Vakıf Finans Factoring Hizmetleri Anonim Şirketi

Transcription

1 Vakıf Finans Factoring Hizmetleri Anonim Şirketi Financial Statements As At andfor the Year Ended 31 December 2012 With Independent Auditors Report Thereon Convenience Translation to English of Financial Statements And Notes To The Financial Statements Originally Issued In Turkish Akis Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi 12 February 2013 This report includes 2 pages of independent auditors report and 42 pages of financial statements and notes to the financial statements.

2

3

4 CONTENTS PAGE Balance sheet 1-2 Statement of off-balance sheet items 3 Income statement 4 Statement of gains and losses recognized in shareholder s equity 5 Statement of changes in shareholders equity 6 Statement of cash flows 7 Statement of profit distribution 8 Notes to the financial statements 9-42 Note 1 Organization and nature of business 9 Note 2 Basis of preparation of financial statements 9-19 Note 3 Cash items 19 Note 4 Available for sale financial assets 20 Note 5 Factoring receivables and payables Note 6 Tangible assets 22 Note 7 Intangible assets 23 Note 8 Deferred tax assets and liabilities 24 Note 9 Information on assets held for sale and assets related to discontinued operations 24 Note 10 Other assets 24 Note 11 Funds borrowed 25 Note 12 Miscellanous payables 26 Note 13 Taxes and duties payable 26 Note 14 Provisions Note 15 Equity Note 16 Operating income 29 Note 17 Operating expenses 29 Note 18 Other income 30 Note 19 Finance expenses 30 Note 20 Specific provision for doubtful receivables 30 Note 21 Other income 30 Note 22 Taxes Note 23 Related party disclosures Note 24 Commitments and contingencies Note 25 Financial risk management Note 26 Subsequent events 42

5 BALANCE SHEET AT 31 DECEMBER STATEMENT OF FINANCIAL POSITION -ASSETS Audited Current Period 31 December 2012 Audited Prior Period 31 December 2011 Note TL FC TOTAL TL FC TOTAL I. CASH AND CASH EQUIVALENTS II. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR Financial assets held for trading purpose Financial assets designated at fair value through profit or loss Derivative financial assets held for trading purpose III. BANKS 3 65,176 10,926 76, ,109 IV. RECEIVABLES FROM REVERSE REPURCHASE AGREEMENTS V. AVAILABLE FOR SALE FINANCIAL ASSETS (Net) 4 2,322-2,322 2,322-2,322 VI. FACTORING RECEIVABLES 5 167,927 17, , ,291 40, , Discounted factoring receivables 39,224 1,973 41, ,704 3, , Domestic 41,530-41, , , Foreign - 2,132 2,132-3,532 3, Unearned income (2,306) (159) (2,465) (6,832) (324) (7,156) 6.2 Other factoring receivables 128,703 15, , ,587 37, , Domestic 123, , , , Foreign 5,620 15,897 21,517 6,354 37,305 43,659 VII. FINANCING LOANS Consumer loans Credit cards Installment based commercial loans VIII. RECEIVABLES FROM LEASING ACTIVITIES Receivables from leasing activities Finance lease receivables Operational lease receivables Others Unearned income Investment in progress subject to leases Advances given due to leasing activities IX. LOANS AND RECEIVABLES UNDER FOLLOW-UP 5 7,907-7, Factoring receivables under follow-up 19,171-19,171 6,377-6, Financing loans under follow-up Receivables from leasing activities under follow-up Specific provisions (-) (11,264) - (11,264) (6,377) - (6,377) X. DERIVATIVE FINANCIAL ASSETS HELD FOR RISK Fair value hedges Cash flow hedges Hedges of net investment in foreign operations XI. HELD-TO-MATURITY INVESTMENTS (Net) XII. INVESTMENTS IN SUBSIDIARIES (Net) XIII. INVESTMENTS IN ASSOCIATES (Net) XIV. INVESTMENTS IN JOINT-VENTURES (Net) XV. TANGIBLE ASSETS (Net) XVI. INTANGIBLE ASSETS (Net) Goodwill Other intangibles XVII. DEFERRED TAX ASSETS 8 2,041-2,041 2,019-2,019 XVIII. ASSETS HELD FOR SALE AND ASSETS RELATED TO THE DISCONTINUED OPERATIONS (Net) Assets held for sale Assets related to the discontinued operations XIX. OTHER ASSETS TOTAL ASSETS 245,985 28, , ,794 41, ,130 The accompanying notes are an integral part of these financial statements. 1

6 BALANCE SHEET AT 31 DECEMBER STATEMENT OF FINANCIAL POSITION - LIABILITIES AND EQUITY Audited Current Period 31 December 2012 Prior Period 31 December 2011 Note TL FC TOTAL TL FC TOTAL I. DERIVATIVE FINANCIAL LIABILITIES HELD FOR TRADING PURPOSE II. FUNDS BORROWED ,204 49, , , , ,052 III. FACTORING PAYABLES 1, , IV. PAYABLES DUE TO LEASING OPERATIONS Finance lease payables Operational lease payables Others Deferred finance leasing expenses ( - ) V. SECURITIES ISSUED (Net) Bills Asset backed securities Bonds VI. MISCELLANEOUS PAYABLES VII. OTHER EXTERNAL RESOURCES PAYABLE DERIVATIVE FINANCIAL LIABILITIES HELD FOR RISK MANAGEMENT PURPOSE VIII. 8.1 Fair value hedges Cash flow hedges Hedges of net investment in foreign operations IX. TAXES AND DUTIES PAYABLES ,754-1,754 X. PROVISIONS Restructuring reserves Reserve for employee benefits Other provisions XI. DEFERRED TAX LIABILITIES XII. PAYABLES FOR ASSETS HELD FOR SALE AND ASSETS RELATED TO DICONTINUED OPERATIONS (Net) Payables related to the assets held for sale Payables related to the discontinued operations XIII. SUBORDINATED LOANS XIV. EQUITY 15 88,498-88,498 84,763-84, Paid-in capital 22,400-22,400 22,400-22, Capital reserves 28,831-28,831 28,831-28, Share premium Share cancellation profits Valuation differences of the marketable securities Revaluation surplus on tangible and intangible assets Bonus shares of associates, subsidiaries and joint-ventures Hedging reserves (effective portion) Revaluation surplus on assets held for sale and assets related to the discontinued operations Other capital reserves 28,831-28,831 28,831-28, Profit reserves 26,986-26,986 20,289-20, Legal reserves 4,987-4,987 3,790-3, Status reserves Extraordinary reserves 21,999-21,999 16,499-16, Other profit reserves Profit or (loss) 10,281-10,281 13,243-13, Prior years profit/(losses) Current year s profit/(losses) 10,281-10,281 13,243-13,243 TOTAL LIABILITIES AND EQUITY 224,816 49, , , , ,130 The accompanying notes are an integral part of these financial statements. 2

7 OFF BALANCE SHEET ITEMS AS AT 31 DECEMBER 2012 OFF-BALANCE SHEET ITEMS Audited Current Period 31 December 2012 Audited Prior Period 31 December 2011 Note TL FC TOTAL TL FC TOTAL I. REVOCABLE FACTORING TRANSACTIONS II. IRREVOCABLE FACTORING TRANSACTIONS 13,844 11,910 25,754 29,455 5,546 35,001 III. COLLATERALS RECEIVED 5 and 24 62, , , ,687 IV. COLLATERALS GIVEN ,463-18,463 V. COMMITMENTS Irrevocable commitments Revocable commitments Revocable lease granting commitments Finance lease commitments Operational lease commitments Other revocable commitments VI. DERIVATIVE FINANCIAL INSTRUMENTS Derivative financial instruments held for risk management purpose Fair value hedges Cash flow hedges Net foreign investment hedges Derivative financial instruments held for trading purpose Forwards purchases and sales Swaps purchases and sales Options purchases and sales Futures purchases and sales Others VII. ITEMS HELD IN CUSTODY 24 32,372 30,300 62, ,631 47, ,031 TOTAL OFF-BALANCE SHEET ITEMS 110,176 42, , ,474 53, ,387 The accompanying notes are an integral part of these financial statements. 3

8 STATEMENT OF INCOME FOR THE YEAR ENDED 31 DECEMBER 2012 INCOME STATEMENT Note Audited Current Period 1 January 31 December 2012 Audited Prior Period 1 January 31 December 2011 I. MAIN OPERATING INCOME INCOME FROM FACTORING OPERATIONS 49,778 63, Interest income from factoring receivables 48,303 62, Discounted 7,990 9, Other 40,313 52, Fees and commissions received from factoring receivables 1,475 1, Discounted Other 1,406 1,029 II. MAIN OPERATING EXPENSES (-) 17 5,467 5, Personnel expenses 3,441 3, Provision expense for employee termination indemnity Research and development expenses General administrative expenses 1,920 1, Other - - III. OTHER OPERATING INCOME , , Interest income on banks 1,372 1, Interest income on reverse repurchase agreements Interest income on securities Interest income on trading financial assets Interest income on financial assets designated at fair value through profit or loss Interest income on available for sale financial assets Interest income on held to maturity investments Dividend income Trading income Derivatives Other Foreign exchange gains 190, , Other IV. FINANCING EXPENSES (-) 19 27,911 43, Interest expense on funds borrowed 27,252 42, Interest expense on factoring payables Interest expense on financial leases Interest expense on securities issued Other interest expenses Fees and commission expenses V. SPECIFIC PROVISIONS FOR LOANS AND RECEIVABLES UNDER FOLLOW-UP 20 5, VI. OTHER OPERATING EXPENSES (-) , , Impairment in value of securities Impairment in value of financial assets designated at fair value through profit or loss Impairment in value of available for sale financial assets Impairment in value of held to maturity investments Impairment in value of non current assets Impairment in value of tangible assets Impairment in value of assets held for sale and assets related to discontinued operations Impairment in value of goodwill Impairment in value of other intangible assets Impairment in value of subsidiaries, associates and joint-ventures Trading losses from derivatives Foreign exchange losses 190, , Other - - VII. OPERATING PROFIT/(LOSSES), NET (I+ +VI) 12,853 16,450 VIII. INCOME RESULTED FROM MERGERS - - IX. GAINS/(LOSSES) ON NET MONETARY POSITION - - X. PROFIT/(LOSSES) FROM CONTINUING OPERATIONS BEFORE TAXES (VII+VIII+IX) 12,853 16,450 XI. PROVISION FOR TAXES FROM CONTINUING OPERATIONS (±) 22 (2,572) (3,207) 11.1 Current tax charge (2,594) (3,359) 11.2 Deferred tax charges due to deferred tax assets Deferred tax charges due to deferred tax liabilities XII. NET PROFIT/(LOSSES) AFTER TAXES FROM CONTINUING OPERATIONS (X±XI) 10,281 13,243 XIII. INCOME FROM DISCONTINUED OPERATIONS Income from assets held for sale Income from sale of associates, subsidiaries and joint-ventures Other income from discontinued operations - - XIV. EXPENSES FROM DISCONTINUED OPERATIONS (-) Expense from assets held for sale Expense from sale of associates, subsidiaries and joint-ventures Other expense from discontinued operations - - XV. PROFIT/(LOSSES) BEFORE TAXES ON DISCONTINUED OPERATIONS (XIII-XIV) - - XVI. PROVISION FOR TAXES FROM DISCONTINUED OPERATIONS (±) Current tax charge Deferred tax charges/credits due to deferred tax assets Deferred tax charges/credits due to deferred tax liabilities - - XVII. NET PROFIT/(LOSSES) AFTER TAXES FROM DISCONTINUED OPERATIONS (XV±XVI) - - XVIII. NET PROFIT/(LOSSES) FOR THE YEAR (XVII+XVIII) 10,281 13,243 ( The accompanying notes are an integral part of these financial statements. 4

9 STATEMENT OF INCOME AND LOSSES RECOGNIZED IN SHAREHOLDER S EQUITY FOR THE YEAR ENDED 31 DECEMBER 2012 Audited Current Period 1 January - 31 December 2012 Audited Prior Period 1 January - 31 December 2011 STATEMENT OF INCOME AND EXPENSE ITEMS ACCOUNTED UNDER SHAREHOLDERS EQUITY I. ADDITIONS TO MARKETABLE SECURITIES REVALUATION DIFFERENCES FOR AVAILABLE FOR SALE FINANCIAL ASSETS 1.1 Net change in the fair value of available for sale financial assets Fair value changes transferred to profit or loss due to disposal of related financial assets - - II. TANGIBLE ASSETS REVALUATION DIFFERENCES - - III. INTANGIBLE ASSETS REVALUATION DIFFERENCES - - IV. FOREIGN EXCHANGE DIFFERENCES FOR FOREIGN CURRENCY TRANSACTIONS - - V. PROFIT/LOSS FROM DERIVATIVE FINANCIAL INSTRUMENTS FOR CASH FLOW HEDGE PURPOSES (Effective portion of fair value differences) Change in fair values (Effective portion) Portion reclassified and presented in the statement of income - - VI. PROFIT/LOSS FROM DERIVATIVE FINANCIAL INSTRUMENTS FOR HEDGE OF NET INVESTMENTS IN FOREIGN OPERATIONS (Effective portion of fair value differences) Change in fair values (Effective portion) Portion reclassified and presented in the statement of income - - VII. THE EFFECT OF CORRECTIONS OF ERRORS AND CHANGES IN ACCOUNTING POLICIES - - VIII. OTHER PROFIT LOSS ITEMS ACCOUNTED UNDER EQUITY DUE TO TAS - - IX. DEFERRED TAX OF VALUATION DIFFERENCES - - X. TOTAL NET PROFIT/LOSS ACCOUNTED UNDER EQUITY (I+II+ +IX) - - XI. PROFIT/LOSS 10,281 13,243 XII. TOTAL PROFIT/LOSS ACCOUNTED FOR THE PERIOD (X±XI) 10,281 13,243 The accompanying notes are an integral part of these financial statements. 5

10 STATEMENT OF CHANGES IN SHAREHOLDER S EQUITY FOR THE YEAR ENDED 31 DECEMBER 2012 CHANGES IN EQUITY Paid-in Capital Capital Reserves from Inflation Adj.s to Paid in Capital Share Premium Share Cancellation Profits Legal Reserves Status Reserves Extraordinary Reserves Other Profit Reserves Net Profit/(Losses) For the Year Prior Years Net Profit / (Losses) Valuation Differences of the Marketable Revaluation Surplus on Tangible and Bonus Shares of Equity Securities Intangible Assets Participations Hedging Reserves Revaluation Surp. On Assets Held for Sale and Assets of Discount. Op.s Prior Year (1 January - 31 December 2011) Audited I. Balances at the beginning of the year 22,400 28, ,157-7,560-9, ,520 II. Corrections per TAS Effects of correction of errors Effects of changes in accounting policies III. Adjusted balances at the beginning of the year (I+II) 22,400 28, ,157-7,560-9, ,520 Changes during the year IV. Increase/decrease related to mergers V. Hedging reserves Cash Flow Hedges Hedging net investment in foreign operations VI. Valuation differences of the marketable securities VII. Revaluation surplus on tangible assets VIII. Bonus shares of associates, subsidiaries and jointventures IX. Translation differences X. Changes resulted from disposal of the assets XI. Changes resulted from reclassifications of the assets XII. Changes resulted from reclassifications of the assets XIII. Issuances of share certificates XIV. Capital reserves from inflation adjustments to paid-in capital XV. Bonds Convertible to Share Certificates XVI. Subordinated loans XVII. Net profit/(losses) of the year , ,243 XVIII. Profit distribution ,939 - (9,572) Dividends Transferred to reserves ,939 - (9,572) Others Balances at the end of the year (31 December 2011) 22,400 28, ,790-16,499-13, ,763 Current year (1 January - 31 December 2012) Audited I. Balance at the beginning of the year 22,400 28, ,790-16,499-13, ,763 Changes during the year II. Increase/decrease related to mergers III. Hedging reserves Cash Flow Hedges Hedging net investment in foreign operations IV. Valuation differences of the marketable securities V. Revaluation surplus on tangible assets VI. Bonus shares of associates, subsidiaries and jointventures VII. Translation differences VIII. Changes resulted from disposal of the assets IX. Changes resulted from reclassifications of the assets X. Cash Capital Increase XI. Issuances of share certificates XII. Capital reserves from inflation adjustments to paid-in - capital XIII. Bonds Convertible to Share Certificates XIV. Subordinated loans XV. Net profit/(losses) of the year , ,281 XVI. Profit distribution ,197-5,500-13, XVII. Dividends (6,546) (6,546) 17.1 Transferred to reserves ,197-5,500 - (13,243) 6, Others Balance at the end of the year (31 December 2012) 22,400 28, ,987-21,999-10, ,498 Total Equity The accompanying notes are an integral part of these financial statements. 6

11 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2012(Currency: Thousands of Turkish Lira ( TL ) unless otherwise stated. ) A. CASH FLOWS FROM OPERATING ACTIVITIES Note Audited Current Period 1 January - 31 December 2012 Audited Prior Period 1 January - 31 December Operating profit before changes in operating assets and liabilities 14,794 21, Interests received/lease income 52,854 63, Lease expenses Dividends received Fee and commissions received 1,475 1, Other income Collections from previously written-off receivables Payments to personnel and service suppliers (3,544) (3,164) Taxes paid (2,103) (2,355) Other (33,915) (37,727) 1.2 Changes in operating assets and liabilities 420,530 (150,106) Net (increase) decrease in factoring receivables 420,921 (152,635) Net (increase) decrease in financing loans Net (increase) decrease in receivables from leasing operations Net (increase) decrease in other assets 42 2, Net increase (decrease) in factoring payables 1, Net increase (decrease) in payables due to leasing activities Net increase (decrease) in funds borrowed Net increase (decrease) in overdue payables Net increase (decrease) in other liabilities (1,518) (367) I. Net cash from operating activities 435,324 (128,964) B. CASH FLOWS FROM INVESTING ACTIVITIES 2.1 Acquisition of Subsidiaries, Associates and Joint Ventures Disposal of Subsidiaries, Associates and Joint Ventures Purchases of property and equipment 6 (105) (19) 2.4 Fixed Assets and Intangible Assets Financial assets available for sale Proceeds from disposal of available for sale financial assets Purchase of held-to-maturity investments Held-to-Maturity Investments Other - - II. Net cash from operating activities (105) (19) C. CASH FLOWS FROM INVESTING ACTIVITIES 3.1 Cash obtained from funds borrowed and securities issued 126, , Cash used for repayment of funds borrowed and securities issued (479,748) (744,424) 3.3 Equity instruments issued Dividends paid (6,546) Payments for finance leases (661) Others - - III. Net cash from/(used in) financing activities (360,330) (216,527) IV. Effect of change in foreign exchange rates on cash and cash equivalents V. Net increase in cash and cash equivalents 74,891 (345,391) VI. Cash and cash equivalents at the beginning of the year 3 1, ,500 VII. Cash and cash equivalents at the end of the year 3 76,000 1,109 The accompanying notes are an integral part of these financial statements. 7

12 STATEMENT OF PROFIT DISTRIBUTION FOR THE YEAR ENDED 31 DECEMBER 2012 I. DISTRIBUTION OF CURRENT YEAR PROFIT Current Period 31 December 2012 (*) Prior Period 31 December NET PROFTI FOR THE YEAR 12,853 16, TAXES AND LEGAL DUTIES PAYABLE (-) (2,572) (3,207) Corporate tax (income tax) (2,594) (3,359) Withholding tax Other taxes and duties A. NET PROFIT FOR THE YEAR ( ) 10,281 13, ACCUMULATED LOSSES (-) FIRST LEGAL RESERVES (-) - (655) 1.5 OTHER STATUTORY RESERVES (-) (22) (152) B NET PROFIT AVAILABLE FOR DISTRIBUTION [(A-( )] 10,259 12, FIRST DIVIDEND TO SHAREHOLDERS (-) - 1, To owners of ordinary shares To owners of privileged shares To owners of redeemed shares To profit sharing bonds To holders of profit and loss sharing certificates DIVIDENDS TO PERSONNEL (-) DIVIDENDS TO BOARD OF DIRECTORS (-) SECOND DIVIDEND TO SHAREHOLDERS (-) - 5, To owners of ordinary shares To owners of privileged shares To owners of redeemed shares To profit sharing bonds To holders of profit and loss sharing certificates SECOND LEGAL RESERVES (-) STATÜ S RESERVES (-) EXTRAORDINARY RESERVES - 5, OTHER RESERVES SPECIAL FUNDS - - II. DISTRIBUTION FROM RESERVES DISTRIBUTION OF RESERVES SECOND LEGAL RESERVES (-) DIVIDENTS TO SHAREHOLDERS (-) To owners of ordinary shares To owners of privileged shares To owners of redeemed shares To profit sharing bonds To holders of profit and loss sharing certificates DIVIDENDS TO PERSONNEL (-) DIVIDENDS TO BOARD OF DIRECTORS (-) - - III. EARNINGS PER SHARE 3.1 TO OWNERS OF ORDINARY SHARES (TL) TO OWNERS OF ORDINARY SHARES ( % ) TO OWNERS OF PRIVILEGED SHARES (TL) TO OWNERS OF PRIVILEGED SHARES ( % ) - - IV. DIVIDEND PER SHARE 4.1 TO OWNERS OF ORDINARY SHARES (TL) TO OWNERS OF ORDINARY SHARES ( % ) TO OWNERS OF PRIVILEGED SHARES (TL) TO OWNERS OF PRIVILEGED SHARES ( % ) - - (**) Profit distribution will be decided at the General Assembly. The accompanying notes are an integral part of these financial statements. 8

13 NOTES TO THE FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER ORGANIZATION AND NATURE OF BUSINESS Vakıf Finans Factoring Hizmetleri Anonim Şirketi ( the Company ) was incorporated on 28 January 1998 to provide factoring services to industrial and commercial firms. The Company maintains its operations factoring, that is a financial product which ensure "guarantee", "finance" and "collection" services by way of assignment to a company called "factor" of the trade receivables arising from sale of goods and/or services by firms to within the country. The company serves both domestic and international factoring services. The Company operates in accordance with Financial Lease, Factoring and Financing Companies Law published on the Official Gazette no dated 13 December 2012 and Regulation on Principles for Establishment and Operations of Finance Lease, Factoring and Financing Companies of Banking Regulation and Supervision Agency (BRSA). As at 31 December 2012 and 2011, the composition of the authorized and paid-in share capital are as follows: 31 December 2012 Share (%) 31 December 2011 Share (%) Türkiye Vakıflar Bankası TAO 17, , Güneş Sigorta A.Ş Vakıf Finansal Kiralama A.Ş Vakıf Per. Öz. Sos. Güv. Vakfı Vakıf Pazarlama Sanayi ve Tic. AŞ Share capital 22, , The Company has 32 employees as at 31 December 2012 (2011: 34 employees). The Company is registered in Turkey and located in the address below: Gazeteciler Sitesi, Yazarlar Sokak, No:10, Esentepe, Şişli / İSTANBUL. The Company carries its operations mainly in one geographical region (Turkey). 2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS 2.1 Basis of Preparation Basis of Preparation of Financial Statements The accompanying financial statements are prepared in accordance with the Communiqué Uniform Chart of Accounts to be implemented by Financial Leasing, Factoring and Consumer Financing Companies and its Explanation as well as the Form and Scope of Financial Statements to be announced to Public published on the Official Gazette no dated 17 May 2007 promulgated by BRSA, Turkish Accounting Standards ( TAS ), Turkish Financial Reporting Standards ( TFRS ) and the appendices and interpretations promulgated by Turkish Accounting Standards Board ( TASB ) and the statements and guidance published by BRSA on accounting and financial reporting principles (together referred as Reporting Standards ). Per decree no 660 enacted and published on the Official Gazette dated 2 November 2011, additional article no:1 of the 2499 numbered Law on establishment of TASB has been abrogated and establishment of Public Oversight, Accounting and Auditing Standards Association ( Board ) was decided by the Council of Ministers. In accordance with this additional temporary article no 1 of the decree, current regulations will prevail until related standards and regulations to be issued by the Board become effective. This has no effect on the accounting principles as at the reporting date. 9

14 NOTES TO THE FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) 2.1 Basis of Preparation (Continued) The financial statements, other than financial assets at fair values through profit and loss and financial liabilities, prepared on the historical cost basis. The balance sheet and income statement prepared as at 31 December 2012 were authorized for issue by the Board of Directors of the Company on 12 February The General Assembly and certain regulatory bodies have the power to amend the statutory financial statements after issue. Additional Paragraph for Convenience Translation to English The differences between accounting principles, as described in the preceding paragraphs, and the accounting principles generally accepted in countries, in which the accompanying financial statements are to be distributed, and International Financial Reporting Standards ( IFRS ), may have significant influence on the accompanying financial statements. Accordingly, the accompanying financial statements are not intended to present the financial position and results of operations in accordance with the accounting principles generally accepted in such countries and IFRS Functional and Presentation Currency The presentation and functional currency of the Company is Turkish Lira ( TL ). The financial statements of the Company have been adjusted for the effects of inflation in accordance with TAS 29 Financial Reporting in Hyperinflationary Economies until 31 December By a circular issued on 28 April 2005, BRSA declared that the application of inflation accounting has been ceased to be applied for the companies operating in Turkey starting from 1 January 2005, since the provisions of hyperinflationary economy do not exist anymore Accounting estimates The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. In preparation of the financial statements, the significant estimates and judgments used by the Company are included in the following notes: Note 5 Provision for receivables under follow-up Changes in Accounting Policies Material changes in accounting policies are adjusted retrospectively and prior periods financial statements are restated. The accounting policies set out below have been applied consistently to all periods presented in these financial statements Changes in accounting estimates and errors If the changes in accounting estimates relate to a specific period, they are applied in the period they relate to whereas if the changes are related to future periods, they are applied both in the period the change is made and prospectively in the future periods. There have been no material changes in current period s accounting estimates. Material accounting errors are adjusted retrospectively and prior periods financial statements are restated. There have been no material changes in current period s accounting errors. 10

15 NOTES TO THE FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) 2.1 Basis of Preparation (Continued) Comparative Information and Restatement of Prior Period Financial Statements The Company s financial statements 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 with respective disclosures for the major differences. Reclassifications made in the financial statements for 2011 The Company's off-balance sheet items of the previous period from the "Guarantees" are classified in the amount of TL 984, and compensation from the Company in favor of the courts of the guarantees to be addressed if the recourse to the Company, which will be contingent assets and liabilities, off-balance sheet items are presented in a comparative statement as "Irrevocable Commitments "line is reclassified Standards and interpretations came into force in 2012 The Company applied all of the relevant and required standards and interpretations promulgated by TASB and Turkish Financial Reporting and Interpretation Comittee (TFRIC) as at 31 December New standards and interpretations not yet adopted as at 31 December 2012 A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 31 December 2012, and have not been applied in preparing these financial statements. None of these are expected to have a significant effect on the financial statements of the Company Offsetting The Company s financial assets and liabilities are offset and the net amount is presented in the balance sheet if and only if there is a legally enforceable right to set off the amounts and there is an intention to settle on a net basis or to realize the asset and settle the liability simultaneously. 2.2 Summary of significant accounting policies (a) Financial instruments Non-derivative financial instruments Non-derivative financial instruments comprise cash and cash equivalents, factoring receivables, available for sale financial assets, funds borrowed, and other miscellanous payables. Non-derivative financial instruments are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as described below. Cash at banks comprises time deposits with an original maturity less than three months. Cash at banks reflects short-term investments; highly liquid, with an original maturity less than three months. Time deposits are recognised at discounted values by using effective interest rate. 11

16 NOTES TO THE FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) 2.2 Summary of significant accounting policies (a) Financial instruments Non-derivative financial instruments The Company initially recognizes factoring receivables and payables on the date that they are originated. Such assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, factoring receivables are measured at amortized cost using the effective interest method, less any impaired losses. The Company recognizes bad debt provisions for factoring receivables and for other assets that meet criteria published in the Communiqué No on the Communiqué on Procedures and Principles for the Provisions to be set aside by Financial Leasing, Factoring and Financing Provision for doubtful factoring receivables and other receivables are recognized as an expense and written off against the profit for the year. Provision for non-performing receivables is allocated assessing the Company s loan portfolio, quality and risk and considering the economic conditions and other factors including the related legislation against the potential losses that may be resulted from the current factoring receivables. In accordance with the Communiqué No on the Communiqué on Procedures and Principles for the Provisions to be set aside by Financial Leasing, Factoring and Financing Companies for their Receivables issued at 20 July 2007 by BRSA, the Company s specific provision rate allocated for the below faktoring receivables considering their collaterals. Available-for-sale financial assets consist of financial asstes except; held-to-maturity investments and financial assets at fair value through profit and loss. Available-for-sale financial assets are subsequently measured at their fair values. However, the fair values can not be determined reliably, for those who have a fixed maturity carried at amortized cost using the effective yield method, the fair value of fixed maturity for non-pricing models or discounted cash flow techniques are measured. Unrecognised gains or losses derived from the difference between their fair value and the discounted values calculated per effective interest rate method are recorded in Fair value reserve under shareholders equity. In case of sales, the realised gain or losses are recognised directly in the statement of operations. Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Borrowings are subsequently measured at amortized cost using the effective interest method plus the interest expense recognized on effective interest method. Interest income and expense are accounted as described in Note 2.2.(h). Other non-derivative financial instruments are measured at amortized cost using the effective interest method less any impairment. A financial instrument is recognised if the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Company s contractual rights to the cash flows from the financial assets expire or if the Company transfers the financial asset to another party without retaining control or with all risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e., the date that the Company commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Company s obligations specified in the contract expire or are discharged or cancelled. 12

17 NOTES TO THE FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) 2.2 Summary of significant accounting policies (Continued) (b) (c) (d) Tangible assets and depreciation Items of tangible assets acquired before 1 January 2005 are measured at cost restated for the effects of inflation in TL units current at 31 December 2004 pursuant to TAS 29 less accumulated depreciation and impairment losses. Tangible assets acquired after 31 December 2004 are measured at cost, less accumulated depreciation and impairment losses. (i) Subsequent costs The cost of replacing part of an item of tangible assets is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of the day-to-day servicing of tangible assets are recognized in the income statement as incurred. (ii) Depreciation Depreciation is recognised in the income statement on a straight-line basis over the estimated useful lives of each part of an item of tangible assets. The estimated useful lives for the current and comparative periods are as follows: Definition Year Furniture and fixtures 5 years Motor vehicles 5 years Leasehold 5 years Leasehold improvements are amortized over the periods of the respective leases on a straight-line basis. Intangible assets Intangible assets represent computer software licenses and rights. Intangible assets acquired before 1 January 2005 are measured at cost restated for the effects of inflation in TL units current at 31 December 2004 pursuant to TAS 29, less accumulated amortization, and impairment losses. Intangible assets acquired after 31 December 2004 are measured at cost, less accumulated amortisation, and impairment losses. Amortization is recognized in the income statement on a straight-line basis over the estimated useful lives of intangible assets. Definition Year Computer software license 3-5 years Impairment Financial Assets A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. The Company recognizes specific provision for factoring receivables in accordance with the Communiqué No on the Communiqué on Procedures and Principles for the Provisions to be set aside by Financial Leasing, Factoring and Financing Companies for their Receivables issued at 20 July 2007 by BRSA. An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. 13

18 NOTES TO THE FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) 2.2 Summary of significant accounting policies (Continued) (d) (e) Impairment (Continued) Financial Assets (continued) Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in the income statement. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost and availablefor-sale financial assets that are debt and equity securities, the reversal is recognised in the income statement to the extent that the impairment loss in respect of a financial asset was not recognized in the previous year. Non-financial assets The carrying amounts of the Company s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognised in the income statement. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. 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. Impairment losses recognised in prior years other assets are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Capital increases Share capital increases from existing shareholders are accounted for at par value as approved at the annual meeting of shareholders. 14

19 NOTES TO THE FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) 2.2 Summary of significant accounting policies (Continued) (f) Reserve for severance payments In accordance with the existing social legislation in Turkey, the Company is required to make lump-sum payments to employees whose employment is terminated due to retirement or for reasons other than resignation or misconduct. Those payments are calculated with basis of taking the upper limit of severance payment at the balance sheet date. In accordance with TAS 19, Employee Benefits, the Company calculated the severance pay liability incurred due to retirement of its employees by discounting the future liabilities to their present values, by using statistical method and reflected to the financial statements. The main estimates used are as follows: Discount Rate 1.91% 3.78% Expected Salary/Limit Increase Rate 5.00% 5.00% Expected severance payment benefit ratio 100% 100% (g) The principal assumption is that the maximum liability for each year of service will increase in line with inflation. Thus, the discount rate applied represents the expected real rate after adjusting for the anticipated effects of future inflation. Since the upper limit of reserve for severance payment has been adjusted two times in a year, the Company has used the upper limit amounting TL 3,034 as at 31 December 2012 (31 December 2011: TL 2,732) for the calculation of reserve for severance payments. Provisions, contingent assets and liabilities In accordance with TAS 37, Provisions, Contingent Liabilities and Contingent Assets, a provision is recognized when the Company has a legal or constructive obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. If the specified criteria are not met, the Company discloses the related issues in the accompanying notes. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability if the time value of the money is significant to the provision. Contingent assets are disclosed in the notes and not recognized unless it is realized. (h) Income and expense recognition (i) Factoring income Factoring revenue consists of factoring interest and commission income collected or accrued on advances given to the customers. Factoring interest and commission income is recognized on accrual basis. (ii) Other income and expenses Other income and expenses are recognized on an accrual basis. (iii) Finance expenses Other interest income and expense are recognized on an accrual basis using effective interest method. 15

20 NOTES TO THE FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) 2.2 Summary of significant accounting policies (Continued) (i) (j) Income tax Tax provision of the period includes the current (corporate tax) and deferred tax. Corporate Tax Current tax is the tax payable on the taxable income for the year, using tax rates enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred Tax Deferred tax is recognized using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or their tax assets and liabilities will be realized simultaneously. According to TAS 12, Income Taxes ; deferred tax assets and liabilities are recognized in the accompanying financial statements, using the balance sheet method, on all taxable temporary differences to the extent that they are expected to increasing or decrease on the income tax payable in the period when they will reverse. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the deferred tax asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Deferred tax is calculated using the tax rates that are expected to be valid at the time that the temporary differences will close. Valuation of assets on the statement of income as a result of these differences and deferred tax income or expense in the income statement on the relevant valuation of the asset is accounted for in equity as a result of the differences, the related deferred tax effect is also recognized in equity. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. Related parties In accordance with TAS 24, Related Party Disclosures shareholders, key management and board members, in each case together with companies controlled by or affiliated with them, and associated companies are considered and referred to as related parties. Related party transactions consist of the transfer of the assets and liabilities between related parties by a price or free of charge. For the purpose of the accompanying financial statements, shareholders of the Company the companies controlled by/associated with them, key management and the Board members of the Company are referred to as related parties. 16

21 NOTES TO THE FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) 2.2 Summary of significant accounting policies (Continued) (k) (l) (m) (n) Subsequent events Subsequent events mean the events occurred between the reporting date and the authorization date for the announcement of the financial statements. In accordance with TAS 10, Subsequent Events ; post-balance sheet events that provide additional information about the Company s position at the balance sheet dates (adjusting events) are reflected in the financial statements. Postbalance sheet events that are not adjusting events are disclosed in the notes when material. Statement of cash flows The Company prepares cash flow statements to inform the users of the financial statements about the changes in its net assets, its financial structure and its ability to affect the amount and timing of its cash flows with respect to changing external conditions. In the statement of cash flows, cash flows of the period are reported with a classification based on operating, investing and financing activities. Cash flows from operating activities represent cash flows from activities within the scope of business. Cash flows relating to investment activities represent cash flows used and generated from investment activities (fixed investments and financial investments). Cash flows relating to financing activities represent the sources of financing the Company used and the repayments of these sources. As at 31 December 2012 and 2011, the cash and cash equivalents are as follows: Cash 1 - Banks - Time deposits 75, Demand deposits 303 1,109 Interest accruals (102) - 76,000 1,109 Segment reporting There is no segment that management of the Company performs the assessment of financial perfomances and decide the resource allocation. Foreign currency transactions Income and expenses deriving from transactions in foreign currencies have been translated into TL at the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies have been translated into TL at the exchange rates prevailing at the balance sheet date. Exchange gains or losses arising from conversion of foreign currency items have been included in the income statement. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to TL at the exchange rate at the date that the fair value was determined. The foreign exchange rates used by the Company as at 31 December 2012 and 2011 are as follows: US Dollar ( USD ) Euro GBP