Vakıf Finans Faktoring Hizmetleri Anonim Şirketi · CONTENTS PAGE Balance sheet (Statement of Financial Position) 1-2 Statement of off-balance sheet items 3 Income statement 4 Statement

(Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Section 2.I)

Vakıf Finans Faktoring Hizmetleri Anonim Şirketi

Financial Statements As At For the Year Ended

31 December 2011 With Independent Auditors’ Report Thereon

“Convenience Translation to English of Financial Statements

And Notes To The Financial Statements Originally Issued In Turkish”

Akis Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi

15 March 2012

This report includes 2 pages of independent auditors’ report and 42 pages of financial statements and notes to the financial statements.

CONTENTS PAGE Balance sheet (Statement of Financial Position) 1-2 Statement of off-balance sheet items 3 Income statement 4 Statement of recognised income and expense in equity 5 Statement of changes in shareholders’ equity 6 Statement of cash flows 7 Statement of profit distribution 8

Notes to the financial statements 9-42 Note 1 Organization and nature of business 9 Note 2 Basis of preparation of financial statements 9-20 Note 3 Cash items 20 Note 4 Available for sale financial assets 20 Note 5 Factoring receivables and payables 21-22 Note 6 Tangible assets 23 Note 7 Intangible assets 24 Note 8 Deferred tax assets and liabilities 24-25 Note 9 Information on assets held for sale and assets related to

discontinued operations

25 Note 10 Other assets 26 Note 11 Funds borrowed 26 Note 12 Miscellanous payables 27 Note 13 Taxes and duties payable 27 Note 14 Provisions 27-28 Note 15 Equity 28-29 Note 16 Operating income 30 Note 17 Operating expenses 30 Note 18 Other income 31 Note 19 Finance expenses 31 Note 20 Specific provision for doubtful receivables 31 Note 21 Other income 31 Note 22 Taxes 32-33 Note 23 Related party disclosures 33-34 Note 24 Commitments and contingencies 34-35 Note 25 Financial risk management 36-42 Note 26 Subsequent events 42

VAKIF FİNANS FAKTORİNG HİZMETLERİ ANONİM ŞİRKETİ

BALANCE SHEET AT 31 DECEMBER 2011 (Currency: Thousands of Turkish Lira “TL” unless otherwise stated. )

The accompanying notes are an integral part of these financial statements. 1

1-STATEMENT OF FINANCIAL POSITION -ASSETS

Audited Current Period

31 December 2011

Restated (*) Audited

Prior Period 31 December 2010

Note TL FC TOTAL TL FC TOTAL

I. CASH AND CASH EQUIVALENTS - - - 2 - 2II. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR - - - - - -2.1 Financial assets held for trading purpose - - - - - -2.2 Financial assets designated at fair value through profit or loss - - - - - -2.3 Derivative financial assets held for trading purpose - - - - - -III. BANKS 3 305 804 1,109 349,084 442 349,526IV. RECEIVABLES FROM REVERSE REPURCHASE AGREEMENTS - - - - - -V. AVAILABLE FOR SALE FINANCIAL ASSETS (Net) 4 2,322 - 2,322 2,322 - 2,322VI. FACTORING RECEIVABLES 5 577,291 40,513 617,804 450,170 15,203 465,3736.1 Discounted factoring receivables 126,704 3,208 129,912 53,851 2,770 56,6216.1.1 Domestic 133,536 - 133,536 54,913 - 54,9136.1.2 Foreign - 3,532 3,532 - 3,169 3,1696.1.3 Unearned income (6,832) (324) (7,156) (1,062) (399) (1,461)6.2 Other factoring receivables 450,587 37,305 487,892 396,319 12,433 408,7526.2.1 Domestic 444,233 - 444,233 388,753 - 388,7536.2.2 Foreign 6,354 37,305 43,659 7,566 12,433 19,999VII. FINANCING LOANS - - - - - -7.1 Consumer loans - - - - - -7.2 Credit cards - - - - - -7.3 Installment based commercial loans - - - - - -VIII. RECEIVABLES FROM LEASING ACTIVITIES - - - - - -8.1 Receivables from leasing activities - - - - - -8.1.1 Finance lease receivables - - - - - -8.1.2 Operational lease receivables - - - - - -8.1.3 Others - - - - - -8.1.4 Unearned income - - - - - -8.2 Investment in progress subject to leases - - - - - -8.3 Advances given due to leasing activities - - - - - -IX. LOANS AND RECEIVABLES UNDER FOLLOW-UP 5 - - - - - -9.1 Factoring receivables under follow-up 6,377 - 6,377 6,166 - 6,1669.2 Financing loans under follow-up - - - - - -9.3 Receivables from leasing activities under follow-up - - - - - -9.4 Specific provisions (-) (6,377) - (6,377) (6,166) - (6,166)X. DERIVATIVE FINANCIAL ASSETS HELD FOR RISK - - - - - -10.1 Fair value hedges - - - - - -10.2 Cash flow hedges - - - - - -10.3 Hedges of net investment in foreign operations - - - - - -XI. HELD-TO-MATURITY INVESTMENTS (Net) - - - - - -XII. INVESTMENTS IN SUBSIDIARIES (Net) - - - - - -XIII. INVESTMENTS IN ASSOCIATES (Net) - - - - - -XIV. INVESTMENTS IN JOINT-VENTURES (Net) - - - - - -XV. TANGIBLE ASSETS (Net) 6 283 - 283 374 - 374XVI. INTANGIBLE ASSETS (Net) 7 106 - 106 106 - 10616.1 Goodwill - - - - - -16.2 Other intangibles 106 - 106 106 - 106XVII. DEFERRED TAX ASSETS 8 2,019 - 2,019 1,868 - 1,868XVIII. ASSETS HELD FOR SALE AND ASSETS RELATED TO THE DISCONTINUED OPERATIONS (Net) 9 18 - 18 18 - 1818.1 Assets held for sale 18 - 18 18 - 1818.2 Assets related to the discontinued operations - - - - - -XIX. OTHER ASSETS 10 450 19 469 320 16 336 TOTAL ASSETS 582,794 41,336 624,130 804,264 15,661 819,925

(*) Please refer to note 2.1.2 for restatement effects on financial statements

VAKIF FİNANS FAKTORİNG HİZMETLERİ ANONİM ŞİRKETİ

BALANCE SHEET AT 31 DECEMBER 2011 (Currency: Thousands of Turkish Lira “TL” unless otherwise stated. )


(*) Please refer to note 2.1.2 for restated effects on financial statements.

1- STATEMENT OF FINANCIAL POSITION - LIABILITIES AND EQUITY


31 December 2011

Restatement (*) Audited


Note TL FC TOTAL TL FC TOTAL

I. DERIVATIVE FINANCIAL LIABILITIES HELD FOR TRADING PURPOSE

- - - - - -

II. FUNDS BORROWED 11 409,157 127,895 537,052 736,305 10,549 746,854III. FACTORING PAYABLES - - - - - -IV. PAYABLES DUE TO LEASING OPERATIONS - - - - - -4.1 Finance lease payables - - - - - -4.2 Operational lease payables - - - - - -4.3 Others - - - - - -4.4 Deferred finance leasing expenses ( - ) - - - - - -V. SECURITIES ISSUED (Net) - - - - - -5.1 Bills - - - - - -5.2 Asset backed securities - - - - - -5.3 Bonds - - - - - -VI. MISCELLANEOUS PAYABLES 12 119 205 324 106 145 251VII. OTHER EXTERNAL RESOURCES PAYABLE - - - - - - VIII.

DERIVATIVE FINANCIAL LIABILITIES HELD FOR RISK MANAGEMENT PURPOSE

- - - - - -

8.1 Fair value hedges - - - - - -8.2 Cash flow hedges - - - - - -8.3 Hedges of net investment in foreign operations - - - - - -IX. TAXES AND DUTIES PAYABLES 13 1,754 - 1,754 1,190 - 1,190X. PROVISIONS 14 237 - 237 110 - 11010.1 Restructuring reserves - - - - - -10.2 Reserve for employee benefits 237 - 237 110 - 11010.3 Other provisions - - - - - -XI. DEFERRED TAX LIABILITIES - - - - - -XII.

PAYABLES FOR ASSETS HELD FOR SALE AND ASSETS RELATED TO DICONTINUED OPERATIONS (Net)

- - - - - -

12.1 Payables related to the assets held for sale - - - - - -12.2 Payables related to the discontinued operations - - - - - -XIII. SUBORDINATED LOANS - - - - - -XIV. EQUITY 15 84,763 - 84,763 71,520 - 71,52014.1 Paid-in capital 22,400 - 22,400 22,400 - 22,40014.2 Capital reserves 28,831 - 28,831 28,831 - 28,83114.2.1 Share premium - - - - - -14.2.2 Share cancellation profits - - - - - -14.2.3 Valuation differences of the marketable securities - - - - - -14.2.4 Revaluation surplus on tangible and intangible assets - - - - - -14.2.5 Bonus shares of associates, subsidiaries and joint-ventures - - - - - -14.2.6 Hedging reserves (effective portion) - - - - - -14.2.7 Revaluation surplus on assets held for sale and assets related to the

discontinued operations

- - - - - -14.2.8 Other capital reserves 28,831 - 28,831 28,831 - 28,83114.3 Profit reserves 20,289 - 20,289 10,717 - 10,71714.3.1 Legal reserves 3,790 - 3,790 3,157 - 3,15714.3.2 Status reserves - - - - - -14.3.3 Extraordinary reserves 16,499 - 16,499 7,560 - 7,56014.3.4 Other profit reserves - - - - - -14.4 Profit or (loss) 13,243 - 13,243 9,572 - 9,57214.4.1 Prior years’ profit/(losses) - - - - - -14.4.2 Current year’s profit/(losses) 13,243 - 13,243 9,572 - 9,572

TOTAL LIABILITIES AND EQUITY 496,030 128,100 624,130 809,231 10,694 819,925

VAKIF FİNANS FAKTORİNG HİZMETLERİ ANONİM ŞİRKETİ OFF BALANCE SHEET ITEMS AS AT 31 DECEMBER 2011 (Currency: Thousands of Turkish Lira “TL” unless otherwise stated. )


OFF-BALANCE SHEET ITEMS


31 December 2011

Audited Prior Period

31 December 2010 Note TL FC TOTAL TL FC TOTAL

I. REVOCABLE FACTORING TRANSACTIONS 29,455 5,546 35,001 14,539 2,143 16,682II. IRREVOCABLE FACTORING TRANSACTIONS 196,720 967 197,687 65,137 - 65,137III. COLLATERALS RECEIVED 5 - 24 18,463 - 18,463 20,029 - 20,029IV. COLLATERALS GIVEN 24 205 - 205 215 - 215V. COMMITMENTS - - - - - -5.1 Irrevocable commitments - - - - - -5.2 Revocable commitments - - - - - -5.2.1 Revocable lease granting commitments - - - - - -5.2.1.1 Finance lease commitments - - - - - -5.2.1.2 Operational lease commitments - - - - - -5.2.2 Other revocable commitments - - - - - -VI. DERIVATIVE FINANCIAL INSTRUMENTS - - - - - -6.1 Derivative financial instruments held for risk management

purpose - - - - - -6.1.1 Fair value hedges - - - - - -6.1.2 Cash flow hedges - - - - - -6.1.3 Net foreign investment hedges - - - - - -6.2 Derivative financial instruments held for trading purpose - - - - - -6.2.1 Forwards – purchases and sales - - - - - -6.2.2 Swaps – purchases and sales - - - - - -6.2.3 Options – purchases and sales - - - - - -6.2.4 Futures – purchases and sales - - - - - -6.2.5 Others - - - - - -VII. ITEMS HELD IN CUSTODY 24 153,631 47,400 201,031 126,528 31,587 158,115 TOTAL OFF-BALANCE SHEET ITEMS 398,474 53,913 452,387 226,448 33,730 260,178

VAKIF FİNANS FAKTORİNG HİZMETLERİ ANONİM ŞİRKETİ STATEMENT OF INCOME FOR THE YEAR ENDED 31 DECEMBER 2011 (Currency: Thousands of Turkish Lira “TL” unless otherwise stated. )


INCOME STATEMENT

Note Audited

Current Period 1 January –

31 December 2011


Prior Period 1 January –

31 December 2010

I. MAIN OPERATING INCOME 16 1.1 INCOME FROM FACTORING OPERATIONS 63,193 53,417 1.1.1 Interest income from factoring receivables 62,010 52,674 1.1.1.1 Discounted 9,917 5,030 1.1.1.2 Others 52,093 47,644 1.1.2 Fees and commissions received from factoring receivables 1,183 743 1.1.2.1 Discounted 154 159 1.1.2.2 Others 1,029 584 1.2 INCOME FROM FINANCING LOANS - - 1.2.1 Interest income from financing loans - - 1.2.2 Fees and commissions received from financing loans - - 1.3 INCOME FROM LEASING OPERATIONS - - 1.3.1 Finance lease income - - 1.3.2 Operational lease income - - 1.3.3 Fees and commission income on leasing operations - - II. MAIN OPERATING EXPENSES (-) 17 5,044 4,995 2.1 Personnel expenses 3,149 2,636 2.2 Provision expense for employee termination indemnity 85 33 2.3 Research and development expenses - - 2.4 General administrative expenses 1,810 2,326 2.5 Others - - III. OTHER OPERATING INCOME 18 434,050 145,893 3.1 Interest income on banks 1,197 15,522 3.2 Interest income on reverse repurchase agreements - - 3.3 Interest income on securities - - 3.3.1 Interest income on trading financial assets - - 3.3.2 Interest income on financial assets designated at fair value through profit or loss - - 3.3.3 Interest income on available for sale financial assets - - 3.3.4 Interest income on held to maturity investments - - 3.4 Dividend income - - 3.5 Trading income - - 3.5.1 Derivatives - - 3.5.2 Others - - 3.6 Foreign exchange gains 432,644 130,145 3.7 Others 209 226 IV. FINANCING EXPENSES (-) 19 43,440 48,477 4.1 Interest expense on funds borrowed 42,996 48,238 4.2 Interest expense on factoring payables - - 4.3 Interest expense on financial leases - - 4.4 Interest expense on securities issued - - 4.5 Other interest expenses - - 4.6 Fees and commission expenses 444 239 V. SPECIFIC PROVISIONS FOR LOANS AND RECEIVABLES UNDER FOLLOW-UP 20 414 75 VI. OTHER OPERATING EXPENSES (-) 21 431,895 133,878 6.1 Impairment in value of securities - - 6.1.1 Impairment in value of financial assets designated at fair value through profit or loss - - 6.1.2 Impairment in value of available for sale financial assets - - 6.1.3 Impairment in value of held to maturity investments - - 6.2 Impairment in value of non current assets - - 6.2.1 Impairment in value of tangible assets - - 6.2.2 Impairment in value of assets held for sale and assets related to discontinued operations - - 6.2.3 Impairment in value of goodwill - - 6.2.4 Impairment in value of other intangible assets - - 6.2.5 Impairment in value of subsidiaries, associates and joint-ventures - - 6.3 Trading losses from derivatives - - 6.4 Foreign exchange losses 431,895 130,012 6.5 Others - 3,866 VII. OPERATING PROFIT/(LOSSES), NET (I+…+VI) 16,450 11,885 VIII. INCOME RESULTED FROM MERGERS - - IX. GAINS/(LOSSES) ON NET MONETARY POSITION - - X. PROFIT/(LOSSES) FROM CONTINUING OPERATIONS BEFORE TAXES (VII+VIII+IX) 16,450 11,885 XI. PROVISION FOR TAXES FROM CONTINUING OPERATIONS (±) 22 (3,207) (2,313) 11.1 Current tax charge (3,359) (3,048) 11.2 Deferred tax charges due to deferred tax assets - - 11.3 Deferred tax charges due to deferred tax liabilities 152 735 XII. NET PROFIT/(LOSSES) AFTER TAXES FROM CONTINUING OPERATIONS (X±XI) 13,243 9,572 XIII. INCOME FROM DISCONTINUED OPERATIONS - - 13.1 Income from assets held for sale - - 13.2 Income from sale of associates, subsidiaries and joint-ventures - - 13.3 Other income from discontinued operations - - XIV. EXPENSES FROM DISCONTINUED OPERATIONS (-) - - 14.1 Expense from assets held for sale - - 14.2 Expense from sale of associates, subsidiaries and joint-ventures - - 14.3 Other expense from discontinued operations - - XV. PROFIT/(LOSSES) BEFORE TAXES ON DISCONTINUED OPERATIONS (XIII-XIV) - - XVI. PROVISION FOR TAXES FROM DISCONTINUED OPERATIONS (±) - - 16.1 Current tax charge - - 16.2 Deferred tax charges/credits due to deferred tax assets - - 16.3 Deferred tax charges/credits due to deferred tax liabilities - - XVII. NET PROFIT/(LOSSES) AFTER TAXES FROM DISCONTINUED OPERATIONS (XV±XVI) - - XVIII. NET PROFIT/(LOSSES) FOR THE YEAR (XVII+XVIII) 13,243 9,572

(*) Please refer to note 2.1.2 for restated effects on financial statements.

VAKIF FİNANS FAKTORİNG HİZMETLERİ ANONİM ŞİRKETİ STATEMENT OF INCOME AND EXPENSE ITEMS ACCOUNTEED UNDER SHAREHOLDER’S EQUITY FOR THE YEAR ENDED 31 DECEMBER 2011 (Currency: Thousands of Turkish Lira “TL” unless otherwise stated. )

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

5

STATEMENT OF INCOME AND EXPENSE ITEMS ACCOUNTED UNDER SHAREHOLDERS’ EQUITY


31 December 2011



I. ADDITIONS TO MARKETABLE SECURITIES REVALUATION DIFFERENCES FOR AVAILABLE FOR SALE FINANCIAL ASSETS 1.1 Net change in the fair value of available for sale financial assets - - 1.2 Fair value changes transferred to profit or loss due to disposal of related financial assets - - II. TANGIBLE ASSETS REVALUATION DIFFERENCES - - III. INTANGIBLE ASSETS REVALUATION DIFFERENCES - - IV. FOREIGN EXCHANGE DIFFERENCES FOR FOREIGN CURRENCY TRANSACTIONS - - V. PROFIT/LOSS FROM DERIVATIVE FINANCIAL INSTRUMENTS FOR CASH FLOW HEDGE PURPOSES (Effective portion of fair value

differences)- -

5.1 Change in fair values (Effective portion) - - 5.2 Portion reclassified and presented in the statement of income - - VI. PROFIT/LOSS FROM DERIVATIVE FINANCIAL INSTRUMENTS FOR HEDGE OF NET INVESTMENTS IN FOREIGN OPERATIONS

(Effective portion of fair value differences) - -

6.1 Change in fair values (Effective portion) - - 6.2 Portion reclassified and presented in the statement of income - - VII. THE EFFECT OF CORRECTIONS OF ERRORS AND CHANGES IN ACCOUNTING POLICIES - - VIII. OTHER PROFIT LOSS ITEMS ACCOUNTED UNDER EQUITY DUE TO TAS - - IX. DEFERRED TAX OF VALUATION DIFFERENCES - - X. TOTAL NET PROFIT/LOSS ACCOUNTED UNDER EQUITY (I+II+…+IX) - - XI. PROFIT/LOSS 13,243 9,572 XII. TOTAL PROFIT/LOSS ACCOUNTED FOR THE PERIOD (X±XI) 13,243 9,572

(*) Please refer to note 2.1.2 for restatement effects on financial statements.

VAKIF FİNANS FAKTORİNG HİZMETLERİ ANONİM ŞİRKETİ STATEMENT OF CHANGES IN SHAREHOLDER’S EQUITY FOR THE YEAR ENDED 31 DECEMBER 2011 (Currency: Thousands of Turkish Lira “TL” unless otherwise stated. )

The accompanying notes are an integral part of these consolidated financial statements.

6

CHANGES IN EQUITY

Paid-in Capital

Capital Reserves from Inflation

Adj.s to Paid in Capital

Share Premium

Share Cancellation

Profits Legal

Reserves Status

Reserves Extraordinary

Reserves Other Profit

Reserves

Net Profit/(Losses) For the Year

Prior Years’ Net Profit / (Losses)

Valuation Differences of the Marketable

Securities

Revaluation Surplus on

Tangible and Intangible Assets

Bonus Shares of Equity

Participations

Hedging Reserves

Revaluation Surp. On Assets

Held for Sale and Assets of

Discount. Op.s

Total Equity

Prior Year (01.01 – 31.12.2010) Audited I. Balances at the beginning of the year 22,400 28,831 - - 1,948 - 638 - - 13,878 - - - - - 67,695 II. Corrections per TAS 8 - - - - - - - - - - - - - - - - 2.1 Effects of correction of errors - - - - - - - - - - - - - - - - 2.2 Effects of changes in accounting policies - - - - - - - - - - - - - - - - III. Adjusted balances at the beginning of the year (I+II) 22,400 28,831 - - 1,948 - 638 - - 13,878 - - - - - 67,695 Changes during the year - - - - - - - - - - - - - - - - IV. Increase/decrease related to mergers - - - - - - - - - - - - - - - - V. Hedging reserves - - - - - - - - - - - - - - - - 5.1 Cash Flow Hedges - - - - - - - - - - - - - - - - 5.2 Hedging net investment in foreign operations - - - - - - - - - - - - - - - - VI. Valuation differences of the marketable securities - - - - - - - - - - - - - - - - VII. Revaluation surplus on tangible assets - - - - - - - - - - - - - - - - VIII. Bonus shares of associates, subsidiaries and joint-

ventures - - - - - - - - - - - - - - - -

IX. Translation differences - - - - - - - - - - - - - - - - X. Changes resulted from disposal of the assets - - - - - - - - - - - - - - - - XI. Changes resulted from reclassifications of the assets - - - - - - - - - - - - - - - - XII. Changes resulted from reclassifications of the assets - - - - - - - - - - - - - - - - XIII. Issuances of share certificates - - - - - - - - - - - - - - - - XIV. Capital reserves from inflation adjustments to paid-in

capital - - - - - - - - -

XV. Bonds Convertible to Share Certificates - - - - - - - - - - - - - - - - XVI. Subordinated loans - - - - - - - - - - - - - - - - XVII. Net profit/(losses) of the year - - - - - - - - 9,572 - - - - - - 9,572 XVIII. Profit distribution - - - - 1,209 - 6,922 - - (13,878) - - - - - (5,747)- 18.1. Dividends - - - - - - - - - (5,747) - - - - - (5,747) 18.2 Transferred to reserves - - - - 1,209 - 6,922 - - (8,131) - - - - - - 18.3 Others - - - - - - - - - - - - - - - -

Restated (*)

Balances at the end of the year (31 December 2010) 22,400 28,831 - - 3,157 - 7,560 - 9,572 - - - - - - 71,520

Current year (1 January - 31 January 2011) Audited I. Balance at the beginning of the year 22,400 28,831 - - 3,157 - 7,560 - 9,572 - - - - - 71,520 Changes during the year - - - - - - - - - - - - - - - - II. Increase/decrease related to mergers - - - - - - - - - - - - - - - - III. Hedging reserves - - - - - - - - - - - - - - - - 3.1 Cash Flow Hedges - - - - - - - - - - - - - - - - 3.2 Hedging net investment in foreign operations - - - - - - - - - - - - - - - - IV. Valuation differences of the marketable securities - - - - - - - - - - - - - - - - V. Revaluation surplus on tangible assets - - - - - - - - - - - - - - - - VI. Bonus shares of associates, subsidiaries and joint-

ventures - - - - - - - - - - - - - - - -

VII. Translation differences - - - - - - - - - - - - - - - - VIII. Changes resulted from disposal of the assets - - - - - - - - - - - - - - - - IX. Changes resulted from reclassifications of the assets - - - - - - - - - - - - - - - - X. Cash Capital Increase - - - - - - - - - - - - - - - - XI. Issuances of share certificates - - - - - - - - - - - - - - - - XII. Capital reserves from inflation adjustments to paid-in

capital - - - - - - - - - - - - - - - -

XIII. Bonds Convertible to Share Certificates - - - - - - - - - - - - - - - - XIV. Subordinated loans - - - - - - - - - - - - - - - - XV. Net profit/(losses) of the year - - - - - - - - 13,243 - - - - - - 13,243 XVI. Profit distribution - - - - 633 - 8,939 - (9,572) - - - - - - - XVII. Dividends - - - - - - - - - - - - - - - - 17.1 Transferred to reserves - - - - 633 - 8,939 - (9,572) - - - - - - - 17.2 Others - - - - - - - - - - - - - - - - Balance at the end of the year (31 December 2011) 22,400 28,831 - - 3,790 - 16,499 - 13,243 - - - - - - 84,763


VAKIF FİNANS FAKTORİNG HİZMETLERİ ANONİM ŞİRKETİ STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2011 (Currency: Thousands of Turkish Lira “TL” unless otherwise stated. )


7

Note Audited

Current Period


Prior Period

31 December 2011 31 December 2010 A. CASH FLOWS FROM OPERATING ACTIVITIES 1.1 Operating profit before changes in operating assets and liabilities 21,142 64,1551.1.1 Interests received/lease income 63,205 52,6741.1.2 Lease expenses - - 1.1.3 Dividends received - - 1.1.4 Fee and commissions received 1,178 7431.1.5 Other income 5 2261.1.6 Collections from previously written-off receivables - - 1.1.7 Payments to personnel and service suppliers (3,164) (2,636)1.1.8 Taxes paid (2,355) (3,048)1.1.9 Others (37,727) 16,196 1.2 Changes in operating assets and liabilities (150,106) 125,6131.2.1 Net (increase) decrease in factoring receivables (152,635) (111,565)1.2.2 Net (increase) decrease in financing loans - - 1.2.3 Net (increase) decrease in receivables from leasing operations - - 1.2.4 Net (increase) decrease in other assets 2,896 (6,128)1.2.5 Net increase (decrease) in factoring payables - - 1.2.6 Net increase (decrease) in payables due to leasing activities - - 1.2.7 Net increase (decrease) in funds borrowed - 244,2121.2.8 Net increase (decrease) in overdue payables - -1.2.9 Net increase (decrease) in other liabilities (367) (906) I. Net cash from operating activities (128,964) 189,768 B. YATIRIM FAALİYETLERİNE İLİŞKİN NAKİT AKIŞLARI 2.1 İktisap Edilen Bağlı Ortaklık ve İştirakler ve İş Ortaklıkları - -2.2 Elden Çıkarılan Bağlı Ortaklık ve İştirakler ve İş Ortaklıkları - -2.3 Satın Alınan Menkuller ve Gayrimenkuller 6 (19) (8)2.4 Elden Çıkarılan Menkul ve Gayrimenkuller - 282.5 Elde Edilen Satılmaya Hazır Finansal Varlıklar - -2.6 Elden Çıkarılan Satılmaya Hazır Finansal Varlıklar - -2.7 Satın Alınan Vadeye Kadar Elde Tutulacak Yatırımlar - -2.8 Satılan Vadeye Kadar Elde Tutulacak Yatırımlar - -2.9 Diğer 7 - - II. Net cash from operating activities (19) 20 C. CASH FLOWS FROM INVESTING ACTIVITIES 3.1 Cash obtained from funds borrowed and securities issued 527,897 -3.2 Cash used for repayment of funds borrowed and securities issued (744,424) (48,478)3.3 Equity instruments issued - -3.4 Dividends paid - (5,747)3.5 Payments for finance leases - -3.6 Others - - III. Net cash from/(used in) financing activities (216,527) (54,225) IV. Effect of change in foreign exchange rates on cash and cash equivalents 119 133 V. Net increase in cash and cash equivalents (345,510) 135,563 VI. Cash and cash equivalents at the beginning of the year 3 346,500 210,804 VII. Cash and cash equivalents at the end of the year 3 1,109 346,500


VAKIF FİNANS FAKTORİNG HİZMETLERİ ANONİM ŞİRKETİ STATEMENT OF PROFIT DISTRIBUTION FOR THE YEAR ENDED 31 DECEMBER 2011

(Currency: Thousands of Turkish Lira “TL” unless otherwise stated. )


8

Current Period 31 December 2011

(**)

Restated (*) Prior Period

31 December 2010 I. DISTRIBUTION OF CURRENT YEAR PROFIT 1.1 NET PROFTI FOR THE YEAR 16,450 11,8851.2 TAXES AND LEGAL DUTIES PAYABLE (-) (3,207) (2,313)1.2.1 Corporate tax (income tax) (3,359) (3,048)1.2.2 Withholding tax - -- 1.2.3 Other taxes and duties (*) 152 735 A. NET PROFIT FOR THE YEAR (1.1-1.2) 13,243 9,572 1.3 ACCUMULATED LOSSES (-) - - 1.4 FIRST LEGAL RESERVES (-) - (633)1.5 OTHER STATUTORY RESERVES (-) (152) (735) B NET PROFIT AVAILABLE FOR DISTRIBUTION [(A-(1.3+1.4+1.5)] 13,091 8,204

1.6 FIRST DIVIDEND TO SHAREHOLDERS (-) - - 1.6.1 To owners of ordinary shares - - 1.6.2 To owners of privileged shares - - 1.6.3 To owners of redeemed shares - - 1.6.4 To profit sharing bonds - - 1.6.5 To holders of profit and loss sharing certificates - - 1.7 DIVIDENDS TO PERSONNEL (-) - - 1.8 DIVIDENDS TO BOARD OF DIRECTORS (-) - - 1.9 SECOND DIVIDEND TO SHAREHOLDERS (-) - - 1.9.1 To owners of ordinary shares - - 1.9.2 To owners of privileged shares - - 1.9.3 To owners of redeemed shares - - 1.9.4 To profit sharing bonds - - 1.9.5 To holders of profit and loss sharing certificates - - 1.10 SECOND LEGAL RESERVES (-) - - 1.11 STATÜ S RESERVES (-) - - 1.12 EXTRAORDINARY RESERVES - (8,939)1.13 OTHER RESERVES - - 1.14 SPECIAL FUNDS - -

II. DISTRIBUTION FROM RESERVES - - 2.1 DISTRIBUTION OF RESERVES - - 2.2 SECOND LEGAL RESERVES (-) - - 2.3 DIVIDENTS TO SHAREHOLDERS (-) - - 2.3.1 To owners of ordinary shares - - 2.3.2 To owners of privileged shares - - 2.3.3 To owners of redeemed shares - - 2.3.4 To profit sharing bonds - - 2.3.5 To holders of profit and loss sharing certificates - - 2.4 DIVIDENDS TO PERSONNEL (-) - - 2.5 DIVIDENDS TO BOARD OF DIRECTORS (-) - -

III. EARNINGS PER SHARE 3.1 TO OWNERS OF ORDINARY SHARES (TL) - - 3.2 TO OWNERS OF ORDINARY SHARES ( % ) - - 3.3 TO OWNERS OF PRIVILEGED SHARES (TL) - - 3.4 TO OWNERS OF PRIVILEGED SHARES ( % ) - - IV. DIVIDEND PER SHARE - - 4.1 TO OWNERS OF ORDINARY SHARES (TL) - - 4.2 TO OWNERS OF ORDINARY SHARES ( % ) - - 4.3 TO OWNERS OF PRIVILEGED SHARES (TL) - - 4.4 TO OWNERS OF PRIVILEGED SHARES ( % ) - -

(*)Please refer to note 2.1.2 for restatement effects on financial statements. (**)The Board of Directors has not made any decision regarding to profit distribution.

VAKIF FİNANS FAKTORİNG HİZMETLERİ ANONİM ŞİRKETİ NOTES TO THE FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2011 (Currency: Thousands of Turkish Lira “TL” unless otherwise stated. )

9

1 ORGANIZATION AND NATURE OF BUSINESS

Vakıf Finans Faktoring Hizmetleri Anonim Şirketi (“the Company”) was incorporated on 28 January 1998 to provide factoring services to industrial and commercial firms. The Company maintains its operations in accordance with the the requirements of the Communiqué on the Regulation on Procedures and Principles for Establishment and Operations of Financial Leasing, Factoring and Consumer Financing Companies” as promulgated by the Banking Regulation and Supervision Agency (“BRSA”).

As at 31 December 2011 and 2010, the composition of the authorized and paid-in share capital are as follows:

31 December

2011Share

(%)31 December

2010 Share

(%) Türkiye Vakıflar Bankası TAO 17,560 78.39 17,560 78.39Güneş Sigorta A.Ş. 3.070 13.71 3.070 13.71Vakıf Finansal Kiralama A.Ş. 850 3.79 850 3.79Vakıf Per. Öz. Sos. Güv. Vakfı 570 2.55 570 2.55Vakıf Pazarlama Sanayi ve Tic. AŞ 350 1.56 350 1.56 Share capital 22,400 100 22,400 100

The Company has 34 employees as at 31 December 2011 (2010: 31 employees).

The Company is registered in Turkey and located in the address below:

Gazeteciler Sitesi, Yazarlar Sokak, No:10, Esentepe, Şişli / İSTANBUL.

The Company carries its operations mainly in one geographical region (Turkey).

2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS

2.1 Basis of Preparation

2.1.1 Basis of Preparation of Financial Statements

The accompanying financial statements are prepared in accordance with the “Communiqué Uniform Chart of Accounts to be implemented by Financial Leasing, Factoring and Consumer Financing Companies and its Explanation as well as the Form and Scope of Financial Statements to be announced to Public” published on the Official Gazette no.26525 dated 17 May 2007 promulgated by Banking Regulation and Supervision Agency (“BRSA”), Turkish Accounting Standards (“TAS”), Turkish Financial Reporting Standards (“TFRS”) and the appendices and interpretations promulgated by Turkish Accounting Standards Board (“TASB”) and the statements and guidance published by BRSA on accounting and financial reporting principles (together referred as “Reporting Standards”).

Per decree no 660 published on the Official Gazette dated 2 November 2011 and became effective, additional article no:1 of the 2499 numbered Law on establishment of TASB has been abrogated and establishment of Public Oversight, Accounting and Auditing Standards Association (“Board”) has been decided by the Council of Ministers. In accordance with this additional temporary article no 1 of the decree, current regulations will prevail until related standards and regulations will be issued by the Board become effective.

The balance sheet and income statement prepared as at 31 December 2011 were authorized for issue by the Board of Directors of the Company on 15 March 2012. The General Assembly and certain regulatory bodies have the power to amend the statutory financial statements after issue.


10

2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS

2.1 Basis of Preparation (continued)

2.1.1 Basis of Preparation of Financial Statements (continued)

Additional Paragraph for Convenience Translation to English

The differences between accounting principles, as described in the preceding paragraphs, and the accounting principles generally accepted in countries, in which the accompanying financial statements are to be distributed, and International Financial Reporting Standards (“IFRS”), may have significant influence on the accompanying financial statements. Accordingly, the accompanying financial statements are not intended to present the financial position and results of operations in accordance with the accounting principles generally accepted in such countries and IFRS.

2.1.2 Resatement of Financial Statements of Prior Period

The impairment loss on the available for sale financial assets recognised in 2010 is revised on the financial statements as at 31 December 2011 according to the Accounting Policies, Changes in Accounting Estimates and Errors (“IAS 8”). The effect of the corrections are presented below as at 31 December 2010. The corrections do not have any effect on the financial statements as at 1 January 2010.

31 December 2010 – Statement of Financial Position Published Adjustments Restated

Available for sale financial assets 6,188 (3,866) 2,322Deferred tax assets 1,095 773 1,868Total assets 823,018 (3,093) 819,925

Net profit/loss 12,665 (3,093) 9,572

2010 – Income Statement Published Adjustments Restated

Other operating income / expense - (3,866) (3,866)Deferred tax income / expense (38) 773 735Net profit/loss 12,665 (3,093) 9,572

2.1.3 Functional and Presentation Currency

The presentation and functional currency of the Company is Turkish Lira (TL).

The financial statements of the Company have been adjusted for the effects of inflation in accordance with TAS 29 “Financial Reporting in Hyperinflationary Economies” until 31 December 2004. By a circular issued on 28 April 2005, BRSA declared that the application of inflation accounting has been ceased to be applied for the companies operating in Turkey starting from 1 January 2005, since the provisions of hyperinflationary economy do not exist anymore.


11

2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued)

2.1 Basis of Preparation (Continued)

2.1.4 Accounting estimates

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. In preparation of the financial statements, the significant estimates and judgments used by the Company are included in the following notes:

Note 5 – Receivables under follow-up Note 6 – Tangible assets Note 7 – Intangible assets Note 8 – Deferred tax assets and liabilities Note 14 – Provisions and contingent liabilities Note 25 – Fair value of financial instruments for disclosure purposes

2.1.5 Changes in Accounting Policies

Material changes in accounting policies are adjusted retrospectively and prior periods’ financial statements are restated. The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

2.1.6 Changes in accounting estimates and errors

If the changes in accounting estimates relate to a specific period, they are applied in the period they relate to whereas if the changes are related to future periods, they are applied both in the period the change is made and prospectively in the future periods. There have been no material changes in current period’s accounting estimates.

Material accounting errors are adjusted retrospectively and prior periods’ financial statements are restated.

2.1.7 Comparative Information and Restatement of Prior Period Financial Statements

The Company’s financial statements have been prepared comparatively with the prior period in order to give information about financial position and performance. If the presentation or classification of the financial statements is changed, in order to maintain consistency, financial statements of the prior periods are also reclassified in line with the related changes with respective disclosures for the major differences. Prior period financial statements restated and presented of the effects on Note 2.1.2.

2.1.8 Standards and interpretations came into force in 2011

The Company applied all of the relevant and required standards and interpretations promulgated by TASB as at 31 December 2011.

2.1.9 New standards and interpretations not yet adopted as at 31 December 2011

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 31 December 2011, and have not been applied in preparing these financial statements. None of these are expected to have a significant effect on the financial statements of the Company, except for TFRS 9 “Financial Instruments”, which is published in Official Gazette No. 27564 on 27 April 2010.


12



2.1 Basis of Preparation (Continued)

2.1.5 Offsetting

The Company’s financial assets and liabilities are offset and the net amount is presented in the balance sheet if and only if there is a legally enforceable right to set off the amounts and there is an intention to settle on a net basis or to realize the asset and settle the liability simultaneously.

2.2 Summary of significant accounting policies

(a) Financial instruments

Non-derivative financial instruments

Non-derivative financial instruments comprise cash and cash equivalents, factoring receivables, available for sale financial assets, funds borrowed, and other miscellanous payables.

Non-derivative financial instruments are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as described below.

Cash items comprise cash balances.

Cash at banks comprises time deposits with an original maturity less than three months. Cash at banks reflects short-term investments; highly liquid, with an original maturity less than three months. Time deposits are recognised at discounted values by using effective interest rate.

The Company initially recognizes factoring receivables and payables on the date that they are originated. Such assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, factoring receivables are measured at amortized cost using the effective interest method, less any impaired losses.

The Company recognizes bad debt provisions for factoring receivables and for other assets that meet criteria published in the Communiqué No. 26588 on the “Communiqué on Procedures and Principles for the Provisions to be set aside by Financial Leasing, Factoring and Financing Companies for their Receivables” issued at 20 July 2007 by BRSA. Doubtful receivables are derecognized after all legal procedures are completed and net loss is determined.

Funds borrowed are recognized initially at cost, net of any transaction costs incurred. Subsequent to initial recognition, bank borrowings are stated at amortized cost with any difference between cost and redemption value being recognized in the income statement over the period of the borrowings.

Interest income and expense are accounted as described in Note 2.2.(h).

Other non-derivative financial instruments are measured at amortized cost using the effective interest method less any impairment.

A financial instrument is recognised if the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Company’s contractual rights to the cash flows from the financial assets expire or if the Company transfers the financial asset to another party without retaining control or with all risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e., the date that the Company commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Company’s obligations specified in the contract expire or are discharged or cancelled.


13


2.2 Summary of significant accounting policies (Continued)

(b) Tangible assets and depreciation

Items of tangible assets acquired before 1 January 2005 are measured at cost restated for the effects of inflation in TL units current at 31 December 2004 pursuant to TAS 29 less accumulated depreciation and impairment losses. Tangible assets acquired after 31 December 2004 are measured at cost, less accumulated depreciation and impairment losses.

(i) Subsequent costs

The cost of replacing part of an item of tangible assets is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of the day-to-day servicing of tangible assets are recognized in the income statement as incurred.

(ii) Depreciation

Depreciation is recognised in the income statement on a straight-line basis over the estimated useful lives of each part of an item of tangible assets.

The estimated useful lives for the current and comparative periods are as follows:

Furniture and fixtures 5 years Motor vehicles 5 years Leasehold 5 years

Leasehold improvements are amortized over the periods of the respective leases on a straight-line basis.

(c) Intangible assets

Intangible assets represent computer software licenses and rights. Intangible assets acquired before 1 January 2005 are measured at cost restated for the effects of inflation in TL units current at 31 December 2004 pursuant to TAS 29, less accumulated amortization, and impairment losses. Intangible assets acquired after 31 December 2004 are measured at cost, less accumulated amortisation, and impairment losses. Amortization is recognized in the income statement on a straight-line basis over the estimated useful lives of intangible assets.

Definition Year

Computer software license 3-5 years

(d) Impairment

Financial Assets

A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.


14



(d) Impairment (continued)

All impairment losses are recognised in the income statement. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost and available-for-sale financial assets that are debt and equity securities, the reversal is recognised in the income statement to the extent that the impairment loss in respect of a financial asset was not recognized in the previous year.

The Company recognizes specific provision for factoring receivables in accordance with the Communiqué No. 26588 on the “Communiqué on Procedures and Principles for the Provisions to be set aside by Financial Leasing, Factoring and Financing Companies for their Receivables” issued at 20 July 2007 by BRSA.

Non-financial assets

The carrying amounts of the Company’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. For intangible assets that have indefinite lives or that are not yet available for use, recoverable amount is estimated at each reporting date.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognised in the income statement.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Impairment losses recognised in prior years are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised

(e) Capital increases

Share capital increases from existing shareholders are accounted for at par value as approved at the annual meeting of shareholders.

(f) Reserve for severance payments

In accordance with the existing social legislation in Turkey, the Company is required to make lump-sum payments to employees whose employment is terminated due to retirement or for reasons other than resignation or misconduct. Those payments are calculated with basis of taking the upper limit of severance payment at the balance sheet date


15



In accordance with TAS 19, “Employee Benefits”, the Company calculated the severance pay liability incurred due to retirement of its employees by discounting the future liabilities to their present values, by using statistical method and reflected to the financial statements. The main estimates used are as follows:

31 December 2011 31 December 2010 Discount Rate 3.78% 4.66% Expected Salary/Limit Increase Rate 5% 5.1%

Expected severance payment benefit ratio 100% 99%

The principal assumption is that the maximum liability for each year of service will increase in line with inflation. Thus, the discount rate applied represents the expected real rate after adjusting for the anticipated effects of future inflation. Since the upper limit of reserve for severance payment has been adjusted two times in a year, the Company has used the upper limit amounting TL 2,732 as at 31 December 2011 (31 December 2010: TL 2,517) for the calculation of reserve for severance payments.

(g) Provisions, contingent assets and liabilities

In accordance with TAS 37, “Provisions, Contingent Liabilities and Contingent Assets”, a provision is recognized when the Company has a legal or constructive obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. If the specified criteria are not met, the Company discloses the related issues in the accompanying notes. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability if the time value of the money is significant to the provision.

Contingent assets are disclosed in the notes and not recognized unless it is realized.

(h) Income and expense recognition

(i) Factoring income

Factoring revenue consists of factoring interest and commission income collected or accrued on advances given to the customers. Factoring interest and commission income is recognized on accrual basis.

(ii) Other income and expenses

Other income and expenses are recognized on an accrual basis.

(iii) Finance expenses

Other interest income and expense are recognized on an accrual basis using effective interest method.


16



(i) Income tax

Tax provision of the period includes the current and deferred tax.

Corporate Tax

Current tax is the tax payable on the taxable income for the year, using tax rates enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred Tax

Deferred tax is recognized using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or their tax assets and liabilities will be realized simultaneously.

According to TAS 12, “Income Taxes”; deferred tax assets and liabilities are recognized in the accompanying financial statements, using the balance sheet method, on all taxable temporary differences to the extent that they are expected to increasing or decrease on the income tax payable in the period when they will reverse.

A deferred tax asset is recognized for unused tax losses, investment incentives, tax credits and deductable temporary differences, to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

(j) Related parties

In accordance with TAS 24, “Related Party Disclosures” shareholders, key management and board members, in each case together with companies controlled by or affiliated with them, and associated companies are considered and referred to as related parties. Related party transactions consist of the transfer of the assets and liabilities between related parties by a price or free of charge.

For the purpose of the accompanying financial statements, shareholders of the Company the companies controlled by/associated with them, key management and the Board members of the Company are referred to as related parties.

(k) Subsequent events

Subsequent events mean the events occurred between the reporting date and the authorization date for the announcement of the financial statements. In accordance with TAS 10, “Subsequent Events”; post-balance sheet events that provide additional information about the Company’s position at the balance sheet dates (adjusting events) are reflected in the financial statements. Post-balance sheet events that are not adjusting events are disclosed in the notes when material.


17



(l) Statement of cash flows

The Company prepares cash flow statements to inform the users of the financial statements about the changes in its net assets, its financial structure and its ability to affect the amount and timing of its cash flows with respect to changing external conditions.

In the statement of cash flows, cash flows of the period are reported with a classification based on operating, investing and financing activities. Cash flows from operating activities represent cash flows from activities within the scope of business. Cash flows relating to investment activities represent cash flows used and generated from investment activities (fixed investments and financial investments). Cash flows relating to financing activities represent the sources of financing the Company used and the repayments of these sources.

As at 31 December 2011 and 2010, the cash and cash equivalents are as follows:

31 December 2011 31 December 2010 Cash - 2Banks Time deposits - 348,028Demand deposits 1,109 1,498Accrual of interest - (3,028) 1,109 346,500

(m) Segment reporting

As the Company solely operates in Turkey and maintains factoring operations, operating segments are not presented.


18



(n) Foreign currency transactions

Income and expenses deriving from transactions in foreign currencies have been translated into TL at the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies have been translated into TL at the exchange rates prevailing at the balance sheet date. Exchange gains or losses arising from conversion of foreign currency items have been included in the income statement. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to TL at the exchange rate at the date that the fair value was determined.

The foreign exchange rates used by the Company as at 31 December 2011 and 2010 are as follows:

31 December 2011 31 December 2010

US Dollar (“USD”) 1.8889 1.5460

Euro 2.4438 2.0491

GBP 2.9170 2.3886

(o) Leases

Rentals income under operating leases are recognised in profit or loss on a straight-line basis over the term of the relevant lease. Initial costs incurred in negotiating and arranging to lease in the same way are included in the cost of the leased asset and is amortized straight-line basis over the lease term.

(p) Earnings per share Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.

Entities, whose ordinary shares or potential ordinary share are not publicly-traded, are not required to disclose earnings per share in accordance with TAS 33, ”Earnings per Share”. Therefore, earnings per share have not been calculated in the accompanying financial statements since the ordinary shares of the Company are not publicly-traded.

2.3 Financial Risk Management

The Company has exposure to the following risks during the course of its operations:

Credit risk

Liquidity risk

Market risk

This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risk.


19


2.3 Financial Risk Management (Continued)

The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework.

The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

Credit risk

The Company is subject to credit risk through its factoring operations. Risk Management and Analysis Department is responsible to manage the credit risk. The Company requires a certain amount of collateral in respect of its financial assets. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit.

At reporting date, there were no significant concentrations of credit risk on customer basis. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Main Operation Department conducts the operations. The Branches does not have operation or payment authority.

Liquidity risk

The Company usually creates funds by liquidating short term financial instruments, such as collecting its receivables and converting bank deposits into cash.

Liquidity risk arises in the general funding of the Company’s activities and in the management of positions. It includes both risk of being unable to fund assets at appropriate maturities and rates and risk of being unable to liquidate an asset at a reasonable price and in an appropriate time frame.The Company meetsits liquidityrequirementsthrough credit linesin the Banks. The Company’s policy is to match cash out flows mainly arising from the repayments of the fund borrowed and cash inflows.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. Market risk management, control market risk exposures within acceptable parameters, while aiming to optimize the return of risk.

Foreign Currency Risk

The Company is exposed to currency risk through transactions (such as funds borrowed, factoring transactions) in foreign currencies. As the currency in which the Company presents its financial statements is TL, the financial statements are affected by movements in the exchange rates against TL. As of December 31, 2011 and 2010, foreign currency denominated assets and liabilities, are shown in Note 5.


20


2.3 Financial Risk Management (Continued)

Interest Rate Risk The Company’s operations are subject to the risk of interest rate fluctuations to the extent that interest-earning assets and interest-bearing liabilities mature or reprice at different times or in differing amounts. In the case of floating rate assets and liabilities, the Company is also exposed to basis risk which is the difference in repricing characteristics of the various floating rate indices, such as year end libor and different types of interest. Risk management activities are aimed at optimizing net interest income, given market interest rate levels consistent with the Company’s business strategies.

3 CASH AT BANKS

As at 31 December 2011 and 2010 cash at banks are as follows:

31 December 2011 31 December 2010 TL FC TL FC -Demand deposits 305 804 1,056 442-Time deposits - - 348,028 - 305 804 349,084 442

As at 31 December 2011, cash at banks comprised of demand deposits and there is no interest accrual on cash at banks (31 December 2010: TL 3,028).

4 AVAILABLE FOR SALE FINANCIAL ASSETS (Net)


Amount Effective

Rate Amount Effective

Rate Company Name Vakıf Enerji ve Madencilik A.Ş. 6,188 % 18.58 6,188 % 18.58 Provision for impairment loss Vakıf Enerji ve Madencilik A.Ş.(-) (3,866) (3,866) Total 2,322 2,322

Fair value of the Vakıf Enerji ve Madencilik AŞ (Vakıf Enerji) determined by appraisal report prepared by independent valuation company on 24 February 2010 is amounting to TL 12,500. The share of the Company on Vakıf Enerji capital is computed as TL 2,322 based on the above mentioned appraisal report. As at 31 December 2010, the Company booked on impairment provision according to its fair value as explained in note 2.1.2.


21

5 FACTORING RECEIVABLES AND PAYABLES

As at 31 December 2011 and 2010, factoring receivables are as follows:

31 December 2011 31 December 2010 TL FC TL FC Factoring Receivables-Discounted Domestic factoring receivables 133,536 - 54,913 -Export factoring receivables - 3,532 - 3,169Unearned factoring income (6,832) (324) (1,062) (399) 126,704 3,208 53,851 2,770 Other Factoring Receivables Domestic factoring receivables 444,233 - 388,754 -Foreign factoring receivables 6,354 37,305 7,566 12,433 450,587 37,305 396,320 12,433 Factoring receivables, net 577,291 40,513 450,170 15,203

As at 31 December 2011 and 2010, guarantees received for factoring receivables are as follows:


Mortgages 18,434 20,000

Letters of guarantee 29 29

Total 18,463 20,029

As at 31 December 2011 and 2010, the breakdown of total factoring receivables by industrial groups is as follows:

31 December 2011 % 31 December 2010 % Energy 177,412 28.72 49,083 10.55Information 116,248 18.82 109,889 23.61Construction 101,259 16.39 170,309 36.60Transportation 66,445 10.76 17,866 3.84Textile 54,288 8.79 23,073 4.96Machinery and equipment 27,002 4.37 20,271 4.36Iron and steel 25,764 4.17 11,356 2.44Food 10,712 1.73 13,895 2.99Other 38,674 6.25 49,631 10.65Total 617,804 100.00 465,373 100.00


22

5 FACTORING RECEIVABLES AND PAYABLES (Continued)

As at 31 December 2011 and 2010, doubtful receivables are as follows:

31 December 2011 31 December 2010 TL FC TL FC Past-Due Loans 462 -- 1,093 --Uncollectible Receivables 5,915 -- 5,073 --Specific Provisions (6,377) -- (6,166) --Doubtful receivables , net -- -- -- --

As at 31 December 2011 and 2010, the aging analysis of the impaired factoring receivables and allowances are as follows:


Total doubtful

factoring receivables Allowance Total doubtful

factoring receivables Allowance Overdue 1 to 3 months 390 (390) 72 (72)

Overdue 3 to 6 months 72 (72) -- --

Overdue 6 to 12 months -- -- -- --Overdue over 1 year 5,915 (5,915) 6,094 (6,094)

Total 6,377 (6,377) 6,166 (6,166)

Movements in specific provision for factoring receivables during the years ended 31 December are as follows:

31 December 201131 December

2010 Balance at 1 January 6,166 6,273Provision for the period 415 74Recoveries during the period (-) (204) (181)Balance at the end of the period 6,377 6,166


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6 TANGIBLE ASSETS

Movements of tangible assets during the period ended 31 December 2011 are as follows:

1 January

2011 Additions Disposals 31 December

2011

Cost

Machinery and equipment 192 16 -- 208

Furniture and fixtures 60 3 -- 63

Leasehold improvements 990 -- -- 990

1,242 19 -- 1,261

1 January

2011Current year depreciation Disposals

31 December 2011

Accumulated depreciation

Machinery and equipment (151) (23) -- (174)

Furniture and fixtures (40) (9) -- (49)

Leasehold improvements (677) (78) -- (755)

(868) (110) -- (978)

Net carrying value 374 (91) -- 283

Movements of tangible assets during the year ended 31 December 2010 are as follows:

1 January


2010

Cost

Machinery and equipment 168 24 -- 192

Furniture and fixtures 50 10 -- 60

Leasehold improvements 934 57 (1) 990

1,152 91 (1) 1,242

1 January

2010Current year depreciation Disposals

31 December 2010

Accumulated depreciation

Machinery and equipment (120) (31) -- (151)

Furniture and fixtures (28) (12) -- (40)

Leasehold improvements (601) (77) 1 (677)

(749) (120) 1 (868)

Net carrying value 403 (29) -- 374

As at 31 December 2011 and 2010, there is no tangibles assets acquired through financial leasing.


24

7 INTANGIBLE ASSETS

Movements of intangible assets during the year ended 31 December 2011 are as follows:

1 January


2011

Cost Computer software 273 62 -- 335

273 62 -- 335

1 January

2011Current year

charge Disposals 31 December

2011

Accumulated amortization Computer software (167) (62) -- (229)

(167) (62) -- (229)

Net carrying value 106 -- -- 106

Movements of intangible assets during the year ended 31 December 2010 are as follows:

1 January


2010

Cost Computer software 217 56 -- 273

217 56 -- 273

1 January

2010Current year

charge Disposals 31 December

2010

Accumulated amortization Computer software (119) (48) -- (167)

(119) (48) -- (167)

Net carrying value 98 8 -- 106

As at 31 December 2011 and 2010, the Company does not have any intangible assets generated within the Company.

8 DEFERRED TAX ASSETS AND LIABILITIES

Deferred tax liabilities and assets are recognised when it is probable that the future economic benefits resulting from the reversal of taxable temporary differences will flow to or from the Company. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the deferred tax asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Currently enacted tax rates are used to determine deferred taxes on income.


25

8 DEFERRED TAX ASSETS AND LIABILITIES(Continued)

As at 31 December 2011 and 2010, temporary differences and deferred tax assets and liabilities are computed using the prevailing corporate tax rates are as follows:

31 December 2011 31 December2010Deferred tax assets Impairment on associates 1,974 1,974Retirement pay provision 39 --Unused vacation provision 9 --Total deferred tax assets 2,022 1,974 Provision Expenses -- (102)Retirement pay expense -- (3)Amortisation and depreciation differences on tangible and intangible assets (3) (1)Total deferred tax liability (3) (106) Deferred tax assets, net 2,019 1,868


Opening Balance 1,867 1,133

Deferred tax (expense)/income 152 735

2,019 1,868

9 INFORMATION ON ASSETS HELD FOR SALE AND ASSETS RELATED TO THE DISCOUNTED OPERATIONS

As at 31 December 2011 and 2010,l assets held for sale are as follows:

31 December 2011 31 December 2010 TL FC TL FC

Assets held for sale 18 -- 18 --

18 -- 18 --

The Company has taken a fund amounting to TL 18 from a one of the factoring customers that extends the maturity corresponding to an execution.


26

10 OTHER ASSETS

As at 31 December 2011 and 2010, the details of other assets are as follows:

31 December 2011 31 December 2010 TL FC TL FCPrepaid Expenses 402 19 307 16Prepaid taxes (witholding taxes) 18 -- -- --Job Advances 14 -- 7 --Advances to Personnel 12 -- 3 --VAT Receivable 4 -- 3 -- 450 19 320 16

11 FUNDS BORROWED

As at 31 December 2011 and 2010, details of funds borrowed are as follows:

31 December 2011 31 December 2010 TL FC TL FC Funds Borrowed 409,157 127,895 736,305 10,549 409,157 127,895 736,305 10,549


Short-term borrowings

Short-term unsecured bank loans 446,136 709,516Short term portion of long-term unsecured bank loans 33,612 37,338 Long-term borrowings -Long-term unsecured bank loans 57,304 -- 537,052 746,854


Currency Maturity Interest

type Interest rate

Original amount (‘000) TL Interest rate

Original amount (‘000) TL

TL 2012 Fixed 6%-16.50% 409,157 409,157 2.70%-7.65% 736,305 736,305

USD 2016 Fixed 3.75%-6.10% 38,421 72,574 -- -- --

USD 2012 Variable 3.58%-7% 18,264 34,498 2.5% 1 1

EUR 2012 Fixed 5.20% 3,506 8,567 2.80% 2,008 4,114

EUR 2012 Variable 3.03%-5.20% 4,035 9,861 2.50% 2,431 4,982

GBP 2012 Variable 4.08% 821 2,395 2.50% 602 1,452

537,052 746,854


27

12 MISCELLANOUS PAYABLES

As at 31 December 2011 and 31 December 2010, details of the miscellanous payables are as follows:


TL FC TL FC Other Purchase Payables 118 151 102 124Payables to Personnel 1 -- 4 --Commisions Payables to Correspondents -- 54 -- 21 119 205 106 145

13 TAXES AND DUTIES PAYABLE

As at 31 December 2011 and 2010, details of taxes and duties payables are as follows:

31 December 2011 31 December 2010 TL FC TL FC Corporate tax payable 1,004 710 --Banking and insurance transactions

tax (BITT) 620 -- 409 --Witholding tax payable 38 -- 33 --Premiums payable 90 -- 37 --Other 2 -- 1 -- 1,754 -- 1,190 --

14 PROVISIONS

As at 31 December 2011 and 2010, details of provisions are as follows:

31 December 2011 31 December 2010 TL FC TL FC Provision for employee benefits Reserve for employee severance payments 195 -- 110 - Reserve for unused vacation pay 42 -- -- - 237 -- 110 -

Reserve for employee severance payments

In accordance with the existing social legislation in Turkey, the Company is required to make lump-sum payments to employees whose employment is terminated due to retirement or for reasons other than resignation or misconduct. The computation of the liability is based upon the retirement pay ceiling announced by the Government. Some transitional provisions related to the pre-retirement service term were excluded from the scope of the Law since the related law was amended on 23 May 2002. Such payments are calculated on the basis of 30 days’ pay, (limited to a maximum of TL 2,732 (2010: TL 2,517) at 31 December 2011) per year of employment at the rate of pay applicable at the date of retirement or termination.

The reserve for employee severance payments is not subject to a funding requirement.


28

14 PROVISIONS (Continued)

Movements in reserve for employee severance payments are as follows:

31 December 2011 31 December 2010 Balance at the beginning of the period 110 120Current service cost 46 21Interest 11 12Payment during the period (11) (58)Actuarial cost 39 15Balance at the end of the period 195 110

Reserve for unused vacation pay liability

In accordance with the existing labor law in Turkey, the Company is required to pay to the employee, whose employment is terminated due to any reasons, or to its inheritors, the wage of the deserved and unused vacation days over the prevailing wage at the date the contract is terminated. Vacation pay liability is the total undiscounted liability of the deserved and unused vacation days of all employees.

Movements in reserve for unused vacation pay liability are as follows:

31 December 2011 31 December 2010 Balance at the beginning of the period -- --Increase during the period 46 --Amount provided/(used) in the period (4) --Balance at the end of the period 42 --

15 EQUITY

15.1 Paid–in capital

The Company’s paid-in capital is amounting to TL 22,400,000, comprised of 22.400.000.000 shares with each has a nominal value of TL 1(full TL). Paid-in capital of the Company amounted to TL 22,400,000 is divided into groups comprised of TL 15,008,000 Group (A), and TL 7,392,000 Group (B).

The Company’s shareholder structure as at 31 December 2011 is as follows:


Amount Share Amount ShareT.Vakıflar Bankası T.A.O 17,560 78.39 17,560 78.39Güneş Sigorta A.Ş. 3.070 13.71 3.070 13.71Vakıf Finansal Kiralama A.Ş. 850 3.79 850 3.79Vakıf Per.Öz. Sos. Güv. Vakfı 570 2.55 570 2.55Vakıf Pazarlama ve Tic. A.Ş. 350 1.56 350 1.56Paid in capital 22,400 100 22,400 100


29

15 EQUITY (Continued)

15.1 Paid–in capital (Continued)

Shareholders ORDER GROUP Number of

Shares Amount

Türkiye Vakıflar Bankası TAO 1-2-3 A 11.765.200 11,765,200

1-2-3 B 5.794.800 5,794,800

Güneş Sigorta A.Ş. 1-2-3 A 2.056.900 2,056,900

1-2-3 B 1.013.100 1,013,100

Vakıf Finansal Kiralama A.Ş. 1-2-3 A 569.500 569,500

1-2-3 B 280.500 280,500

Vakıf Per.Öz. Sos. Güv. Vakfı 1-2-3 A 381.900 381,900

1-2-3 B 188.100 188,100

Vakıf Pazarlama ve Tic. A.Ş. 1-2-3 A 234.500 234,500

1-2-3 B 115.500 115,500

Group A has fifty (50) vote right and shareholders of Group B have one (1) vote right for a share in Ordinary and Extraordinary General Meetings of Shareholders.

15.2 Capital reserves

As at 31 December 2011 and 2010, capital reserves amounting to TL 28,831 consist of the inflationary adjustment of the paid-in capital.

15.3 Profit reserves

As at 31 December 2011, profit reserves consist of legal reserves amounting to TL 3,791 and extraordinary reserves amounting to TL 16,498 (2010: TL 3,158 legal reserves and extraordinary reserves amounting to TL 7,560).

15.4 Profit distribution

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

The legal reserves consist of first and second reserves, in accordance with the Turkish Commercial Code. The first legal reserve appropriated out of the statutory profit at the rate of 5% until the total reserve reaches a maximum of 20% of the Company’s paid-in capital. The second legal reserve is appropriated at the rate of 10% of all distributions in excess of 5% of the Company’s paid-in capital. The first and second legal reserves are not available for distribution unless they exceed 50% of the share capital but may be used to absorb losses in the event that the general reserve is exhausted.

In Ordinary General Assembly meeting dated 31 March 2011, it has been decided to distribute the 2010 profit amounting to TL 12,644 remaining after tax liabilities (profit before tax liabilities amounting to TL 13,914). The legal reserve transfer amount is TL 633(2010: TL 1,240), the remaining amount TL 12,031 is transferred to extraordinary reserves (2010: TL 6,957 extraordinary reserve and TL 5,747 dividend distribution).


30

16 OPERATING INCOME

For the years ended 31 December, details of operating income are as follows:

2011 2010 Interest income on factoring receivables -Discounted 9,917 5,030-Other 52,093 47,643 62,010 52,673

Fees and commissions on factoring receivables -Discounted 154 160-Other 1,029 584 1,183 744

Operating Income 63,193 53,417

17 OPERATING EXPENSE

For the years ended 31 December, details of operating expenses are as follows:

2011 2010Personnel expenses 3,149 2,636Rent expenses 321 298Vehicle lease expenses 177 178Depreciation and amortization expenses 172 168Provision expence for severance pay 85 33Consulting expenses 68 82Other operating expenses 1,072 1,600

5,044 4,995

For the years ended 31 December, details of personnel expenses included in operating expenses are as follows:

2011 2010 Wages and salaries 1,842 1,641Bonuses and premiums 429 194Social security premium employer’s share 196 148Employee insurance expenses 134 147Others 548 506 3,149 2,636


31

18 OTHER INCOME

For the years ended 31 December, details of other income are as follows:

2011 2010Interest received from banks 1,197 15,522Foreign exchange gain 432,644 130,145Other 209 226

434,050 145,893

19 FINANCE EXPENSES

For the years ended 31 December, details of finance expenses are as follows:

2011 2010

Interest expense on borrowings 42,996 48,238

Fees and commissions 444 239

43,440 48,477

20 SPECIFIC PROVISION FOR DOUBTFUL RECEIVABLES

For the years ended 31 December, details of specific allowance for doubtful receivables are as follows:

2011 2010

Provision provided during the period 414 75

414 75

21 OTHER EXPENSES

For the years ended 31 December, details of other expenses are as follows:

2011 2010 Foreign exchange loss 431,895 130,013Other - 3,866

431,895 133,879


32

22 TAXES

As at 31 December 2011, corporate income tax is levied at the rate of 20% (2010: 20%). Corporate tax rate is levied on the statutory corporate income tax base, which is determined by modifying accounting income for disallowable expenses and certain exclusions and allowances for tax purposes. If the profit has not been distributed, it is not subject to any other tax.

Some of the deduction rates included in the 15th and 30th articles of the Law no. 5520 on the Corporate Tax have been redefined according to the cabinet decision numbered 2006/10731, which was announced at Trade Registry Gazette of 23 July 2006-26237. In this respect, withholding tax rate on dividend payments, which are made to the companies except those are settled in Turkey or generate income in Turkey via a business or a regular agent, was increased to 15% from 10%. When applying the withholding tax rates on dividend payments to the non-resident institutions and the individuals, the withholding tax rates covered in the related Double Tax Treaty Agreements are taken into account.

The transfer pricing provisions have been stated under the Article 13 of Corporate Tax Law with the heading of “disguised profit distribution via transfer pricing”. The General Communiqué on disguised profit distribution via Transfer Pricing sets details about implementation. New amendments to transfer pricing are in accordance with the principles of “transfer pricing manual” of OECD.

If the tax payers have transactions like service taking or product and goods buying or selling with related parties which are not in accordance with the counterpart principle it will be adjudge that disguised profit distribution via transfer pricing. This kind of disguised profit distribution via transfer pricing will not be deducted from the corporate tax. The companies are obliged to fill the transfer pricing form attached to the annual corporate tax declaration. On this form, all the related party transactions, amounts and the related Transfer Pricing methods are disclosed.

In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Companies file their tax returns within four months following the closing date of the related financial year. Tax returns are open for five years from the beginning of the year that follows the date of filing during which time the tax authorities have the right to audit tax returns, and the related accounting records on which they are based, and may issue re-assessments based on their findings.

The reported income tax expense for the years ended 31 December are different than the amounts computed by applying the statutory tax rate to profits before income taxes as shown in the following reconciliation:

31 December2011 Rate %

31 December 2010 Rate %Reported pre-tax profit / (loss)

Profit before tax 16,450 11,885

Tax computed using statutory tax rate 3,290 20 2,377 20

Tax reconciliation:

- Disallowable expenses (83) (0.50) (64) (0.53)

Tax expense on income statement 3,207 19.50 2,313 19.47

VAKIF FİNANS FAKTORİNG HİZMETLERİ ANONİM ŞİRKETİ Notes to the Financial Statements As at and for the Period Ended 31 December 2011 (Currency: Turkish Lira (“TL”) unless otherwise stated)

33

22 TAXES (contiuned)

For the year ended December 31 tax expense in the income statement is summarized below:

2011 2010

Corporate tax (3,359) (3,048)

Deferred tax income / (expense) 152 (735)

3,207 2,313

As at 31 December 2011 and 2010, provision for income taxes and prepaid taxes are as follows:

31 December 2011 31 December 2010 Corporate Tax Provision 3,359 3,048 Prepaid Taxes (2,355) (2,338)Corporate Tax (Note 13) 1,004 710

23 RELATED PARTIES

As at 31 December 2011 and 2010, balances with related parties are as follows:


Bank Deposits T.Vakıflar Bankası T.A.O. 1,071 1,305 1,071 1,305

Loans T.Vakıflar Bankası T.A.O. 202,739 593,159Vakıfbank International AG 7,881 6,435 210,620 599,594

Payables to Related Parties

T.Vakıflar Bankası T.A.O. 151 124Güneş Sigorta AŞ 84 84Vakıf Sistem Pazarlama AŞ 25 12Vakıf Sigorta Aracılık Ltd. Şti. 2 1 262 221


34

23 RELATED PARTY DISCLOSURES (contiuned)

For the years ended from the details of transactions with related parties as at 31 December 2011 and 2010 are as follows:

2011 2010

Interest Income T.Vakıflar Bankası T.A.O. 7 --

7 --

Financial Expencses T.Vakıflar Bankası T.A.O. Interst Expenses 17,554 36,823 Other Financial Expenses 64 28 Letter of Guarantee Expenses 18 20 17,636 36,871Vakıfbank International A.G. InterstExpenses 288 - 288 - Other Expenses Vakıfbank Spor Klubü Derneği 197 -Güneş Sigorta A.Ş. 115 121Vakıf Sistem Pazarlama A.Ş. 39 35Vakıf Sigorta Ara. Hiz. Ltd. 2 2Vakıf Gayrimenkul Ekspertiz Değerleme A.Ş. - 125 353 283

Directors’ Remuneration

The key management and the Board of Directors received remuneration and fees amounting to TL 223 for the year ended 31 December 2011 (31 December 2010: TL 195).

24 COMMITMENTS AND CONTINGENCIES

24.1 Collaterals received

The Company has the following collaterals for its factoring receivables at 31 December 2011 and 2010:

31 December 2011 31 December 2010 TL FC TL FC Mortgages 18,434 -- 20,000 --Letters of guarantees 29 -- 29 -- 18,463 -- 20,029 --


35

24 COMMITMENTS AND CONTINGENCIES(Continued)

24.2 Collaterals given

As at 31 December 2011 and 2010, collaterals given are comprised of notes given to the following institutions:

31 December 2011 31 December 2010 TL FC TL FC Notes given to the courts 205 - 215 - 205 - 215 -

24.3 Held in custody securities

The Company has obtained securities held in custody for its factoring receivables at 31 December 2011 and 2010 as detailed below:

31 December 2011 31 December 2010 TL FC TL FC Customer checks 134,297 19,276 112,168 22,116Customer notes 19,334 28,124 14,360 9,471 153,631 47,400 126,528 31,587


36

25 FINANCIAL RISK MANAGEMENT

25.2.1 Credit Risk

As at 31 December 2011 and 2010, the sectoral details of factoring receivables are disclosed in Note there is no sectoral concentration. Details of the financial assets exposed to credit risk AS AT 31 December 2011 and 2010 are as follows:

31 December 2011 Factoring receivables

Receivables under follow-up

Related party Non-related

party Related

party Non-related

party Cash at banks

Other

Exposure to maximum credit risk as at reporting date (A+B+C+D+E) - 617,804 - - 1,109 -

A) Net carrying value of financial assets which are neither impaired nor overdue - 617,804 - - 1,109 - B) Net carrying value of financial assets that are restructred/renegotiated, otherwise which will be regarded as overdue or impaired - - - - - -

C) Net carrying value of financial assets which are overdue but not impaired - Secured portion by any guarantee - - - - - - D) Net carrying value of impaired assets - - - - - - - Overdue (gross book value) - - - 6,377 - - - Impairment (-) - - - (6,377) - - - Secured portion of net book value (with letter of guarantee etc) - - - -- - - - Notdue (gross book value) - - - - - - - Impairment (-) - - - - - - - Secured portion of net book value (with letter of guarantee etc) - - - - - - E) Off balance sheet items with credit risks - - - - - -


37

25 FINANCIAL RISK MANAGEMENT (Continued)

25.2.1 Credit Risk (Continued)

31 December 2011 Factoring receivables Receivables under follow-up

Related party Non-related party Related

party Non-related party Cash at banks

Other

Exposure to maximum credit risk as at reporting date (A+B+C+D+E) - 465,373 - - 349,526 -

A) Net carrying value of financial assets which are neither impaired nor overdue - 465,373 - - - B) Net carrying value of financial assets that are restructred/renegotiated, otherwise which will be regarded as overdue or impaired - - - - - -

C) Net carrying value of financial assets which are overdue but not impaired - Secured portion by any guarantee - - - - - - D) Net carrying value of impaired assets - - - -- - - - Overdue (gross book value) - - - 6,166 - - - Impairment (-) - - - (6,166) - - - Secured portion of net book value (with letter of guarantee etc) - - - - - - - Notdue (gross book value) - - - - - - - Impairment (-) - - - - - - - Secured portion of net book value (with letter of guarantee etc) - - - - - - E) Off balance sheet items with credit risks - - - - - -


38


25.2 Risk Management Disclosures (Continued)

25.2.2 Liquidity Risk

The table below shows the notional amounts of non derivative financial liabilities analyzed by the term to maturity. The amounts below represents undicontinued gross cash flows:

31 December 2011

Expected maturities Carrying Amount

Contractual Cash Flows

Less than 3 months

3-12 months

1-5 years

More than 5 years

Non derivative fiancial liabilities 537,376 (572,577) (292,796) (151,629) (128,152) --

Funds borrowed 537,052 (572,253) (292,472) (151,629) (128,152) --

Miscellaneous payables 324 (324) (324) -- -- --

31 December 2010

Expected maturities Carrying Amount

Contractual Cash Flows

Less than 3 months

3-12 months

1-5 years

More than 5 years

Non derivative fiancial liabilities 747,105 (747,105) (647,969) (99,136) -- -- Funds borrowed 746,854 (746,854) (647,718) (99,136) -- -- Miscellaneous Payables 251 (251) (251) -- -- --

25.2.3 Market Risk

Interest Rate Risk

The tables below summarize average effective interest rates by major currencies for monetary financial instruments at 31 December 2011 and 2010:

2011 2010

USD (%)

Euro (%)

TL (%)

USD (%)

Euro (%)

TL (%)

Assets Cash at Banks -Time deposits - - - - - 12.01 Factoring receivables - - 25.17 - - 29.85 Liabilities Funds borrowed 4.98 4.11 11.5 2.5 4.11 7.5


39


25.2 Risk Management (Continued)

25.2.3 Market Risk (Continued)

Interest Rate Risk (Continued)

Interest Rate Sensitivity Analyisis

As at 31 December, The interest rate profiles of the interest-bearing financial instruments are as follows:

Carrying Amount

Fixed Rate Instruments 31 December 2011 31 December 2010Financial Assets Factoring receivables 617,804 465,373Time deposits - 348,028Financial Liabilities Funds borrowed 498,051 740,419Floating Rate Instruments Financial Liabilities Funds borrowed 39,001 6,435

A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss before tax by TL 390 as at 31 December 2011 (31 December 2010: TL 64).

Foreign Currency Risk

The Company is exposed to currency risk through transactions (such as factoring operations and borrowings) in foreign currencies. As the currency in which the Company presents its financial statements is TL, the financial statements are affected by movements in the exchange rates against TL.

As at 31 December 2011 and 2010, the foreign currency position of the Company is as follows (TL equivalents):

31 December 2011 31 December 2010 (TL Amount) (TL Amount)

A. Foreign Currency Monetary Assets 141,956 171,272B. Foreign Currency Monetary Liabilities (140,890) (170,528)Net foreign currency position (A+B) 1,066 744


40

25 FINANCIAL RISK MANEGEMENT (Continued)



Foreign Currency Risk (Continued)

As at 31 December 2011 and 2010, the foreign currency assets and liabilities of the Company are as follows:

31 December 2011

31 December 2011 USD Euro

Other Total

Assets

Banks 666 131 7 804Factoring receivables(*) 117,005 21,547 2,582 141,134Other assets - 15 3 18Total Assets 117,671 21,693 2,592 141,956 Liabilities

Funds borrowed(*) 117,291 20,999 2,396 140,686Miscellaneous liabilities 152 46 6 204Total Liabilities 117,443 21,045 2,402 140,890Net position Assets 228 648 190 1,066

(*) FC Indexed factoring receivables TL 100,621 has been included in factoring receivables as at 31 December 2011. (*)TL 12,792 foreign indexed loans are included in funds borrowed as at 31 December 2011.

(*) FC Indexed factoring receivables TL 155,621 has been included in factoring receivables as at 31 December 2010. (*) TL 159,834 foreign indexed loans are included in funds borrowed as at 31 December 2011.

31 December 2010

USD Euro

Other Total

Assets

Banks 14 422 6 442Factoring receivables(*) 149,110 20,213 1,491 170,814Other assets -- 14 2 16Total Assets 149,124 20,649 1,499 171,272

Liabilities 148,257 20,674 1,452 170,383

Funds borrowed(*) 124 17 4 145

Miscellaneous liabilities 148,381 20,691 1,456 170,528Total Liabilities

Net position 743 (42) 43 744


41




Foreign Currency Risk (Continued)

Foreign Currency Sensitivity Analysis

As at 31 December 2011, a 10 percent weakening of the TL against the foreing currencies would have increased profit before tax by TL 107 (31 December 2010: TL 74 increase). This analysis assumes that all other variables, in particular interest rates; remain constant at 31 December 2011 and 31 December 2010.

31 December 2011 Profit/(Loss) Equity USD 23 23 Euro 65 65 Others 19 19 Total 107 107

25.3 Fair Values of Financial Instruments

Fair value has been determined by discounting the relevant cash flows using current (market) interest rates for factoring receivables and funds borrowed. The carrying amounts of the cash at banks, other assets and liabilities are accepted as their fair values due to their short term nature by the Company management.

Fair value representation of assets and liabilities at 31 December 2011 and 2010 are as follows:

31 December 2011

Financial Assets at

the Amortized

CostLoans and

Receivables

Financial Liabilities at

the Amortized

Cost Carrying Amount

Fair Value

Financial Assets Banks 1,109 -- -- 1,109 1,109Factoring Receviables -- 617,804 -- 617,804 617,804 Financial Liabilities Funds Borrowed -- -- 537,052 537,052 537,052Miscellaneous Payables -- -- 324 324 324

31 December 2010 Profit/(Loss) Equity USD 74 74 Euro (4) (4) Others 4 4 Total 74 74


42


25.3 Fair Values of Financial Instruments (Continued)

31 December 2010

Financial Assets at

the Amortized

CostLoans and

Receivables

Financial Liabilities at

the Amortized

Cost Carrying Amount

Fair Value

Financial Assets Banks 349,526 -- -- 349,526 349,526Factoring Receviables -- 465,373 -- 465,373 465,373 Financial Liabilities Funds Borrowed -- -- 746,854 746,854 746,854Miscellaneous Payables -- -- 251 251 251

Fair value level of Financial Instruments

As at 31 December 2011 and 2010, the Company doesn’t have any financial assets and liabilities at fair value through profit and loss.

25.4 Capital Management

The Company’s policy is to maintain a strong capital base so as to to sustain future development of the business and maintain an equivalence between funds borrowed and equity to increase its profitability. The capital structure of the Company is composed of liabilities, cash and cash equivalents and equity items comprising share capital and profit reserves.

The cost of equity and each other risk associated with equity items assesed by the Company management. There is no change in the policies of the Group as compared to previous period.

26 SUBSEQUENT EVENTS

None.

Documents

Vakıf Finans Faktoring Hizmetleri Anonim Şirketi · CONTENTS PAGE Balance sheet (Statement of Financial Position) 1-2 Statement of off-balance sheet items 3 Income statement 4 Statement