1. CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT COMPLIANCE STATEMENT
   
   H. Ö. Sabancı Holding A.Ş. (hereinafter referred to as the Company) complies with and applies "Corporate Governance Principles" published by Capital Markets Board (CMB) within the period from 1 January 2006 to 31 December 2006.

SECTION I - SHAREHOLDERS

2. Shareholders Relations Department

We have an Institutional Investor Relations Department in relation to shareholders. This department carries out its operations under coordination of CFO, Faruk Bilen. The Director of the Department is Fikret Cömert (fcomert@sabanci.com) while Emine Çelik works as a specialist (ecelik@sabanci.com) and Zeynep Banu Belger as Secretary (zbelger@sabanci.com). The Department may also be contacted on telephone number 0212 385 80 80 and on fax number 0212 385 83 55.

This department has performed operations with respect to relations with shareholders. In 2006, as part of such effort, over 100 meetings at the headquarters, and, within the framework of 7 road-shows and 2 investor conferences, again over 100 meetings abroad have been held with institutional shareholders; around 500 calls have been exchanged with institutional shareholders and their questions have been answered; in addition, 621 e-mails from shareholders have been replied.

3. The Use of Shareholders Right to Obtain Information

In 2006, Shareholders Relations Department replied over 1,000 request through telephone and 621 requests through e-mails from shareholders and, to this end, announced relevant information to shareholders on web page within compulsory deadlines.

Assignment of a Special Auditor is not arranged as a right in Company's Articles of Association. No request has been received from shareholders with respect thereto in 2006.

4. Information on General Assembly

One General Assembly was held in 2006 (on 12 May 2006). This assembly was attended by shareholders who represent 77.09% of capital stock. Invitation to such meeting has been made in accordance with the provisions of the Turkish Commercial Code and of the Company's Articles of Association. In order to ensure the attendance of shareholders who own registered shares at the meeting, recording in share ledger of the Company is made until the day before the General Assembly.

Annual Report also containing audited 2006 financials has been presented for inspection of shareholders at Company's Head Office at least 14 days in advance. Shareholders did not use their right to pose questions during the General Assembly and did not make any proposal other than items of agenda.

Significant decisions as defined in the Turkish Commercial Code are presented for approval of shareholders at Shareholders' Meeting. When legal compliance of Corporate Governance principles is achieved, all significant decisions to be defined in changing laws will also be presented for approval of shareholders at the General Assembly, as well.

5. Voting Rights and Minority Rights

No privileged rights on voting are incorporated under our Company's Articles of Association.

There is no arrangement in terms of cumulative voting rights in our Articles of Association for current shareholding percentages and shareholding structure as it is thought that it would impair our Company's harmonious management structure.

This issue will be considered at the General Assembly when proper legal arrangements are made to prevent abuse of cumulative voting rights by minority shareholders.

6. Dividend Policy and Deadline for Dividend Distribution

Our Dividend Distribution Policy is as follows:

To distribute at least 20% of the distributable profit in accordance with the CMB Principles, in cash or in the form of bonus share. This policy is reviewed annually by Board of Directors in view of unfavourable developments occurring in national and global economy and of projects in agenda, as well as of status of funds.

This information is presented in a separate section of the 2006 Annual Report and has been disclosed to shareholders and to the public before the General Assembly.

Our Company's dividend distribution is realized within the legal period. Sabancı Foundation and Members of Board of Directors enjoy privilege in dividend distribution according to the provisions of the Articles of Association. Such privileges are calculated from the amount after deduction of dividend distributed to shareholders, in line with the Articles of Association.

7. Transfer of Shares

No provisions which restrict transfer of shares are incorporated under our Company's Articles of Association.

SECTION II - PUBLIC DISCLOSURE AND TRANSPARENCY

8. Company Information Disclosure Policy

Our Company implements an information disclosure policy as defined in CMB Corporate Governance Principles. Under this policy, partly audited 6-month consolidated financials and fully audited 12-month consolidated financials are disclosed to the public via press conference, while 3-month and 9-month consolidated financials are disclosed to the public via press release. Disclosure of reports prepared in line with International Financial Reporting Standards (IFRS) has been made within the periods set by CMB. Press conference dates for 2006 will be announced in advance on our web page at www.sabanci.com.tr.

Güler Sabancı, Chairman of Board of Directors, and Ahmet Cemal Dördüncü, CEO, are responsible for implementation of the disclosure policy.

9. Disclosure of Material Events

In 2006, our Company has made 40 disclosures on material events to CMB or ISE according to CMB regulations. 6 of such disclosures have been requested by CMB and ISE, while the remaining 34 have been prepared by the Company at its own discretion for information-sharing purposes. Such disclosures have been made timely and no sanctions have been imposed by CMB or ISE for not disclosing material events on time.

Our Company's shares are not listed at foreign stock exchanges.

10. The Company's Web Site and its Contents

Our Company has a web site. The web-site is available at www.sabanci.com. Information mentioned in CMB Corporate Governance Principles Section II, Article 1.11.5 is provided in the Company's web site.

11. Disclosure of the Company's Ultimate Controlling Individual Shareholder/ Shareholders (Beneficial Ownership)

Our Company has no ultimate controlling individual shareholder.

12. Disclosure on Insiders

Individuals who can be classified as an insider have been disclosed to the public in the Annual Report's Board of Directors, Executive Committees, Strategic Business Unit Presidents and Corporate Management sections.

SECTION III - STAKEHOLDERS

13. Informing Stakeholders

Stakeholders are informed of Company-related facts through disclosures made under the relevant legislation.

Company's employees are also informed through meetings held on their specialization areas and on other related fields and through seminars and training programs, as well as through information sent via e-mail. There is a portal for employees, which enables them to have access to any kind of required information and document. 

14. Participation of the Stakeholders in Management

Participation of stakeholders in management is ensured through periodical in-company meetings (at least two times a year) and annual target setting and performance appraisal meetings. Furthermore, employees are encouraged to provide feedback to management and colleagues through 360 degree feedback mechanism, and results of such feedback are discussed at various management meetings and, thus, action plans are created for necessary changes. With these approaches, employees are driven to participate in and contribute to effective management of the Company.

15. Human Resources Policy

Our Company has established policies on human resources.

Our Company's Human Resources Strategy is to be known as a world-class human resources management organization. We want to maintain our reputation as a first-class employer of first-class people. Our Policies on Human Resources underline fundamental concept on which its practices and priorities towards people management are resting.

Main policies on Human Resources aim to recruit qualified workforce at our Company, to invest in employees for their continual development and potential realization, to ensure continual development and strengthening of organization, to implement total pay management and rewards system designed to attract qualified workforce into our Company and to enhance their loyalty and to improve motivation and loyalty of employees and, thus, to become a privileged company.

Our Company has not assigned a representative to handle relations with employees.

No complaints on discrimination have been received from employees in and before 2006.

16. Information on Relations with the Clients and Suppliers

Our Company does not engage in and deal with marketing and sales of goods and services on the score of its field of activity.

17. Social Responsibility

Our Company takes social responsibility concept in the context of "sustainability" and "social value creation" and, in this framework, handles social responsibility activities with respect to education and culture/arts, in particular. 

In this context; dividend contributions made to Sabancı Foundation and in-kind and cash donations to schools are examples of educational activities; while, cash supports provided to various exhibitions and cultural events at Sakıp Sabancı Museum of Sabancı University are examples of social responsibility activities in cultural and artistic fields.

SECTION IV - BOARD OF DIRECTORS

18. The Structure and Composition of Board of Directors and Independent Members

Members of Board of Directors of our Company are as follows, sorted by whether they are executive, non-executive and independent:

Güler SABANCI- Chairman and Managing Director (Executive)
Erol SABANCI- Vice Chairman (Non-executive)
Sevil Sabancı SABANCI- Board Member (Non-executive)
Serra SABANCI- Board Member (Non-executive)
Hasan GÜLEŞÇİ- Board Member (Independent - Non-executive)
Nafiz Can PAKER - Board Member (Independent - Non-executive)
Ahmet Cemal DÖRDÜNCÜ- Board Member / Delegated Member (CEO-Executive)
Members of our Board of Directors are authorized by virtue of a resolution of Shareholders' Meeting to carry out transactions as defined in Sections 334 and 335 of the Turkish Commercial Code.

19. Qualifications of Board Members
Qualifications required for the election of Board Members of the Company comply with the qualifications stated in CMB Corporate Governance Principles.  No minimum qualifications required for the election of Board Members are regulated by the Articles of Association.

Improvement programs have been devised and implemented for Board Members, if and when required, in order to enable them to keep better track of contemporary and state-of-the-art changes in management science in cooperation with universities and other scientific institutions.

20. Mission, Vision and Strategic Goals of the Company

Board of Directors has determined and disclosed the vision and the mission statement of the Company to the public through Annual Report and on its web site available at www.sabanci.com.

Board of Directors sets three-year strategic goals in consultation with CEO and Strategic Business Unit Presidents.

Furthermore, it approves annual budgets prepared within the framework of such strategic goals.

Board of Directors gets full and direct information on process of implementation of resolutions that are taken in parallel to comparative presentations made by Company executives during Board meetings. During such presentations, apart from budgetary and actual comparison of current year, comparative information on the same periods of previous years is presented to Board of Directors. Board of Directors repeats this process every month.

21. Risk Management and Internal Control Mechanism

The Company has a Risk Management Department, headed by Chief Risk Officer, to ensure effective use of risk management by Board of Dirctors. Risk Management Department houses processes developed and put into implementation for effective risk management on Company and Group basis.

Likewise, an Internal Control Mechanism is in place since the establishment of the Company, and as an Audit Committee set up to this end, carries out duties assigned to them by Board of Directors in an effective way in observance of Regulation on Audit Committee. A Board member is acting as Chairman to the existing Audit Committee.

22. Authorities and Responsibilities of the Members of the Board of Directors and Executives

Managerial rights and representational authorities of Board of Directors are defined in the Articles of Association. Authorities and responsibilities of Executives are not regulated in the Articles of Association. However, such authorities and responsibilities have been set by Board of Directors.

23. Principles of the Activity of the Board of Directors

In 2006, Board of Directors held 34 meetings, in total, of which 6 have been held face-to-face while 28 held getting written approval in parallel to provisions of the Turkish Commercial Code and of the Articles of Association. Agenda of Meetings of Board of Directors are set through discussions among Chairman, current Members of Board of Directors and CEO. The agenda and contents of topics of agenda are passed to Members of Board of Directors by Secretariat-General of Board of Directors, one week in advance, in the form of a file, to enable them to make necessary inspections and preparations.

No dissenting opinion has been voiced against resolutions passed by Members of Board of Directors during meetings held in 2006.

Attendance in person of Members without an excuse at the Board of Directors Meetings has been secured while adopting resolutions on subjects stated in Section IV, Article 2.17.4 of CMB Corporate Governance Principles. No questions of Members of Board of Directors have been recorded in the minutes of the meeting as they have not raised questions on such subjects. Members of Board of Directors have not been granted weighted voting rights and/or veto rights with respect to such resolutions.

24. Prohibition of Carrying Out Transactions with the Company and Prohibition of Competing with the Company

In 2006, Members of Board of Directors have not carried out transactions with the Company and have not engaged in any activity which competes with the Company in the same fields of activity.

25. Ethical Rules

Our Company has established and put into implementation ethical rules of business. Ethical rules of business have been disclosed to the public via corporate web site.  Employees have been made aware of such rules through disclosure on Company internal communication portal and distribution of printed booklets to all employees and conduct of training programs.

26. Number, Structure and Independence of Committees Established by Board of Directors

There are Committees of Audit, Finance and Human Resources reporting to Board of Directors. As Company's Board of Directors is directly involved in Corporate Governance Principles and compliance therewith, establishment of a separate committee has been deemed unnecessary.

In existing committees, Members of Board of Directors do not serve in more than one committee at a time. Members of Audit Committee chaired by an independent member are elected among non-executive Members of Board of Directors. Chairman of existing Committees of Finance and Human Resources have been elected to such posts to make use of the worldwide-recognized experience they have in their field of practice. On same grounds, Committees of Finance and Human Resources have members who hold executive positions and have full knowledge, background and experience in their competences as resolutions of such committees are of executive character in nature.

No conflict of interest has occurred in 2006 due to current membership structure of committees.

27. Remuneration of the Board of Directors

Terms and criteria in relation to all sorts of rights, benefits and wages granted to the Members of Board of Directors are defined in the Articles of Association. Dividend and attendance fee to Chairman and Members of Board of Directors are determined at the General Assembly. Company's operational results and performance appraisal method are taken into consideration while determining such rights. Managing Director is also paid 12 salaries and four bonuses a year as set annually by Board of Directors in parallel to Company's policy of remuneration.

In 2006, Company has not lent money to any Board Member; and has not provided credit to them; and has not prolonged the terms of existing loans and credits; and has not improved borrowing conditions; and has not extended credit under the name of personal credit means through a third person or has not provided warranties such as guarantee in their favour.