arab Emirates as well as to other Middle Eastern countries. Date of establishment: 1962 OYAK’s participation: 1967 Field of activity: Manufacturing and sales of tomato and pepper pastes, canned foods, ready-to-eat foods and pickles Number of employees: 349 Number of service points: 60 regional dealers (31.12.2001 - TL billion) Total assets: 53,832 Total equity: 12,563 Gross sales: 50,299 Total exports (USD thousand): 16,756 Total taxes: 2,475 OYAK’s share: 72.00% www.tukas.com.tr OYAK ANNUAL REPORT 2001 34 HEKTAÞ Hektaß imports, manufactures, and markets agricultural chemicals (including their primary and secondary raw materials), household pesticides, veterinary pharmaceuticals, and leaf fertilizers. Hektaß also acts as the representative and distributor for a number of world-famous brands such as DuPont, FMC, and Uniroyal, Turkey. The Company’s production activities are carried out in modern facilities located in the Urfa and Gebze industrial parks. Hektaß has seven regional departments and more than 2,000 sales outlets located all over Turkey. Controlling an 18.9% share of the national market for agricultural chemicals, the Company easily defended its position as leader of the domestic sector in 2001. Under a project that is being conducted to improve operational effectiveness, the Company underwent a restructuring in 2001 in which its headquarters were also relocated to its factory in the Gebze Industrial Zone. Hektaß had gross sales of TL 33.1 trillion as a result of its operations in 2001. Date of establishment: 1956 OYAK’s participation: 1963 Field of activity: Manufacturing and sales of agricultural chemicals Number of employees: 197 (31.12.2001 - TL billion) Total assets: 31,614 Total equity: 20,018 Gross sales: 33,071 Total exports (USD thousand): 919 Total taxes: 4,219 OYAK’s share: 53.81% www.hektas.com.tr OYAK ANNUAL REPORT 2001 35 TAM GIDA Tam G›da makes biscuits, crackers, and cakes under the "Eti" label. Tam G›da took a number of important steps in 2001 to increase its market share and it also expanded its product line. The Company’s sales to the domestic market last year reached 28,505 tons; export sales also reached 5,346 tons. Tam G›da had gross sales of TL 40.2 trillion as a result of its operations in 2001. The Company’s domestic and foreign sales are carried out by Eti Pazarlama. Date of establishment: 1980 OYAK’s participation: 1982 Field of activity: Manufacturing of biscuits, crackers and cakes Number of employees: 445 (31.12.2001 - TL billion) Total assets: 15,089 Total equity: 8,571 Gross sales: 40,207 Total exports (USD thousand): 1,993 Total taxes: 4,815 OYAK’s share: 29.09% ET‹ PAZARLAMA Eti Pazarlama is a marketing company active in the baked goods sector, producing 150 different kinds of biscuits, crackers, cookies, cakes, pies, wafers, bars, and similar snack foods in a total of seven different categories. Eti Pazarlama is able to reach 167,860 sales points all over Turkey through its eight regional departments and 148 distributors who are supplied by a fleet of 756 vehicles. Eti Pazarlama is a company with high export potential. In 2001, the Company’s exports increased 201% and reached nearly 12,000 tons. While the main export markets are Middle Eastern and Balkan countries, Eti Pazarlama also exports goods to developed markets in Europe, the United States, and South and Southeastern Asia. Date of establishment: 1981 OYAK’s participation: 1982 Field of activity: Distribution and sales of biscuits, cakes, crackers, pies Number of employees: 223 Number of service points: 8 regional departments and 148 distributors Eti Pazarlama had gross sales amounting to TL 163.9 trillion as a result of its operations in 2001. (31.12.2001 - TL billion) Total assets: 27,661 Total equity: 3,593 Gross sales: 163,933 Total exports (USD thousand): 9,376 Total taxes: 3,804 OYAK’s share: 26.00% www.etipazarlama.com.tr OYAK ANNUAL REPORT 2001 36 Services OYTAÞ OYCEM OYAK ‹NÞAAT OYPA OYTUR OYAK GÜVENL‹K OYAK ANNUAL REPORT 2001 37 OYTAÞ Oytaß is a general trading company which specializes in foreign trade and which handles the import/export operations of OYAK subsidiaries. The Company has a participation in OYCEM, Spain that was established to coordinate the cement exports to that region. For more than a quarter of a century, Oytaß has been a company with a strong reputation for its experience in import/export, for its professionalism, and for its highly qualified personnel. The Company’s service quality has been verified by an ISO 9002 Certificate. for OYAK-owned cement factories and it plays an important role in procuring high-quality coal under the most favorable terms possible. Oytaß has considerable experience in exporting cement and clinker. The Company had gross sales of TL 89.9 trillion as a result of its operations in 2001. Date of establishment: 1974 OYAK’s participation: 1974 Field of activity: Domestic and international trading Number of employees: 37 (31.12.2001 - TL billion) Total assets: 21,271 Total equity: 5,724 Gross sales: 89,930 Total exports (USD thousands): 31,209 Total taxes: 5,031 OYAK’s share: 99.48% www.oytas.com.tr Oytaß is the leader of the Turkish market in the sale of imported petrocoke and heating coal. The Company also searches out the most suitable sources of the coal needed OYAK ‹NÞAAT Founded in 1982, Oyak ‹nßaat is a construction company that undertakes project, construction, and installation works in a wide range of applications from housing to hospitals and from industrial buildings to tourism and military facilities. The Company also develops housing projects for OYAK members. In addition to its construction work being undertaken jointly with the Social Security Organization, Oyak ‹nßaat is currently carrying out its Zirvekent project in Ankara. This project was designed for and is being promoted to the general market entirely by the Company. Oyak ‹nßaat investigates and seeks useful applications for advanced construction techniques such as prefabrication, tunnel molds, and steel construction and it will be devoting more attention to this area in the future. Successful in its conduct of its activities in Turkey, the Company also takes an interest in international contracting work and is currently investigating opportunities in this area. Oyak ‹nßaat registered gross sales of TL 20.3 trillion as a result of its operations in 2001. Date of establishment: 1982 OYAK’s participation: 1982 Field of activity: Project construction and installation works Number of employees: 259 (31.12.2001 - TL billion) Total assets: 31,467 Total equity: 7,718 Gross sales: 20,314 Total taxes: 1,771 OYAK’s share: 75.00% OYAK ANNUAL REPORT 2001 38 OYPA Originally created to be a military commissariat service in 1963, OYPA (Ordu Pazarlar›) became an independent company in 1998. Since its founding, OYPA has been at the service of all customers, putting its knowledge and experience to work for them while adhering to its principles of quality in goods and service and suitability of price. The goal of the Company today is to provide its customers with the best possible service conforming to 21st century retailing standards; and in line with that mission, it keeps continuously abreast of innovations in this field. With its primary focus on customer satisfaction, OYPA successfully completed a restructuring in 2001. Its image completely refurbished, the Company continues to provide customers good value for their money. Today OYPA has 21 stores and is seeking to make additions to this number in its effort to expand its consumer network. OYPA had gross sales amounting to TL 76.5 trillion as a result of its operations in 2001. Date of establishment: 1998 OYAK’s participation: 1998 Field of activity: Retailing and wholesale trading Number of employees: 807 Number of service points: 21 stores (31.12.2001 - TL billion) Total assets: 16,170 Total equity: 2,762 Gross sales: 76,519 Total taxes: 2,083 OYAK’s share: 100.00% OYAK ANNUAL REPORT 2001 39 OYTUR Oytur (OYAK Turizm) is a member of IATA and holds a "Class A" travel agency license. Oytur’s activities are conducted by a dynamic and youthful team who are led by professional management and who provide firstrate, painstaking service in keeping with the OYAK reputation for quality. The Company registered gross sales of TL 7.6 trillion as a result of its operations in 2001. Date of establishment: 1989 OYAK’s participation: 1989 Field of activity: Tourism and tourism related trading Number of employees: 80 Number of service points: 2 agencies (31.12.2001 - TL billion) Total assets: 7,896 Total equity: 6,409 Gross sales: 7,593 Total taxes: 773 Oytur’s main services are domestic and international airline ticketing and the organization of national and international congresses, conferences, seminars, courses, and company meetings both in Turkey and abroad. The Company also operates the Ankara Zirvekent sports facilities. OYAK’s share: 100.00% www.oyaktur.com.tr OYAK GÜVENL‹K Oyak Güvenlik was set up to seek out and provide solutions to the needs of OYAK and its subsidiaries as well as of domestic and foreign companies in the areas of security and the safe transport of money, negotiable instruments, and valuables. In addition to standard security services, Oyak Güvenlik also keeps track of innovations in the field and makes them available to its customers. As of year-end 2001, the Company was serving 27 clients. Other services provided by the Company include security consultation, recruitment of security personnel, setting up and operating electronic and physical security systems, and integrated security solutions. Oyak Güvenlik had gross sales amounting to TL 5.8 trillion as a result of its operations in 2001. Date of establishment: 2001 OYAK’s participation: 2001 Field of activity: Security services and systems Number of employees: 1172 (31.12.2001 - TL billion) Total assets: 1,192 Total equity: 806 Gross sales: 5,753 Total taxes: 1,577 OYAK’s share: 100.00% www.oyakguvenlik.com.tr OYAK ANNUAL REPORT 2001 40 BOARD OF DIRECTORS Y. Selçuk Saka ‹brahim Aç›kmeße Cevat Temel Özkaynak (Ret.) Lieutenant General Major General Gendarmerie (Ret.) Major General Chairman Board Member (since October 3, 2001) Board Member (since November 12, 2001) Bekir Ata Y›lmaz Sabri Demirezen Nafiz Kartal Air Force Brigadier General Brigadier General (Ret.) Rear Admiral (LH) Board Member Board Member Board Member Lütfi Fikret Tuncel Þerif Coßkun Ulusoy, Ph.D. Board Member CEO and Board Member BOARD OF AUDITORS Ahmet Feyyaz Ö¤ütcü Haydar Gezmiß Ekrem Keskin, Ph.D. Rear Admiral (UH) Member Member Member OYAK ANNUAL REPORT 2001 41 EXECUTIVE MANAGEMENT Þerif Coßkun Ulusoy, Ph.D. Caner Öner, Ph.D. Ayd›n Müderriso¤lu, Ph.D. Chief Executive Officer Executive Vice President Executive Vice President Investments and Information System New Business Development Hülya Atahan Ergün Oktay Okur Celalettin Ça¤lar Executive Vice President Executive Vice President Executive Advisor Financial and Administrative Affairs Member Services Head of Cement and Automotive Groups OYAK AUDITORS’ REPORT 2001 42 Denetim Serbest Mali Müßavirlik A.Þ. ‹ran Caddesi 33/4 06700 Gaziosmanpaßa - Ankara Türkiye Tel: (312) 427 62 35 Faks: (312) 427 62 02 www.deloitte.com.tr ORDU YARDIMLAÞMA KURUMU (ARMED FORCES PENSION FUND) INDEPENDENT AUDITORS' REPORT FOR THE YEAR ENDED 31 DECEMBER 2001 1. We have audited the accompanying balance sheets of Ordu Yard›mlaßma Kurumu (Armed Forces Pension Fund) (‘OYAK – the ‘Institution’) as at 31 December 2001 and the related statement of income, for the year then ended. These financial statements are the responsibility of the Institution’s management. Our responsibility is to express an opinion on these financial statements based on our audits. 2. We conducted our audits in accordance with International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. 3. Under the terms of the existing social legislation in Turkey and the labor union agreement, the Institution is required to make lump-sum payments to employees whose employment is terminated due to retirement or for reasons other than resignation or misconduct. However, as of December 31, 2001 the Institution did not provide a reserve for the retirement pay liability of TL 1,724 billion (31.12.2000: TL 1,055 billion) since such reserve is not compulsory under the Uniform Chart of Accounts. 4. As of December 31, 2001, the Institution did not provide a reserve for the Civilian Defense Fund liability, amounting to TL 2,972 billion (31.12.2000: TL 1,087 billion) in the accompanying financial statements (Note 17). OYAK AUDITORS’ REPORT 2001 43 5. Although the financial statements of Sümerbank and Oyakbank as of 31.12.2001 are finalized with the Independent Auditors’ Report and accordingly, with the approval of BDDK, the transfer of Sümerbank has been realized, according to the regulations of Law published on 31.01.2002 in the Official Gazette which amends Law Number: 4389, bank financial statements as of 31.12.2001 are subject to a special independent audit with a wider scope. According to the results of the independent audit, there is a possibility of a change in the dividend income accrual of OYAK as of 31.12.2001. For this reason, the effect of the possible changes, if exist, on the total dividend income of TL 150,955 Billion from Oyakbank and Sümerbank could not be estimated. 6. In our opinion, except the effects of the matters discussed in the paragraphs 3,4 and 5, financial statements referred to above present fairly, in all material respects, the financial position of the Ordu Yard›mlaßma Kurumu (Armed Forces Pension Fund) as of 31 December 2001 and the results of its operations for the year then ended in accordance with the rules and principles indicated in Law of Oyak (Law Number 205 "the Code"- Note 1) and generally accepted accounting principles in Turkey. Ankara, 1 March 2002 Bülent BEYDÜZ Partner DENET‹M SERBEST MAL‹ MÜÞAV‹RL‹K A.Þ. Member Firm of DELOITTE TOUCHE TOHMATSU OYAK AUDITORS’ REPORT 2001 44 OYAK ORDU YARDIMLAÞMA KURUMU BALANCE SHEETS AS AT 31 DECEMBER 2001 AND 2000 (BILLION TL) TECHNICAL ASSETS 31.12.2001 TECHNICAL ASSETS 31.12.2000 I. CURRENT ASSETS A. Cash and Cash Equivalents 1. Cash 2. Banks 3. Cheques Given and Payment Orders (-) 4. Other cash equivalents B. Marketable Securities 1. Share Certificates 2. Private Sector Notes, Bonds and Bills 3. Public Sector Notes, Bonds and Bills C. Short Term Trade Receivables 1. Receivables from Retired Members 2. Receivables from Government Financial Offices and Service Borrowings 3. Dividends Receivable 4. Other Trade Receivables 5. Doubtful Trade Receivables D. Other Receivables 1. Receivables from Participations 2. Receivables from Subsidiaries 3. Investments with Social Purposes 4. Receivables from the Personnel 5. Other Various Receivables E. Inventories 1. Raw material 2. Trade Goods F. Short Term Prepaid Expenses and Income Accruals 1. Prepaid Expenses 2. Income Accruals G. Other Current Assets 1. VAT Carry-forward 2. VAT Deductible 3. Job Advances 4. Personnel Advances 5. Other Current Assets 811,693 426,921 23 427,114 (325) 109 12,396 1,435 10,961 294,956 1,163 1,050 282,160 10,145 438 71,439 2 253 71,027 157 1,476 35 1,441 2,713 4 2,709 1,792 1,780 12 363,004 165,068 26 165,129 (205) 118 42,900 927 41,973 88,209 758 1,368 81,232 4,842 9 51,178 1 35 51,035 107 838 838 13,888 13,888 923 888 4 31 II. NON CURRENT ASSETS A. Trade Receivables 1. Deposits and Guarantees B. Financial Non-Current Assets 1. Participations 2. Capital Commitments to Participations 3. Subsidiaries 4. Capital Commitments to Subsidiaries 5. Other Financial Non-Current Assets C. Fixed Assets 1. Land 2. Buildings 3. Machinery and Equipment 4. Vehicles 5. Furnitures and Fixtures 6. Other Tangible Fixed Assets 7. Accumulated Depreciation 8. Construction in Progress D. Intangibles 1. Leasehold Improvements 2. Accumulated Depreciation E. Other Non-Current Assets 446,241 418,609 91,481 327,128 26,380 6,728 19,008 854 41 1,149 2 (1,980) 578 1,247 1,380 (133) 5 280,167 260,022 45,642 214,380 18,867 6,404 12,104 629 35 359 (1,214) 550 1,278 1,380 (102) - 1,257,934 643,171 52,605 69,555 17,239 28,092 1,380,094 688,502 TOTAL ASSETS Housing Pre-Accumulation Fund Retirement Income System Based On Donations TOTAL ASSETS INCLUDING FUNDS OYAK AUDITORS’ REPORT 2001 45 OYAK ORDU YARDIMLAÞMA KURUMU BALANCE SHEETS AS AT 31 DECEMBER 2001 AND 2000 (BILLION TL) TECHNICAL LIABILITIES 31.12.2001 TECHNICAL LIABILITIES 31.12.2000 I. SHORT TERM LIABILITIES A. Trade Payables 1. Suppliers 2. Payables to Members 3. Payables to Financial Offices 4. Deposits and Guarantees Taken B. Other Payables 1. Payables to Participations 2. Payables to Subsidiaries 3. Payables to Personnel 4. Other Miscellaneous Payables C. Advances Received 1. Resources for House Constructions D. Taxes and Other Liabilities Payable 1. Taxes and Funds Payable 2. Social Security Deductions Payable 3. Other Liabilities Payable E. Reserves 1. Reserves for Taxes 2. Other Reserves F. Deferred Income and Expense Accruals 1. Short Term Deferred Income 2. Expense Accruals G. Other Short Term Liabilities 1. Current Accounts of Headquarter and Branches 2. Count Differences 7,937 820 598 120 102 835 2 307 1 525 410 203 74 133 160 160 5,618 5,524 94 94 94 7,690 1,082 662 77 343 279 1 121 157 2,852 2,852 221 173 46 2 110 110 3,125 3,110 15 21 21 II. LONG TERM LIABILITIES A. Trade Payables 1. Deposits and Guarantees Taken B. Deferred Income and Expense Accruals 1. Long Term Deferred Income C. Retirement Pay Liabilities 1,214 1,214 1,214 - 2,730 2,730 2,730 - III. EQUITY A. Reserves B. Revaluation Funds C. Profit 1. Income D. Capitals of Army Markets 1,248,783 654,401 594,382 594,382 - 632,751 415,366 217,385 217,385 - TOTAL LIABILITIES 1,257,934 643,171 52,605 69,555 17,239 28,092 1,380,094 688,502 Housing Pre-Accumulation Fund Retirement Income System Based On Donations TOTAL LIABILITIES INCLUDING FUNDS OYAK AUDITORS’ REPORT 2001 46 OYAK ORDU YARDIMLAÞMA KURUMU INCOME STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2001 AND 2000 (BILLION TL) TECHNICAL INCOME 31.12.2001 TECHNICAL INCOME 31.12.2000 A. Investment Income 1. Income from Participations 2. Income from Subsidiaries 3. Real Estate Income 4. Income from Placements B. Income from Social Investments 1. Income from Army Markets 2. Loan Lending Assistance and Commodity Credits Income 3. Housing Aid Income C. Other Income 1. Interest and Commissions Income 2. Other Income D. Revaluation Funds 530,012 75,345 207,908 4,637 242,122 19,407 1,645 5,421 12,341 12,872 2,692 10,180 45,817 163,566 43,138 38,584 2,841 79,003 15,014 840 8,218 5,956 17,529 1,225 16,304 29,271 TOTAL INCOME 608,108 225,380 E. Administrative Expenses 1. Personnel Expenses 2. Legal Branch Expenses 3. Office Expenses 4. Fixed Assets Expenses 5. Miscellaneous Expenses 6. Social and Cultural Expenses 7. Depreciation Expenses F. Financial Expenses 1. Bank Commission Expenses 2. Share Certificate Commissions and Expenses 3. Other Financial Expenses G. Real Estate Operational Expenses H. Other Expenses (11,416) (7,657) (151) (740) (201) (2,024) (373) (270) (434) (282) (152) (313) (162) (6,299) (3,788) (93) (555) (115) (1,107) (538) (103) (355) (222) (58) (75) (224) (117) TOTAL EXPENSES (12,325) (6,995) OPERATIONAL INCOME 595,783 218,385 (1,401) (1,000) - - 594,382 217,385 I. Technical Income/(Expense), net J. Civilian Defense Fund NET PROFIT DIRECTORY CORPORATE HEADQUARTERS Ziya Gökalp Cad. No: 64 06600 Kurtuluß ANKARA - TURKEY Phone: (+90 312) 415 60 00 Fax: (+90 312) 432 27 05 www.oyak.com.tr FINANCE OYAK BANK A.Þ. Eski Büyükdere Cad. Ayaza¤a Köy Yolu No: 6 80670 Maslak ‹STANBUL - TURKEY Phone: (+90 212) 335 10 00 Fax: (+90 212) 335 20 05 www.oyakbank.com.tr AXA OYAK HOLD‹NG A.Þ. Meclisi Mebusan Cad. No: 81 OYAK ‹ßhan› 80040 Sal›pazar› ‹STANBUL - TURKEY Phone: (+90 212) 334 24 24 Fax: (+90 212) 249 48 28 www.axaoyak.com.tr OYAK YATIRIM VE MENKUL DEÚERLER A.Þ. Büyükdere Cad. Beytem Plaza No: 17 80220 Þißli ‹STANBUL - TURKEY Phone: (+90 212) 315 10 00 Fax: (+90 212) 315 11 08 www.oyakmenkul.com.tr OYAK ANKER BANK GMBH Am Plan 1 56068 KOBLENZ - GERMANY Phone: (+49 261) 912 30 Fax: (+49 261) 912 31 33 www.oyakankerbank.de HALK F‹NANSAL K‹RALAMA A.Þ. 19 May›s Cad. Golden Plaza 80220 Þißli ‹STANBUL - TURKEY Phone: (+90 212) 230 92 48 Fax: (+90 212) 230 46 69 www.halkleasing.com.tr OYAK EUROPEAN FINANCE PLC 87 Lower Leeson Str. DUBLIN 2 - IRELAND Phone: (+353 1) 676 38 90 Fax: (+353 1) 676 38 93 www.oyakeuro.com CEMENT ADANA Ç‹MENTO SAN. T.A.Þ. Ceyhan Yolu Üzeri 01321 ADANA - TURKEY Phone: (+90 322) 332 99 50 Fax: (+90 322) 332 95 01 BOLU Ç‹MENTO SAN. A.Þ. Bolu Mengen Yolu Üzeri 14001 Çaydurt BOLU - TURKEY Phone: (+90 374) 226 47 70 Fax: (+90 374) 226 50 68 www.bolucim.com.tr ÜNYE Ç‹MENTO SAN. VE T‹C. A.Þ. Devlet Sahil Yolu, Cevizdere Mevkii 52300 Ünye ORDU - TURKEY Phone: (+90 452) 321 11 00 Fax: (+90 452) 321 11 30 www.unyecimento.com.tr MARD‹N Ç‹MENTO SAN. VE T‹C. A.Þ. Savuryolu 6. Km 47019 MARD‹N - TURKEY Phone: (+90 482) 226 64 30 Fax: (+90 482) 226 64 36 www.mcs.com.tr OYSA N‹ÚDE Ç‹MENTO SAN. VE T‹C. A.Þ. K›rüstü Mevkii Hac›lar Sk. 51270 N‹ÚDE - TURKEY Phone: (+90 388) 232 36 30 Fax: (+90 388) 232 36 34 ELAZIÚ-ALTINOVA Ç‹MENTO SAN. T.A.Þ. K›z›lay Mah. Kaz›m Karabekir Cad. No:12 23200 ELAZIÚ - TURKEY Phone: (+90 424) 224 39 21 Fax: (+90 424) 224 16 70 www.elazigcimento.com.tr OYSA ‹SKENDERUN Ç‹MENTO SAN VE T‹C. A.Þ. Adana-‹skenderun Karayolu 31201 Karay›lan Beldesi Yan› ‹SKENDERUN - TURKEY Phone: (+90 326) 654 25 10 Fax: (+90 326) 654 25 00 www.oysa.com.tr DIRECTORY AUTOMOTIVE OYAK RENAULT OTOMOB‹L FABR‹KALARI A.Þ. Barbaros Plaza Emirhan Cad. No: 145/C 80700 Dikilitaß ‹STANBUL - TURKEY Phone: (+90 212) 326 44 44 Fax: (+90 212) 326 44 66 www.renault.com.tr MA‹S MOTORLU ARAÇLAR ‹MAL VE SATIÞ A.Þ. Büyükdere Cad. No: 175 80794 Levent ‹STANBUL - TURKEY Phone: (+90 212) 316 66 66 Fax: (+90 212) 268 04 20 www.renault.com.tr OMSAN LOJ‹ST‹K A.Þ. Tugay Yolu Cevizli 81540 Maltepe ‹STANBUL - TURKEY Phone: (+90 216) 458 55 55 Fax: (+90 216) 458 54 54 SELYAK PETROL ÜRÜNLER‹ ÜRET‹M VE PAZ. A.Þ. Barbaros Bulv. Þakir Kesebir Sk. No: 25 / 27 Balmumcu 80700 Beßiktaß ‹STANBUL - TURKEY Phone: (+90 212) 275 25 18 Fax: (+90 212) 274 47 29 www.selyak.com GOODYEAR LAST‹KLER‹ T.A.Þ. Büyükdere Cad. Maslak Meydan› No: 41 80670 Levent ‹STANBUL - TURKEY Phone: (+90 212) 329 50 00 Fax: (+90 212) 276 62 25 www.goodyear.com.tr FOOD - CHEMICALS ET‹ PAZARLAMA VE SANAY‹ A.Þ. Gültepe Mah. Harman Cad. Ali Kaya Sk. Polat Plaza B Blok No: 2 80640 1. Levent ‹STANBUL - TURKEY Phone: (+90 212) 325 21 71 Fax: (+90 212) 325 22 60 www.etipazarlama.com.tr TAM GIDA SANAY‹ VE T‹CARET A.Þ. Organize Sanayi Bölgesi 26110 ESK‹ÞEH‹R - TURKEY Phone: (+90 222) 236 00 09 Fax: (+90 222) 236 03 49 OYTAÞ ‹Ç VE DIÞ T‹CARET A.Þ. Kemeralt› Cad. No: 28 80030 Karaköy ‹STANBUL - TURKEY Phone: (+90 212) 293 42 10 Fax: (+90 212) 293 42 20 www.oytas.com.tr OYPA OYAK BÜYÜK MAÚAZACILIK A.Þ. 105 Evler Halk Sk. No: 1 81080 Kozyata¤› ‹STANBUL - TURKEY Phone: (+90 216) 411 06 06 Fax: (+90 216) 411 06 14 OYAK ‹NÞAAT A.Þ. Eskißehir Devlet Yolu No: 6 06520 Beßtepe ANKARA - TURKEY Phone: (+90 312) 286 53 10 Fax: (+90 312) 286 49 96 OYTUR OYAK TUR‹ZM VE T‹CARET A.Þ. Mahir ‹l Cad. No: 50/1 Altunizade 81190 Üsküdar ‹STANBUL - TURKEY Phone: (+90 216) 474 11 11 Fax: (+90 216) 474 23 23 www.oyaktur.com.tr OYAK GÜVENL‹K A.Þ. Necatibey Cad. OYAK ‹ß Merkezi No: 51 06440 K›z›lay ANKARA - TURKEY Phone: (+90 312) 232 17 82 Fax: (+90 312) 231 15 34 www.oyakguvenlik.com.tr TUKAÞ GIDA SANAY‹ VE T‹CARET A.Þ. Nadir Nadi Cad. No: 15 35260 Konak ‹ZM‹R - TURKEY Phone: (+90 232) 445 97 77 Fax: (+90 232) 482 12 22 www.tukas.com.tr HEKTAÞ T‹CARET T.A.Þ. Gebze Organize Sanayi Bölgesi ‹hsan Dede Cad. 700. Sk. 41480 Gebze KOCAEL‹ - TURKEY Phone: (+90 262) 751 14 12 Fax: (+90 262) 751 14 22 www.hektas.com.tr SERVICES OYTEK OYAK TEKNOLOJ‹ H‹ZMETLER‹ A.Þ. Polat Plaza Ali Kaya Sk. No: 4 A Blok 80620 Levent ‹STANBUL - TURKEY Phone: (+90 212) 325 29 29 Fax: (+90 212) 279 74 47