We would like to warmly welcome all of you to our Annual General Assembly Meeting where we will discuss the operating results for the 53rd year of Migros Türk T.A.Ş.

Turkey left behind a rough year in 2007 which was the scene of a series of significant political and economical developments. The political agenda was dogged by the impending general election, followed by the selection of a new president. The election produced a single-party government, paving the way for continued political stability. From the economical standpoint, although a relatively consistent course was adopted during the year, the negative developments outside Turkey’s borders did begin to take a toll on the Turkish economy towards the end of the year.

The Turkish economy has enjoyed an uninterrupted run of growth since 2002. After the 6.9% growth in 2006, GDP growth slowed to 4.5% in 2007. Although inflation did not meet the target set by the government, it still remained in single digits. CPI inflation ended the year at 8.4% in 2007. Increased costs in the food sector and elevated energy prices stand out as the obstacles to reaching the inflation targets in 2008. Domestic interest rates, on the other hand, followed a downward trend in 2007, while the Turkish lira continued to gain value against foreign currencies.

Meanwhile, the budget deficit and the current deficit continued to pose risks for the national economy, with the current account deficit reaching a gaping USD 38 billion by the end of the year, an increase of 18% on the year, while the foreign trade deficit surpassed USD 63 billion in the same period, marking a 15% increase on the year.

Tourism revenues notched up a 10% increase, compared to 2006, to exceed USD 18 billion, contributing to the financing of current deficit. In a similar vein, foreign investors’ interest in Turkey continued to grow. With USD 19 billion of net inflows in 2006, the direct investments item registered USD 19.8 billion of net inflows in 2007, up an increase of 4.1%.

However, we have been watching the worsening of the global economy with concern. The crisis that started in the US housing sector sends signals of a significant deceleration in the growth of the US economy. In spite of the measures adopted, the crisis has gradually come to dominate global markets, led by Europe and Japan. The slowdown in the global economy will certainly bear its impact on our country as well. To survive these developments and by escaping with the least possible damage, necessary measures must be adopted courageously and rapidly. Economic issues must gain priority on the country’s agenda, the accession negotiations with the EU must regain their former pace, and fiscal discipline and structural reforms must be pursued, because the signs are that 2008 will be a tougher year than 2007. In order to avoid losing the gains we have secured so far, we must all work together with a sense of determination and resolution.

When it comes to the food retail sector, 2007 saw continued growth of the overall market and companies operating in the sector moved forward with their investments with greater momentum. Our Company stepped up its growth pace, opening 160 new stores in various formats in 2007, compared to 93 in 2006. In foreign countries, two new stores were opened in Kazakhstan. Migros made its debut this year in the listing of the world’s top 250 retailers according to the Deloitte rating agency’s Global Powers of Retailing list prepared based on 2006 data. According to the ranking, which includes all retailers, as well as food retailers, Migros numbered was placed 236th among the world’s giant companies. Based on the same report, our Company ranked 12th among the world’s fastest growing 50 companies in the 2001-2006 period. Behind this proud success lies the trust held in us by our customers, suppliers and shareholders, the commitment of our employees and the devoted efforts of our business partners.

Even while Migros increased its investments, it sustained its profitability in 2007. Its consolidated sales increased by 12% in 2007 to reach TRY 4.8 billion. This growth was reflected to domestic gross profitability, especially boosting our consolidated gross profitability, which climbed 10% to reach TRY 1.2 billion. The consolidated gross profit margin came in at 24.9%, while consolidated operating profit was up 4% to reach TRY 213 million. Our earnings before tax, interest and depreciation (EBITDA) grew by 5% to TRY 326 million with an EBITDA margin of 6.8%. Fueled by the gains on the sales of associates generated on the sales of Ramenka, our consolidated pre-tax profit more than quadrupled from TRY 155 million in 2006 to TRY 639 million in 2007, while our net profit surged by seven times to TRY 552.9 million from TRY 78.7 million. Our consolidated net profit margin also increased significantly from 1.8% to 11.5%. When evaluating these financial results, it should be noted that Ramenka was included in the consolidation for the first 10 months of 2007, whereas it had been consolidated for the full year in 2006.

Under a globalizing conjuncture and in an environment characterized by rapidly increasing competition, the Koç Group has revised its strategy and decided to grow more deeply, and to become competitive on a global basis by concentrating its resources and energies in a smaller number of sectors. In line with this approach the Group aimed to focus on four core businesses: energy, durables, automotive and financial services. For this purpose, the Group assigned an investment bank during the year to assess all strategic alternatives including the sales of Migros.

Under this framework, Migros’ 50% stake in Harranova Besi ve Tarım Ürünleri A.Ş., a domestic associate, was sold in September to Tat Konserve Sanayii A.Ş. for a price of TRY 5.5 million. This was followed by the sales of Ramenka Limited Şirketi (Ramenka), Migros’ subsidiary in Russia in which the Company held a 50% stake, to Enka Holding Investment S.A. for USD 542.5 million in November. In the same process, all shares representing Migros’ 0.37% share in Koç Finansal Hizmetler A.Ş., a domestic associate, were sold to Koç Holding in December for TRY 32 million.

Ultimately, a share transfer agreement was concluded on 13 February 2008 by and between Koç Holding and Moonlight Capital S.A., controlled by the funds managed by BC Partners, an international private equity firm, for the sale of shares representing 50.83% of the capital of Migros held by Koç Holding, to Moonlight Capital for a price of TRY 1,977,365,405.44.

Although the Koç Group, through a strategic decision, disposed of its controlling share in Migros, I am fully confident that Migros will maintain its success in the sector, drawing on its new capital structure. I believe the innovation and leadership inherent in the culture of Migros will set the stage for new achievements in the coming period. It is my sincere conviction that Migros will spearhead the development and growth of the Turkish retail sector in the years to come, as it has been doing for 53 years.

I would like to take this opportunity to thank all of you for participating in our Annual General Assembly Meeting.

Sincerely,

Rahmi M. Koç
Chairman of the Board
April 29, 2008