EKO FAKTORİNG A.Ş....Net increase in factoring receivables (60,765) (77,669) Net decrease in other assets and prepaid expenses 66 38 Net decrease in asset held for sale 35 37 Net

EKO FAKTORİNG A.Ş.

FINANCIAL STATEMENTSAT 31 DECEMBER 2011 TOGETHER WITHINDEPENDENT AUDITOR’S REPORT


FINANCIAL STATEMENTS AT 31 DECEMBER 2011(Amounts expressed in thousands of Turkish lira (“TL”) unless otherwise indicated.)

CONTENTS PAGES

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

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

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

CASH FLOW STATEMENT ...................................................................................................... 4

NOTES TO THE FINANCIAL STATEMENTS ....................................................................... 5-32

NOTE 1 ORGANISATION AND NATURE OF OPERATIONS…… ................................................................... 5NOTE 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS............................................................. 5-13NOTE 3 FINANCIAL RISK MANAGEMENT....................................................................................................... 14-19NOTE 4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS ........................................................... 19NOTE 5 CASH AND CASH EQUIVALENTS ...................................................................................................... 20NOTE 6 FACTORING RECEIVABLES, NET ....................................................................................................... 20-22NOTE 7 ASSET HELD FOR SALE ........................................................................................................................ 22NOTE 8 BORROWINGS......................................................................................................................................... 23NOTE 9 OTHER ASSETS AND PREPAID EXPENSES........................................................................................ 23NOTE 10 PROPERTY AND EQUIPMENT.............................................................................................................. 24NOTE 11 INTANGIBLE ASSETS ............................................................................................................................ 25NOTE 12 TAXES ON INCOME ............................................................................................................................... 25-27NOTE 13 EMPLOYMENT BENEFIT OBLIGATIONS ........................................................................................... 27-28NOTE 14 OTHER LIABILITIES AND ACCRUED EXPENSES............................................................................. 28NOTE 15 SHARE CAPITAL .................................................................................................................................... 29NOTE 16 RETAINED EARNINGS AND LEGAL RESERVES .............................................................................. 30NOTE 17 OTHER OPERATING INCOME/(EXPENSES), NET ............................................................................. 30NOTE 18 OPERATING EXPENSES......................................................................................................................... 30NOTE 19 FACTORING REVENUES ....................................................................................................................... 30NOTE 20 FOREIGN EXCHANGE GAINS/(LOSSES), NET................................................................................... 31NOTE 21 TRANSACTIONS AND BALANCES WITH RELATED PARTIES ...................................................... 31NOTE 22 COMMITMENTS AND CONTINGENT LIABILITIES ......................................................................... 31NOTE 23 DISCONTINUED OPERATIONS ............................................................................................................ 32NOTE 24 POST BALANCE SHEET EVENTS ........................................................................................................ 32


BALANCE SHEET AT 31 DECEMBER 2011(Amounts expressed in thousands of Turkish lira (“TL”) unless otherwise indicated.)

1

Notes 2011 2010

ASSETS

Cash and cash equivalents 5 7,320 9,998Factoring receivables, net 6 239,550 178,785Assets held for sale 7 152 117Other assets and prepaid expenses 9 262 196Property and equipment, net 10 6,209 6,404Intangible assets, net 11 80 91Deferred tax asset, net 12 4,968 3,840

Total assets 258,541 199,431

LIABILITIES AND EQUITY

Bank borrowings 8 187,960 135,901Current income taxes payable, net 12 416 1,443Other liabilities and accrued expenses 14 775 769Employment benefit obligations 13 461 419

Total liabilities 189,612 138,532

EQUITY

Share capital 15 21,026 21,026Adjustment to share capital 15 424 424

Total paid-in share capital 15 21,450 21,450Share premiums 16,410 16,410Revaluation fund 701 701Retained earnings 30,368 22,338

Total equity 68,929 60,899

Total liabilities and equity 258,541 199,431

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


STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 2011(Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)

2

Notes 2011 2010

CONTINUING OPERATIONS:

Factoring interest income 19 42,776 33,739Factoring commissions 19 5,125 3,907

Income from factoring operations 47,901 37,646

Interest expenses (18,838) (11,108)Foreign exchange gains and losses, (net) 20 29 (2)Impairment loss on factoring receivables 6 (8,817) (5,754)Recoveries from impaired factoring receivables 6 5,706 2,309

Income after foreign exchange gains and losses, netand provision for impaired factoring receivables 25,981 23,091

Interest income other than factoring 81 26Other income/(expense) , net 17 392 (768)

Operating profit 26,454 22,349

Operating expenses 18 (15,959) (15,980)

Income before taxes from continuingoperations 10,495 6,369

Taxation on income from continuing operations- Current year tax expense 12 (2,554) (2,808)- Deferred tax income 12 1,128 437

Profit for the year from continuing operations 9,069 3,998

DISCONTINUED OPERATIONS:

Profit for the year fromdiscontinued operations 23 - 11

Net profit for the year 9,069 4,009

Other comprehensive income - -

Total comprehensive income for the year 9,069 4,009



STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2011(Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)

3

Equity attributable to equity holdersAdjustment Equity

Share to share Share Revaluation Retained attributable to Minority Totalcapital capital premium Fund earnings equity holders interest equity

1 January 2010 -Restated (*) 21,026 424 16,410 789 20,329 58,978 134 59,112

Revaluation fund - - - (88) - (88) - (88)Dividend paid - - - - (2,000) (2,000) - (2,000)Effect of changes in minority interest - - - - - - (134) (134)Net profit for the year - - - - 4,009 4,009 - 4,009

31 December 2010 21,026 424 16,410 701 22,338 60,899 - 60,899

1 January 2011 21,026 424 16,410 701 22,338 60,899 - 60,899

Dividend paid - - - - (1,039) (1,039) - (1,039)Revaluation fund - - - - - - - -Effect of changes in minority interest - - - - - - - -Net profit for the year - - - - 9,069 9,069 - 9,069

31 December 2010 21,026 424 16,410 701 30,368 68,929 - 68,929

(*) See Note 2 “Basis of presentation of financial statements” for the details.



NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2011(Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)

4

Notes 2011 2010

Cash flows from operating activities

Net profit for the year 9,069 4,009

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

Depreciation of property and equipment 10 298 411Amortization of intangible assets 11 - 30Impairment of property and equipment 10 - 114Proceeds from sale of property and equipment - 8Reserve for employment benefit obligations 13 461 369Provision for impaired factoring receivables 6 8,817 5,754Interest income, net (23,938) (22,631)Interest paid (18,838) (11,108)Interest received 48,243 30,023Current year taxation expense 12 1,425 2,371Other - (168)

Cash flows from operating profit beforechanges in operating assets and liabilities 25,537 9,182

Net increase in restricted cash 5 (50) (5,050)Net increase in factoring receivables (60,765) (77,669)Net decrease in other assets and prepaid expenses 66 38Net decrease in asset held for sale 35 37Net decrease in other liabilities and accrued expenses (10,091) (2,735)Income taxes paid 12 (2,547) (1,816)Employment termination benefit paid 13 (237) (231)

Net cash used in operating activities (48,052) (78,244)

Cash flows from investing activities:Purchase of property, plant and equipment 10 (121) (389)Purchases of intangible assets-net of disposals 11 - (58)Proceeds from sale of property, plant and equipment (34) -Redemption of held-to-maturity securities 5 -

Net cash used in investing activities (150) (447)

Cash flows from financing activities:Proceeds/(payments) of borrowings 50,781 80,611Dividend paid (1,039) (2,000)

Net cash provided from financing activities 49,742 78,611

Net increase/(decrease) in cash and cash equivalents 1,540 (80)

Effect of foreign exchange rate changeson cash and cash equivalents 782 168

Cash and cash equivalents at beginning of the year 5 4,948 4,860

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




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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 84 employees at 31 December 2011 (2010: 110). 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 on30 March 2012.

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS

The principal accounting policies adopted in the preparation of the financial statements at31 December 2011 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”). The financialstatements are based on the statutory records with adjustments and reclassifications for the purpose offair 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.

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)

New standards and amendments:

• IAS 32 (amendment), “Financial instruments: Presentation”, is effective for annual periodsbeginning on or after 1 February 2010. The amendment recognizes that the previousrequirement to classify foreign-currency-denominated rights issued to all existing shareholderson a pro rata basis as derivative liabilities is not consistent with the substance of the transaction,which represents a transaction with owners acting in their capacity as such. The amendmenttherefore creates an exception to the ‘fixed for fixed’ rule in IAS 32 and requires rights issueswithin the scope of the amendment to be classified as equity. The amendment should be appliedretrospectively. Early adoption is permitted.

• IFRIC 19, “Extinguishing financial liabilities with equity instruments”, is effective for annualperiods beginning on or after 1 July 2010. IFRIC 19 clarifies the accounting when an entityrenegotiates the terms of its debt with the result that the liability is extinguished by the debtorissuing its own equity instruments to the creditor (referred to as a ‘debt for equity swap’). Earlyadoption is permitted. The interpretation should be applied retrospectively from the beginningof the earliest comparative period presented, as adoption in earlier periods would result only in areclassification of amounts within equity.

• IFRS 1 (amendment), “First-time adoption of IFRS”, is effective for annual periods beginningon or after 1 July 2010. The amendment Provides the same relief to first-time adopters as wasgiven to current users of IFRSs upon adoption of the amendments to IFRS 7. Also clarifies thetransition provisions of the amendments to IFRS 7. Earlier adoption is permitted. Early adoptionis required for a first-time adopter that has a first reporting period that begins earlier than 1 July2010 in order to benefit from the disclosure relief.

• IAS 24 (revised), “Related party disclosures”, is effective for annual periods beginning on orafter 1 January 2011. The revised standard removes the requirement for government-relatedentities to disclose details of all transactions with the government and other government-relatedentities. It also clarifies and simplifies the definition of a related party. Earlier adoption ispermitted either for the entire standard or for the reduced disclosures for government-relatedentities.

• IFRIC 14 (amendment), “IAS 19 - The limit on a defined benefit asset, minimum fundingrequirements and their interaction”, is effective for annual periods beginning on or after1 January 2011. The amendment removes unintended consequences arising from the treatmentof pre-payments where there is a minimum funding requirement. The amendment also results inpre-payments of contributions in certain circumstances being recognised as an asset rather thanan expense. It will apply from the beginning of the earliest comparative period presented.Earlier adoption is permitted.

• Annual Improvements to IFRSs 2010. Amendments effect six standards and one IFRIC: IFRS 1,IFRS 3, IFRS 7, IAS 27, IAS 34 and IFRIC 13.



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Forthcoming requirements:

• IFRS 7 (amendment), “Financial instruments: Disclosures”, is effective for annual periodsbeginning on or after 1 July 2011. This amendment will promote transparency in the reportingof transfer transactions and improve users’ understanding of the risk exposures relating totransfers of financial assets and the effect of those risks on an entity’s financial position,particularly those involving securitisation of financial assets. Comparative information is notneeded 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”, is effective for annual periods beginning on or after1 January 2012. This amendment introduces an exception to the existing principle for themeasurement of deferred tax assets or liabilities arising on investment property measured at fairvalue. 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.

• IAS 1 (amendment), “Presentation of financial statements”, is effective for annual periodsbeginning on or after 1 July 2012. The main change resulting from these amendments is arequirement for entities to group items presented in ‘other comprehensive income’ (OCI) on thebasis of whether they are potentially reclassifiable to profit or loss subsequently (reclassificationadjustments). The amendments do not address which items are presented in OCI. Early adoptionis permitted.

• 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.

• IFRS 9, “Financial instruments”, is effective for annual periods beginning on or after 1 January2015. The standard addresses the classification, measurement and recognition of financial assetsand financial liabilities. IFRS 9 was issued in November 2009 and October 2010. It replaces theparts of IAS 39 that relate to the classification and measurement of financial instruments. IFRS9 requires financial assets to be classified into two measurement categories: those measured asat fair value and those measured at amortised cost. The determination is made at initialrecognition. The classification depends on the entity’s business model for managing its financialinstruments and the contractual cash flow characteristics of the instrument. For financialliabilities, the standard retains most of the IAS 39 requirements. The main change is that, incases where the fair value option is taken for financial liabilities, the part of a fair value changedue to an entity’s own credit risk is recorded in other comprehensive income rather than theincome statement, unless this creates an accounting mismatch.



8


• 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.

• 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 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.

• IFRIC 20, Stripping costs in the production phase of a surface mine.

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 21).



9


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

All property and equipment except for buildings are carried at cost less impairments and accumulateddepreciation (Note10).

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 yearsMotor vehicles 4-5 yearsLeasehold improvements 4-5 years

In 2010 the Company stated to adopt the “revaluation method” in accordance with the IAS 16“Property, Plant and Equipment” for its buildings. Independent expert appraisal values are presentedin the financial statements.

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.



10


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 capitalised if they result in an enlargement or substantialimprovement of the respective assets (Note 11).

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

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

Income taxes

a. Income taxes currently payable

Income taxes (“corporation tax”) currently payable are calculated based in accordance with theTurkish tax legislation (Note 12).

Taxes other than on income are recorded within operating expenses (Note 18).

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 12).



11


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.

Employment termination benefits

Provision for employment termination benefits represents the present value of the future probableobligation of the Company, according to the Turkish Labour Law, arising from the retirement of theemployees (Note 13).

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.



12


Offsetting

Financial assets and liabilities are offset and the net amount is reported in the balance sheet when thereis a legally enforceable right to set-off the recognised amounts and there is an intention to settle on anet basis, or to realise the asset and settle the liability simultaneously.

Comparatives

Where necessary, comparative figures have been reclassified to conform to changes in presentation inthe current year so that the reclassification will result in a more appropriate presentation of events ortransactions.

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.

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.

The Company corrected the effects of details explained below in previous years’ financial statementsretrospectively in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates andErrors”. In accordance with IAS 1 “Presentation of Financial Statements”, when the financialstatements are subject to a restatement of prior year financial statements, an entity should present threestatements of financial position. Accordingly, balance sheet as of 31 December 2011 with the restatedbalance sheets prepared as of 31 December 2010 and 31 December 2009 is presented. A summarytable of corrections and explanations of significant corrections and rearrangements on material itemsare as follows:



13


Corrections of the year ended 31 December 2009:

Balance Sheet:

ReportedPreviously Restated Difference

Deferred tax asset (i) 3,910 3,381 (529)Property and equipment

and intangible assets (net) (ii) 4,012 6,656 2,644

2,115

Asset/Liability total 114,555 116,670 2,115

Income Statement:

ReportedPreviously Restated Difference

Other (expense)/income, net (ii) (2,653) (998) 1,655Deferred tax income (ii) 748 419 (329)

1,326

Net profit for the year 5,506 6,832 1,326Revaluation fund, net of deferred tax (ii) - 789 789

Total effect on equity 2,115

Equity 56,997 59,112 2,115

(i) The correction of deferred tax asset amount:

In accordance with IAS 12, the Company recognises deferred tax on the basis of temporarydifferences. In this context, the net deferred tax asset amount was corrected on the basis ofcorrection in the valuation report of building. As a result of the increase in value of property andequipment, deferred tax assets were reduced by TL529 as of 31 December 2009.

(ii) The correction of errors in the expertise for the buildings which are evaluated according to“the revaluation method”.

Starting from 2010, the Company changed its accounting policy and decided to adopt “therevaluation method” in the valuation of buildings which is classified under property andequipment, within the context of IAS 16. In the expertise report dated 5 February 2010 the sizeof the building was assessed below its real size as of 31 December 2009. Accordingly, the fairvalue of the building subject to revaluation method was accounted for by TL2,644 below its fairvalue as of 31 December 2010. This amount was corrected in the 2009 financial statementswhich was presented comparatively with the financial statements of 2010. In this process, theimpairment expense in property and equipment amounting to TL1,655 previously accounted forin 2009 financial stetements has been reversed and corrected together with its deferred taximpact of TL329.



14

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 2011 assets % liabilities %

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

258,541 100 189,612 100

Total Total31 December 2010 assets % liabilities %

Turkey 199,383 100 135,245 98European countries 48 - 3,287 2

199,431 100 138,532 100

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.



15

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 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

Up to 3 3 to12 Over Non-interest31 December 2010 months months 1 year bearing Total

AssetsCash and cash equivalents 5,467 - - 4,531 9,998Factoring receivables, net 162,655 16,130 - - 178,785Assets held for sale - - - 117 117Other assets and prepaid expenses - - - 196 196Property and equipment, net - - - 6,404 6,404Intangible assets, net - - - 91 91Deferred tax asset, net - - - 3,840 3,840

Total assets 168,122 16,130 - 15,179 199,431

LiabilitiesBank borrowings 61,917 - 73,984 - 135,901Current income taxes payable, net - - - 1,443 1,443Other liabilities and accrued expenses - - - 769 769Employment benefit obligations - - - 419 419

Total liabilities 61,917 - 73,984 2,631 138,532

Net repricing gap 106,205 16,130 (73,984) 12,548 60,899



16


Average interest rates of financial instruments are as follows:

2011 2010USD EUR CHF TL USD EUR CHF TL

AssetsBanks

- Time deposit - - - - 2.34 2.15 - -Factoring receivables - - - 20.24 - - - 19.00

LiabilitiesFinancial liabilities 6.71 - 5.46 16.31 6.27 2.15 5.46 9.34

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)2011 2010

USD (465) (141)EUR 3 153CHF (87) (196)

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



17


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

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)

31 December 2010 USD EUR CHF Total

AssetsCash and cash equivalents 5,351 2,285 - 7,636Other assets and prepaid expenses 4 - - 4

Total assets 5,355 2,285 - 7,640

LiabilitiesBank borrowings 6,764 759 1,959 9,482

Total liabilities 6,764 759 1,959 9,482

Net balance sheet position (1,409) 1,526 (1,959) (1,842)

As of 31 December 2011 and 2010, exchange rates of the foreign currencies used by the Company areas follows:

2011 2010

USD 1.8889 1.5460EUR 2.4438 2.0491CHF 2.0062 1.6438



18


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 2011 and 2010, 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 2011 months months 1 year maturity Total

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

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

Up to 3 3 to12 Over No definite31 December 2010 months months 1 year maturity Total

Bank borrowings 61,912 - 78,052 - 139,964

Total liabilities 61,912 - 78,052 - 139,964

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.



19


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 2011, total volume of statutory factoring receivables (net) granted by theCompany in its records is 3.52 times of the statutory equity (2010: 2.89):

Factoring receivables (A) 242,441

Total paid-in share capital 21,026Capital Reserves 17,110Profit Reserves 2,962Net profit for the period 7,233Retained earnings 20,576Minority interest in equity -

Total equity (B) 68,907

Factoring receivables /equity ratio (A/B) 3.52

NOTE 4 - CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The Company makes estimates and assumptions that affect the reported amounts of assets andliabilities within the next financial year. Estimates and judgements are continually evaluated and arebased on Management’s experience and other factors, including expectations of future events that arebelieved to be reasonable under the circumstances. Management also makes certain judgements, apartfrom those involving estimations, in the process of applying the accounting policies. These disclosuressupplement the commentary significant accounting policies (Note 2) and financial risk management(Note 3). Judgements that have the most significant effect on the amounts recognised in the financialstatements and estimates that can cause a significant adjustment to the carrying amount of assets andliabilities within the next financial year include:

Recognition of deferred tax asset: Deferred tax assets can be recorded as much as the said tax benefitis probable. 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.

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 and the trend of collectionperformance.



20

NOTE 5 - CASH AND CASH EQUIVALENTS

2011 2010

Cash on hand 43 22Banks:- Demand deposits 7,277 4,509- Time deposits - 5,467

7,320 9,998

As of 31 December 2010, time deposits are shorter than 3 months and also as of 31 December 2011,the Company has blocked deposits amounting TL50 against its borrowings as of 31 December 2011(2010: TL5,050).

For the purposes of the cash flow statement, cash and cash equivalents amounting to TL7,270(2010: TL4,948) as of 31 December 2011 comprised from cash and due from banks excluding accruedinterest and blocked deposits.

NOTE 6 - FACTORING RECEIVABLES, NET

2011 2010

Domestic transactions 251,440 187,430Impaired factoring receivables 35,266 32,155

Gross factoring receivables 286,706 219,585

Less: allowance for impairment (37,660) (34,425)Less: unearned revenue (9,496) (6,375)

Factoring receivables, net 239,550 178,785

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

At 31 December 2011 and 2010, factoring receivables are fixed interest rated.

Factoring receivables can be analyzed as below;

2011 2010

Neither past due nor impaired 239,779 178,971Past due but not impaired 2,165 2,084Impaired 35,266 32,155

Gross factoring receivables 277,210 213,210

Less: allowance for impairment (37,660) (34,425)

Net factoring receivables 239,550 178,785



21

NOTE 6 - FACTORING RECEIVABLES, NET (Continued)

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

2011 2010

1 - 3 months 2,165 2,084

Prospective aging analysis of the net factoring receivables is as follows:

2011 2010

Up to 3 month 167,293 162,6553 month to 12 month 72,257 16,1301 year more - -

239,550 178,785

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

2011 2010

1 January 34,425 30,980

Charge for the year 8,941 5,754Recoveries of amounts previously provided (5,706) (2,309)

31 December 37,660 34,425

As of 31 December 2011, the total of post-dated cheques and notes for the factoring receivables of theCompany is TL273,445 (2010: TL209,264) (Note 22). These cheques and notes are followed up underoff-balance sheet accounts.

The total impairment provision for factoring receivables at 31 December 2011 amounts to TL37,660(2010: TL34,425) of which TL35,266 (2010: TL32,155) represents the individually impairedreceivables and the remaining amount of TL2,394 (2010: TL2,270) represents the portfolio provision.



22

NOTE 6 - FACTORING RECEIVABLES, NET (Continued)

Economic sector risk concentrations of gross factoring receivables are as follows:

2011 % 2010 %

Health 46,262 16 4,056 2Construction 46,130 16 56,308 26Nuclear energy, oil and coal products manufacturing 25,883 9 - -Textile and textile products 20,304 7 33,037 15Tourism 19,963 7 5,093 2Electrical and optical equipment 18,507 6 16,991 8Food, beverage and tobacco industry 18,252 6 15,747 7Transportation, warehousing and communication 11,307 4 4,760 2Electric, gas and water resources 8,462 3 - -Machinery and equipment 7,668 3 8,511 4Wholesale and retail trade 7,530 2 7,593 3Wood and wooden products industry 5,434 2 7,659 3Paper and printing industry 4,696 2 3,757 2Mining industry 4,635 2 2,987 1Rubber and plastic products industry 4,379 2 16,555 8Agriculture, farming and forestry 3,857 1 4,760 2Leather industry 2,971 1 - -Transportation Vehicles Industry 2,669 1 2,348 1Chemical products industry 2,108 1 4,067 2Metal industry and processed material production 1,795 1 4,821 2Commission, rent and

management operations - - 12,457 6Other 23,894 8 8,078 4

286,706 100 219,585 100

NOTE 7 - ASSETS HELD FOR SALE2011 2010

Assets held for sale 152 117

152 117

At 31 December 2011 and 2010 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 December2011 Additions Disposals 2011

Cost:

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

117 50 (15) 152



23

NOTE 8 - BORROWINGS

Borrowings at 31 December 2011 and 2010 are set out below according to their currencies:

2011 2010Effective Original Effective Original

interest rate currency TL interest rate currency TL

Domestic banks

Fixed rate borrowings:TL 16.31 180,522 180,522 9.34 126,419 126,419USD 7.74 2,477 4,678 6.27 4,375 6,764EUR - - - 2.15 370 759

Total domestic bank borrowings 185,200 133,942

Foreign banks

Fixed rate borrowings:USD 4.20 1,000 1,889 - - -CHF 5.46 434 871 5.46 1,192 1,959

Total foreign bank borrowings 2,760 1,959

Total borrowings 187,960 135,901

NOTE 9 - OTHER ASSETS AND PREPAID EXPENSES

2011 2010

Advances given to lawyers 135 30Prepaid expenses 43 45Deposits and guarantees given 39 45Receivable from personnel 28 53Other 17 23

262 196



24

NOTE 10 - PROPERTY AND EQUIPMENT

1 January 31 December2011 Additions Disposals Impairment 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

1 January 31 December2010 Additions Disposals Impairment 2010

Cost:Buildings (*) 6,340 57 - (114) 6,283Machinery and equipments 1,413 249 (56) - 1,606Furniture and fixtures 224 83 (30) - 277Motor vehicles 21 - (21) - -Leasehold improvements 88 - (16) - 72

8,086 389 (123) (114) 8,238

Accumulated Depreciation:Buildings (265) (113) - 5 (373)Machinery and equipments (993) (234) 6 - (1,221)Furniture and fixtures (170) (49) 30 - (189)Motor vehicles (17) (4) 21 - -Leasehold improvements (48) (11) 8 - (51)

(1,493) (411) 65 5 (1,834)

Net book value 6,593 (22) (58) (109) 6,404

(*) Buildings are pledged to the counterparty banks as collateral against the funds borrowed.



25

NOTE 11 - INTANGIBLE ASSETS

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


Cost:Rights 190 - (20) 170

Accumulated amortization:Rights (99) - 9 (90)

Net book value 91 - (11) 80


Cost:Rights 132 58 - 190

Accumulated amortization:Rights (69) (30) - (99)

Net book value 63 28 - 91

NOTE 12 - TAXES ON INCOME

2011 2010

Corporate tax provision 416 1,443

416 1,443

2011 2010

Corporate tax payable 2,554 2,808Less: prepaid taxes (2,138) (1,365)

Corporate tax payable, net 416 1,443

Current year tax expense (2,554) (2,808)Deferred tax income 1,128 437

Total tax expense (1,426) (2,371)



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NOTE 12 - TAXES ON INCOME (Continued)

The Corporate Tax Law was amended by Law No,5520 dated 13 September 2006. Most of the articlesof the new Corporate Tax Law in question, No,5520, have come into force effective from 1 January2006. Corporation tax is payable at a rate of 20% (2009: 20%) on the total income of the Companyregistered in Turkey after adjusting for certain disallowable expenses, 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:

2011 2010

Profit before tax 10,495 6,369

Theoretical tax charge at the applicable tax rate of 20% 2,099 1,274Disallowable expenses and other additions 2,353 1,164Tax-exempt income (3,026) (67)

Current year tax charge 1,426 2,371



27

NOTE 12 - TAXES ON INCOME (Continued)

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

2011 2010Cumulative Deferred tax Cumulative Deferred taxtemporary assets/ temporary assets /differences (liabilities) differences (liabilities)

Provision for impairedfactoring receivables 14,875 2,975 13,452 2,690

Unearned factoring income 9,496 1,899 6,375 1,275Provision for employment benefit

obligations 461 92 419 84Other provisions 28 6 - -

Deferred tax assets 4,972 4,049

Difference between the carryingvalue and tax base ofproperty and equipment 22 4 171 34

Revaluation fund effect - - 876 175

Deferred tax liabilities 4 209

Deferred tax assets 4,968 3,840

NOTE 13 - EMPLOYMENT BENEFIT OBLIGATIONS

2011 2010

Employee termination benefits 279 395Bonus provision 122 -Provision for unused vacation 60 24

461 419

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 TL2,731.85 as of 31 December 2011 (2010: TL2,517,01) 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.



28

NOTE 13 - EMPLOYMENT BENEFIT OBLIGATIONS (Continued)

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:

2011 2010

Discount rate (%) 4.66 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 2,805.04 as of1 January 2011 (1 January 2010: TL2,623.23) 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:

2011 2010

1 January 395 257

Current year charge 76 310Service cost 18 34Interest cost 27 25Paid during the year (237) (231)

Balance at 31 December 279 395

NOTE 14 - OTHER LIABILITIES AND ACCRUED EXPENSES

2011 2010

Taxes and funds payable 636 563Trade payables 71 138Other 68 68

775 769



29

NOTE 15 - SHARE CAPITAL

Paid-in share capital of the Company is TL21,026 (2010: TL21,026) and consists of 21,026 (2010:21,026) authorised shares of nominal value of TL1 each.

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 1,039 on June 3,2011 based on the decision takenby General Assembly held on May 31, 2011.

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

2011 2010Shareholders TL Share % TL Share %Coöperatieve BVS Financial

Services U.A. 5,985 28 5,985 28Guiseppe Davit Franco 2,256 11 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 1,624 8 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

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.



30

NOTE 16 - 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:

2011 2010

Legal reserves 3,170 2,962

NOTE 17 - OTHER (EXPENSES)/INCOME, NET

2011 2010

Tangible asset sale income - 8Tangible asset purchase expense (10) -Other income - 313Other expense 402 (1,089)

392 (768)

NOTE 18 - OPERATING EXPENSES

2011 2010

Personnel expenses 11,237 10,885Banking fees 545 377Litigation and court expenses 511 1,264Service, consultancy expenses 347 292Depreciation and amortisation expense (Note 10, 11) 298 441Rent expenses 280 448Representation and accommodation expenses 123 157Bonus provision 122 -Other 2,496 2,116

15,959 15,980

NOTE 19 - FACTORING REVENUES

2011 2010

Factoring interest income 42,776 33,739Factoring commission income 5,125 3,907

47,901 37,646



31

NOTE 20 - FOREIGN EXCHANGE GAINS/(LOSSES), NET

2011 2010

Foreign exchange gains 978 1,110Foreign exchange losses (949) (1,112)

29 (2)

NOTE 21 - TRANSACTIONS AND BALANCES WITH RELATED PARTIES

The Company has no due from shareholders as 31 December 2011 (2010: None). As of 31 December2011, the Company has no due to shareholders balance (2010: None).

The total benefit provided to the members of the Board and key management personnel as of31 December 2011 amounts to TL4,097 (2010: TL4,559).

NOTE 22 - COMMITMENTS AND CONTINGENT LIABILITIES

2011 2010Guarantees given

Mortgage 11,525 10,058Guarantees given to the courts 708 611Blocked deposits (Note 5) 50 5,050

12,283 15,719

Guarantees received

Cheques received (Note 6) 273,445 209,264Mortgage received 11,080 5,110

284,525 214,374

There are 36 lawsuits (2010:134 lawsuits) outstanding for the Company amounting to TL2,039 (2010:TL1,844) and as the Company does not expect any cash outflows regarding these lawsuits, noprovision has been provided for in the financial statements.



32

NOTE 23 - DISCONTINUED OPERATIONS

Since it was agreed that Eko Finansal Kiralama A.Ş. could not continue its activities as a result of developments in market conditions, with the decision No. 2008-02, dated 30 June 2008, theExtraordinary General Assembly was summoned regarding the liquidation of the company. Since withthe Board of Directors Decision No. 2008-03, dated 7 July 2008, it was decided that the financialleasing authorisation be removed, the Banking Regulation and Supervision Authority (“BRSA”) wasrequested to cancel the activity permit of the company. With BRSA decision No. 2724, dated 31 July2008, the cancellation of the financial leasing activity permit of Eko Finansal Kiralama A.Ş. was deemed appropriate and Eko Finansal Kiralama A.Ş. was notified of this decision by the BRSA with the correspondence No. BDDK.UYII.130.76-10787, dated 5 August 2008. Following thesedevelopments, as per Article 434 of the Turkish Commercial Code, it was decided in the ExtraordinaryGeneral Assembly Meeting held on 21 November 2008 that company be dissolved and liquidated as ofthis date and the expression “in Liquidation” be added to the commercial title of the Company, inaccordance with the Law.

As the subsidiary has liquidated as of 25 October 2010, the Company does not have any discontinuedoperations for the year ended 31 December 2011 financial statements.

Summary of the balance sheet from discontinued operations

2011 2010

Cash and cash equivalents - -Other assets and prepaid expenses - -

Total assets - -

Other liabilities and accrued expenses - -Equity - -

Total liabilities and equity - -

Profit/loss from discontinued operations

2011 2010

Interest income - 138

Operating expenses (-) - (10)Other income/(expense) - (117)

Profit before taxation 11

Tax expense (-) - -

Net profit for the year - -

NOTE 24 - POST BALANCE SHEET EVENTS

None.

……………………………

Documents

EKO FAKTORİNG A.Ş....Net increase in factoring receivables (60,765) (77,669) Net decrease in other assets and prepaid expenses 66 38 Net decrease in asset held for sale 35 37 Net