We pledge to reinforce our position of leadership in the national economy and are determined, as always, to fulfill the social responsibilities that such a position entails.

2006 witnessed a significant increase in Koç Group's business volume, reflecting the success of initiatives put in place over the last few years. The addition of new companies to our business portfolio had a considerable impact on the rapid expansion of operating results. The successful absorption of these large entities into the system and culture of the Koç Group is due to the tireless efforts and the commitment to change on the part of our both longstanding and new managers and employees.

Fluctuations in the global financial markets in the middle of the year affected Turkey negatively. However, in contrast to similar crises in the past, the impact of this was overcome quickly. This difference signifies that Turkey has entered into a new phase in which political stability and economic discipline mutually reinforce the resilience of the Turkish financial markets to sharp changes in currency and interest rates.

The uninterrupted economic growth experienced over the last five years is indeed noteworthy given the track record in recent history. The economy expanded by another 6% in 2006, despite widespread expectations that the rate of growth would cool down slightly, thus raising hopes for the future. Other indicators, including the strong inflow of foreign direct investment, the significant increase in exports, the slowing down of the current account deficit and the improvement, however slight, in the distribution of income–support our optimism.

The positive developments in the economy is reflected in our business results. Traditionally, Koç Group always outperforms market developments in Turkey and this proved to be the case once again in
2006. However, we judge our business performance not only by economic results but by the added value we create. We seek to distinguish ourselves from our competitors in both domestic and international markets by the quality of our goods and services as well as by such factors as innovation, design, reliability and customer satisfaction. The results we have achieved demonstrate that we have attained our objectives.

In today's environment of global competition in the industrial and service sectors, relentless dynamism is the key to success. In addition to continuing to enhance the productivity and profitability of our businesses, we are committed to utilizing technology, processing information, supporting innovation and funding research & development. We give utmost priority to risk management and the evaluation of opportunities amidst constantly changing market conditions. By establishing a business system that trains all of our employees to follow these principles, we have empowered our companies to compete and succeed. 

In 2007, risks and difficulties are likely to stem from the two upcoming elections in Turkey in addition to any unforeseen fluctuations in the global markets. However, I am hopeful that these risks and difficulties will remain at minimal levels or even will not materialize at all provided that the

government, bureaucrats, businessmen, media–in sum all segments of society– remember the lessons of the past and continue to apply strict economic policies.

Koç Group has set high growth and profit targets for 2007. We will make every effort to achieve these objectives. We pledge to reinforce our position of leadership in the national economy and are determined, as always, to fulfill the social responsibilities that such a position entails.

As Koç Group enters its 81st year, I extend my sincere thanks to our shareholders, customers, dealers, business partners and employees for their unfaltering support and cooperation.

Rahmi M. Koç
Koç Holding Honorary Chairman

Quoted from 2006 Annual Report.