CAPITAL MARKETS BOARD PROSPECTUS FORMAT

Transcription

1 CAPITAL MARKETS BOARD PROSPECTUS FORMAT TO BE USED FOR THE PUBLIC OFFERING OF SHARES BEING TRADED AT DEVELOPING CORPORATIONS MARKET (DCM) OF ISTANBUL STOCK EXCHANGE (ISE) 2012

2 From Beyaz Filo Oto Kiralama Anonim Şirketi This is the prospectus regarding the public offering of group B shares with a nominal value of total TL to be issued due to the increase of issued/paid capital of our partnership from TL to TL The above-mentioned shares are registered on.../.../... under the registration number. by the Capital Markets Board (Board) pursuant to article 4 of Capital Markets Law (CML). However, such registration does not mean indemnification of our partnership and shares by the Board or public. Issuers are liable to ensure that information included in the prospectus and its enclosures fairly reflects the truth. However, intermediary firms that do not pay the required attention may be called upon for the part of the damage that cannot be compensated by the issuers. Independent auditing firms are legally liable for the damages that may arise due to the misinformation and misstatements in the reports that they write up in relation to the financial statements and reports that they audit. The institutions with their titles below and the persons authorized to represent such institutions are liable to ensure that information included in the prospectus and its annexes fairly reflects the truth. Beyaz Filo Oto Kiralama A.Ş. and Galata Menkul Değerler A.Ş. serving as an intermediary firm and market consultant in the public offering are responsible for the prospectus and its enclosures as a whole and Başaran Nas Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. responsible for the independent audit reports regarding the consolidated financial statements dated and that are enclosed hereto and that are sources of the information specified in the prospectus. Notice for Investors This prospectus includes prospective statements expressed with words including "it is considered", "it is planned", "it is targeted", "it is expected" and so on. Such explanations involve uncertainty and risk and indicate the predictions and expectations on the publication date of the prospectus. There are many factors that may cause the prospective statements of Beyaz Filo Oto Kiralama A.Ş to eventuate very differently from predicted. I. EXCHANGE MARKET S OPINION: A Market Consultancy Agreement was signed by and between Galata Menkul Değerler A.Ş. and the Company on , and at the conclusion section of the Market Consultant s Report prepared by Galata Menkul Değerler A.Ş., it says: The Company has applied to Capital Markets Board and ISE for the purpose of trading securities to be issued to provide funds from capital markets in order to go public by increasing its capital at Developing Corporations Market established within ISE.

3 As understood from the report and its annexes, the Company has set up a structure so as to provide legal and financial liabilities arising out of capital market regulation and other regulations, defined and determined business processes. As a result of our studies and evaluations as corporation before Beyaz Filo Oto Kiralama A.Ş. and in line with the document and information presented by the Company to us, we submit for your information that Beyaz Filo Oto Kiralama A.Ş. is a company with a potential to grow and develop, that it would be proper if they are accepted into the Developing Corporations Market List of Istanbul Stock Exchange and benefit from capital markets. The Market Consultant s Report (Annex/1) is available at and internet sites. II. OPINION OF THE EXCHANGE MARKET III. OPINIONS AND APPROVALS OF OTHER INSTITUTIONS None. IV. INFORMATION OF RISK NOTIFICATION FORM APPLICATION AT DCM Before Exchange market members perform intermediation to the primary and secondary market transactions of the securities to be traded at DCM, they are liable to inform the investors about criteria of acceptance to DCM list of the shareholder interests, market consultant application, differences between DCM and Equity market and risk of investing on securities to be traded at DCM and other risks which may be encountered. The members have to get the DCM Risk Notification Form (Annex) signed by customers before conducting intermediary for the first time for forwarding customers orders to DCM. The said form sample is available at and internet sites. CONTENTS ABBREVIATIONS AND DEFINITIONS

4 Vehicle A.Ş. Euro or EURO Beyaz Filo or the Company Beyaz Operasyonel Beyaz Sistem/ Beyaz Servis BOFA ML Cevizli Otomotiv ERP EBIT Flap Turizm/Flap Kongre Galata Galata Group ITL Halkbank Halk Yatırım ISE or EXCHANGE Đş Girişim PDP PPL TRNC SME LTD Maslak Motorlu Araçlar MKK PWC SGMK IAFA CMB or BOARD Company ŞTĐ. Takasbank T.R. TFRS TAS TL or TRL TTRG IFRS IAS USD MB MBR CPA FC Motor vehicles usable on highway in accordance with the Highway Traffic Code numbered 2918 Joint Stock Company European Union Currency Beyaz Filo Oto Kiralama A.Ş. Beyaz Operasyonel Oto Kiralama A.Ş. Beyaz Sistem Otomotiv ve Tic.A.Ş. Bank of America Merrill Lynch International Cevizli Otomotiv ve Ticaret A.Ş. Enterprise Resource Planning (Kurumsal Kaynak Planlaması) Earnings Before Interest and Tax Flap Kongre Toplantı Hizmetleri Otomotiv ve Turizm A.Ş. Galata Menkul Değerler A.Ş. Galata Menkul Değerler A.Ş. Beyaz Filo Oto Kiralama A.Ş. and Beyaz Operasyonel Oto Kiralama A.Ş. Income Tax Law Türkiye Halk Bankası A.Ş. Halk Yatırım Menkul Değerler A.Ş. Istanbul Stock Exchange Đş Girişim Sermayesi Yatırım Ortaklığı A.Ş. Public Disclosure Platform Public Procurement Law Turkish Republic of Northern Cyprus Small and Medium Size Enterprises Limited Maslak Motorlu Araçlar Turizm Sanayi ve Ticaret A.Ş. Merkezi Kayıt Kuruluşu A.Ş. PricewaterhouseCoopers Fixed Income Security Independent Accountant and Financial Advisor Capital Markets Board Beyaz Filo Oto Kiralama A.Ş. Company Takas ve Saklama Bankası A.Ş. Republic of Turkey Turkish Financial Reporting Standards Turkish Accounting Standards Turkish Liras Turkish Trade Registry Gazette International Financial Reporting Standards International Accounting Standards United States Dollar Management Board Management Board Resolution Certified Public Accountant Foreign Currency

5 1. ABSTRACT

6 This chapter is the abstract of the prospectus and investment decisions regarding capital market instruments should be taken after evaluating the prospectus as a whole. 1.1 About Partnership Beyaz Filo is engaged in long term vehicle leasing and management named as operating lease in the literature. As of , General Directorate of Beyaz Filo maintaining its activities with a vehicle fleet of is in Ankara. The company has Macunköy Branch acting to provide support services for its customers in Ankara and Istanbul Branch founded to carry out sale and marketing activities in Istanbul Four entrepreneur friends came together for operating in vehicle leasing and tourism and founded Rapid Turizm Sanayi ve Ticaret Ltd. Şti. located in Ankara on The fleet leasing and managing services started and the vehicle number reached up to The title of the company, Rapid Turizm Sanayi ve Ticaret Ltd. Şti. was changed as Flap Tur Rapid Turizm San. ve Tic. Ltd. Şti. on Following the change of its kind , its title, which was Flap Tur Rapid Turizm San. Ve Tic. Ltd. Şti. was also changed as Flap Turizm Anonim Şirketi The company was divided into two on As a result of this division, its capital of TL was shared between the companies and operating lease activities are carried on under the title of Flap Turizm A.Ş. with a capital of TL and congress activities are carried on under the title of Flap Kongre Toplantı Hizmetleri ve Turizm A.Ş. with a capital of TL Flap Turizm A.Ş., operating operational leasing activities, took over Beyaz Otomobil Kiralama Turizm ve Sigortacılık Hizmetleri San. ve Tic. A.Ş. which became a group company on and merged under the title of Flap Turizm A.Ş. The title of the company, which was Flap Turizm A.Ş., was changed as Beyaz Filo Oto Kiralama A.Ş., its current title, on o On , Đş Girişim became a partner with Beyaz Filo and purchased minority stock of Beyaz Filo in return for US$ Number of vehicles reached to o On , Beyaz Sistem A.Ş. was founded by four real persons, who are also the partners of Beyaz Filo. Beyaz Filo initiated to sell second hand vehicles which are got back from leasing.

7 2007 o A loan agreement of US$ with a term of 5 years was executed with BOFA ML. Number of vehicles with the loan taken reached to o Đş Girişim transferred its minority stock to Flap Kongre, which is an affiliated company in return for USD, and then left. Number of our vehicles reached to within the year o The Company opened its own maintenance and repair services in order to ensure vehicle maintenance. Structure of the organization was developed and the Company carried its all accounting and business processes into the electronic environment with ERP (Enterprise Resource Planning) software and formed a special software named pricing model regarding the vehicle leasing prices offer to be given to the customers and it was started to be used o Risk management system was restructured. Number of SME customer was decreased and large-scale customers in class A were prioritized. o Cash flow structure was strengthened. December 2011 The company has been carrying out its activities in the sector for 19 years as of 1993, thanks to its vehicle fleet consisting of as from December 2011 and 1325 leasing agreements with 659 customers as of As of the end of the period, vehicle numbers are as follows:

8 The Company downsized because of the liquidity crisis which the global economic crisis affected the real market for the last three years and the ban made by the Ministry of Transportation on the leasing of the commercial vehicles as of the beginning of While the vehicle number was at the end of the year 2008, when the global economic crisis started, the vehicle number decreased to 6.615, downsizing 32% at the end of the year On when this regulation took effect, number of vehicles in the fleet was and vehicles out of this amount was sold until In this case, the decrease of vehicles in the fleet between and happened not because of the competition but because of the sales of the commercial vehicles after the amendment in the legal regulations. The Company took the following actions in order to protect itself against the effects of the global economic crisis experienced in 2008: First of all, it provided a cash inflow of TL by increasing the cash capital in December 2008 and strengthened its financial structure as a measure for the crisis. It removed the customers having difficulty in payment from its portfolio and executed contracts agreements with companies which are larger, more corporate and financially more powerful and gave weight on such kind of customers in its portfolio. As marketing strategy, it focused on projects which may provide more profitable and create more powerful cash inflow rather than the number of vehicles. Pursuant to the reaction of financial markets to the crisis, it suspended its growth strategies for a temporary period and had decreased its fleet in the rate of 15% in 2009 when compared to the previous years. Information about the vehicles bought and sold in the last two years:

9 Services of Vehicle Maintenance, Repair and Damage: Beyaz Filo provides its customer with all kinds of services with 282 services in total in the 81 provinces of Turkey; 263 of which are contracted authorized services and 19 of which are private services. So that Ankara/Macunköy service which was within Beyaz Filo beforehand could give more efficient and qualified services to the customers, it was transferred to Beyaz Sistem, which became an affiliated company in April Hence, it was aimed to gather the activities of second hand vehicle sales and services in one body and to improve productivity. The Important Milestones Partnership with Đş Girişim; Beyaz Filo increased its capital from TL to TL in the year 2006; sold increased shares to Đş Girişim in return for 4 Million USD and thus Đş Girişim became partners with Beyaz Filo. The following are the most important 3 events for Beyaz Filo in 2007, after the partnership with Đş Girişim initiated in i. Increase of the number of vehicles in the fleet and accordingly increase in the number of contracts (customers), Increase Number of Vehicles %42 Number of Customers %36 ii. iii. Foundation of Beyaz Operasyonel for the purpose of participating in the tenders initiated in scope of Public Procurement Law (PPL), Execution of a loan agreement with BOFA ML in the amount of 80 million USD.

10 Beyaz Filo adopted a motion for maintaining its growth by finding a new strategic partner in 2008 and therefore requested the termination of its partnership with Đş Girişim. Flap Kongre bought the shares of Beyaz Filo owned by Đş Girişim in return for million USD and partnership with Đş Girişim is ended. Board of Directors Partnership Board of Director is formed of four members. According to the Articles of Incorporation, two of the Board members are elected among the candidates appointed by Group A shares. Name Surname Title Starting Date of Office/Term of Office Gürkan Gençler Chairman of the Board /3 years Ahmet Can Teoman Vice Chairman of the Board /3 years Osman Turgut Fırat Member of the Board /3 years Metin Ziya Tansu Member of the Board /3 years Members of the Board of Auditors According to the provisions of Articles of Incorporation, number of auditors is 1 (one) and elected for two years among members of Group A shares. Name Surname Title Starting Date of Office/Term of Office Sakıp Şeker CPA/Auditor /2 yıl 1.2 Risk Factors i) Risks Regarding Partnership The Status of the Company in accordance with the Article 324 of T.C.C. In accordance with the sub-paragraph 2 of the article 324 of T.C.C., in case there are indications showing that the company is in insolvency in the consolidated balance sheet conforming to the regulations of accounting standards, it is stated that there is no need to issue unconsolidated balance sheet in accordance with the Notification numbered 25 with serial XI of the main partnership of the management board/ifrs and to convene the general assembly if the two out of three of the principal capital is unreturned as per the interim balance sheet, otherwise the company will be considered to be annulled however, while the consolidated balance sheet shows the capital loss in the rate of two out of three, if there is no capital loss or going into debt in the unconsolidated balance sheet in accordance with the Notification numbered 25 with serial XI of the main partnership of the management board/ifrs, to take measures estimated in the article 324 of the law. In accordance with the balance sheets issued in accordance with the regulations of CMB, since the Company is in accordance with the article 324 of T.C.C, by means of evaluation of the vehicles in the stocks over their current values with the vehicles used in the operational leasing in interim period consolidated balance sheet dated 31 st December 2011, interim balance sheet was issued as of the same dates. It was determined that 37% of the Company capital was lost in the interim balance sheet dated , issued with the current values.

11 the Company. Inability to Distribute the Profit Due to Accumulated Losses In case the company earns profit, accumulated losses should be appropriated from the profit at the outset in calculating the profit to be distributed in accordance with the provisions of TCC and CMB. As accumulated losses caused by foreign currency losses formed as a result of the increase in exchange rates arising particularly due to valuation of loans in foreign currency are to be appropriated at the outset in case of earning profit in the following years, there is a risk of inability to distribute the profit. The Company has the accumulated loss in the amount of TL in the consolidated financial statements dated , issued in accordance with IFRS. Hence, until the company obtains the profit enough for meeting its accumulated losses or appropriating the accumulated losses within years, it shall not be make any distribution of profit. Risks Regarding BOFA ML Loan The Company has some ratio liabilities to be followed and achieved in relation to the loan received from BOFA ML. Relative explanations are as follows: 1. Adjusted EBIT Ratio (>=0,20): (Service Cost excluding vehicle lease incomes depreciation)/vehicle lease incomes. It is calculated through the financial statement for the results from the last 2 quarters and incomes and costs regarding the second hand vehicles are out of the scope of calculation. 2. Non Performing Leases (<0,0350): First Purchase Price of vehicles subject to Non Performing Leases/ Total First Purchase Price of Fleet. This ratio is prepared only for the vehicles that are in scope of ML Loan agreement. The vehicles which are in scope of the said agreement but are "assistant vehicles" are out of the scope of calculation. In determining First Purchase prices, EUR values are calculated with TL rates valid on the date of purchase. 3. Fleet Depreciation (<0,15): Total Annual Depreciation Rates of the Sold Vehicles (%) - (2 nd Hand Sale Price / Purchase Price)/Total Number of Sold Vehicles Number of Days that X vehicle is in asset/365). This ratio is prepared only for the vehicles that are in scope of ML Loan agreement. In determining First Purchase Prices and 2 nd Hand Sale Prices, EURO values are calculated with TL rates valid on the date of purchase and sale. VAT is excluded. 4. Secondhand Sales Revenue (>=0,90): Secondhand sales revenue / 2nd Hand Vehicle Cost of the Good Sold (including Beyaz System commission cost). It is calculated through the financial statement for the results from the last 3 quarters. 5. Loan Coverage Ratio (>120%): (Net book value of the fleet calculated according to IFRS/CMB Standards-capital debt remaining from Vehicle Indebtedness in Beyaz Filo on the date of execution of ML Loan agreement + money in the pledged assignment)/ ML Loan Balance excluding the business loan. This ratio is prepared only for the vehicles that are in scope of BOFA ML Loan agreement.

12 First 4 ratios are secondary ratios for ML and Beyaz Filo. That each ratio value exceeds or is less than limit value requires Beyaz Filo to send Beyaz Filo a written statement to be approved by Beyaz Filo. The last ratio is the primary ratio: In case ratio values are less than the limit value, Beyaz Filo is deemed to go into default and BOFA ML has the right to withdraw the loan at its own discretion, A written statement was prepared once in the past for the secondary ratios and this statement was approved by BOFA ML. With regard to the last ratio, limit values could not be reached 3 times (end of 2008, 3rd quarter of 2009 and end of 2009); however BOFA ML did not use its rights under the loan agreement due to the effect of the crisis and parties agreed in negotiations for memorandum of understanding held for 13 times. On the other hand, in the current situation, while the exchange difference incomes of the realized part of the receivables from the leasing agreements, subject of the hedge transaction done by the Company in the financial statements by writing sales income as the invoice is issued, is rejected by means of reducing it from the hedge assets in the balance sheet and the exchange difference income written in return for it, it shall be done by means of reducing it from the sales incomes instead of the related amendment exchange difference income as of 2012 with the accounting amendment requested by CMB. The effect of the related amendment transaction on the financial statements shall be the decrease of the gross and activity profit of the Company, the increase of the exchange difference incomes in the same rate, without any effect on the pre-tax profit, net profit for the year and balance sheet items. However, as a result of these changes, there will be a need to renegotiate the operation profitability rate given within the frame of BOFA ML agreement and it is not clear whether the agreement will be made or not. The initial structure of the loan was considerably amended due to the crisis for the loan agreement between the parties. The payments of capital and interest regarding the BOFA ML loan have been made thoroughly since August 2011 by the Company. In return for this, in accordance with the agreement provisions, depending on not asserting the ratios detailed above and not making the payments in time or making the payments deficiently, there is a risk for BOFA ML to withdraw the loan. Balance of the said loan is TL as of and activities of the Company may be considerably influenced if this loan is withdrawn. After all, there are negotiations of reconstructing with BOFA ML regarding the refunding maturities and loan terms. The commission in the amount of approximately 375 thousand USD except for the payments of capital and interest for the negotiations of reconstructing shall be paid. Besides, the Company shall incur some additional costs because of this loan regarding the public offering transactions. The management loan in the amount of USD and vehicle loan in the amount of USD received from ML started to be used in 2007 for the first time and as parts. 4 parts in 2007 and 11 parts in 2008 were used. The total amount of loans is as follows as per the currency: USD : usd EUR : eur TL : TL

13 As of , the management loan in the amount of USD was thoroughly paid and the debt balance regarding the loan of BOFA ML is as follows: USD : usd EUR : eur TL : TL Financing the Bofa ML Facility Security Deficit Approximately 73 Million USD loan has been used from the Facility which was signed at November 1, Closure date for the Facility, according to current repayment plan is September As of 27 February, 2012 an approximate total of USD has been paid to the facility where USD is principal, USD is the,interest. As of 27 February, 2012 the unpaid balances are USD principal and USD interest respectively. Securities related to this unpaid balance is explained below : Securtiy 1 : Pledge on the fleet. As of 27 February, 2012 a total of 801 vehicles are pledged to Bofa ML. 280 vehicles out of this fleet has been returned to car park after their contracts has been expired. Such vehicles are waiting for their pledge to be removed by Bofa ML in order to be sold for cash. Average expected sales proceeds for such vehicles are USD per vehicle, and is worth of USD (all of these vehicles are C segment vehicles with a mojorty model year of 2008). Securtiy 2 : Pledge on the rent income of the fleet. Up until September 2012 to the close of faciltiy, pledged rental revanue is approximately USd Security 3 : Share Pledge. As a colleteral to the Facility 74% of the share capital was pledged, however no value has been attributed to this security. After the deduction of securites explained above, the unsecured portion of the Facility is approximately amounting to USD. Following are the financing paln for this unsecured debt : Or 1) Approximately USD payment from net IPO Proceeds 2) Other financing loans from domestic commercila banks in the amount of Other funds which will be received from group companies Ml Facility has been used in three currencies ; EUR, USD and TRL

14 The Loan which Flap Kongre receives from Finansbank and the Pledge put for Finansbank over the Shares of Flap Kongre on the Company During the purchasing of the Company shares from Đş Girişim by Flap Kongre, in return for the loan used by Flap Kongre from Finansbank, shares of the Company in the rate of 15,69% was rejected in favor of Finansbank A.Ş., the pledge on shares was removed on As of , the Finansbank pledge on shares is continued. This pledge consists of depending the subjects of the transfer of shares, use of priority rights, distributing of dividends, profit share and coupon on the permit of Finansbank A.Ş. Within this scope, there is the pledge right on shares of the Company shares belonging to Flap Kongre. Limitations Within BOFA ML and Finansbank Loans The company shareholders pledged the shares of the Company in the rate of 84,31% in return for the loan used from BOFA ML in favor of BOFA ML. Hence, there is BOFA ML pledge on all the shares of the 4 real person partners and shares of 1 legal person partner. The transfer of the shares was limited because of the pledges on the shares and the share transfers are subject to the permit of the institutions pledged. There is not any limitation regarding the transfer on the shares to be offered to public. The waiver notices of the BOFA ML and Finansbank A.Ş. have been taken regarding the subject. The profit distribution, capital increase by rights issues or by bonus issues or mutual share sales are subject to the permits of BOFA ML and Finansbank A.Ş. in the rates of pledged shares within the loan agreements of BOFA ML and Finansbank A.Ş. The minimum profit distribution needed to be distributed in accordance with the provisions of CMB was permitted by BOFA ML, with the remaining profit, it shall not be able to be closed in accordance with the provisions of BOFA ML loan agreement until the loan is closed. CMB has not made it obligatory to make profit distribution for the companies operating in the Exchange Market recently. In the waiver notice of Finansbank, all the limitations regarding the use of the rights over the shares to be offered to public and there is no limitation regarding the dividend distribution. Currency Risk Assets and liabilities in the type of foreign currency cause currency risk. Hence, the Company has written net exchange difference expense in the amount of TL because of the liabilities in the type of foreign currency and the Company made transaction of hedge accounting for the agreements with foreign currency to defend from the currency risk and the currency income in the amount of TL was written because of the hedge accounting. In case of the increase in currencies the Company writing currency income because of the hedge transaction shall write currency difference expense because of the hedge accounting transaction in case of decrease in currencies. The Company leases the vehicles to its customers, which it buys by using foreign currency loans and the hedge accounting transaction (fixed guaranty-hedging) is done because of the foreign currency agreements. As a result of the transaction of hedge

15 accounting, with the effect of increase in the currencies, it wrote the assets in the amount of TL in 2010 and in the amount of TL in 2011 and currency incomes in return for them. In case of the decrease in the foreign currency, the transactions shall be made to reduce the assets and the currency losses shall be increased in return for it. Liquidity Risk The most important purpose of the Group in asset and liability management is to provide liquidity necessary for the Group to fulfill its commitments to the loaners and meet the liquidity needs of the Group. On the basis of the remaining period till the due date of the contract, the company performs the analysis of the Group's net financial liabilities by an appropriate term grouping. That is, it brings term of the loans that it uses in conformity with the term of receivables and minimizes the liquidity risk. The Company plans to pay its financial debts with lease incomes; therefore, in case any adverse event is experienced in the collection term of receivables or receivables cannot be collected, the Company may go into default in paying its financial debts. Loan Risk Loan risk consists of the deposits kept in banks and customers subject to loan risk including uncollected receivables and subscribed transactions. Loan risk is managed on the basis of Group for the deposits kept in banks. Loan risk and keeping financial assets evokes the risk that opposite party does not meet the requirements of the agreement. The area where the group is subject to loan risk is intense in Turkey in which it performs most of its activities. These risks are observed by the management by limiting the total risk for each party and distributing loan risk with a high number of customers. Commercial receivables are assessed by the Group management considering past experiences and current economic condition and indicated in net amount in the balance sheet after allocating the allowance for bad debts in the appropriate amount. In case customers have difficulties in payment and lease claims cannot be collected, the Company may be subject to loan risk. Amount of the receivables for which the company took legal action due to the problematic receivables is TL TL as of Risk of Cash Flow and Fair Value Interest Rate The Group is subject to the risk of interest upon the fluctuations in market values of balance sheet items (price risk) or by the effect of instant rate changes of assets and liabilities which are interest-sensitive. The Group s interest-sensitive liabilities mainly consist of long term loans. The Group matches the terms of loans regarding the vehicle lease contracts and executes fixed-

16 interest loan contracts pursuant to its asset-liability management. Therefore, the Group s debt costs relatively react late to the interest changes occurring in short term. Revenue Loss Risk In case of the liquidation of the Company for any reason, there will be a risk to sell the vehicles of the Company with a lower value than the current value because of the mass sales, so there will be some problems in meeting the loans from the banks, hence the loss of the Company shall increase because of the vehicle sales. The Company buys the vehicles which it uses in leasing mostly with loans and the vehicles are pledged as a guarantee to the bank of loan. 69% of the loans of the Company is in foreign currency and in case of the default in payment of the loans because of the high debt of loan, since the pledged vehicles will be seized, there is the risk that there will not be revenue to be gained from the second hand vehicle sales. In case unilateral cancellation of the Agreements by the Company, it shall be obligatory to pay the penalties written in the tender specifications of the tender authority in the works received with tender at first. The damage shall be requested by litigation in the works without tenders. Hence, the loss of the Company shall increase in case of the unilateral cancellation of the agreements. ii) Sector Risks The information regarding the operational leasing sector where the Company operates in is not published by any authority of institution and not disclosed in mutual or separately to the public. Hence, the information regarding the place of the Company in the sector has no final results. Legislation Risk Sector of long term vehicle leasing may be influenced by regulations of law and tax legislation Although changes in VAT and SCT made in the previous period in relation to the vehicle sale negatively influenced the companies profitability, it also brought a positive conclusion in terms of the competition of companies that are only engaged in this activity with other actors in the Market. Changes made in the rates of VAT-SCT in relation to vehicle purchases (on increase) have decreased the general demand for the leasing sector and influenced lease incomes and incomes from the sale of 2 nd hand vehicles in a negative way. In case this kind of changes are made in the future, the sector and thus the company's performance will be influenced. Therefore, the Company's performance is considerably susceptible to the changes in legislation.

17 As of the date , it has been obligated that VAT rate is applied as 18% in the 2nd hand sale of vehicles in scope of passenger cars purchased so as to include the companies performing lease and operating lease. In the sale of passenger cars registered for at least two years in the company s assets on , VAT rate is applied as 1%. In the leases carried out after this date, the respective additional costs have been covered from the company's lease incomes. As a result, rent level has gradually increased. Pursuant to the legal regulation, which took effect previously but adjourned until , containing amendments made by the Ministry of Transportation in the Regulation of Highway Transport and published in the official gazettes numbered with dated and numbered 25 February , 8 September , 15 December and b removed the opportunity of operating lease companies to lease commercial vehicles directly to their customers. On when this regulation took effect, number of vehicles in the fleet was and vehicles out of this amount was sold until In case the ban is lifted on the following dates, there is a probability of growth in the same rate. Vehicle Value Loss Risk The prices of the second hand vehicles decrease as in all the goods in economic crisis. Hence it will result in the decrease in the revenue from the second hand vehicle sales of the Company. Operational Risks: Cases of Accidents and Damages: Policy premiums with considerably high multiplier coefficients may be offered to the sector by insurance companies due to the intense accident and damage cases as an abuse of rental rationale by users of lessee companies and therefore the sector is obliged to pay high premiums. In addition, value of the vehicles decreases in the 2 nd hand market as the lessees misuse the vehicles. Scraping: The Company has to purchase vehicle insurance policies that are appropriate for minimizing the risks against the possibility that the vehicle scraps due to an accident. In case the users are guilty due to reasons like drunk driving, price of the vehicle cannot be received from the insurance. In this case, the Company collects the receivable from the respective user. Theft: In case the vehicle or equipment in the vehicle is stolen, a return in the amount of loss is collected from the insurance company upon the submittal of the required documents by the user. Provision of the documents proving that the user is not faulty in the incident of theft of the relevant vehicle or equipment is effective in the determination of the amount to be collected. In case the documents proving that the user is not faulty are not submitted, the losses cannot be compensated. Complicity and Administrative Fine: Determination of that the vehicle is under the responsibility of the user when leased vehicles are used in crime activities or subject to administrative fines, that is the proper issue of the delivery reports is important for

18 proving that the company is not responsible. In case the delivery reports are deficient, the Company may be deemed as responsible. iii) Risks Regarding the Shares Issued In the capital structure of the Company has been separated into two groups as A and B. The shares of Group A are the preferential shares and have preference to indicate two candidates in the election of the board members of the Company. Besides, all of the members of the Board of Auditors shall be elected from the candidates whom the shareholders of Group A shall indicate. The Risks Regarding the Profit Share Income of the Shares Issued Share certificate investors obtain two kinds of incomes. The first one is profit share incomes and the second one is capital gain. These profit shares, known as dividend income also, are the incomes obtained from the distribution of the profits to be obtained according to the performances of the companies at the end of the year. The profit share incomes may be obtained by distribution of the profits of the companies in cash or addition of the dividend to the capital. In accordance with the resolutions of the Capital Market Board, the joint stock companies offered to public operating in the exchange market do not have to distribute profits. The share certificate investors should make decisions of investment, being aware of the profit distribution risks. The Board of the Company may decide not to distribute the profit obtained at the end of the year. Since the Company has made loss in the last years, in case it declares profit in the next years, at first it will be needed for the accumulated losses to be appropriated and even if the profit is declared, there is a risk of not distributing profits. As of , the Company has accumulated losses in the amount of TL so as to appropriate from the profits to be born in the next years. There will not be any profit distribution without any approval of Merill Lynch in accordance with the loan agreement of the Company made with Merill Lynch. Risks Regarding Capital Gain of the Shares Issued Shares of the company are not traded in ISE or a similar market actively before the public offering. Public offering price of the shares to be sold shall be determined by the Company and this price may be different from the price arising in ISE after the offering. In addition, after the shares are issued, their prices shall be determined in the market depending on the developments in the economy and/or in the financial structure of the Company. In case the financial performance of the Company is under the expectation or the conditions in the Capital Market get worse, price of the Company s shares may decrease. Investors should take their investment decisions considering the market risk. Furthermore, shareholders also share the profit and loss of the Company. Shareholder participates in the balance at liquidation in the rate of their shares in case any balance remains after the liquidation of the Company. In case of liquidation of the partnership, necessary payments shall be made to all other loaners and then payments can be made to the shareholders. Market price of the Company s shares may be instable after the public offering. In case they do not use their Right to Purchase New Share in the future capital increases, their shares may decrease in value in proportion to the whole capital. Shares of the Shareholders

19 who will not participate in the public offering will considerably lose value in proportion to the whole capital. Cease of purchase and sale of the company s shares will have a negative effect on the share price. An active and sustainable trade market may not arise for the shares or, if available, such market may not be maintained. Share sale of the Company's main partners may cause a decrease in the Company's share price or a change in the management of the company. In case the Company becomes insolvent, shares held by the Company s shareholders may totally decrease in value. 1.3 Summary Information Regarding the Issue The issued capital of Beyaz Filo is currently TL and will be increased to TL after public offering. The public offering will be made with the method of Collection of Demands with Fixed Price and Sales in the Primary Market of Istanbul Stock Exchange Market. Issuing Company Beyaz Filo Oto Kiralama A.Ş. Intermediary Firm Galata Menkul Değerler A.Ş. Capital Before the Public Offering TL Amount to be Offered to the Public TL a) Due to Capital Increase TL b) Due to the Sale of Current Shares None-Available Capital After the Public Offering TL Public Offering Price 4.50 TL Free Float Rate 9,73 % Duration of the Right to Get New Shares None-Available Duration of Public Offering 3 Working Days Selling Method Collection of Demands and Sale with Fixed Price on ISE Primary Market Group of Stocks to Be Offered to the Public Group B In the name/bearer To bearer Duration of public offering is planned to be 3 working days. Start and end dates of this duration shall be stated in the circular to be announced at Information regarding the shares to be issued on behalf of the capital increased for cash Share Number of Group Shares Registered/Bearer Preference Nominal Value of a Share (TL) B Bearer Not Available Total Amount of Nominal Values (TL) Total The partnership and capital structure before and after public offering will be as follows: Partners Before Public Offering (TL) (%) After Public Offering (TL) Gürkan Gençler , ,51 (%)

20 Ahmet Can Teoman , ,50 Osman Turgut Fırat , ,51 Metin Ziya Tansu , ,50 Flap Kongre Turizm A.Ş , ,25 The Part Offered to Public ,73 TOTAL , , Exclusive Financial Information: Summary Information Regarding the Financial Statements, Consolidated Balance Sheet (TL) Subject to Independent Auditing Subject to Independent Auditing ASSETS Current Assets Fixed Assets Total Assets LIABILITIES Short-term liabilities Long-term liabilities Total Liabilities EQUITIES Paid Capital Accumulated Losses Net profit/loss of the period Total Equities TOTAL LIABILITIES AND EQUITIES

21 Consolidated Income Statement INCOME STATEMENT Subject to Independent Auditing Subject to Independent Auditing 31 December December 2010 Sales Incomes (net) 71,593,250 60,004,220 Gross Profit/Loss 37,075,947 24,948,759 Operation Profits / Losses 31,535,631 17,828,763 Profit(Loss) Before Tax - 4,210, ,637 Net Period Profit(Loss) - 3,709,314 53, Reason of issue and places of use of the net cash inflow to be obtained from the public offering Company s expectations regarding the public offering may be summarized as follows: Strengthening capital structure Increase in credibility Increasing credibility Providing a healthy growth Increase in competitive power Strengthening and extending its recognition and popularity Strengthening the transparent and accountable structure Beyaz Filo aims to grow by increasing its equities with the sources to be obtained from the public offering via capital increase. The Company shall use 70% of the net cash inflow to be obtained from the public offering via capital increase in paying loans of BOFA ML and use the remaining amount in meeting the need of operation capital. With this method, the remaining amount of ,80 TL out of TL of BOFA ML loan as of will have been paid. USE OF CASH ENTRY TO BE USED FROM PUBLIC OFFERING Gross Cash Entry Expected from Public Offering 15,876,000 Public Offering Cost 596,895 Net cash entry from public offering 13, 279,105 Places where Net Cash Entry will be used BOFA ML Loan Payment 12,212,640 TL MTV Payment 1,066,465

22 A payment of approximately TL shall be made in July and August included in loan installment payments to BOFA ML for the negotiations conducted with BOFA ML and the permission received within the scope of public offering. 1.6 Information on financial status and activity results Twenty two percent of the company capitals are formed of liquid assets, 78% is formed of fixed assets. The Company assets have not changed much in proportion to the last year and were realized as TL The Company liabilities are formed of 62% short term liabilities, 36% long term liabilities, 2% equities. Short term liabilities decreased by 3%, long term liabilities increased by 2% and equities decreaed by 44% in proportion to the last year. The reason of decrease in equities is the exchange rate loss due to the loan assessments subject to the increase in exchange rates. 1.7 The Views of the Independent Auditor The independent auditing of the Company s financial statements are conducted by Başaran Nas Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. Murat Sancar acted as the responsible partner chief auditor for this auditing. The previous responsible partner chief partner Zafer Alper Önder has left the independent auditing company. The view of the auditor in the independent auditing report is as below: In our opinion, the attached consolidated financial statements reflect the financial status of Beyaz filo Oto Kiralama A.Ş. and its affiliate as of December 31 st, 2011, its financial performance of the period ending on the same date and consolidated cash flows truly and fairly in line with the financial reporting standards published by Capital Markets Board. 2. RISK FACTORS 2.1. Risks Regarding the Partnership and the Respective Sector: Risks Regarding the Partnership a) The Status of the Company in accordance with the Article 324 of T.C.C. In accordance with the sub-paragraph 2 of the article 324 of T.C.C., in case there are indications showing that the company is in insolvency in the consolidated balance sheet conforming to the regulations of accounting standards, it is stated that there is no need to issue unconsolidated balance sheet in accordance with the Notification numbered 25 with serial XI of the main partnership of the management board/ifrs and to convene the general assembly if the two out of three of the principal capital is unreturned as per the interim balance sheet, otherwise the company will be considered to be annulled however, while the consolidated balance sheet shows the capital loss in the rate of two out of three, if there is no capital loss or going into debt in the unconsolidated balance sheet in accordance with the Notification numbered 25 with serial XI of the main partnership of the management board/ifrs, to take measures estimated in the article 324 of the law.

23 The evaluations whether the Company is in accordance with the article 324 of T.C.C. are as follows: The equity sized regarding the financial statements (CMB balance sheet) of the years 2010 and 2011, prepared in accordance with the capital market law of the Company and subject to independent audit is given in the tables below: Equity Sizes of the Company (CMB Financial Statements Subject to Independent Audit) EQUITIES (TL) Paid Capital Accumulated Losses ( ) ( ) Net Profit/(loss) of the year ( ) In terms of the balance sheets issued in accordance with the CMB legislation in the tables above, as of 31 st December ,4% of the paid capital and as of 31 st December % of the paid capital has been unreturned. Almost all of the assets of the Company are the assets used in operational lease and vehicles under the stocks items and the said assets are monitored with cost fee in the CBM balance sheet mostly. Since the Company is in accordance with the Article 324 of T.C.C. according to the balance sheets issued in accordance with the CMB regulations, the Company issued interim balance sheet as of the same dates so as to evaluate the vehicles used in operational lease in the interim period consolidated balance sheet dated 31 st December 2011 and the vehicles in the stocks over the current prices. The Company has based on the vehicle insurance value list announced by the Association of the Insurance and Reinsurance Companies of Turkey as a current price of the vehicles in interim balance sheet and evaluated the vehicle insurance prices of the vehicles. The specific CPA reports regarding the value difference determination in the said interim balance sheet are attached (Enclosure-5). Hence, the value dated of the fleet monitored by the Company over the cost price is TL, It is determined that - The value calculated with the vehicle values is TL, - The value of tax exempt from the (current/sale) vehicle insurance value with 18% VAT included is TL Considering the fact that the Company gives fleet leasing services and hence the insurance values of the vehicles are higher than the normal vehicles, in the interim balance sheet dated prepared as a result of the evaluation as discounted in the

24 amount of 10% from the insurance values, the Company lost 37% of the capital and the CPA report regarding the said determination is enclosed (Enclosure 6) Values of the Vehicles of the Company (Thousand TL) (CMB Legislation) Insurance Values Interim Balance Sheet Dated (10% discounted amount of the insurance value) Stocks Operationally leased Paid Capital Total Equities b) Inability to Distribute the Profit Due to Accumulated Losses of Previous Years In case the company earns profit, accumulated losses should be appropriated from the profit at the outset in calculating the profit to be distributed in accordance with the provisions of TCC and CMB. As accumulated losses caused by foreign currency losses formed as a result of the increase in exchange rates arising particularly due to valuation of loans in foreign currency are to be appropriated at the outset in case of earning profit in the following years, there is a risk of inability to distribute the profit. The Company has the accumulated loss in the amount of TL in the consolidated financial statements dated , issued in accordance with IFRS. Hence, until the company obtains the profit enough for meeting its accumulated losses or appropriating the accumulated losses within years, it shall not be make any distribution of profit. c) Risks Regarding BOFA ML Loan The Company has some ratio liabilities to be followed and achieved in relation to the loan received from BOFA ML. Relative explanations are as follows: 1. Adjusted EBIT Ratio (>=0,20): (Service Cost excluding vehicle lease incomes depreciation)/vehicle lease incomes. It is calculated through the financial statement for the results from the last 2 quarters and incomes and costs regarding the second hand vehicles are out of the scope of calculation. 2. Non Performing Leases (<0,0350): First Purchase Price of vehicles subject to Non Performing Leases/ Total First Purchase Price of Fleet. This ratio is prepared only for the vehicles that are in scope of ML Loan agreement. The vehicles which are in scope of the said agreement but are "assistant vehicles" are out of the scope of calculation. In determining First Purchase prices, EUR values are calculated with TL rates valid on the date of purchase. 3. Fleet Depreciation (<0,15): Total Annual Depreciation Rates of the Sold Vehicles (%) - (2 nd Hand Sale Price / Purchase Price)/Total Number of Sold Vehicles Number of Days that X vehicle is in asset/365). This ratio is prepared only for the

25 4. vehicles that are in scope of ML Loan agreement. In determining First Purchase Prices and 2 nd Hand Sale Prices, EURO values are calculated with TL rates valid on the date of purchase and sale. VAT is excluded. 5. Secondhand Sales Revenue (>=0,90): Secondhand sales revenue / 2nd Hand Vehicle Cost of the Good Sold (including Beyaz System commission cost). It is calculated through the financial statement for the results from the last 3 quarters. 6. Loan Coverage Ratio (>120%): (Net book value of the fleet calculated according to IFRS/CMB Standards-capital debt remaining from Vehicle Indebtedness in Beyaz Filo on the date of execution of ML Loan agreement + money in the pledged assignment)/ ML Loan Balance excluding the business loan. This ratio is prepared only for the vehicles that are in scope of BOFA ML Loan agreement. First 4 ratios are secondary ratios for ML and Beyaz Filo. That each ratio value exceeds or is less than limit value requires Beyaz Filo to send Beyaz Filo a written statement to be approved by Beyaz Filo. The last ratio is the primary ratio: In case ratio values are less than the limit value, Beyaz Filo is deemed to go into default and BOFA ML has the right to withdraw the loan at its own discretion, A written statement was prepared once in the past for the secondary ratios and this statement was approved by BOFA ML. With regard to the last ratio, limit values could not be reached 3 times (end of 2008, 3rd quarter of 2009 and end of 2009); however BOFA ML did not use its rights under the loan agreement due to the effect of the crisis and parties agreed in negotiations for memorandum of understanding held for 13 times. On the other hand, in the current situation, while the exchange difference incomes of the realized part of the receivables from the leasing agreements, subject of the hedge transaction done by the Company in the financial statements by writing sales income as the invoice is issued, is rejected by means of reducing it from the hedge assets in the balance sheet and the exchange difference income written in return for it, it shall be done by means of reducing it from the sales incomes instead of the related amendment exchange difference income as of 2012 with the accounting amendment requested by CMB. The effect of the related amendment transaction on the financial statements shall be the decrease of the gross and activity profit of the Company, the increase of the exchange difference incomes in the same rate, without any effect on the pre-tax profit, net profit for the year and balance sheet items. However, as a result of these changes, there will be a need to renegotiate the operation profitability rate given within the frame of BOFA ML agreement and it is not clear whether the agreement will be made or not. The initial structure of the loan was considerably amended due to the crisis for the loan agreement between the parties. The payments of capital and interest regarding the BOFA ML loan have been made thoroughly since August 2011 by the Company. In return for this, in accordance with the agreement provisions, depending on not asserting the ratios detailed above and not making the payments in time or making the payments deficiently, there is a risk for BOFA ML to withdraw the loan. Balance of the said loan is TL as of and activities of the Company may be considerably influenced if this loan is withdrawn. After all, there are negotiations of reconstructing with BOFA ML regarding the

26 refunding maturities and loan terms. The commission in the amount of approximately 375 thousand USD except for the payments of capital and interest for the negotiations of reconstructing shall be paid. Besides, the Company shall incur some additional costs because of this loan regarding the public offering transactions. The management loan in the amount of USD and vehicle loan in the amount of USD received from ML started to be used in 2007 for the first time and as parts. 4 parts in 2007 and 11 parts in 2008 were used. The total amount of loans is as follows as per the currency: USD : usd EUR : eur TL : TL As of , the management loan in the amount of USD was thoroughly paid and the debt balance regarding the loan of BOFA ML is as follows: USD : usd EUR : eur TL : TL Financing the Bofa ML Facility Security Deficit Approximately 73 Million USD loan has been used from the Facility which was signed at November 1, Closure date for the Facility, according to current repayment plan is September As of 27 February, 2012 an approximate total of USD has been paid to the facility where USD is principal, USD is the,interest. As of 27 February, 2012 the unpaid balances are USD principal and USD interest respectively. Securities related to this unpaid balance is explained below : Securtiy 1 : Pledge on the fleet. As of 27 February, 2012 a total of 801 vehicles are pledged to Bofa ML. 280 vehicles out of this fleet has been returned to car park after their contracts has been expired. Such vehicles are waiting for their pledge to be removed by Bofa ML in order to be sold for cash. Average expected sales proceeds for such vehicles are USD per vehicle, and is worth of USD (all of these vehicles are C segment vehicles with a mojorty model year of 2008). Securtiy 2 : Pledge on the rent income of the fleet. Up until September 2012 to the close of faciltiy, pledged rental revanue is approximately USd Security 3 : Share Pledge. As a colleteral to the Facility 74% of the share capital was pledged, however no value has been attributed to this security. After the deduction of securites explained above, the unsecured portion of the Facility is approximately amounting to USD. Following are the financing paln for this unsecured debt : Or 1) Approximately USD payment from net IPO Proceeds 2) Other financing loans from domestic commercila banks in the amount of

27 Other funds which will be received from group companies d) The Loan which Flap Kongre receives from Finansbank and the Pledge put for Finansbank over the Shares of Flap Kongre on the Company During the purchasing of the Company shares from Đş Girişim by Flap Kongre, in return for the loan used by Flap Kongre from Finansbank, shares of the Company in the rate of 15,69% was rejected in favor of Finansbank A.Ş., the pledge on shares was removed on As of , the Finansbank pledge on shares is continued. This pledge consists of depending the subjects of the transfer of shares, use of priority rights, distributing of dividends, profit share and coupon on the permit of Finansbank A.Ş. Within this scope, there is the pledge right on shares of the Company shares belonging to Flap Kongre. e) Limitations Within BOFA ML and Finansbank Loans The company shareholders pledged the shares of the Company in the rate of 84,31% in return for the loan used from BOFA ML in favor of BOFA ML. Hence, there is BOFA ML pledge on all the shares of the 4 real person partners and shares of 1 legal person partner. The transfer of the shares was limited because of the pledges on the shares and the share transfers are subject to the permit of the institutions pledged. There is not any limitation regarding the transfer on the shares to be offered to public. The waiver notices of the BOFA ML and Finansbank A.Ş. have been taken regarding the subject. The profit distribution, capital increase by rights issues or by bonus issues or mutual share sales are subject to the permits of BOFA ML and Finansbank A.Ş. in the rates of pledged shares within the loan agreements of BOFA ML and Finansbank A.Ş. The minimum profit distribution needed to be distributed in accordance with the provisions of CMB was permitted by BOFA ML, with the remaining profit, it shall not be able to be closed in accordance with the provisions of BOFA ML loan agreement until the loan is closed. CMB has not made it obligatory to make profit distribution for the companies operating in the Exchange Market recently. In the waiver notice of Finansbank, all the limitations regarding the use of the rights over the shares to be offered to public and there is no limitation regarding the dividend distribution. f) Currency Risk Assets and liabilities in the type of foreign currency cause currency risk. Hence, the Company has written net exchange difference expense in the amount of TL because of the liabilities in the type of foreign currency and the Company made transaction of hedge accounting for the agreements with foreign currency to defend from the currency risk and the currency income in the amount of TL was written because of the hedge accounting. In case of the increase in currencies the Company

28 writing currency income because of the hedge transaction shall write currency difference expense because of the hedge accounting transaction in case of decrease in currencies. The Company leases the vehicles to its customers, which it buys by using foreign currency loans and the hedge accounting transaction (fixed guaranty-hedging) is done because of the foreign currency agreements. As a result of the transaction of hedge accounting, with the effect of increase in the currencies, it wrote the assets in the amount of TL in 2010 and in the amount of TL in 2011 and currency incomes in return for them. In case of the decrease in the foreign currency, the transactions shall be made to reduce the assets and the currency losses shall be increased in return for it. Since most of the payables of the Company are in Foreign Currency and the receivables of vehicle lease cannot be indicated in the balance sheet, the Company incurs currency risk in major amounts and can write currency difference losses indicating changes from time to time. The Company wrote net currency difference loss in the amount of TL in 2011 and TL in As of 31 st December 2011, 31 st December 2010, the amounts of the foreign currency assets and liabilities of the Group and their TL equivalents are as follows: Total Assets Total Liabilities Monetary Items Net Foreign Currency Asset/(Liability) Position Operating Lease Receivables Off-Balance Sheet Foreign Currency Asset/(Liability) Position TL Equivalent USD Euro TL Equival ent USD Euro ( ) ( ) ( ) ( ) ( ) ( ) The Group incurred to the currency risk in Euro and USD. As of 31 st December 2011, 31 st December 2010 and 31 st December 2009, assuming that TL has gained and lost value of 10% against the foreign currency and all the other variables are stable, the effect of the foreign currency of the Group in Euro and USD on net profit/loss for the year and equities are set out below: Foreign Currency s Increase in Value 31 st December 2011 Profit/Loss Equities (*) Foreign Currency s Decrease in Value Foreign Currency s Increase in Value Foreign Currency s Decrease in Value USD Net Effect in Case USD gains/loses value against TL in the rate of 10% Euro Net Effect in Case Euro gains/loses value against TL in the rate of 10% Total Net Effect st December 2010

29 Foreign Currency s Increase in Value Profit/Loss Equities (*) Foreign Currency s Decrease in Value Foreign Currency s Increase in Value Foreign Currency s Decrease in Value USD Net Effect in Case USD gains/loses value against TL in the rate of 10% Euro Net Effect in Case Euro gains/loses value against TL in the rate of 10% Total Net Effect (*) The effect on the equities consists of the effects of income statement. The detailed explanations regarding the currency risk are available in Independent Audit Report issued in the periods of 2009, 2010 and 2011 and enclosed. g)liquidity Risk The most important purpose of the Group in asset and liability management is to provide liquidity necessary for the Group to fulfill its commitments to the loaners and meet the liquidity needs of the Group. On the basis of the remaining period till the due date of the contract, the company performs the analysis of the Group's net financial liabilities by an appropriate term grouping. That is, it brings term of the loans that it uses in conformity with the term of receivables and minimizes the liquidity risk. The Company plans to pay its financial debts with lease incomes; therefore, in case any adverse event is experienced in the collection term of receivables or receivables cannot be collected, the Company may go into default in paying its financial debts. The financial liabilities of the Company are not derivative, result from the loans. As of 31 st December 2011, 31 st December 2010 and 31 st December 2009, unreduced cash flows of the liabilities and indication according to the remaining terms are stated in the tables below: 31st December 2011 Less than 3 Between 3- Between 1- (TL) Book value months 12 months 5 years Undated Sum of cash outflows pursuant to the agreement Financial liabilities

30 Less than 3 months 31st December 2010 Between 3-12 months Between 1-5 years (TL) Book value Undated Sum of cash outflows pursuant to the agreement Financial liabilities The detailed explanations regarding the liquidity risk are available on the Independent Audit Reports of 2010 and h)loan Risk Loan risk consists of the deposits kept in banks and customers subject to loan risk including uncollected receivables and subscribed transactions. Loan risk is managed on the basis of Group for the deposits kept in banks. Loan risk and keeping financial assets evokes the risk that opposite party does not meet the requirements of the agreement. The area where the group is subject to loan risk is intense in Turkey in which it performs most of its activities. These risks are observed by the management by limiting the total risk for each party and distributing loan risk with a high number of customers. Commercial receivables are assessed by the Group management considering past experiences and current economic condition and indicated in net amount in the balance sheet after allocating the allowance for bad debts in the appropriate amount. In case customers have difficulties in payment and lease claims cannot be collected, the Company may be subject to loan risk. Amount of the receivables for which the company took legal action due to the problematic receivables is TL TL as of The short term loan debt of the Company is TL as of and long term loan debt is TL and the loan details according to the years are as follows as per the foreign currency. Bank Loans Short Term Original Currency 31 st December st December 2010 TL Interest Original Rate Currency TL Interest Rate TL Loans %13, %16,28 Euro Loans %6, %7,11 USD Loans %8, %8,40 Short-term part of long-term bank loans TL Loans %13, %16,28 Euro Loans %6, %7,11 USD Loans %8, %8, Bank Loans Long Term

31 31st December 11 31st December 2010 Original Interest Original Interest Currency TL Rate Currency TL Rate TL Loans %13, %16,28 Euro Loans %6, %7,11 US Dollar Loans %8, %8,40 Short term part of the long term bank loans TL Loans ( ) ( ) %13,63 ( ) ( ) %16,28 Euro Loans ( ) ( ) %6,99 ( ) ( ) %7,11 US Dollar Loans ( ) ( ) %8,86 ( ) ( ) %8,40 Total i)risk of Cash Flow and Fair Value Interest Rate The Group is subject to the risk of interest upon the fluctuations in market values of balance sheet items (price risk) or by the effect of instant rate changes of assets and liabilities which are interest-sensitive. The Group s interest-sensitive liabilities mainly consist of long term loans. The Group matches the terms of loans regarding the vehicle lease contracts and executes fixedinterest loan contracts pursuant to its asset-liability management. Therefore, the Group s debt costs relatively react late to the interest changes occurring in short term. As of 31 st December 2011, in case the other variables remain fixed and the market interest rates increase/decrease 1%, as the interest expense regarding the loans decreases/increases, the revenue before tax for the related period shall be less TL or TL more respectively. The detailed explanations regarding the risk of cash flow and fair value interest rate are available on the Independent Audit Report issued for the periods of 2009, 2010 and j) Revenue Loss Risk In case of the liquidation of the Company for any reason, there will be a risk to sell the vehicles of the Company with a lower value than the current value because of the mass sales, so there will be some problems in meeting the loans from the banks, hence the loss of the Company shall increase because of the vehicle sales. The Company buys the vehicles which it uses in leasing mostly with loans and the vehicles are pledged as a guarantee to the bank of loan. 69% of the loans of the Company

32 is in foreign currency and in case of the default in payment of the loans because of the high debt of loan, since the pledged vehicles will be seized, there is the risk that there will not be revenue to be gained from the second hand vehicle sales. In case unilateral cancellation of the Agreements by the Company, it shall be obligatory to pay the penalties written in the tender specifications of the tender authority in the works received with tender at first. The damage shall be requested by litigation in the works without tenders. Hence, the loss of the Company shall increase in case of the unilateral cancellation of the agreements Sector Risks The information regarding the operational leasing sector where the Company operates in is not published by any authority of institution and not disclosed in mutual or separately to the public. Hence, the information regarding the place of the Company in the sector has no final results. a) Legislation Risk Sector of long term vehicle leasing may be influenced by regulations of law and tax legislation Although changes in VAT and SCT made in the previous period in relation to the vehicle sale negatively influenced the companies profitability, it also brought a positive conclusion in terms of the competition of companies that are only engaged in this activity with other actors in the Market. Changes made in the rates of VAT-SCT in relation to vehicle purchases (on increase) have decreased the general demand for the vehicle leasing sector and influenced vehicle lease incomes and incomes from the sale of 2 nd hand vehicles in a negative way. In case this kind of changes are made in the future, the sector and thus the company's performance will be influenced. Therefore, the Company's performance is considerably susceptible to the changes in legislation. As of the date , it has been obligated that VAT rate is applied as 18% in the 2nd hand sale of vehicles in scope of passenger cars purchased so as to include the companies performing lease and operating lease. In the sale of passenger cars registered for at least two years in the company s assets on , VAT rate is applied as 1%. In the vehicle leases carried out after this date, the respective additional costs have been covered from the Company's vehicle lease incomes. As a result, rent level has gradually increased. Pursuant to the legal regulation, which took effect previously but adjourned until , containing amendments made by the Ministry of Transportation in the Regulation of Highway Transport and published in the official gazettes numbered with dated and numbered 25 February , 8 September , 15 December and b removed the opportunity of operating lease companies to lease commercial vehicles directly to their customers. On when this regulation took effect, number of vehicles in

33 the fleet was and vehicles out of this amount was sold until b)vehicle Value Loss Risk The prices of the second hand vehicles decrease as in all the goods in economic crisis. Hence it will result in the decrease in the revenue from the second hand vehicle sales of the Company. c) Operational Risks Cases of Accidents and Damages: Policy premiums with considerably high multiplier coefficients may be offered to the sector by insurance companies due to the intense accident and damage cases as an abuse of rental rationale by users of lessee companies and therefore the sector is obliged to pay high premiums. In addition, value of the vehicles decreases in the 2 nd hand market as the lessees misuse the vehicles. Scraping: The Company has to purchase vehicle insurance policies that are appropriate for minimizing the risks against the possibility that the vehicle scraps due to an accident. In case the users are guilty due to reasons like drunk driving, price of the vehicle cannot be received from the insurance. In this case, the Company collects the receivable from the respective user. Theft: In case the vehicle or equipment in the vehicle is stolen, a return in the amount of loss is collected from the insurance company upon the submittal of the required documents by the user. Provision of the documents proving that the user is not faulty in the incident of theft of the relevant vehicle or equipment is effective in the determination of the amount to be collected. In case the documents proving that the user is not faulty are not submitted, the losses cannot be compensated. Complicity and Administrative Fine: Determination of that the vehicle is under the responsibility of the user when leased vehicles are used in crime activities or subject to administrative fines, that is the proper issue of the delivery reports is important for proving that the company is not responsible. In case the delivery reports are deficient, the Company may be deemed as responsible Risks Regarding the Shares Issued The shares in the capital structure of the Company are classified as Group A and B. The shares of the Group A are preferential shares and have the privilege to indicate two candidates in the election of the management board of the Company. Besides, all the members of Board of Auditors are elected from the candidates indicated by the shareholders of Group A. a) Risks Regarding Profit Share Income of the Shares Issued Stock investors generate two kinds of income, the first of which is profit share incomes and the other is capital gain. This profit share, which is also known as dividend income, is the income to be obtained upon the distribution of the profits that the companies gain according to their performances in the end of the year. Profit share incomes may be realized by the

34 companies distributing their profits in cash or adding the dividend to the capital. Pursuant to the resolutions of the Capital Markets Board, publicly-traded corporations have no obligations for profit distribution. Stock investors should take investment decisions considering the risk of profit distribution. The Company s General Assembly may decide not to distribute the profit obtained by the Company in the end of the year. As the company has made losses in recent years, the accumulated losses are to be appropriated at the outset in case of earning profit in the following years and in this case, the risk of inability to distribute the profit arises even if the company earns profit. As from , the company has an accumulated loss of TL to be appropriated from the profits to be earned in the following years. In accordance with the loan agreement of the Company made with Merill Lynch, without the approval of Merill Lynch, there will not be profit distribution. b)risks Regarding Capital Gain of the Shares Issued Shares of the company are not traded in ISE or a similar market actively before the public offering. Public offering price of the shares to be sold shall be determined by the Company and this price may be different from the price arising in ISE after the offering. In addition, after the shares are issued, their prices shall be determined in the market depending on the developments in the economy and/or in the financial structure of the Company. In case the financial performance of the Company is under the expectation and the conditions in the Capital Market get worse, price of the Company s shares may decrease. Investors should take their investment decisions considering the market risk. Furthermore, shareholders also share the profit and loss of the Company. Shareholder participates in the balance at liquidation in the rate of their shares in case any balance remains after the liquidation of the Company. In case of liquidation of the partnership, necessary payments shall be made to all other loaners and then payments can be made to the shareholders. Market price of the Company s shares may be instable after the public offering. In case they do not use their Right to Purchase New Share in the future capital increases, their shares may decrease in value in proportion to the whole capital. Shares of the shareholders who will not participate in the public offering will considerably lose value in proportion to the whole capital. Cease of purchase and sale of the Company s shares will have a negative effect on the share price. An active and sustainable trade market may not arise for the shares or, if available, such market may not be maintained. Share sale of the Company's main partners may cause a decrease in the Company's share price or a change in the management of the company. In case the Company becomes insolvent, shares held by the Company s shareholders may totally decrease in value Other Risks Not Available

35 3. INFORMATION REGARDING THE PARTNERSHIP 3.1. Introductory Information Trade Name : Beyaz Filo Oto Kiralama A.Ş. Registered Office : Şehit Kurbani Akboğa Sok. No:24 Birlik Çankaya/ ANKARA Actual Management Address : Şehit Kurbani Akboğa Sok. No:24 Birlik Çankaya/ ANKARA Trade Registry Office in Which It : Ankara is Registered Trade Registry Number : Registry Date : Its Term If Founded with Term : Indefinite Legal Regulation : T.R. Laws Its Purpose and Scope Pursuant to the Articles of Association : Providing the service of vehicle lease and management, selling 2nd hand vehicles and providing related services Telephone and Fax Numbers : Tel: (312) Fax: (312) Web Address : Number of Partners Known : It has 5 partners, 1 of which is a legal entity and 4 of which are natural entities History and Development of the Partnership 1993 Four investors founded Rapid Turizm Sanayi ve Ticaret Ltd.Şti. located in Ankara so as to operate in vehicle lease and tourism on Services of fleet leasing and management were commenced and number of vehicles reached to The trade name of the Company, which was Rapid Turizm Sanayi ve Ticaret Ltd. Şti. was changed as Flap Tur Rapid Turizm San. Ve Tic. Ltd. Şti. on The trade name of the Company, which was Flap Tur Rapid Turizm San. Ve Tic. Ltd. Şti. was changed as Flap Turizm Anonim Şirketi on because of change of kind The Company was split into 2 on The capital in the amount of TL in the history of split up was shared between the companies after the split up. The operational lease activity has been continued under the trade name of Flap Turizm A.Ş. with the capital of TL and the congress activities under the trade name of Flap Kongre Toplantı Hizmetleri ve

36 Turizm A.Ş. with the capital of TL. Flap Turizm A.Ş., operating in the operational lease activities took over the other group company Beyaz Otomobil Kiralama Turizm ve Sigortacılık Hizmetleri San. Ve Ticaret A.Ş. on and merged under the trade name of Flap Turizm A.Ş. The trade name of the Company, which was Flap Turizm A.Ş. was changed on as Beyaz Filo Oto Kiralama A.Ş. as today. Đş Girişim became a partner on and purchased the minority shares of Beyaz Filo in return for USD. The vehicle number of Beyaz Filo reached to Beyaz Sistem A.Ş. was founded by four real persons, who are partners of Beyaz Filo A.Ş., on Beyaz Filo started to sell second hand vehicles returning from rental through Beyaz Sistem A loan agreement of US$ with a term of 5 years was executed with Merill Lynch. Number of vehicles purchased with loan became Đş Girişim transferred its minority stock to Flap Kongre, which is an affiliated company, in return for USD and then left. Number of our vehicles reached to within the year The Company opened maintenance and repair services in order to ensure vehicle maintenance. Structure of the organization was developed and with a special ERP (Enterprise Resource Planning) software, the Company carried all the accounting and work processes to the electronic environment and a pricing model started to be used about the price offers of vehicle lease to be given to the customers Risk management system was restructured. Number of SME customer was decreased and large-scale customers in class A were prioritized. Cash flow structure was strengthened. December 2011 The Company has been carrying out its activities in the sector for 19 years thanks to its vehicle fleet consisting of as from December 2011 and having 1325 lease agreements with 659 customers as of

37 Vehicle numbers at the end of the period regarding the last 5 years The Company started to grow particularly after the BOFA ML loan used in 2007 and 2008 and reached the highest vehicle number in the Company history. From the beginning of 2008 because of the global financial crisis in 2008, it postponed the growth targets and started to shrink because of the liquidity problem in the market. Vehicle numbers at the end of the period regarding of the Company are as follows: While the Company started to grow the fleet with Đş Girişim partnership and BOFA ML loan, it decreased the vehicle number in the fleet starting from 2009 because of the liquidity problem of the global economic crisis in the SME customers and the ban of the commercial vehicles as of Information Regarding the Articles of Association Brief information regarding the articles of association full text of which is enclosed and included on kap.gov.tr and is specified hereunder Information regarding privileges, context and restrictions for each share group: Group (A) shares have privilege right in determining Board members and auditors pursuant to the Articles 9 and 10 of the Articles of Association. Pursuant to the article 9 of the Articles of Association, 2 (two) members of the Board of Directors, consisting of 4 members, are selected among the candidates nominated by the majority of Group A shares. Pursuant to the article 10 of the Articles of Association, General Assembly assigns 1(one) auditor having the required qualifications for 2 (two) years as a maximum among shareholders or aliunde pursuant to the Turkish Commercial Law and regulations of Capital Markets Board. All auditors are selected among the candidates to be nominated by the Group (A) shareholders. Also, resolution of the Board of Directors should be approved by the board of preferred shareholders in case of any change in the articles of association that violates the rights of preferred shareholders pursuant to the article 389 of the Turkish Commercial Code and in principal capital increases without seeking violation pursuant to the article 391 of the Turkish

38 Commercial Code. Provisions of the Turkish Commercial Code and Capital Market Law apply in the General Assembly meetings and quorums of Preferred Shareholders Principals regarding share transfers Principals regarding share transfers are regulated in the articles 7 and 8 in the articles of association. General Principals of Share Transfer Article 7 Approval of majority of the Board of Directors is a prerequisite for the transfer of group (A) registered shares. The Board of Directors may refrain from approving without submitting any reason. Group (B) bearer shares can be transferred freely in accordance with the provisions of the relevant legislation. Unless otherwise resolved by the General Assembly or the Board of Directors, shareholders have the right of preference in line with their share rates in the capital increased to be performed pursuant to the article 394 of the Turkish Commercial Code. Shareholders use their right of preference within their own group. Group A shares remaining after the use of rights of preference are firstly offered to the other Group A shareholders. If there are shares that could not be sold even in this situation, the remaining shares may be sold to other shareholders or the real or legal entities to be new shareholders. In case the shares remaining after the use of rights of preferences are to be offered to the public, relevant transactions are performed in accordance with the Capital Market legislation. Share Transfers Article 8 Transfer of Group A Shares: In case a Group A shareholders ( Transferor ) wants to transfer his Group A shares partly or wholly ("Offered Shares ) to a third person ( Transferee ), he shall inform other Group A shareholders and the Board of Directors with a written notice ( Notice of Transfer ) about (i) (ii) (iii) (iv) (v) his will to transfer or sell, amount of such shares constituting all or a part of his shares, information regarding the Transferee to whom he made an offer share price, other points regarding the offer. Transfer transaction that is offered should be performed in good faith. Transferor will provide the Board of Directors with the copies of the documents indicating that the Transferee accepts to purchase the Offered Shares and other information that may be requested. Other Group A shareholders shall notify the Transferor in written on whether they will purchase the Offered Shares in prices and conditions specified in the Notice of Transfer in thirty (30) as from the date when such notice is sent. In case of any change in the content of

39 the notice of transfer, the term of thirty (30) days specified herein restarts as from the date the revised Notice of Transfer is delivered. Group A shareholders who do not notify in this term is deemed to refuse the offer of the Transferor. In case one of the Group A shareholders wants to purchase these shares, Offered Shares shall be transferred to this shareholder. In case more than one shareholder wants to purchase these shares, offered shares shall be transferred to these shareholders in the rate of their shares. Transfer of Group B Shares: Group (B) bearer shares can be transferred freely in accordance with the provisions of the relevant legislation Principals regarding the amendment of shareholders rights and privileges: In the clause 13 of the article 11 of the Articles of Association, it is specified that resolution of the Board of Directors should be approved by the board of preferred shareholders in case of any change in the articles of association that violates the rights of preferred shareholders pursuant to the article 389 of the Turkish Commercial Code and in increasing the upper limit of the registered capital without seeking violation pursuant to the article 391 of the Turkish Commercial Code. Provisions of the Turkish Commercial Code and Capital Market Law apply in the General Assembly meetings and quorums of Preferred Shareholders Information regarding the invitation of ordinary and extraordinary general assembly to meeting and terms of participation to the meetings: General Assembly Meetings are held in accordance with the provisions of the article 11 of the Articles of association and meetings of the Board of Directors are held in accordance with the provisions of the article 9. Article 11: General Assembly General assemblies convene as ordinary or extraordinary. Provisions of Articles 355, 365, 366 and 368 of the Turkish Commercial Code and relative provisions of the Capital Market legislation shall apply to the invitation to these meetings. Ordinary general assemblies convene in 3 months as of the end of company's fiscal period and at least once a year and extraordinary general assemblies convene in cases and times when required by the company's affairs. The person who will chair the General Assembly meetings is assigned by the General Assembly. The Board of Directors is liable to register the parts of the minutes of the General Assembly meetings that are subject to registry and declaration to the trade registry and declare the same. In the General Assembly meetings, the regulations of Turkish Commercial Code and Capital Market Board shall be conformed regarding the use of right to vote and representative assignment. Shareholders and representatives present in the ordinary and extraordinary General Assembly meetings to be held by the Company have one vote for each share. Pursuant to the Article 11 of the Capital Market Law, minority rights shall be used by the shareholders representing 1/20 of the paid capital. Unless otherwise specified in these Articles

40 of Association, provisions of the Turkish Commercial Code and Capital Market Law apply to the meeting and decision quorums in ordinary and extraordinary General Assembly meetings. General Assembly meetings are held in the company s head-office or any other appropriate place to be chosen by the Board of Directors within the boundaries of the Republic of Turkey. An authorized legal representative should be present in both ordinary and extraordinary General Assembly meetings and sign the meeting minutes together with the relative persons. Resolution of the Board of Directors should be approved by the board of preferred shareholders in case of any change in the articles of association that violates the rights of preferred shareholders pursuant to the article 389 of the Turkish Commercial Code and in principal capital increases without seeking violation pursuant to the article 391 of the Turkish Commercial Code. Provisions of the Turkish Commercial Code and Capital Market Law apply in the General Assembly meetings and quorums of Preferred Shareholders. Article 9: Board of Directors The Company is represented and managed by a Board of Directors consisting of 4 (four) members to be selected by the General Assembly in accordance with the Turkish Commercial Code, Capital Market Law and legislation and the provisions of these Articles of Association. 2 (two) members of the Board of Directors are selected among the candidates nominated by the majority of Group A shares, 1 (one) member is selected among the candidates nominated by the majority of Group B shares and 1 (one) member is selected among the candidates nominated by the General Assembly. In the meetings and quorums of the Management Boards, Turkish Commercial Code and Capital Market Law and related regulations are conformed. For all the meetings of Management Board, the meeting quorum consists of 3 (three) persons at least in any case. All of the resolutions of the Management Board are taken by a large majority with the affirmation votes of three members at least. Board Members can be selected to be on duty for a period of 3 (three) years as a maximum. The Board of Directors shall convene at least 2 (two) times a month. Meeting of the Board of Directors is held in the Company s head-office. For any document prepared or any agreement executed in the name of the Company to be valid and binding for the Company, they should have the signatures of the signatories to be determined with a circular of signature to be issued by the Board of Directors under the Company's title. The Board of Directors may assign executive members, executive managers, coordinators, general manager, manager or executives who are similar or equivalent to those among the board members or aliunde by determining their duties and authorities.

41 Information regarding the provisions that may cause delay, suspension or prevention in the handover of the management authority of the partnership: Pursuant to the article 7 of the Articles of Association, approval of majority of the Board of Directors is a prerequisite for the transfer of group (A) registered shares. The Board of Directors may refrain from approving without submitting any reason. Also pursuant to the clause of Transfer of Group A Shares in the article 8 of the Articles of Association; In case a Group A shareholder ( Transferor ) wants to transfer his shares partly or wholly ("Offered Shares ) to a third person ( Transferee ), he shall inform other Group A shareholders and the Board of Directors with a written notice ( Notice of Transfer ) about (i) his will to transfer or sell, (ii) amount of such shares constituting all or a part of his shares, (iii) information regarding the Transferee to whom he made an offer, (iv) share price (v) other points regarding the offer. Transfer transaction that is offered should be performed in good faith. Transferor will provide the Board of Directors with the copies of the documents indicating that the Transferee accepts to purchase the offered shares and other information that may be requested. Other Group A shareholders shall notify the Transferor in written on whether they will purchase the Offered Shares in prices and conditions specified in the Notice of Transfer in thirty (30) as from the date when such notice is sent. In case of any change in the content of the notice of transfer, the term of thirty (30) days specified herein restarts as from the date the revised Notice of Transfer is delivered. Group A Shareholders who do not notify in this term is deemed to refuse the offer of the Transferor. In case one of the Group A shareholders wants to purchase these shares, Offered Shares shall be transferred to this shareholder. In case more than one Group A shareholder wants to purchase these shares, Offered Shares shall be transferred to these shareholders in the rate of their shares Information regarding the provisions to be valid in case conditions specified in the articles of association for capital increase and decrease are more aggravated than required: Not available Abstracts of provisions regarding board of directors and auditors: Pursuant to the article 9 of the Articles of Association; Group A shareholders have privileges in the assignment of the Company s Board of Directors and 2 (two) members of the Board of Directors are selected among the candidates nominated by the majority of Group A shares, 1 (one) member is selected among the candidates nominated by the majority of Group B shares and 1(one) member is selected among the candidates nominated by the General Assembly.

42 In addition, Board members may be selected for 3 (three) years as a maximum. A Board member whose duty term terminates may be re-selected. Pursuant to the article 10 of the Articles of Association; General Assembly assigns 1(one) auditor having the required qualifications for 2 (two) years as a maximum among shareholders or aliunde pursuant to the Turkish Commercial Law and regulations of Capital Markets Board. All auditors are selected among the candidates to be nominated by the Group (A) shareholders Information Regarding Activities Information regarding the partnership activities including main product/service categories for the last three years and the respective interim period: As of , General Directorate of Beyaz Filo maintaining its activities with a vehicle fleet of is in Ankara. The company has Macunköy Branch acting to provide support services for its customers in Ankara and Istanbul Branch founded to carry out sale and marketing activities in Istanbul. Long Term Vehicle Lease Activities: Beyaz Filo provides long term fleet leasing service for corporate companies. The service given is named as operational leasing in the literature. All of the customers are corporate companies. Vehicles are leased for 3 years on the average and from time to time they are leased for 24 and 48 months upon the customer s request. There are 659 customers and 1325 agreements. Brands and models of the vehicles to be leased are determined in line with the demands of customers and vehicles are purchased as zero mileage and then leased to the customers. During the lease term, Beyaz Filo provides all the services, except from supplying fuel, required for the vehicle to stay in traffic. Such services include registry and license plate transactions, maintenance, repair, tire supply, insurance services, tax liabilities and all transactions to be performed in public institutions. Customers deliver the vehicle to Beyaz Filo in good condition (except for the periodical obsolescence) at the end of the lease term. Beyaz Filo utilizes the returned vehicles by selling them in the 2 nd hand market at the end of leasing period and life of such vehicles within Beyaz Filo comes to an end. To sum up, Activity of operational leasing consists of four stages; SALES (customer information and execution of contract), VEHICLE PURCHASE & LOAN USE (performed simultaneously), FLEET MANAGEMENT (provision of all services regarding the vehicle, except from fuel, through the term of contract), 2 nd HAND SALE (sales of the vehicle returned by the customer in the end of the term of contract). As of the end of the period, vehicle numbers are as follows:

43 The Company downsized because of the liquidity crisis which the global economic crisis affected the real market for the last three years and the ban made by the Ministry of Transportation on the leasing of the commercial vehicles as of the beginning of While the vehicle number was at the end of the year 2008, when the global economic crisis started, the vehicle number decreased to 6.615, downsizing 32% at the end of the year On when this regulation took effect, number of vehicles in the fleet was and vehicles out of this amount was sold until In this case, the decrease of vehicles in the fleet between and happened not because of the competition but because of the sales of the commercial vehicles after the amendment in the legal regulations. The Company took the following actions in order to protect itself against the effects of the global economic crisis experienced in 2008: First of all, it provided a cash inflow of TL by increasing the cash capital in December 2008 and strengthened its financial structure as a measure for the crisis. It removed the customers having difficulty in payment from its portfolio and executed contracts agreements with companies which are larger, more corporate and financially more powerful and gave weight on such kind of customers in its portfolio. As marketing strategy, it focused on projects which may provide more profitable and create more powerful cash inflow rather than the number of vehicles. Pursuant to the reaction of financial markets to the crisis, it suspended its growth strategies for a temporary period and had decreased its fleet in the rate of 15% in 2009 when compared to the previous years. Information about the vehicles bought and sold in the last two years:

44 Services of Vehicle Maintenance, Repair and Damage: Beyaz Filo provides its customer with all kinds of services with 282 services in total in the 81 provinces of Turkey; 263 of which are contracted authorized services and 19 of which are private services. So that Ankara/Macunköy service which was within Beyaz Filo beforehand could give more efficient and qualified services to the customers, it was transferred to Beyaz Sistem, which became an affiliated company in April Hence, it was aimed to gather the activities of second hand vehicle sales and services in one body and to improve productivity Information regarding the engagement sectors/markets, place of the partnership in these sectors/markets and its advantages and disadvantages: Beyaz Filo carries out its operating lease activities within the boundaries of Turkey. Customers dominantly consist of legal entities performing business in large cities, particularly in Istanbul and Ankara.

45 Operating lease activities has a customer portfolio including even persons abroad (especially USD); however this is not prevailing for Turkey yet. As long term vehicle lease provides the companies with tax advantages and flexibilities, growth in the vehicle/fleet lease sector have become inevitable. Figures regarding the sector of Operating Lease in Turkey are not published by any public or private institution. The only work related to the sector is the master thesis of Aynur Çeltik Kestenci which covers the years between 2000 and 2008 and published in Sales (million TL) 43.1% CAGR 1 Number of Agreements (thousands) 20.8% CAGR 1 Notes 1) CAGR: Compound Annual Growth Rate Source: Development of Vehicle Lease Sector and Its Contributions to the National Economy, Aynur Çeltik Kesenci, 2010 Vehicle lease market had an increase of 43.1% on the basis of endorsement and 20.8% on the basis of volume of the contracts executed.

46 There is no restriction about the entry of new actors to the market. However, it is thought that there is a low possibility for the entry of new actors to the sector due to the restrictions on the financing opportunities after the global crisis experienced in 2008 as big actors came to the market in the last 10 years causing sovereignty and high-leverage area of activity. Today, it seems impossible to access to the data regarding Operating Lease Sector and the companies engaged in this sector; however it is estimated that there are 15 companies having a fleet consisting of more than (a thousand) vehicles in the sector. A performance meeting the expectations and targets of the Company about selling second hand vehicles has been achieved owing to Beyaz Sistem Otomotiv ve Ticaret A.Ş., a group company engaged in second hand market that is an important area of activity in operating lease. There are 3 brands mainly consisting majority in the fleet and almost all of the vehicles sold in Turkey (except from luxury categories) are distributed by various model years in the fleet.