VAKIF FİNANS FACTORİNG HİZMETLERİ ANONİM ŞİRKETİ

Transcription

1 CONVENIENCE TRANSLATION INTO ENGLISH OF FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 TOGETHER WITH INDEPENDENT AUDITOR S REPORT ORIGINALLY ISSUED IN TURKISH

2

3

4 CONVENIENCE TRANSLATION INTO ENGLISH OF FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2014 ORIGINALLY ISSUED IN TURKISH CONTENTS PAGE FINANCIAL POSITION STATEMENT (BALANCE SHEET) OFF-BALANCE SHEET ITEMS... 3 PROFIT OR LOSS STATEMENT... 4 PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME... 5 STATEMENT OF CHANGES IN EQUITY... 6 STATEMENT OF CASH FLOWS... 7 STATEMENT OF PROFIT DISTRIBUTION... 8 NOTES TO THE FINANCIAL STATEMENTS NOTE 1 ORGANIZATION AND NATURE OF OPERATIONS... 9 NOTE 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS NOTE 3 CASH AT BANKS NOTE 4 AVALIABLE FOR SALE FINANCIAL ASSETS NOTE 5 FACTORING RECEIVABLES NOTE 6 TANGIBLE ASSETS NOTE 7 INTANGIABLE ASSETS NOTE 8 CURRENT PERIOD TAX ASSETS NOTE 9 DEFERRED TAX ASSETS AND LIABILITIES NOTE 10 INFORMATION ON ASSETS HELD FOR SALE AND ASSETS RELATED TO THE DISCOUNTED OPERATIONS NOTE 11 PREPAID EXPENSES NOTE 12 OTHER RECEIVABLES NOTE 13 FUNDS BORROWED NOTE 14 OTHER PAYABLE NOTE 15 TAXES AND DUTIES PAYABLE NOTE 16 PROVISIONS NOTE 17 EQUITY NOTE 18 OPERATING INCOME NOTE 19 FINANCING EXPENSES NOTE 20 OPERATING EXPENSES NOTE 21 OTHER INCOME NOTE 22 SPECIFIC PROVISION FOR DOUBTFUL RECEIVABLES NOTE 23 OTHER EXPENSES NOTE 24 TAXES NOTE 25 RELATED PARTY DISCLOSURES NOTE 26 COMMITMENTS AND CONTINGENCIES NOTE 27 FINANSIAL RISK MANAGEMENT NOTE 28 EARNINGS PER SHARE NOTE 29 SUBSEQUENT EVENTS... 46

5 CONVENIENCE TRANSLATION INTO ENGLISH OF FINANCIAL POSITION STATEMENT (BALANCE SHEET) AT 31 DECEMBER 2014 ORIGINALLY ISSUED IN TURKISH STATEMENT OF FINANCIAL POSITION-ASSETS Audited Current Period 31 December 2014 Audited Prior Period 31 December 2013 Note TL FC TOTAL TL FC TOTAL I. CASH AND CASH EQUIVALENTS AND CENTRAL BANK II. DEĞERLER FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT or Trading (LOSS) Financial (Net)) Assets Financial Assets Designated at Fair Value through Profit or (Loss) Trading Derivative Financial Assets III. BANKS , ,795 IV. RECEIVABLES FROM REVERSE REPURCHASE AGREEMENTS V. AVAILABLE-FOR-SALE FINANCIAL ASSETS (Net) (Net) 4 2,601-2,601 2,322-2,322 VI. FACTORING RECEIVABLES 5 498,068 12, , ,617 6, , Discounted Factoring Receivables 138, ,320 1,867 1,638 3, Domestic 142, ,848 3,214-3, Foreign ,723 1, Unearned Income (-) (4,262) (18) (4,280) (1,347) (85) (1,432) 6.2 Other Factoring Receivables 359,482 11, , ,750 5, , Domestic 359, , , , Foreign - 11,580 11,580-5,189 5,189 VII. FINANCE LOANS Consumer Loans Credit Cards Commercial Installment Loans VIII. LEASING ACTIVITIES Receivables from Leasing Transactions Financial Lease Receivables Operational Lease Receivables Unearned Income (-) Investment in progress subject to leases Advances given due to leasing activities IX. OTHER RECEIVABLES X. DOUBTFUL RECEIVABLES 5 26,338-26,338 32,792 1,750 34, Doubtful Factoring Receivables 45,415 3,363 48,778 55,348 3,501 58, Doubtful Finance Loans Doubtful Lease Receivables Specific Provisions (-) (19,077) (3,363) (22,440) (22,556) (1,751) (24,307) XI. HEDGING DERIVATIVE FINANCIAL ASSETS Fair Value Hedge Cash Flow Hedge Foreign Net Investment Hedge XII. HELD-TO-MATURITY SECURITIES (Net) XIII. SUBSIDIARIES (Net) XIV. INVESTMENTS IN ASSOCIATES (Net) XV. JOINT VENTURES (Net) XVI. PROPERTY AND EQUIPMENT (Net) XVII. INTANGIBLE ASSETS (Net) Goodwill Other XVIII. PREPAID EXPENSES XIX. CURRENT PERIOD TAX ASSET XX. DEFERRED TAX ASSET ,367-1,367 XXI OTHER ASSETS SUBTOTAL 528,056 12, , ,621 8, ,494 XXII. ASSETS HELD FOR RESALE AND DISCONTINUED OPERATIONS (Net) Held for resale Discontinued Operations TOTAL ASSETS 528,083 12, , ,648 8, ,521 The accompanying notes set out are an integral part of these financial statements. 1

6 CONVENIENCE TRANSLATION INTO ENGLISH OF FINANCIAL POSITION STATEMENT (BALANCE SHEET) AT 31 DECEMBER 2014 ORIGINALLY ISSUED IN TURKISH STATEMENT OF FINANCIAL POSITION- LIABILITIES Audited Current Period 31 December 2014 Audited Previous Period 31 December 2013 Note TL FC TOTAL TL FC TOTAL I. TRADING DERIVATIVE FINANCIAL LIABILITIES II. FUNDS BORROWED ,683 26, ,135 52,253 41,158 93,411 III. FACTORING PAYABLES IV. PAYABLES DUE TO LEASING OPERATIONS Financial Lease Payables Operational Lease Payables Other Deferred Financial Lease Expenses ( - ) V. ISSUED SECURITIES (Net) Bills Backed securities asset Bonds VI. OTHER LIABILITIES VII. OTHER EXTERNAL RESOURCES PAYABLE DERIVATIVEFINANCIAL LIABLITIES HELD FOR RISK MANAGEMENT PURPOSE VIII. 8.1 Fair Value Hedge Cash Flow Hedge Foreign Net Investment Hedge IX. TAX LIABILITY X. PROVISIONS Restructuring Reserves Reserves for Employee Rights Other Provisions XI. DEFERRED INCOME XII. CURRENT PERIOD TAX LIABILITY XIII. DEFERRED TAX LIABILITY XIV. SUBORDINATED LOANS SUB TOTAL 422,401 26, ,880 52,853 41,365 94,218 XV. PAYABLES FOR ASSET HELD FOR RESALE AND DISCONTINUED OPERATIONS (Net) Held for Sale Purpose Related to Discontinued Operations XVI. SHAREHOLDERS' EQUITY 17 91,700-91,700 81,303-81, Paid-in Capital 22,400-22,400 22,400-22, Capital Reserves 28,831-28,831 28,831-28, Share Premium Share Cancellation Profits Other capital reserves 28,831-28,831 28,831-28, Other comprehensive income/expense not to be reclassified to profit or loss Other comprehensive income/expense to be reclassified to profit or loss Profit Reserves 37,267-37,267 37,267-37, Legal Reserves 4,987-4,987 4,987-4, Status Reserves Extraordinary Reserves 32,280-32,280 32,280-32, Other Profit Reserves Income or (Loss) 2,805-2,805 (7,247) - (7,247) Prior Years Income or (Loss) (7,247) - (7,247) Current Period Income or (Loss) 10,052-10,052 (7,247) - (7,247) TOTAL LIABILITIES 514,101 26, , ,156 41, ,521 The accompanying notes set out are an integral part of these financial statements. 2

7 CONVENIENCE TRANSLATION INTO ENGLISH OF OFF BALANCE SHEET ITEMS AT 31 DECEMBER 2014 ORIGINALLY ISSUED IN TURKISH OFF BALANCE SHEET COMMITMENTS Audited Current Period 31 December 2014 Audited Prior Period 31 December 2013 Note TL FC TOTAL TL FC TOTAL I. RECOURSE FACTORING TRANSACTIONS 29,765 5,023 34,788 52,069 6,666 58,735 II. NON-RECOURSE FACTORING TRANSACTIONS 90, ,823 16,992 4,071 21,063 III. GUARANTEES RECEIVED 5, IV. GUARANTEES GIVEN V. COMMITMENTS Irrevocable Commitments Revocable Commitments Lease Commitments Financial Lease Commitments Operational Lease Commitments Other Revocable Commitments VI. DERIVATIVE FINANCIAL INSTRUMENTS Hedging Derivative Financial Instruments Transactions for Fair Value Hedge Transactions for Cash Flow Hedge Transactions for Foreign Net Investment Hedge Trading Transactions Forward Buy/Sell Transactions Swap Buy/Sell Transactions Options Buy/Sell Transactions Futures Buy/Sell Transactions Other VII. ITEMS HELD IN CUSTODY , , ,188 35,363 35,127 70,490 TOTAL OFF BALANCE SHEET COMMITMENTS 289, , , ,303 45, ,167 The accompanying notes set out are an integral part of these financial statements. 3

8 CONVENIENCE TRANSLATION INTO ENGLISH OF PROFIT OR LOSS STATEMENT FOR THE PERIOD ENDED INCOME STATEMENT 4 Note Audited Current Period 1 January - 31 December 2014 Audited Prior Period 1 January 31 December 2013 I. OPERATING INCOME 18 FACTORING INCOME 45,656 17, Interest received from Factoring Receivables 45,138 16, Discounted 9,496 2, Other 35,642 14, Fees and Commissions Received from Factoring Receivables Discounted Other II. FINANCING EXPENSES( - ) 19 26,784 6, Interest expense on funds borrowed 26,492 5, Interest expense on factoring payables Interest expense on financial leases Interest expense on securities issued Other interest expenses Fees and commission expenses III. GROSS PROFIT/LOSS (I+II) 18,872 10,771 IV. OPERATING EXPENSE (-) 20 5,225 4, Personnel Expenses 3,337 3, Provision Expense for Employment Termination Benefits Research and Development Expenses General Administration Expenses 1,846 1, Other - - V. GROSS OPERATING PROFIT/LOSS (III+IV) 13,647 5,818 VI. OTHER OPERATING INCOME , , Interest Received from Banks Interest Received from Reverse Repurchase Agreements Interest Received from Marketable Securities Portfolio Trading Financial Assets Financial Assets at Fair Value through Profit or (Loss) Available-for-sale Financial Assets Held to Maturity Investments Dividend Income Trading Gains on Securities From Derivative Financial Transactions Other Foreign Exchange Gains 332, , Other 1,689 1,327 VII. SPECIFIC PROVISIONS FOR FOLLOW-UP RECEIVABLES (-) 22 3,759 14,358 VIII. OTHER OPERATING EXPENSES (-)23 332, , Impairment of Marketable Securities Impairment of Financial Assets at Fair Value through Profit or (Loss) Impairment of Available-for-sale Financial Assets Impairment of Held to Maturity Investments Impairment of Fixed Assets Impairment of Property and Equipment Impairment of Non-current Assets Held for Resale and Discontinued Operations Impairment of Goodwill Impairment of Other Intangible Non-current Assets Loss from impairment of Associates, Subsidiaries and Joint Ventures (business partners) Loss from Derivative Financial Transaction Foreign Exchange Loss 332, , Other - - IX. NET OPERATING INCOME/EXPENSE (V+...+VIII) 12,051 (6,586) X. SURPLUS WRITTEN AS GAIN AFTER MERGER - - XI. NET MONETARY POSITION GAIN/LOSS - - XII. PROFIT/LOSS BEFORE TAX FROM CONTINUING OPERATIONS (IX+X+XI) 12,051 (6,586) XIII. TAXATION ON INCOME FROM CONTINUING OPERATIONS(±) 24 (1,999) (661) 13.1 Current Tax Provision (871) Deferred Tax Expense Effect (-) (1,128) (661) 13.3 Deferred Tax Income Effect (+) - - XIV. NET PROFIT/LOSS FROM CONTINUING OPERATIONS (XII+XIII) 10,052 (7,247) XV. INCOME FROM DISCONTINUING OPERATIONS Income from Assets Held for Resale Income from Investment and Associates, Subsidiaries and Joint Ventures Other income - - XVI. EXPENSES FROM DISCONTINUING OPERATIONS (-) Expenses from Assets Held for Resale Loss on Investment and Associates, Subsidiaries and Joint Ventures Other Expenses - - XVII. PROFIT/LOSS BEFORE TAX FROM DISCONTINUING OPERATIONS (XV-XVI) - - XVIII. TAXATION ON INCOME FROM DISCONTINUING OPERATIONS (±) Current Tax Provision Deferred Tax Expense Effect (+) Deferred Tax Income Effect (-) - - XIX. NET PROFIT/LOSS FROM DISCOUNTINUED OPERATIONS (XVII±XVIII)- - XX. NET PROFIT/LOSSES (XIV+XIX) 10,052 (7,247) EARNINGS PER SHARE (Tam TL) ( ) Earnings Per Share From Continuing Operations ( ) Earnings Per Share From Discontinued Operations - - DILUTED EARNINGS PER SHARE - - Earnings Per Share from Continued Operations - - Earnings Per Share from Discontinued Operations - - The accompanying notes set out are an integral part of these financial statements.

9 VAKIF FINANS FACTORİNG HIZMETLERI ANONİM ŞİRKETİ CONVENIENCE TRANSLATION INTO ENGLISH OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME STATEMENT FOR THE PERIOD ENDED PROFIT/LOSS AND OTHER COMPREHENSIVE INCOME Audited Current Period 1 January - 31 December 2014 Audited Prior Period 1 January - 31 December 2013 I. CURRENT PROFIT/LOSS 10,052 (7,247) II. OTHER COMPREHENSIVE INCOME Items not to be reclassified under profit and loss Revaluation differences of tangible assets Revaluation differences of intangible assets Defined benefit plans remeasurement gains / losses Other comprehensive income items not to be reclassified under profit and loss Taxes on other comprehensive income not to be reclassified under profit or loss (16) (13) Income tax expense/income Deferred tax expense/income (16) (13) 2.2 Items to be reclassified under profit and loss Foreign exchange differences from foreign currency transactions Revaluation differences of available-for-sale financial assets Income/loss on cash flow hedge derivative financial assets Income/loss from foreign investment hedge derivative financial assets Other comprehensive income items to be reclassified under profit and loss Taxes on other comprehensive income to be reclassified under profit or loss Income tax expense/income Deferred tax expense/income - - III. TOTAL COMPREHENSIVE INCOME / (EXPENSE) (I+II) 10,397 (7,195) The accompanying notes set out are an integral part of these financial statements. 5

10 CONVENIENCE TRANSLATION INTO ENGLISH OF STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED STATEMENT OF CHANGES IN EQUITY Paid in Capital Capital Reserves Share Premium Share Cancellation Profits Accumulated other comprehensive income or losses not to be reclassified under profit or loss statement Accumulated other comprehensive income or losses to be reclassified under profit or loss statement Other Reserves Profit Reserves Legal Reserves Status Reserves Extraordinar y Reserve Other Reserves Current Period Net Income /(Loss) Prior Period Net Income /(Loss Net Profit / Loss Total Equity PRIOR PERIOD ( ) (Audited) I. Period Opening Balance ( ) 22,400 28, , ,986 4,987-21,999-10,281-10,281-88,498 II. Changes in Accounting Policies according to TAS Effects of Correction of Errors Effects of the Changes in Accounting Policies III. New Balance (I+II) 22,400 28, , ,986 4,987-21,999-10,281-10,281-88,498 IV. Total Comprehensive Income V. Increase in Paid-in Capital VI. Capital Increase From Internal Resources VII. Adjustments to Paid-in Capital VIII. Bonds Convertible to Shares IX. Subordinated Loans X. Other Changes XI. Current Period Income or Loss (7,247) - (7,247) (7,247) XII. Profit Distribution , ,281 - (10,281) - (10,281) Dividend Paid Transfers to Reserves , ,281 - (10,281) - (10,281) Other Period End Balance ( ) 22,400 28, , ,267 4,987-32,280 - (7,247) - (7,247) 81,303 CURRENT PERIOD ( ) (Audited) I. Period Opening Balance ( ) 22,400 28, , ,267 4,987-32,280 - (7,247) - (7,247) 81,303 II. Changes in Accounting Policies according to TAS Effects of Correction of Errors Effects of the Changes in Accounting Policies III. New Balance (I+II) 22,400 28, , ,267 4,987-32,280 - (7,247) - (7,247) 81,303 IV. Total Comprehensive Income V. Increase in Paid-in Capital VI. Capital Increase From Internal Resources VII. Adjustments to Paid-in Capital VIII. Bonds Convertible to Shares IX. Subordinated Loans X. Other Changes XI. Current Period Income or Loss ,052-10,052 10,052 XII. Profit Distribution ,247 (7,247) Dividend Paid Transfers to Reserves ,247 (7,247) Other Period End Balance ( ) 22,400 28, , ,267 4,987-32,280-10,052 (7,247) 2,805 91,700 (1) The accumulated revaluation increases/losses on property and equipment, (2) The accumulated remeasurement gains/losses on defined benefit plans, (3) Other (Accumulated other comprehensive income or losses not to be reclassified under profit or loss statement), (4) Foreign currency translation differences (5) The accumulated revaluation increases/losses on available for sale asset, (6) Other (Cash flow hedge gains/losses, accumulated other comprehensive income or losses to be reclassified under profit or loss statement) The accompanying notes set out are an integral part of these financial statements. 6

11 CONVENIENCE TRANSLATION INTO ENGLISH OF STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED 31 DECEMBER 2014 ORIGINALLY ISSUED IN TURKISH A. CASH FLOWS FROM OPERATING ACTIVITIES Note Audited Current Period Audited Prior Period 1.1 Operating Profit before Changes in Operating Assets and Liabilities 10,100 5, Interest Received/Factoring Income 36,230 14, Interest Paid/Leasing Expense (29,147) (6,217) Leasing Expenses (370) Dividend Received Fees and Commissions Received Other Income 1, Collections from Previously Written-off Doubtful Receivables 5,626 1, Payments to Personnel and Service Suppliers (3,379) (3,324) Taxes Paid 13 (627) Other (1,030) (771) 1.2 Changes in Operating Assets and Liabilities (13,612) 12, Net (Increase)/Decrease in Factoring Receivables (370,816) 14, Net (Increase)/Decrease in Other Assets (44) Net Increase/(Decrease) in Factoring Payables - (1,085) Net Increase/(Decrease) in Funds Borrowed 357, Net Increase/(Decrease) in Payables Net Increase/(Decrease) in Other Liabilities 67 (491) I. Net Cash Used in Operating Activities (3,512) 18,800 B. CASH FLOWS FROM INVESTING ACTIVITIES 2.1 Acquisition of Investments, Associates and Subsidiaries Disposal of Investments, Associates and Subsidiaries Purchases of Property and Equipment 6,7 (65) (30) 2.4 Disposals of Property and Equipment Purchase of Investments Available-for-sale Sale of Investments Available-for-sale Purchase of Investment Securities Held to Maturity Sale of Investment Securities Held to Maturity Other - - II. Net Cash (Used in)/provided from Investing Activities (17) (8) C. CASH FLOWS FROM FINANCING ACTIVITIES 3.1 Cash Obtained from Funds Borrowed and Securities Issued - 4,618, Cash Used for Repayment of Funds Borrowed and Securities Issued - (4,708,978) 3.3 Issued Capital Instruments Dividends Paid Payments for Finance Leases - (383) 3.6 Other - - III. Net Cash Provided from Financing Activities - (90,998) IV. Effect of Change in Foreign Exchange Rate on Cash and Cash Equivalents 42 - V. Net Increase in Cash and Cash Equivalents (3,487) (72,206) VI. Cash and Cash Equivalents at Beginning of the Period 2 3,794 76,000 VII. Cash and Cash Equivalents at End of the Period ,794 The accompanying notes set out are an integral part of these financial statements. 7

12 CONVENIENCE TRANSLATION INTO ENGLISH OF STATEMENT OF PROFIT DISTRIBUTION FOR THE PERIOD ENDED I. DISTRIBUTION OF CURRENT PERIOD PROFIT Current Period 31 December 2014 (*) Prior Period 31 December 2013 (**) 1.1 CURRENT PERIOD PROFIT 12,051 (6,586) 1.2 TAXES AND DUES PAYABLE (-) (1,999) (661) Corporate Tax (871) Withholding Tax Other taxes and dues (***) (1,128) (661) A. NET PERIOD PROFIT ( ) 10,052 (7,247) 1.3 PRIOR YEARS' LOSSES (-) (7,247) FIRST LEGAL RESERVE (-) OTHER STATUTORY RESERVES NEEDED TO BE KEPT IN THE COMPANY (-) - - B DISTRIBUTABLE NET PERIOD PROFIT [(A )] (***) 2,805 (7,247) 1.6 FIRST DIVIDEND TO SHAREHOLDERS (-) To Owners of Ordinary Shares To Owners of Preferred Stocks To Owners of Preferred Stocks To Profit Sharing Bonds To Owners of the profit /loss Sharing Certificates DIVIDEND TO PERSONNEL (-) DIVIDEND TO BOARD OF DIRECTORS (-) SECOND DIVIDEND TO SHAREHOLDERS (-) To Owners of Ordinary Shares To Owners of Preferred Stocks To Owners of Preferred Stocks To Profit Sharing Bonds To Owners of the profit /loss Sharing Certificates SECOND LEGAL RESERVE (-) STATUS RESERVES (-) EXTRAORDINARY RESERVES OTHER RESERVES SPECIAL FUNDS - - II. DISTRIBUTION FROM RESERVES DISTRIBUTED RESERVES SECOND LEGAL RESERVES (-) SHARE TO SHAREHOLDERS (-) To Owners of Ordinary Shares To Owners of Preferred Stocks To Owners of Preferred Stocks To Profit Sharing Bonds To Owners of the profit /loss Sharing Certificates SHARE TO PERSONNEL (-) SHARE TO BOARD OF DIRECTORS (-) - - III. EARNINGS PER SHARE 3.1 TO OWNERS OF STOCKS (Tam TL) ( ) 3.2 TO OWNERS OF STOCKS ( % ) (32.35) 3.3 TO OWNERS OF PREFERRED STOCKS (TL) TO OWNERS OF PREFERRED STOCKS ( % ) - - IV. DIVIDEND PER SHARE 4.1 TO OWNERS OF STOCKS (TL) TO OWNERS OF STOCKS ( % ) TO OWNERS OF PREFERRED STOCKS (TL) TO OWNERS OF PREFERRED STOCKS ( % ) - - (*) As of the date of finalization of the financial statements 31 December 2014 the General Assembly has not been held yet. (**) There is no profit to be distributed in the previous year. (***) Deferred tax income is not subject to profit distribution. The accompanying notes set out are an integral part of these financial statements. 8

13 1 - ORGANIZATION AND NATURE OF OPERATIONS Vakıf Finans Factoring Hizmetleri A.Ş. ( the Company ) was incorporated on 28 January 1998 to provide factoring services to industrial and commercial firms. The Company provides factoring services, that is a financial product which ensure guarantee, finance and collection services by way of assignment to a company called factor of the trade receivables arising from sale of goods and/or services by firms to within the country. The Company serves both domestic and international factoring services. The Company operates in accordance with Financial Lease, Factoring and Financing Companies Law published on the Official Gazette no dated 13 December 2012 and Regulation on Principles for Establishment and Operations of Finance Lease, Factoring and Financing Companies of Banking Regulating and Supervision Agency (BRSA). As at 31 December 2014 and 2013, the compositions of the authorized and paid-in share capital are as follows: Share Share 31 December 31 December 2014 (%) 2013 (%) Türkiye Vakıflar Bankası T.A.O. 17, , Güneş Sigorta A.Ş. 3, , Vakıf Finansal Kiralama A.Ş Vakıf Per. Öz. Sos. Güv. Vakfı Vakıf Pazarlama Sanayi ve Tic. A.Ş Share Capital 22, The Company has 30 employees as at 31 December (31 December 2013: 29). The Company is registered in Turkey and located in the address below: Şerifali Mahallesi, Bayraktar Bulvarı, No: 62, Ümraniye / İSTANBUL. The Company carries its operations mainly in one geographical region (Turkey). Approval of Financial Statements The financial statements were approved by the Board on February 26, The General Assembly has authority to amend the financial statements. 9

14 2 - BASIS OF PREPARATION OF FINANCIAL STATEMENTS 2.1 Basis of Preparation Basis of Preparation of Financial Statements The Company prepared accompanying financial statements due to the Regulation on Accounting Practices and Financial Statements of Financial Leasing, Factoring and Financing Companies and the Communiqué on Uniform Chart of Accounts and Prospectus to be implemented by Financial Leasing, Factoring and Financing Companies and on Financial Statements to be announced Public published in the Official Gazette dated 24 December 2013 and numbered Turkish Accounting Standards published by Public Oversight Accounting and Auditing Standards Institute (POAAS), Turkish Financial Reporting Standards and other regulations, communiqués and circulars announced by BRSA in respect of accounting and financial reporting (together referred as Reporting Standards ). The financial statements have been prepared on the historical cost basis except true financial assets and liabilities are recognized at fair value Additional paragraph for convenience translation into English The differences between accounting principles, as described in the preceding paragraphs and accounting principles generally accepted in countries in which these financial statements are to be distributed and International Financial Reporting Standards ( IFRS ) have not been quantified in these financial statements. Accordingly, these financial statements are not intended to present the financial position, results of operations and changes in financial position and cash flows in accordance with the accounting principles generally accepted in such countries and IFRS Currency used Financial statements of the Company have been presented using the currency (functional currency) of the economic environment in which the Company operates. The financial position and the results of operations of the Company have been presented in Turkish Lira ( TL ) which is also the functional currency of the Company. Financial statements are prepared on the historical cost basis as per thousand Turkish Lira ( TL ) basis except for financial assets and liabilities recognized at fair value Restatement of Financial Statements in Hyperinflationary Economies The financial statements of the Company have been adjusted for the effects of inflation in accordance with TAS 29 Financial Reporting in Hyperinflationary Economies until 31 December By a circular issued on 28 April 2005, BRSA declared that hyperinflationary period is over and inflation accounting has ceased as of 1 January Offsetting Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously Going concern The Company prepared its financial statements considering the going concern principal. 10

15 2 - BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) Critical Accounting evaluations, estimates and assumptions Preparation of these financial statements requires estimates and judgments regarding the reported amount of assets and liabilities or contingent assets and liabilities and reported amount of income and expenses of the related period. Such estimates and judgments are based on the Company s best estimates regarding current events and transactions, however, the actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimate is revised and in any future years affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are described in the following notes: Allowance for impairment losses on factoring receivables Assumptions and methods used to estimate the amount and timing of future cash flows from factoring receivables often being revised to eliminate the difference between the realized impairment losses estimated losses on factoring receivables. Recognition of deferred tax assets Deferred tax assets can be recorded as much as the said tax benefit is probable. Amount of taxable profits and possible tax benefits in the future is based on medium term business plan and expectations prepared by the Company. The business plan is based on rational expectations of the Company under current circumstances. 2.2 CHANGES IN ACCOUNTING POLICIES Comparatives and restatement of prior year financial statements In order to enable the determination of the financial position and performance trends, the Company s financial statements have been presented comparatively with the prior period. Reclassifications are made on comparative figures to conform to changes in presentation of the financial statements and major differences are explained Changes in accounting policies Changes in accounting policies are applied retrospectively and the prior period financial statements are restated accordingly. There are no major changes, in the accounting policies of the Company in the current period. 11

16 2 - BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) Change in accounting estimates and errors The effect of a change in an accounting estimate is recognized prospectively in the period of the change, if the change affects that period only; or the period of the change and future periods, if the change affects both. There has not been any significant change in the accounting estimates of the Company in the current year. Material prior year errors are corrected retrospectively by restating the comparative amounts for the prior periods Amendments in standards and interpretations Adoption of new or revised standards and interpretations The Company has applied those related to their field of activity of new and revised standards and interpretations issued by the UPS from the date of January 1, Standards, Amendments and IFRICs applicable to 31 December 2014 year ends Amendment to TAS 32, Financial instruments: Presentation, on offsetting financial assets and financial liabilities, effective from annual periods beginning on or after 1 January This amendment updates the application guidance in TAS 32, Financial instruments: Presentation, to clarify some of the requirements for offsetting financial assets and financial liabilities on the balance sheet. Amendments to TAS 36, Impairment of assets, effective from annual periods beginning on or after 1 January These amendments address the disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal. Amendment to TAS 39 Financial instruments: Recognition and measurement, on novation of derivatives and hedge accounting, effective from annual periods beginning on or after 1 January These narrow-scope amendments allow hedge accounting to continue in a situation where a derivative, which has been designated as a hedging instrument, is novated to effect clearing with a central counterparty as a result of laws or regulation, if specific conditions are met. IFRIC 21, Levies, effective from annual periods beginning on or after 1 January This interpretation is on TAS 37, Provisions, contingent liabilities and contingent assets. TAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for the entity to have a present obligation as a result of a past event (known as an obligating event). The interpretation clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. Amendments to TFRS 10, Consolidated financial statements, TFRS 12 and TAS 27 for investment entities, effective from annual periods beginning on or after 1 January These amendments mean that many funds and similar entities will be exempt from consolidating most of their subsidiaries. Instead, they will measure them at fair value through profit or loss. The amendments give an exception to entities that meet an investment entity definition and which display particular characteristics. Changes have also been made TFRS 12 to introduce disclosures that an investment entity needs to make. 12

17 2 - BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) New Standards and interpretations not yet adopted as at 31 December 2014 Annual improvements 2012; effective from annual periods beginning on or after 1 July These amendments include changes from the cycle of the annual improvements project, that affect 7 standards: - TFRS 2, Share-based payment. - TFRS 3, Business Combinations - TFRS 8, Operating segments - TFRS 13, Fair value measurement - TAS 16, Property, plant and equipment and TAS 38, Intangible assets - TFRS 9, Financial instruments, TAS 37, Provisions, contingent liabilities and contingent assets - TAS 39, Financial instruments Recognition and measurement Annual improvements 2013; effective from annual periods beginning on or after 1 July These amendments include changes from the cycle of the annual improvements project, that affect 4 standards: - TFRS 1, First time adoption - TFRS 3, Business combinations - TFRS 13, Fair value measurement and - TAS 40, Investment property TFRS 14 Regulatory deferral accounts, effective from annual periods beginning on or after 1 January TFRS 14, Regulatory deferral accounts permits first time adopters to continue to recognise amounts related to rate regulation in accordance with their previous GAAP requirements when they adopt TFRS. However, to enhance comparability with entities that already apply TFRS and do not recognise such amounts, the standard requires that the effect of rate regulation must be presented separately from other items. Amendment to TFRS 11, 'Joint arrangements' on acquisition of an interest in a joint operation, effective from annual periods beginning on or after 1 January This amendment adds new guidance on how to account for the acquisition of an interest in a joint operation that constitutes a business. The amendments specify the appropriate accounting treatment for such acquisitions. Amendment to TAS 16, 'Property, plant and equipment' and TAS 38, 'Intangible assets', on depreciation and amortisation, effective from annual periods beginning on or after 1 January In this amendment it has clarified that the use of revenue based methods to calculate the depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. It is also clarified that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. Amendments to TAS 27, Separate financial statements on the equity method, effective from annual periods beginning on or after 1 January These amendments allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. 13

18 2 - BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) Amendments to TFRS 10, Consolidated financial statements and TAS 28, Investments in associates and joint ventures, effective from annual periods beginning on or after 1 January These amendments address an inconsistency between the requirements in TFRS 10 and those in TAS 28 in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. TFRS 15 Revenue from contracts with customers, effective from annual periods beginning on or after 1 January TFRS 15, Revenue from contracts with customers is a converged standard from the IASB and FASB on revenue recognition. The standard will improve the financial reporting of revenue and improve comparability of the top line in financial statements globally. TFRS 9 Financial instruments, effective from annual periods beginning on or after 1 January This standard replaces the guidance in TAS 39. It includes requirements on the classification and measurement of financial assets and liabilities; it also includes an expected credit losses model that replaces the current incurred loss impairment model. Amendments to TAS 16 Property, plant and equipment, and TAS 41, Agriculture, regarding bearer plants, effective from annual periods beginning on or after 1 January These amendments change the financial reporting for bearer plants, such as grape vines, rubber trees and oil palms. It has been decided that bearer plants should be accounted for in the same way as property, plant and equipment because their operation is similar to that of manufacturing. Consequently, the amendments include them within the scope of TAS 16, instead of TAS 41. The produce growing on bearer plants will remain within the scope of TAS 41. Amendment to TAS 19 regarding defined benefit plans, effective from annual periods beginning on or after 1 July These narrow scope amendments apply to contributions from employees or third parties to defined benefit plans. The objective of the amendments is to simplify the accounting for contributions that are independent of the number of years of employee service, for example, employee contributions that are calculated according to a fixed percentage of salary. Annual improvements 2014, effective from annual periods beginning on or after 1 January These set of amendments impacts 4 standards: - TFRS 5, Non-current assets held for sale and discontinued operations regarding methods of disposal - TFRS 7, Financial instruments: Disclosures, (with consequential amendments to TFRS 1) regarding servicing contracts. - TAS 19, Employee benefits regarding discount rates. - TAS 34, Interim financial reporting regarding disclosure of information. Early adoption of standards The Company has no standard undergone new changes or early adopted in 2014.The Company management does not foresee any material impact of adoption of the aforementioned standards and interpretations on the financial statements of the Company in the upcoming periods. 14

19 2 - BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) 2.3 Summary of Significant Accounting Policies Valuation principles and accounting policies followed in the preparation of these financial statements are summarized below. Cash and Cash Equivalents Bank balances include short-term deposits with a maturity less than three months. Bank balances are highly liquid investments with a maturity of less than three months and without impairment risk. Term deposits in banks are followed in amortized cost using the effective interest rate after the initial recognition. Financial instruments Financial assets and liabilities if there is a legal party to these financial instruments of the Company is located in the Company s balance sheet. Financial assets As a result of being connected to a contract on the purchase or sale of financial assets in accordance with the terms of the delivery timeframe established by the market of investment instruments are recognized or derecognized on the trade date. Financial assets classified as financial assets at fair value through profit or loss, held-to-maturity investments, available-for-sale financial assets and loans and receivables. Investment securities available-for-sale Available for sale financial asset consist of financial assets other than held-to-maturity investments, financial assets at fair value through profit/ loss. Subsequent valuation of available for sale financial assets is measured at their fair values. However, the fair value cannot be reliably determined, the fair value of financial assets for those with a fixed maturity is measured at amortized cost by using the effective interest rate method and the fair value of financial assets for those without a fixed maturity is determined by using value pricing models or discounted cash flow techniques. Unrealized gains and losses arising from the difference between the fair value and amortized cost calculated by using effective interest rate method of these available for sale securities are recognized under equity in the Marketable Securities Valuation Reserve account. In case of disposal of these available for sale financial assets, the amount under equity is transferred to statement of income. Factoring and other receivables Factoring receivables and payables are recognized net of any transaction costs through the initial costs. In subsequent periods of the initial recognition, the factoring receivables are shown through amortizing the difference between the initial cost and the present value of repayment amounts which is calculated by using effective interest method, in the income statement. 15

20 2 - BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) For the doubtful factoring receivables and other receivables provision is recognized and deducted as expense from current period income. The factoring receivables provision for the impairment is established based on a credit review of the receivables portfolio as whole including all the nonperforming factoring receivables in the portfolio of the Company. The Company has set this provision in accordance with the Communiqué of BRSA named The Procedures Regarding the Provisions to Be Provided for the Loans of Leasing, Factoring and Consumer Finance Companies ( Provisions Communiqué ) which was published in the Official Gazette dated 24 December 2013 and numbered According to the Provisions Communiqué, specific provisions are set in following proportions: minimum 20% for collateralized factoring receivables which related collections are not received after 90 to 180 days past due, minimum 50% for collateralized factoring receivables which related collections are not received after 180 to 365 days past due and 100% for collateralized factoring receivables which related collections are not received after 1 year past due. The factoring receivables that have not been collected for less than a year are classified as Receivables to liquidate under the doubtful receivables, while the factoring receivables that have not been collected to more than a year are classified as uncollectible receivables. Funds Borrowed Funds borrowed are recognized at initial cost net off transaction costs. In subsequent periods, borrowings are recognized at amortized cost calculated as the present value of repayments by using effective interest rate method. Tangible assets and depreciation Tangible assets acquired before 1 January 2005 are measured at cost restated for the effects of inflation at 31 December 2004 less accumulated depreciation. Tangible assets acquired after 1 January 2005 are measured at cost less accumulated depreciation. To change any part of tangible assets, expenses in the future economic benefits of the asset are capitalized enhancing qualities. All other costs are recognized in the income statement on an accrual basis. Tangible assets are depreciated over the estimated useful lives by using the straight-line method. The estimated useful lives of tangible assets are as follows: Definition Year Furniture and fixtures 5 Motor vehicles 5 Leasehold Leasehold improvements are amortized over the periods of the respective leases on the straight-line basis. 16

21 2 - BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) Intangible Assets Intangible assets consist of computer software. They are recorded at acquisition cost and amortized on a straight-line basis over their estimated economic lives for a period not exceeding five years from the date of acquisition. Definition Year Computer software license 3-5 years Impairment Financial Assets Financial assets other than financial assets at fair value through profit or loss are subject to an assessment at each balance sheet date to determine whether there is any indication of impairment. If after the recognition of financial assets one or more events occur and if there is objective evidence that there is impairment on future cash flows of the financial asset or group of assets, the financial asset is impaired and impairment loss is recognized. The Company recognizes specific provision for factoring receivables in accordance with the Communiqué No: on the Regulation on Accounting Practices and Financial Statements of Financial Leasing, Factoring and Financing Companies and Communiqué Uniform Chart of Accounts to be implemented by Financial Leasing, Factoring and Consumer Financing Companies and its Explanation published in the same date and number issued at 24 December 2013 by BRSA. The impairment loss is deducted from the carrying value of the other financial assets valued at amortized cost. The exception of available-for sale equity instruments, impairment losses recognized after the date of the impairment if events occurred with a reversal can be related objectively. The cancellation of financial assets measured at amortized cost is recognized in the income statement. Increase occurring after the impairment of the fair value of available for sale equity instruments are recognized directly in equity. Non-Financial Assets The carrying amounts of the Company s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset s recoverable amount is estimated. An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognized in the income statement. 17

22 2 - BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the asset. Impairment losses recognized in prior years are assessed at each reporting date for any indications that the impairment loss has decreased or no longer exits. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no, impairment loss had been recognized. Capital and Dividends Ordinary shares are classified as equity. Ordinary dividends on ordinary shares are recognized in the period in which they are declared. Capital increase from current shareholders are recognized over the nominal value shall be duly approved at the annual general meeting. Employment termination benefits Severance provisions are accounted at present value of the contingent liabilities arisen from the retirement of Company s employees and calculated according to Turkish Labor Law. Severance provisions are calculated based on an accrual basis after completion of one year service by each employee and recognized in the financial statements. Obligations related to employee termination and vacation rights are accounted for in accordance with Turkish Accounting Standard for Employee Rights ( TAS 19 ) and are classified under reserve for employee benefits account in the balance sheet. The retirement benefit obligation recognized in the balance sheet arise in the future due to retirement of all employees based on the net present value of the expected liability and is reflected in the financial statements. According to the TAS 19 that is revised by Public Oversight Accounting and Auditing Standards Authority with the Communiqué published in Official Gazette on 12 March 2013 numbered 28585, in the calculation of the employment termination benefit liabilities of the Company, the recognition method of the actuarial gains and losses derived from the changes in actuarial assumptions or the differences between actuarial assumptions and realizations in the income statement has been eliminated which is effective for the annual periods beginning on or after 1 January Beginning of 1 January 2013, the Company has recognized the actuarial gains and losses that occur in related reporting periods in the Statement of Comprehensive Income and presented in the Other comprehensive income/expense not to be reclassified to profit or loss item in the Equity section of the financial statements. Provisions, contingent asset and liabilities In accordance with TAS 37, Provisions, Contingent Liabilities Assets, a provision is recognized when the Company has a legal or constructive obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. If the specific criteria are not met, the Company discloses the related issues in the accompanying notes. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessment of the time value of money and the risks specific to the liability if the time value of the money is significant to the provision. To determine the discount rate the interest rate in related markets and risks associated with the liability are considered. Contingent assets are disclosed in the notes and not recognized unless it is realized. 18

23 2 - BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) Income and Expense Recognition Factoring income Factoring revenue consists of factoring interest and commission income collected or accrued on advances given to the customers. Factoring interest and commission income is recognized on accrual basis. Other income and expenses Other income and expenses are recognized on an accrual basis. Finance expenses Other finance expenses are recognized on an accrual basis using effective interest method. Taxes on income Tax provisions of the period include the current (corporate) tax and deferred tax. Corporate tax Corporation tax liability which is arising from results of operations of the Company in the financial statements is calculated on Company s operating results adjusted by the Tax Procedure Law not acceptable expenses and exceptions. Deferred tax Deferred tax is recognized using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. According to TAS 12, Income Taxes ; deferred tax assets and liabilities are recognized in the accompanying financial statements, using the balance sheet method, on all taxable temporary differences to the extent that they are expected to increasing or decrease on the income tax payable in the period when they will reserve. Deferred tax assets are recognized to the extent that is probable that future taxable profits will be available against which the deferred tax asset can be utilised. Deferred tax assets are reduced to the extent that is no longer probable that the related tax benefit will be realized. Valuation of assets on the statement of income as a result of these differences and deferred tax income or expense in the income statement on the relevant valuation of the asset is accounted for in equity as a result of differences; the related deferred tax effect is also recognized in equity. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the deferred tax and liabilities are realized simultaneously. 19

24 2 - BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) Related parties In accordance with TAS 24, Related Party Disclosures shareholders, key management and board members, in each case together with companies controlled by or affiliated with them, and associated companies or considered and referred to as related parties. Related party transactions consist of the transfer of the assets and liabilities between related parties by a price or free of charge. For the purpose of the accompanying financial statements, shareholders of the Company the companies controlled by/associated with them, key management and the Board members of the Company are referred to as related parties. Subsequent events Subsequent events mean the events occurred between the reporting date and the authorization date for the announcement of the financial statements. In accordance with TAS 10, Subsequent Events ; postbalance sheet events that provide additional information about the Company s position at the balance sheet dates (adjusting events) are reflected in the financial statements. Post balance sheet events that are not adjusting events are disclosed in the notes when material. Statement of cash flows The Company prepares cash flow statements to inform the users of the financial statements about the changes in its net assets, its financial structure and its ability to affect the amount and timing of its cash flows with respect to changing external conditions. In the statement of cash flows, cash flows of the period are reported with a classification based on operating, investing and financing activities. Cash flows from operating activities represent cash flows from activities within the scope of business. Cash flows relating to investment activities represent cash flows used and generated from investment activities (fixed investments and financial investments). Cash flows relating to financing activities represent the sources of financing and the repayments of these sources. Due to nature of the transaction short term borrowings are shown under cash flows from operating activities starting from 1 January As at 31 December 2014 and 2013, the cash and cash equivalents are as follows: Cash - - Banks -Time deposits - 3,430 -Demand deposits Interest accruals - (1) 307 3,794 20

25 2 - BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) Segment reporting There is no segment that management of the Company performs the assessment of financial performances and decides the resource allocation. Foreign currency transactions Income and expenses deriving from transactions in foreign currencies have been translated into TL at the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies have been translated into TL at the exchange rates prevailing at the balance sheet date. Exchange gains or losses arising from conversion of foreign currency items have been included in the income statement. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to TL at the exchange rate the date that the fair value was determined. The foreign exchange rates used by the Company as at 31 December 2014 and 2013 are as follows: USD Euro GBP Leases Leases by which the risks and rewards belongs to lessor are classified as operating leases. Payments made under operating leases are recognized as an expense in the income statement on a straight-line basis over the lease term. Earning per share Earing per share is calculated by dividing the profit or loss by the weighted average number of ordinary shares outstanding during the period. 3 - CASH AT BANKS As at 31 December 2014 and 2013 cash at banks are as follows: 31December December 2013 TL FC TL FC - Demand deposits Time deposits - - 3, , Bank account consists of time and demand deposit. As at 31 December 2014 there are no interest accruals (31 December 2013: 1 TL).

26 4 - AVAILABLE FOR SALE FINANCIAL ASSETS (Net) 31 December December 2013 Effective Effective Amount Rate Amount Rate Vakıf Enerji ve Madencilik A.Ş. 6,467 % ,188 %18.58 Provision for impairment loss Vakıf Enerji ve Madencilik A.Ş. (-) (3,866) (3,866) Total 2,601 2,322 Fair value of the Vakıf Enerji ve Madencilik A.Ş. (Vakıf Enerji) determined by appraisal report prepared by independent valuation company on 29 November 2014 is amounting to TL 14,000. The value of the Company s shares amounts to TL 2, FACTORİNG RECEVIABLES As at 31 December 2014 and 2013, factoring receivables are as follows: TL FC TL FC Factoring Receivables Discounted Domestic factoring receivables 142,848-3,214 - Export factoring receivables ,723 Unearned factoring income (4,262) (18) (1,347) (85) 138, ,867 1,638 Other Factoring Receivables Domestic factoring receivables 359, ,750 - Foreign factoring receivables - 11,580-5, ,482 11, ,750 5,189 Factoring receivables, net 498,068 12, ,617 6,827 As at 31 December 2014 and 2013, there is no collateral taken against the factoring receivables of the Company. As at 31 December 2014 and 2013, the breakdown of total factoring receivables by industrial groups is as follows: 31 December 2014 % 31 December 2013 % Energy 242, , Information 57, , Transportation 45, , Textile 28, , Machinery and equipment 23, Construction 15, , Iron and steel 14, Food 8, , Other 74, , Total 510, ,

27 5 - FACTORING RECEIVABLE (Continued) As at 31 December 2014 and 2013, the breakdown of doubtful receivables and provisions are as follows: TL FC TL FC Past-Due Loans 30,488 3,363 27,122 3,501 Uncollectible Receivables 14,927-28,226 - Specific Provisions (19,077) (3,363) (22,556) (1,751) Doubtful receivables, net 26,338-32,792 1,750 As at 31 December 2014 and 2013, the aging analysis of the impaired factoring receivables and allowance are as follows: Total Total doubtful doubtful factoring factoring receivables Allowance receivables Allowance Overdue 1-3 months Overdue 3-6 months Overdue 6-12 months 2, ,624 8,532 Overdue over 1 year 45,391 21,497 28,225 15,775 Total 48,778 22,440 58,849 24,307 Movements in specific provision for factoring receivables during the years ended 31 December are as follows: Balance at 1 January 24,307 11,264 Provision for the period 3,759 14,358 Recoveries during the period (-) (5,626) (1,315) Balance at the end of the period 22,440 24,307 As at 31 December 2014 and 2013, the breakdown of collateral taken against factoring receivables of the Company is as follows: Received mortgages and pledges 34,999 48,319 Total 34,999 48,319 23

28 6 - TANGIBLE ASSETS Movements of tangible assets during the period ended 31 December 2014 and 2013 are as follows: 1 January 2014 Additions Disposals 31 December 2014 Cost Machinery and equipment Furniture and fixtures Leasehold improvements (48) 943 1, (48) 1,226 Current year 1 January 2014 depreciation Disposals 31 December 2014 Accumulated depreciation Machinery and equipment (192) (13) - (205) Furniture and fixtures (57) (5) - (62) Leasehold improvements (912) (70) 40 (942) (1,161) (88) 40 (1,209) Net Carrying Value 102 (8) 17 1 January 2013 Additions Disposals 31 December 2013 Cost Machinery and equipment (22) 209 Furniture and fixtures Leasehold improvements , (22) 1,263 Current year 1 January 2013 depreciation Disposals 31 December 2013 Accumulated depreciation Machinery and equipment (193) - - (193) Furniture and fixture (54) (2) - (56) Leasehold improvements (834) (78) - (912) (1,081) (80) - (1,161) Net carrying value 185 (22) 102 As at 31 December 2014 and 2013, there are no tangibles assets acquired through financial lease. 24

29 7 - INTANGIBLE ASSETS Movements of intangible assets during the year ended 31 December 2014 and 2013 are as follows: 1 January 2014 Additions Disposals 31 December 2014 Cost Computer Software Current year 1 January 2014 charge Disposals 31 December 2014 Computer software (380) (55) - (435) (380) (55) - (435) Net carrying value January 2013 Additions Disposals 31 December 2013 Cost Computer software Current year 1 January 2013 charge Disposals 31 December 2013 Accumulated amortization Computer software (315) (65) - (380) (315) (65) - (380) Net carrying value As at 31 December 2014 and 2013, the Company does not have any internally generated intangible assets. 25

30 8 - CURRENT PERIOD TAX ASSETS As at 31 December 2014 and 2013, the current year tax assets are as follows: 31 December December 2013 Prepaid Corporate Tax Prepaid Taxes (withholding) 12 8 Value added tax DEFERRED TAX ASSETS AND LIABILITIES Deferred tax liabilities and assets are recognized when it is probable that the future economic benefits resulting from the reversal of taxable temporary differences will flow to or from the Company. Deferred tax assets and liabilities are recognized at the tax rates that are expected to be applied at the reversal of taxable temporary differences. As at 31 December 2014 and 2013, temporary differences and deferred tax assets and liabilities are computed using the prevailing corporate tax rates are as follows: Deferred tax Temporary Differences assets / (liabilities) Provision for doubtful receivables Provision for severance payment Allowance provision Useful life differences Tangible and intangible assets Tax losses - 8,577-1,715 Total deferred tax assets 1,119 8, ,785 Provision for doubtful receivables - 2, Total deferred tax liability - 2, Deferred tax assets, net 223 1,367 Opening Balance 1,367 2,041 Deferred tax (expense)/income (1,128) (661) Classified in Other Comprehensive Income/Expense (16) (13) 223 1,367 26

31 10 - INFORMATION ON ASSETS HELD FOR SALE AND ASSETS RELATED TO THE DISCOUNTED OPERATIONS As at 31 December 2014 and 2013, assets held for sale are as follows: Assets held for sale The Company purchased assets amounting to TL 27 from execution in exchange for the uncollectible receivable of a factoring customer PREPAID EXPENSES As it 31 December 2014 and 2013, prepaid expenses are as follows: TL FC TL FC Prepaid expenses OTHER RECEIVABLES Other receivables consist of receivables from personnel as at 31 December 2014 and FUNDS BORROWED As at December 2014 and 2013, details of funds borrowed are as follows: TL FC TL FC Funds Borrowed 420,683 26,452 52,253 41, ,683 26,452 52,253 41,158 Short-term borrowings Short-term unsecured bank loans 427,982 78,130 Short-term portion of long-term unsecured bank loans 7,662 6,704 Long-term borrowings Long-term unsecured bank loans 11,491 8, ,135 93,411

32 13 - FUNDS BORROWED (Continued) Effective Rate Currency Effective Rate Currency of Interest (%) amount TL of Interest (%) amount TL Fixed rate loans: - US Dollar ,088 14, ,374 15,858 - EURO ,502 4, ,710 7,970 - British Pound Turkish Lira , , ,340 50,340 Adjustable-rate loans: - US Dollar ,480 5, ,988 17,093 - EURO , British Pound ,140 - Turkish Lira ,135 93, OTHER PAYABLE As at 31 December 2014 and 2013, details of the miscellaneous payables are as follows: Other Purchase Payables Payables to Personnel - 1 Commissions Payable to Correspondents TAXES AND DUTIES PAYABLE As at 31 December 2014 and 2013, details of taxes and duties payables are as follows: Corporate tax payable Banking and insurance transactions tax Premiums payable Withholding tax payable Other ,

33 16 - PROVISIONS As at 31 December 2014 and 2013, details of provisions are as follows: Provision for employee benefits Reserve for employee severance payments Reserve for unused vacation pay Other provision Reserve for employee severance payments In accordance with the existing social legislation in Turkey, the Company is required to make lump sum payments to employees whose employment is terminated due to retirement or for reasons other than resignation or misconduct. The computation of the liability is based upon the retirement pay ceiling announced by the Government. Such payments are calculated on the basis of 30 days pay and limited to a maximum of full TL 3,438 (31 December 2013: full TL 3,254) as at 31 December 2014 per year of employment at the rate of pay applicable at the date of retirement or termination. The reserve for employee severance payments is not subject to a funding requirement. The reserve for employee severance payments is calculated by using the following assumptions: Net discount rate %3.08 %3.77 Expected salary/ limit increase %5.50 %6.00 Entitlement ratio of the estimated severance pay %90 %100 The basic assumption is that the maximum liability for each year of service will increase in line with inflation. Thus, the discount rate shows the real rate after adjusting for the effects of inflation. The Company s provision for severance pay, severance pay ceiling is adjusted every six months, which is effective as 1 January 2015 full TL 3,541 (1 January, 2014: Full TL 3,438) in the calculation. Movements in reserve for employee severance payments are as follows: 31 December December 2014 Balance at 1 January Current service cost Interest Payment during the period (18) (10) Actuarial (loss) / profit (82) (65)

34 16 - PROVISIONS (Continued) Reverse for unused vacation pay liability In accordance with the existing labor law in Turkey, the Company is required to pay to the employee, whose employment is terminated due to any reasons, or to its inheritors, the wage of the deserved and unused vacation days over the prevailing wage at the date the contract is terminated. Vacation pay liability is the total undiscounted liability of the deserved and unused vacation days of all employees. Movements in reserve for unused vacation pay liability are as follows: 31 December December 2014 Balance at 1 January Increase during the period 33 - Amount provided/ (used in the period) - (2) EQUITY Paid-in capital The Company s paid-in capital is amounting to full TL 22,400,000, comprised of shares with each has a nominal value of TL 1 (full TL). Paid-in capital of the Company is divided into groups comprised of full TL 15,008,000 Group (A), and full TL 7,392,000 Group (B). The Company s shareholder structure is as follows: Amount Share Amount Share T.Vakıflar Bankası T.A.O 17, , Güneş Sigorta A.Ş. 3, , Vakıf Finansal Kiralama A.Ş Vakıf Per. Öz. Sos. Güv. Vakfı Vakıf Pazarlama ve Tic. A.Ş Paid in capital 22, , SHAREHOLDERS GROUP NUMBER OF SHARES AMOUNT (FULL) Türkiye Vakıflar Bankası T.A.O. A 11,765,200 11,765,200 B 5,794,800 5,794,800 Güneş Sigorta A.Ş. A 2,056,900 2,056,900 B 1,013,100 1,013,100 Vakıf Finansal Kiralama A.Ş. A 569, ,500 B 280, ,500 Vakıf Per.Öz. Sos. Güv. Vakfı A 381, ,900 B 188, ,100 Vakıf Pazarlama ve Tic. A.Ş. A 234, ,500 B 115, ,500 Shareholders of Group A have fifty (50) vote right and shareholders of Group B have one (1) vote right for share in Ordinary and Extraordinary General Meetings of Shareholders. 30

35 17 - EQUITY (Continued) Capital reserves As at 31 December 2014 and 2013, capital reserves amounting to TL 28,831 consist of the inflationary adjustments of the paid-in capital. Profit reserves As at 31 December 2014, profit reserves consist of legal reserves amounting to TL 4,987 and (31 December 2013: TL 4,987), and extraordinary reserves amounting to TL 32,820 (31 December 2013: TL 32,280). Profit distribution Retained earnings as per the statutory financial statements other than legal reserves are available for distribution, subject to the legal reserve requirement referred to below: The legal reserves consist of first and second reserves, in accordance with the Turkish Commercial Code. The first legal reserve appropriated out of the statutory profit at the rate of 5% until the total reserve reaches a maximum of 20% of the Company s paid-in capital. The second legal reserve is appropriated at the rate of 10% of all distributions in excess of 5% of the Company s paid-in capital. The first and second legal reserves are not available for distribution unless they exceed 50% of the share capital but may be used to absorb losses in the event that the general reserve is exhausted. The Company has no distributable profit for the year 2013, so there is no profit distribution in year OPERATING INCOME For the years ended 31 December, details of operating income are as follows: Interest income on factoring receivables - Discounted 9,496 2,318 - Other 35,642 14,206 45,138 16,524 Fees and commissions on factoring receivables - Discounted Other Operating Income 45,656 17,085 31

36 19 - FINANCING EXPENSE For the years ended 31 December, details of financing expenses are as follows: Interest expense on borrowings 26,492 5,931 Fees and Commissions ,784 6, OPERATING EXPENSES For the years ended 31 December, details of operating expenses are as follows: Personnel expenses 3,337 3,335 Rent expenses Litigation expenses Cleaning expenses Consulting expenses Amortization expenses Taxes Car rental expenses Data processing expenses Representation expenses Provision for employee benefits Advertising expenses 26 3 Notary expenses Other expenses ,225 4,953 For the years ended 31 December, details of personnel expenses included in operating expenses are as follows: Wages and salaries 2,069 2,205 Bonuses and premiums Social security premium employer s share Employee insurance expenses Personnel food expenses Other ,337 3,335 32

37 21 - OTHER INCOME For the years ended 31 December, details of other income are as follows: Foreign exchange gain 332, ,476 Interest received from banks Other (*) 1,689 1, , ,207 (*) December 31, 2014 the date of the end of the accounting period, other operating income TL 1,490 of collections factoring NPL provision in previous years, the remaining TL 199 consist of other income (31 December 2013: TL 1,315 factoring NPL provision in previous years, the made from collection, the rest consist of TL 12 other income) SPECIFIC PROVISION FOR DOUBTFUL RECEIVABLES For the years ended 31 December, details of specific allowance for doubtful receivables are as follows: Provision provided during the period 3,759 14,358 3,759 14, OTHER EXPENSES For the years ended 31 December, details of other expenses are as follows: Foreign exchange loss 332, , , ,253 33

38 24 - TAXES As at 31 December 2014, corporate income tax is levied at the rate of 20% (2013: 20%). Corporate tax rate is levied on the statutory corporate income tax base, which is determined by modifying accounting income for disallowable expenses and certain exclusions and allowances for tax purposes. If the profit has not been distributed, it is not subject to any other tax. Some of the deduction rates included in the 15th and 30th articles of the Law no on the Corporate Tax have been redefined according to the cabinet decision numbered 2006/10731, which was announced at Trade Registry Gazette of 23 July In this respect, withholding tax rate on dividend payments, which are made to the companies except those are settled in Turkey or generate income in Turkey via a business or a regular agent, was increased to 15% from 10%. When applying the withholding tax rates on dividend payments to the non-resident institutions and the individuals, the withholding tax rates covered in the related Double Tax Treaty Agreements are taken into account. The transfer pricing provisions have been stated under the Article 13 of Corporate Tax Law with the heading of disguised profit distribution via transfer pricing. The General Communiqué on disguised profit distribution via Transfer Pricing sets details about implementation. New amendments to transfer pricing are in accordance with the principles of transfer pricing manual of OECD. If the tax payers have transactions like service taking or product and goods buying or selling with related parties which are not in accordance with the counterpart principle it will be adjudge that disguised profit distribution via transfer pricing. This kind of disguised profit distribution via transfer pricing will not be deducted from the corporate tax. The companies are obligated to fill the transfer pricing form attached to the annual corporate tax declaration. On this form, all the related party transactions, amounts and the related Transfer Pricing methods are disclosed. In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Companies file their tax returns within four months following the closing date of the related financial year. Tax returns are open for five years from the beginning of the year that follows the date of filling during which time the tax authorities have the right to audit tax returns, and the related accounting records on which they are based, on may issue re-assessments based on their findings. The reported income tax expense for the years ended 31 December 2014 and 2013 are different than the amounts computed by applying the statutory tax rate to profits before income taxes as shown in the following reconciliation: Profit before tax 12,051 (6,586) Tax computed using statutory tax rate (2,410) 1,317 -Tax reconciliation: -Reversal of the deferred tax from impairment of affiliates - (1,974) -Disallowable expenses (1) (4) -Other Tax expense on income statement (1,999) (661) 34

39 24 - TAXES (Continued) For the years ended 31 December, tax expense in the income statement is summarized below: Corporate tax provision expense (871) - Deferred tax income / (expense) (1,128) (661) (1,999) (661) As at 31 December 2014 and 2013, provision for income taxes and prepaid taxes are as follows: Corporate tax provision (Note 15) Deferred tax income / (expense) (Note 8) (54) (614) Corporate Tax 273 (614) 25 - RELATED PARTY DISCLOSURES As at 31 December 2014 and 2013, balances with related parties are as follows: Bank Deposits T. Vakıflar Bankası T.A.O , ,789 Loans T. Vakıflar Bankası T.A.O. 20,156 28,844 Vakıfbank International AG 81 2,392 20,237 31,236 Payable to Related Parties Güneş Sigorta A.Ş Kredi Kayıt Bürosu A.Ş. 2 - Vakıf Sigorta Ara. Hiz. Ltd. Şti. 2 - T. Vakıflar Bankası T.A.O Prepaid Expenses Güneş Sigorta A.Ş Vakıf Sigorta Ara. Hiz. Ltd. Şti

40 25 - RELATED PARTY DISCLOSURES (Continued) Income and expenses for the years ended as at 31 December 2014 and 2013 arisen from the transactions with related parties are as follows: Interest Income from related party T. Vakıflar Bankası T.A.O Financial expenses from related party T. Vakıflar Bankası T.A.O. Interest Expenses 1,534 3,103 Other Financial Expenses Letter of Guarantee Expenses ,636 3,318 Vakıfbank International AG Interest Expenses Other Financial Expenses Other Expenses paid to the related parties Vakıf Gayrimenkul Yatırım Ortaklığı Güneş Sigorta A.Ş Kredi Kayıt Bürosu A.Ş Vakıf Pazarlama Sanayi ve Tic. A.Ş. 2 6 Vakıf Sigorta Ara. Hiz. Ltd. Şti. 2 2 Vakıf Yatırım Değerleme A.Ş. 2 - Directors Remuneration: The key management and the Board of Directors received remuneration and fees amounting to 430 TL (31 December 2013: 190 TL) COMMITMENTS AND CONTINGENCIES Collaterals received None. (31 December 2013: None) 36

41 26 - COMMITMENTS AND CONTINGENCIES (Continued) Commitments As at 31 December 2014 and 2013, commitments are comprised of notes given to the following institutions: Collaterals given the courts Held in custody securities The Company has obtained securities held in custody for its factoring receivables at 31 December 2014 and 2013 as detailed below: TL FC TL FC Customer checks 108,799 34,054 32,805 3,386 Customer notes 60,272 81,063 2,558 31, , ,117 35,363 35, FINANSIAL RISK MANAGEMENT The Company s activities expose it to a variety of financial risks: Credit Risk Liquidity Risk Market Risk This note presents information about the Company s exposure to each of the above risks, the Company s objectives, policies and processes for measuring and managing risk. The Company s Board of Director s has overall responsibility for the establishment and oversight of the Company s risk management framework. The Company s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company s activities. The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. Credit Risk The Company is subject to credit risk mainly through its factoring operations. Risk Management and Analysis Department is responsible to manage the credit risk. The Company requires a certain amount of collateral in respect of its financial assets. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Main Operation Department conducts the operations. The Branches does not have operation or payment authority. 37

42 27 - FINANCIAL RISK MANAGEMENT (Continued) Credit Risk Details of the financial assets exposed to credit risk as at 31 December 2014 and 2013 are as follows: Factoring Receivable under Receivables Follow up Related Non-related Related Non-related 31 December 2014 Party Party Party Party Cash at banks Other Exposure to maximum credit risk as at reporting date (A+B+C+D+E) - 510,382-26, Exposure to maximum credit risk as at reporting date A. Net carrying value of financial assets which are neither impaired nor overdue - 510, Secured portion by any guarantee B. Net carrying value of financial assets that are restructured/renegotiated, otherwise which will be regarded as overdue or impaired Secured potion by any guarantee C. Net carrying value of financial assets which are overdue but not - or impaired Secured portion by any guarantee D. Net carrying value of impaired assets , Overdue (gross book value) , Impairment (-) (22,440) Secured portion of net book value (*) , Not due (gross book value) Impairment (-) Secured portion of net book value (with letter of guarantee etc.) E. Off balance sheet items with credit risks (*) Includes the Company s mortgages and guarantees acquired the provision of the factoring receivables in the process of prosecuting. 38

43 27 - FINANCIAL RISK MANAGEMENT (Continued) Factoring Receivables Receivables under follow-up Related Non-related Related Non-related 31 December 2013 Party Party Party Party Cash at banks Other Exposure to maximum credit risk as at reporting date (A+B+C+D+E) - 132,444-34,542 3, Exposure to maximum credit risk as at reporting date A. Net carrying value of financial assets which are neither impaired nor overdue - 132, , Secured portion by any guarantee B. Net carrying value of financial assets that are restructured/renegotiated, otherwise which will be regarded as overdue or impaired Secured potion by any guarantee C. Net carrying value of financial assets which are overdue but not -impaired Secured portion by any guarantee D. Net carrying value of impaired assets , Overdue (gross book value) , Impairment (-) (24,307) Secured portion of net book value (*) , Not due (gross book value) Impairment (-) Secured portion of net book value (with letter of guarantee etc.) E. Off balance sheet items with credit risks (*) Includes the Company s mortgages and guarantees acquired the provision of the factoring receivables in the process of prosecuting. 39

44 27 - FINANCIAL RISK MANEGEMENT (Continued) Liquidity Risk The Company usually creates funds by liquidating short term financial instruments, such as collecting its receivables and converting bank deposits into cash. Liquidity risk arises in the general funding of the Company s activities and the management of positions. It includes both risk of being unable to fund assets at appropriate maturities and rates and risk of being unable to liquidate an asset at a reasonable price and in an appropriate time frame. The Company meets its liquidity requirements through credit lines in the bank. The Company s policy is to match cash out flows mainly arising from repayments of the fund borrowed and cash inflows. The following table, based on the remaining period until the maturity date of the contract as of the reporting dates, the Company s financial liabilities by relevant maturity groupings by providing the analysis. The amounts disclosed in the table are the contractual undiscounted cash flows: 31 December 2014 Carrying Contractual Less than More than Expected maturities Amount Cash Flows months months years 5 years Non derivative financial liabilities 447,302 (455,974) (416,356) (36,803) (2,815) - Fund borrowed 447,135 (455,807) (416,189) (36,803) (2,815) - Miscellaneous payables 167 (167) (167) December 2013 Carrying Contractual Less than More than Expected maturities Amount Cash Flows months months years 5 years Non derivative financial liabilities 93,731 (95,586) (61,989) (24,593) (9,004) - Fund borrowed 93,411 (95,266) (61,669) (24,593) (9,004) - Miscellaneous payables 320 (320) (320) Market Risk Market risk is the risk that changes in market prices, such as foreign exchange rates interest rates and equity prices will affect the Company s income or the value of its holdings of financial instruments. Market risk management, control market risk exposures within acceptable parameters, while aiming to optimize the return of risk. Foreign Currency Risk The Company is exposed to currency risk through transactions (such as funds borrowed, factoring transactions) in foreign currencies. As the currency in which the Company presents its financial statements is TL, the financial statements are effected by movements in the exchange rates against to TL. As at 31 December 2014 and 2013, foreign currency denominated assets and liabilities, are shown in Note

45 27 - FINANCIAL RISK MANEGEMENT (Continued) Interest Rate Risk The Company s operations are subject to the risk of interest rate fluctuations to the extent that interestearning assets and interest-bearing liabilities mature or reprice at different times or in differing amounts. In the case of floating rate assets and liabilities, the Company is also exposed to basis risk which is the difference is repricing characteristics of the various floating rate indices, such as year-end libor and different types of interest. Risk management activities are aimed at optimizing net interest income, given market interest rate levels consistent with the Company s business strategies. Interest Rate Risk The tables below summarize average effective interest rates by major currencies for monetary financial instruments at 31 December 2014 and 2013: USD Euro TL USD Euro TL Assets Cash at Banks -Time deposits % 0.96% 5.73% Factoring receivables 4.37% 4.76% 13.96% 6.43% 5.41% 12.99% Liabilities Funds borrowed 3.05% 2.60% 10.52% 5.04% 2.41% 8.15% Interest Rate Sensitivity Analysis As at 31 December, the interest rate profiles of the interest-bearing financial instruments are as follows: Fix Rate Instruments Financial Assets Factoring receivables 325,630 93,486 Time deposits - 3,430 Financial Liabilities Funds borrowed 439,037 74,168 Floating Rate Instruments Financial Assets Factoring receivables 184,752 38,958 Financial Liabilities Funds borrowed 8,098 19,243 41

46 27 - FINANCIAL RISK MANEGEMENT (Continued) 31 December, 2014 date of interest differs from the variable rate financial instruments of the renewal date by 100 basis points higher/ lower with all other variables held constant, variable rate instruments interest income consist of/ loss before tax due to the net loss for the period TL 412 (31 December 2013: TL 138) will be lower/ higher. Profit / (Loss) Equity (*) 100 bp 100 bp 100 bp 100 bp increase decrease increase decrease 31 December (412) 412 (412) (*) Includes Profit/Loss effects. Foreign Currency Risk The Company is exposed to currency risk through transactions (such as factoring operations and borrowings) in foreign currencies. As the currency in which the Company presents its financial statements is TL, the financial statements are affected by movements in the exchange rates against TL. As at 31 December 2014 and 2013, the foreign currency position of the Company is as follows (TL equivalents): (TL Amount) (TL Amount) Foreign Currency Monetary Assets 99,445 34,590 Foreign Currency Monetary Liabilities (108,343) (43,278) (8,898) (8,688) 42

47 27 - FINANCIAL RISK MANEGEMENT (Continued) As at 31 December 2014 and 2013, the foreign currency assets and liabilities of the Company are as follows: 31 December 2014 USD Euro Other Total Assets Banks Factoring Receivables (*) 76,682 22,580-99,262 Other assets Total Assets 76,759 22, ,445 Liabilities Funds borrowed (**) 82,748 25, ,316 Miscellaneous liabilities Total Liabilities 82,748 25, ,343 Asset Net position (5,989) (2,915) 6 (8,898) (*) FC Indexed factoring receivables TL 86,948 has been included in factoring receivables. (**) FC Indexed receivables TL 81,864 TL has been included in funds borrowed. 31 December 2013 USD Euro Other Total Assets Banks Factoring Receivables (*) 26,244 5,818 2,232 34,294 Other assets Total Assets 26,275 6,049 2,266 34,590 Liabilities Funds borrowed (**) 32,951 7,980 2,140 43,071 Miscellaneous liabilities Total Liabilities 33,125 8,002 2,151 43,278 Asset Net position (6,850) (1,953) 115 (8,688) (*) FC Indexed factoring receivables TL 25,717 has been included in factoring receivables. (**) FC Indexed receivables TL 1,913 TL has been included in funds borrowed. 43

48 27 - FINANCIAL RISK MANAGEMENT (Continued) Foreign Currency Sensitivity Analysis As at 31 December 2014, a 10 percent weakening of the TL against the foreign currencies would have increased profit before tax by TL 890 (2013: Period profit will increase about 869 TL). This analysis assumes that all other variables, in particular interest rates; remain constant at 31 December 2014 and 31 December December 2014 Profit/(Loss) Equity USD (599) (599) Euro (292) (292) Others 1 1 Total (890) (890) 31 December 2013 USD (685) (685) Euro (195) (195) Others Total (869) (869) Fair Values of Financial Instruments Financial Financial Asset at Liabilities at the Loans the Amortized and Amortized Carrying Fair 31 December 2014 Cost Receivables Cost Amount Value Financial Assets Banks Factoring Receivables - 510, , ,382 Financial Liabilities Funds Borrowed , , ,462 Miscellaneous Payables Financial Financial Asset at Liabilities at the Loans the Amortized and Amortized Carrying Fair 31 December 2013 Cost Receivables Cost Amount Value Financial Assets Banks 3, ,795 3,795 Factoring Receivables - 132, , ,444 Financial Liabilities Funds Borrowed - 93,411 93,411 94,348 Miscellaneous Payables The Company s management thought, that the carrying value of financial assets and the financial liabilities except for the borrowings are approximately close to their fair value due to the time that they are short term. 44

49 27 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (Continued) Banks factoring receivables and including short-term bank loans denominated in TL, which are measured at amortized cost discounted effective interest rate approximately due to the short-term nature and negligible possible gross amount. The fair value of financial assets and financial liabilities are determined as follows: First level: Financial assets and liabilities in active markets for identical assets and liabilities are valued using stock market prices. Second level: Financial assets and liabilities, the related asset or liability, either directly or indirectly, other than quoted prices included within Level 1 observable market prices used for valuation purposes. Third level: Financial assets and liabilities, determining fair value of the asset or liability, are not based on observable market data used in the valuation. The fair values of financial assets and liabilities are categorized as follows: The fair value level as of the reporting date 31 December Level 2. Level 3. Level Financial Assets 2, ,601 Available-for-sale financial assets (*) 2, ,601 The fair value level as of the reporting date 31 December Level 2. Level 3. Level Financial Assets 2, ,322 Available-for-sale financial assets (*) 2, ,322 (*) The value of the available-for-sale financial assets is determined by an independent valuation firm s study. 45

50 28 - EARNINGS PER SHARE The weighted average number of shares of the Group and earnings per share for the period ended 31 December 2014 and 31 December 2013 are as follows: Weighted average number of outstanding shares 22,400 22,400 Net profit for the period (TL) 10,052 (7,247) Basic earnings per share (full TL) ( ) There are no diluted shares of the Company SUBSEQUENT EVENTS None... 46