IS INVESTMENT Financial Results & Performance 2007/Q3
2 Is Investment was established by Is Bank in 1996, with a paid in capital of NTL 500.000. The company has started with 42 staff and reached 272 employees as of 2007/Q3 and shareholders’ equity increased to NTL 235.9 mn. at the same time. Is Investment - the investment arm of Is Bank and the leading investment banking institution in Turkey - stands out as the only listed brokerage house in the country offering variety of services, such as; Brokerage (Trading securities including domestic and international equities, fixed income and derivatives) Investment Advisory Asset Management Corporate Finance (Public offerings, M&A’s and strategic consultancy) Research About Us
3 Overview of Turkish Capital Markets - 1 Equity Market (NTL Billion) 2006/Q32007/Q3 513.9 574.5 Equity market displayed a better performance with respect to the same period of 2006 Bills & Bonds Market (NTL Billion) 579.3 575.5 The comparative low uncertainities on politic area in 2007/Q3, led the Bonds & Bills market trading volume almost catch up with 2006/Q3. 2006/Q32007/Q3
4 Overview of Turkish Capital Markets - 2 Derivative Market (NTL Billion) 2006/Q32007/Q3 21.4 144.1 913 2.048 3.677 25.010 20.271 29.268 Mutual Funds (USD Million) Pension Funds 2005200626/10/2007 Portfolio size of pension funds still keep on becoming the driving force of the fund management business, rising 78% with respect to the end of 2006 Derivative market displayed a paramount performance and reached more than two-folds of our year-end trading volume target, growing 571% compared with 2006/Q3
5 Overview of Turkish Capital Markets - 3 Number of Public Companies Traded on the ISE 200520062007/Q3 306 322 326 Market Capitalisation ($ Billion) Average Free Float Rate (%) 20052006 2007/Q3 30,9 31,6 31,4 200520062007/Q3 162.8 163.7 285.8
6 Overview of Turkish Capital Markets - 4 (Foreign Investors) 20032004200520062007/Q3 Share in Total Equity Portfolio (%) 51 59 67 72 Trading Volume / Total Equity Trading Volume (%) 20032004200520062007/Q3 9 12 18 19 30 Foreign investors trade 30% of the ISE trading volume, while they hold the 72% of the free float market capitalisation
7 Market Share in Equity Market Share in Equity Market Equity Market - Is Investment (NTL Billion) 2006/Q32007/Q3 32.8 36.3 6,38% 6,33% We maintain our leadership position as of 2007/Q3 with NTL 36.3 bn trading volume and 6,33% market share Our performance is in line with our targets.
8 Market Share in Bills & Bonds Market Bills & Bonds Market - Is Investment (NTL Billion) 2006/Q32007/Q3 16.9 11.3 13,65% 12,43% We hold one of the first leading ranks with 12,43% market share and 11.3 bn trading volume and it is expected to see a recovery in the market with the issuance of private sector bonds in 2008
9 Market Share in Derivative Market Derivative Market – Is Investment (NTL Billion) 2006/Q32007/Q3 6.1 25.2 17,53% 27,4% Our derivative market trading volume is already quite close to the two-folds of our year-end target figure (NTL 14 bn) we had set for the full year, reaching NTL 25.2 bn. We maintain our uncontested leadership as of 2007/Q3 with 17,53% market share despite the rise in the market players. Our client base in derivative products continue to get wider in each quarter as stated before (foreign & domestic). Quite close to the two-folds of our year-end target
10 Trading Volume in International Capital Markets I International Capital Markets – Is Investment (USD Billion) 2006/Q32007/Q3 1.2 12.5 Our trading volume reached USD 12.5 bn from USD 1.2 bn surging by ten-folds of the same period of 2006 and our trading volume will likely increase with the anticipated new instruments in international capital markets
11 Asset Under Management AuM & Pension Funds Portfolio Size – Is Asset Management (Million NTL) The growth trend of mutual funds kept rising in 2007/Q3 due to the new accounts and the rise in current portfolios and reached NTL 6.6 billion, after the major shake out in 2006 20052006/Q32006 2007/H1 2007/Q3 The portfolio size of pension funds grows in parallel with the overall market 173 7.043 6.003 410 516 5.247 682 6.484 777 6.620
12 Corporate Finance (Public Offerings - M&As) 2006/Q32007/Q3 Public Offering Size (USD Million) - Is Investment 1.911 708 M&As Size (USD Million) - Is Investment 2006/Q32007/Q3 341 34.9 The largest privatization offering in the Turkish capital markets - Halkbank - completed this year We executed USD 341 mn. amounted 6 M&As while it was USD 34,9 mn. in the same period of 2006 and new corporate bond and IPO projects are in the pipeline The largest domestic demand for Tekfen Holding among the private sector IPOs
13 Income Statement Is Investment NTL (000) Operating Income Interest and Trading Income Commission Revenues Income from Corporate Finance Other Income Total Operating Revenues Operating Expense Net Operating Profit Other Expenses Financial Expenses Minority Expense EBT Tax Net Profit 2006/Q32007/Q3 YoY ▲% 56.676 37.093 5.125 4.864 103.758 -41.884 61.874 -4.324 -4.100 -26.760 26.690 -5.260 21.430 17.150 29.513 6.653 7.340 60.656 -30.204 30.452 -7.944 -7.802 -406 14.300 -1.847 12.453 230 25 -22 -33 71 38 103 45 47 n.m. 86 184 72
14 Operating Revenues ( (NTL 000) Interest and TradingCommissionsCorporate FinanceOther 17.150 56.676 29.513 37.093 6.653 5.125 7.340 4.864 2006/Q3 2007/Q3 Is Investment’s total revenues amounted to NTL 103.7 mn in 2007/Q3, up by 71% on YoY basis. Interest and trading revenues displayed a sharp growth, increasing to NTL 56.6 mn. from NTL 17.1 mn. The dismal 2006/Q3 results could be attributed to the low credit volumes and the negative impact of the turmoil. Commission revenues reached NTL 37.1 mn, surging by 63% over 2007/H1 figure, the commissions had totaled NTL 29.5 in the period of 2006/Q3. Other revenues amounted to NTL 4.8 mn down from NTL 7.3 mn due to the mainly decline in marked to market value of Is Private Equity.
15 Brokerage & Trading Commissions (YoY) (NTL 000) 2006/Q3 2007/Q3 BrokerageAsset Management Other 20.544 28.647 4.462 7.468 4.507 978 Brokerage commissions reached NTL 28.6 mn. recording 39% rise over its 2006/Q3 performance. Commissions on derivatives rocketed by five-folds on YoY basis in 2007/1H, reaching NTL 5.7 mn. vs NTL 1.1 mn in 2006/Q3. Fees on asset management rose to NTL 7.4 mn. due to the effect of 70% consolidation of Is Asset Management started in 2007/Q3.
16 Margin Trading Outstanding Loans (NTL Million) Interest on Loans Extended to Clients (NTL Million) 2006/Q32007/Q3 06/Q106/Q206/Q307/Q3 31.5 21 35.2 67.1 10.4 4.1 Interest income on margin accounts recorded 153% YoY growth, reaching NTL 10.4 mn and loans to clients reached NTL 67.1 mn as of 2007/Q3 surging by 91% with respect to the same period of 2006
17 Operating Expenses NTL (000) 2006/Q3 2007/Q3 YoY ▲ Employee Costs15.233 19.648 28% Severance 188 170 -9% Depreciation 898 905 0.7% Goodwill -253 -598 136% Consultancy 1.853 1.650 -11% Operating Costs 5.922 9.694 63% Sundry Taxes 3.841 5.232 36% Advertisement 1.198 903 35% Marketing and Dist. 1.324 4.280 223% Total 30.204 41.884 38% Operating costs recorded 38% rise on YoY basis and foreign marketable security transaction shares and other marketing, selling and distribution expenses also emerged as important cost components of operating expenses in 2007/Q3
18 TradeMaster International (TMI) – A New Product To perform stock and forward contract transactions in various global stock exchanges With the incentive marketing, many requests recieved for the initial and unique application for the e-trade platform in the country -TMI-
19 TradeMaster International Features Allows investors to reach information on the global markets in detail and in real time and to perform stock and forward contract transactions in various global stock exchanges quickly and easily with access to pertinent information. Allows investors to undertake transactions in various global stock markets with detailed and real-time information. Allows investors to carry out visual and statistical analysis using various techniques on detailed and real time data. This application enables investors to carry out transactions and keep a watch on their investments in global markets from their own PC or any location with internet access. TradeMaster International allows investors to reach global markets directly and quickly through simple menus. Each time it is opened, TradeMaster International automatically downloads and installs any new versions. As a result, new versions are always updated, and the program allows investors to work with an updated version Provides additional security for its investors through various channels of security within its software. Advantages Limits on investor accounts, specified by Is Investment, may be uploaded to the program and investors can perform the required transactions in international markets within specified limits. Ensures speed and ease for investors in their transactions in global markets. The program allows investors to perform transactions directly and without the need for any other intermediary. The program allows investors to access global market data in detail and in real time Investor Profile Traders interested in global markets and various products in these markets. Investors seeking to follow their investments closely while on business or personal travel. Those who use visual and statistical analysis in reaching investment decisions, and those who would like to carry out such analysis independently. Those who place importance on speed in their transactions.
20 Conclusion 2007/Q3 profit enforces our estimates to exceed the year-end profit target. We maintain our dividend policy disclosed to the public (minimum 20% of the distributable profit). Maxis Securities - the full subsidiary of Is Investment - started to welcome the client accounts and started to deal and it is planned to increase our international capital markets efficiency with Maxis. There are 2 corporate bond issue projects that will be finalized in the last quarter and 2 IPO’s are also in the pipeline for the year 2008. 70% consolidation of Is Asset Management that started in 2007/Q3 positevely effected our profit as stated before. Akaretler Branch has gone into operation in Istanbul as the 5th branch of Is Investment and the 6th one will probably be seen in 2008. TradeMaster International (TMI) has already been requested by many investors, and also theTradeMaster (the domestic form of TMI) Some institutional investors apply Is Investment to establish new funds which are to be managed by us. CMB approval for our capital-guaranteed fund is waited to be finalized in the last quarter. We have set out a new and active marketing policy in cooperation with the private banking department of Isbank. Foreign investors will be able to trade directly at ISE-Equity market via GL Trade served by Is Investment in the last quarter.
21 The information in this report is prepared by “IS YATIRIM MENKUL DEGERLER A.S.” (İş Investment) and it is not to be construed as an offer or solicitation for the purchase or sale of any financial instrument or the provision of an offer to provide investment services. Information, opinions and comments contained in this material are not under the scope of investment advisory services. Investment advisory services are given according to the investment advisory contract, signed between the intermediary institutions, portfolio management companies, investment banks and the clients. Opinions and comments contained in this report reflect the personal views of the analysts who supplied them. The investments discussed or recommended in this report may involve significant risk, may be illiquid and may not be suitable for all investors. Therefore, making decisions with respect to the information in this report cause inappropriate results. All prices, data and other information are not warranted as to completeness or accuracy and are subject to change without notice. Any form of reproduction, dissemination, copying, disclosure, modification, distribution and/or publication of this report is strictly prohibited. The information presented in this report has been obtained from sources believed to be reliable. Is Investment cannot be held responsible for any errors or omissions or for results obtained from the use of such information.
22 IS INVESTMENT SECURITIES isyatirim.com.tr isinvestment.com HEAD OFFICE Is Kuleleri Kule-2 Kat 12 4. Levent 34330 Istanbul Ph: (0212) 350 20 00 Fax: (0212) 325 12 26 – 325 12 48 IZMIR BRANCH Talatpasa Bulvari No:27 Alsancak 35220 Izmir Ph: (0232) 488 90 00 Fax: (0232) 464 69 43 – 464 68 98 KALAMIS BRANCH Fenerbahce, Fener Kalamis Cad. Tibas-Belvu Sitesi A2 Blok Daire 3 Kadikoy 81030 Istanbul Ph: (0216) 542 72 00 Fax: (0216) 542 72 01 ALMA ATA LIAISON OFFICE 181 Zheltoksan St. The Regent Almaty Oda 108 Almaata 480013 Kazakhstan Ph: (+73272) 505000 Fax: (+73272) 582805 ANKARA BRANCH Tahran Cad. No:3/8 06700 Kavaklidere - Ankara Ph: (0312) 455 26 50 Fax: (0312) 466 26 62 YENIKOY BRANCH Koybasi Caddesi Iskele Cikmazi No 277 34464 Yenikoy ISTANBUL Ph: (0212) 363 01 00 Fax: (0212) 363 01 01 AKARETLER BRANCH Akdeniz Cad. No:14 Birsel İş Merkezi Daire: 601 35210 Alsancak / İZMİR Ph: (0232) 488 90 00 Fax: (0232) 488 90 01 LEVENT LIAISON OFFICE Yapi Kredi Plaza C Blok Kat 9 Bolum 25/B 34330 Besiktas, Istanbul Ph: (0212) 282 00 18 Fax: (0212) 282 00 19 SUBSIDIARYMAXIS SECURITIES LTD 8 Princes Street London EC2R 8HL UK Ph: (+44207) 397 1431 Fax: (+44207) 726 2566