Ülker bİskÜvİ san. a.Ş. annual report 2009...in the “brands 2008” survey by ac nielsen,...

ÜLKER BİSKÜVİ SAN. A.Ş. AnnuAl RepoRt 2009

Davutpaşa Cad. No: 10 Topkapı-Istanbul, TurkeyTel: +90 (212) 567 68 00 Fax: +90 (212) 613 90 90www.ulker.com.tr www.ulkerbiskuvi.com.tr

ÜLKER BİSKÜ

Vİ SAN

. A.Ş. A

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L REpoRT 2009

Contents 2 Ülker Bisküvi in Brief 4 overview of Yıldız Holding 6 Key Financial and operational Indicators 8 Capital and Shareholder Structure 10 performance of Ülker Bisküvi Shares 12 Message from the Chairman of the Board14 Board of Directors 18 Message from the General Manager 22 The Food Industry Worldwide and in Turkey 25 Activities in 2009 Ülker Bisküvi in 2009 Production and Capacity Marketing and Distribution Investments Subsidiaries • BirlikPazarlama • İdealGıda • İstanbulGıda-BirleşikDışTicaret • BiskotGıda • AtlasGıdaPazarlama • Godiva • OtherSubsidiaries 42 Corporate Governance Ülker Bisküvi Family: Human Resources Environment,QualityandR&DActivities ShareholderRelationsandProfitDistributionPolicy Social Responsibility Projects CorporateGovernancePrinciplesComplianceReport59 profit Distribution proposal61 Audit Board Report 65 Independent Audit Report

1

For 65 years, we have been working for happy moments.

Ülker Bisküvi, one of the giant food producers of the world with 280 assorted biscuit and cracker products supplied to both national and international markets, is the indisputable leader of the sector.

Ülker Bisküvi’s main goal is to make its customers happy and it has held a place in everyone’s memory with “Happy Moments” since 1944.

Meeting the needs and expectations of its customers at the highest level, Ülker Bisküvi will continue to carry out consumer-oriented activities to increase “Happy Moments” even more.

2 ÜLKER BİSKÜVİ ANNUAL REPORT 2009

Ülker Bisküvi in Brief

Ülker Bisküvi, which started to operate in Eminönü, Istanbul 65 years ago in a small bakery with six or seven pots, a small oven and three workers, is now the flagship of Yıldız Holding in respect of both sales volume and profitability.

Ülker Bisküvi produces biscuits, crackers, chocolate covered biscuits and wafers at its factories in Topkapı/Istanbul and Ankara. As the indisputable leader of the sector, Ülker Bisküvi is one of the giant food producers of the world with 280 assorted biscuit and cracker products supplied to both domestic and international markets.

In 1996, Ülker Bisküvi received the ISO 9002 certificate for quality standards in production, and in 2001, the HACCP certificate for quality standards in food safety. In 2002, it won the top mark of “High Level” in an analysis conducted by the Europe-based quality certification firm BRC, thus, further secured its success in the field of quality control.

Ülker Quality in Global Markets Ülker Bisküvi introduces approximately 60 new products to the market annually. It constantly takes its innovative approach to higher levels with its independent laboratories and expert and experienced R&D staff. This innovative approach is the reason why Ülker has become one of the food brands most in demand.

Ülker Bisküvi’s products are exported mainly to the Middle East, Russia and Central Asian republics, as well as to Europe, Africa and the US. Ülker Bisküvi successfully represents Turkey’s approach to quality on a global scale.

Ülker Bisküvi has an effective quality control system that injects synergy into the entire process from production to consumption, and it conducts its investments based on its strategy which is focused on sustainable and profitable growth.

Ülker Bisküvi has found itself a place in everyone’s life since 1944 and is always remembered with “Happy Moments.”

3

Ülker and “Happy Moments”Closely known by three generations from 1944 to today, Ülker Bisküvi has a place in everyone’s memory with “Happy Moments.” The advertising campaign launched on the 65th anniversary of the brand and incorporation of the Company was built on this concept.

Surveys conducted show high levels of loyalty to the Ülker brand. In the “Brands 2008” survey by AC Nielsen, Ülker ranked first in the biscuits category, and second and third in the categories of the brands that consumers feel closest to and “top-of-the-mind” firms and brands, respectively.

According to research carried out by the Istanbul Chamber of Commerce in 2008, Ülker Bisküvi ranked 105th among the top industrial enterprises of Turkey.

Local distribution of biscuits and chocolate covered products produced by Ülker Bisküvi and its subsidiaries is undertaken by the subsidiary, Atlas Gıda Pazarlama, and other companies of Yıldız Holding, namely Esas Pazarlama, Merkez Gıda Pazarlama and Rekor Pazarlama.

Ülker Bisküvi has written its industrial history with its consumers. From the very beginning up to today, from production to sales, from marketing to distribution, Ülker’s management philosophy has always been to put its customers first.

Meeting the needs and expectations of its customers at the highest level, Ülker Bisküvi will continue to carry out consumer-oriented activities to increase “Happy Moments” even more.

1944

Ülker Bisküvi was established by Sabri Ülker in 1944 in the Eminönü district of Istanbul. It started out as a small bakery with just three workers, producing 200 kg of biscuits per day. A few years later, the Company relocated to the Topkapı district of Istanbul and had four 20 m2 ovens, which enabled it to achieve what was considered a high level of production at the time.


Having created value on a global scale with “the spirit of entrepreneurship, honesty, vision, innovation, determination, trust and courage” Yıldız Holding, achieved a consolidated gross turnover of TL 8.8 billion in 2009 just from its food related businesses.

Yıldız HoldingWith a total of 53 factories, seven of which are located abroad, 22,500 employees, a strong distribution network, product variety, production and sales power, Yıldız Holding is one of the leading pioneers compared with both local and international peers. The Holding attained this nature through its eight major business groups.

The Ülker (Biscuit-Chocolate) Group and the Food, Beverages, Candy and Chewing Gum Group under the Holding go beyond meeting all the nutritional demands of the consumers, forecasting possible demands and planning products for the future.

The Food, Frozen Food and Personal Care Group manages the subsidiaries in the areas of tea and frozen food as well as overseeing the investments undertaken in personal care products.

The IT and Packaging Groups fulfill the requirements of the Yıldız Holding companies and are constantly growing within their respective sectors with a “visionary” approach.

While the Real Estate Investments Group continues to develop as a new business area, the International Operations Group manages the investments held by the Holding abroad.

Overview of Yıldız Holding

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The Financial Subsidiaries Division facilitates coordination between the subsidiaries of the Holding in the area of financial services.

Godiva, one of the world’s leading producers of premium brand chocolate, became a member of Yıldız Holding at the end of 2007.

Yıldız Holding is one of the enterprises favored by the giant global brands for strategic partnership and is in cooperation with important global companies such as Kellogg’s, Hero Baby, Cargill, Gumlink and Laurens Spethmann Holding.

Having strengthened its long-established reputation thanks to its social awareness, reflected in various projects in such areas as the environment, sports, education, health and the arts, Yıldız Holding contributes to the development of society with social responsibility and sponsorship projects.

Representing a system of values that reaches from the first half of the 20th century into the 21st century, Yıldız Holding creates value on a global scale with “the spirit of entrepreneurship, honesty, vision, innovation, determination, trust and courage.”

1948

Producing a total of 75 tons of biscuits in 1944, Ülker Bisküvi tripled its capacity at its Topkapı factory, built in 1948 specifically in order to increase the production volume.


Key Financial and Operational Indicators

Key Financial Indicators (TL) 2008 2009

Shareholder’s Equity 708,417,130 1,125,668,600

Gross Profit 306,330,460 388,735,490

Operating Profit 97,272,079 147,079,597

EBITDA 120,673,891 177,941,880

Net Profit for the Year 15,685,234 102,917,554

Production Amount (*) 127,624 120,621

Sales Volume (*) 128,103 120,137

(*) Amounts are given in tons.

The gross real operating profit of Ülker Bisküvi in 2009 was TL 388.7 million; whereas the net profit for the year was TL 102.9 million. With the investment made in the wafer production facility at the Ankara Factory in 2009, the total production capacity increased by 4,800 tons. The total production amount in the Istanbul and Ankara factories was 120,621 tons and the total capacity utilization was 72%.

2007 2008 2009

129,

741

127,

624

120,

621

Production Amount (Tons/Year)

2007 2008 2009

116,

054,

667

15,6

85,2

34

102,

917,

554

Net Profit for the Year (TL)

7

1955

Ülker Bisküvi decided to distribute its products throughout Turkey at factory prices and achieved a huge production increase with this innovation. The Company’s marketing efforts with door-to-door vendors in big cities had revolutionary characteristics in terms of the presentation strategy of biscuits, chocolates and similar products.

2007

2007

2008

2008

2009

2009

321,

792,

720

131,

758

306,

330,

460

128,

103

388,

735,

490

120,

137

Gross Real Operating Profit (TL)

Sales Volume (Tons/Year)


Shareholder Amount (TL) %

Yıldız Holding A.Ş. 113,049,151 42.09

Others 155,550,849 57.91

Total 268,600,000 100.00

Yıldız Holding A.Ş.

42.09%Other

57.91%

The shareholder structure of Ülker Bisküvi as of December 31, 2009 is as below. No real person owns more than 10% of the shares of the Company directly.

32% of the shares of Ülker Bisküvi are open to public as of December 31, 2009.

Capital and Shareholder Structure

9

1970

In line with the growth strategy of Ülker Bisküvi, Anadolu Gıda Sanayii A.Ş. was founded in Ankara as a multiple-shareholder company. As a result of this, the production capacity of Ülker Bisküvi was doubled.


Performance of Ülker Bisküvi Shares

Company Ülker Bisküvi

Reuters & Foreks Code ULKER.IS

ISIN Code TREULKR00015

Industry Food

XU100

XU050

ISE Index Listings XUTUM

XUSIN

XGIDA

XSANK

Price (TL) (December 31, 2009) 3.54

Free Float (%) 32.00

Market Value (US$ thousand) 950,844

Free Float Market Cap (US$ thousand) 304,270

Average Trading Volume (US$ thousand) (01.01.09-12.31.09) 9,775

Beta 0.61

Source: Reuters and Bizim Menkul Değerler

February2009 March April May June July August September October November December 2010

XU100ÜLKER

Ülker Bisküvi January 2, 2009-December 31, 2009

1.20

1.40

1.60

1.80

2.00

2.20

2.40

2.60

2.80

3.00

3.20

3.40

3.60

3.80

4.00

4.20

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1974

The first biscuit export was made after choosing the Middle East as the target market. Opportunities for international competition were increased with the creation of the R&D department in the same year.


Message from the Chairman of the Board

Dear Shareholders,

The course of the global economy in 2009 was set in the last quarter of 2008, with the onrush of the harsh conditions of an inevitable global crisis. Starting from the financial systems of the developed economies, the global crisis affected the real economy and spread to the whole world in 2009. While the developed and developing economies were suffering from these negative effects, the Asian countries resisted the crisis, which was among the spectacular events of the last year. Although their growth rate decreased, China and India were the national economies which did not contract and they were the first to emerge from the global crisis.

The indicators tell us that we have taken a turn for the better and that the global economy will enter a positive growth phase in 2010.

Turkey was among the countries that weathered the global crisis with relatively less damage than the European economies. The greatest problem that the global crisis caused across the world as well as in Turkey was unemployment. Estimates for the year 2010 agree that Turkish economy will enter into a growth process. It is very important that this growth be supported with investments that will create new employment opportunities.

Ülker Bisküvi successfully finished 2009 with its determination and resilience, gained through long-standing experience, its commitment to quality and innovation, and the importance it attaches to its consumers. The net sales of Ülker Bisküvi were TL 1,552 million and the operating profit was TL 147 million in 2009.

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Whilst the economy was struggling under such harsh conditions, Ülker Bisküvi celebrated a happy event: its 65th anniversary. Ülker, a source of pride for Turkish industry since 1944, has always stood for “Happy Moments” for its consumers. For this reason, we emphasized at our 65th anniversary that we have been working and will continue to work to increase these happy moments even more.

Another pleasing event for Ülker Bisküvi in 2009, was the positive echo of our global experience with Godiva. The Godiva acquisition story was presented in the December 2009 issue of Harvard Business Review, one of the most prestigious academic publications in the world, as a successful business model. The article entitled “Don’t integrate your acquisitions, partner with them,” which examined the strategy we pursued, focused on the success of the period following the acquisition of Godiva.

In our projections for 2009, we foresaw growth for Ülker Bisküvi despite the negative environment that might be created by the macroeconomic conditions and the anticipated increase in costs. Ülker Bisküvi successfully finished 2009 with its determination and resilience, gained through long-standing experience, its commitment to quality and innovation, and the

importance it attaches to its consumers. The net sales of Ülker Bisküvi were TL 1,552 million and the operating profit was TL 147 million in 2009.

The facts underlying our success can be listed as; keeping our prices at the optimum level for our customers, continuing production and investment with new launches, developing new products and associations in harmony with the time, and implementing models that will increase efficiency.

Ülker Bisküvi has accepted environmentally friendly production as one of its corporate priorities since its establishment and will continue to operate in awareness of its responsibilities towards the society. Ülker Bisküvi will carry on creating value for its shareholders, consumers, employees and its country in the forthcoming period.

With my best regards,

Murat ÜlkerChairman of the Board


Board of Directors

Murat Ülker Chairman of the BoardMurat Ülker was born in Istanbul in 1959. He began his business career in 1982, after graduating from the Management Department Faculty of Economics and Administrative Sciences at Boğaziçi University. He worked as the Control Coordinator in the Group in 1984, and afterwards, attended various training courses (AIB and ZDS) abroad and worked as a trainee at the Continental Baking Company in the US. Mr. Ülker worked in the export field for two years in the Middle East. He also oversaw about 60 factories and facilities operating in the biscuit, chocolate and food industry in the US and Europe for three years. Mr. Ülker participated in various IESC projects, and undertook many investments keeping in line with the principle of vertical integration. After working as Assistant General Manager for Enterprises, General Manager, Executive Committee Member and Board Member in various companies of the Group, Murat Ülker was elected the Chairman of the Board of Yıldız Holding in 2000. Murat Ülker speaks English and German and his hobbies include sailing, as well as traveling with his family. He is married with three children.

Orhan Özokur Deputy Chairman of the BoardOrhan Özokur was born in Balıkesir in 1946. Having begun working during his high school years, Orhan Özokur pursued his academic and business life hand in hand. He graduated from the Academy of Economic and Business Studies. Mr. Özokur joined the Group as a Commercial Manager in 1973, and served as Chairman of the Board and Board Member in different companies of the Group. He was appointed Deputy Chairman of the Board of Directors of Yıldız Holding in 2000. Orhan Özokur speaks English, has a special interest in basketball, and his hobbies include tennis, listening to music and playing the guitar. He is married with three children.

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Ali Ülker Board Member (Executive Director)Born in Istanbul in 1969, Ali Ülker graduated from the Economics and Business Management Department Faculty of Economics and Administrative Sciences at Boğaziçi University. He began his business career in 1985 as a trainee in the Quality Control Department of Ülker Gıda A.Ş. Ali Ülker attended various academic programs at IMD, Harvard and Wharton. Mr. Ülker took part in the De Boccard & Yorke consultancy company’s Internal Kaizen Study (1992) and the IESC Sales System Improvement and Internal Organization Project (1997). He served as a trainee, Sales Executive, Sales Coordinator, Product Group Coordinator and Product Group Manager during 1986-98 at the chocolate production facilities and Atlas Gıda Pazarlama A.Ş. He served as the General Manager of Atlas Gıda Pazarlama A.Ş. in 1998, Deputy Chairman of the Consumer Group for Marketing and Chain Stores in 2000, General Manager of Merkez Gıda Pazarlama A.Ş. in 2001 and Deputy Chairman of the Food Group in 2002. In 2005, he was appointed Chairman of the Ülker (Biscuit, Chocolate, Candy) Group. Ali Ülker speaks English and German and his hobbies include fishing, watching movies, reading books, and playing basketball and billiards. He is married with three children.

Necdet Buzbaş Board MemberBorn in Samsun in 1948, Necdet Buzbaş graduated from the Faculty of Chemistry at Istanbul University. He began his business career at Adeka İlaç Sanayii in Samsun. Mr. Buzbaş joined the Ülker Group in 1975 for a new chapter in his professional career. He worked as Plant Chief Officer, Production Manager, Assistant General Manager and General Manager at Ülker Gıda Sanayi A.Ş. before being appointed Chairman of the Ülker Group as part of the 2000 reorganization of the Company. He was appointed a member of the Advisory Committee in 2005. Mr. Buzbaş has also served as a member of the Governing Body of the Confederation of Turkish Employers’ Associations (TİSK), Chairman of the Turkish Food Industry Employers’ Association, member of the Assembly of the Istanbul Chamber of Industry (ICI), and member of the Executive Committee of the Association of the Sugar Products Industry (ŞEMAD). Mr. Buzbaş speaks English, and has also served in non-governmental organizations including the Educational Volunteers Foundation of Turkey (TEGEV), KalDer (Quality Association) and Katek (Quality and Technology Advisory Committee of ISO).


Board of Directors

Cengiz Solakoğlu Board Member (Independent)Cengiz Solakoğlu was born in Erzurum in 1943. After graduating from the Istanbul Academy of Economic and Business Studies in 1964, Cengiz Solakoğlu began his business career as a salesman at Beko Ticaret A.Ş in 1967. He became an Area Sales Manager in 1969, and Sales Director in 1975. After serving as the General Manager in Beko Ticaret A.Ş. between 1977-83 and in Atılım A.Ş. between 1983-91, Mr. Solakoğlu was appointed Deputy Chairman in 1991 and Chairman in 1994 of the Consumption Group of Koç Holding. Also serving as a member of the Executive Committee of the Koç Group in 1996-98, he was appointed Chairman of the Durables Consumption Group of Koç Holding in 2002. Having worked in the Koç Group continuously for 37 years and 8 months, Mr. Solakoğlu retired due to the Group’s policy of mandatory retirement at age 60. He was one of the founders of the Educational Volunteers Foundation of Turkey and has been a Board Member since its foundation, serving as Chairman of the Board between 2002-04. He was elected a Leader of Civil Society by the Ekonomist magazine in 2004. In 2007, he reassumed the role of Chairman of the Board of the Educational Volunteers Foundation of Turkey. Mr. Solakoğlu is a Board Member of Ülker Çikolata A.Ş., Ülker Bisküvi A.Ş., Atlas Gıda Pazarlama A.Ş., Atlantik Gıda Pazarlama A.Ş., Fresh Cake San. A.Ş., İdeal Gıda A.Ş. and Anadolu Gıda San. A.Ş. He is married with two children and three grandchildren.

Mahmut Mahir Kuşculu Board Member (Independent)Born in Istanbul in 1950, Mr. Kuşculu graduated from Istanbul Erkek Lisesi, and then the Faculty of Economics, Istanbul University. He completed his postgraduate education in international marketing in Georgia, the US. Mr. Kuşculu served as Executive Manager and Board Member in the family glass industry businesses, Tamcam A.Ş. and Arsal Cam Sanayii. He established Kutaş Dış Ticaret ve Pazarlama A.Ş. in 1982, and Erdem Dış Ticaret A.Ş. in 1985, also taking part in their management. Mr. Kuşculu continues to work as a Board Member in these companies and other companies. Mr. Kuşculu has served on the Professional Committees of the Istanbul Chamber of Commerce and the Istanbul Chamber of Industry for 20 years, and as a member of the Assembly of Istanbul Chamber of Industry for 14 years. He is also a Board Member of Ülker Çikolata A.Ş., Ülker Bisküvi A.Ş., Atlas Gıda Pazarlama A.Ş., Atlantik Gıda Pazarlama A.Ş., Fresh Cake San. A.Ş., İdeal Gıda A.Ş., Anadolu Gıda San. A.Ş., Polinas Plastik San. A.Ş., Sağlam Gayrimenkul Yatırım Ortaklığı A.Ş. and Godiva Chocolatier Inc. He is married and has two children.

17

Güven Obalı Board Member (Independent)Born in Cihanbeyli in 1943, Mr. Obalı graduated from Finance and Economics Department Political Sciences Faculty at Ankara University in 1964. He was appointed Assistant Tax Inspector in the same year and became a Tax Inspector in 1967. He was sent to Germany in order to study Value Added Tax Regulation and application for one year in 1971. In 1975, he left the Ministry of Finance and began working at the Industrial Development Bank of Turkey (Türkiye Sınai Kalkınma Bankası). Starting his career as a Financial Analyst, he continued with managerial positions in various units. During his tenure, he also acted as a representative of the bank in the management and audit boards of various companies, including Şişe Cam Group, Koruma Tarım İlaçları A.Ş., Çelik Halat A.Ş. and Bakırsan A.Ş. After retiring, he founded ABC Sworn Financial Advisor Company in 1994. He retired as Sworn Financial Advisor in 2004. Mr. Obalı continues to serve as Audit Board Member in Kuveyt Türk Katılım Bank and as a Board Member of Ülker Çikolata A.Ş., Ülker Bisküvi A.Ş., Atlas Gıda Pazarlama A.Ş., Atlantik Gıda Pazarlama A.Ş., Bizim Toplu Tüketim A.Ş. and Sağlam Gayrimenkul Yatırım Ortaklığı A.Ş. He is an honorary member of various associations and foundations. He is married with two children.

Audit Committee

Ataman Yıldız Member of the Audit Committee Nurettin Aliz Member of the Audit Committee


Message from the General Manager

Dear Shareholders,

2009 was a special year for Ülker Bisküvi, for it was the 65th anniversary of our incorporation. In this respect, we aim to reach our consumers with a series of events that started in 2009 and will continue in 2010.

Factory tours are organized to show children how our products, each of which has had its “happy moments” within the memories of three generations, are produced.These tours are organized in our Istanbul and Ankara factories and in the İdeal Gıda factory in Gebze, one of our subsidiaries, in coordination with the Provincial Directorates of Education. They are invaluable experiences for our children.

Though its importance for our Company, 2009 was also the year in which the effects of the global crisis that started in 2008 were felt at their worst. The Turkish economy kept contracting from the last quarter of 2008 to the third quarter of 2009. In the first quarter of 2009, the Turkish economy shrank by 14.7%, in the second quarter by 7.9%, and in the third by 3.3%.

In 2009, our Company continued to implement the precautions introduced in 2008 without any compromises, and succeeded in increasing its turnover despite these difficult conditions. It demonstrated the same performance in operating profit and reached TL 147 million with a 51% increase over the previous year. I would like to share the progress, our Company made in 2009, with our esteemed shareholders.

Strategic Business Unit In 2009, an important step was taken at Yıldız Holding, to which we are affiliated, and a Strategic Business Unit, which is responsible for gathering interrelated companies and organizations under the same roof and managing them, was set up. In this respect, a Vice Presidency (Biscuits-Cakes) was established under the Ülker Division. Our Company has been restructured under this division with all the other related organizations. With this change, our target is to increase our competitiveness by creating synergy and functioning in a more coordinated manner.

Institutionalization EffortsOur institutionalization efforts continue at a fast pace. Under the guidance of the Corporate Governance, Audit and Risk Committees, established within this scope, Corporate Risk Management efforts were initiated in our Company in 2009 and began to be implemented in April 2010. The aims of the Corporate Risk Management are to provide early diagnosis of factors that may endanger the existence, development and continuity of our Company, to take the necessary precautions, to create and implement solutions, and to manage all risks. Thus, our Company has taken another important step towards realization of the Corporate Governance Principles, namely justice, transpa-rency, accountability and responsibility.

Production and Capacity UtilizationDespite the severe crisis conditions in 2009, production reached 120,621 tons in total in our Istanbul and Ankara factories. Capacity utilization was 76% in the Istanbul factory and 69% in the Ankara factory. With these results, our capacity utilization was 72% overall.

2009 came with the excitement of our 65th anniversary. We aim to reach our consumers with a series of events that started in 2009 and will continue in 2010. Factory tours are organized to show children how our products, each of which has had its “happy moments” within the memories of three generations, are produced.

19

One of the precautions we have taken against the global crisis is to review the investments that are not urgent. Heading this precaution, our Company made investments amounting to TL 8.5 million in 2009 in the areas of capacity increase, renewal, modification of production lines and increased efficiency. TL 1 million of this was in the Topkapı Factory and the remaining TL 7.5 million in the Ankara Factory.

Constant EfficiencyThe Lean Production Project, which was initiated in our Ankara Factory in 2007, continued throughout 2009 in both the Ankara and Istanbul factories with new facilities. Its target is to simplify all processes and to prevent unnecessary expenditure in our Company.

Among our efforts within the scope of constant efficiency are “best practice” share applications between companies sharing the best practices to increase operational efficiency, cost reduction as a result of cooperation with suppliers, and rewarding improvement efforts in production-efficiency parameters.

R&D and New ProductsAs always, developing products in accordance with the expectations of our customers and consumers was among our main targets in 2009.

In 2009, we worked on a total of 68 new projects in the R&D departments of our Istanbul and Ankara factories and 10 of these projects were turned into products and offered to the market. Hero Baby İyi Geceler Baby’s Biscuit, Gogly Milk Baby’s Biscuit, Mini Halley, Rondo Dark, Mavi Yeşil Cacao Cream Biscuit and Mavi Yeşil Wholewheat Cinnamon Biscuit are just a few of our new products introduced to the market.

In 2009, we worked on 68 new projects in total in the R&D departments of our Istanbul and Ankara factories and ten of these projects were turned into products and offered to the market.


Message from the General Manager

The Lean Production Project, which was initiated in our Ankara factory in 2007, continued throughout 2009 with new facilities in both the Ankara and Istanbul factories. Our target is to simplify all processes and to prevent unnecessary expenditure in our Company.

Quality, Environment and Social Contribution2009 was a year in which all the quality certificates in both of our Company’s factories were reviewed and renewed with an awareness of occupational safety, high quality production and environmental responsibility. We continued to maintain our high quality production philosophy, confirmed by the quality certificates we received, in every aspect of our operations in 2009.

The ISO 9001:2000 Quality Management System, ISO 22000 Food Safety Management System, TS 180001 Occupational Health and Safety Management System, BRC and IFS certificates can be listed as some of the quality certificates that our factories received.

As usual, with our awareness of social responsibility, we continued to provide our support to the social responsibility and sponsorship projects realized throughout Turkey in 2009. We gave special support to Bingöl Sabri Ülker Soup Kitchen project.

Our Employees: Our Most Valuable Asset As of the end of 2009, the number of our employees reached 1,280. Despite the global crisis, we maintained the number of our employees and proceeded with our work without compromising our workforce.

Training procedures to increase the personal competencies of our employees, whom we deem our most valuable assets, continued throughout 2009, and 28,229 hours of training were provided in total achieving maximum value in terms of quality and efficiency. We are committed to maintaining our training approach in 2010, focused on personal development and increasing the quality of work of our employees.

“Mind Cube,” a personal suggestion system devised to benefit from the ideas of our employees and applied in our Company for years, was reviewed in 2009 with a new project entitled “General Suggestion System.” This extends the scope of our personal suggestion system and updates the process, and we believe we shall be able to see its outcome better in 2010. Our employees made 1,009 suggestions towards increasing efficiency in all of our processes during 2009, and 236 employees were rewarded for their suggestions.

The “Smile Group,” carrying out activities aimed to increase the motivation and satisfaction of our employees, continued to operate in both our factories.

In “Industrial Relations Board” meetings, regularly held with employee and union representatives, requests and suggestions were made at first hand and information about company policies was shared. This enabled trust, cooperation and empathy with our employees to rise to the highest level.

With an application entitled “Collective Communication Platform” initiated in 2009, we made efforts to understand the requests and expectations of personnel who are not included in the collective bargaining agreements, and to implement solutions on our agenda. Within the scope of this application, half-time work on Saturdays was cancelled in 2009. The intention was to increase the time that our employees, especially women workers, whose number is increasing day by day, spend with their families. Also in 2009, the “Career Planning”

21

application, with recording on an electronic medium, was initiated within the HR department for launch in 2010, as requested by our employees on our communication platform for career management.

Within the scope of the Employee Satisfaction Survey, completed in 2008, we started a Training and Development Program for foremen in 2009.

Our activities for our employees will continue without even losing sight of our notion that “our employees are our most valuable assets.”

Balanced Scorecard ActivitiesWithin the scope of the Balanced Scorecard Project, finalized in 2008 in order to transform our company strategies into operational objectives, the project of transferring the corporate and departmental scorecard to the SAP environment was completed at the end of 2009. Hence, from the beginning of 2010, we started to monitor the corporate and departmental scorecards on SAP.

Our Objectives for 2010Our activities will continue in 2010 without compromising our customer-oriented and innovative approach and our high standards of quality and hygiene.

We shall finalize the projects foreseen for the year 2010 in order to realize our strategic objectives as determined within the scope of our strategic plans. We will proceed with our efforts for transformation to the “Lean Production” philosophy, which we aim to extend to all of our facilities.

We shall make Corporate Risk Management, which holds an important place in our Company’s institutionalization efforts, one of our essential processes.

In 2010, we shall continue to work with all our power by dedicating ourselves to keeping our financial and operational results at the highest possible level, following budgetary and strategically planned objectives. Our driving forces are, as they have always been, your support as our valued shareholders and the efforts of our employees.

We hope to see many years to come with our shareholders, employees and consumers.

With my best regards,

Dr. Cafer FındıkoğluGeneral Manager


The Food Industry Worldwide and in Turkey

The Food Industry Worldwide The negative events in the economy, which started in the US and were observed in the global finance markets in the last quarter of 2008, increased in 2009 and affected the real economies.

In 2009, when unemployment increased and demand continually decreased due to the global crisis, especially in the US, the EU member states and Japan supplied large sums of funds to the market in order to save their own financial spheres.

In the food sector, the economic crisis, which began with the extreme increase in the prices of raw materials for food in 2007, escalated to recession in the first quarter of 2008. After high expectations following 2007 and 2008; the long awaited 2009 finished as a very difficult year.

Besides the major movements of capital, weather conditions and investments delayed by the crisis caused a supply shortage. Under these circumstances, the financial investors headed towards agricultural food products, also called the “soft commodities,” which caused an increase in prices. In an environment where interest rates decreased and credit facilities were extremely restricted, agricultural products became a center of attraction.

In the last days of 2009, the price of cacao beans increased by 28.6%, sugar increased by 165.1%, coffee increased by 30.2%, tea increased by 83.5% and orange juice increased by 88.8% when compared to the beginning of the year.

Most of these products are produced in a few developing countries. Interruption of supply due to the causes such as the credit crunch because of the economic crisis, as well as political disturbances in these countries, negatively impacts the prices.

After high expectations following 2007 and 2008; the long awaited 2009 finished as a very difficult year. In an environment where interest rates decreased and credit facilities were extremely restricted, the prices of the agricultural products increased due to global demand-supply disequilibrium.

23

The Food Sector in Turkey In Turkey, which was affected by the global crisis, manufacturing industry shrank by 10.9% in 2009; whereas the food and beverages industry finished the year with a shrinkage of 1.3%. In the food sector, where product prices failed to reflect the rise in the prices of raw materials, cost-push inflation was seen and the companies had to give up their profits.

Besides the worldwide increase in the prices of unprocessed foods, the GMO Regulation enacted in Turkey on October 26, 2009 caused price movements especially in inputs based on import. Ups and downs in the prices of milk and meat were also discussed at length in the food industry.

We hope that 2010 will be a year when relative stability will be assured with the positive effects of emergence from the global crisis, and that demand will increase, the installed capacity will be reasonably utilized and raw material prices will be stabilized.

1979

Ülker products began to be packed in cellophane-based packaging.

25

Activities in 2009

Despite the severe crisis conditions in 2009, production reached 120,621 tons in total in our Istanbul and Ankara factories. Capacity utilization was 76% in the Istanbul Factory and 69% in the Ankara Factory. With these results, our capacity utilization was 72% overall.

Surveys conducted show high levels of loyalty to the Ülker brand. In the “Brands 2008” survey by AC Nielsen, Ülker ranked first in the biscuits category, and second and third in the categories of the brands that consumers feel closest to and “top-of-the-mind” firms and brands, respectively.


Ülker Bisküvi in 2009

In factories owned by Ülker Bisküvi, all of the production processes incorporate high technology. Most of the boxing, box handling, packaging and storage processes providing logistical support are carried out using robot technology and automation.

The Risk Committee was established under the scope •of the Corporate Governance Principles published by the Capital Market Board and the Articles of Incorporation of the Company, and work was initiated to establish a Corporate Risk Management System.

“Best practice” share application between companies •sharing the best practices continued throughout the year.

“Collective Communication Platform” meetings were •held with all employees.

Business analysis and permanent staff work were •implemented to increase operational efficiency.

“Industrial Relations” meetings were held with the •workers’ union.

27

We are working for a happy moment when you understand that laugh is everlasting


Production and Capacity

The market share of Ülker Bisküvi, which carries out its production in factories in Topkapı/Istanbul and Ankara, is 53.3%. Besides these two main factories, Ülker Bisküvi also conducts production activities in the facilities of its subsidiaries, namely İdeal Gıda/Gebze and Biskot Gıda/Karaman.

In the Topkapı and Ankara factories of Ülker Bisküvi, equipped with the highest technology, 120,621 tons of biscuits were produced in total in 2009.

Biscuits, chocolate covered biscuits and wafers are produced in 9 facilities in the Topkapı Factory and in 14 facilities in the Ankara Factory.

Topkapı/Istanbul Factory

The Topkapı Factory operated at high capacity in 2009, producing 48,655 tons of biscuits, and sold net 48,889 tons of biscuits.

The actual average capacity utilization of the Factory, operating in three shifts, was 76% in 2009.

In factories owned by Ülker Bisküvi, all of the production processes incorporate high technology. Most of the boxing, box handling, packaging and storage processes providing logistical support are carried out using robot technology and automation.

Main Products Produced in the Topkapı Factory Pötibör (plain, with cacao, double baked) Çizi (with sesame seed)Aro Kraker Haylayf Çubuk KrakerHanımeller (with hazelnut, chocolate chips, özbesi, negrita)Bebe Bisküvisi (iyi geceler, googly, with honey-banana)Biskrem (with chocolate, apple, fig, dark, hazelnut cream, duo)

In the Topkapı and Ankara factories of Ülker Bisküvi, equipped with the highest technology, 120,621 tons of biscuits were produced in total in 2009. The total quantity of the Company’s sales amounted to 120,137 tons.

29

Ankara Factory

The Ankara Factory, which operates in an 80,000 m2 enclosed space located on a total area of 110,000 m2, has the biggest biscuit production and storage complex in the Middle East. For more than 39 years, the Ankara Factory has brought dynamism to the economy of the region.

The Ankara Factory’s 2009 production quantity was 71,966 tons and its net sales quantity was 71,248 tons. The actual average capacity utilization of the Factory, operating in three shifts, was 69% in 2009.

Main Products Produced in the Ankara FactoryPötibör (plain, two colors) Krim Kraker Probis ÇokoprensAs Kraker Başak (plain, with chocolate, linseed)İkram (with chocolate, hazelnut, cheese) Canpare Rondo (with banana, strawberry, plain, coconut, orange, raspberry, cheesecake flavors) Altınbaşak Wafers (with hazelnut, banana, orange, strawberry, coconut, vanilla, cacao, chocolate flavors) Halley Kat Kat Tat Çubuk Kraker Alpella Ring Mavi Yeşil branded productsHasatHanımeller Kurabiyem (with hazelnut, chocolate)

2003

In 2003, Ülker Bisküvi merged with Anadolu Gıda, taking important steps towards further institutionalization.


Thanks to its powerful distribution network, customers can easily access Ülker Bisküvi products at anytime and anywhere. Ülker’s distribution network has been specially designed on every level to respond to the demands of its consumers in the best possible manner.

Marketing and Distribution

With two weeks’ production, Ülker Bisküvi and its subsidiaries are capable of providing a biscuit to everyone in the world.

The domestic marketing and distribution of the biscuits and chocolate covered products of Ülker Bisküvi and its subsidiaries are performed by its subsidiary, Atlas Gıda Pazarlama, as well as Yıldız Holding companies Pasifik Pazarlama, Esas Pazarlama, Merkez Gıda Pazarlama and Rekor Pazarlama.

Atlas Pazarlama performs nationwide distribution through its Regional Offices in Istanbul, Ankara, Izmir, Thrace region, Bursa, Samsun, Gaziantep, Adana and Erzurum, with 129 experienced, reputable and efficient distributors across Turkey. Atlas Pazarlama provides regular and high quality service to 181,000 points of sale weekly, with a total of more than 1,150 delivery vans.

This powerful distribution network ensures that customers can easily access Ülker Bisküvi products at anytime and anywhere. Ülker’s distribution network has been specially designed on every level to respond to the demands of its consumers in the best possible manner, in accordance with prevailing market conditions.

31

2007

The Company name was changed from Ülker Gıda to Ülker Bisküvi in 2007 as part of a move to provide a clearer definition of its field of business.


In 2009, Ülker Bisküvi made investments in the Topkapı/Istanbul and Ankara factories in the areas of new facility establishments, capacity increase, renewal, modification of production lines, efficiency increase, hygiene and storing.

Ülker Bisküvi fully achieved the investments foreseen in its strategic development plan in 2009.

The common objective of the investments is to reinforce Ülker Bisküvi’s leading position in the market, increase customer satisfaction, improve product quality, and contribute to efficiency and productivity so as to make the cost basis more competitive.

In 2009, Ülker Bisküvi made investments in the Topkapı/Istanbul and Ankara factories in the areas of new facility establishment, capacity increase, renewal, modification of production lines, efficiency increase, hygiene and storing.

Whilst an investment in the amount of TL 1 million was made in the Topkapı Factory for enlargement and modernization purposes, the investment made in the Ankara Factory amounted TL 7.5 million.

Investments

33

We are working for a happy moment in which your life is at just the right consistency.


Ülker Bisküvi Sanayi A.Ş. Subsidiary List as of 12/31/2009

Subsidiary Share (%) Field of Business

Birlik Pazarlama 99.0 Flour production

İdeal Gıda San. ve Tic. A.Ş. 97.5 Biscuit and cracker production

İstanbul Gıda Dış Ticaret A.Ş. 83.8 International marketing

Atlas Gıda Paz. San. ve Tic. A.Ş. 78.2 Domestic marketing

Birleşik Dış Ticaret A.Ş. 68.0 Foreign trade

Biskot Bisküvi San. ve Tic. A.Ş. 50.5 Biscuit and chocolate covered biscuit production

G-New Inc. (Godiva) 25.2 International investment

Godiva Belgium BVBA (Godiva) 25.2 Chocolate production and marketing

PNS Pendik Nişasta A.Ş. 23.0 Starch and starch-based sugar production

Netlog Lojistik A.Ş. 12.5 Logistics and transportation

BİM Birleşik Mağazalar A.Ş. 12.0 Retail

Sağlam GYO A.Ş. 10.7 REIT

Fresh Cake A.Ş. 10.0 Cake production

Besler Gıda A.Ş. 7.0 Oil and margarine production

Tire Kutsan A.Ş. 1.9 Paper and cardboard box production

Benefiting effectively from different Group companies, each holding a leading position in its sector, Ülker Bisküvi, besides the biscuit facilities in different cities in Anatolia, has formed a dynamic value production process that includes all the branches of the food industry, such as obtaining good quality flour, butter and packaging.

Subsidiaries

35

Birlik Pazarlama

Birlik Pazarlama, one of the most important subsidiaries of Ülker Bisküvi Sanayi A.Ş., was incorporated in 1978. Birlik Pazarlama, which produces not only flour from every kind of grain based on the needs of the Group but also pasta, semolina, packaged wheat flour and rice flour for the market, moved its headquarters to Ankara in 1992.

Located on the same site as Ülker Bisküvi’s Ankara Factory on an area of 37,000 m2, Birlik Pazarlama operates in an enclosed area of about 24,000 m2. Together with three flour factories in Ankara, Birlik Pazarlama has a factory processing soya, oats and other grains and a rice plant, a Branch Office and a flour factory in Karaman, in addition to a rented pasta, flour and semolina factory in Hendek.

Birlik Pazarlama has undertaken contractual planting in cooperation with agrarian research institutes, for the improvement, development and increased cultivation of varieties of wheat necessary for biscuit production, currently not sufficiently produced in Turkey.

Birlik Pazarlama holds TSE (Turkish Standards Institute) ISO-EN 9000, TSE TS 13001 and ISO 22000 certificates. In 2007, the HACCP certificate was replaced by ISO 22000 certificate.

The subsidiaries of Birlik Pazarlama include Hero Gıda, PNS Pendik Nişasta and Birleşik Dış Ticaret.

The Company’s actual wheat processing capacity is 930 tons per day in total, including 730 tons per day in Ankara and 200 tons per day in Karaman. Birlik Pazarlama’s rice processing capacity is 19 tons per day, its soya processing capacity is 7.5 tons per day and its oat processing capacity is two tons per day.

In a survey published by the Istanbul Chamber of Industry in 2008, Birlik Pazarlama was listed as 427th among the top 500 industrial enterprises in Turkey. With a total grain storage capacity of 35,000 tons, Birlik Pazarlama will continue its investments in 2010 to ensure higher quality production with more competitive prices.

2008

Within the scope of Corporate Governance, the Articles of Incorporation were amended and Corporate Governance and Audit Committees were set up. At the beginning of 2008, Ülker Bisküvi took part in the acquisition of the premium chocolatier brand, Godiva, with a 25.23% share.


İdeal Gıda İdeal Gıda, which was established in the Gebze Organized Industrial Zone in 1997, operates on an area of 85,000 m2 that includes 41,000 m2 of enclosed space. İdeal Gıda has actively produced biscuits and crackers since 2000 and its capacity utilization was 86% in 2009.

In İdeal Gıda, which has 433 employees, the production is carried out for four main product groups for domestic and international markets in nine production lines. Ideal Gıda, which continuously invests to develop its equipment pool and facilities and to increase its production capacity, raised its biscuits and crackers production from 30,654 tons in 2003 to 37,770 tons in 2004 and to 41,338 tons in 2005. The total production in 2006 was 37,337 tons, due to the fact that production had to stop for a month during the conversion of ovens to natural gas. The production in 2008 reached 42,166 tons, up from 40,205 tons in 2007, and it was 43,902 tons in 2009.

The production is carried out in compliance with ISO 9001-2000, ISO 22000, ISO 14001-2004, OHSAS 18001-1999, BRC and IFS certification standards.

İdeal Gıda was listed as 395th in the Istanbul Chamber of Industry list of Turkey’s Top 500 Industrial Enterprises in 2008.

Subsidiaries

Having actively engaged in the production of biscuits and crackers since 2000, İdeal Gıda’s capacity utilization in 2009 was 86%. Ideal Gıda, which continuously invests to develop its equipment pool and facilities and increase its production capacity, raised its biscuits and crackers production from 30,654 tons in 2003 to 43,902 tons in 2009.

37

İstanbul Gıda-Birleşik Dış Ticaret

İstanbul Gıda was established in 1987 to undertake the international sales and marketing of all Ülker products. Birleşik Dış Ticaret undertakes exportation of the products of other brands. Established in 1999, Birleşik Dış Ticaret has a branch in the Atatürk Airport Free Trade Zone. Both of these companies finished 2009 with turnovers close to those of 2008.

İstanbul Gıda and Birleşik Dış Ticaret, with the powerful sales and distribution channels they own, export Ülker products to more than 80 countries, including the Balkans and the Middle East in particular, and also the Turkic Republics, the United States, Europe, Africa and the Far East.

İstanbul Gıda-Birleşik Dış Ticaret, which ranked 303rd in the “500 Top Private Companies of Turkey” in Capital magazine, made optimization efforts in order to reduce the logistics costs and thus ensured an increase of efficiency.

2009

The article entitled “Don’t integrate your acquisitions, partner with them” published in the December 2009 issue of Harvard Business Review, one of the most prestigious academic publications in the world, presented the process that followed Ülker’s purchase of Godiva as a successful business model.

An advertising campaign was launched for the 65th anniversary celebrations of Ülker with the concept “Happy Moments.”


factory, 64% in the Biscuit-2 factory, and 71% in total within the whole Company.

Biskot Gıda increased its biscuit production from 5,221 tons in 1999 to 102,630 tons in 2009 through new investments and efficiency improvement works.

Biskot Gıda’s product portfolio includes Pötibör finger-picnic, cream and sandwich biscuits, chocolate covered bar, chocolate flavored wafer, Rulokat, Çokomel, cream chocolate, special biscuits, special chocolate, crackers and products in the category of covered cakes.

As well as its own products and in addition to the Ülker, Halk and Karsa brands, Biskot Gıda continues to produce “private label” crackers, marshmallows, wafers, chocolate and chocolate covered products in four different factories.

Biskot Gıda holds the TSE-ISO-EN 9000 Quality Management System, TSE-ISO-EN 22000 Food Safety Management System and TSE-ISO-EN 14000 Environmental Management System certifications and the IFS-International Food Standard and BRC Global Standard for Food Safety quality certificates.

Biskot Gıda, which ranked 208th in the Istanbul Chamber of Industry list of Turkey’s Top 500 Industrial Enterprises in 2007, was 181st in 2008.

Biskot GıdaOperating in four different factories in the Karaman Organized Industrial Zone, Biskot Gıda has been among the subsidiaries of Ülker Bisküvi since 1999.

Biskot Gıda added the Chocolate-2 factory to its facilities in 2008. This includes a Winkler chocolate molding facility, one of the few in Europe and a facility for preparing semi-finished chocolate products. With these facilities, where approximately 2,750 people are employed, Biskot Gıda has become one of the leading industrial enterprises and the biggest employer of the region. In 2009, two wafer production facilities were added to the existing factory and in the Biscuit-2 factory automation efforts were initiated in four cream biscuit facilities. In three of the cream biscuit facilities, automation of the cream filling facility was finished; and in another one, packaging automation was finalized. In two facilities, packaging automation work is still continuing. When this work is completed, three cream biscuit production facilities will be fully automated. Furthermore, thanks to newly-purchased packaging machinery, an important capacity increase was achieved. Capacity utilization rates were approximately 79% in the Biscuit-1 factory, 80% in the chocolate

Subsidiaries

39

Atlas Gıda PazarlamaEstablished in 1987, Atlas Gıda Pazarlama is one of the leading companies of bakery products in terms of sales and reach. It issues invoices to 80% of 181,300 points of sale throughout Turkey, which are visited at least once a week.

Atlas Gıda Pazarlama conducts an efficient and widespread distribution/marketing operation in 11 regions across Turkey, in addition to its head office organization in Istanbul. Atlas Gıda Pazarlama’s organization of distribution channels consisted of distributors, chain markets, local markets and door-to-door vendors in 2007, and at the end of 2007 it transferred the chain markets to a newly established Group company, Pasifik Gıda Pazarlama.

•Distributors:Throughtheirownsalesnetwork,AtlasGıda Pazarlama’s 129 distributors market the products they buy from the Company to their own regions and points of sale.

•Door-to-doorvendors:UsingvehicleshiredfromAtlasGıda Pazarlama, door-to-door vendors’ organizations buy and sell products to points of sale allocated to them on their own behalf. There are 149 door-to-door vendors in total working for Atlas Gıda Pazarlama in İstanbul, Ankara and İzmir.

Following the restructuring in 2005, Atlas Gıda Pazarlama has focused primarily on the domestic distribution of biscuits, cakes, crackers and some chocolate covered products. There are 40 brand names in Atlas Gıda’s portfolio.

The Company is able to implement different promotional and consumer initiatives for various product categories in parallel to its rapidly expanding product portfolio, to develop storage and logistics strategies on a product basis, and to measure its delivery efficiency more accurately.


Other SubsidiariesBesler Gıda produces oil, the main raw material in •biscuit and wafer productionPNS Pendik Nişasta is one of the largest companies in •the corn and starch sectorFresh Cake produces cakes•Sağlam GYO is a real estate investment partnership •which went public at the beginning of 2007Tire Kutsan is a publicly traded company producing •paper and cardboard boxesBİM Birleşik Mağazacılık is a publicly traded company •operating in the field of markets and stores.

Godiva With the agreement signed in December 2007, the world’s leading premium chocolatier brand, Godiva, became an official member of Yıldız Holding on March 18, 2008. During this process, Ülker Bisküvi played an active role by acquiring 25.23% of the shares in Godiva.

Godiva was established in Brussels in 1926 by Joseph Draps, inspired by the legendary story and personality of Lady Godiva, and has been producing premium chocolate products for more than 80 years. The Godiva brand serves its customers through 450 stand-alone boutiques and 9,300 sales points worldwide, with more than 60 products ranging from premium chocolates to biscuits, coffee to cacao, cakes and chocolate bars to chocolate drinks. Having opened its first boutique on the Fifth Avenue in New York, the US, in 1972, Godiva offers its products throughout four geographic regions, including North America, Japan, the Pacific region and Europe.

The world trend, leaning towards a combination of biscuit and chocolate, has made a big imprint on Ülker Bisküvi’s partnership with Godiva. For Ülker Bisküvi, this partnership is an important step towards sharing experience and acquiring a synergy in the international arena.

Subsidiaries

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We are working for a happy moment in which you live your life the way you feel it.


Corporate Governance / Ülker Bisküvi Family

Human Resources Ülker Bisküvi is committed to ensuring and supporting the development of its employees, whom it defines as “our biggest capital” and “our most valuable assets,” not only for the Company’s business targets and competitiveness but for their happiness as well.

Educational Breakdown (2009)

High school

70.1%

Primary education

18.9%

Two-year degree

2.1%Graduate

and above

8.9%

Seniority Breakdown (2009)

Between 6-10 years

29.9%

5 years and below

65.4%20 years

and above

1.3%Between 11-19 years

3.4%

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Breakdown of Age (2009)

Ülker Bisküvi’s human resources policy is conducted with a vision to shape and implement the highest caliber human resources organization in all the fields of business. Ülker Bisküvi’s human resources operations are carried out in accordance with the Holding’s policy.

The Company’s mission in human resources is to increase the competitiveness of Ülker Bisküvi through efficient management of human resources with a high quality of work, high motivation, company loyalty and collaboration.

Under the conditions of global competition, the key to attaining high technology and achieving new opportunities in business life is a human resources policy open to development. Ülker Bisküvi organizes employee satisfaction surveys aimed at further increasing company loyalty and the motivation of employees and creates development programs in keeping with these results, as well as providing social activities for employees and their families.

Employees are invited to give their opinions and put forward their ideas to ensure continuation of employee satisfaction and loyalty. “Industrial Relations Board” meetings are held twice a year through the workers’ union. In these meetings, communication between the employees and the employer are emphasized and efforts are made to promote continuing dialogue in every area.

The “Collective Communication Platform” is intended to ensure communication between employees who are not included in the collective bargaining agreement and to increase employee satisfaction, thus taking proactive steps to prevent any possible problem.

30 and below

34.9%

ages 31-44

56.6%45 and above

8.5%

Between 11-19 years

3.4%

Between the


Activities for Employees Ülker Bisküvi, as in previous years, continued a series of activities in order to increase all employees’ motivation in the factories and to strengthen the social communication network and loyalty to the Company.

With the • technical visits between the factories, the employees’ social communication network was strengthened. Separately, various factory visits were organized for the families of employees to provide them with an opportunity to see the working environment and find out more about the Company.Employees were sent to the football games of •Beşiktaş, sponsored by Ülker.The • traditional football tournament was also successfully organized in 2009. Ranking teams were rewarded. A cultural visit to • The Panorama 1453 Historical Museum on the Conquest of Istanbul was organized. A • visit to the Darülaceze (alms house) was organized to develop the social responsibility awareness of employees. Among activities for National Independence and •Children’s Day on the 23rd of April, a movie festival for employees’ children was organized under the sponsorship of Ülker. An LCD screen was installed in the dining room, •showing videos to inform and educate employees on issues such as the H1N1 influenza virus and occupational health and safety. Feasible and successful ideas within the scope of the •Mind Cube project were rewarded.Within the scope of the • Koza Social Responsibility Project of YASED (International Investors Association of Turkey), internship opportunities were provided to two students from the Eastern and Southeastern Anatolia during the summer of 2009.

Ülker Bisküvi Family

“Industrial Relations Board” meetings are held twice a year through the workers’ union and efforts are made to promote continuing dialogue in every area.

45

Ülker Bisküvi pursues a human resources policy that is always open to development, in order to reflect advanced technology and new opportunities in business life, while operating under globally competitive conditions in parallel with the developments throughout the world.

Ülker Bisküvi maintains its competitive industrial advantage not only through technology but also by substantial investments in human resources.

Corresponding to the idea that each manager should also be a good human resources manager, all managers are informed about human resources.

Regarding employees as “our biggest capital” and “our most important asset,” Ülker Bisküvi is committed to ensuring and supporting the development of its employees, not only for the Company’s business targets and competitiveness but for their happiness as well.

Support for the personal and professional development of employees is given through training and development programs, so that they can maintain top performance in their job and prepare Ülker Bisküvi and themselves for the future.

Training Ülker Bisküvi provides its employees with in-house and outsourced training opportunities in the following areas:

Quality Systems • (Hygiene, ISO 14001 Environment Management Systems, OHSAS 18001 Occupational Health and Safety, etc.) Personal Development • (Professional Behavior in Business Life, Conflict Management, Innovation Management, Interpersonal Relations Management and Communication Skills, etc.)

Foreign Languages • (English, etc.)Technical Training • (Pneumatic, Mechatronics, Siemens S7 200, Siemens S7 300, etc.)On-the-job • (TQM and Management Systems Documentation, Issues to be Taken into Account with Hands and Overalls, Allergens, What Is the Operational Requirements Plan?, etc.)Job orientation • (Job start program, factory visit, etc.)

The results of the Employee Satisfaction and Loyalty Survey conducted in 2008 were analyzed and a new training-development program entitled “Effective Leader - Manager Program” was prepared.

Ülker Bisküvi uses the Performance and Career Management System to identify and reward employees’ potential and achievements and to determine their potential development areas. The Performance and Career Management System is aimed at improving the competencies of each and every employee and their contribution to the vision of Ülker Bisküvi. These competencies have been defined under two headings as “Company Competencies” and “Business Family Competencies.” Company Competencies are “Consumer-focused, Team Work Disposition, Innovation, Result-oriented, Effective Problem Solving.”

A Collective Labor Negotiation was signed in February 2010 with the Öz Gıda Labour Union for the period from January 1, 2010 to December 31, 2011. Ülker Bisküvi’s senior and employee termination benefit fund, as of December 31, 2009, stood at TL 17,349,386.


Environmental Policy

The environmental policy of Ülker Bisküvi is based upon the following principles and objectives:

To bring under control all wastes resulting from •activities and all kinds of contamination, To educate employees, suppliers and business •partners regarding this issue, To support efficient use of natural resources and •energy sources and to prevent loss, To perform as per defined standards and regulations •in this area.

Training for employees and business partners was organized, and actions were taken to raise awareness for sustaining a habitable world in harmony with these principles and objectives.

Both Ülker Bisküvi factories hold the emission permission certificate. According to the results of emissions measurements, it was reported that among the greenhouse gases, only carbon dioxide is produced in the facilities and that the resulting figure for the consumption of natural gas is far below the limit values as per regulation.

Fire systems in the facilities are regularly maintained in order to prevent fuel loss and increase efficiency.

In Ülker Bisküvi’s Istanbul Factory, 404A refrigerant gas has started to be used in cooling systems instead of the Freon 22 refrigerant, which is one of the hydrofluorocarbons producing greenhouse gases that are subject to restrictions based on the Kyoto Protocol.

Both Ülker Bisküvi factories hold the emission permission certificate. Fire systems in the facilities are regularly maintained in order to prevent fuel loss and increase efficiency.

Environment, Quality and R&D Activities

47

R&D and Quality Activities

Ülker Bisküvi, offering innovative products that appeal to the traditional taste buds of Turkey and the world, defines the ethical principles in R&D practices as follows:

Using scientific methods and techniques to search for, •find and report the facts, Caring for the people, environmental health and the •public good in adhering to the laws and regulations in effect as well as to the principles and targets of the Group, Giving the utmost importance to ensuring customer •satisfaction and meeting customer needs, Providing food safety-quality-price-variety •optimization in products,Acting in accord with the principle that “we never offer •our customers any product that we will not consume ourselves or give to our children.”

Ülker Bisküvi, with its professional and experienced R&D staff, continued to develop new products consistent with its sense of quality, and took its innovative approach to a higher level in 2009.

In 2009, when the effects of the economic crisis were largely felt, the focus was on R&D projects to utilize the idle capacities of the facilities and at the end of the year, one of our facilities started production of a new product at full capacity.

In 2009, we worked on 68 new projects in total in the R&D departments of our Istanbul and Ankara factories and 10 of these projects were turned into products and offered to the market.

One of the greatest projects Ülker Bisküvi realized in 2009 was “Mini Halley.” In addition, the following projects were completed successfully within the biscuit, wafer and cracker group:

Six new products in the Ankara Factory: Mini Halley, •Mavi Yeşil with Cacao Cream, Mavi Yeşil Wholewheat Cinnamon, Rondo Dark, Original Gourmet Chocolate Wafer, Original Gourmet Vanilla Wafer,32 new products in the Istanbul Factory: Hero Baby •İyi Geceler Baby’s Biscuit, morning biscuit in the shape of the sun, Gogly milk biscuit, Biskrem Caramel, Hanımeller special for mothers’ day, Hanımeller Coconut Biscuit, Hanımeller negrita white, Big Biskrem, Haylayf with Cacao, Haylayf with Caramel, Sour Cherry, Apple Cinnamon, Raspberry, pie bars, plain, almond crocant, hazelnut crocant shortbread, Pötibör with Cream, Passions cookie, Alpella Waynut, etc.,One product development in Ankara: Crackers Snack,•16 product developments in Istanbul: Pötibör for the •65th Anniversary, Halk Tatbeni with Cream, Alpella Riva, Biskrem Stick, Biskrem round, small round Albeni, Biskrem with fluid cream, Biskrem hazelnut in bag, Biskrem 60 gr. and 110 gr. for exports, etc.,11 packaging developments in Ankara: Original •Gourmet Strawberry Wafer, Probis Box, Çokoprens Bim package, Çiziviç 3 in MP, Pötibör inner package, Altınbaşak Bim package, Pötibör 1,200 gr., Krim Kraker 500 gr., Başak Cake Recipes, Mavi Yeşil Apple Flavor 4 in MP, Mavi Yeşil with Lemon Flavor 4 in MP, 47 packaging developments (single Biskrem 11 gr., Mini Çizi cracker, Metro package works, Hanımeller Negrita double, Hero milk baby and honey and banana for Egypt, Poland, Czech Republic etc.).


In 2009, the products developed as a result of R&D activities represented 6.6% of the total product tonnage of the Ankara factory, and 1.25% of the total product tonnage of the Istanbul factory. The Ankara R&D department is currently working on 63 new projects and the Istanbul factory is working on 35 new projects.

“Delicious, Healthy and Safe Products”Ülker continued in 2009 to conduct routine tests and analyses in areas such as raw materials and packaging, as well as carrying out semi-finished and finished product evaluations, in order to guarantee the standardized, reliable production quality of Ülker products free from human error. Production trials with physical, chemical and microbiological analyses were performed on a total of 124 alternative raw materials in Ankara, and on a total of 47 alternative raw materials in Topkapı/Istanbul.

In addition, results of analysis performed by accredited laboratories were requested from suppliers and recorded. Within the scope of defined analysis methods and plans, routine activities in process and CCP controls, shelf life analyses, scoring, appliances, environmental and employee hygiene supervision were continued as routine.

For the standardized production of Ülker products, and to determine the differences between the similar products of competitive companies, a benchmarking was made on the product groups of Pötibör, Kremalı (cream biscuit), Çubuk Kraker, Gofret (wafer), Halley and Light Biscuit in 2009.

In 2009, the products developed as a result of R&D activities represented 6.6% of the total product tonnage of the Ankara Factory, and 1.25% of the total product tonnage of the Istanbul Factory. The Ankara R&D Department is currently working on 63 new projects and the Istanbul Factory is working on 35 new projects.

Environment, Quality and R&D Activities

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“Employee Hygiene Training,” “Environment” and “Allergies and Allergens” were organized in order to guarantee product safety and hygiene in 2009.

Ülker Bisküvi’s objective is to meet customer expectations at the highest possible level and to increase customer satisfaction constantly; therefore the Company carefully investigates customer feedback about the products and takes any necessary corrective action. In addition, tests and analyses were conducted in cooperation with the suppliers to prevent quality-related problems at source.

Ülker Bisküvi, which adopts the principle of producing “Delicious, Healthy and Safe” products, in compliance with the laws and regulations, under hygienic conditions, consistently and with a superior quality, renewed its quality certificates in 2009:

ISO 9001:2008 Quality Management System,•ISO 22000 Food Safety Management System,•TS 18001:2007 Occupational Health and Safety •Management System,ISO 14001 Environment Management System •BRC (Achieved Grade: A)•IFS (at a Higher level)•


It is observed that the losses seen at the ISE, in parallel with the negative shocks at the international markets in 2008, recovered to some extent in 2009 and that the ISE national index has risen.

Ülker Bisküvi shares have moved in line with general trends at the ISE in 2009, as in the previous years. Consequently, Ülker Bisküvi shares have been preferred by those investors who tend to make a long-term investment far from speculative considerations, seeking an attractive dividend alongside a balanced price course, and also looking for stable return compared to alternative investment opportunities. Ülker Bisküvi shares are traded on the ISE National Market with the Reuters ticker symbol ULKER.IS and Bloomberg’s ULKER.TI.

Relations with shareholders are coordinated by the Department of Finance. This unit manages the communication with the ISE, CMB, CRA (Central Registry Agency) and Takasbank (the ISE Settlement and Custody Bank), and informs shareholders of announcements from these bodies, in collaboration with the Investor Relations Unit. It also organizes meetings with shareholders upon their request, or on a project basis as required, in addition to the ordinary and extraordinary shareholders’ meetings.

The Investor Relations Unit holds meetings with local and foreign investors, as well as attending investor conferences organized at home and abroad. To this end, the Investor Relations Unit met with many local and foreign corporate investors in 2009.

Shareholder Relations and Profit Distribution Policy

The ISE equity market performance of Ülker Bisküvi shares have moved in line with the general trends in 2009, as in the previous years.

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Profit Distribution PolicyÜlker Bisküvi has adopted the principle of determining the amount of dividend to be distributed, no matter what not less than the proportion and amount set by the CMB, in accordance with the resolutions of the General Assembly within the framework of Turkish Commercial Code, the rules and regulations of the CMB and the provisions laid down in its Articles of Incorporation. The dividend amount is to be distributed within the legal periods designated by the CMB.

Profit distribution proposals by the Board of Directors at the General Assembly are set by taking care of delicate balance between the shareholders’ expectations and the growth dynamics of the Company, in consideration of

prevailing conditions of the national economy and the subject industry.

The principle of distributing the dividends in cash and/or as bonus shares is adopted. Type A and Type B shares, as well as the founding shares are entitled to have “dividend privilege” at the rates laid down in the Articles of Incorporation.

Furthermore, the Articles of Incorporation also state that employees shall be paid merit bonuses from the profit according to their performance. Although there is a provision in the Articles of Incorporation for payment of advance dividend, this method has not been exercised to date.

Company Ülker Bisküvi

Reuters & Foreks Code ULKER.IS

ISIN Code TREULKR00015

Industry Food

XU100

XU050

ISE Index Listings XUTUM

XUSIN

XGIDA

XSANK

Price (as of December 31, 2009)(TL) 3.54

Free Float (%) 32.00

Market Capitalization (US$ thousand) 950,844

Free Float Market Cap (US$ thousand) 304,270

Average Daily Trading Volume (US$ thousand) (01.01.09-12.31.09) 9,775

Beta 0.61

Sources: Reuters and Bizim Securities Inc.

Market Capitalization (US$ thousand) 2005 2006 2007 2008 2009Maximum 1,085,083 1,069,449 1,131,223 1,081,239 696,896

Minimum 589,681 452,504 620,739 243,951 239,314

Share Performance (%)TL (2.1) (20.9) 43.4 (61.9) 102.1

US$ (1.3) (24.5) 73.9 (71.0) 106.8

Relative Performance to ISE 100 (38.55) (19.57) 1.02 (21.18) 2.77


Respect for the Environment in ProductionÜlker Bisküvi’s environmental policy has been established not as a result of the legal obligations, but with the awareness of a citizen of Turkey and a habitant of the world. Activities are based on the strategy of reducing greenhouse gas emission, which is the greatest cause of global warming. With this objective, fuel systems used in the Company’s production facilities are maintained regularly in order to prevent fuel loss and increase efficiency. Factory chimney gas emission measurements made according to the Control of Industrial Facilities Origination Air Pollution Legislation show that the smoke gas emission measurements of Ülker Bisküvi production facilities are below the legal limits prescribed by law.

Ülker Bisküvi’s activities for environmental protection are not only limited to greenhouse gases. The water issue becomes more and more important every day due to global warming. To use water more efficiently, the purification facilities in the Ülker Bisküvi factories each year clean more than 73,000 cubic meters of water and make it reusable.

In addition to the above, used paper and similar materials are collected separately for recycling purposes and it is ensured that batteries are disposed of appropriately.

Ülker Offers Healthy Products Ülker Bisküvi offers a wide range of products based on the different requirements of different consumer segments.

Ülker Bisküvi, which has not used trans fat in its products since June 2007, differentiates itself by developing healthy products thanks to its technological infrastructure.

Social Responsibility Projects

Ülker Bisküvi, which does not use trans fat in its products, differentiates itself by developing healthy products thanks to its technological infrastructure.

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Ülker Bisküvi contributes to healthy nutrition with its products, not only in Turkey but also in its countries of export by strictly observing the food standards applicable in these countries.

Projects Inviting Children to Get Involved with Life Since its inception, Yıldız Holding has undertaken social responsibility projects aimed at social development, as well as contributing to the economic development of Turkey.

As the flagship of Yıldız Holding, Ülker Bisküvi continues to support the social responsibility and sponsorship projects undertaken by the Group.

The wide-ranging social activities of the Group, which range from environmental protection to sports, focus especially on projects that invite children to get involved with life. Yıldız Holding, always in close relationships with youth and children, supports projects for children, who the Company considers to be the future of Turkish sports.

The Grassroots project that aims to get children into the habit of participating in sports has been undertaken in cooperation with the Turkish Football Federation. Within the scope of this project to take outdoors children whose playgrounds are decreasing day by day and who consequently have to spend more and more time indoors, children between the ages of 6-12 can enroll for free at the Grassroots centers in Istanbul, Adana, Trabzon, Diyarbakır, Sinop and Muş.

The Grassroots project also includes football villages. This activity was first organized in Van in 2007 and afterwards in Sinop, Bolu, Sivas and Isparta in 2008 and in Sakarya, Zonguldak, Kütahya, Malatya, Trabzon and Erzincan in 2009. In football villages children are not only taught to play football, but they are also given information on nutrition, personal development, chess and environmental awareness.

The Football and Basketball Festival, inspired by the idea of combining sports with fun, gathers thousands of students from all over Turkey. The Festival is organized in a different city every year and students learn cooperation, fair play and friendship, in addition to sports.

With the projects realized to date, approximately 50,000 children have taken the opportunity to play sports and to see new places.

Each year, Ülker organizes the Children’s Movie Festival on National Independence and Children’s Day, which falls on April 23. Approximately 255,000 children found the chance to watch “Nim’s Island” last year and “The Secret of the Moonacre” this year free and to meet with brand new worlds and to broaden their imagination.

Yıldız Holding, while undertaking projects for the physical and mental development of children, also did not neglect its environment and the land and locations where it is situated. The Company is one of the initial supporters of TEMA’s rural development projects and has supported three villages in Edirne and Kırklareli. Under this project, pastures in those villages have been cleared, new fruit saplings have been bought, and activities such as viniculture, apiculture and alternative seeds plantation have increased the income of the villages.

Continuing its investments especially in children, education, environment and sports, Yıldız Holding also supports congresses and conferences which contribute to the development of the industry in which it is active.


1. Declaration of Compliance with the Corporate Governance PrinciplesOur Company is aware of the importance of the implementation of the principles included in the Corporate Governance Principles published by the Capital Market Board in 2003 and revised and finalized in 2005, and has undertaken necessary work and continues to show necessary care to make further progress in this process. Please find below the evaluations and findings of our Company in respect of the level of compliance with the Corporate Governance Principles, as well as its comprehensive opinion for the improvement of the level of compliance in terms of scope and nature. In brief:

The Unit in charge of the Shareholders Relations has •been restructured.Arrangements have been made in respect of trading of •insider information.The working guidelines of Committees have been •reshaped.The website has been designed as stated in the •Principles.Work has been undertaken for the Compliance of •the Articles of Incorporation with the Corporate Governance Principles.The Corporate Governance Committee and the Risk •Committee, which will report to the Board of Directors, have been established and the Audit Committee has been reorganized.

It is also planned gradually to implement those principles which have not yet been implemented, although this has not led to any conflict of interests between the interest owners to date.

The following Corporate Governance Principles Compliance Report has also been disclosed to the public on the Company’s website at www.ulkerbiskuvi.com.tr.

SECTION I - SHAREHOLDERS

2. Shareholder Relations UnitRelations with shareholders are coordinated by the Department of Finance. This Department responds to the queries made by our shareholders in writing or via the Internet, as well as attending investor meetings held in Turkey and abroad. Contact details of the Shareholder Relations Unit are given below:

İlhan Turan UstaFinance Director Davutpaşa Cad. No: 10 34015 Topkapı/[email protected] +90 212 567 68 00

Corporate Governance Principles Compliance Report

Didar Sevdil YıldırımCorporate Finance and Capital Markets Coordinator of Yıldız HoldingKısıklı Mah. Ferah Cad. No: 1 B. Çamlıca Üsküdar/[email protected] +90 216 524 25 00

Relations with shareholders are coordinated by the Department of Finance. This Department manages the communication with the ISE, CMB, CRA (Central Registry Agency) and Takasbank (the ISE Settlement and Custody Bank) and informs shareholders of announcements from these bodies. It also organizes meetings with shareholders upon their request, or on a project basis as required, in addition to the ordinary and extraordinary shareholders’ meetings.

3. Exercise of the Right of Access to Information by ShareholdersThe written or verbal requests for information from our shareholders during the period have been met, except those that are characterized as business secrets or not disclosed to the public. All information that might be required for the exercise of the shareholders’ rights is provided to our shareholders in our annual reports and material case announcements and through individual requests. Furthermore, necessary information is also made available to shareholders in general at the website: www.ulkerbiskuvi.com.tr.

4. Information on General AssemblyOne Annual Ordinary General Meeting was held in 2009.

Ordinary General Meeting:The Ordinary General Meeting of 2008, held on May 26, 2009, was attended by our shareholders representing approximately 48% of the paid-in capital, which was TL 268,600,000. No interest owner or media came to the meeting.

As provided in the Law and Articles of Incorporation, the invitation to the meeting containing venue, date, time, agenda and power of attorney form was duly made by a notice given in the Turkish Trade Registry Gazette No. 7304, dated May 5, 2009, in the daily newspapers Dünya and Referans of May 1, 2009 and via the Internet, as well as by sending registered mail to the holders of shares issued to name and to holders of shares issued to the bearer if they have lodged shares and notified the Company of their address in advance.

The financial statements and reports, including the annual report, the profit distribution proposal, any necessary information document prepared in relation to the items on the agenda of the General Meeting, and

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any other documents in support of the items on the agenda as well as the latest version of the Articles of Incorporation and the copy of amendments and grounds thereof, if any amendment will be in the Articles of Incorporation, are made available to our shareholders for review at the Head Office and branch offices of our Company from the date of notice given for the invitation to the General Assembly.

In the General Meeting, information about the issues on the agenda was given in a straightforward and clear manner. Shareholders were offered equal opportunity to express their feelings and ask questions, and an atmosphere of healthy discussion was created.

No questions were raised by the shareholders at the General Meeting of 2008, and no proposals were made other than the items on the agenda.

5. Voting Rights and Minority RightsEvery share has one vote, as per our Articles of Incorporation.

The capital of our Company consists of Group A, B, C and D shares. Four members of the Board of Directors can be elected from among the candidates nominated by the absolute majority of Group A shareholders, and one member can be elected from among the candidates nominated by the absolute majority of Group D shareholders. The other members can be elected from among the candidates nominated according to the general provisions. There is no relationship of mutual affiliation between any of our shareholders and our Company. The cumulative voting method is not exercised in our Company.

There is no provision in our Articles of Incorporation that prevents voting by proxy as the representative of shareholders not present.

6. Profit Distribution Policy and Date of Profit Distribution Within the scope of the Corporate Governance Principles set forth by the CMB, our Board of Directors has adopted a profit distribution policy as mentioned herein below. Accordingly:

Our Company has adopted the principle of determining the amount of dividend to be distributed according to the resolution adopted in the Shareholders’ Meeting within the framework of Turkish Commercial Law, the provisions of the CMB and the provisions laid down in the Articles of Incorporation. The dividend will not be less than the rate and amount fixed by the Capital Market Board, and will be distributed within the legal periods designated by the CMB.

Profit distribution proposals made by the Board of Directors at the General Meeting maintain a sensitive balance between the expectations of shareholders and the growth requirements of Ülker Bisküvi, taking into consideration the prevailing conditions of the national economy and the industry in which the Company operates.

The principle of distributing the dividends in cash and/or as free shares has been adopted, and the A and B shares and the founding shares are privileged to receive shares from the profit at the rates laid down in the Articles of Incorporation.

Furthermore, the Articles of Incorporation also state that employees shall be paid merit bonuses from the profit according to their performance.

Also, although there is a provision in the Articles of Incorporation for payment of advance dividend, this method has not been exercised to date.

The shareholders were informed about the profit distribution policy of our Company at the General Meeting. This profit distribution policy is disclosed to the public and is also included in the Company’s website and annual reports.

7. Transfer of SharesArticle 10 of our Articles of Incorporation provides for the transfer of shares issued to name. According to the said Article, the shares issued to name can be transferred in principle. The transfer shall be effective as from delivery of share to the transferee and registration into the share book. The Company may refrain from registering the transfer into the share book without stating a reason.

SECTION II - PUBLIC INFORMATION AND TRANSPARENCY

8. Company Information PolicyıCompany information policy is carried out in accordance with legal regulations, CMB legislation and the rules determined by legal announcements. The Company prepared a written document regarding public disclosure and information and published it on its website following the approval of the Board of Directors.

Additionally, it is adopted as the basic principle to make available any information which has already been disclosed to the public, to the relevant person in the shortest time possible upon request. Shareholders’ requests for information are met in writing or verbally. In the event of any important developments requiring public information during the year, necessary material


case announcements are also made in a timely manner. Our annual report is prepared in detail to ensure public access to any information regarding the activities of the Company.

9. Material Case AnnouncementsOur Company issued 14 material case announcements during the period of January - December 2009, pursuant to the CMB regulations. No additional explanation was requested by the CMB in reference to the material case announcements made by our Company in 2009. There are no material case announcements that have not been made in due time by our Company.

10. Company Website and its ContentOur Company’s website, in Turkish and English, is available at www.ulkerbiskuvi.com.tr. The information below is available on our website for the purpose of informing the shareholders in relation to our Company:

Information on Ülker Bisküvi and its subsidiaries•The Vision of the Company•Ethical rules and principles•Information on the Board of Directors and the •General ManagerCapital structure of the Company•Organizational structure•Social responsibility•Trade registry information and Company profile•Articles of Incorporation•Financial Statements and footnotes•Annual reports•Material case announcements•Corporate Governance Principles Report•Information on General Meetings (Agenda, minutes, •list of attendants and power of attorney form) Company Information Policy•Committees•Press announcements (General Meeting •announcements, etc.) Insider information list•Broker companies’ reports•Rating reports•Ülker Bisküvi at the ISE (ratios and graphic •information regarding the shares)

11. Declaration of Individual Ultimate Controlling Shareholder(s)There is no individual ultimate controlling shareholder in our Company. Our shareholder structure is included in the annual report and on our website.

12. Public Disclosure of Persons who can have Insider InformationOur Company has taken every precaution necessary to prevent the use of insider information. Our website lists these precautions and the executives who have access


to information that can affect the value of capital market instruments, as well as other individuals/entities from whom it receives services.

SECTION III - INTEREST OWNERS

13. Informing the Interest OwnersIn the event that the rights of interest owners are not regulated by the legislation or contract, their interests shall be protected within the framework of the rules of goodwill and by observing the prestige of Company to the extent permitted by the resources of the Company.

Additionally, the employees have access to circulars and announcements through the Internet portal of the Company. Some of the important announcements are released simultaneously to all employees via e-mail.

14. Participation of Interest Owners in the ManagementThe Board of Directors consists of seven members, as per our Articles of Incorporation, and these members are elected by the General Meeting upon recommendation of various shareholders according to the provisions laid down in the Articles of Incorporation.

15. Human Resources PolicyThe basic policy of the human resources department is to develop a high performance team with the improvement and development of human resources building upon what has been done to date.

The human resources policy adopted by our Company is in general the policies adopted by Yıldız Holding. These policies are available at www.ulker.com.tr and www.ulkerbiskuvi.com.tr. No discrimination complaint has ever been made against the human resources policy implemented by our Company.

16. Information Regarding Relations with Customers and SuppliersOur Company seeks continuity of service quality and standards at all stages of production. The utmost care is taken with the confidentiality of the customers’ and suppliers’ information that has the nature of trade secrets. Customer satisfaction is one of the basic principles of our Company.

17. Social Responsibility The social responsibility activities of our parent holding company, namely, Yıldız Holding, are listed in our annual report and are also available at www.ulker.com.tr and www.ulkerbiskuvi.com.tr. Our Company takes the utmost care in implementing such policies which respect and support the environment, sports, education and public health.

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SECTION IV - BOARD OF DIRECTORS

18. Structure and Composition of the Board of Directors, and the Independent MembersThe Board of Directors is composed of seven members. In line with the Articles of Incorporation, these members are elected by the General Meeting; four members are elected from among the candidates nominated by the absolute majority of Group A shareholders and one member is elected from among the candidates nominated by the absolute majority of Group D shareholders. The other members are elected from among the candidates nominated according to the general provisions.

Details of members of the Board of Directors are provided below.

Name and Surname TitleMurat Ülker ChairmanOrhan Özokur Deputy ChairmanAli Ülker Member (Executive Director)Necdet Buzbaş* MemberMahmut Mahir Kuşculu Member Cengiz Solakoğlu Member Güven Obalı Member

Mahmut Mahir Kuşculu, Cengiz Solakoğlu and Güven Obalı serve on the Board of Directors as independent members.

*Alain Strasser was appointed a Member of the Board of Directors to be effective as of April 14, 2010.

19. Qualifications of Members of the Board of DirectorsThe minimum qualifications required for election as a member of the Board of Directors are in line with the qualifications set forth in Articles 3.1.1, 3.1.2 and 3.1.5 of Section IV of the CMB Corporate Governance Principles. In the Articles of Incorporation, there is a provision requiring that the Board Members have sufficient knowledge of the legal framework which regulates the activities of the Company, and be qualified and experienced in company management and able to analyze the financial statements and reports of the Company. Additionally, as per the Articles of Incorporation, at least one third of the members of the Board of Directors are required to be elected from among university graduates.

Our Board of Directors consists of seven members, and this number ensures efficient organization of the activities of the Board of Directors.

20. The Vision of the CompanyOur Company and all companies of Yıldız Holding have been founded with the belief that “every person is entitled to enjoy a pleasant childhood no matter which country s/he may live in.” The vision of Ülker Bisküvi is to strengthen its position as a brand most preferred by consumers, and to be among the top five companies in the world markets within the next ten years, particularly in the area of bakery products.

The vision and mission of Yıldız Holding and our Company have been made public and are available at www.ulker.com.tr and www.ulkerbiskuvi.com.tr.

21. Risk Management and Internal Control MechanismActivities regarding risk management are carried out by the Risk Committee. Furthermore, our Company is also audited regularly by the audit units of Yıldız Holding A.Ş., its principal shareholder, and by independent auditors. The findings of these audits are submitted to members of the Committee in Charge of Audit and other members of the Board of Directors. Company workflows, procedures, and the authorities and responsibilities of employees have been placed under control, subjected to constant supervision within the framework of risk management.

22. Authorities and Responsibilities of Members of the Board of Directors and ExecutivesThe authorities and responsibilities of members of the Board of Directors and executives are clearly set forth in the Articles of Incorporation available at www.ulkerbiskuvi.com.tr.

The Board of Directors exercises its powers having all the information required, prudently and within the framework of the rules of goodwill to ensure proper fulfillment of its role.

23. Principles of Activity of the Board of DirectorsThe Board of Directors held 20 meetings in the period of January - December 2009. Utmost care is taken to determine the date of meetings to allow all members to attend. The Board of Directors meets regularly, whenever the businesses of the Company require.

24. Non-Transaction and Non-Competition with the CompanyMembers of the Board of Directors do not have any transaction or activity that may be within the scope of prohibition of transaction and competition with the Company and which, hence, require permission from the General Meeting.

25. Ethical RulesÜlker Bisküvi is a member of a Group that produces quality and healthy products, respects its employees, cares for the rights of partners and shareholders,


suppliers and customers, is law-abiding, attaches importance to the values of society, bears social responsibility, has adopted principles of management that are based on the highest level of respect, cooperation, high performance of work, honesty, consistence, respect, confidence and responsibility between executives, employees, suppliers and customers, and endeavors to improve upon these principles.

The ethical rules adopted by Yıldız Holding companies are implemented in all Group companies, and these ethical rules have been made public and are available for the information of our shareholders at www.ulker.com.tr and www.ulkerbiskuvi.com.tr.

26. Number, Composition and Independence of the Committees in the Board of Directors

Audit Committee:The Audit Committee, which was established with the decision of the Board of Directors dated May 22, 2006, has been reorganized as per Communiqué No. 22, Series X of the CMB following the decision of the Board on August 5, 2008. The Audit Committee ensures that the financial and operational activities of the Company are carried out on a solid and healthy basis. Working under the Board of Directors, the Committee is responsible for following up the processes of the accounting system, the auditing and disclosure of financial information, and the functioning and efficiency of the internal control system. This Committee meets whenever required, which should be no less than quarterly. The structure of the Audit Committee, amended with the Board of Directors’ decision dated March 31, 2010, is as follows:

Position in the Name and Surname Title Company Mahmut Mahir Kuşculu Chairman Board of Directors Member (Independent)Güven Obalı Member Board of Directors Member (Independent) Halil Cem Karakaş Member Head of Department of Finance of the Holding

Corporate Governance Committee:Following the decision of the Board on August 5, 2008, a Corporate Governance Committee was established within the Company as per CMB Corporate Governance Principles. The Committee reports to the Board of Directors. It meets whenever required, which should be no less than three times in a year. The structure of the Corporate Governance Committee, amended with the Board of Directors’ decision dated March 31, 2010, is as follows:

Position in the Name and Surname Title Company Cengiz Solakoğlu Chairman Board of Directors Member (Independent)İlhan Turan Usta Member Finance Director Didar Sevdil Yıldırım Member Corporate Finance and Capital Markets Coordinator, Yıldız Holding

Risk Committee:Following the decision of the Board on August 21, 2009, a Risk Committee was established within the Company as per CMB Corporate Governance Principles and the Articles of Incorporation. The Committee reports to the Board of Directors and meets whenever required. Details of the Risk Committee are as below:

Position in the Name and Surname Title Company Necdet Buzbaş Chairman Board of Directors MemberMahmut Mahir Kuşculu Member Board of Directors Member (Independent)

27. Financial Benefits Provided for the Board of DirectorsThe fees of members of the Board of Directors are determined separately for each by the General Assembly in view of the financial conditions of the Company. It was decided to pay a monthly gross fee of TL 2,310 to each member of the Board of Directors in 2009, pursuant to the decision adopted at the General Meeting.

No member of the Board of Directors or executive has been either directly or through a third party, given any loan, or allowed to use any credit, or provided any guarantees during this period.


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At the Meeting with number 558, dated April 14, 2010, the Board of Directors of Ülker Bisküvi reviewed the consolidated income statement which was issued in accordance with the Capital Market Board’s Communiqué No. 29, Series XI and which passed the independent audit, and the profit distribution table, which was prepared in view of the Capital Market Board’s resolutions number 7/242, dated February 25, 2005, and number 21/537, dated May 5, 2006 as well as resolution number 02/51, dated January 27, 2010, regarding the calculation of the net distributable annual profit from the activities in 2009 in respect of the companies that are open to public offering; and decided to distribute dividends in cash against dividend coupons No. 7 for the founding shares and against dividend coupons 2009 for the group A, B, C and D shares. It was decided to submit a proposal to our shareholders at the Ordinary General Meeting to distribute the intended TL 14,000,000 gross and TL 11,900,000 net sum of dividends in accordance with article 34 of our Articles of Incorporation on profit distribution, on the basis of a cash dividend at the gross amount of TL 0.04028 (4.03%) and net amount of TL 0.03424 (3.42%) for each publicly traded ordinary share with a nominal value of TL 1, so that the gross amount of TL 10,818,329.34 (net 9,195,579.94) will be distributed to the ordinary shares and the gross amount of TL 1,909,435.13 (net 1,623,019.86) will be distributed to Group A and B shares, and gross amount of TL 1,272,235.53 (net 1,081,400.20) will be distributed to the founding shares, with the remaining revenue to be recorded in the account of Extraordinary Reserves.

Profit Distribution Proposal

1. Paid-in / Issued Capital 268,600,000.00

2. Total Legal Capital Reserve (According to legal records) 41,050,219.21

As per the Articles of Incorporation, if there is a privilege in the profit distribution, information regarding this is as stated below:

An amount of 17.65% of the first dividend will be distributed to A and B group shareholders, and

an amount of 11.76% of the first dividend will be distributed to the registered dividend right

certificate holders.

As per CMB As per legal records (LR)

3. Term Profit 128,462,728.00 149,353,488.45

4. Taxes Due (-) (25,545,174.00) (12,689,864.23)

5. Net Term Profit (=) 102,917,554.00 136,663,624.22

6. Losses of previous years (-) 0.00 0.00

7. Primary Reserve (-) 6,833,181.21 6,833,181.21

8. NET DISTRIBUTABLE TERM PROFIT (=) 96,084,372.79 129,830,443.01 129.830.443,01

9. Donations within the year (+) 359,835.48

10. Net distributable term profit that includes donation for calculation of first dividends

96,444,208.27

11. First Dividend to Shareholders 10,818,329.34

- Cash 10,818,329.34

- Free 0.00

- Total 10,818,329.34

12. Dividend to privileged shareholders 1,909,435.13

13. Dividend to the members of the Board of Directors, Employees etc.

0.00

14. Dividend to Redeemed Shareholders 1,272,235.53

15. Second dividend to shareholders (Free) 0.00

16. Second Issue legal reserve funds 57,000.00

17. Statutory Reserves 0.00

18. Special Reserves 0.00

19. EXTRAORDINARY RESERVES 82,027,372.79 115,773,443.01

20. Other resources planned for distribution 0.00 0.00

- Profit of the previous year 0.00 0.00

- Extraordinary Reserves 0.00 0.00

- Other reserves to be distributed as per law and the Articles of Incorporation

0.00 0.00

Profit Distribution Table for 2009


Profit Distribution Proposal

INFORMATION ON DISTRIBUTED PROFIT RATIO

INFORMATION ON DIVIDEND PER SHARE

GROUP

TOTAL AMOUNT OF DIVIDEND (TL)

DIVIDEND PER TL 1 NOMINAL VALUED SHARE RATIO (%)

GROSS

AMOUNT (TL) RATIO (%)

A 1,279,358.57 86,123.13 8,612,313.48

B 630,076.56 86,123.13 8,612,313.48

C and D 10,818,329.34 0.04028 4.03

FOUNDER 1,272,235.53

TOTAL 14,000,000.00

NET

A 1,087,454.78 73,204.66 7,320,466.46

B 535,565.08 73,204.66 7,320,466.46

C and D 9,195,579.94 0.03424 3.42

FOUNDER 1,081,400.20

TOTAL 11,900,000.00

GROUP TOTAL DIVIDEND AMOUNT (TL)

QUANTITY DIVIDEND PER SHARE (TL)

FOUNDER SHARES GROSS 1,272,235.53 22,171.00 57.38287

NET 1,081,400.20 48.77544

RATIO OF THE DISTRIBUTED DIVIDEND OVER THE NET DISTRIBUTABLE TERM PROFIT INCLUDING DONATIONS

AMOUNT OF DIVIDENDS DISTRIBUTED TO PARTNERS (TL)

RATIO OF THE DISTRIBUTED DIVIDEND TO SHAREHOLDERS OVER THE NET DISTRIBUTABLE TERM PROFIT INCLUDING DONATIONS (%)

14,000,000.00 14.52

61

Audit Board Report

Company * Title : ÜLKER BİSKÜVİ SANAYİ A.Ş.* Head Office : ISTANBUL* Capital : TL 268,600,000* Field of Business : Production of biscuits, chocolate covered products and

wafers.

Names and surnames of auditor(s), : Ataman Yıldız and Nurettin Aliz.terms of office, whether they are Their term of office is one year.shareholders or employees of the Company The auditors are neither shareholders nor employees of the

Company.

Number of the Board of Directors meetings : Attended five meetings of the Board of attended and number of Audit Committee Directors in 2009 and the Audit Committee meetings which were held monthly.

meetings held

Scope, dates and conclusion of review : Company accounts, books and documents were made on

the Company accounts, books andduly audited at the end of every month, and it documents on the shareholders’ accounts was found that the statutory books were kept in compliance with the provisions of its Articles of Incorporation and the Turkish Commercial Code.

Dates and results of counts made in the cash : Since the Company does not have any cash of the Company pursuant to sub-paragraph 3 in the Company cash office and all payments of paragraph 1 of Article 353 of the and receipts are realized through check and Turkish Commercial Codebank channels, no counts were made.

Dates and results of review made pursuant : The required review was made at the end of to sub-paragraph 4 of paragraph 1 of Articleevery month, and the existing securities and 353 of the Turkish Commercial Codenegotiable instruments were found in accordance with the records, and other duties assigned to the auditors in the other paragraphs of the same article were fulfilled.

Any complaint or corruption reported : No complaint or corruption was reported and the action

taken verbally or in writing to us during our term of office.

We have reviewed the accounts and transactions of ÜLKER BİSKÜVİ SANAYİ A.Ş. for the period January 1, 2009 to December 31, 2009 in accordance with the Turkish Commercial Code, its Articles of Incorporation, other applicable regulations and generally accepted accounting principles and standards.

In our opinion, the operations of the Company, summarized in the report prepared by the Board of Directors and, accordingly, the annexed balance sheet dated December 31, 2009 reflects the financial status of the Company at that date, and the income statement for the period from January 1, 2009 to December 31, 2009 reflects the results of activities in that period accurately and correctly, of which we agree with the contents, and the profit distribution proposal appears to be in compliance with the laws and Articles of Incorporation of the partnership.

In conclusion, we hereby kindly request you to consider and vote for the approval of the balance sheet and income statement and to grant discharge to the Board of Directors.

Auditor Auditor

Ataman Yıldız Nurettin Aliz

63

Ülker Bisküvi Sanayi A.Ş. and its SubsidiariesNotes to the Consolidated Financial Statements For the Year Ended 31 December 2009(Amounts expressed in Turkish Lira [TL] unless otherwise stated.)

ÜLKER BİSKÜVİ SANAYİ A.Ş.AND ITS SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2009

(TRANSLATED INTO ENGLISH FROM THE ORIGINAL TURKISH REPORT)

65

CONVENIENCE TRANSLATION OFTHE REPORT AND FINANCIAL STATEMENTSORIGINALLY ISSUED IN TURKISH

INDEPENT AUDITORS’ REPORT

To the Board of Directors of Ülker Bisküvi Sanayi A.Ş.

We have audited the accompanying consolidated financial statements of Ülker Bisküvi Sanayi A.Ş. (“the Company”) and its subsidiaries (together “the Group”) comprising the consolidated balance sheet as of 31 December 2009, and the consolidated statement of comprehenive income, consolidated statement of changes in shareholders’ equity and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s ResponsibilityManagement is responsible for the preparation and fair presentation of these financial statements in accordance with the financial reporting standards issued by the Capital Market Board. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards published by Capital Markets Board. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the accompanying financial statements give a true and fair view of the consolidated financial position of Ülker Bisküvi Sanayi A.Ş as of 31 December 2009, and of its financial performance and its cash flows for the year then ended in accordance with the financial reporting standards published by the Capital Market Board.

Istanbul, 8 April 2010

DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş. Member of DELOITTE TOUCHE TOHMATSU

Burç SevenPartner


ASSETS Notes 31 December 2009(As Restated)

31 December 2008Current Assets 1.486.472.342 1.121.498.021

Cash and Cash Equivalents 6 279.444.678 154.180.917Financial Assets 7 871.011 801.177Trade Receivables -Trade Receivables from Related Parties 37 105.957.392 89.321.243-Other Trade Receivables 10 188.659.486 140.318.598Other Receivables -Non-trade Receivables from Related Parties 37 706.221.936 538.241.741-Other Short Term Receivables 11 14.516.668 15.384.989Inventories 13 160.708.314 140.703.915Other Current Assets 26 30.092.857 42.545.441

Non-Current Assets 1.242.995.613 912.746.096Trade Receivables 10 864.028 318.509Other Receivables 11 62.939 62.260Financial Assets 7 684.405.037 350.457.316Investments Accounted for Under Equity Method 16 248.857.262 256.702.603Tangible Assets 18 292.521.715 284.863.678Intangible Assets 19 5.848.775 1.600.883Goodwill 20 1.534.035 1.534.035Deferred Tax Assets 35 1.110.536 7.009.443Other Non-current Assets 26 7.791.286 10.197.369

TOTAL ASSETS 2.729.467.955 2.034.244.117

The accompanying notes form an integral part of these financial statements.

Ülker Bisküvi Sanayi A.Ş. and its SubsidiariesConsolidated Balance Sheet As Of 31 December 2009 (Amounts expressed in Turkish Lira [TL] unless otherwise stated.)

67

LIABILITIES Notes 31 December 2009(As Restated)

31 December 2008Current Liabilities 1.253.743.647 900.761.473

Finacial Liabilities 8 540.383.522 483.678.611Other Financial Liabilities 9 7.938.615 755.122Trade Payables-Trade Payables to Related Parties 37 355.134.157 222.974.689-Other Trade Payables 10 74.321.470 69.197.466Other Payables-Other Payables to Related Parties 37 168.405.960 65.704.715-Other Payables 11 81.394.285 42.749.672Corporate Tax Payable 35 7.608.080 18.390Debt Provisions 22 1.966.102 2.097.964Provisions for Employee Benefits 24 10.646.415 6.619.496Other Liabilities 26 5.945.041 6.965.348

Non-Current Liabilities 288.605.970 377.373.865Financial Liabilities 8 241.487.624 344.504.346Provisions for Employee Benefits 24 6.168.987 3.826.257Deferred Tax Liabilities 35 40.949.359 29.043.262

SHAREHOLDERS’ EQUITY 1.187.118.338 756.108.779Total Equity Attributable To Equity Holders’ of the Parent 27 1.125.668.600 708.417.130

Share Capital 268.600.000 268.600.000Inflation Adjustments to Share Capital 108.056.201 108.056.201Valuation Funds 446.354.171 125.668.539Restricted Reserves Appropriated from Profits 29.541.106 28.772.464Translation Gain/Loss 31.362.234 34.232.938Retained Earnings 138.837.334 127.401.754Net Profit for the Year 102.917.554 15.685.234

Minority Interest 27 61.449.738 47.691.649TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 2.729.467.955 2.034.244.117


Ülker Bisküvi Sanayi A.Ş. and its SubsidiariesConsolidated Balance Sheet As Of 31 December 2009 (Amounts expressed in Turkish Lira [TL] unless otherwise stated.)


NotesJanuary 1-

December 31, 2009

(As Restated) January 1-

December 31, 2008Sales Revenue 28 1.551.549.924 1.412.160.407Cost of Sales (-) 28 (1.162.814.434) (1.105.829.947)GROSS PROFIT 388.735.490 306.330.460Marketing, Sales and Distribution Expenses (-) 29-30 (199.892.299) (181.764.610)General Administrative Expenses (-) 29-30 (65.014.794) (52.252.476)Research and Development Expenses (-) 29-30 (1.053.724) (961.310)Other Operating Income 31 26.878.730 29.877.077Other Operating Expenses (-) 31 (2.573.806) (3.957.062)OPERATING PROFIT 147.079.597 97.272.079Share in Net Profit of Investments Accounted for Under Equity Method 16 (3.478.557) (14.818.955)Finance Income 32 239.138.115 245.527.705Finance Expenses (-) 33 (237.410.775) (304.224.187)PROFIT BEFORE TAXATION 145.328.380 23.756.642Tax Charge from Continued Operations 35 (25.545.174) (4.445.576)Current Tax Charge (26.405.643) (4.118.292)Deferred Tax (Charge)/Benefit 860.469 (327.284)PROFIT FOR THE YEAR 119.783.206 19.311.066Reconciliation of the Profit for the YearMinority Interest 27 16.865.652 3.625.832Equityholders of the Parent 102.917.554 15.685.234Earnings per Share From Operating Activities 36 0,38 0,06

Other Comprehensive Income:Change in Financial Asset Valuation Fund 337.972.741 (27.524.036)Change in Currency Translation Reserve (4.090.433) 31.760.228Share on other comprehensive income of investments valued using equity method (16.898.637) 1.358.608

COMPREHENSIVE INCOME/(EXPENSE) AFTER TAX 316.983.671 5.594.800

TOTAL COMPREHENSIVE INCOME/(EXPENSE) 436.766.877 24.905.866

Distribution of Total Comprehensive IncomeMinority Interest 16.034.395 3.620.849Equity Holders of the Parent 420.732.482 21.285.017


Ülker Bisküvi Sanayi A.Ş. and its SubsidiariesConsolidated Statement Of Comprehensive Income for the Year Ended 31 December 2009 (Amounts expressed in Turkish Lira [TL] unless otherwise stated.)

69

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Ülker Bisküvi Sanayi A.Ş. and its SubsidiariesConsolidated Statement Of Changes In Shareholders’ EquityFor the Year Ended 31 December 2009(Amounts expressed in Turkish Lira [TL] unless otherwise stated.)



Ülker Bisküvi Sanayi A.Ş. and its SubsidiariesConsolidated Statement Of Cash FlowsFor the Year Ended 31 December 2009 (Amounts expressed in Turkish Lira [TL] unless otherwise stated.)

Notes1 January-

31 December 2009

(As Restated) 1 January-

31 December 2008CASH FLOWS FROM OPERATING ACTIVITIESNet profit for the year 119.783.206 19.311.066Adjustments to reconcile net profit/(loss) to net cash provided by operating activitiesDepreciation expenses of tangible assets 18 28.826.667 21.734.701Amortization expenses of intangible assets 19 2.035.616 1.667.111Allowance for doubtful receivables 10 (6.082.516) 1.304.350Provision for employment termination benefits 24 4.007.755 (663.528)Interest accrual 14.022.892 13.892.436Unrealized foreign currency loss/(gain) (6.720.813) 67.799.800Gain on sales of assets 31 (1.919.302) (9.283.716)Provision for Impairment of inventory 13 (674.208) (2.900.779)(Income)/loss from investments accounted for under equity method 16 3.478.557 14.818.955Income from acquisition of affiliates 31 (1.776.464) -Accrued taxation 35 25.545.174 4.445.576Operating cash flows provided before changes in working capital 180.526.564 132.125.973(Increase) in trade receivables 10 (40.905.420) 13.137.620(Increase)/Decrease in trade receivables from related parties 37 (16.636.149) 7.891.242Decrease in inventories 13 (17.738.004) (23.131.844)(Increase) in other receivables and other current assets 11 17.333.385 (12.649.582)(Decrease) in trade payables 10 3.017.682 (28.344.134)(Increase)/Decrease in payables to related parties 37 132.159.468 53.311.947Increase/(Decrease) in other liabilities 11 45.937.393 34.981.554Cash (utilized in)/generated from operations 303.694.919 177.322.776Taxes paid 35 (19.459.998) (19.696.728)Employee termination benefits paid 24 (1.665.025) (525.544)Collections from doubtful trade receivables 10 183.782 115.008Net cash provided by operating activities 282.753.678 157.215.513

CASH FLOWS FROM INVESTING ACTIVITIESAcquisitions of tangible assets 18 (28.054.937) (51.273.498)Acquisitions of intangible assets 19 (6.283.485) (537.833)Net cash outflow from sales of fixed assets 3.245.899 27.242.609(Increase)/Decrease in non-trade receivables from related parties 37 (167.980.195) (277.894.176)Acquisitions of long term financial assets 7-16 (1.747.240) (218.067.626)Net cash (used in) investing activities (200.819.958) (520.530.524)

71

Notes1 January-

31 December 2009

(As Restated) 1 January-

31 December 2008CASH FLOWS FROM FINANCING ACTIVITIES

-Loan repayments 8 (434.549.192) (176.904.956)-Loans acquired 8 379.186.226 621.423.802-Change in leasing expenses 1.749.080 4.385.294-Dividends paid (6.577.318) (31.500.000)-Change in other reserves 417.306 --Changes in non-trade receivables from related parties 37 102.701.245 65.148.995-Changes in minority interest (net) 402.694 (4.983)

Net cash (used in)/provided by financing activities 43.330.041 482.548.152

NET CHANGE IN CASH AND CASH EQUIVALENTS 125.263.761 119.233.139

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 6 154.180.917 34.947.778

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 6 279.444.678 154.180.917


Ülker Bisküvi Sanayi A.Ş. and its SubsidiariesConsolidated Statement Of Cash FlowsFor the Year Ended 31 December 2009 (Amounts expressed in Turkish Lira [TL] unless otherwise stated.)



1. ORGANIZATION AND OPERATIONS OF THE GROUP

Organization and Shareholders:

Ülker Bisküvi Sanayi A.Ş. Group, (“the Group”), comprises of the parent Ülker Bisküvi Sanayi A.Ş. (“the Company”), nine subsidiaries in which the Company owns the majority share of the capital or which are controlled by the Company, two joint ventures and two subsidiaries.

Ülker Bisküvi Sanayi A.Ş. was established in 1944. The Company’s core business activities are manufacturing of biscuits, chocolate coated biscuits and wafers.

Ülker Bisküvi Sanayi A.Ş. which is registered at the Capital Market Board, merged under its own title with Anadolu Gıda Sanayi A.Ş., whose shares have been quoted on İstanbul Stock Exchange since 30 October 1996, as of 31 December 2003.

Ülker Bisküvi Sanayi A.Ş. is located in Davutpaşa Cad. No:10 Topkapı Zeytinburnu / İstanbul.

As of 31 December 2009, the total number of people employed by the Group is 5.631 which contains 1.194 employees who worked as subcontractors (31 December 2008: 5.846, subcontractor: 1.459).

The parent and the controlling party of the Group is Yıldız Holding A.Ş.

As of 31 December 2009 and 31 December 2008, the names and percentages of the shareholders owning more than 10% of the Company’s share capital are as follows:

31 December 2009 31 December 2008Name of the Shareholders Share Percentage Share PercentageYıldız Holding A.Ş. 113.049.151 %42,09 113.049.151 %42,09Dynamic Growth Fund 71.369.033 %26,57 71.369.033 %26,57Other 84.181.816 %31,34 84.181.816 %31,34

268.600.000 % 100,00 268.600.000 % 100,00

As of 31 December 2009 and 31 December 2008, the details of the subsidiaries in terms of share of ownership and principal business activities are as follows:

31 December 2009 31 December 2008

Subsidaries

Ratio of Direct

Ownership%

Ratio of Effective

Ownership %

Ratio of Direct

Ownership%

Ratio of Effective

Ownership %

Nature of Operations

İdeal Gıda Sanayi ve Ticaret A.Ş. %97,5 %97,9 %97,5 %97,9 ManufacturingBiskot Bisküvi Gıda Sanayi ve Ticaret A.Ş. %50,5 %50,8 %50,5 %50,8 Manufacturingİstanbul Gıda Dış Ticaret A.Ş. %83,8 %83,8 %83,8 %83,8 Sales&MarketingAtlas Gıda Pazarlama Sanayi ve Ticaret A.Ş. %78,2 %78,2 %78,2 %78,2 Sales&MarketingBirleşik Dış Ticaret A.Ş. %68,0 %69,0 %68,0 %69,0 Sales&MarketingBirlik Pazarlama Sanayi ve Ticaret A.Ş. %99,0 %99,0 %99,0 %99,0 ManufacturingRekor Gıda Pazarlama A.Ş. - %46,6 - %46,6 Sales&MarketingLord Food International Ltd (*) - %50,8 - - Sales&MarketingKBF Ltd (*) - %50,8 - %50,8 Manufacturing

(*) The acquisition of KBF Ltd. ve Lord Food International Ltd., operating in Ukraine, have been completed in 21 January 2009. The group management have identified these two companies to be a single cash generating unit and thus following their acquisition have included them in the consolidated financial statements as of 31 December 2009 for the first time. The related subsidiaries were previously recorded under “Assets Held of Sale”.

73


İdeal Gıda Sanayi ve Ticaret A.Ş. and Biskot Bisküvi Gıda Sanayi ve Ticaret A.Ş. manufacture and sell similar products with those of Ülker Bisküvi Sanayi A.Ş. On the other hand İstanbul Gıda Dış Ticaret A.Ş., Atlas Gıda Pazarlama Sanayi ve Ticaret A.Ş., Birleşik Dış Ticaret A.Ş. and Rekor Gıda Pazarlama A.Ş are involved in domestic and international sales and marketing of products of the above mentioned companies and other food products purchased from the domestic market. Birlik Pazarlama Sanayi ve Ticaret A.Ş. provides raw materials to manufacturing companies.

Based on the decision of the Group management, KBF Ltd. and Lord Food International Ltd. have been consolidated for the first time in the current year.

The investments in associates and joint ventures of Ülker Bisküvi Sanayi A.Ş. which are accounted for under equity method in consolidation are as follows:

31 December 2009 31 December 2008

Associates and Joint Ventures

Ratio of Direct

Ownership%

Ratio of Effective

Ownership %

Ratio of Direct

Ownership%

Ratio of Effective

Ownership %

Nature of Operations

Pendik Nişasta Sanayi ve Ticaret A.Ş. %23,00 %23,99 %23,00 %23,99 ManufacturingHero Gıda Sanayi ve Ticaret A.Ş. - %39,59 - %39,59 ManufacturingGodiva Belgium BVBA %25,23 %25,23 %25,23 %25,23 ManufacturingG New Inc. %25,23 %25,23 %25,23 %25,23 Investment

Dividend Paid:

Group have made a dividend payment of 6.577.318 TL in the current year.

Approval of Financial Statements

The Board of Directors has approved the financial statements and given authorization for the issuance of the financial statements on 8 April 2010. The General Assembly has the authority to amend/modify the statutory financial statements.

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS

2.1 Basis of the presentation:

The Company and its Turkish subsidiaries maintain their books of account and prepare their statutory financial statements in accordance with accounting principles in the Turkish Commercial Code and tax legislation.

Subsidiaries operating in foreign countries maintain their books of account in the currencies of those countries and prepare their statutory financial statements in accordance with the legislation effective in those counties.

Capital Market Board (CMB) Decree No XI-29 “Capital Markets Financial Reporting Standards” provides principals and standards regarding the preparation and presentation of financial statements. This Decree became effective for periods beginning after 1 January 2008 and with its issuance Decree No XI-25 “Capital Markets Accounting Standards” was annulled. Based on this Decree, the companies are required to prepare their financial statements based on International Financial Reporting Standards (“IFRS”) as accepted by the European Union. However during the period in which the differences between the standards accepted by European Union and the standards issued by International Accounting Standards Board (“IASB”) are announced by Turkish Accounting Standards Board (“TASB”), IAS/ IFRS will be applied. In this scope, Turkish Accounting/ Financial Reporting Standards issued by TASB which do not contradict to the standards accepted will be adopted.



The accompanying consolidated financial statements have been prepared in accordance with IFRS and comply with CMB’s decree announced on 17 April 2008 and 9 January 2009 regarding the formats of the financial statements and footnotes since at the date of the issuance of these financial statements the differences of IAS/ IFRS accepted by the European Union are not declared by the TASB. In this scope, some reclassifications are made in the prior year financial statements.

Financial statements are prepared on the basis of historical cost principal except for revaluation of some financial instruments.

Determination of Functional Currency

Financial statements of each subsidiary of the Group are presented in the currency of the primary economic environment in which the entities operate (its functional currency). The results and financial position of the each subsidiary are expressed in Turkish Lira, which is the functional and presentation currency of the Group. The functional currency of the Group’s subsidiaries, KBF Ltd. and Lord Food International Ltd. is Hryvnia. The Group’s consolidated reporting currency is TRY. In accordance with IAS 21 (The Effects of Changes in Foreign Exchange Rates), in the preparation of the Group’s consolidated financial statements, balance sheet items of the related subsidiaries are translated at the balance sheet date Hryvnia rate, whereas income, expenses and cashflows are translated either at the rates prevailing at the trade date (historical rate) or the annual average rate. Exchange difference arising from the consolidatation of such subsidiaries using the afiliates is recognized under the exchange difference account in equity.

The functional currency of the Group’s associates, Godiva Belgium BVBA and G New Inc. is Euro and US $, respectively. The Group’s consolidated reporting currency is TRY. Exchange difference arising from the consolidatation of such subsidiaries using the equity method is recognized under the exchange difference account in equity. As of 31 December 2009, Central Bank of Republic of Turkey declared foreign currency rates are 1 Hryvnia= 0,1894 TL, 1 Euro = 2,1603 TL, 1 U.S.D. = 1,5057 TL. Between the period of 1 January – 31 December 2009, average foreign currency rates declared by Central Bank of Republic of Turkey are 1 Euro = 2,1507 TL, 1 U.S.D = 1,5456 TL., 1 Hryvnia=0,1990 TL (Between the period of 1 January-31 December 2008, average foreign currency rates declared by Central Bank of Republic of Turkey are 1 Euro =1,8969,1 U.S.D=1,2976)

Preparation of Financial Statements in Hyperinflationary Periods:

CMB, with its resolution dated 17 March 2005 and decree no 11/367 declared that companies operating in Turkey which prepare their financial statements in accordance with CMB Accounting Standards, effective 1 January 2005, will not be subject to the application of inflation accounting. Consequently, in the accompanying financial statements IAS 29 “Financial Reporting in Hyperinflationary Economies” was not applied.

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Comparative Information and Restatement of Prior Period Financial Statements

Consolidated financial statements of the Group have been prepared comparatively with the prior period in order to give information about financial position and performance. If the presentation or classification of the financial statements is changed, in order to maintain consistency, financial statements of the prior periods are also reclassified in line with the related changes. While preparing its financial statements in line with the Capital Market Board (CMB) issued Decree No XI-29, the Group reclassified its previous period financial statements accordingly in order to compare with the current period financial statement. The natures, reasons and amounts of the reclassifications are explained below:

• TheGroupmanagementhasreviewedandcorrecteditscalculationofthegoodwillarisingfromtheacquisitionof its Godiva Belgium BVBA and G New Inc. subsidiaries presented in its consolidated financial statements for 31 December 2008. This correction does not have an effect on the financial statements, however, the revised goodwill calculation has been presented in note 16.

• TheGroupmanagementhasnotedthattherehasbeenatransitionbetweenthe“InvestmentsAccountedforUnderthe Equity Method” and “Translation Gain/Loss” amounting to 2.472.710 TL in its 31 December 2008 consolidated financial statements and has corrected this error with a reclassification.

• TheGroupmanagementhasnotedthattherehasbeenatransitionwithinits“TangibleAssets”and“IntangibleAssets” in its 31 December 2008 consolidated financial statements and has corrected this error with a reclassification.

• TheGroupmanagementhasreclassifiedabalanceof15.217.814TLof“Dividendincome”presentedunder“Other Operating Income” in its 31 December 2008 consolidated financial statements to “Finance Income” for comparative presentation purposses.

• TheGroupmanagementhasreclassifiedabalanceof2.825.374TLof“Duestopersonnel”presentedunder“OtherReceivables and Payables” in its 31 December 2008 consolidated financial statements to “Provision for Employee Benefits” for comparative presentation purposses.

• TheGroupmanagementhasnettedthe“Foreignexchangegain”and“Foreignexchangeloss”balancesrecordedunder “Finance Income” and “Finance Expense” in its 31 December 2008 consolidated financial statements.

• TheGroupmanagementhasreclassifiedabalanceof2.377.645TLof“Performanceandpremiumprovision”presented under “Other Assets and Liabilities” in its 31 December 2008 consolidated financial statements to “Provision for Employee Benefits” for comparative presentation purposses.

• TheGroupmanagementhaspresentedabalanceof755.122TLof“DerivativeFinancialLiabilities”presentedunder “Other Assets and Liabilities” in its 31 December 2008 consolidated financial statements to “Other Financial Liabilities” for comparative presentation purposses.



Consolidation:

The consolidated financial statements include the financial statements of the companies controlled by the Group stated in Note 1. Necessary adjustments are posted for the elimination of Subsidiaries, all the intercompany transactions, and balances between the Company and its Subsidiaries (“Group”).

The results of subsidiaries acquired or disposed of during the year are included in the consolidated comprehensive comprehensive income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiary to bring its accounting policies into line with those used by the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Noncontrolling interests (“Minority interests”) in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein. Minority interests consist of the amount of those interests at the date of the original business combination and the minority’s share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are allocated against the interests of the Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses.

The acquisition of subsidiaries from third parties is accounted for using the purchase method. On acquisition, the assets and liabilities of a subsidiary are measured at their fair values as at the date of acquisition. The interest of minority shareholders is stated at the minority’s proportion of the fair values of the assets and liabilities recognized if applicable. Where necessary, adjustments are made to the annual financial statements of subsidiaries to bring the accounting policies used by them in line with those used by the Group. The results of subsidiaries acquired or disposed of during the year are included in the consolidated comprehensive income statement from the effective date of acquisition up to the effective date of disposal, as appropriate.

Goodwill arising on acquisitions is recognized as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognized. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognized immediately in profit or loss.

Investments in Associates

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

Results and assets and liabilities of associates are incorporated in the accompanying consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale, in that case they are accounted for under IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”. Under the equity method, associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group’s interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate) are not recognized.

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Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognized at the date of acquisition is recognized as goodwill. Goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

Where a Group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associate.

Joint Ventures

Results and assets and liabilities of associates are incorporated in the accompanying consolidated financial statements using the equity method of accounting. Under the equity method, associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group’s interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate) are not recognized.

Netting:

Financial assets and liabilities are offset and the net amount reported in the consolidated balance sheet when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.

2.2 Changes in the Accounting Policies:

Financial statements of the Company have been prepared comparatively with the prior period in order to give information about financial position and performance. The Group has not made any changes to its accounting policies in the current period.

2.3 Changes and Errors in Acccounting Estimates:

If the changes in the accounting polices are related to one period they are applied in the current year; if they are related with the future period they are applied both in the current period and future periods. The Group did not have any changes in the accounting estimates in the current period.

2.4 Adoption of New and Revised International Financial Reporting Standards:

The following new and revised standards and interpretations were implemented in the current period and this implementation had an impact on the reported amounts and disclosures of financial statements. Other standards and interpretations that implemented in the financial statements but had no effect on reported amounts are also explained in the further parts of this article.



Standards and Interpretations affecting reported results or financial position of 2009

IAS 1, (as revised in 2007) “Presentation of Financial Statements”

IAS 1(2007) has introduced terminology changes (including revised titles for the financial statements) and changes in the format and content of the financial statements. The Group presents in the consolidated statement changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the comprehensive statement of income.

IFRS 8, “Operating Segments” IFRS 8 is a disclosure Standard that has resulted in a redesignation of the Group’s reportable segments (Note 5).

Improving Disclosures about Financial Instruments (Amendments to IFRS 7, “Financial Instruments: Disclosures”)

The amendments to IFRS 7 expand the disclosures required in respect of fair value measurements and liquidity risk.

Standards and Interpretations that are effective in 2009 that do not impact the 2009 financial statements

The following new and revised Standards and Interpretations have also been adopted in these financial statements. Their adoption has not had any significant impact on the amounts reported in these financial statements but may may impact accounting for future transactions or arrangements.

Amendments to IFRS 2 Share-based Payment-Vesting Conditions and Cancellations

The amendments clarify the definition of vesting conditions for the purposes of IFRS 2, introduce the concept of ‘non-vesting’ conditions, and clarify the accounting treatment for cancellations.

IAS 23 (as revised in 2007) Borrowing Costs

The principal change to the Standard was to eliminate the option to expense all borrowing costs when incurred. This change has had no impact on these financial statements because it has always been the Company’s accounting policy to capitalise borrowing costs incurred on qualifying assets.

Amendments to IAS 32 Financial Instruments:Presentation and IAS 1 Presentation of Financial Statements – Puttable Financial Instruments and Obligations Arising on Liquidation

The revisions to IAS 32 amend the criteria for debt/equity classification by permitting certain puttable financial instruments and instruments (or components of instruments) that impose on an entity an obligation to deliver to another party a pro-rata share of the net assets of the entity only on liquidation, to be classified as equity, subject to specified criteria being met.

Amendments to IAS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Items

The amendments provide clarification on two aspects of hedge accounting: identifying inflation as a hedged risk or portion, and hedging with options.

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Embedded Derivatives (Amendments to IFRIC 9 and IAS 39)

The amendments clarify the accounting for embedded derivatives in the case of a reclassification of a financial asset out of the ‘fair value through profit or loss’ category as permitted by the October 2008 amendments to IAS 39 Financial Instruments: Recognition and Measurement (see above).

IFRIC 15 Agreements for the Construction of Real Estate

The Interpretation addresses how entities should determine whether an agreement for the construction of real estate is within the scope of IAS 11 Construction Contracts or IAS 18 Revenue and when revenue from the construction of real estate should be recognized. The requirements have not affected the accounting for the Company’s construction activities.

IFRIC 16 Hedges of a Net Investment in a Foreign Operation

The Interpretation provides guidance on the detailed requirements for net investment hedging for certain hedge accounting designations.

IFRIC 18 Transfers of Assets from Customers (adopted in advance of effective date of transfers of assets from customers received on or after 1 July 2009)

The Interpretation addresses the accounting by recipients for transfers of property, plant and equipment from ‘customers’ and concludes that when the item of property, plant and equipment transferred meets the definition of an asset from the perspective of the recipient, the recipient should recognize the asset at its fair value on the date of the transfer, with the credit recognized as revenue in accordance with IAS 18 Revenue.

Improvements to IFRSs (2008) In addition to the changes affecting amounts reported in the financial statements described above, the Improvements have led to a number of changes in the detail of the Company’s accounting policies – some of which are changes in terminology only, and some of which are substantive but have had no material effect on amounts reported. The majority of these amendments are effective from 1 January 2009.

IFRIC 13, “Customer Loyalty Programmes”

Under IFRIC 13, customer loyalty programs should be recognized as a separately identifiable component of the sales transaction(s). A portion of the fair value of the consideration received in respect of the initial sale shall be allocated to the award credits and the consideration allocated to award credits should be recognized as revenue when awards credits are redeemed.

Amendments to IAS 38, “Intangible Assets”

As part of Improvements to IFRSs (2008), IAS 38 has been amended to state that an entity is permitted to recognize a prepayment asset for advertising or promotional expenditure only up to the point at which the entity has the right to access the goods purchased or up to the point of receipt of services.

Amendments to IAS 20, “Accounting for Government Grants and Disclosure of Government Assistance”

As part of Improvements to IFRSs (2008), IAS 20 has been amended to require that the benefit of a government loan at a below-market rate of interest be treated as a government grant. This accounting treatment was not permitted prior to these amendments.



Amendments to IAS 39, “Financial Instruments: Recognition and Measurement” and IFRS 7, “Financial Instruments: Disclosures regarding reclassifications of financial assets”

The amendments to IAS 39 permit an entity to reclassify non-derivative financial assets out of the „fair value through profit or loss‟ (FVTPL) and “available-for-sale” (AFS) categories in very limited circumstances. Such reclassifications are permitted from 1 July 2008. Reclassifications of financial assets made in periods beginning on or after 1 November 2008 take effect only from the date when the reclassification is made.

Standards and Interpretations that are issued but not yet effective in 2009 and have not been early adopted

IFRS 3 (as revised in 2008) “Business Combinations”

IFRS 9 “Financial Instruments: Classification and Measurement”

IAS 24 (revised 2009) “Related Party Disclosures”

IAS 27 (as revised in 2008) “Consolidated and Separate Financial Statements”

IFRIC 17 “Distributions of Non-cash Assets to Owners”

IFRIC 19 “Extinguishing Financial Liabilities with Equity Instruments”

Amendments Related to Annual Improvements to IFRS (2009)

2.5 Summary of Significant Accounting Policies

The accounting policies applied in preparation of the accompanying financial statements are as follows:

Revenue:

Most of the revenue is generated from sale of biscuit, chocolate covered biscuit and wafer. Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates, and other similar allowances

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Sale of goods

Revenue generated from biscuit, chocolate covered biscuit and wafer are recognised when all the following conditions are satisfied:

• TheGrouphastransferredtothebuyerthesignificantrisksandrewardsofownershipofthegoods,• TheGroupretainsneithercontinuingmanagerialinvolvementtothedegreeusuallyassociatedwith ownership nor effective control over the goods sold,• Theamountofrevenuecanbemeasuredreliably,• Itisprobablethattheeconomicbenefitsassociatedwiththetransactionwillflowtotheentity;and• Thecostsincurredortobeincurredinrespectofthetransactioncanbemeasuredreliably.

Sales discounts are granted at the point of sale based on a percentage and are recorded as a reduction of revenue in the period of the sale. Sale discount percentages vary depending on the product sold.

Sales returns are granted based on agreements with the third party distributors, sales agents, and chain grocery stores and recorded as a reduction of revenue in the period of sale.

Dividend and interest revenue

Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. Dividend revenue from investments is recognized when the shareholders’ rights to receive payment have been established.

Rent income

Rent income from real estates is accounted by the linear method during the respective rent agreement.

Inventories:

Inventories are stated at the lower of cost and net realizable value. Costs, including an appropriate portion of fixed and variable overhead expenses, are assigned to inventories held by the method most appropriate to the particular class of inventory, with the majority being valued on an average basis. Net realizable value represents the estimated selling price less all estimated costs of completion and costs necessary to make a sale. Group has provided provision for diminishing in value of inventories which are unsalable or useless.Provision set for slow moving inventories can be found in note 13.

Tangible Assets:

Tangible assets that are acquired before 1 January 2005 are carried at their restated costs adjusted to the effects of inflation as of 31 December 2004, less any accumulated depreciation and any impairment loss and tangible assets that are acquired after 1 January 2005 are carried at cost of acquisition, less any accumulated depreciation and any impairment loss. Depreciation is charged so as to write off the cost of assets, other than land and construction in progress, over their estimated useful lives, using the straight line method. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets, or, when shorter, the term of the relevant lease.



Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease.

The gain or loss arising on the disposal or retirement of an item of tangible fixed assets is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

Leasing Transactions

The Group as lessor:

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term. Information on operational leases of the Group was given in Note 8.

The Group as lessee:

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are initially recognized as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognized immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Group’s general policy on borrowing costs.

Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognized as an expense in the period in which they are incurred. Business Combinations and Goodwill

The acquisition of subsidiaries and businesses are accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the recognition criteria under IFRS 3, “Business Combinations” are recognized at fair value at the date of acquisition, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 “Non-Current Assets Held for Sale and Discontinued Operations”, which are recognized and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognized as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognized. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognized immediately in profit or loss.

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If the initial accounting for a business combination can be determined only provisionally by the end of the period in which the combination is effected because either the fair values to be assigned to the acquiree’s identifiable assets, liabilities or contingent liabilities or the cost of the combination can be determined only provisionally, the combination is accounted using such provisional values. Any adjustments to those provisional values as a result of completing the initial accounting are recognized within twelve months of the acquisition date.

The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognized. In business combinations under common control, assets and liabilities subject to business combination are accounted for at carrying value in consolidated financial statements. Statements of income are consolidated starting from the beginning of the fiscal year in which the business combination is realized. Financial statements of previous fiscal years are restated in the same manner in order to maintain consistency and comparability. Any positive or negative goodwill arising from such business combinations is not recognized in the consolidated financial statements. Residual balance calculated by netting off investment in subsidiary and the share acquired in subsidiary’s equity is directly accounted under equity as “effect of business combinations under common control”.

Intangible Assets:

Intangible assets that are acquired before 1 January 2005 are carried at their restated costs adjusted to the effects of inflation as of 31 December 2004, less any accumulated amortization and any impairment loss and intangible assets that are acquired after 2005 are carried at cost of acquisition, less any accumulated amortization and any impairment loss.

Impairment of Assets:

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Borrowing Costs:

All borrowing costs are recorded in the consolidated comprehensive income statement in the period in which they are incurred.The Group does not have any borrowing costs that should be capitalized as per IAS 23 (Revised) “Borrowing costs”.



Financial Instruments:

Financial assets:

Investments are recognised and derecognised on a trade date where the purchase or sale of an investments under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.

Financial assets are classified into the following specified categories: financial assets as ‘at fair value through profit or loss’ (FVTPL), ‘held-to-maturity investments’, ‘available-for-sale’ (AFS) financial assets and ‘loans and receivables’.

Effective interest method:

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period.

Income is recognised on an effective interest basis for debt instruments other than those financial assets designated as at FVTPL.

Financial assets at FVTPL:

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as held for trading unless they are designated as hedges. Assets in this category are classified as current assets.

Available-for-sale financial assets: Investments other than held-to-maturity debt securities and held for trading securities are classified as available-for-sale, and are measured at subsequent reporting dates at fair value except available-for-sale investments that do not have quoted prices in active markets and whose fair values cannot be reliably measured are stated at cost and restated to the equivalent purchasing power. Gains and losses arising from changes in fair value are recognized directly in equity, until the security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognized in equity is included in the profit or loss for the period. Impairment losses recognized in profit or loss for equity investments classified as available-for-sale are not subsequently reversed through profit or loss. Impairment losses recognized in profit or loss for debt instruments classified as available-for-sale are subsequently reversed if an increase in the fair value of the instrument can be objectively related to an event occurring after the recognition of the impairment loss.

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Loans and receivables

Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method less any impairment.

Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of AFS equity securities, any increase in fair value subsequent to an impairment loss is recognised directly in equity.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments which have an original maturity of three months or less from date of acquisition and that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. The carrying amount of these assets approximates their fair value.

Financial Liabilities

Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.

Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities.



Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is designated as at FVTPL. Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.

Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Derivative financial instruments and hedge accounting

The Group is exposed to currency and interest rate risks arising from its operations. The main reason of the interest rate risk is bank loans. The Group uses derivative financial instruments (mainly uses interest swap contracts) to hedge its financial risks associated with specific firm commitments and interest rate fluctuations of its expected future transactions.

Derivative financial instruments are initially measured at fair value at the contract date, and are remeasured to fair value at subsequent reporting dates.

Foreign Currency Transactions

The individual financial statements of each Group group are presented in the currency of the primary economic environment in which the group operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group are expressed in TL, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual entities, transactions in currencies other than TL (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences are recognized in profit or loss in the period in which they arise except for:

• Exchangedifferenceswhichrelatetoassetsunderconstructionforfutureproductiveuse,whichareincludedin the cost of those assets where they are regarded as an adjustment to interest costs on foreign currency borrowings;

• Exchangedifferencesontransactionsenteredintoinordertohedgecertainforeigncurrencyrisks.• Exchangedifferencesonmonetaryitemsreceivablefromorpayabletoaforeignoperationforwhichsettlement

is neither planned nor likely to occur, which form part of the net investment in a foreign operation, and which are recognized in the foreign currency translation reserve and recognized in profit or loss on disposal of the net investment.

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For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are expressed in TL using exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the Group’s translation reserve. Such exchange differences are recognized in profit or loss in the period in which the foreign operation is disposed of.

Earnings Per Share

Earnings per share disclosed in the accompanying consolidated statement of income is determined by dividing net income by the weighted average number of shares in existence during the year concerned.

In Turkey, companies can raise their share capital by distributing “Bonus Shares” to shareholders from retained earnings. In computing earnings per share, such “bonus share” distributions are assessed as issued shares. Accordingly, the retrospective effect for those share distributions is taken into consideration in determining the weighted-average number of shares outstanding used in this computation.

Events After Balance Sheet Date:

Events after balance sheet date are those events, favourable and unfavourable, that occur between the balance sheet date and the publication date of the balance sheet. Should any evidence about the events that are prior to the balance sheet date or any related events arise subsequent to the balance sheet date, should be explained in the relevant disclosure.

Provisions, Contingent Liabilities and Contingent Assets:

Provisions

The Group shall recognise a provision only when it has a present obligation as a result of a past event, and it is probable that the entity will be required to transfer economic benefits in settlement; and the amount of the obligation can be estimated reliably (note 22).

Contingent assets and liabilities

A contingent assets and liabilities are defined as a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity, and are disclosed where an inflow or outflow of economic benefits is probable.

Related Parties:

In the accompanying consolidated financial statements the key management personnel and Board of Directors, close members of the family of any individual who directly or indirectly controls the Company are considered and referred to as “Related Parties”.

Government Grants and Incentives: The Group is exempt from the stamp tax and duties attributed to the export transactions and other profitable foreign exchange operations to the extent of the procedures and basis determined by the Ministry of Finance and Undersecretariat of Foreign Trade.

The government grants are paid to support the participation of attending fairs abroad according to the decision dated 16 December 2004 and numbered 2004/11 of Money Credit and Coordination Committee which was prepared on the basis of “Decisions of Export-oriented Government Grants”.



Based on the Cash Loan Coordination Board’s resolution dated 20/6, the Group also receives tax refunds for the export of its agricultural products in accordance with the Communiqué No: 2000/5 on ‘Export Refunds for Agricultural Products’.

In the current period, the Group has utilized grants given under the “Law No. 5084 Governing the Changes Made to Certain Laws Regarding Investment and Employment Grants”issued on 6 February 2004 at the Official Gazette Numbered 25365, allowing for various tax and insurance premium grants, and energy supports and free of charge lands for investments to increase investment and employment at certain cities.

Taxation and Deferred Income Taxes:

Turkish tax legislation does not permit a parent company and its subsidiary to file a consolidated tax return. Therefore, provisions for taxes, as reflected in the accompanying consolidated financial statements, have been calculated on a separate-entity basis. Income tax expense represents the sum of the tax currently payable and deferred tax.

Current Tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the comprehensive income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred Tax

Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

89


Current and Deferred Tax

Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited or debited directly to equity, in which case the tax is also recognised directly in equity, or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in calculating goodwill or determining the excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over cost.

Employee Benefits / Retirement Pay Provision:

Benefits such as bonus, allowance for heating, marriage allowance, leave of absence, religious holidays, education incentive, birth and death allowance are provided to the Group employees. Moreover, under the Turkish law and union agreements, lump sum payments are made to employees retiring or involuntarily leaving the Group. Such payments are considered as being part of defined retirement benefit plan as per IAS 19 (revised): “Employee Benefits.” The provision has been calculated by estimating the present value of the future probable obligation of the Group arising from the retirement of employees. The principal assumption is that the maximum liability for each year of service will increase parallel with inflation.

Thus, the discount rate applied represents the expected real rate after adjusting for the anticipated effects of future inflation.

Future retirement payments are discounted to their present value at the balance sheet date at an interest rate determined as net of an expected inflation rate and an appropriate discount rate.

Cash Flow Statement:

In statement of cash flow, cash flows are classified according to operating, investment and finance activities.

Cash flows from operating activities reflect cash flows generated from the manufacturing and marketing of biscuits, chocolate coated biscuits and wafers activities.

Cash flows from investment activities express cash used in investment activities (direct investments and financial investments) and cash flows generated from investment activities of the Group.

Cash flows relating to finance activities express sources of financial activities and payment schedules of the Group.

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments which their maturities are three months or less from date of acquisition and that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.



Capital and Dividends

Ordinary shares are classified as equity. Dividends distributed over the ordinary shares are classified as dividend liability after deducting retained earnings at the period in which the dividend distribution decision is made.

2.6 Critical Accounting Judgments and Key Sources of Estimation Uncertainty

Group’s Critical Accounting Judgments

In the process of applying the entity’s accounting policies, which are described in Note 2.5, management has made the following judgments that have the most significant effect on the amounts recognized in the financial statements:

Useful life of property, plant and equipment:

Group has calculated the depreciation amounts regarding the useful lifes specified on Note 18.

Impairment of inventories:

In the current year, a provision has been set for inventories that are not expected to be used and the slow moving inventories. In the current year the group has identified certain inventories with net realizable values lower than costs. Based on the anlaysis, 275.232 TL impairment provision has been booked for inventories (2008: 949.440 TL).

Doubtful receivables provision:

In the current year, a provision has been set for receivables that are not expected to be collectible and those that have not been collected for long time. As of 31 December 2009, a provision for 3.014.822 TL of the trade receivables have been provided for as doubtful receivable provision (2008: 9.281.120 TL).

Impairment of goodwill:

In the current period, impairment of goodwill is measured by using the discounted cash flow method and accordingly no impairment is recognized.

Impairment of associates:

Under the equity method, associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the associate, less any impairment in the value of individual investments. In the discounted cash flow calculation, 8% is used as the discount rate, in terms of US Dollars, and 3% is used in the growth rate of carrying amount.

Deferred taxes:

Deferred tax assets and liabilities are recorded using substantially enacted tax rates for the effect of temporary differences between book and tax bases of assets and liabilities. In the subsidiaries of the Group, there are deferred tax assets resulting from tax loss carry-forwards and deductible temporary differences, all of which could reduce taxable income in the future. Based on available evidence, both positive and negative, it is determined whether it is probable that all or a portion of the deferred tax assets will be realized. The main factors which are considered include future earnings potential; cumulative losses in recent years; history of loss carry-forwards and other tax assets expiring; the carry-forward period associated with the deferred tax assets; future reversals of existing taxable temporary differences; tax-planning strategies that would, if necessary, be implemented, and the nature of the income that can be used to realize the deferred tax asset. As a result of the assessment made, the Group has recognized deferred tax assets in certain entities because it is probable that taxable profit will be available sufficient to recognize deferred tax assets in those entities.

91


Fair values of derivative instruments and other financial instruments:

The Group determines the fair values of its financial instruments without an active market using various market infromation for similar transactions, similar instruments with fair values and discounted cash flow analysis.

3. BUSINESS COMBINATIONS

The Group has completed the acquisition of KBF Ltd. And Lord Food International Ltd., subsidiaries, on 21 January 2009. Group management believes that these two copmanies (previously presented under “Assets Held for Sale”) constitute a single cash generating unit and has included in the consolidation for the first time in its consolidated financial statements dated 31 December 2009.

The goodwill generated at the acquisition of KBF Ltd. and Lord Food International Ltd. have been presented below:

Carrying ValueFair Value

AdjustmentsFair Value

Group’s ShareCurrent Assets 6.749.572 - 6.749.572Cash and cash equivalents 164.481 - 164.481Trade receivables 4.087.970 - 4.087.970Inventories 1.592.187 - 1.592.187Other current assets 904.934 - 904.934Non-Current Assets 2.811.406 7.397.339 10.208745Tangible and intangible assets 2.811.406 7.397.339 10.208745Current Liabilities (2.938.754) - (2.938.754)Trade payables (2.106.322) - (2.106.322)Other payables (832.432) - (832.432)Non-Current Liabilities - (1.849.335) (1.849.335)Deferred tax liabilities - (1.849.335) (1.849.335)Total Net Assets 6.622.224 5.548.004 12.170.228Total Cash Paid 10.393.762Gain generated from the acquisition as of 1 January 2009 (*) (1.776.466)Gain generated from the acquisition as of 31 December 2009 (*) (1.776.466)

(*) The gain generated during the acquisition of KBF Ltd. and Lord Food International Ltd. have been accounted under “Other Income” in accordance with IFRS 3.

4. JOINT VENTURES

Hero Gıda Sanayi ve Ticaret A.Ş. and Pendik Nişasta Sanayi ve Ticaret A.Ş. have been presented as joint ventures in the accompanying consolidated financial statements and have been consolidated using the equity method. Joint ventures have been explained in detail in Note 2.



5. SEGMENTAL INFORMATION

The Group’s core business activities are manufacturing of biscuits, chocolate coated biscuits and wafers. The decision makers of the Group routinely review the Ülker Bisküvi Sanayi A.Ş. and its subsidiaries consolidated financial statements. Since the Group has operations in only one production area and the decision makers use the consolidated financials, segmental reporting in accordance with IFRS 8 have not been provided in the accompanying consolidated financial statements.

6. CASH AND CASH EQUIVALENTS

31 December 2009 31 December 2008Cash 5.303 11.730Demand deposits 7.290.622 43.308.139Time deposits (*) 268.473.753 110.625.636Other liquid assets 3.675.000 235.412

279.444.678 154.180.917

(*) Time deposists consist of repurchase agreements amounted as TL 2.791.669 (31 December 2008: TL 2.779.744).

Cash and cash equivalents include bank deposits amounting to TL 478.303 at Türkiye Finans Katılım Bankası A.Ş. which is a related party (31 December 2008: TL 753.682).

The detail of time deposits is as follows:

Currency Type Interest Rate (%) Maturity 31 December 2009TL %5,75 January 2010 2.680.433USD %0,19-%2,75 January 2010 265.793.320

268.473.753

Currency Type Interest Rate (%) Maturity 31 December 2008TL %14,00-%16,75 January 2009 108.584.017USD %1,75-%3,50 January 2009 2.041.619

110.625.636

7. FINANCIAL ASSETS

Short Term Financial Assets: 31 December 2009 31 December 2008Available for sale financial assets 856.423 787.217Financial assets at fair value through profit or loss 14.588 13.960

871.011 801.177

The Company’s short term financial assets compose of various liquid funds and shares.

Long Term Financial Assets: 31 December 2009 31 December 2008Available for Sale Financial Assets 684.405.037 350.457.314

684.405.037 350.457.314

93


Long Term Available for Sale Ratio % 31 December 2008 Ratio % 31 December 2008BİM Birleşik Mağazalar A.Ş. (i) 12,03% 630.143.145 12,03% 296.673.233 Tire Kutsan O.M.K. ve K. San. A.Ş. (ii) 1,94% 33.714.313 9,83% 32.063.813 KBF Ltd. (iii) 50,76% - 50,76% 7.017.862 Sağlam GYO A.Ş. (i) 10,71% 5.220.000 10,71% 2.520.000 Besler Gıda ve Kimya San. A.Ş. 7,00% 3.097.685 7,00% 3.097.685 Netlog A.Ş. (iv) 15,91% 2.614.613 15,91% 2.614.613 Fresh Cake Gıda A.Ş. 10,00% 2.430.618 10,00% 2.430.618 Dünya Gümrükleme Müş. A.Ş. (v) 79,58% 575.454 79,58% 575.454 Igit Ulus.Nak. Turizm Mak. San. Tic. A.Ş.(v) 50,77% 5.510.760 46,84% 2.581.078Other 1.098.449 882.960

684.405.037 350.457.314

(i) The shares are traded on a stock exchange and have been valued at their fair value.

(ii) Ülker Bisküvi Sanayi A.Ş. and Mondi Packaging have agreed to continue their cooperation in Tire Kutsan San. A.Ş. (Tire) as a partnership for a period of 3 years. Ülker Bisküvi Sanayi A.Ş.’s shares which has a nominal value of TL 3.887.332,61, equals to the 1,94% of Tire’s equity share. According to this agreement, Ülker Bisküvi Sanayi A.Ş. will transfer 388.733.261 number of Tire Kutsan A.Ş. shares to Mondi Pacakaging after three years following the date, 3 September 2007 on the basis of a share price of 0,05006927 USD and an annual interest of 6%. As of 31 December 2008 and 31 December 2009, the valuation of the shares of Tire Kutsan A.Ş. are done on the basis of the terms on this agreement.

(iii) The subsidiary; in period periods, due to its small size and low transaction volume has been presented under “Available for Sale Assets” and not included in the consolidation, has now been inlcuded in the consolidation for the first time in the current year based on the Group management’s decision.

(iv) An agreement for the sale of Netlog Lojistik Hizmetleri A.Ş.’s shares have been signed and the sale has been completed in March 2010.

(v) The subsidiary, due to its small size and low transaction volume and because its operations are outside the scope of the Grop, has not been included in the consolidation.

Those equity instruments that are traded in an active market are presented at their fair values. The difference in the fair values of such instruments of 446.354.171 TL (2008: 125.668.539 TL) has been presented under other comprehensive income under equity.

As the expected value gaps for those financial assets that are not traded in an active market are high and expected values are not reliable, available for sale assets presented above of 8.718.370 TL have been presented at cost.



8. FINANCIAL BORROWINGS

31 December 2009 31 December 2008Short Term Financial Borrowings:Short term bank loans 531.398.974 480.156.445Short term financial lease payables 8.984.548 3.522.166

540.383.522 483.678.611

Long Term Financial Borrowings:Long term loans 238.379.100 337.682.520Long term financial lease payables 3.108.524 6.821.826

241.487.624 344.504.346

31 December 2009Currency Type Maturity Interest Rate (%) Short Term Long TermTL February 2010 %8,5-%10,73 40.430.268 -USD January 2010-March 2013 %2,73-%9,5 490.968.706 238.379.100

531.398.974 238.379.100

31 December 2008Currency Type Maturity Interest Rate (%) Short Term Long TermTL January 2009 %25-%28 2.704.243 -USD January 2009-March 2013 %1,64-%10,75 477.452.202 337.682.520

480.156.445 337.682.520

Repayment schedule of financial borrowings is as follows:

31 December 2009 31 December 2008to be paid within 1 year 531.398.974 480.156.445to be paid within 1-2 years 99.319.936 110.712.352to be paid within 2-3 years 100.823.420 86.201.100to be paid within 3-4 years 38.235.744 102.080.250to be paid within 4-5 years - 38.688.818

769.778.074 817.838.965

6.861.796 TL of financial borrowings are due to Fon Finansal Kiralama A.Ş., which is a related party (2008: 10.343.992 TL).

The Company signed the credit agreement amounting to USD 950 million regarding the takeover of Godiva Belgium BVBA and G New Inc. with Yıldız Holding A.Ş. and Ülker Çikolata Sanayi A.Ş, and undertook its own qutoa amounting to USD 240 million. In addition the Company bailed together with Yıldız Holding A.Ş and Ülker Çikolata Sanayi A.Ş. for the loan amounting to USD 710 million.A payment of USD 33 million of principle have been made in the current year. As of 31 December 2009 the burden has been decreased to USD 577 million.

95


a) The detail of short term financial lease payables is as follows:

ShortTerm Financial Lease Payables 31 December 2009 31 December 2008Financial lease payables 9.893.381 4.670.616Deferred financial lease payables (-) (908.833) (1.148.450)

8.984.548 3.522.166

b) The detail of long term financial lease payables is as follows:

Long-Term Financial Lease Payables 31 December 2009 31 December 2008Financial lease payables 3.344.966 7.768.770Deferred financial lease payables (-) (236.442) (946.944)

3.108.524 6.821.826

The maturity detail of the financial lease payables is as follows:

31 December 2009 31 December 2008to be paid within 1 year 8.984.548 3.522.166to be paid within 1-2 years 2.844.055 3.839.810to be paid within 2-3 years 251.085 2.758.035to be paid within 3-4 years 13.384 223.981

12.093.072 10.343.992

9. OTHER FINANCIAL LIABILITIES

31 December 2009 31 December 2008Derivative Financial Liabilities 7.938.615 755.122

7.938.615 755.122

10. TRADE RECEIVABLES AND PAYABLES

31 December 2009 31 December 2008Due From Related PartiesDue from related parties (Note: 37) 105.957.392 89.321.243

105.957.392 89.321.243Other Trade ReceivablesTrade receivables 191.674.308 149.599.718Provision for doubtful receivables(-) (3.014.822) (9.281.120)

188.659.486 140.318.598

Total Short Term Trade Receivables 294.616.878 229.639.841

Trade receivables are disclosed at discounted net realizable value using the effective yield method. Net realizable value has been calculated over discount rate of 10% based on the Group’s cash sales. (31 December 2008: 20%). The allowance for trade receivables is provided based on the estimated irrecoverable amounts from the sale of goods, determined by reference to past default experience.



The movement of the allowance for doubtful receivables as of 31 December 2009 and 31 December 2008 is as follows:

1 January – 31 December 2009


Opening balance (9.281.120) (8.091.778)Charge for the period (3.049) (3.334.862)Translation gain or loss 321 (1.095.002)Cancelled provisions 6.085.244 3.125.514Collections 183.782 115.008Closing balance (3.014.822) (9.281.120)

Long Term Trade Receivables 31 December 2009 31 December 2008Notes Receivable 864.028 318.509

864.028 318.509

Short Term Trade Payables 31 December 2009 31 December 2008Trade payables to related parties (Note:37) 355.134.157 222.974.689Trade payables 74.321.470 69.197.466

429.455.627 292.172.155

11. OTHER RECEIVABLES AND PAYABLES

31 December 2009 31 December 2008Other ReceivablesNon trade receivables from related parties (Note: 37) 706.221.936 538.241.741Short term other receivables 14.516.668 15.384.989

720.738.604 553.626.730

Other Short Term ReceivablesOther short term receivables 14.309.757 14.724.510Tax receivables - 492.589Deposits and guarantees given - 4.883Receivables from personel 206.911 163.007

14.516.668 15.384.989

Other Long Term Receivables 31 December 2009 31 December 2008Deposists and guarantees given 62.939 62.260

62.939 62.260

Other Payables 31 December 2009 31 December 2008Non trade payables torelated parties (Note: 37) 81.394.285 42.749.672Other payables to related parties 168.405.960 65.704.715

249.800.245 108.454.387

97


Other Short Term Payables 31 December 2009 31 December 2008Advances received 69.222.704 41.882.588Other Payables 12.166.581 862.084Deposists and guarantees received 5.000 5.000

81.394.285 42.749.672

12. RECEIVABLES AND PAYABLES FROM FINANCIAL SECTOR OPERATIONS

None (31 December 2008: None).

13. INVENTORIES

The detail of inventories is as follows:

31 December 2009 31 December 2008Raw materials 105.657.652 84.950.591 Work in progress 1.792.692 1.512.780 Finished goods 37.700.917 36.391.728 Trade goods 14.142.311 17.554.901 Other inventories 1.689.974 1.243.355 Inventory impairment provision (-) (275.232) (949.440)

160.708.314 140.703.915

Inventory is presented on cost value and allowence for impairment on inventory is booked.

The movement of allowence for impairment on inventory for the periods ending 31 December 2009 and 31 December 2008 are below:

1 January- 31 December 2009


Opening balance (949.440) (3.850.219)Charge for the year (275.232) (288.998)Used allowence 949.440 3.189.777Closing balance (275.232) (949.440)

14. BIOLOGICAL ASSETS


15. ASSETS RELATED TO ONGOING CONSTRUCTION CONTRACTS




16. INVESTMENTS ACCOUNTED FOR UNDER THE EQUITY METHOD

Associates and joint ventures are accounted for under the equity pick-up method:

Associates and Joint Ventures Share % 31 December 2009 Share % 31 December 2008Hero Gıda San. ve Tic. A.Ş. %39,60 9.211.033 %39,60 7.662.821Pendik Nişasta San. ve Tic. A.Ş. %23,99 18.413.278 %23,99 17.528.533Godiva Belgium BVBA %25,23 97.937.755 %25,23 98.409.486G New Inc. %25,23 123.295.196 %25,23 133.101.763

248.857.262 256.702.603

31 December 2009 31 December 2008Indexed cost 242.553.696 242.553.696Profits arising after the acquisition date and net-off with dividends received(-) 6.303.566 14.148.907

248.857.262 256.702.603

The financial information for the Group’s associates and joints ventures accounted for under the equity pick-up method are as follows:

31 December 2009 31 December 2008Total assets 1.720.274.590 1.484.049.926Total liabilities (739.103.581) (630.312.553)Net assets 981.171.009 853.737.373

Group’s share in net assets 248.857.262 256.702.603

1 January-31 December 2009


Net sales 1.005.954.631 677.032.499Net loss for the period (15.272.304) (42.726.234)Group’s share in net loss for the period (3.478.557) (14.818.955)

On the basis of IFRS 3, the Company took over 25,23% shares of Godiva Belgium BVBA and G New Inc. for 73.734.943 U.S.D. (93.044.667 TL) and 93.512.926 U.S.D (117.793.273 TL) respectively. The goodwill resulting from this acqusition is stated in below:

99


Goodwill resulting from the acqusition of G-New Inc. is presented below:

Carrying Value Adjustments Fair Value Portion of GroupCurrent Assets 43.848.050 4.093.673 47.941.723 12.095.697 Cash and Cash Equivalents 2.398.324 - 2.398.324 605.097 Receivables and Other Current Assets 16.495.477 - 16.495.477 4.161.809 Inventories 24.954.249 4.093.673 29.047.922 7.328.791 Tangible and Intangible Non-current Assets 75.668.151 455.206.557 530.874.708 133.939.689 Short-term Liabilities (51.433.208) - (51.433.208) (12.976.598)Financial Liabilities (28.941.364) - (28.941.364) (7.301.906)Trade Payables (22.491.844) - (22.491.844) (5.674.692)Other Liabilities - - - -Long-term Liabilities (167.334.626) - (167.343.626) (42.220.797)Financial Liabilities (166.044.656) - (166.044.656) (41.893.067)Debt Provisions (1.289.970) - (1.298.970) (327.730)Net Total Assets (99.251.633) 459.300.230 360.039.597 90.837.990 Total Cash Paid 117.793.273 18 March 2008 Positive Goodwill 26.955.283 31 December 2009 Positive Goodwill(*) 32.744.309

(*) Goodwill from the acquisition of G New Inc. is disclosed in investments based on the equity method. Goodwill resulting from the acqusition of G-New Inc. is presented below:

Carrying Value Adjustments Fair Value Portion of GroupCurrent Assets 106.590.546 3.626.184 110.216.730 27.807.681 Cash and Cash Equivalents 36.797.759 - 36.797.759 9.284.075 Receivables and Other Current Assets 40.812.269 - 40.812.269 10.296.935 Inventories 28.980.518 3.626.184 32.606.702 8.226.671 Non-Current Assets 56.115.740 261.601.198 317.716.938 80.159.983 Receivables and other Non-current Assets 9.190.624 - 9.190.624 2.318.794 Tangible and Intangible Assets 46.925.116 261.601.198 308.526.314 77.841.189 Short-term Liabilities (62.529.287) - (62.529.287) (15.776.139)Financial Liabilities (3.156.750) - (3.156.750) (796.448)Trade Payables (59.372.537) - (59.372.537) (14.979.691)Other Liabilities (62.087.691) (105.429.311) (167.517.002) (42.264.540)Long-term Liabilities (61.466.398) - (61.466.398) (15.507.972)Financial Liabilities (621.293) (8.820.134) (9.441.427) (2.382.072)Other Provisions - (96.609.177) (96.609.177) (24.374.495)Net Total Assets 38.089.308 159.798.071 197.887.379 49.926.986 Total Cash Paid 93.044.667 18 March 2008 Positive Goodwill 43.117.681 31 December 2009 Positive Goodwill(*) 46.786.441

(*) Goodwill from the acquisition of Godiva Belgium BVBA is disclosed in investments based on the equity method.



17. INVESTMENT PROPERTY None (31 December 2008: None).

18. TANGIBLE ASSETS (NET)

Movements of tangible assets between 1 January 2009 and 31 December 2009 are as follows:

Cost1 January

2009 Addition Disposal Transfers

Change in Consolidation

StructureTranslation Gain / Loss

31 December 2009

Land 3.902.688 - - - - - 3.902.688

Land improvements 5.936.359 88.549 (35.131) 4.365 - - 5.994.142

Buildings 171.302.934 175.139 (1.227.479) 15.801.584 8.143.644 (392.091) 193.803.731

Machinery, plant and equipment 283.540.188 17.029.242 (1.404.944) 12.727.625 3.054.092 (147.045) 314.799.158

Vehicles 3.325.646 - (357.716) - 43.211 (2.080) 3.009.061

Furniture and fixtures 34.734.261 642.688 (206.401) 142.734 128.352 (6.180) 35.435.454

Leasehold improvements 16.264.854 9.819 - - 22.679 (1.092) 16.296.260

Other tangible assets 2.306.092 3.079 - - 53.271 (2.565) 2.359.877

Construction in progress 18.799.237 10.106.421 - (28.676.308) 205.043 (9.873) 424.520

540.112.259 28.054.937 (3.231.671) - 11.650.292 (560.926) 576.024.891

Accumulated Depreciation

1 January 2009 Addition Disposal Transfers

Change in Consolidation

StructureTranslation Gain / Loss

31 December 2009

Land improvements (1.127.231) (282.724) - - - - (1.409.955)

Buildings (33.159.069) (7.853.463) 531.907 - - 27.915 (40.452.710)

Machinery, plant and equipment (181.360.424) (17.875.246) 970.311 - (1.274.899) 71.726 (199.468.532)

Vehicles (2.175.131) (311.278) 264.846 - (30.333) 1.544 (2.250.352)

Furniture and fixtures (30.376.428) (1.551.691) 138.010 - (72.545) 4.018 (31.858.636)

Leasehold improvements (5.380.272) (795.441) - - (18.067) 1.007 (6.192.773)

Other tangible assets (1.670.026) (156.824) - - (45.702) 2.334 (1.870.218)

(255.248.581) (28.826.667) 1.905.074 - (1.441.546) 108.544 (283.503.176)

Net Book Value 284.863.678 292.521.715

In amortization expenses, 24.883.520 TL (31 December 2008: 13.650.202 TL) is included cost of goods sold, 13.926 TL (31 December 2008: 7.020 TL) is included in research and development expenses, 3.913.985 TL (31 December 2008: 3.679.506 TL) is included in marketing and selling expenses and 2.050.852 TL (31 December 2008: 6.065.084 TL) is included in general administrative expenses.

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Movements of tangible assets between 1 January 2008 and 31 December 2008 are as follows:

Cost1 January

2008 Addition Disposal Transfers31 December

2008Land 3.210.302 1.404.000 (711.614) - 3.902.688Land improvements 5.770.007 17.165 - 149.187 5.936.359Buildings 169.132.740 10.394.465 (13.482.684) 5.258.413 171.302.934Machinery, plant and equipment 262.491.793 4.081.755 (6.462.959) 23.429.599 283.540.188Vehicles 8.595.822 81.017 (5.351.193) - 3.325.646Furniture and fixtures 34.250.108 633.503 (728.861) 579.511 34.734.261Leasehold improvements 16.180.502 86.801 (2.449) - 16.264.854Other tangible assets 2.306.092 - - - 2.306.092Construction in progress 13.641.155 34.574.792 - (29.416.710) 18.799.237

515.578.521 51.273.498 (26.739.760) - 540.112.259

Accumulated Depreciation1 January

2008 Addition Disposal Transfers31 December

2008Land improvements (856.397) (270.834) - - (1.127.231)Buildings (31.559.742) (2.259.696) 660.369 - (33.159.069)Machinery, plant and equipment (170.383.878) (15.787.616) 4.811.070 - (181.360.424)Vehicles (4.264.454) (575.999) 2.665.322 - (2.175.131)Furniture and fixtures (29.291.306) (1.729.065) 643.943 - (30.376.428)Leasehold improvements (4.540.193) (840.242) 163 - (5.380.272)Other tangible assets (1.398.777) (271.249) - - (1.670.026)

(242.294.747) (21.734.701) 8.780.867 - (255.248.581)

Net Book Value 273.283.774 284.863.678

(*) The Group performed reclassifications between Tangible Assets and Intangible Assets to the closing balance of 31 December 2008.

The useful lifes of tangible assests are as follows:

Useful lifeBuildings 25 – 50 yearsLand improvements 10 – 50 yearsMachinery and equipment 4 – 15 yearsVehicles 4 – 10 yearsOther tangible assets 4 – 10 yearsFurniture and fittings 3 – 10 yearsLeasehold improvements 5 – 10 years



19. INTANGIBLE ASSETS (NET)

Movements of intangible assets between 1 January 2009 and 31 December 2009 are as follows:

Cost1 January

2009 Addition DisposalChanges due to

ConsolidationTranslation Differences

31 December 2009

Rights 22.306.537 6.276.538 - - - 28.583.075Other intangible assets 660.421 6.947 - 130 (7) 667.491

22.966.958 6.283.485 - 130 (7) 29.250.566

Accumulated amortization

1 January 2008 Addition Disposal

Changes due to Consolidation

Translation Differences

31 December 2008

Rights (20.934.420) (1.986.510) - - - (22.920.930)Other intangible assets (431.655) (49.106) - (130) 30 (480.861)

(21.366.075) (2.035.616) - (130) 30 (23.401.791)

Net Book Value 1.600.883 5.848.775

Movements of intangible assets between 1 January 2008 and 31December 2008 are as follows:

Cost 1 January 2008 Addition Disposal 31 December 2008Rights 21.837.636 468.901 - 22.306.537Other intangible assets 591.489 68.932 - 660.421

22.429.125 537.833 - 22.966.958

Accumulated Amortization 1 January 2008 Addition Disposal 31 December 2008Rights (19.306.009) (1.628.411) - (20.934.420)Other intangible assets (392.955) (38.700) - (431.655)

(19.698.964) (1.667.111) - (21.366.075)

Net Book Value 2.730.161 1.600.883

The intangible assets are amortized on a straight-line basis over their estimated useful lives for the period.

Useful LifeRights 2 – 15 yearsOther intangible assets 5 – 12 years

20. GOODWILL

Ülker Bisküvi Sanayi A.Ş., acquired 4,725% share, which corresponds to 968.625 shares, of the total equity of Atlas Gıda Pazarlama Sanayi ve Ticaret A.Ş. for TL 2.405.600 from Dynamic Growth Fund on 19 October 2007. As a result of this acquisition a positive goodwill amounting TL 1.534.035 has been generated. The impairment calculations have been performed as of 31 December 2009 and as a result of this assessment no impairment for the goodwill was noted (31 December 2008:TL 1.534.035).

The goodwill resulting from the acquisition of Godiva Belgium BVBA and G-New Inc is presented in Note 16.

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21. GOVERNMENT GRANTS AND INCENTIVES

Group has received government incentive in the current period amounting TL 5.834.593. (31 December 2008:TL 518.264). This benefit is considered as government incentives and explained on Note 2. In 2009 the of amount relating to law 5084; 1.630.640 TL is from energy grants, 4.230.953 TL is from employment grants (2008: 518.264 TL relating to energy grants).

22. PROVISIONS, CONTINGENT ASSETS AND LIABILITIES

Short-Term Provisions 31 December 2009 31 December 2008Provision for lawsuits 1.966.102 2.097.964

1.966.102 2.097.964

Movement of the legal case provision



Opening Balance 2.097.964 1.885.127Current year charge 1.123.787 212.837Provision released (1.255.649) -

1.966.102 2.097.964

A significant portion of the legal case provision as of 31 December 2009 and 2008 are relating to legal filings made by the personnel.

a) Guarantees Given

(Balances denominated in foreign currencies have been presented in their original currency)

31 December 2009 31 December 2008TL USD TL USD Euro

A) Total Guarantees Pledges and Liens (“GPL”)Given in the Legal Name of the Company 37.442.714 70.406.641 28.779.140 26.727.459 5.913B) Total GPL Given in the Name of Fully Consolidated Companies - - - - -C) Total GPL Given to Manage Trading Operations of Entity in the name of 3rd parties - - - - -D) Total-Other GPL Given - 589.601.021 250.000 713.856.292 -

i. Total GPL Given in the Name of the Parentii. Total GPL Given in the name of other Group Companies not included in B) and C) - 579.601.021 250.000 703.856.292 -iii. Total GPL given in the name of 3rd parties not included in C) - 10.000.000 - 10.000.000 -

Total 37.442.714 660.007.662 29.029.140 740.583.751 5.913

The proportion of guarantees, pledges and liens given by the Group to its equity as of 31 December 2009 is 49% (31 December 2008: 94%).



b) Lawsuits Filed by and Against to the Group

ba) As of 31 December 2009;

Lawsuits filed by the Group:

TL USDCompensation litigations 1.100.000 -Foreclosure proceedings 700.465 100.000Tax litigations 1.134 -Action of debt 577.300 -Penalty proceedings 325.097 -

2.703.996 100.000

Lawsuits filed against to the Group:

TL USDAction of debts (*) 188.579 -Execution files (*) 49.713 -Compensation ligitations (*) 2.135.737 400.000

2.374.029 400.000

bb) As of 31 December 2008;

Lawsuits filed by the Group:

TLCompensation litigations 1.165.000Foreclosure proceedings 380.272Tax litigations 40.888Action of debt 818.724Penalty proceedings 267.450

2.672.334

Lawsuits filed against to the Group:

TLAction of debts (*) 183.897Compensation litigations (*) 2.099.724

2.283.621

(*) A provision of TL 1.966.102 has been provided for various court cases filed against the Group. For the rest of the lawsuits it is decided not to book any provision because no cash outflow is projected. (31 December 2008: TL 2.097.964).

Operational Leasing Agreements

The operating leases of the company are for one year period. All operational leasing agreements include a clause allowing the re-arrangement of the terms of the lease had the lessee renewed the contract under the current market conditions. The lessee does not have a right to purchase the asset at the end of the term.

Group’s rental income from its operational leasing agreements for assets leased are 7.922.492 TL in the year (2008: 6.658.034 TL). In the current year opeational leasing expenses are 9.607.998 TL (2008: 6.626.395 TL). Due to non-cancellable rent agreements, the Gropu’s rental revenue to be received in the future periods is 10.527.654 TL and are all to be realized in a one year period. Due to non-cancellable rent agreements, the Group’s rental expense to be incurred in the future periods is 1.817.796 TL and are all payable in a one year period.

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23. COMMITMENTS

The Group’s export commitments’ amount is TL 105.966.819 as of 31 December 2009 (31 December 2008: 32.740.421)

24. EMPLOYEE BENEFITS

Shor Term Provision 31 December 2009 31 December 2008Unused vacation accrual 2.262.620 1.416.477Dues to personnel 4.078.722 2.825.374Performance and premium provision 4.305.073 2.377.645

10.646.415 6.619.496

Long Term Provisions 31 December 2009 31 December 2008Retirement pay provision 6.168.987 3.820.273

6.168.987 3.820.273

Under Turkish Labor Law, the Group is required to pay employment termination benefits to each employee who has qualified. Also, employees are required to be paid their retirement pay who retired by gaining right to receive according to current 506 numbered Social Insurance Law’s 6 March 1981 dated, 2422 numbered and 25 August 1999 dated, 4447 numbered with 60th article that has been changed. The amount payable consists of one month’s salary limited to a maximum of TL 2.365,16 for each period of service at 31 December 2009 (31 December 2008: TL 2.173,19). As the maximum liability is revised semi annually, the maximum amount of TL 2.427,04 effective from 1 January 2008 has been taken into consideration in calculation of provision from employment termination benefits.

The liability is not funded, as there is no funding requirement. The provision has been calculated by estimating the present value of the future probable obligation of the Group arising from the retirement of employees. IAS 19 requires actuarial valuation methods to be developed to estimate the entity’s obligation under defined benefit plans. Accordingly, the following actuarial assumptions were used in the calculation of the total liability:

The principal assumption is that the maximum liability for each year of service will increase parallel with inflation. Thus, the discount rate applied represents the expected real rate after adjusting for the anticipated effects of future inflation. Consequently, in the accompanying financial statements as at 31 December 2009, the provision has been calculated by estimating the present value of the future probable obligation of the Group arising from the retirement of the employees. The provisions at the respective balance sheet dates have been calculated assuming an annual inflation rate of % 4,80 and a discount rate of %11, resulting in a real discount rate of approximately %5,92 (31 December 2008: % 6,26).

Movement of retirement pay provision is as follows:

1 January –31 December 2009


Opening balance 3.826.257 3.688.273Service costs 3.701.571 2.157.090Interest costs 226.363 209.528Actuarial gain 79.821 (264.615)Provision released in the current period - (1.438.475)Payment (1.665.025) (525.544)Closing balance 6.168.987 3.826.257



25. RETIREMENT BENEFITS


26. OTHER ASSETS AND LIABILITIES

Other Current Assets 31 December 2009 31 December 2008VAT carried forward 25.308.868 24.479.267Order advances given 3.180.211 2.823.760Prepaid expenses 425.976 933.865Prepaid taxes and funds 645.240 10.867.663Other 532.562 3.440.886

30.092.857 42.545.441

Other non-current assets 31 December 2009 31 December 2008Advances given 7.791.286 10.197.369

7.791.286 10.197.369

Other Current Liabilities 31 December 2009 31 December 2008Taxes and funds payable 2.423.288 2.526.905 Social security premiums payable 2.291.724 2.028.653 Expense accruals 763.584 2.330.489 Other liabilities 466.445 79.301

5.945.041 6.965.348

27. SHAREHOLDERS’ EQUITY

The composition of the Company’s paid-in share capital as of 31 December 2009 and 31 December 2008 is as follows:

31 December 2009 31 December 2008Shareholders TL Share (%) TL Share (%)Yıldız Holding A.Ş. 113.049.151 %42,09 113.049.151 %42,09Dynamic Growth Fund 71.369.033 %26,57 71.369.033 %26,57Other 84.181.816 %31,34 84.181.816 %31,34

268.600.000 % 100,00 268.600.000 % 100,00

Subsequent to the acquisition of Anadolu Gıda Sanayi A.Ş., the Company increased its registered share capital ceiling to TL 500.000.000 with the permission of Capital Market Board dated 23 January 2004 and numbered 1301.

Considering additional profit share distribution, Class A and B share certificate owners have been granted a privilege out of the primary dividend at an additional rate of 17,65%. Additionally, the owners of 22.171 founder certificates not included in the capital structure have been granted privilege out of the primary dividend at the rate of 11,76%. Class A and D share certificate owners have also been granted privilege for 4 and 1 vote respectively, for appointing candidates for board of directors.

b) Valuation Fund

Financial Asset Valuation Fund:

Financial Asset Valuation Fund is generated from the valuation of available for sale instruments with their fair values.When a financial asset valued at its fair value is disposed, the related portion in the valuation fund is directly recognized in that period’s profit and loss. When a financial instrument is revalued and a decrease in value is observed, the related portion in the valuation fund is directly recognized in that period’s profit and loss.

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As of 31 December 2009 the Group has a financial asset valuation fund of 446.354.171 TL (31 December 2008: 125.668.539 TL).

c) Restricted Reserves Appropriated from Profit

Restricted reseves appropriated from profit are composed of legal reserves.

Legal reserves comprise of first and second legal reserves, appropriated in accordance with the Turkish Commercial Code. The first legal reserve is appropriated out of historical statutory profits at the rate of 5% per annum, until the total reserve reaches 20% of the historical paid-in share capital. The second legal reserve is appropriated after the first legal reserve and dividends, at the rate of 5% per annum of all cash dividend distributions. In accordance with the CMB’s requirements which were effective until 1 January 2008, the amount generated from the first-time application of inflation adjustments on financial statements, and followed under the “accumulated loss” item was taken into consideration as a reduction in the calculation of profit distribution based on the inflation adjusted financial statements within the scope of the CMB’s regulation issued on profit distribution. The related amount that was followed under the “accumulated loss” item could also be offset against the profit for the period (if any) and undistributed retained earnings and the remaining loss amount could be offset against capital reserves arising from the restatement of extraordinary reserves, legal reserves and equity items, respectively. In addition, in accordance with the CMB’s requirements which were effective until 1 January 2008, at the first-time application of inflation adjustments on financial statements, equity items, namely “Capital issue premiums”, “Legal reserves”, “Statutory reserves”, “Special reserves” and “Extraordinary reserves” were carried at nominal value in the balance sheet and restatement differences of such items were presented in equity under the “Shareholders’ equity inflation restatement differences” line item in aggregate. “Shareholders’ equity inflation restatement differences” related to all equity items could only be subject to the capital increase by bonus issue or loss deduction, while the carrying value of extraordinary reserves could be subject to the capital increase by bonus issue; cash profit distribution or loss deduction.

However, in accordance with the CMB’s Decree Volume: XI; No: 29 issued on 1 January 2008 and other related CMB’s announcements, “Paid-in capital”, “Restricted reserves” and “Premium in excess of par” should be carried at their registered amounts in statutory records. Restatement differences (e.g. inflation restatement differences) arising from the application of the Decree should be associated with:

-“Capital restatement differences” account, following the “Paid-in capital” line item in the financial statements, if such differences are arising from “Paid-in Capital” and not added to capital;

- “Retained earnings/Accumulated loss”, if such differences are arising from “Restricted reserves” and “Premium in excess of par” and has not been subject to profit distribution or capital increase.

Other equity items are carried at the amounts that are valued based on the CMB’s Financial Reporting Standards.

Capital restatement differences can only be included in capital.



Profit Distribution:

In accordance with the Capital Markets Board’s (the “Board”) Decree issued on 27 January 2010, in relation to the profit distribution of earnings derived from the operations in 2009, minimum profit distribution is not required for listed companies (December 31, 2008: 20%), and accordingly, profit distribution should be made based on the requirements set out in the Board’s Communiqué Serial:IV, No: 27 “Principles of Dividend Advance Distribution of Companies That Are Subject To The Capital Markets Board Regulations”, terms of articles of corporations and profit distribution policies publicly disclosed by the companies.

Furthermore, based on the afore-mentioned decree, companies that are required to prepare consolidated financial statements should calculate their net distributable profits, to the extent that they can be recovered from equity in their statutory records, by considering the net profit for the period in the consolidated financial statements which are prepared and disclosed in accordance with the Communiqué Serial: XI, No: 29.

Legal Reserves and Share Issuance Premiums which are considered as legal reserves under the Turkish Commercial Code No: 446, have been presented at their values in legal books. Thus, the inflation adjustment differences from the valuation studies for IFRS purposses for those as of the balance sheet date that have not been subject to profit distribution or capital increase have been presented under retained earnings.

Resources Available for Profit Distribution:

The Group has in its legals books a profit for the period of TL 136.663.624 (31 December 2008: TL 15.448.738) and other reserves of TL 138.665.384 TL (31 December 2008: TL 127.959.500) that can be utilized for profit distribution.

d) Retained Earnings

Details of the retained earnings is as follows:

31 December 2009 31 December 2008Retained earnings 57.894.778 57.582.388 Capital-investment elimination (115.084.884) (115.084.884)Extraordinary reserves 153.023.031 142.317.148 Inflation restatement differences of shareholders’ equity accounts other than capital and legal reserves 38.728.240 38.728.240 Other Reserves 4.276.169 3.858.862 138.837.334 127.401.754

e) Minority interest

The amount of minority interest as of 31 December 2009 is equal to TL 61.449.738 (31 December 2008: TL 47.691.649). The minority share of TL 16.865.652 on operating results for the period between 1 January – 31 December 2009 has been presented separately from the net profit for the same period in the accompanying consolidated statements of income (1 January – 31 December 2008: 3.625.832 TL)

109


f) Foreign Currency Translation Difference

Financial statements of each subsidiary of the Group are presented in the currency of the primary economic environment in which the entities operate (its functional currency). The results and financial position of the each subsidiary are expressed in Turkish Lira, which is the functional and presentation currency of the Group. Details and calculation methods of the foreign currency translation differences have been explained in Note 2.1.

28. REVENUE AND COST OF SALES

a) The detail of operating income is as follows:

1 January 31 December 2009


Domestic sales 1.631.877.019 1.523.166.257Export sales 338.510.684 256.355.113Other operating income 34.638.592 41.360.329Sales returns (-) (64.898.633) (74.548.366)Sales discounts (-) (388.577.738) (334.172.926)Sales Income (net) 1.551.549.924 1.412.160.407

b) Cost of sales



Raw materials used (610.862.956) (516.832.778)Personnel expenses (84.792.647) (84.590.851)Production overheads (50.540.225) (42.361.904)Depreciation expenses (24.883.520) (13.650.202)Change in work-in-progress inventories 279.912 64.156Change in finished goods inventories 1.309.189 10.558.333Cost of merchandises sold (769.490.247) (646.941.558)Cost of trade goods sold (393.324.187) (458.888.389)Cost of sales (1.162.814.434) (1.105.829.947)



29. RESEARCH AND DEVELOPMENT EXPENSES, MARKETING, SELLING AND DISTRIBUTING EXPENSES, GENERAL ADMINISTRATIVE EXPENSES



Marketing, selling and distribution expenses (199.892.299) (181.764.610)General administrative expenses (65.014.794) (52.252.476)Research and development expenses (1.053.724) (961.310)

(265.960.817) (234.978.396)

30. EXPENSES BY NATURE

The detail of operating expenses are as follows;



Research and Development ExpensesPersonnel expenses (347.675) (254.164)Materials used (225.135) (225.536)Depreciation and amortization expenses (13.926) (7.020)Consultancy expenses (338.361) (356.077)Other (128.627) (118.513)

(1.053.724) (961.310)

Marketing, Sales and Distribution Expenses Personnel expenses (19.803.312) (21.157.881)Marketing expenses (159.823.036) (150.670.991)Depreciation and amortization expenses (3.913.985) (3.679.506)Other (16.351.966) (6.256.232)

(199.892.299) (181.764.610)

General Administrative ExpensesPersonnel expenses (25.588.743) (16.586.476)Operating expenses(*) (26.931.405) (17.859.903)Depreciation and amortization expenses (2.050.852) (6.065.084)Consultancy expenses (3.561.463) (5.842.975)Taxes,duties and levies (1.958.847) (1.570.334)Other (4.923.484) (4.327.704)

(65.014.794) (52.252.476)

Total Operating Expenses (265.960.817) (234.978.396) (*) The operating expenses of the Group mainly comprises of management support, information technology and administaration expenses reflected by Yıldız Holding.

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31. OTHER OPERATING INCOME / (EXPENSES)

a) The detail of other operating income is as follows;

1 January-

31 December 20091 January-

31 December 2008Gain on sale of property, plant and equipment 2.036.596 12.299.698Collected doubtful receivables 6.269.026 3.240.522Provisions released 1.255.649 587.601Rent income 7.922.492 6.658.034Income from acquisition of affiliates 1.776.464 -Other ordinary income and profits 7.618.503 7.091.222

26.878.730 29.877.077

b) The detail of other operating expenses is as follows;

1 January-


31 December 2008Provision expense (1.123.787) (115.837)Loss on sale of property, plant and equipment (117.294) (3.015.982)Other expenses (1.332.725) (825.243)

(2.573.806) (3.957.062)

32. FINANCE INCOME

1 January-


31 December 2008Dividend income 11.524.463 15.217.814Foreign exchange gain 138.446.111 120.552.560Financing Income from forward sales 36.470.923 42.805.497Foreign currency and interest gain from financing 43.845.319 62.264.761Discount income 8.851.299 4.672.310Other - 14.763

239.138.115 245.527.705

33. FINANCE EXPENSES

1 January-


31 December 2008Foreign exchange loss (144.118.587) (78.584.287)Foreign currency and interest gain from financing (56.059.993) (180.088.141)Financing expense from forward purchases (23.958.097) (35.856.357)Discount expense (11.190.280) (4.862.112)Other (2.083.818) (4.833.290)

(237.410.775) (304.224.187)

34. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

None.



35. DEFERRED TAX ASSETS AND LIABILITIES

The Group, accounts deferred tax assets and liabilities for temporary timing differences rooted from differences between legal financial statements and financial statements prepared in accordance with IFRS. Those differences in question are caused generally by the fact that some profit and loss accounts come up in different periods in legal financial statements and financial statements prepared in accordance with IFRS.

Turkish tax legislation does not permit a parent company and its subsidiary to file a consolidated tax return. Therefore, provisions for taxes, as reflected in the accompanying consolidated financial statements, have been calculated on a separate-entity basis.The rate applied in the calculation of deferred tax assets and liabilities is 20% (2008: 20%). Subsidiaries that have deferred tax asset:

Deferred tax bases

Deferred tax assets Deferred tax liabilities31 December

200931 December

2008 31 December

200931 December

2008 Indexation and useful life differences of tangible and intangible assets 515.128 (9.722.455) 110.004.676 117.954.970Financial instruments valuation differences 3.967.100 (1.579.220) 466.570.840 131.783.420Profit margin elimination on inventory - - (6.791.960) (2.571.920)Discount of trade receivables / payables (net) (997.652) 555.715 1.198.559 319.175Allowance for employee termination benefits (812.302) (978.540) (5.356.685) (2.946.810)Allowance for doubtful receivables (221.766) (7.228.630) (929.040) -Previous year losses (3.180.715) (14.738.555) (42.730) -Provision for lawsuits - - (1.966.105) (2.000.964)Derivative financial liabilities - - (7.938.615) (755.120)Other (1.847.129) (2.539.947) (1.704.618) 2.271.125

(2.547.346) (36.231.632) 553.044.322 244.053.876

Deferred tax asset / liabilities

Deferred tax assets Deferred tax liabilities31 December

200831 December

2008 31 December

200831 December

2008 Indexation and useful life differences of tangible and intangible assets 103.026 (1.944.491) 22.327.053 23.590.994Financial instruments valuation differences 198.355 (78.961) 23.328.542 6.589.171 Profit margin elimination on inventory - - (1.358.392) (514.384)Discount of trade receivables / payables (net) (199.530) 111.143 239.712 63.835Allowance for employee termination benefits (162.459) (195.708) (1.071.337) (589.362)Allowance for doubtful receivables (44.355) (1.445.726) (185.808) -Previous year losses (636.143) (2.947.711) (8.546) -Provision for lawsuits - - (393.221) (400.193)Derivative financial liabilites - - (1.587.723) (151.024)Other (369.430) (507.989) (340.921) 454.225

(1.110.536) (7.009.443) 40.949.359 29.043.262

113


Movement of Deferred Tax Liabilities:1 January –

31 December 20091 January –

31 December 2008Opening balance 22.033.819 23.065.143Taxes netted against funds transfered under equity 16.898.639 (1.358.608) Change in consolidation structure 1.849.335 -Translation difference (82.501) -Deferred tax expense / (income) (860.469) 327.284

39.838.823 22.033.819

The Group is subject to Turkish corporate taxes. Provision is made in the accompanying financial statements for the estimated charge based on the Group’s results for the year.

Corporate Tax

The Company and its Turkish subsidiaries are subject to Turkish corporate taxes. Provision is made in the accompanying financial statements for the estimated charge based on the Group’s results for the period.

Corporate tax is applied on taxable corporate income, which is calculated from the statutory accounting profit by adding back non-deductible expenses, and by deducting dividends received from resident companies, other exempt income and investment incentives utilized.

The effective tax rate in 31 December 2009 is 20% (31 December 2008: 20%).

In Turkey, advance tax returns are filed on a quarterly basis. The advance corporate income tax rate is 20% in 2009 (31 December 2008: 20%).

Losses are allowed to be carried 5 years maximum to be deducted from the taxable profit of the following years. However, losses occurred cannot be deducted from the profit occurred in the prior years retroactively.

In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Companies file their tax returns between 1-25 April following the close of the accounting year to which they relate. The companies with special accounting periods, file their tax returns between 1st-25th of fourth month after fiscal year end. Tax authorities may, however, examine such returns and the underlying accounting records and may revise assessments within five years.

Income witholding tax

In addition to corporate taxes, companies should also calculate income withholding taxes and funds surcharge on any dividends distributed, except for resident companies in Turkey which include this dividend income in their taxable profit for the related period and Turkish branches of foreign companies. The rate of income withholding tax is 10% starting from 24 April 2003. This rate was changed to 15% with the code numbered 5520 article 15 commencing from 21 June 2006. However until the resolution of council of ministers, it was used as 10%. After the resolution, declared in Official Gazette in 23 July 2006, this rate is changed to 15% effective from 23 July 2006. Undistributed dividends incorporated in share capital are not subject to income withholding taxes.

As the Group did not use any investment incentives, the Company has used 20% corporate tax rate.



Provision for taxation as of 31 December 2009 and 31 December 2008 are as follows:

31 December 2009 31 December 2008Current tax provision (26.405.643) (4.118.292)Prepaid taxes and funds 18.797.563 4.099.902 Taxation in the balance sheet (7.608.080) 18.390

1 January-

31 December 2009 1 July-

31 December 2008Current tax provision 26.405.643 (4.118.292)Deferred tax benefit (860.469) (327.284)Taxation in the statement of income 25.545.174 (4.445.576)

The reconciliation of taxation as of 31 December 2009 and 2008 are as follows:



Reconciliation of taxation:

Profit before tax 145.328.380 23.756.642

Effective tax rate 20% 20%

Expected taxation 29.065.676 4.751.328

Tax effects of:-Non-deductible expenses 767.146 2.742.731-Dividends and other non-taxable income (4.948.130) (4.590.469)-Carryforward tax losses (483.456) (34.348)-Exempt from tax (954.580) (2.677.999)-Farklı vergi oranına sahip yabancı iştiraklerin etkisi 471.625 --Consolidation adjustment 1.626.893 4.254.333

Taxation in the statement of income 25.545.174 4.445.576

36. EARNINGS PER SHARE

A summary of the Group’s weighted average number of shares outstanding as of 31 December 2009 and 2008 and computation of earnings per share set out here as follows (cash increases are assumed to exclude founder shares):



Weighted average number of common stock outstanding 26.860.000.000 26.860.000.000Net profit 102.917.555 15.685.234Basic Earnings Per Share (1 TL par value each) 0,38 0,06

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37. BALANCES AND TRANSACTIONS WITH RELATED PARTIES a) The detail of receivables from related parties is as follows:

31 December 2009 31 December 2008Trade receivables 105.957.392 89.321.243Non-trade receivables 706.221.936 538.241.741

812.179.328 627.562.984

Trade receivables from retaled parties is mainly composed of sales transactions and approximate maturity is 2 months. Non-trade receivables are loans given to related parties, and interest is received as quarterly based on effective market interest rate. The interest rate used in 31 December 2009 is %10 for TL, %7 for foreign currencies.(31 December 2008: 18% for TL, 8% for foreign currencies).

The detail of trade and non-trade receivables is as follows:

31 December 2009 31 December 2008Trade Non-Trade Trade Non-Trade

Principle ShareholdersYıldız Holding A.Ş. - 662.337.288 105.379 467.928.846

SubsidiariesHero Gıda Sanayi ve Ticaret A.Ş 9.479.707 - 12.106.903 -

Other Companies Controlled by the Principle ShareholdersPasifik Tük. Ürün. Satış Ve Ticaret A.Ş. 17.808.621 - 8.522.854 -Teközel Gıda T.Sağ. Mrk. Hiz. San. Tic. A.Ş. 14.463.209 - 7.012.262 -Esas Pazarlama ve Tic. A.Ş 13.009.228 - 8.112.014 19.821Hamle Company Ltd (Kazakistan) 11.565.542 9.795.230 15.549.453 -Merkez Gıda Pazarlama San. ve Tic. A.Ş. 10.808.657 - 3.337.092 -Anadolu Gıda San.A.Ş 6.818.503 - 2.050.775 -Ülker Çikolata Sanayi A.Ş. 3.379.828 12.045.600 3.203.620 12.149.575Atlantik Gıda Paz.Tic.A.Ş. 2.789.708 - 13.503.700 -GF Lovell Deutshland GMBH 2.557.957 - 3.236.045 -Bizim Toplu Tük.Paz.San.Tic.A.Ş. 2.466.832 - 2.007.171 -Della Gıda San.ve Tic.A.Ş. - 15.057.000 - 15.123.000Fresh Cake Gıda San.ve Tic.A.Ş. 338.401 - 4.241.705 -Other 10.471.199 6.986.818 6.332.270 43.020.499

105.957.392 706.221.936 89.321.243 538.241.741

In addition to the balances above, there are bank deposits amounting to TL 478.303 at Türkiye Finans Katılım Bankası A.Ş. (31 December 2008: TL 753.682)

The trade receivables from related parties mainly comprises the sales to Atlantik Gıda Pazarlama ve Tic. A.Ş and Pasifik Tük. Ürün. Satış Ve Ticaret A.Ş. which undertakes the sales of biscuit and chocolate covered biscuit in domestic market under Ülker brand. The non-trade receivables from related parties comprises the interest invoices issued to Yıldız Holding, Ülker Çikolata Sanayi A.Ş, Ak Gıda San. ve Tic. A.Ş. and Della Gıda San.ve Tic. A.Ş.



b) The detail of payables to related parties is as follows:

Payables to related parties is due to purchases and approximately matured in 2 months.

31 December 2009 31 December 2008Short-Term PayablesTrade payables 355.134.157 222.974.689Non-trade payables 168.405.960 65.704.715

523.540.117 288.679.404

The detail of trade and non-trade payables is as follows:

31 December 2009 31 December 2008Trade Non-Trade Trade Non-Trade

Principle ShareholdersYıldız Holding A.Ş. 6.418.195 167.902.316 1.400.019 65.376.459

SubsidiariesHero Gıda Sanayi ve Ticaret A.Ş 8.291.494 - 7.236.176 -Pendik Nişasta Sanayi A.Ş 1.306.208 - 989.361 -

Other Companies Controlled by the Principle ShareholdersPasifik Tük. Ürün. Satış Ve Ticaret A.Ş. 126.994.894 - 57.269.639 -Fresh Cake Gıda San. ve Tic. A.Ş. 85.170.380 - 63.655.583 -Besler Gıda ve Kimya San. Tic. A.Ş. 48.693.291 - 40.663.788 -Öncü Pazarlama ve Ticaret A.Ş 17.835.184 - 9.085.015 -Önem Gıda San.ve Tic.A.Ş. 14.543.879 - 13.199.028 -Anadolu Gıda San.A.Ş. 9.891.303 - 4.826.609 -Ak Gıda San.Tic.A.Ş. 8.562.305 - 6.361.129 -Tire Kutsan O.M.K ve K.San.A.Ş. 5.887.122 - 2.900.337 -Ülker Çikolata Sanayi A.Ş. 4.823.008 - 1.767.261 -Netlog Lojistik Hizmetleri A.Ş. 4.526.819 - 2.978.464 -Örgen Gıda San.ve Tic.A.Ş. 3.045.213 - 2.515.441 -Other 9.234.016 503.644 8.126.839 328.256

355.134.157 168.405.960 222.974.689 65.704.715

The trade payables to related parties mainly comprises the raw materials and finished goods purchases from Fresh Cake Gıda San.ve Tic.A.Ş, Besler Gıda ve Kimya San. Tic. A.Ş. and Önem Gıda San. ve Tic. A.Ş and the advances given to Pasifik Tük. Ürün. Satış Ve Ticaret A.Ş. The non-trade payables to related parties mainly comprises the information service, management and corporate support received from Yıldız Holding A.Ş.

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c) The detail of purchases from and sales to related parties is as follows:

1 January– 31 December 2009 1 January– 31 December 2008Purchases Sales Purchases Sales

SubsidiariesHero Gıda San. ve Tic. A.Ş. 40.258.695 39.105.116 45.605.461 46.213.390Pendik Nişasta San. A.Ş. 9.462.769 - 8.533.385 31.503

Other Companies Controlled by the Principle ShareholdersBesler Gıda ve Kimya Sanayi ve Ticaret A.Ş. 132.298.933 8.727.460 155.103.201 6.926.336Fresh Cake Gıda Sanayi ve Ticaret A.Ş. 123.609.517 29.227.648 105.060.552 11.013.004Önem Gıda San. ve Tic. A.Ş 79.711.452 10.388.040 83.122.189 1.034.532Ak Gıda Sanayi ve Ticaret A.Ş. 50.575.498 7.578.205 44.697.636 6.338.906Anadolu Gıda San.Tic.A.Ş. 36.346.755 23.838.049 24.645.961 19.903.648Ülker Çikolata San.A.Ş. 25.943.838 21.472.580 39.067.232 21.239.975Örgen Gıda San ve Tic.A.Ş. 15.401.372 3.267.969 13.458.972 3.300.866Esas Pazarlama ve Tic.A.Ş. 1.628.979 57.728.211 1.327.160 64.322.531Merkez Gıda Paz.San ve Tic.A.Ş. 12.012 37.530.855 54.104 22.092.569Pasifik Tük.Ürünleri Satış ve Tic.A.Ş. - 142.470.795 27.661 112.732.724Teközel Gıda Tem.Sağ.Mark.Hizm.A.Ş. - 62.532.251 140.504 57.747.822Atlantik Gıda Paz.ve Tic.A.Ş. - 7.589.159 167.915 33.558.766Other 46.771.665 47.477.474 36.594.441 25.086.304

OtherTire Kutsan O.M.K ve K.San.A.Ş. 26.028.711 2.155.726 19.879.602 302.413

588.050.196 501.089.538 577.485.976 431.845.289

Other than those described above as of 31 December 2009 the Group has finance leasing payables of 6.861.796 TL to Finansal Kiralama Anonim Şirketi (2008: 10.343.992 TL).

The Group mainly acquires raw materials from Besler Gıda ve Kimya Sanayi ve Ticaret A.Ş which produces vegetable oil and margarine, Pendik Nişasta San.A.Ş, Ak Gıda Sanayi ve Tic.A.Ş and Önem Gıda San ve Tic.A.Ş.The Group sells its products to Esas Pazarlama Ve Ticaret A.Ş., Atlantik Gıda Pazarlama ve Tic. A.Ş, Pasifik Tük. Ürün. Satış Ve Ticaret A.Ş



d) The detail of income and expenses pertaining to interest, rent and services arising from transactions with related parties is as follows:

For the twelve months period ended 31 December 2009;

Interest Income

Interest Expense

Rent Income

Rent Expense

Service Income

Service Expense

Principle ShareholdersYıldız Holding A.Ş. 35.413.174 (6.299.686) 134.202 (1.824.891) 1.293.675 (21.357.324)

SubsidiariesHero Gıda Sanayi ve Tic.A.Ş. - - - - 598.656 (3.895.755)Pendik Nişasta Sanayi ve Tic.A.Ş - - - - 78.368 -

Other Companies Controlled by Principle ShareholdersDella Gıda San.ve Tic.A.Ş. 1.603.643 - - - 1.927 (86.941)Mavi Yeşil Koz.Gıda San.Tic.A.Ş. 1.421.374 - - - - -Ülker Çikolata San.A.Ş. 968.353 - 451.596 (4.662) 334.847 (3.175.476)Ak Gıda San.ve Tic.A.Ş. 718.148 - - - 48.051 (1.470.703)Pasifik Tük.Ür.Satış ve Tic. A.Ş. - (1.552.366) 24.042 - 1.070.494 (3.504.141)FFK-Fon Finansal Kiralama A.Ş. - (1.149.608) - - 73.533 -Öncü Paz.ve Tic.A.Ş. - (113.777) 246.191 (211.310) 22.025 (56.338.535)Natura Gıda San.ve Tic.A.Ş. - (26) 274.128 - 500 (2.330)Netlog Lojistik Hizm.A.Ş. - - 4.789.730 (218.698) 685.138 (40.042.253)Atlantik Gıda Paz.ve Tic.A.Ş. - - 240.658 2.103 83.274 (124.045)Başak Sağlık ve Eğt.Hizm.A.Ş. - - 354 (261.735) 928 (276.439)Other 647.306 (994.293) 576.979 (156.984) 538.994 (5.243.375)

40.771.998 (10.109.756) 6.737.880 (2.676.177) 4.830.410 (135.517.317)

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For the twelve months period ended 31 December 2008;

Interest Income

Interest Expense

Rent Income

Rent Expense

Service Income

Service Expense

Principle ShareholdersYıldız Holding A.Ş. 26.366.822 (5.608.836) 136.978 (2.350.312) 236.199 (26.108.811)

SubsidiariesHero Gıda Sanayi ve Tic.A.Ş. - - 27.789 (180) 496.024 (131.020)Pendik Nişasta Sanayi ve Tic.A.Ş - - 540 - 276.470 -

Other Companies Controlled by Principle ShareholdersNetlog Lojistik Hizmetleri A.Ş. - (20.000) 3.193.714 (1.585.187) 435.763 (40.366.023)Öncü Pazarlama ve Ticaret A.Ş - (897.146) 107.001 (205.413) 804.592 (30.987.217)Ülker Çikolata San.A.Ş. 979.457 - 414.226 (5.009) 123.552 (2.865.778)Pasifik Tük.Ürn. Satış ve Tic.A.Ş 125.389 - 85.727 (500) 186.064 (640.527)Başak Sağlık Hizm.A.Ş - - 2.606 (286.291) 1.693 (510.725)Besler Gıda ve Kim. San. ve Tic.A.Ş 880.587 (150.440) - (42.350) 91.481 (89.478)Anadolu Gıda Sanayi A.Ş. 907.612 - 235 - 1.225.991 (60.380)Natura Gıda Sanayi ve Ticaret A.Ş. - - 254.345 - 15.935 (16.433)Della Gıda Sanayi ve Ticaret A.Ş. 1.345.527 - - - - (14.408)Seher Gıda Paz. San. ve Ticaret A.Ş. - - 334.584 - 29.902 (8.358)Fon Finansal Kiralama A.Ş. 1.636 (1.097.283) - - - (859)Other 2.532.841 (14.439) 269.018 (200.925) 402.095 (6.279.968)

OtherTire Kutsan O.M.K. ve K. San. A.Ş. - - - - 4.375 (3.954)

33.139.871 (7.788.144) 4.826.763 (4.676.167) 4.330.946 (108.083.939)

e) Benefits provided to board members and key management personnel:

31 December 2009 31 December 2008BOD Members 636.035 1.701.492Senior management 3.406.925 4.075.472

4.042.960 5.776.964



f) The detail of guarantees, commitments and advances given in favour of related parties is as follows (in original currencies).

31 December 2009 31 December 2008TL USD TL USD

A) Total Guarantees Pledges and Liens (“GPL”)Given in the Legal Name of the Company - - - -B) Total GPL Given in the Name of Fully Consolidated Companies - - - -C) Total GPL Given to Manage Trading Operations of Entity in the name of 3rd parties - - - -D) Total-Other GPL Given - 579.601.021 250.000 703.856.292

i. Total GPL Given in the Name of the Parentii. Total GPL Given in the name of other Group Companies not included in B) and C) - 579.601.021 250.000 703.856.292iii. Total GPL given in the name of 3rd parties not included in C)

Total - 579.601.021 250.000 703.856.292

38. NATURE AND LEVEL OF RISKS DERIVED FROM FINANCIAL INSTRUMENTS

(a) Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 8, cash and cash equivalents disclosed in note 6 and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in note 27.

The management of the Group considers the cost of capital and the risks associated with each class of capital. The management of the Group aims to balance its overall capital structure through the payment of dividends, new share issues and the issue of new debt or the redemption of existing debt.

The Group controls its capital with the liability / total capital ratio.Net liability is divided by total capital in this ratio. Cash and cash equivalents is substracted from total liabilities to calculate the net liability. The shareholder’s equity is added to net liabilties to calculate the total capital.

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Net liability / Total capital ratio as of 31 December 2009 and 31 December 2008 is as follows;

31 December 2009 31December 2008Total liabilities 1.211.326.773 1.120.355.112Negative: Liquid assets (279.444.678) (154.180.917)Net liabilities 931.882.095 966.174.195Total shareholder’s equity 1.125.668.600 708.417.130Total capital 2.057.550.695 1.674.591.325

Net Liability/Total Capital Ratio %45 % 58

b) Financial Risk Factors

The risks of the Group, resulted from operations, include market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The Group’s risk management program generally seeks to minimize the effects of uncertainty in financial market on financial performance of the Group.

Risk management is implemented by finance department according to the policies approved by Board of Directors. The Group’s finance department provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyses exposures by degree and magnitude of risks. The written procedures are formed by Board of Directors to manage the foreign currency risk, interest risk, credit risk, use of derivative and non-derivative financial instruments and the assessment of excess liquidity.



(b-1) Credit Risk Management

ReceivablesCredit Risk of Financial Instruments Trade Receivables Other Receivables

31 December 2009Related

partyThird party

Related party

Third party

Deposits in Bank

Derivative Instruments Other

Maximum net credit risk as of balance sheet date (*) 105.957.392 188.659.486 706.221.936 14.516.668 275.764.375 - -- The part of maximum risk under guarantee with collateral etc. (**) - 67.520.395 -A. Net book value of financial assets that are neither past due nor impaired 92.486.977 159.452.586 706.221.936 14.516.668 275.764.375 - -

B. Net book value of financial assets that are renegotiated, if not that will be accepted as past due or impaired - - - - - - -C. Carrying value of financial assets that are past due but not impaired 13.470.415 29.206.900 - - - - -- The part under guarantee with collateral etc. - 7.468.407 - - - - -

D. Net book value of impaired assets - - - - - - -- Past due (gross carrying amount) - 3.014.822 - - - - -

-Impairment (-) - (3.014.822) - - - - -- The part of net value under guarantee with collateral etc. - 807.581 - - - -- Not past due (gross carrying amount) - - - - - - -

-Impairment (-) - - - - --The part of net value under guarantee with collateral etc. - - - - - - -

E. Off-balance sheet items with credit risk - - 872.705.257 - - - -

(*) Items that increase the credit reliability, such as; letter of guarantees received, are not taken into account in the calculation(**)Guarantees include letter of guarantees, gurantee notes and mortgages.

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ReceivablesCredit Risk of Financial Instruments Trade Receivables Other Receivables

31 December 2008Related

PartyThird Party

Related Party

Third Party

Deposits in Bank

Derivative Instruments Other

Maximum net credit risk as of balance sheet date (*) 89.321.243 140.318.598 538.241.741 15.384.989 153.933.775 - -- The part of maximum risk under guarantee with collateral etc. (**) - 28.321.782 - - - - -A. Net book value of financial assets that are neither past due nor impaired 88.954.898 125.189.960 538.190.566 15.384.989 153.933.775 - -B. Net book value of financial assets that are renegotiated, if not that will be accepted as past due or impaired - - - - - - -C. Carrying value of financial assets that are past due but not impaired 366.345 15.128.638 51.175 - - - -- The part under guarantee with collateral etc. - 6.372.804 - - - - -

D. Net book value of impaired assets - - - - - - -- Past due (gross carrying amount) - 9.281.120 - - - - -

-Impairment (-) - (9.281.120) - - - - -- The part of net value under guarantee with collateral etc. - 320.470 - - - - -- Not past due (gross carrying amount) - - - - - - -

-Impairment (-) - - - - - - --The part of net value under guarantee with collateral etc. - - - - - - -

E. Off-balance sheet items with credit risk - - 719.637.471 - - - -

(*) Items that increase the credit reliability, such as; letter of guarantees received, are not taken into account in the calculation(**) Guarantees include letter of guarantees, guarantee notes and mortgages



Aging of the past due receivables are as follows:

Receivables31 December 2009 Trade Receivables Other Receivables TotalPast due 1-30 days 11.357.464 - 11.357.464Past due 1-3 months 10.023.426 - 10.023.426Past due 3-12 months 11.095.415 - 11.095.415Past due 1-5 years 14.497.647 - 14.497.647Past due more than 5 years 1.239.833 - 1.239.833Total past due receivables 48.213.785 - 48.213.785The part under guarantee with collateral 8.275.988 - 8.275.988

Receivables31 December 2008 Trade Receivables Trade Receivables TotalPast due 1-30 days 5.465.385 - 5.465.385Past due 1-3 months 4.771.043 - 4.771.043Past due 3-12 months 1.948.282 51.175 1.999.457Past due 1-5 years 12.591.393 - 12.591.393Past due more than 5 years - -Total past due receivables 24.776.103 51.175 24.827.278The part under guarantee with collateral 6.693.274 - 6.693.274

Collaterals held for the trade receivables that are past due but not impaired as of balance sheet date are as follows:

31 December 2009 31 December 2008Nominal Value Nominal Value

Guarantees Received 5.738.279 4.958.141Mortgages 1.724.280 1.396.610Collaterals - -Notes Received 5.848 18.053

7.468.407 6.372.804

Collaterals held for the trade receivables that are past due and impaired as of balance sheet date are as follows:

31 December 2009 31 December 2008Nominal Value Nominal Value

Guarantees Received 807.581 320.470

When one part of the financial instrument does not fulfill their obligations, that results in a financial loss risk to the Group and that risk is defined as credit risk. Group’s credit risk is basically related to their trade receivables.The balance shown in the balance sheet is the net amount that is obtained when doubtful receivables are written off accoriding to Group management’s previous experiences and current economic conditions. Group’s non-trade receivables from related parties are mostly due to Yıldız Holding.

b.2) Liquidity risk management

The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

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Liquidity risk tablesmanagement

The following table presents the maturity of Group’s non-derivative financial liabilities. The table includes both interest and principal cash flows..

Contractual Maturity Analysis December, 31 2009

Carrying value

Total cash outflow

according to contract

(I+II+III+IV)Less than 3 months (I)

3-12 months (II)

1-5 years (III)

More than 5 years (IV)

Non-derivative financial liabilities

Bank borrowings 769.778.074 788.285.331 244.897.996 299.147.305 244.240.029 -

Financial lease liabilities 12.093.072 12.388.953 2.944.255 6.166.478 3.278.221 -

Trade payables 429.455.627 429.455.627 407.512.584 21.943.043 - -

Other financial liabilities 249.800.245 249.800.245 249.800.245 - - -

Total liabilities 1.461.127.018 1.479.930.156 905.155.080 327.256.826 247.518.250 -

Contractual Maturity Analysis December, 31 2009

Carrying value

Total cash outflow



3-12 months (II)

1-5 years (III)


Derivative financial liabilitiesOther financial liabilities 7.938.615 7.938.615 - - 7.938.615 -

Total liabilities 7.938.615 7.938.615 - - 7.938.615 -

The expected maturities are same as the maturities per contracts.

Contractual Maturity Analysis December, 31 2008 Carrying value

Total cash outflow



3-12 months (II)

1-5 years (III)


Non-derivative financial liabilitiesBank borrowings 817.838.965 882.050.618 109.867.119 380.800.989 391.382.510 -

Financial lease liabilities 10.343.992 11.643.090 1.070.727 3.191.301 7.381.062 -

Trade payables 292.172.155 298.484.705 280.693.777 17.481.717 309.211 -

Other financial liabilities 111.279.761 112.050.459 112.050.459 - - -

Total liabilities 1.231.634.873 1.304.228.872 503.682.082 401.474.007 399.072.783 -

The expected maturities are same as the maturities per contracts.

Contractual Maturity AnalysisDecember, 31 2008 Carrying value

Total cash outflow



3-12 months (II)

1-5 years (III)


Derivative financial liabilitiesOther financial liabilities 755.122 755.122 - - 755.122 -

Total liabilities 755.122 755.122 - - 755.122 -



(b)-3 Market risk management

The Group, is subject to financial risks related with the fx rates ((b)-3.1) and interest rates ((b)-3.2).

Market risk management is also followed by sensitivity analysis.

In the current year, the Group’s market risk management method or its market risk exposure have not changed when compared to prior year.

(b)-3.1 Foreign currency risk management

Transactions in foreign currencies expose the Group to foreign currency risk.

This risk mainly arises from fluctuation of foreign currency used in conversion of foreign assets and liabilities into Turkish Lira. Foreign currency risk arises as a result of trading transactions in the future and the difference between the assets and liabilities recognized. In this regard, the Group manages this risk with a method of netting foreign currency denominated assets and liabilities. The management reviews the foreign currency open position and provide measures if required. The Group is mainly exposed to foreign currency risk in USD, EUR, GBP, CHF, GRV and DKK.

The foreign currency denominated assets and liabilities of monetary and non-monetary items are as follows:

31 December 2009TL Equivalent

(Functional Currency) USD EURO CHF GBP DKK SAR GRV

1. Trade Receivables 38.844.892 12.271.260 9.181.201 - 219.545 - - 4.945.899

2a. Monetary Financial Assets 785.356.969 519.014.830 1.626.656 4.943 148.547 693 - -

2b. Non-Monetary Financial Assets 595.630 395.583 - - - - - -

3. Other 1.437.283 884.632 48.740 - - - - -

4. CURRENT ASSETS 826.234.774 532.566.307 10.856.597 4.943 368.092 693 - 4.945.899

5. Trade Receivables - - - - - - - -

6a. Monetary Financial Assets 20.129 13.369 - - - - - -

6b. Non-Monetary Financial Assets - - - - - - - -

7. Other 32.571 9.852 8.210 - - - - -

8. NON-CURRENT ASSETS 52.700 23.220 8.210 - - - - -

9. TOTAL ASSETS 826.287.474 532.589.527 10.864.807 4.943 368.092 693 - 4.945.899

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31 Aralık 2009 TL Equivalent USD EURO CHF GBP DKK SAR GRV10. Trade Payables 8.752.744 2.131.363 1.383.260 144.160 55.749 - 5.482.582 3.053.582

11. Financial Liabilities 499.687.190 326.073.392 3.711.638 483.186 - - - -

12a. Other Monetary Financial Liabilities 383.223.405 247.092.743 5.173.292 - - - - -

12b. Other Non-Monetary Financial Liabilities 64.351.914 42.524.702 124.428 - 22.464 - - -

13. CURRENT LIABILITIES 956.015.253 617.822.200 10.392.617 627.345 78.212 - 5.482.582 3.053.582

14. Trade Payables - - - - - - - -

15. Financial Liabilities 241.077.887 158.317.792 1.220.508 42.868 - - - -

16a. Other Monetary Financial Liabilities - - - - - - - -

16b. Other Non-Monetary Financial Liabilities - - - - - - - -

17. NON-CURRENT LIABILITIES 241.077.887 158.317.792 1.220.508 42.868 - - - -

18. TOTAL LIABILITIES 1.197.093.140 776.139.992 11.613.125 670.213 78.212 - 5.482.582 3.053.58220. Net foreign currency liability position (370.805.666) (243.550.465) (748.318) (665.270) 289.880 693 (5.482.582) 1.892.317

21. Net foreign currency asset / liability position of monetary items (1+2a+5+6a-10-11-12a-14-15-16a) (308.519.235) (202.315.831) (680.840) (665.270) 312.343 693 (5.482.582) 1.892.317



31 December 2008TL Equivalent

(Functional Currency) USD EUR CHF GBP DKK

1. Trade Receivables 50.421.977 20.544.597 8.866.128 - 169.575 -

2a. Monetary Financial Assets 509.110.327 331.526.530 2.868.452 90.861 669.540 14.412

2b. Non-Monetary Financial Assets 863.921 571.263 - - - -

3. Other 50.224.761 24.697.757 5.746.364 97.495 12.001 1.416.041

4. CURRENT ASSETS 610.620.986 377.340.147 17.480.944 188.356 851.116 1.430.453

5. Trade Receivables - - - - - -

6a. Monetary Financial Assets 4.418.615 - 2.064.002 - - -

6b. Non-Monetary Financial Assets - - - - - -

7. Other 1.512 1.000 - - - -

8. NON-CURRENT ASSETS 4.420.128 1.000 2.064.002 - - -

9. TOTAL ASSETS 615.041.114 377.341.147 19.544.945 188.356 851.116 1.430.453

10. Trade Payables 31.555.652 19.362.636 892.435 112.744 3.292 677.280

11. Financial Liabilities 474.430.619 311.055.456 1.296.853 870.735 - -

12a. Other Monetary Financial Liabilities 66.567.564 43.164.248 602.248 - - -

12b. Other Non-Monetary Financial Liabilities 7.177.326 4.745.893 52 - 446 -

13. CURRENT LIABILITIES 579.731.161 378.328.234 2.791.588 983.479 3.738 677.280

14. Trade Payables - - - - - -

15. Financial Liabilities 341.507.921 225.000.302 3.215 862.295 - -

16a. Other Monetary Financial Liabilities - - - - - -

16b. Other Non-Monetary Financial Liabilities - - - - - -

17. NON-CURRENT LIABILITIES 341.507.921 225.000.302 3.215 862.295 - -

18. TOTAL LIABILITIES 921.239.082 603.328.536 2.794.805 1.845.774 3.738 677.280

20. Net foreign currency asset liability position (306.197.968) (225.987.388) 16.750.143 (1.657.418) 847.378 753.173

21. Net foreign currency asset / liability position of monetary itemsitems (1+2a+5+6a-10-11-12a-14-15-16a) (350.110.837) (246.511.515) 11.003.832 (1.754.913) 835.823 (662.868)

The Group’s import and export totals for the twelve month periods are presented below:



Total exports 338.510.684 256.355.113Total imports 53.146.152 173.161.601

Foreign currency sensitivity

The Group is exposed to foreign exchange risk arising primarily from US Dollar and TL currency exposures.

In the table below, the foreign currency sensitivity of the Company arrising from %10 change in US dolar and TL rates. 10% is the rate used when reporting to senior management of the Company. This rate is the anticipated rate change of the Company’s senior management. Sensitivity analysis includes only the monetary items in foreign currency at year end and shows the effect of %10 increase in US dolar and TL foreign currency rates. Positive value implies the effect of %10 increase in US dolar and TL foreign currency rates on net profit increase against EURO.

129


31 December 2009 31 December 2008Income / Expense Income / Expense

Appreciation of

foreign currencyDepreciation of

foreign currency Appreciation of

foreign currencyDepreciation of

foreign currencyIf US Dollar appreciated against TL by 10%1-US Dollar net asset / liability (30.462.695) 30.462.695 (37.279.936) 37.279.9362- Part of hedged from US Dollar risk (-)3- US Dollar net effect (1 +2) (30.462.695) 30.462.695 (37.279.936) 37.279.936If Euro appreciated against TL by 10%4-Euro net asset / liability (147.082) 147.082 2.355.700 (2.355.700)5-Part of hedged from Euro risk (-)6- Euro net effect (4 +5) (147.082) 147.082 2.355.700 (2.355.700)Total (3+6) (30.609.777) 30.609.777 (34.924.236) 34.924.236

(b)-3.2 Interest risk management

Financial liabilities based on fixed and floating interest rates expose the Company to interest rate risk. The related risk is controlled by interest rate swap agreements and floating interest rate agreements by balancing the fixed and floating intrest rate borrowings. Risk strategies are reviewed periodically considering the interest rate expectations and predetermined interest risks; which aims to establish optimum interest risk management regarding the balance sheet position and the interest expenses.

Interest rate sensitivity

Sensitivity analysis has been determined based on the interest rate risk that the non-derivative instruments are exposed with on the balance sheet date. Assumption related to the analysis of floating rate liabilities is that the year end balance exists for the whole year. The Company management expects a fluctuation of 1% in TL interest rates. %1 increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

On the reporting date if the Euribor/ libor interest rates had been 1% higher, and all other variables held constant, net income of the Company would have decreased by TL 4.338.059 (1 January-31 December 2008: a decrease of TL 5.527.456). This is mainly attributable to the Group’s exposure to interest rates on its variable rate borrowings.

The financial instruments that are sensitive to interest rate are as follows:

Interest Position Table 31 December 2009 31 December 2008

Fixed interest rate financial instruments Financial assets Cash and Cash Equivalents 268.473.753 43.216.720 Non-trade payables to related parties 706.221.936 538.241.741Financial liabilities Loans 335.972.193 254.100.000 Non-trade payables to related parties 168.405.960 65.704.715

Floating interest rate financial instruments

Financial assets - -Financial liabilities Loans 433.805.881 552.745.650



(b)-3.3 Price risk

The Group is exposed to price risk due to the fluctuations in exchange rate and interest rate. The investigation on market information is examined and followed through appropriate valuation method regarding price risk by the Group. In current year, there has not been any changes compared to prior year in the market risk that the Group is exposed to or the administration or calculation methods of these risks.

(b)-3.4 Equity investments price sensitivity

The sensitivity analysis presented below has been prepared based on the equity investments price risks exposed.

As of reporting date, assuming that all other variables are held constant and when the values used in the valuation method increase/decrease by 10%:

As of 31 December 2009, as long as the equity investment are classified as available for sale and not disposed of or they are not impaired the net profit/loss will not be effected.

The other funds in the shareholders’ equity will increase/decrease by TL 60.422.893 (2008: incerase/decrease of TL 10.767.018). This situation is the result of the changes in the value of available for sale securities.

39. FINANCIAL INSTRUMENTS

Categories and fair values of financial instruments:

31 December 2009Financial assets at

amortized costLoans and

receivablesAvailable for sale

financial assets

Financial liabilities at

amortized costCarrying

value NotesFinancial assetsCash and cash equivalents 279.444.678 - - - 279.444.678 6

Trade receivables - 188.659.486 - - 188.659.486 10

Due from related parties - 706.221.936 - - 706.221.936 37

Other financial assets 14.588 - 685.261.460 685.276.048 685.276.048 7

Financial liabilities Financial liabilities - - - 781.871.146 781.871.146 8

Trade payables - - - 74.321.470 74.321.470 10

Due to related parties - - - 523.540.117 523.540.117 37

Other financial liabilities - - - 7.938.615 7.938.615 9

131


31 December 2008Financial assets at

amortized costLoans and

receivablesAvailable for sale

financial assets

Financial liabilities at

amortized costCarrying

value NotesFinancial assetsCash and cash equivalents 154.180.917 - - - 154.180.917 6

Trade receivables - 140.318.598 - - 140.318.598 10

Due from related parties - 627.562.984 - - 627.562.984 37

Other financial assets 13.960 - 351.244.533 351.258.493 351.258.493 7

Financial liabilitiesFinancial liabilities - - - 828.182.957 828.182.957 8

Trade payables - - - 69.197.466 69.197.466 10

Due to related parties - - - 288.679.404 288.679.404 37

Other financial liabilities - - - 755.122 755.122 9

(*) The Company management believes that the carrying values of the financial assets reflect their fair values. Derivative Financial Instruments

The Group entered into interest rate swap agreement to control part of its borrowings by replacing floating interest rate with fixed interest rate swaps. The nominal value of the related loan is 195.000.000USD. The floating interest rate of the related loan is confined against the change in six months libor rate. The expected fair value of the transaction corresponds to TL 7.938.615 (2008:TL 755.122).

Fair value of financial instruments

The fair values of financial assets and financial liabilities are determined as follows:

• Firstlevel:Thefairvalueoffinancialassetsandfinancialliabilitiesaredeterminedwithreferencetoactivelytraded market prices;

• Secondlevel:Otherthanmarketpricesspecifiedatfirstlevel,thefairvalueoffinancialassetsandfinancialliabilities are evaluated with reference to inputs that used to determine directly or indirectly observable price in market;

• Thirdlevel:Thefairvalueoffinancialassetsandfinancialliabilitiesareevaluatedwithreferencetoinputsthatused to determine fair value but not relying on observable data in the market.



Level classifications of financial assets at fair value are as follows:

Level of fair value as of reporting date31 December 2009 Level 1 TL Level 2 TL Level 3 TL

Financial assetsFair value difference through profit and loss

Held for trading 8.732.958 14.588 - 8.718.370

Fair value difference through comprehensive income statement

Shares 669.745.603 636.031.290 33.714.313 -

Total 669.760.191 636.045.878 33.714.313 8.718.370

Financial liabilitiesFair value difference through profit and loss Other financial liabilities (7.938.615) - (7.938.615) -

(7.938.615) - (7.938.615) -

Level of fair value as of reporting dateFinancial assets 31 December 2009 Level 1 TL Level 2 TL Level 3 TLFair value difference through profit and loss

Held for trading 8.732.330 13.960 - 8.718.370

Fair value difference through comprehensive income statement

Shares 331.888.600 299.824.787 32.063.813 -

Total 331.902.560 299.838.747 32.063.813 8.718.370

Financial liabilitiesFair value difference through profit and loss Other financial liabilities (755.122) - (755.122) -

(755.122) - (755.122) -

40. EVENTS AFTER THE BALANCE SHEET DATE

Netlog Lojistik Hizmetleri A.Ş., an associate of Ülker Bisküvi Sanayi A.Ş., has been sold to Gökalp Çak in March 2010.

Ülker Bisküvi Sanayi A.Ş.’s shares in KOMAŞ Kocatepe Modern Mağazacılık İşletmeleri San. ve Tic. A.Ş., have been transfered to Pasifik Tüketim Ürünleri Satış ve Tic. A.Ş. for a fee of 170.000 TL.

Contents 2 Ülker Bisküvi in Brief 4 overview of Yıldız Holding 6 Key Financial and operational Indicators 8 Capital and Shareholder Structure 10 performance of Ülker Bisküvi Shares 12 Message from the Chairman of the Board14 Board of Directors 18 Message from the General Manager 22 The Food Industry Worldwide and in Turkey 25 Activities in 2009 Ülker Bisküvi in 2009 Production and Capacity Marketing and Distribution Investments Subsidiaries • BirlikPazarlama • İdealGıda • İstanbulGıda-BirleşikDışTicaret • BiskotGıda • AtlasGıdaPazarlama • Godiva • OtherSubsidiaries 42 Corporate Governance Ülker Bisküvi Family: Human Resources Environment,QualityandR&DActivities ShareholderRelationsandProfitDistributionPolicy Social Responsibility Projects CorporateGovernancePrinciplesComplianceReport59 profit Distribution proposal61 Audit Board Report 65 Independent Audit Report

ÜLKER BİSKÜVİ SAN. A.Ş. AnnuAl RepoRt 2009

Davutpaşa Cad. No: 10 Topkapı-Istanbul, TurkeyTel: +90 (212) 567 68 00 Fax: +90 (212) 613 90 90www.ulker.com.tr www.ulkerbiskuvi.com.tr

ÜLKER BİSKÜ

Vİ SAN

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L REpoRT 2009

Ülker bİskÜvİ san. a.Ş. annual report 2009...in the “brands 2008” survey by ac nielsen,...

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