Energy

Borusan Enerji was founded in September of 2007 by Borusan Holding for the purpose of becoming active in the generation, distribution and trade of electricity in the Turkish market. The Company began operations by acquiring a license for the 48 MW Yedigöl Aksu hydro project and securing, from Manas Investment Holding, a 70% stake in Maya Enerji, which owned a hydro power station license of 52 MW.

During February of 2009, even though production had not started yet, Borusan Enerji agreed to sell half of its 912 MW portfolio to the German electricity generation and distribution expert EnBW and a sales and purchase agreement was signed at that time. This strategic partnership was founded on the principle of jointly creating and managing a balanced portfolio in Turkey with a heavy emphasis on renewable energy production. The priority aim in the short term will be to complete the necessary investments to increase the portfolio to 1000 MW. Meanwhile the long-term vision of the partnership is to develop the capacity of producing 2000 MW annually through the completion of targeted new investments.

Borusan Enerji has continued its investments and increased the combined portfolio to 912 MW. The Company's current portfolio consists of 37% hydro, 43% wind and 20% coal projects and once full capacity generation is started the annual production capacity is expected to reach close to 3.6 billion kWh by 2014. Borusan Enerji is expected to finalize $ 1.5 billion in investments and become one of the top ten energy generators in Turkey.

In conclusion, 2008 will be remembered not only as a year when all our companies gained significantly in terms of both economic and strategic aspects but also as a year when much hardship was experienced because of the crisis, especially during the last quarter. Our steel companies were the most affected by the crisis, not only because of the drop in demand but also as a result of the provisions needed for the decrease in the value of our inventory. Consequently, BMB reported a loss for the first time in its 65-year history and, likewise, Kerim Çelik was also unable to avoid a significant loss. Despite this, all our other large companies were successful in turning a profit.

As a result, the Borusan Group management and all the members of the Borusan family are aware that the term ahead of us is going to be a challenging one. Because of this, in October of 2008 the Borusan Group implemented a crisis management plan, made up of 18 principles, across all of our companies. So far, we have been relatively successful in the implementation of this plan.

Resolute precautions have been implemented with discipline in order to reduce operating capital and debts, change the budgeting process, increase sales through the systematic use of innovation and reduce expenses to restructure the balance because of declining income. We will continue to implement this disciplined approach in the days ahead without compromise.

Both as a result of our Group's strategic market strength and financial structure, and also because of the precautions we have taken, despite a downturn in revenue we have no doubt that 2009 will be a profitable year for the Borusan Group as we implement new and profitable strategic ventures.

As is the case with many companies worldwide because of the current economic situation, we were forced to part ways with some of our employees during this time. In addition, the present members of Borusan are working with great devotion and have made many personal sacrifices. On behalf of the Borusan Holding Executive Committee, I would like to hereby thank all those members of the Borusan family who are no longer with us, as well as those who continue to carry the Borusan torch into the future. As in the past, the members of Borusan will be the architects of tomorrow's successful results.

Executive Office
Agah Uğur
CEO