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EKO FAKTORİNG A.Ş.

FINANCIAL STATEMENTSAT 31 DECEMBER 2012 TOGETHER WITHINDEPENDENT AUDITOR’S REPORT


FINANCIAL STATEMENTS AT 31 DECEMBER 2012

CONTENTS PAGES

BALANCE SHEET (STATEMENT OF FINANCIAL POSITION)........................................ 1

STATEMENT OF COMPREHENSIVE INCOME................................................................... 2

STATEMENT OF CHANGES IN EQUITY .............................................................................. 3

STATEMENT OF CASH FLOWS.............................................................................................. 4

NOTES TO THE FINANCIAL STATEMENTS ....................................................................... 5-33

NOTE 1 ORGANISATION AND NATURE OF OPERATIONS…….................................................... 5NOTE 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS............................................. 5-13NOTE 3 FINANCIAL RISK MANAGEMENT....................................................................................... 14-18NOTE 4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS ........................................... 19NOTE 5 CASH AND CASH EQUIVALENTS ....................................................................................... 19NOTE 6 FACTORING RECEIVABLES, NET........................................................................................ 20-21NOTE 7 ASSET HELD FOR SALE......................................................................................................... 22NOTE 8 BORROWINGS ......................................................................................................................... 22-23NOTE 9 FINANCIAL LEASE PAYABLES............................................................................................ 23NOTE 10 ISSUED DEBT SECURITIES ................................................................................................... 23-24NOTE 11 OTHER ASSETS AND PREPAID EXPENSES........................................................................ 24NOTE 12 PROPERTY AND EQUIPMENT .............................................................................................. 24-25NOTE 13 INTANGIBLE ASSETS............................................................................................................. 26NOTE 14 TAXES ON INCOME................................................................................................................ 26-28NOTE 15 EMPLOYMENT BENEFIT OBLIGATIONS............................................................................ 28-29NOTE 16 OTHER LIABILITIES AND ACCRUED EXPENSES............................................................. 30NOTE 17 SHARE CAPITAL .................................................................................................................... 30-31NOTE 18 RETAINED EARNINGS AND LEGAL RESERVES .............................................................. 31NOTE 19 OTHER OPERATING INCOME/(EXPENSES), NET.............................................................. 31NOTE 20 OPERATING EXPENSES......................................................................................................... 32NOTE 21 FACTORING REVENUES........................................................................................................ 32NOTE 22 FOREIGN EXCHANGE GAINS/(LOSSES), NET ................................................................... 32NOTE 23 TRANSACTIONS AND BALANCES WITH RELATED PARTIES ...................................... 33NOTE 24 COMMITMENTS AND CONTINGENT LIABILITIES ......................................................... 33NOTE 25 SUBSEQUENT EVENTS ......................................................................................................... 33


BALANCE SHEET (STATEMENT OF FINANCIAL POSITION)AT 31 DECEMBER 2012(Amounts expressed in thousands of Turkish lira (“TL”) unless otherwise indicated.)

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Notes 2012 2011

ASSETS

Cash and cash equivalents 5 19,363 7,320Factoring receivables, net 6 296,639 239,550Assets held for sale 7 116 152Other assets and prepaid expenses 11 1,246 262Property and equipment, net 12 7,829 6,209Intangible assets, net 13 135 80Deferred tax asset, net 14 5,598 4,968

Total assets 330,926 258,541

LIABILITIES AND EQUITY

Bank borrowings 8 193,306 187,960Lease payables, net 9 226 -Issued debt securities 10 50,466 -Factoring payables 520 -Current income taxes payable, net 14 663 416Other liabilities and accrued expenses 16 1,035 775Employment benefit obligations 15 824 461

Total liabilities 247,040 189,612

EQUITY

Share capital 17 21,026 21,026Adjustment to share capital 17 424 424

Total paid-in share capital 17 21,450 21,450Share premiums 16,410 16,410Revaluation fund 1,337 701Retained earnings 44,689 30,368

Total equity 83,886 68,929

Total liabilities and equity 330,926 258,541

The accompanying notes form an integral part of these financial statements.


STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 2012(Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)

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Notes 2012 2011

Factoring interest income 21 67,149 42,776Factoring commissions 21 7,335 5,125

Income from factoring operations 74,484 47,901

Interest expenses (28,271) (18,838)Foreign exchange gains and losses, (net) 22 (132) 29Impairment loss on factoring receivables 6 (7,771) (8,817)Recoveries from impaired factoring receivables 6 1,050 5,706

Income after foreign exchange gains and losses, netand provision for impaired factoring receivables 39,360 25,981

Interest income other than factoring 33 81Other income/(expense), net 19 (315) 392

Operating profit 39,078 26,454

Operating expenses 20 (18,201) (15,959)

Income before taxes from 20,877 10,495

Taxation on income from operations- Current year tax expense 14 (4,976) (2,554)- Deferred tax income 14 710 1,128

Net profit for the year 16,611 9,069

Revaluation differences of tangible assets 12 716 -Deferred taxes related to revaluation differences 14 (80) -

Total comprehensive income for the year 17,247 9,069



STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2012(Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)

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AdjustmentShare to share Share Revaluation Retained Totalcapital capital premium fund earnings equity

1 January 201121,026 424 16,410 701 22,338 60,899

Dividend paid - - - - (1,039) (1,039)Net profit for the year - - - - 9,069 9,069

31 December 2011 21,026 424 16,410 701 30,368 68,929

1 January 2012 21,026 424 16,410 701 30,368 68,929

Dividend paid - - - - (2,290) (2,290)Revaluation fund - - - 636 - 636Net profit for the year - - - - 16,611 16,611

31 December 2012 21,026 424 16,410 1,337 44,689 83,886



STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 31 DECEMBER 2012(Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)

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Notes 2012 2011

Cash flows from operating activities

Net profit for the year 16,611 9,069

Adjustments to reconcile net income for the year to netcash provided from operating activities:

Depreciation of property and equipment 12 437 298Amortization of intangible assets 13 30 -Proceeds from sale of property and equipment (2) -Reserve for employment benefit obligations 15 458 461Provision for impaired factoring receivables 6 7,771 8,817Interest income, net (38,909) (23,938)Interest paid (26,338) (18,838)Interest received 67,180 48,242Current year taxation expense 14 4,266 1,426Other 72 -

Cash flows from operating profit beforechanges in operating assets and liabilities 31,576 25,537

Net decrease/ (increase) in restricted cash 5 50 (50)Net increase in factoring receivables (64,340) (60,765)Net increase/ (decrease) in other assets and prepaid expenses (984) 66Net decrease in asset held for sale 36 35Net increase/ (decrease) in other liabilities and accrued expenses 188 (10,091)Income taxes paid 14 (4,729) (2,547)Employment termination benefit paid 15 (95) (237)

Net cash used in operating activities (38,298) (48,052)

Cash flows from investing activities:Purchase of property, plant and equipment 12 (1,343) (121)Purchases of intangible assets-net of disposals 13 (85) -Proceeds from sale of property, plant and equipment 2 (34)Redemption of held-to-maturity securities - 5

Net cash used in investing activities (1,426) (150)

Cash flows from financing activities:Proceeds/ (payments) of borrowings 5,039 50,781Issuance of debt securities 48,840 -Increase in finance lease payables 226 -Dividends paid (2,290) (1,039)

Net cash provided from financing activities 51,815 49,742

Net increase in cash and cash equivalents 12,091 1,540

Effect of foreign exchange rate changeson cash and cash equivalents - 782

Cash and cash equivalents at beginning of the year 5 7,270 4,948

Cash and cash equivalents at end of the year 5 19,361 7,270



NOTES TO THE FINANCIAL STATEMENTSAT 31 DECEMBER 2012(Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)

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NOTE 1 - ORGANISATION AND NATURE OF OPERATIONS

Eko Faktoring A.Ş. (“the Company”) was established in 1994. The Company provides domestic factoring services. The company has 99 employees at 31 December 2012 (2011: 84). The registeredoffice address of the Company is Eski Büyükdere Asfaltı, Ayazağa Yolu Cad., No: 4 Kat: 4 İz Plaza Giz Maslak, Istanbul/Turkey.

The financial statements of the Company are authorized for issue by the Board of Directors on1 March 2013.

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS

The principal accounting policies adopted in the preparation of the financial statements at31 December 2012 are set out below. These policies have been consistently applied to the yearpresented, unless otherwise stated.

Accounting standards

The Company maintains its books of account and prepares its statutory financial statements in TurkishLira (“TL”), in accordance with the communiqué “Uniform Chart of Accounts, Disclosures togetherwith Form and Nature of Financial Statements to be Issued by Leasing, Factoring and ConsumerFinance Companies”(“Financial Statement’s Communiqué”) issued by the Banking Regulation andSupervision Agency (“BRSA”) in the Official Gazette dated 17 May 2007, numbered 26525; and inaccordance with Turkish Accounting / Financial Reporting Standards (“TAS/TFRS”) and theiradditions and comments issued by the Turkish Accounting Standard’s Board (“TASB”).

These financial statements are based on the statutory records with adjustments and reclassifications forthe purpose of fair presentation in accordance with International Financial Reporting Standards(“IFRS”).

The balance sheet and the income statement of the Subsidiary are on basis and the carrying value ofthe Subsidiary held by the Company eliminated against the related equity.

Company’s going concern

The Company has prepared the financial statements according to the going concern assumption.

Accounting for the effects of hyperinflation

Prior to 1 January 2006, International Accounting Standard 29 (“IAS29”), “Financial Reporting inHyperinflationary Economies”, requires that the financial statements prepared in the currency of ahyperinflationary economy be stated in terms of the purchasing power of this currency at balance sheetdate and restatement of the financial statements of the comparative periods within same terms. As thecharacteristics of the economic environment of Turkey indicate that hyperinflation has ceased,effective from 1 January 2006, the Company has no longer applied IAS 29. Accordingly, themeasuring unit current at 31 December 2005 is treated as the basis for the valuation of the amounts inthese financial statements.



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NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

Amendments in standards and interpretations

The Company adopted the standards, amendments and interpretations published by the InternationalAccounting Standards Board (“IASB”) and International Financial Reporting InterpretationCommittee (“IFRIC”) and which are mandatory for the accounting periods beginning on or after1 January 2012 which are related to the Company’s operations.

Standards, amendments and IFRICs applicable to 31 December 2012 year ends

- IFRS 7 (amendment), “Financial instruments: Disclosures on transfers of assets”, is effective forannual periods beginning on or after 1 July 2011. This amendment will promote transparency inthe reporting of transfer transactions and improve users’ understanding of the risk exposuresrelating to transfers of financial assets and the effect of those risks on an entity’s financialposition, particularly those involving securitisation of financial assets. Comparative informationis not needed in the first year of adoption. Earlier adoption is permitted.

- IFRS 1 (amendment), “First-time adoption of IFRS”, is effective for annual periods beginningon or after 1 July 2011. These amendments include two changes to IFRS 1. The first replacesreferences to a fixed date of 1 January 2004 with ‘the date of transition to IFRSs’, thuseliminating the need for entities adopting IFRSs for the first time to restate derecognitiontransactions that occurred before the date of transition to IFRSs. The second amendmentprovides guidance on how an entity should resume presenting financial statements inaccordance with IFRSs after a period when the entity was unable to comply with IFRSs becauseits functional currency was subject to severe hyperinflation. Earlier adoption is permitted.

- IAS 12 (amendment), “Income taxes” on deferred tax, is effective for annual periods beginningon or after 1 January 2012. This amendment introduces an exception to the existing principle forthe measurement of deferred tax assets or liabilities arising on investment property measured atfair value. As a result of the amendments, SIC 21, “Income taxes - recovery of revalued non-depreciable assets”, will no longer apply to investment properties carried at fair value. Theamendments also incorporate into IAS 12 the remaining guidance previously contained in SIC21, which is withdrawn. Early adoption is permitted.

New IFRS standards, amendments and IFRICs effective after 1 January 2013

- IAS 19 (amendment), “Employee benefits”, is effective for annual periods beginning on or after1 January 2013. These amendments eliminate the corridor approach and calculate finance costson a net funding basis. Early adoption is permitted.

- IAS 1 (amendment), “Presentation of financial statements”, regarding other comprehensiveincome is effective for annual periods beginning on or after 1 July 2012. The main changeresulting from these amendments is a requirement for entities to group items presented in “othercomprehensive income” (OCI) on the basis of whether they are potentially reclassifiable toprofit or loss subsequently (reclassification adjustments). The amendments do not address whichitems are presented in OCI. Early adoption is permitted.



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- IFRS 10, “Consolidated financial statements”, is effective for annual periods beginning on orafter 1 January 2013. The standard builds on existing principles by identifying the concept ofcontrol as the determining factor in whether an entity should be included within the consolidatedfinancial statements of the parent company. The standard provides additional guidance to assistin the determination of control where this is difficult to assess. This new standard might impactthe entities that a group consolidates as its subsidiaries.

- IFRS 11, “Joint arrangements”, is effective for annual periods beginning on or after 1 January2013. IFRS 11 is a more realistic reflection of joint arrangements by focusing on the rights andobligations of the arrangement rather than its legal form. There are two types of jointarrangement: joint operations and joint ventures. Joint operations arise where a joint operatorhas rights to the assets and obligations relating to the arrangement and hence accounts for itsinterest in assets, liabilities, revenue and expenses. Joint ventures arise where the joint operatorhas rights to the net assets of the arrangement and hence equity accounts for its interest.Proportional consolidation of joint ventures is no longer allowed.

- IFRS 12, “Disclosures of interests in other entities”, is effective for annual periods beginning onor after 1 January 2013. The standard includes the disclosure requirements for all forms ofinterests in other entities, including joint arrangements, associates, special purpose vehicles andother off balance sheet vehicles.

- IFRS 10, 11 and 12 on transition guidance (amendment), is effective for annual periodsbeginning on or after 1 January 2012. The amendment also provide additional transition relief inIFRSs 10, 11 and 12, limiting the requirement to provide adjusted comparative information toonly the preceding comparative period. For disclosure related to unconsolidated structuredentities, the amendments will remove the requirement to present comparative information forthe periods before IFRS 12 is applied.

- IFRS 13, “Fair value measurement”, is effective for annual periods beginning on or after1 January 2013. The standard aims to improve consistency and reduce complexity by providinga precise definition of fair value and a single source of fair value measurement and disclosurerequirements for use across IFRSs. The requirements, which are largely aligned between IFRSsand US GAAP, do not extend the use of fair value accounting but provide guidance on how itshould be applied where its use is already required or permitted by other standards within IFRSsor US GAAP.

- IAS 27 (revised), “Separate financial statements”, is effective for annual periods beginning onor after 1 January 2013. The standard includes the provisions on separate financial statementsthat are left after the control provisions of IAS 27 have been included in the new IFRS 10.

- IAS 28 (revised), “Associates and joint ventures”, is effective for annual periods beginning onor after 1 January 2013. The standard includes the requirements for joint ventures, as well asassociates, to be equity accounted following the issue of IFRS 11.

- IFRS 7 (amendment), “Financial instruments: Disclosures”, on offsetting financial assets andfinancial liabilities”, is effective for annual periods beginning on or after 1 January 2013. Theamendment reflects the joint IASB and FASB requirements to enhance current offsettingdisclosures. These new disclosures are intended to facilitate comparison between those entitiesthat prepare IFRS financial statements and those that prepare US GAAP financial statements.



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- IAS 32 (amendment), “Financial instruments: Presentation”, on offsetting financial assets andfinancial liabilities”, is effective for annual periods beginning on or after 1 January 2014. Theamendment updates the application guidance in IAS 32, ‘Financial instruments: Presentation’,to clarify some of the requirements for offsetting financial assets and financial liabilities on thebalance sheet.

- IFRS 1 (amendment), “First time adoption, on government loans”, is effective for annualperiods beginning on or after 1 January 2013. The amendment addresses how a first-timeadopter would account for a government loan with a below-market rate of interest whentransitioning to IFRS. It also adds an exception to the retrospective application of IFRS, whichprovides the same relief to first-time adopters granted to existing preparers of IFRS financialstatements when the requirement was incorporated into IAS 20 in 2008.

- Annual Improvements to IFRSs 2011 is effective for annual periods beginning on or after1 January 2013. Amendments effect five standards: IFRS 1, IAS 1, IAS 16, IAS 32 and IAS 34.

- IFRS 9, “Financial instruments: Classification and Measurement”, is effective for annualperiods beginning on or after 1 January 2015. The standard addresses the classification,measurement and recognition of financial assets and financial liabilities. It replaces the parts ofIAS 39 that relate to the classification and measurement of financial instruments.

- IFRS 10, (amendment) “Consolidated Financial Statements”, IFRS 12 and IAS 27 forinvestment entities is effective for annual periods beginning on or after 1 January 2013. Theseamendments mean that many funds and similar entities will be exempt from consolidating mostof their subsidiaries. Instead, they will measure them at fair value through profit or loss. Theamendments give an exception to entities that meet an “investment entity” definition and whichdisplay particular characteristics. Changes have also been made IFRS 12 to introducedisclosures that an investment entity needs to make.

Early adoption of standards

The Company did not early-adopt new or amended standards at 31 December 2012. Considering thefinancial statement items of the Company, it is deemed that the prospective changes would have nosignificant effect to over the financial position and performance of the Company.

Cash and cash equivalents

Cash and cash equivalents are initially recognised at cost in the balance sheet. Cash and cashequivalents consist of cash on hand, deposits at banks, defined amounts those are convertible to cashand highly liquid investments not significantly exposed to revaluation risk with maturities threemonths or less than three months (Note 5).

Related parties

In these financial statements, major shareholders of the Company, the organizations directly orindirectly financially related to the Company, key management personnel, board members of theCompany and their families, in each case together with, companies controlled by or affiliated withthem are considered and referred to as related parties (Note 23).



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Factoring receivables and provision for impaired factoring receivables

Factoring receivables originated by the Company by providing money directly to the borrower areconsidered as factoring receivables and are carried at amortised cost. All factoring receivables arerecognised when cash is advanced to borrowers against their domestic and foreign receivables.

A credit risk provision for impairment of the factoring receivables is established if there is objectiveevidence that the Company will not be able to collect all amounts due as a result of one or more eventsthat occurred after the initial recognition of the asset (a “loss event”) and that loss event(or events) has an impact on the estimated future cash flows of the receivables. The amount of theprovision for impaired factoring receivables is the difference between the carrying amount andrecoverable amount, being the present value of expected cash flows, including the amount recoverablefrom guarantees and collateral, discounted based on the interest rate at inception. For restructuredreceivables, the Company initially determines as to whether there has been an impairment as a resultof the restructuring, and if so, a provision for impairment is recorded representing the differencebetween the recoverable amount, being the present value of expected cash flows from restructuredreceivables discounted using the interest rate of the original receivables, and the carrying amount.

The provision also covers losses where there is objective evidence that probable losses are present incomponents of the portfolio at the balance sheet date. These have been estimated based upon historicalloss experience which is adjusted on the basis of current observable data to reflect the effects ofcurrent conditions that did not affect the period on which the historical loss experience is based and toremove the effects of conditions in the historical period that do not currently exist. The provision madeduring the year is charged against the income for the period.

Receivables that cannot be recovered are written off and charged against the provision for impairedfactoring receivables. These receivables are written off after all the necessary legal procedures havebeen completed and the amount of the loss is finally determined. Recoveries of amounts previouslyprovided for are treated as a reduction of the charge for provision for impaired factoring receivablesfor the period (Note 6).

Property and equipment

The Company has chosen the “revaluation method” as defined in (IAS 16) “Plant, property andequipment” in subsequent measurement of its buildings stated in its properties. The Company presentsthe buildings at the fair value based on valuation report of an independent licensed valuation company.Valuations are performed with sufficient regularity to ensure that fair value of buildings does notdiffer materially from its carrying amounts. Accumulated depreciation concerning the buildings isrestated proportionate to the change in the gross carrying amount of the asset such that the net bookvalue of the asset after revaluation equals its revaluated amount. All other property and equipment isstated at their net value which is their historical costs less any accumulated depreciation andimpairment (Note 12).

If a revaluation results in an increase in value, it should be credited to as “other comprehensiveincome” under the “Statement of Comprehensive Income” and accumulated in equity under theheading “revaluation funds” unless it represents the reversal of a revaluation decrease of the sameasset previously recognised as an expense, in which case it should be recognised as income.

Property and equipment are presented at recorded amount after the deduction of impairment andaccumulated depreciation (Note 12).



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Depreciation is calculated on the booked amounts of property and equipment using the straight-linemethod. The ranges of estimated useful lives are as follows:

Buildings 50 yearsOffice equipment, furniture and fixtures 4-5 yearsLeasehold improvements 4-5 years

Estimated useful life and depreciation method is checked for every year in order to determine theprobable effects of the changes in estimation and these changes are recorded. Where the carryingamount of an asset is greater than its estimated recoverable amount, it is written down to itsrecoverable amount and the impairment provision is accounted for related to the income statement.

Gains or losses on disposal of property and equipment are determined with the comparison of restatedamounts and sales amounts and recorded to the related income or expense accounts.

Intangible assets

Intangible assets comprise of software expenses and amortized over their estimated useful lives of fiveyears. Expenses for the repair and maintenance of computer software are accounted for in the incomestatement. However, the expenses are capitalized if they result in an enlargement or substantialimprovement of the respective assets (Note 13).

Impairment of assets

At each reporting date, the Company evaluates whether there is any impairment indication on theasset. When an indication of impairment exists, the Company estimates the recoverable values of suchassets. Impairment exists if the carrying value of an asset or a cash generating unit is greater than itsrecoverable amount which is the higher of value in use or fair value less costs to sell.

Assets held for sale

A tangible asset (or a disposal Company of tangible assets) classified as “asset held for sale” ismeasured at lower of carrying value or fair value less costs to sell. An asset (or a disposal group ofassets) is regarded as “asset held for sale” only when the sale is highly probable and the asset (disposalgroup) is available for immediate sale in the frame of the common conditions for sale of assets.

Financial liabilities and issued debt securities

Financial liabilities are recognized initially at fair value, including the transaction costs incurred.Subsequently, financial liabilities are measured at amortized cost using the effective yield method.Any difference between initial amount after transaction costs and the amortized value is recognized inthe income statement as finance cost over the redemption period of the financial liability.



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Accounting for Finance Lease (where the Company is “lessee”)

Under the finance leases, the Company recognizes the assets, with the fair value of the leased asset or,if lower, the present value of the minimum lease payments each determined at the inception of thelease. The assets that are obtained with finance lease agreements are classified as property andequipment. The useful life of an asset leased under a finance lease is considered equal to the lease termand leased assets are depreciated over the period of lease term. The finance lease liabilities arepresented in the balance sheet as “Finance lease payables” and related interest expenses and exchangegains and losses are charged to the income statement in the period that they occur (Note 9).

Income taxes

a. Income taxes currently payable

Income taxes (“corporation tax”) currently payable are calculated based in accordance with theTurkish tax legislation (Note 14).

Taxes other than on income are recorded within operating expenses (Note 20).

b. Deferred income taxes

Deferred income tax is provided in full, using the liability method, on temporary differences arisingbetween the tax bases of assets and liabilities and their carrying amounts in the financial statements.The rates enacted, or substantively enacted, at the balance sheet date are used to determine deferredincome tax.

The principal temporary differences arise from the provision for impaired factoring receivables,property and equipment, reserve for annual leave and provision for employment termination benefits(Note 14).

Deferred tax liabilities and assets are recognised when it is probable that the future economic benefitresulting from the reversal of temporary differences will flow to or from the Company. Deferred taxassets resulting from temporary differences in the recognition of expense for income tax, and forfinancial reporting purposes are recognised to the extent that it is probable that future taxable profitwill be available against which the deferred tax asset can be utilised.

Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a resultof past events and it is probable that an outflow of resources will be required to settle the obligationand a reliable estimate of the amount can be made. If mentioned criteria are not formed, then theCompany presents these cases in the related financial notes. Where the effect of the time value ofmoney is material, the amount of a provision shall be the present value of the expenditures expected tobe required to settle the obligation. The discount rate reflects current market assessments of the timevalue of money and the risks specific to the liability.

The contingent assets are not accounted for in the financial statements unless they are realized anddisclosed in the related notes to the financial statements.



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Employment termination benefits

Provision for employment termination benefits represents the present value of the future probableobligation of the Company. According to the labour laws and regulations in Turkey, the Company isrequired to provide compensation payments to employees who retires, leaves or is dismissed due toany inappropriate act defined in Turkish Labour Law. In this context, provision for employmenttermination benefits that represents the present value of the future probable obligation of theCompany, is calculated with defined actuarial estimations and accrued to the financial statements(Note 15).

Revenue recognition

Factoring service revenues are the interest income collected from the customers and accrued on thecash advances paid to these customers. Commission income is composed of a percentage of theamounts on invoices subject to factoring. All income and expenses are recognised on the accrual basis.

In finance leasing, the asset subject to leasing is accounted for in financial statements at a receivableamount equal to the net leasing investment. Finance income under finance lease is identified byapplying a constant rate of return to the net investment subject to lease. Received lease payments arededucted from the gross lease investment by decreasing the cost and unearned finance income. Theunearned finance income represents the difference between the gross amount of the leasing investmentand the present value of the investment calculated by a rate of return used in leasing. Rate of returnrepresents the rate that equalizes the sum of the minimum lease payments and the non-guaranteedremaining balance to the sum of the fair value and initial cost of the leased asset.

Commissions and fees, resulted from factoring and finance lease operations, are accrued on a timebasis.

Foreign currency transactions

Foreign currency transactions are translated into Turkish Lira using the exchange rates prevailing atthe dates of the transactions. Foreign exchange gains and losses resulting from the settlement of suchtransactions and from the translation at year-end exchange rates of monetary assets and liabilitiesdenominated in foreign currencies are accounted for in the income statement. Translation of thosebalances is performed with the year-end exchange rates.

Comparatives

Financial statements of the Company have been prepared comparatively with the prior period in orderto give information about financial position and performance. If the presentation or classification ofthe financial information is changed, in order to maintain consistency, financial information of theprior periods are also reclassified in line with the related changes.

No material reclassification has been made in the prior period financial statements of the Company.



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Reporting of cash flows

For the purposes of statement of cash flows, cash and cash equivalents include cash and due frombanks with original maturity periods of less than three months, excluding the interest income accrualsaccrued over time deposits (Note 5).

Changes in accounting policies

Material changes in accounting policies are applied retrospectively and previous period financialstatements are rearranged. There is no material change in Company’s accounting policies in currentyear.

Changes in accounting estimates and errors

Significant changes in accounting policies or significant errors are corrected, retrospectively; byrestating the prior period consolidated financial statements. The effect of changes in accountingestimates affecting the current period is recognised in the current period; the effect of changes inaccounting estimates affecting current and future periods is recognised in the current and futureperiods.

Shareholders’ equity and dividends

The ordinary shares are classified as share capital. The dividends distributed over the ordinary sharesare recognized in the period when they are declared. The necessary expenses that incur directly fromthe increase in share capital are recognized under total paid-in share capital.

Subsequent events

Certain subsequent events that require an adjustment are provided with additional informationregarding the position of Company as of the balance sheet date are recognised in the financialstatements. Events that do not require an adjustment are presented at the notes to these financialstatements, if they meet a certain level of importance (Note 25).



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NOTE 3 - FINANCIAL RISK MANAGEMENT

Credit risk

Credit risk is the risk that one party to a financial instrument will fail to meet the terms of theiragreements as foreseen and cause the Company to incur a financial loss. The Company is subject torisks as a result of factoring activities. Credit risk is controlled by allocating specific limits to partiesthat create the credit risk and following the anticipated collections from customers. Credit risk is fullyconcentrated in Turkey where the Company mainly operates. Serving many customers from differentsectors allows the company to spread the credit risk.

Geographical distribution of Company’s assets and liabilities are as follows:

Total Total31 December 2012 assets % liabilities %

Turkey 330,926 100 237,529 96European countries - - 9,511 4

330,926 100 247,040 100

Total Total31 December 2011 assets % liabilities %

Turkey 258,541 100 186,852 99European countries - - 2,760 1

258,541 100 189,612 100

Market risk

Market risk is the risk of negative effect of fluctuations in interest rates, exchange rates, inflation rates,and market prices on the Company’s share capital, income and ability to reach their objectives. TheCompany follows market risk under the headings, liquidity risk, exchange rate risk and interest raterisk.



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NOTE 3 - FINANCIAL RISK MANAGEMENT (Continued)

Interest rate risk

The table below analyses assets and liabilities of the Company into relevant maturity buckets based onthe remaining period at balance sheet date to the contractual repricing dates.

Up to 3 3 to12 Over Non-interest31 December 2012 months months 1 year bearing Total

AssetsCash and cash equivalents - - - 19,363 19,363Factoring receivables, net 187,927 66,103 42,609 - 296,639Assets held for sale - - - 116 116Other assets and prepaid expenses - - - 1,246 1,246Property and equipment, net - - - 7,829 7,829Intangible assets, net - - - 135 135Deferred tax asset, net - - - 5,598 5,598

Total assets 187,927 66,103 42,609 34,287 330,926

LiabilitiesBank borrowings 150,874 40,432 2,000 - 193,306Issued debt securities 1,319 3,786 45,361 - 50,466Factoring payable - - - 520 520Current income taxes payable, net - - - 663 663Financial lease payable 22 67 137 - 226Other liabilities and accrued expenses - - - 1,035 1,035Employment benefit obligations - - - 824 824

Total liabilities 152,215 44,285 47,498 3,042 247,040

Net repricing gap 35,712 21,818 (4,889) 31,245 83,886

Up to 3 3 to12 Over Non-interest31 December 2011 months months 1 year bearing Total

AssetsCash and cash equivalents - - - 7,320 7,320Factoring receivables, net 167,293 72,257 - - 239,550Assets held for sale - - - 152 152Other assets and prepaid expenses - - - 262 262Property and equipment, net - - - 6,209 6,209Intangible assets, net - - - 80 80Deferred tax asset, net - - - 4,968 4,968

Total assets 167,293 72,257 - 18,991 258,541

LiabilitiesBank borrowings 161,884 26,076 - - 187,960Current income taxes payable, net - - - 416 416Other liabilities and accrued expenses - - - 775 775Employment benefit obligations - - - 461 461

Total liabilities 161,884 26,076 - 1,652 189,612

Net repricing gap 5,409 46,181 - 17,339 68,929



16


Average interest rates of financial instruments are as follows:

2012 2011USD EUR CHF TL USD EUR CHF TL

AssetsBanks

- Time deposit - - - 5.00 - - - -Factoring receivables - - - 25.00 - - - 20.24

LiabilitiesFinancial liabilities - - - 10.94 6.71 - 5.46 16.31

Currency risk

The exchange rate risk originates from the foreign currency denominated assets and liabilities. TheCompany holds certain amount of foreign exchange position result of its operations.

The table below shows the Company’s sensitivity to 10% change in USD, EUR and CHF rates. Thetable below presents the effect of 10% increase in USD, EUR and CHF rates against TL on incomestatement. In this analysis, all other variables, in particular the interest rates are assumed to remainconstant.

Profit/(Loss) Profit/(Loss)2012 2011

USD (14) (465)EUR - 3CHF - (87)

In case of 10% decrease in exchange rates against TL, there will be a negative effect on the incomestatement same as the amounts above.

The Company’s assets and liabilities denominated in foreign currencies are as follows:

31 December 2012 USD EUR CHF Total

AssetsCash and cash equivalents 89 4 - 93Other assets and prepaid expenses 2 - - 2

Total assets 91 4 - 95

LiabilitiesFinancial lease payable 226 - - 226

Total liabilities 226 - - 226

Net balance sheet position (135) 4 - (131)



17


31 December 2011 USD EUR CHF Total

AssetsCash and cash equivalents 427 33 - 460Other assets and prepaid expenses 2 - - 2

Total assets 429 33 - 462

LiabilitiesBank borrowings 6,567 - 871 7,438

Total liabilities 6,567 - 871 7,438

Net balance sheet position (6,138) 33 (871) (6,976)

As of 31 December 2012 and 2011, exchange rates of the foreign currencies used by the Company areas follows:

2012 2011

USD 1.7826 1.8889EUR 2.3517 2.4438CHF 1.9430 2.0062

Liquidity risk

Liquidity risk is the possibility that the Company will be unable to fund its net funding requirements.Liquidity risk can be caused by market disruptions or credit downgrades, which may cause certainsources of funding to dry up immediately. To hedge against this risk, management has diversifiedfunding sources, and assets are managed with liquidity in mind, maintaining a proper balance of cashand cash equivalents.

The table below analyses liabilities of the Company into relevant maturity buckets as at31 December 2012 and 2011, based on the remaining period to the contractual maturity dates.Additionally, the interests that will be collected based on the assets and liabilities of the Company, areincluded in the table below. The amounts disclosed in the table are the contractual undiscounted cashflows.

Up to 3 3 to12 Over No definite31 December 2012 months months 1 year maturity Total

Bank borrowings 142,159 53,975 2,202 - 198,336Factoring payables - - - 520 520Financial lease payables 26 79 147 - 252Issued debt securities 1,329 4,035 54,035 - 59,399

Total liabilities 143,514 58,089 56,384 520 258,507



18


Up to 3 3 to12 Over No definite31 December 2011 months months 1 year maturity Total

Bank borrowings 163,470 28,965 - - 192,435

Total liabilities 163,470 28,965 - - 192,435

Fair value of financial instruments

Fair value is the amount at which a financial instrument could be exchanged in a current transactionbetween willing parties, other than in a forced sale or liquidation. The fair value is best evidenced by aquoted market price, if one exists.

The estimated fair values of financial instruments have been determined by the Company usingavailable market information and appropriate valuation methodologies. However, judgement isnecessarily required to interpret market data to develop the estimated fair value. Accordingly, theestimates presented herein are not necessarily indicators of the amounts the Company could realise ina current market exchange.

The fair values of current financial assets and short term borrowings are considered to approximatetheir respective carrying values due to their short term nature and the insignificant discount effect.

The carrying value of factoring receivables including the provision for doubtful receivables is alsoconsidered to approximate the fair value due to their short-term nature.

Since the Company does not have any financial assets carried at fair value, no additional disclosure offair value measurements by level of fair value hierarchy has been presented.

Capital risk management

According to 23rd article of “Regulation on the Establishment and Operations of Factoring, Leasingand Consumer Finance Companies” which was published in the Official Gazette dated 10 October2006, total volume of factoring receivables originated from the funding activities of factoringcompanies cannot exceed 30 times of the equity.

As of 31 December 2012, total volume of statutory factoring receivables (net) granted by theCompany in its records is not exceeding 30 times of the statutory equity (2011: Not exceeding).



19

NOTE 4 - CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The Company makes accounting estimates and assumptions that may affect the reported amounts ofassets and liabilities within the next financial year. Estimations and judgements are continually evaluatedand are based on Management’s experience and other factors, including expectations of future eventsthat are believed to be reasonable under the circumstances. Management also makes certain judgements,apart from those involving estimations, in the process of applying the accounting policies. Thesedisclosures supplement the commentary significant accounting policies (Note 2) and financial riskmanagement (Note 25). Judgements that have the most significant effect on the amounts recognised inthe financial statements and estimates that can cause a significant adjustment to the carrying amount ofassets and liabilities within the next financial year include:

Allowance for impairment of factoring receivables: A credit risk provision for impairment offactoring receivables is established if there is objective evidence that the Company will not be able tocollect all amounts due. The estimates used in evaluating the adequacy of the provision for impairmentof factoring receivables are based on the aging of these receivable balances, the historical trend ofcollection performance.

Recognition of deferred tax asset: Deferred tax assets can be recorded as much as the said tax benefit isprobable. Amount of taxable profits and possible tax benefits in the future is based on medium termbusiness plan and expectations prepared by the company. The business plan is based on rationalexpectations of the company under current circumstances.

The Company intends to not to distribute capital gains which may arise in next periods out of the saleof tangible fixed assets that the Company has accounted with fair value, for 5 years period subsequentto such transactions, in order to benefit from the tax exemptions specified in relevant legislation.Consequently, deferred tax liabilities which have been calculated from temporary differences derivedbetween cost and fair value of the asset are calculated by taking into consideration of relevantexemptions (Note 14).

NOTE 5 - CASH AND CASH EQUIVALENTS

2012 2011

Cash on hand 17 43Banks:- Demand deposits 4,444 7,277- Time deposits 14,902 -

19,363 7,320

As of 31 December 2012, time deposits are shorter than 3 months and also as of 31 December 2012,there is no blockage over bank deposits. (2011: TL50).

For the purposes of the cash flow statement, cash and cash equivalents amounting to TL19,361(2011: TL7,270) as of 31 December 2012 comprised from cash and due from banks excluding accruedinterest and blocked deposits.



20

NOTE 6 - FACTORING RECEIVABLES, NET

2012 2011

Domestic transactions 312,209 251,440Impaired factoring receivables 42,282 35,266

Gross factoring receivables 354,491 286,706

Less: allowance for specific provision (42,282) (35,266)Less: allowance for general provision (2,099) (2,394)Less: unearned revenue (13,471) (9,496)

Factoring receivables, net 296,639 239,550

Unearned revenue represents advance collections of factoring fees, recognised on pro-rata basis overthe term of the collection of factoring receivables.

At 31 December 2012 and 2011, factoring receivables are fixed interest rated.

Factoring receivables can be analyzed as below;

2012 2011

Neither past due nor impaired 297,521 239,779Past due but not impaired 1,217 2,165Impaired 42,282 35,266

Gross factoring receivables 341,020 277,210

Less: allowance for impairment (44,381) (37,660)

Net factoring receivables 296,639 239,550

The aging analysis of the factoring receivables past due but not impaired is as follows:

2012 2011

1 - 3 months 1,217 2,165

Prospective aging analysis of the net factoring receivables is as follows. The balances have been statedexcluding impaired factoring receivables and the general portfolio provision.

2012 2011

Up to 3 month 190,026 160,6633 month to 1 year 66,103 72,1241 year more 42,609 9,157

298,738 241,944



21

NOTE 6 - FACTORING RECEIVABLES, NET (Continued)

Movements in the provision for impaired factoring receivables during the year are as follows:

2012 2011

1 January 37,660 34,425

Charge for the year 7,771 8,941Recoveries of amounts previously provided (1,050) (5,706)

31 December (*) 44,381 37,660

(*) The total impairment provision for factoring receivables at 31 December 2012 amounts to TL44,381 (2011:TL37,660) of which TL42,282 (2011: TL35,266) represents the specific provisions for individuallyimpaired receivables and the remaining amount of TL(2,099) (2011: TL2,394) represents the generalportfolio provision.

As of 31 December 2012, the total of post-dated cheques and notes for the factoring receivables of theCompany is TL315,383 (2011: TL273,445) (Note 24). These cheques and notes are followed up underoff-balance sheet accounts.

Economic sector risk concentrations of gross factoring receivables are shown in the table below. Thebalances have been stated excluding impaired factoring receivables and the general portfolioprovision.

2012 % 2011 %

Construction 51,889 17.37 38,719 16.00Consultancy, entertainment, advertising and media operations 45,216 15.14 23,534 9.73Sport activities 33,603 11.25 16,707 6.91Textile and textile products 30,118 10.08 10,489 4.34Mining industry 25,371 8.49 8,470 3.50Food, beverage and tobacco industry 17,573 5.88 12,713 5.25Transportation, warehousing and communication 14,784 4.95 15,090 6.24Electrical and optical equipment 12,164 4.07 15,681 6.48Transportation Vehicles Industry 10,787 3.61 14,547 6.01Tourism 10,421 3.49 16,139 6.67Health 10,005 3.35 10,833 4.48Nuclear energy, oil and coal products manufacturing 6,057 2.03 19,063 7.88Wholesale and retail trade 5,508 1.84 9,081 3.75Machinery and equipment 4,775 1.60 2,820 1.17Metal industry and processed material production 4,028 1.35 4,169 1.72Leather industry 3,284 1.10 2,428 1.00Wood and wooden products industry 2,730 0.91 3,332 1.38Paper and printing industry 2,728 0.91 3,731 1.54Agriculture, farming and forestry 1,993 0.67 4,063 1.68Chemical products industry 1,393 0.47 1,717 0.71Rubber and plastic products industry 1,106 0.37 4,138 1.71Electric, gas and water resources 552 0.18 1,129 0.47Other 2,653 0.89 3,351 1.38

298,738 100.00 241,944 100.00



22

NOTE 7 - ASSETS HELD FOR SALE2012 2011

Assets held for sale 116 152

116 152

At 31 December 2012 and 2011 asset held for sale comprised of the tangible assets obtained againstdelinquent receivables.

Movement for assets held for sale for the period ended 31 December is as follows:

1 January 31 December2012 Additions Disposals 2012

Cost:

Buildings 114 - - 114Securities 38 - (36) 2

152 - (36) 116


Cost:

Buildings 100 14 - 114Securities 3 36 (1) 38Land 14 - (14) -

117 50 (15) 152

NOTE 8 - BORROWINGS

Borrowings at 31 December 2012 and 2011 are set out below according to their currencies:

2012 2011Effective Original Effective Original

interest rate currency TL interest rate currency TL

Domestic banks (*)

Fixed rate borrowings:TL 10.86 183,795 183,795 16.31 180,522 180,522USD - - - 7.74 2,477 4,678EUR - - - - - -

Total domestic bank borrowings 183,795 185,200

(*) The effective interest rates of borrowings from domestic banks have been calculated togetherwith the Banking and Insurance Transactions Tax (“BITT”) rate.



23

NOTE 8 - BORROWINGS

2012 2011Effective Original Effective Original

interest rate currency TL interest rate currency TL

Foreign banks

Fixed rate borrowings:TL 12.39 9,511 9,511 - - -USD - - - 4.20 1,000 1,889CHF - - - 5.46 434 871

Total foreign bank borrowings 9,511 2,760

Total borrowings 193,306 187,960

NOTE 9 - FINANCIAL LEASE PAYABLES

Net and gross financial lease liabilities that the Company has leased tangible fixed assets with financialleasing agreements are as follows:

Gross leasing liabilities2012 2011

Up to 1 year 104 -1-4 years 148 -

Gross leasing payables 252 -

Deferred finance lease expenses (-) (26) -

Net leasing payables 226 -

NOTE 10 - ISSUED DEBT SECURITIES

2012 2011

Bonds issued 50,466 -

50,466 -

The Company has bonds those were issued through private placement. The details of those bonds areas follows:

ISIN CODE Issue Date Issued Amount Redemption date Coupon period

TRSEKOF71415 26 July 2012 TL50,000,000 24 July 2014 3 Month



24

NOTE 10 - ISSUED DEBT SECURITIES (Continued)

The coupons of the issued bonds have floating interest rates. For each coupon payment, the nominalinterest rates are calculated with respect to the rates of related government debt securities issued by theUndersecretariat of Treasury with the methods defined in the circulars for those bonds.

NOTE 11 - OTHER ASSETS AND PREPAID EXPENSES

2012 2011

Advances given to courts 525 135Advances given to suppliers 291 -Prepaid expenses 277 43Deposits and guarantees given 64 39Advances given to personnel 47 -Receivable from personnel 32 28Other 10 17

1,246 262

NOTE 12 - PROPERTY AND EQUIPMENT

1 January 31 December2012 Additions Disposals Revaluation 2012

Cost:

Buildings (**) 6,283 - - 164 6,447Machinery and equipments (*) 1,654 695 (83) - 2,266Furniture and fixtures 283 217 (28) - 472Leasehold improvements 105 431 - - 536

8,325 1,343 (111) 164 9,721

Accumulated Depreciation:

Buildings (498) (125) - 552 (71)Machinery and equipments (1,350) (249) 83 - (1,516)Furniture and fixtures (211) (41) 26 - (226)Leasehold improvements (57) (22) - - (79)

(2,116) (437) 109 552 (1,892)

Net book value 6,209 906 (2) 716 7,829



25

NOTE 12 - PROPERTY AND EQUIPMENT (Continued)

1 January 31 December2011 Additions Disposals Revaluation 2011

Cost:

Buildings (**) 6,283 - - - 6,283Machinery and equipments 1,606 56 (8) - 1,654Furniture and fixtures 277 27 (21) - 283Leasehold improvements 72 38 (5) - 105

8,238 121 (34) - 8,325

Accumulated Depreciation:

Buildings (373) (125) - - (498)Machinery and equipments (1,221) (132) 3 - (1,350)Furniture and fixtures (189) (34) 12 - (211)Leasehold improvements (51) (7) 1 - (57)

(1,834) (298) 16 - (2,116)

Net book value 6,404 (177) (18) - 6,209

The amount of insurance on tangible fixed assets is TL2,891 as of 31 December 2012 (31 December2011:TL1,588).

(*) Amount of TL280 of additional items for machinery and equipment in 2012 are composed offixed assets capitalised by financial leasing method.

(**) There are no mortgages on tangible fixed assets as of 31 December 2012. (2011: Buildings arepledged to the counterparty banks as collateral against the funds borrowed).

If lands and buildings were stated on the historical cost basis, the amounts would be as follows:

2012 2011

Cost 5,368 5,368Accumulated depreciation (544) (436)

Net value 4,824 4,932



26

NOTE 13 - INTANGIBLE ASSETS

Movement for intangible assets and related amortisation for the period ended 31 December is asfollows:


Cost:

Rights 170 85 (26) 229

Accumulated amortization:

Rights (90) (30) 26 (94)

Net book value 80 55 - 135


Cost:

Rights 190 - (20) 170

Accumulated amortization:

Rights (99) - 9 (90)

Net book value 91 - (11) 80

NOTE 14 - TAXES ON INCOME

2012 2011

Corporate tax provision 663 416

663 416

2012 2011

Corporate tax payable 4,976 2,554Less: prepaid taxes (4,313) (2,138)

Corporate tax payable, net 663 416

Current year tax expense (4,976) (2,554)Deferred tax income 710 1,128

Total tax expense (4,266) (1,426)



27

NOTE 14 - TAXES ON INCOME (Continued)

The Corporate Tax Law was amended by Law No. 5520 dated 13 September 2006. Most of thearticles of the new Corporate Tax Law in No. 5520, have come into force effective from 1 January2006. Corporation tax is payable at a rate of 20% (2010: 20%) on the total income of the Companyregistered in Turkey after adjusting for certain disallowable expenses, tax exempt income (e.g. incomefrom subsidiaries and investment incentive) and other allowances (e.g. research and developmentallowance). No further tax is payable unless the profit is distributed (except for withholding tax at therate of 19.8%, calculated on an exemption amount if an investment allowance is granted in the scopeof Income Tax Law temporary article 61).

Dividends paid to non-resident corporations, which have a place of business in Turkey, or residentcorporations are not subject to withholding tax. Otherwise, dividends paid are subject to withholdingtax at the rate of 10% according to the Income Tax Law No, 94. An increase in capital via issuingbonus shares is not considered as a profit distribution.

Corporations are required to pay advance corporation tax quarterly at the rate of 20% on theircorporate income. Advance tax is declared to the tax authority by the 14th day and payable by the 17th

day of the second month following each calendar quarter end. Advance tax paid by corporations isdeducted from the annual corporation tax liability. If, despite offsetting, there remains an amount foradvance tax amount paid, it may be refunded or offset against other liabilities to the government.

In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Companiesfile their tax returns by the 25th of the fourth month following the close of the financial year to whichthey relate.

In tax reviews, authorized bodies can review the accounting records for the past five years and if errorsare detected, tax amounts may change due to tax assessment.

Under the Turkish taxation system, tax losses can be carried forward to be offset against future taxableincome for up to 5 years. Tax losses cannot be carried back to offset profits from previous periods.

There exist many exemptions in Corporate Income Tax Law for corporations. Therefore, theexceptional incomes in the commercial income/profit have been considered during the corporateincome tax calculations.

The reconciliation between the expected and the actual taxation charge is as follows:

2012 2011

Profit before tax 20,877 10,495

Theoretical tax charge at the applicable tax rate of 20% 4,176 2,099Disallowable expenses and other additions 90 2,353Tax-exempt income - (3,026)

Current year tax charge 4,266 1,426



28

NOTE 14 - TAXES ON INCOME (Continued)

The temporary differences giving rise to the deferred income tax assets and the deferred tax liabilitiesare as follows:

2012 2011Cumulative Deferred tax Cumulative Deferred taxtemporary assets/ temporary assets /differences (liabilities) differences (liabilities)

Provision for impairedfactoring receivables 14,616 2,923 14,875 2,975

Unearned factoring income 13,471 2,694 9,496 1,899Provision for employment benefit

obligations 424 85 461 92Other provisions 23 6 28 6

Deferred tax assets 5,708 4,972

Difference between the carryingvalue and tax base ofproperty and equipment 114 23 22 4

Discount difference of loans andsecurities issued 35 7 - -

Revaluation difference of building 1,592 80 - -

Deferred tax liabilities 110 4

Deferred tax assets, (net) 5,598 4,968

Deferred tax assets/(liabilities) movement table as follows:

Net2012 2011

Deferred tax credit related with the net income for the period 710 1,128Deferred tax charge related with components of

other comprehensive income (80) -

December 31 630 1,128

NOTE 15 - EMPLOYMENT BENEFIT OBLIGATIONS

2012 2011

Bonus provision 400 122Employee termination benefits 232 279Provision for unused vacation 192 60

824 461



29

NOTE 15 - EMPLOYMENT BENEFIT OBLIGATIONS (Continued)

Provision for Termination Indemnities:

Under the Turkish Labour Law, the Company is required to pay termination benefits to each employeewho has completed at least one year of service and whose employment is terminated without due cause,is called up for military service, dies or who retires at the retirement age (58 for women and 60 for men).Since the legislation was changed on 8 September 1999, there are certain transitional provisions relatingto length of service prior to retirement. The amount payable consists of one month’s salary limited to amaximum of TL3,033.98 as of 31 December 2012 (2011: TL2,731.85) for each year of service.

The liability has no legal funding requirement.

The reserve has been calculated by estimating the present value of the future probable obligation of theCompany arising from the retirement of its employees.

International Accounting Standards require actuarial valuation methods to be developed to estimate theenterprise’s obligation for such benefits. Accordingly, the following actuarial assumptions were used inthe calculation of the total liability:

2012 2011

Discount rate (%) 2.50 4.66

The principal assumption is that the maximum liability for each year service, set as of 1 January 2006,will be increased in line with inflation. Accordingly, the discount rate used represents a level apart frominflation. As the maximum liability is revised semi-annually the maximum amount of 3,129.25 as of1 January 2012 (1 January 2011: TL2,805.04) has been taken into consideration in calculating theprovision for employment termination benefits of the Company.

Movement of the provision for employment termination benefits is as follows:

2012 2011

1 January 279 395

Current year charge 77 76Service cost 15 18Interest cost 13 27Released provision (57) -Paid during the year (95) (237)

Balance at 31 December 232 279



30

NOTE 16 - OTHER LIABILITIES AND ACCRUED EXPENSES

2012 2011

Taxes and funds payable 765 636Trade payables 198 112Provision for operational lease expenses 45 -Provision for audit fee 25 20Other provisions 2 7

1,035 775

Taxes and funds payable

Income tax payable 301 283BITT payable 330 245Social security premiums payable 124 102Other taxes 10 6

765 636

NOTE 17 - SHARE CAPITAL

The Company’s authorised and paid-in share capital amounts are stated below:

2012 2011Shareholders TL Share % TL Share %Coöperatieve BVS Financial

Services U.A. 5,985 28 5,985 28Guiseppe Davit Franco 2,145 10 2,256 11Jak Kondu 1,692 8 1,692 8Yako Valansi 1,573 7 1,573 7Albert Valansi 1,542 7 1,542 7Enver Gocay 1,504 7 1,504 7Hayim Viko Valansi 940 4 940 4Vedat Valansi 827 4 827 4Tanya Valansi 827 4 827 4Yusuf Besalel 752 4 752 4Nedim Kondu 752 4 752 4İzzet Kondu 752 4 752 4 Other 1,735 9 1,624 8

Historical share capital 21,026 100 21,026 100

Adjustments to share capital 424 424

Total paid-in share capital 21,450 21,450

Paid-in share capital of the Company is TL21,026 (2011: TL21,026) and consists of21,026 (2011: 21,026) authorised shares of nominal value of TL1 each.



31

NOTE 17 - SHARE CAPITAL (Continued)

The capital of the Company has been increased to TL21,026 and within this context on 1 July 2009 thechange of the shareholders agreement has been approved by BRSA. The registration of theextraordinary Board of Directors minute issued on 14 August 2008 concerning the capital increase hasbeen announced in the Turkey Trade Registry Gazette no 7131 and date of 20 August 2008. The totalamount of the capital increase amounting to TL1,026 has been subscribed by the shareholders by cashand the total has been paid off from shareholders’ current accounts.

The Company has paid dividends amounting to TL 2,290 on May 27, 2012 based on the decisiontaken by General Assembly held on May 17, 2012.

Retained earnings, as per the statutory financial statements, other than legal reserves, are available fordistribution, subject to the legal reserve requirement referred to below.

The legal reserves consist of first and second reserves, appropriated in accordance with the TurkishCommercial Code (“TCC”).The TCC stipulates that the first legal reserve is appropriated out ofstatutory profits at the rate of 5% per annum, until the total reserve reaches 20% of the Company’spaid-in share capital. The second legal reserve is appropriated at the rate of 10% per annum of all cashdistributions in excess of 5% of the paid-in share capital. Under the TCC, the legal reserves can beused only to offset losses and are not available for any other utilization unless they exceed 50% ofpaid-in share capital.

NOTE 18 - RETAINED EARNINGS AND LEGAL RESERVES

Retained earnings in legal records should be distributed in accordance with the legislation stated belowfor legal reserves.

The reserves held by the Company in the statutory financial statements are as follows:

2012 2011

Legal reserves 3,802 3,170

NOTE 19 - OTHER (EXPENSES)/INCOME, NET

2012 2011

Other income 33 698Tangible asset purchase expense - (10)Duties, taxes and levies (339) (82)Other expenses (9) (214)

(315) 392



32

NOTE 20 - OPERATING EXPENSES

2012 2011

Personnel expenses 12,029 11,323Transportation and travel expenses 993 902Advisory and credit inquiry expenses 595 375Rent expenses 592 372Bank expenses 524 545Litigation and court expenses 504 511Depreciation and amortisation expense (Note 12,13) 467 298Written-off receivables 345 162Office expenses 315 237Advertisement and sponsorships 314 150Maintenance expenses 277 305IT expenses 273 122Communication expenses 239 222Accommodation expenses 158 123Unused vacation expenses 132 36Legal fees and other taxes 100 90Provision for employment termination benefits 47 -Other expenses 297 186

18,201 15,959

NOTE 21 - FACTORING REVENUES

2012 2011

Factoring interest income 67,149 42,776Factoring commission income 7,335 5,125

74,484 47,901

NOTE 22 - FOREIGN EXCHANGE GAINS/(LOSSES), NET

2012 2011

Foreign exchange gains 1,684 978Foreign exchange losses (1,816) (949)

Net (132) 29



33

NOTE 23 - TRANSACTIONS AND BALANCES WITH RELATED PARTIES

The Company has no due from shareholders as 31 December 2012 (2011: None).

The total benefit provided to the members of the Board and key management personnel as of31 December 2012 amounts to TL5,661 (2011: TL5,488).

NOTE 24 - COMMITMENTS AND CONTINGENT LIABILITIES

2012 2011Guarantees given

Guarantees given to the courts 800 708Mortgage - 11,525Blocked deposits (Note 5) - 50

800 12,283

Guarantees received

Cheques received (Note 6) 315,383 273,445Mortgage received 19,830 11,080

335,213 284,525

There are 69 lawsuits (2011: 36 lawsuits) outstanding for the Company amounting to TL3,815 (2011:TL2,039) and as the Company does not expect any cash outflows regarding these lawsuits, noprovision has been booked in the financial statements.

NOTE 25 - SUBSEQUENT EVENTS

a. On 9 January 2013, the Company has sold its immovable property that is classified underbuildings in the financial statements as of 31 December 2012, for the proceedings amounted toTL 9,322. The asset has been derecognized from the financial statements at that the trade date.

b. With the resolution of General Assembly dated 19 February 2013, it has been decided toconduct all necessary actions and appeal to T.R. Ministry of Trade and Custom in order toincrease the Company’s paid in capital from TL21,026,414 to TL55,000,000.

c. With the resolution of the Board of Directors of the Company, dated on 20 February 2013 andnumbered 2013/09, the issuance of debt securities amounted up to TL75.000.000 in 2013 hasbeen decided.

……………………………

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