To the distinquished investors and business partners and valued employees of Koç Holding,

We met 2010 with negative expectations; there was a risk that high public debt could cause a chain reaction, potentially plunging the country back into a crisis. There was also the possibility that the recession in developed countries would bring about a second dip. Yet our fears were not realized. While developed countries were unable to reach the desired growth numbers, neither did they experience a double-dip recession.

In spite of developments that presented a gloomy picture, the global economy still grew by five percent, exceeding expectations. Undoubtedly, certain developing countries, mainly China, India and Brazil, played an important role in this.

The Turkish economy was able to finish 2010 with almost nine percent growth, despite these developments around the world; in particular, the difficulties experienced by its neighbor Europe. Turkey’s economic performance was followed with awe in the international arena. The addition of Turkey, Indonesia, South Korea and Mexico, described as “growing markets,” to the BRIC countries with rapid development – Brazil, Russia, India and China – was a topic on the agenda.

Undoubtedly, the strengthening of the balance sheets of both banks and the non-financial sector following the 2001 crisis, as well as the increase in their productivity and flexibility, played a major role in this more upbeat scenario. Our national economy quickly pulled itself together at the beginning of 2010, around the same time that the global economy began signaling that the economic crisis was over.

Turkey is entering 2011 with strong growth momentum as well, aided by this progressive legacy. We expect that our country will sustain its positive performance, yet we must not forget the effect of external dynamics, either. Developments that may lead to an upward movement of oil and commodity prices in the Middle East and North Africa must be carefully followed, as well.

As the largest and fastest growing economy in the Middle East, Turkey will most likely play a defining role in presenting alternative models for governments that may newly arise in the region. This is a factor that will further strengthen Turkey’s position in its region. We also believe that Turkey will continue to be of interest around the world due to its economic performance. We foresee an economic atmosphere in the first six months with a high level of consumer trust, active domestic consumption and continuous investments.

At Koç Holding, we are defining our strategies with precise analysis and positioning. We emerged stronger from the crisis due to the focused strategy we followed in recent years, the conjunctural measures we have taken and our innovative and creative practices. We had successful results in 2010, as well.

As always, the basic foundation of our success, one that protects and develops our position as Koç Holding, is our heightened sense of camaraderie. Koç Holding has a consistently successful performance in every industry in which it participates; unfailingly, we are “number one” and our unity – our internal synergy – is top level.

In 2011, when we celebrate our 85th year, these qualities will continue to define our success. To bring our position in the global arena to an even higher level and increase our success, we will focus on making innovation a force of competition and evaluating the opportunities afforded by existing markets; while making the effort to add alternative markets to our exportation map. As always, we will take the right steps in making use of opportunities. While we carry out our investments in line with these plans in 2011, we continue to focus on productivity, on cost control and on creating more equity capital.

At Koç Holding, we keep in mind the words of our founder, the late Vehbi Koç, who said “As long as my country exists, so do I.” Based on this approach, we support our market achievements with a broad range of projects that serve as levers in the solution of social problems, and we will continue to add value to our country, our employees and our shareholders via these efforts.

Respectfully,
Mustafa V. Koç