mastercard payment transaction services turkey …

MASTERCARD PAYMENT TRANSACTION SERVICES TURKEY BİLİŞİM HİZMETLERİ A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2016 TOGETHER WITH INDEPENDENT AUDITOR’S REPORT (ORIGINALLY ISSUED IN TURKISH)

CONVENIENCE TRANSLATION INTO ENGLISH OF

CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

MASTERCARD PAYMENT TRANSACTION

SERVICES TURKEY BİLİŞİM HİZMETLERİ A.Ş.

CONTENTS TO THE CONSOLIDATED FINANCIAL STATEMENTS

AT 31 DECEMBER 2016

CONTENTS PAGE

CONSOLIDATED BALANCE SHEETS ................................................................................... 1-2

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER

COMPREHENSIVE INCOME ................................................................................................... 3

CONSOLIDATED STATEMENT OF CHANGE IN EQUITY ............................................... 4

CONSOLIDATED STATEMENT OF CASH FLOW ............................................................... 5

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ...................................... 6-44





AUDITED CONSOLIDATED BALANCE SHEETS AT 31 DECEMBER 2016 AND 2015 (Amounts expressed in Turkish Lira (“TRY”) unless otherwise stated.)

1

Notes 2016 2015

ASSETS Current assets 38,504,038 42,958,954

Cash and cash equivalents 4 14,319,915 21,137,702 Trade receivables - Trade receivables from related parties 22 86,840 - - Trade receivables from non-related parties 5 20,098,690 16,914,785 Other receivables - Other receivables from related parties 22 285,000 - - Other receivables from non-related parties 360,991 211,280 Inventories 343,008 841,753 Prepaid expenses 6 2,055,359 1,983,740 Current income tax assets 105,752 159,236 Other current assets 7 848,483 1,710,458 Non-current Assets 24,781,651 23,936,658

Other receivables - Other receivables from non-related parties 17,897 25,606 Property, plant and equipment 8 21,014,674 19,523,129 Intangible assets 9 2,127,449 2,819,176 Prepaid expenses 6 381,591 548,056 Other non-current assets 7 1,240,040 1,020,691

Total assets 63,285,689 66,895,612

These consolidated financial statements were signed by Sedat Kesik on behalf of the Board of Directors to be issued on the 8 September 2017. The consolidated financial statements will be finalized with the approval of the General Assembly.

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





AUDITED CONSOLIDATED BALANCE SHEETS AT 31 DECEMBER 2016 AND 2015 (Amounts expressed in Turkish Lira (“TRY”) unless otherwise stated.)

2

Notes 2016 2015

LIABILITIES Current liabilities 29,551,766 25,075,500

Financial leasing liabilities 10 1,962,906 1,024,861 Trade payables - Trade payables to related parties 487,310 2,849 - Trade payables to non-related parties 5 19,744,846 18,093,666 Liabilities for employee benefits 13 596,176 514,562 Other payables - Other payables to non-related parties 417,364 116,304 Deferred income 6 854,930 450,074 Current income tax liabilities 6,256 5,708 Short-term provisions - Provisions for employee benefits 13 4,325,746 3,780,039 - Other short-term provisions 146,000 65,000 Other current liabilites 7 1,010,232 1,022,437 Non-current liabilities 2,644,759 4,236,727

Financial leasing liabilities 10 1,214,992 1,156,920 Deferred income 6 - 953,280 Long-term provisions - Provisions for employee benefits 13 1,222,505 1,750,434 Deferred tax liabilities 15 207,262 376,093 Equity 31,089,164 37,583,385

Share capital 14 105,449,628 97,184,249 Other comprehensive income and expenses not no be reclassified to profit or loss - Re-measurement of provision for employment termination benefits 830,192 27,742 Legal reserves 14 859,381 859,381 Accumulated losses (60,487,987) (53,883,512) Net loss for the period (15,562,050) (6,604,475) Total liabilities and equity 63,285,689 66,895,612


CONVENIENCE TRANSLATION INTO ENGLISH

OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH



AUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND

OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2016 (Amounts expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

3

Notes 2016 2015

PROFIT OR LOSS

Revenue 16 63,451,103 60,521,008 Cost of sales (-) 16 (65,337,158) (52,472,526) Gross profit (1,886,055) 8,048,482 Selling and marketing expenses (-) 17 (4,543,310) (2,823,331) General administrative expenses (-) 18 (8,603,857) (10,566,342) Other operating income 20 1,205,251 3,231,895 Other operating expenses (-) 20 (2,622,600) (4,618,995) Operating loss (16,450,571) (6,728,291)

Income from investing activities 53,442 - Operating loss before financial income (16,397,129) (6,728,291)

Finance income 21 3,525,693 2,680,619 Finance expenses (-) 21 (2,525,249) (2,293,576) Loss from continuing

operations before tax (15,396,685) (6,341,248)

Continuing operations tax expense: Current income tax expense 15 (333,785) (71,361) Deferred income tax expense 15 168,420 (191,866) Continuing operations net loss for the period (15,562,050) (6,604,475)

OTHER COMPREHENSIVE INCOME Re-measurement of provision for employment termination benefits 13 802,039 28,695 Other comprehensive tax expenses not no be reclassified to profit or loss - Deferred income tax expense 15 411 (953) Other comprehensive income

not no be reclassified to profit or loss 802,450 27,742

Total comprehensive loss (14,759,600) (6,576,733)


CONVENIENCE TRANSLATION INTO ENGLISH OF CONSOLIDATED FINANCIAL STATEMENTS

ORIGINALLY ISSUED IN TURKISH

MASTERCARD PAYMENT TRANSACTION SERVICES TURKEY BİLİŞİM HİZMETLERİ A.Ş.

AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2016 (Amounts expressed in Turkish Lira (“TRY”) unless otherwise indicated)

4

Re-measurement of

provision for

Share employement Legal Accumulated Net loss

capital terminatıon benefits reserves Losses for the period Total equity

1 January 2015 74,286,944 - 859,381 (52,023,647) - 23,122,678 Capital increase (Note 14) 22,897,305 - - (1,859,865) - 21,037,440 Total comprehensive loss - 27,742 - - (6,604,475) (6,576,733)

31 December 2015 97,184,249 27,742 859,381 (53,883,512) (6,604,475) 37,583,385

1 January 2016 97,184,249 27,742- 859,381 (53,883,512) (6,604,475) 37,583,385 Capital increase (Note 14) 8,265,379 - - - - 8,265,379 Transfers - - - (6,604,475) 6,604,475 - Total comprehensive loss - 802,450 - - (15,562,050) (14,759,600)

31 December 2016 105,449,628 830,192 859,381 (60,487,987) (15,562,050) 31,089,164


CONVENIENCE TRANSLATION INTO ENGLISH OF CONSOLIDATED

FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH



AUDITED CONSOLIDATED STATEMENT OF CASH FLOW

AT 31 DECEMBER 2016 (Amounts expressed in Turkish Lira (“TRY”) unless otherwise indicated)

5

Notes 2016 2015

A. Cash flows from operating activities (10,831,867) (176,736)

Loss before income tax (15,396,685) (6,341,248)

Adjustments to reconcile net profit to net cash provided by operating activities 9,121,210 9,579,295

Adjustments related to impairment 20 711,705 2,811,263 - Adjustments related to impairment on trade receivable 20 711,705 311,263 - Adjustments related to other impairments 20 - 2,500,000 Adjustments related to provisions 3,961,907 3,682,736 - Adjustments related to provisions for employee benefits 13 3,880,907 3,702,937 - Adjustments related to provisions (reverse) for litigation 81,000 (20,201) Adjustments related to interest (income) and expenses 21 (603,067) (679,704) - Adjustments related to interest income 21 (847,930) (1,148,416) - Adjustments related to interest expenses 21 244,863 468,712 Depreciation and amortization expense 8, 9 5,050,665 3,765,000

Cash flows before changes in net working capital (4,556,392) (3,414,783)

Adjustments related to trade receivables (3,982,450) (4,798,902) - (İncrease) decrease in trade receivables from related parties (86,840) 7,416 - İncrease in trade receivables from non-related parties (3,895,610) (4,806,318) Adjustments related to other receivables (427,002) (2,193,061) - (İncrease) decrease in other receivables from related parties (285,000) 380,000 - İncrease in other receivables from non-related parties (142,002) (2,573,061) Adjustments related to decrease (increase) in inventories 498,745 (273,739) Decrease (increase) in prepaid expenses 94,846 (37,257) Adjustments related to trade payables 2,135,641 9,912,413 - İncrease in trade payables to related parties 484,461 2,849 - İncrease in trade payables to non related parties 1,651,180 9,909,564 Increase in liabilities for employee benefits 81,614 123,910 Adjustments related to increase (decrease) in other payables 301,060 (263,247) Decrease in deferred income (548,424) (1,104,249) Payments related to provisions for employee benefits (3,061,090) (2,887,234) Tax payments (333,237) (246,545) Adjustments related to decrease (increase) in other net working capital 683,905 (1,646,872) - Decrease (increase) in other assets 696,109 (1,954,827) - Decrease (increase) in other liabilities (12,204) 307,955

B. Cash flows from investing activities (5,850,483) (10,637,364)

Purchase of tangible and intangible assets (5,908,729) (10,695,506) - Purchase of tangible assets (5,732,572) (9,500,800) - Purchase of intangible assets (176,157) (1,194,706) Proceeds from sale of tangible and intangible assets 58,246 58,142 - Proceeds from sale of tangible assets 58,246 58,142

C. Cash flows from financing activities 9,628,984 19,548,960

Cash flows arising from capital increase 8,265,379 21,037,440 Repayments of other financial liabilities (705,799) (2,022,804) Proceeds from other financial liabilities 1,701,916 - Interest paid (244,863) (468,712) Interest received 847,930 1,148,416 Other cash outflows (235,579) (145,380)

Net increase in cash and cash equivalents (A+B+C) (7,053,366) 8,734,860

D. Cash and cash equivalents at the beginning of the year 4 20,992,322 12,257,462

Cash and cash equivalents at the end of the year (A+B+C+D) 4 13,938,956 20,992,322


CONVENIENCE TRANSLATION INTO ENGLISH OF CONSOLIDATED FINANCIAL

STATEMENTS ORIGINALLY ISSUED IN TURKISH



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2016 (Amounts expressed in Turkish Lira (“TRY”) unless otherwise stated.)

6

NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS Mastercard Payment Transaction Services Turkey Bilişim Hizmetleri A.Ş. (“The Company or “Mastercard Bilişim”) was established on 5 April 2001. The main activities of the Company and its subsidiaries (collectively referred to as a the “Group”) are end-to-end credit card operating services, bank card and prepaid card operation, point of sale (“POS”) and automated teller machine (“ATM”) operations and high volume abstract printing. The Company is controlled by the Mastercard/Europay U.K. Limited. The ultimate parent of the Company is the Mastercard Incorporated.

The address of its registered office is as follows:

Ayazağa Mahallesi Mezarlık Sokak No:3 Ayazaga/Istanbul

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS

2.1 Basis of presentation

The accompanying consolidated financial statements are prepared in accordance with Turkish Accounting Standards (“TAS”) issued by Turkish Accounting Standards issued by Public Oversight Accounting and Auditing Standards Authority (“POAASA”). TAS comprises; Turkish Accounting Standards, Turkish Financial Reporting Standards (“TFRS”) and its addendum and interpretations. The Group and its Turkish subsidiaries maintain their books of accounts and prepare their statutory financial statements in accordance with the Turkish Commercial Code (“TCC”), tax legislation, the Uniform Chart of Accounts issued by the Ministry of Finance. The consolidated financial statements are based on the statutory records with the required adjustments and reclassifications reflected for the purpose of fair presentation in accordance with TAS based on the accounting policies disclosed in Note 2.2. The Group has made necessary adjustments and reclassifications in accordance with the format defined in the Illustrative Financial Statements and User Guide issued by POA and TAS taxonomy approved by the Board decision dated 2 June 2016.

2.2 Summary of significant accounting policies

Basis of consolidation

a) Consolidated subsidiaries

Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.







7

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

a) Consolidated subsidiaries (Continued)

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquire and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquire on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

Acquisition-related costs are expensed as incurred.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquire is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss. Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group’s accounting policies.

b) Joint agreements

Joint agreements are classified as joint operation or joint ventures according to the rights and liabilities of the parties. Since the Group has rights and liabilities for the relevant assets, as per the joint agreement to which it is a party, this agreement is classified as a joint operation.

The group recognises the following as per its share in the joint operation:

- its assets including the share in the jointly owned assets,

- its liabilities including the share in the jointly borne liabilities,

- revenues arising from the sales of the share in the output of the joint operation, - its share in the revenue arising from the output of the joint operation, and - its expenses including the share in the jointly borne expenses. The group recognises assets, liabilities, revenues, and expenses related with its share in the joint agreement according to the TFRS, which it applies on said assets, liabilities, revenues, and expenses.







8

NOTE 2 - BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) Functional and presentation currency

Items included in the consolidated financial statements of the Group are measured using the currency of the primary economic environment in which the entity operates. The Group’s functional and presentation currency is TRY.

Property, plant and equipment

Property, plant and equipment are carried at cost less accumulated depreciation and any accumulated impairment losses. Assets to be used for administrative purposes, or used in the production of goods and services and are in the course of construction are carried at cost, less any recognized impairment loss. Legal fees are included in the cost. Depreciation is calculated on a straight line basis over the estimated useful life of the assets. Expected useful life, residual value and amortization method are evaluated every year for the probable effects of changes arising in the expectations and are accounted for prospectively. The depreciation terms are as follows:

Years

Machinery and equipment 4 - 16 Furniture and fixtures 3 - 15 Leasehold improvements 5 - 10 Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Fair value less cost to sell is the amount obtainable from the sale of an asset less the costs of disposal. Repairs and maintenance are charged to the statements of income during the financial period in which they were incurred. Costs of property plant and equipment are included in the asset’s carrying amount or recognized as a separate asset as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. Gains or losses on disposals or suspension of property, plant and equipment are determined by sale revenue less net book value and collected amount and included in the related other income or other expense accounts, as appropriate. Intangible assets Intangible assets mainly comprise of softwares. Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortized over their estimated useful lives (3 - 15 years).







9


Impairment of assets

The carrying amounts of the Group’s assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. When an indication of impairment exists, the Group compares the carrying amount of the asset with its net realizable value which is the higher of value in use or fair value less costs to sell. Impairment exists if the carrying value of an asset or a cash generating unit is greater than its recoverable amount which is the higher of value in use or fair value less costs to sell. An impairment loss is recognized immediately in the statement of profit or loss.

The increase in carrying value of the assets (or a cash generated unit) due to the reversal of recognized impairment loss shall not exceed the carrying amount of the asset (net of amortisation amount) in case where the impairment loss was reflected in the financial statements in prior periods. Such a reversal is accounted for in the statement of profit or loss.

Financial assets

a) Classification

The Group classifies its financial assets in the following categories: loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The Group’s loans and receivables comprise ‘trade receivables’, ‘due from related parties’ and ‘cash and cash equivalents’ in the balance sheet.

b) Recognition and measurement

Regular purchases and sales of financial assets are recognised on the trade-date – the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Loans and receivables are subsequently carried at amortised cost using the effective interest method.

Offsetting financial instruments

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

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.







10

NOTE 2 - BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) Trade receivables Trade receivables due from customers for services performed in the ordinary course of business are recoggnized with net off unearned financial income. Trade receivables, are measured at amortized cost, using the effective interest rate method, less the unearned financial income. Short duration receivables with no stated interest rate are measured at the original invoice amount unless the effect of imputing interest is significant. A credit risk provision for trade receivables is established if there is objective evidence that the Group will not be able to collect all amounts due. The amount of the provision is the difference between the carrying amount and the recoverable amount. The recoverable amount is the present value of all cash flows, including amounts recoverable from guarantees and collateral, discounted by the original effective interest rate of the originated receivables at inception. If the amount of the impairment subsequently decreases due to an event occurring after the write-down, the release of the provision is credited to the statement of profit or loss. Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term liquid investments with original maturities of 3 months or less. Capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares are shown in equity as a deduction, net of tax, from the proceeds. Trade payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the statement of comprehensive income over the period of the borrowings using the effective interest method.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.







11


Current and deferred income tax

Taxes include current period income taxes and deferred taxes. Current and deferred tax is recognized as income or loss in the statement of profit or loss, except to the extent that it relates to items recognized directly in equity or other comprehensive income. In such case, the tax is recognized in equity or other comprehensive income. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Provision for employment termination benefits The provision for employment termination benefits represents the present value of the estimated total provision of the future probable obligation of the Group arising from the retirement of the employees calculated in accordance with Turkish Labour Law. The provision for unused vacation represents the present value of the estimated total provision for potential liabilities related to employees' unused vacation days accrued in period and qualified of the Group calculated in accordance with Turkish Labour Law. The effects of differences between the actuarial assumptions and the actual outcome together with the effects of changes in actuarial assumptions are recognised within the statement of comprehensive income. Previous service costs are recognised in profit or loss in the period in which they are incurred.







12

NOTE 2 - BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) Revenue Revenue is recognized on an accrual basis at the fair value of considerations received or receivable for the sale of goods and services. Net sales represent the invoiced value of goods sold less sales returns and commission, and exclude sales taxes. When the arrangement effectively constitutes a financing transaction, the fair value of the consideration is determined by discounting all future receipts using an imputed rate of interest. The difference between the fair value and the nominal amount of the consideration is recognized in the period on an accrual basis as income from other operating activities. Revenue from card operation, POS, ATM and Fast Toll Collection System (“HGS”) is recognized on an accrual basis during periods of agreements signed between Group and customers. Revenue of printing is accounted on an accrual basis in consolidated financial statements when delivered or accepted by the customers. Interest income Interest income is accrued using the effective interest method which brings the remaining principal amount and expected future cash flows to the net book value of the related deposit during the expected life of the deposit. Financial leases Leasing of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leasing. Finance leases are capitalized at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Financial costs of leasing are distributed over the lease period with a fixed interest rate. The property, plant and equipment acquired under financial leases are depreciated over the useful lives of the assets. If there is a decrease in the value of the property, plant and equipment under financial leasing, the Group provides impairment. The foreign exchange and interest expenses related with financial leasing have been recorded in the income statement. Lease payments have been deducted from leasing debts.

Operating leases

Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the consolidated statement of income on a straight-line basis over the period of the lease. Related parties

For the purpose of these consolidated financial statements, shareholders, key management personnel and Board members, in each case together with the companies controlled by/or affiliated with them, associated companies and other companies within the Group are considered and referred to as related parties.







13

NOTE 2 - BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) Statement of cash flows

The Group prepares statements of cash flows as an integral part of its of financial statements to enable financial statement analysis about the change in its net assets, financial structure and the ability to direct cash flow amounts and timing according to evolving conditions. Cash flows include those from operating activities, working capital, investing activities and financing activities. Cash flows from operating activities represent the cash flows generated from the Group’s activities. Cash flows related to investing activities represent the cash flows that are used in or provided from the investing activities of the Group (fixed investments and financial investments). Cash flows arising from financing activities represent the cash proceeds from the financing activities of the Group and the repayments of these funds. Events after the balance sheet date

The Group adjusts the amounts recognised in the financial statements to reflect the adjusting events after the balance sheet date. If non-adjusting events after the balance sheet date have material influences on the economic decisions of users of the financial statements, they are disclosed in the notes to the financial statements. 2.3 Significant accounting estimates and assumptions

Preparation of consolidated financial statements requires presenting amounts of assets and liabilities as of reporting date, presenting contingent assets and liabilities and estimations which can affect income or expense amounts presented at reporting date. The evaluation, expectation and estimation of accounting are made by considering past experience, other factors and reasonable expectations for situations in the future. These expectations and estimations may vary even if management made their estimation using their best knowledge. Estimations which can affect assets and liabilities in the next financial reporting period stated below: a) Useful lives of tangible and intangible assets In accordance with the accounting policy stated in Note 2.2, tangible and intangible assets are stated at historical cost less depreciation and net of any impairment. Depreciation on tangible assets is calculated using the straight-line method to allocate their cost amounts to their residual values over their estimated useful lives. Useful lives depend on the best estimates of management, and are reviewed in each financial period and corrected accordingly. b) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made.







14

NOTE 2 - BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) 2.3 Significant accounting estimates and assumptions (Continued) c) Going concern The consolidated financial statements have been prepared in accordance with the going concern assumption. The Group’s management has made an assessment of the Group’s ability to continue as a going concern and is satisfied that the Group has the resources to continue in business for the foreseeable future. d) Provision for doubtful receivables The provision for doubtful receivables is an estimated amount that management believes to be adequate to absorb possible future losses on existing receivables that may become uncollectible due to current economic conditions and inherent risks in the receivables. When evaluating the impairment of the receivables, credibility and prior performance of the other debtors in the market, performance of related assets from the balance sheet date to the report issue date and renegotiated terms are also considered. The Group provides reserve for doubtful trade receivables which will not be collected from the customers or the non-realizable portion of guarantees obtained against these receivables. In case of deterioration of the financial situation in order to reduce the solvency of customers, may require additional provisions for future. e) Deferred income tax assets Deferred income tax asset is only recorded if it is probable that a taxable income will be realized in the future. Under the circumstances that a taxable income will be realized in the future, deferred tax is calculated over the temporary differences and tax losses carried forward. The deferred tax income tax assets is not recognized by Mastercard Bilişim due to it is not probable that a taxable income will be realized in the future. 2.4 New and amended international financial reporting standards

a) Standards, amendments and interpretations applicable as of 31 December 2016:

- TFRS 14, “Regulatory deferral accounts”, effective from annual periods beginning on or after

1 January 2016. TFRS 14, “Regulatory deferral accounts” permits first-time adopters to continue to recognise amounts related to rate regulation in accordance with their previous GAAP requirements when they adopt TFRS. However, to enhance comparability with entities that already apply TFRS and do not recognise such amounts, the standard requires that the effect of rate regulation must be presented separately from other items.







15


a) Standards, amendments and interpretations applicable as of 31 December 2016

(Continued):

- Annual improvements 2014, effective from annual periods beginning on or after 1 January 2016. These set of amendments impacts 4 standards:

• TFRS 5, “Non-current assets held for sale and discontinued operations” regarding methods of disposal

• TFRS 7, “Financial instruments: Disclosures”, (with consequential amendments to TFRS 1) regarding servicing contracts

• TAS 19, “Employee benefits” regarding discount rates • TAS 34, “Interim financial reporting” regarding disclosure of information

- Amendment to TFRS 11, “Joint arrangements” on acquisition of an interest in a joint operation, effective from annual periods beginning on or after 1 January 2016. This amendment adds new guidance on how to account for the acquisition of an interest in a joint operation that constitutes a business. The amendments specify the appropriate accounting treatment for such acquisitions.

- Amendments to TAS 16, “Property, plant and equipment” and TAS 41, “Agriculture”, regarding

bearer plants, effective from annual periods beginning on or after 1 January 2016. These amendments change the financial reporting for bearer plants, such as grape vines, rubber trees and oil palms. It has been decided that bearer plants should be accounted for in the same way as property, plant and equipment because their operation is similar to that of manufacturing. Consequently, the amendments include them within the scope of TAS 16, instead of TAS 41. The produce growing on bearer plants will remain within the scope of TAS 41.

- Amendment to TAS 16, “Property, plant and equipment” and TAS 38, “Intangible assets”, on depreciation and amortisation, effective from annual periods beginning on or after 1 January 2016. In this amendment the it has clarified that the use of revenue based methods to calculate the depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. It is also clarified that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset.

- Amendments to TAS 27, “Separate financial statements” on the equity method, effective from annual periods beginning on or after 1 January 2016. These amendments allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements.

- Amendment to TFRS 10, “Consolidated financial statements” and TAS 28, “Investments in

associates and joint ventures”, effective from annual periods beginning on or after 1 January 2016. These amendments clarify the application of the consolidation exception for investment entities and their subsidiaries.

- Amendment to TAS 1, “Presentation of financial statements” on the disclosure initiative,

effective from annual periods beginning on or after 1 January 2016, these amendments are as part of the TASB initiative to improve presentation and disclosure in financial reports.







16

NOTE 2 - BASIS OF PREPARATION OF FINANCIAL STATEMENTS (Continued) b) Standards, amendments and interpretations effective after 1 January 2017: - Amendments to TAS 7, “Statement of cash flows”, on disclosure initiative, effective from

annual periods beginning on or after 1 January 2017. These amendments introduce an additional disclosure that will enable users of financial statements to evaluate changes in liabilities arising from financing activities. The amendment is part of the TASB’s Disclosure Initiative, which continues to explore how financial statement disclosure can be improved.

- Amendments TAS 12, “Income Taxes”, effective from annual periods beginning on or after 1 January 2017. The amendments clarify the accounting for deferred tax where an asset is measured at fair value and that fair value is below the asset’s tax base. It also clarify certain other aspects of accounting for deferred tax assets.

- Amendments to TFRS 2, “Share based payments” on clarifying how to account for certain types

of share-based payment transactions, effective from annual periods beginning on or after 1 January 2018. This amendment clarifies the measurement basis for cash-settled, share-based payments and the accounting for modifications that change an award from cash-settled to equity-settled. It also introduces an exception to the principles in TFRS 2 that will require an award to be treated as if it was wholly equity-settled, where an employer is obliged to withhold an amount for the employee’s tax obligation associated with a share-based payment and pay that amount to the tax authority.

- TFRS 9, “Financial instruments”, effective from annual periods beginning on or after

1 January 2018. This standard replaces the guidance in TAS 39. It includes requirements on the classification and measurement of financial assets and liabilities; it also includes an expected credit losses model that replaces the current incurred loss impairment model.

- TFRS 15 “Revenue from contracts with customers”, effective from annual periods beginning on

or after 1 January 2018. TFRS 15, “Revenue from contracts with customers” is a converged standard from the TASB and FASB on revenue recognition. The standard will improve the financial reporting of revenue and improve comparability of the top line in financial statements globally.

- Amendment to TFRS 15, “Revenue from contracts with customers”, effective from annual

periods begining on or after 1 January 2018. These amendments comprise clarifications of the guidance on identifying performance obligations, accounting for licences of intellectual property and the principal versus agent assessment (gross versus net revenue presentation). New and amended illustrative examples have been added for each of those areas of guidance. The TASB has also included additional practical expedients related to transition to the new revenue standard.







17


b) Standards, amendments and interpretations effective after 1 January 2017 (Continued):

- TFRS 16, “Leases”, effective from annual periods beginning on or after 1 January 2019, This standard replaces the current guidance in TAS 17 and is a farreaching change in accounting by lessees in particular. Under TAS 17, lessees were required to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance sheet). TFRS 16 now requires lessees to recognise a lease liability reflecting future lease payments and a ‘right-of-use asset’ for virtually all lease contracts. The TASB has included an optional exemption for certain short-term leases and leases of low-value assets; however, this exemption can only be applied by lessees. For lessors, the accounting stays almost the same. However, as the TASB has updated the guidance on the definition of a lease (as well as the guidance on the combination and separation of contracts), lessors will also be affected by the new standard. At the very least, the new accounting model for lessees is expected to impact negotiations between lessors and lessees. Under TFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

- Amendments to TFRS 4, “Insurance contracts” regarding the implementation of TFRS 9, “Financial instruments”, effective from annual periods beginning on or after 1 January 2018. These amendments introduce two approaches: an overlay approach and a deferral approach. The amended standard will • Give all companies that issue insurance contracts the option to recognise in other

comprehensive income, rather than profit or loss, the volatility that could arise when TFRS 9 is applied before the new insurance contracts standard is issued; and

• Give companies whose activities are predominantly connected with insurance an optional temporary exemption from applying IFRS 9 until 2021. The entities that defer the application of TFRS 9 will continue to apply the existing “Financial instruments” standard-TAS 39.

- Amendment to TAS 40, “Investment property” relating to transfers of investment property, effective from annual periods beginning on or after 1 January 2018. These amendments clarify that to transfer to, or from, investment properties there must be a change in use. To conclude if a property has changed use there should be an assessment of whether the property meets the definition. This change must be supported by evidence.

- Annual improvements 2014 - 2016, effective from annual periods beginning on or after 1 January 2018. These amendments impact 3 standards:

• TFRS 1, “First-time adoption of TFRS”, regarding the deletion of short-term exemptions for first-time adopters regarding TFRS 7, TAS 19, and IFRS 10 effective 1 January 2018

• TFRS 12, “Disclosure of interests in other entities” regarding clarification of the scope of the standard. These amendments should be applied retrospectively for annual periods beginning on or after 1 January 2017

• TAS 28, “Investments in associates and joint ventures” regarding measuring an associate or joint venture at fair value effective 1 January 2018.

- TFRIC 22, “Foreign currency transactions and advance consideration”, effective from annual periods beginning on or after 1 January 2018. This TFRIC addresses foreign currency transactions or parts of transactions where there is consideration that is denominated or priced in a foreign currency. The interpretation provides guidance for when a single payment/receipt is made as well as for situations where multiple payments/receipts are made. The guidance aims to reduce diversity in practice.







18


The Group is considering the implications of the standards, the impacts on the Group and the timing of their adoption by the Group. The amendments do not have significant impact on the Group’s consolidated financial statements.

NOTE 3 - INTERESTS IN OTHER ENTITIES

a) Subsidiaries

The Group has the following consolidated subsidiaries at 31 December 2016 and 2015. Proportion

of ordinary

Proportion Proportion shares

of ordinary of ordinary held by

shares shares non-controlling

Nature of held by held by interest

31 December 2016 Country business parent (%) group (%) (%)

Mastercard Payment Transaction Services Turkey Teknik ATM operation Hizmetleri ve Bilişim A.Ş. Turkey systems 100.00 100.00 -

Proportion

of ordinary

Proportion Proportion shares

of ordinary of ordinary held by

shares shares non-controlling

Nature of held by held by interest

31 December 2015 Country business parent (%) group (%) (%)

Provus Teknik Hizmetler ve ATM operation Bilişim A.Ş. (*) Turkey systems 100.00 100.00 - Mastercard Payment Transaction Services Turkey Ödeme Payment operation Sistemleri A.Ş. (**) Turkey systems 100.00 100.00 -

(*) Trade name of Provus Teknik Hizmetler ve Bilişim A.Ş. was changed with Mastercard Payment Transaction Services Turkey Teknik Hizmetleri ve Bilişim A.Ş. at the Extraordinary General Assembly Meeting held on 7 January 2016.

(**) All assets and liabilities was transferred to Mastercard Payment Transaction Services Turkey Ödeme Sistemleri A.Ş. at the Extraordinary General Assembly Meeting held on 21 November 2016.

b) Joint operation

Proportion

of ordinary

shares

Nature of held by

31 December 2016 Country business group(%)

Mastercard Payment Transaction Services Turkey Bilişim Hizmetleri A.Ş. - Su Damlaları Teknoloji Yazılım Tasarım Reklam ve Matbaacılık Sanayi Ticaret A.Ş. Printing Ortak Girişimi Adi Ortaklığı (“Mastercard - Su Damlaları”) Turkey solutions 50.00







19

NOTE 3 - INTERESTS IN OTHER ENTITIES (Continued)

Proportion

of ordinary

shares

Nature of held by

31 December 2015 Country business group (%)

Printing Mastercard - Su Damlaları Turkey solutions 50.00

NOTE 4 - CASH AND CASH EQUIVALENTS

2016 2015 Cash in hand 3 1,264 Banks - Demand deposits 14,319,912 13,436,438 - Time deposits - 7,700,000

Total 14,319,915 21,137,702

The average interest rate of TRY denominated time deposits of TRY7,700,000 is 13.25% per annum (“p.a.”) at 31 December 2015. The maturities of time deposits are less than three months. Cash and cash equivalents include the following for the purposes of the statement of cash flows: 2016 2015 Cash and cash equivalents 14,319,915 21,137,702 Less: Blocked deposit (380,959) (145,380)

Total 13,938,956 20,992,322

NOTE 5 - TRADE RECEIVABLES AND PAYABLES

a) Trade receivables

2016 2015 Trade receivables 12,979,835 16,363,712 Receivables from settlements 10,155,048 2,875,561 Less: provision for doubtful receivables (3,036,193) (2,324,488)

Total 20,098,690 16,914,785







20

NOTE 5 - TRADE RECEIVABLES AND PAYABLES (Continued) The fair value of trade receivables equals their carrying amount, as the impact of discounting is not significant. As of 31 December 2016, trade receivables of TRY8,459,152 (2015: TRY7,658,492) were past but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows: 2016 2015 1 - 30 days 3,584,106 599,819 1 - 3 months 3,366,366 487,259 3 - 12 months 1,417,267 3,690,614 1 - 5 years 91,413 2,880,800

Total 8,459,152 7,658,492

As of 31 December 2016, trade receivables TRY3,036,193 (2015: TRY2,324,488) were impaired and provisions made. The ageing of these receivables is as follows: 2016 2015

1-3 months 192,324 - 6-12 months 195,191 - Over 1 year 2,648,678 2,324,488

Total 3,036,193 2,324,488

Movements on the provision for impairment of trade receivables are as follows: 2016 2015 1 January 2,324,488 2,144,504 Provision for doubtful receivables 711,705 311,263 Collections - (131,279) 31 December 3,036,193 2,324,488

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above.







21

NOTE 5 - TRADE RECEIVABLES AND PAYABLES (Continued) b) Trade payables

2016 2015

Trade payables 11,984,995 16,520,054 Payables to settlement 7,759,851 1,573,612

Total 19,744,846 18,093,666

The fair value of trade payables equals their carrying amount, as the impact of discounting is not significant.

NOTE 6 - PREPAID EXPENSES AND DEFERRED REVENUE

a) Short-term prepaid expenses 2016 2015

Prepaid expenses for the following months 1,740,521 1,893,824 Given order advances 314,838 - Other - 89,916 Total 2,055,359 1,983,740

b) Long-term prepaid expenses 2016 2015

Prepaid expenses for following years 381,591 548,056 Total 381,591 548,056

c) Short-term deferred revenue 2016 2015

Deferred revenue 854,930 - Advances received - 450,074

Total 854,930 450,074

d) Long-term deferred revenue 2016 2015

Advances received - 953,280

Total - 953,280







22

NOTE 7 - OTHER ASSETS AND LIABILITIES

a) Other current assets

2016 2015

Value Added Tax receivables (“VAT”) 741,405 1,658,527 Other 107,078 51,931

Total 848,483 1,710,458

b) Other non-current assets

2016 2015

VAT 1,240,040 1,020,691

Total 1,240,040 1,020,691

c) Other current liabilities

2016 2015

Taxes and funds payable 1,010,232 1,009,159 Other - 13,278

Total 1,010,232 1,022,437

NOTE 8 - PROPERTY, PLANT AND EQUIPMENTS

1 January 31 December

2016 Additions Disposals (-) 2016

Cost: Machinery and equipment 29,647,817 5,508,338 (255,848) 34,900,307 Motor vehicles 93,850 - (93,850) - Furniture and fixtures 2,065,486 58,068 - 2,123,554 Leasehold improvements 3,756,840 166,166 - 3,923,006

Total 35,563,993 5,732,572 (349,698) 40,946,867

Accumulated depreciation: Machinery and equipment (13,517,167) (3,325,148) 197,602 (16,644,713) Motor vehicles (93,850) - 93,850 - Furniture and fixtures (710,401) (341,093) - (1,051,494) Leasehold improvements (1,719,446) (516,540) - (2,235,986) Total (16,040,864) (4,182,781) 291,452 (19,932,193)

Net book value 19,523,129 21,014,674







23

NOTE 8 - PROPERTY, PLANT AND EQUIPMENTS (Continued)

1 January 31 December 2015 Additions Disposals (-) 2015 Cost: Machinery and equipment 21,908,393 7,885,199 (145,775) 29,647,817 Motor vehicles 93,850 - - 93,850 Furniture and fixtures 1,441,415 668,540 (44,469) 2,065,486 Leasehold improvements 2,809,779 947,061 - 3,756,840 Total 26,253,437 9,500,800 (190,244) 35,563,993

Accumulated depreciation: Machinery and equipment (11,154,655) (2,464,997) 102,485 (13,517,167) Motor vehicles (93,850) - - (93,850) Furniture and fixtures (476,723) (263,295) 29,617 (710,401) Leasehold improvements (1,326,701) (392,745) - (1,719,446) Total (13,051,929) (3,121,037) 132,102 (16,040,864) Net book value 13,201,508 19,523,129

The cost of property, plant and equipments acquired with finance leases is TRY19,579,558 (2015: TRY18,007,789) as of 31 December 2016. The accumulated depreciation of property, plant and equipments acquired with finance leases is TRY12,761,132 (2015: TRY11,234,398) as of 31 December 2016. NOTE 9 - INTANGIBLE ASSETS 1 January 31 December 2016 Additions Disposal (-) 2016

Cost Software 8,442,658 176,157 - 8,618,815 Accumulated amortization: Software (5,623,482) (867,884) - (6,491,366) Net book value 2,819,176 2,127,449

1 January 31 December

2015 Additions Disposal (-) 2015

Cost

Software 7,247,952 1,194,706 - 8,442,658 Accumulated amortization:

Software (4,979,519) (643,963) - (5,623,482)

Net book value 2,268,433 2,819,176

Depreciaton and amortisation expense of TRY4,683,012 has been charged in cost of sales, TRY248,232 in general and administrative expenses, TRY119,421 in marketing and selling expenses.







24

NOTE 10 - BORROWINGS

31 December 2016

Interest Original TRY

rate (%) currency amount equivalent

Financial leasing liabilities: Financial leasing liabilities denominated in USD 2.60 - 3.70 440,922 1,551,691 Financial leasing liabilities denominated in EURO - 131,250 486,924 Less: financial expense of unrealized financial leasing liabilities (75,709)

Total current portion of long-term debt 1,962,906

Long-term financial leasing liabilities:

Financial leasing liabilities denominated in EURO - 327,500 1,214,992 Less: financial expense of unrealized financial leasing liabilities -

Total long-term debt 327,500 1,214,992

31 December 2015

Interest Original TRY

rate (%) currency amount equivalent

Current portion of long-term debt:

Financial leasing liabilities denominated in USD 2.60 - 3.70 395,253 1,149,237 Less: financial expense of unrealized financial leasing liabilities (124,376) Total current portion of long-term debt 1,024,861

Long-term debt:

Financial leasing liabilities denominated in USD 2.60 - 3.70 416,623 1,211,373 Less: financial expense of unrealized financial leasing liabilities (54,453) Total long-term debt 1,156,920

The fair value of borrowings equals their carrying amount, as the impact of discounting is not significant

NOTE 11 - COMMITMENTS, CONTINGENT ASSETS AND LIABILITIES

Guarantees received as of 31 December 2016 and 31 December 2015 are as follows: 31 December 2016 31 December 2015

Original Original TRY Original TRY

currency amount equivalent amount equivalent

Guarantees received TRY - - 35,000 35,000 USD - - 2,511,460 7,302,321 Total 7,337,321







25

NOTE 11 - COMMITMENTS, CONTINGENT ASSETS AND LIABILITIES (Continued)

Collaterals, pledges and mortgages (“CPM”) given by the Group are as follows: 31 December 2016

Original Original TRY

currency amount equivalent

A. Total amount of CPMs given in the name of its own legal personality TRY 714,886 714,886 US Dollars 4,378,326 15,408,205 Euro 1,100,000 4,080,890 B. Total amount of CPMs given on behalf of the fully consolidated subsidiary - - C. Total amount of CPMs given on behalf of third parties for ordinary course of business - - D. Total amount of other CPMs given i. Total amount of CPMs given on behalf of the majority shareholder - - ii. Total amount of CPMs given to on behalf of- other group companies which are not in scope of B and C TRY 2,851,274 2,851,274 US Dollars 476,275 1,676,107 iii. Total amount of CPMs given to on behalf of third parties which are not in scope of C - -

Total 24,731,362

31 December 2015

Original Original TRY

currency amount equivalent

A. Total amount of CPMs given in the name of its own legal personality TRY 648,187 648,187 US Dollars 4,792,670 13,935,168 Euro 1,100,000 3,495,360 B. Total amount of CPMs given on behalf of the fully consolidated subsidiary - - C. Total amount of CPMs given on behalf of third parties for ordinary course of business - - D. Total amount of other CPMs given i. Total amount of CPMs given on behalf of the majority shareholder - - ii. Total amount of CPMs given to on behalf of other group companies which are not in scope of B and C TRY 2,851,274 2,851,274 US Dollars 476,275 1,384,817 iii. Total amount of CPMs given to on behalf of third parties which are not in scope of C - -

Total 22,314,806







26

NOTE 11 - COMMITMENTS, CONTINGENT ASSETS AND LIABILITIES (Continued)

Contingencies

The Group has been a joint guarantor for the loans and contingencies of Servus Bilişim Teknolojileri A.Ş. and Servus Bilgisayar A.Ş. received from Kuveyt Turk Katılım Bank. The Group is responsible for the all debts received from Kuveyt Turk Katılım Bank of the companies for which being guarantor. The relevant companies declared bankruptcy and the provision has not been made in consolidated financial statement as of 31 December 2016 since any unpaid amount of loan and contingency has not been recoursed by the Kuveyt Turk Katılım Bank to Group.

NOTE 12 - COMMITMENTS

The future aggregate minimum lease payments under non-cancellable operating leases are as follows 31 December 2016 and 2015:

Operating lease commitments 31 December 2016 31 December 2015

No later than 1 year 1,528,330 - 1 - 5 years 2,671,384 -

Total 4,199,714 -

NOTE 13 - EMPLOYEE BENEFITS

a) Employee benefits payable

2016 2015

Social security premium payable 423,200 456,507 Other 172,976 58,055

Total 596,176 514,562

b) Short-term provisions for employee benefits

2016 2015

Provision for personnel bonus 1,676,370 2,084,042 Provision for unused vacation 1,329,446 1,695,997 Provision for employment termination benefits 1,319,930 -

Total 4,325,746 3,780,039

c) Long-term provisions for employee benefits

2016 2015

Provision for employment termination benefits 1,222,505 1,750,434

Total 1,222,505 1,750,434







27

NOTE 13 - EMPLOYEE BENEFITS (Continued) Movements in the provision for personnel bonus and unused vacation were as follows: Provision Provision

for personnel for unused

bonus vacation

1 January 2016 2,084,042 1,695,997

Additional provisions 1,676,370 1,329,446 Reversal of provisions (28,454) (691,534) Paid during year (2,055,588) (1,004,463) 31 December 2016 1,676,370 1,329,446

Provision Provision

for personnel for unused

bonus vacation 1 January 2015 2,077,421 1,167,859

Additional provisions 1,736,207 1,567,067 Reversal of provisions - (1,038,929) Paid during year (1,729,586) - 31 December 2015 2,084,042 1,695,997

The provision for employment termination benefits is calculated within the frame of assumptions explained as below: Under Turkish Labour Law, the Group is required to pay termination benefits to each employee who has completed one year of service and whose employment is terminated without due cause, is called up for military service, dies or who retires after completing 25 years of service (20 years for women) and achieves the retirement age (58 for women and 60 for men). The amount payable consists of one month’s salary limited to a maximum of TRY4,297.21 (2015: TRY3,828.37) for each year of service. The provision has been calculated by estimating the present value of the future probable obligation of the Group arising from the retirement of the employees with certain actuarial assumptions. The liability is not funded, as there is no funding requirement. The provision has been calculated by estimating the present value of the future probable obligation of the Group arising from the retirement of the employees. The following actuarial assumptions were used in the calculation of the total liability:







28

NOTE 13 - EMPLOYEE BENEFITS (Continued) 2016 2015 Discount rate (%) 4.25 3.77 Probability of retirement for personnel (%) 87.56 89.16 The principal assumption is that the maximum liability for each year 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. The retirement pay provision ceiling is revised semi-annually, and TRY 4,426.16 which is effective from 1 January 2017, is taken into consideration in the calculation of provision for employee benefits (1 January 2016: TRY4,092.53). Movements in the provision for employment termination benefits during the years were as follows:

2016 2015

1 January 1,750,434 1,498,183 Service cost 147,228 224,954 Interest expense 127,920 174,709 Actuarial gain (802,039) (28,695) Payments during the year (1,038) (118,717) 31 December 1,222,505 1,750,434

NOTE 14 - EQUITY

a) Paid in capital

The Company’s authorised share capital consists of 10,544,962,835 (2015: 9,718,424,923) shares of TRY0.01 (2015: TRY0.01) value as of 31 December 2016.

The Company’s share capital and shareholding structure were as follows:

2016 2015

Share (%) Amount Share (%) Amount

Mastercard/Europay U.K. Limited 99.99 105,447,075 99.99 97,181,896 Other 0.01 2,553 0.01 2,353

Total 100 105,449,628 100 97,184,249

It was decided to increase capital amount from TRY97,184,249 to TRY105,449,628 at 2016 General Assembly Meeting held on 18 February 2016. It was paid in cash by shareholders.







29

NOTE 14 - EQUITY (Continued)

Going Concern

It is understood that half of the Group's total capital and legal reserves was lost as at 31 December 2016 due to the losses incurred.

Under Article 376, it is ruled that if it is clear in the last annual balance sheet that half of the sum of the capital and statutory reserves is unsecured due to loss, the Board of Directors shall immediately convoke the General Assembly and submit the remedial measures it considers appropriate.

Based on such last annual balance sheet, if it is clear that two-thirds of the sum of the capital and statutory reserves are unsecured due to loss, unless the General Assembly immediately convoked decides to fully supplement the capital or to be satisfied with one-third of the capital, the Company shall automatically terminate. If there are indications that the company is insolvent, the board of directors issues an interim balance sheet not only on a going concern basis but also on the basis of the possible sale prices of the assets. If it is understood from this balance sheet that the assets are not sufficient to cover the receivables of the company’s creditors, the board of directors notifies the commercial court of first instance for the area where the company’s headquarters are located and files for the bankruptcy of the company. Before deciding on bankruptcy, the creditors related to company debts in the amount which covers the company deficit and would save the company from insolvency must agree in writing that creditors are placed below all the other creditors in the list of creditors, and the appropriateness, authenticity, and validity of this statement should be approved by the experts appointed by the Court to which the board of directors will declare their bankruptcy request. Otherwise, the application made to the Court for expert review is accepted as bankruptcy notification. The board of directors and any one of the creditors may demand deferment of bankruptcy by presenting an improvement project to the court which shows objective and real sources and measures including addition of new cash capital. In this respect, Article 179 and 179/b of the Enforcement and Bankruptcy Law apply. The capital was increased from amount of TRY105,449,628 to TRY145,490,598 at Extraordinary General Assembly Meeting held on 6 March 2017 to solve the conditions may indicate the uncertainty to continue as a going concern. The Group management has also planned additional precautions in 2017. b) Restricted reserves The legal reserves consist of first and second reserves, appropriated in accordance with the Turkish Commercial Code (“TCC”). The TCC stipulates that the first legal reserve is appropriated out of statutory profits at the rate of 5% per annum, until the total reserve reaches 20% of a company’s paid-in share capital. The second legal reserve is appropriated at the rate of 10% per annum of all cash distribution in excess of 5% of the paid-in share capital. Under the TCC, the legal reserves can only be used to offset losses and are not available for any other usage unless they exceed 50% of paid-in share capital.







30

NOTE 14 - EQUITY (Continued) b) Restricted reserves The reserves indicated as above has to be classified in restricted reserves. The compositions of restricted reserves were as follows: 2016 2015 Legal reserves 859,381 859,381

NOTE 15 - TAXES ON INCOME (INCLUDING DEFERRED TAX ASSETS AND

LIABILITIES)

The analysis of current and deferred income taxes per the statement of income for the period of 1 January - 31 December 2016 as follows:

1 January - 1 January -

31 December 2016 31 December 2015

Current income tax expense (333,785) (71,361) Deferred income tax expense 168,420 (191,866) Total income tax expense (165,365) (263,227)

a) Current income taxes

Turkish tax legislation does not permit a parent company and its subsidiaries to file a consolidated tax return. Therefore, provisions for taxes, as reflected in these consolidated financial statements, have been calculated on a separate-entity basis. Turkish Corporate Tax Law has been amended by Law No. 5520 dated 13 June 2006. Most of the articles of this new Law No. 5520 have come into force effective from 1 January 2006. The corporation tax rate is 20% (2015: 20%) Corporation tax rate is applicable on the total income of the companies after adjusting for certain disallowable expenses, income tax exemptions (participation exemption, investment incentive exemption, etc.) and income tax deductions (for example research and development expenses deduction). No further tax is payable unless the profit is distributed.

Except for the dividends paid to non-resident corporations which have a representative office in Turkey or resident corporations, dividends are subject to withholding tax at the rate of 15%. An increase in capital via issuing bonus shares is not considered as a profit distribution and thus does not incur withholding tax.







31


LIABILITIES) (Continued) a) Current income taxes (Continued)

Corporations are required to pay advance corporation tax quarterly at the rate of 20% on their corporate income. Advance tax is declared by the 14th and paid by the 17th of the second month following each calendar quarter end. Advance tax paid by corporations is credited against the annual corporation tax liability, if, despite offsetting, there remains a paid advance tax amount, 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. Companies file their tax returns by the 25th of the fourth month following the close of the financial year to which they relate. Tax returns are open for 5 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.

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

Tax amnesty law The tax amnesty law, which entered into force with the promulgation in the Official Gazette on 19 August 2016, allows for arrangements such as restructuring of the outstanding tax liabilities, restructuring of the tax liabilities related to tax assessments and tax liabilities at the court stage and voluntary increases in tax bases. The law states that if tax bases or tax amounts for the previous five years are increased at certain rates, no tax inspections/assessments will be made for those years. Tax bases and tax increases will be established for four tax groups (income tax, corporate income tax, withholding tax related to certain limited payments and value added tax). According to the law, a tax rate of 15% instead of 20% will be used for those who submit annual income tax returns in a timely manner for year for which an increase was introduced, who paid their taxes related to these returns on time, and who do not have any finalized or disputed income tax debts. In order to take advantage from the tax amnesty law, the Company made additional corporate tax payment amounting to TRY161,053 for the years between 2011 and 2015, and total carry forward losses to be lost is TRY5,341,442 for the years 2011 and 2015







32


LIABILITIES) (Continued)

The reconciliation of taxation on income for the period of 1 January - 31 December 2016 as follows:



Loss before tax (15,396,685) (6,341,248)

Tax calculated at enacted tax rate 3,079,337 1,268,250 Expenses not deductible for tax purposes (479,616) (121,598) Tax losses for which no deferred income tax asset was recognised (3,962,104) (2,073,682) Temporary differences for which no deferred income tax asset was recognised 1,358,127 668,590 Tax amnesty (161,053) - Other (56) (4,787)

Total (165,365) (263,227)

b) Deferred income taxes

The Group recognises deferred income tax assets and liabilities based upon temporary differences arising between its financial statements as reported for TAS purposes and its statutory tax financial statements. The temporary differences which gave rise to deferred income tax assets and liabilities were as follows:

Cumulative temporary Deferred income tax differences asset/(liability) 2016 2015 2016 2015

Provision for employment termination benefits (93,019) (121,825) 18,604 24,365 Trade payables (644,631) 89,645 128,926 (17,929) Prepaid expenses 89,470 304,200 (17,894) (60,840) Employee benefits payable - 624,180 - (124,836) Trade receivables 1,684,488 984,267 (336,898) (196,853)

Deferred income tax liabilities, net (207,262) (376,093)

The movement on the deferred income tax account is as follows:

2016 2015

1 January (376,093) (183,274)

Statement of profit or loss charge 168,420 (191,866) Tax credit relating to components of other comprehensive income 411 (953)

31 December (207,262) (376,093)







33


LIABILITIES) (Continued)

b) Deferred income taxes (Continued)

Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable. The Group did not recognise deferred income tax assets of TRY25,816,049 (31 December 2015: TRY12,160,081) in respect of losses amounting to TRY5,163,210 (31 December 2015: TRY2,432,016) that can be carried forward against future taxable income. The relevant tax loss carry-forwards are result from Mastercard Bilişim and could be offset with profit of company until that date as below:

2016 2015

31 December 2019 895,836 1,791,673 31 December 2020 4,445,606 8,891,212 31 December 2021 20,474,607 -

Total 25,816,049 10,682,885

NOTE 16 - REVENUE AND COST OF SALES

a) Revenue



Domestic card operation 22,796,561 19,406,892 Domestic printing 21,667,596 23,325,153 Domestic ATM operation 4,302,083 6,436,776 Prepaid card sales 3,949,300 2,700,427 Domestic POS operation 1,740,911 1,774,792 Domestic HGS 1,013,582 1,367,208 Other 678,611 120,999

Domestic sales 56,148,644 55,132,247

Export card operation 3,997,991 3,343,628 Export ATM operation 1,596,437 1,350,841 Export POS operation 1,348,244 624,526 Export printing 11,439 76,217 Other 643,606 152,890

Export sales 7,597,717 5,548,102

Sales returns and discounts (295,258) (159,341)

Revenue, net 63,451,103 60,521,008







34

NOTE 16 - REVENUE AND COST OF SALES (Continued)

b) Cost of sales 1 January - 1 January - 31 December 2016 31 December 2015

Employee benefits (29,052,987) (24,584,597) Paper and envelope material expenses (10,214,959) (5,072,501) Maintenance and repair expenses (4,959,874) (2,967,008) Depreciation and amortisation (4,683,012) (3,523,836) Commission expense (*) (4,250,348) (736,322) Printing and enveloping expenses (3,344,129) (3,912,009) Consultancy expenses (2,436,434) (5,466,874) Rent expense (1,274,468) (1,257,027) Card personalization expenses (916,593) (1,296,047) Comunication expense (697,536) (824,636) Tax and duties (506,904) (607,180) Other (2,999,914) (2,224,489)

Cost of sales (65,337,158) (52,472,526)

(*) Commission expenses include commissions paid to BKM, Mastercard and Visa for card transactions. The major of the increase in commission expenses is related to the increase in transaction volume

NOTE 17 - MARKETING EXPENSES 1 January - 1 January - 31 December 2016 31 December 2015

Employee benefits 3,841,405 2,154,252 Maintenance and repair expenses 224,803 110,601 Travel expenses 212,506 155,152 Depreciation and amortisation 119,421 90,764 Advertising and promotion expenses - 168,599 Other 145,175 143,963

Total 4,543,310 2,823,331

NOTE 18 - GENERAL ADMINISTRATIVE EXPENSES 1 January - 1 January - 31 December 2016 31 December 2015

Employee benefits 4,031,993 6,497,943 Consultancy expenses 1,721,783 1,825,908 Maintenance and repair expenses 1,236,971 328,060 Utilization expenses 271,402 283,148 Rent expenses 268,217 229,407 Travel expenses 265,552 327,930 Depreciation and amortization expenses 248,232 150,400 Tax and duties 228,917 293,561 Communication expenses 119,764 128,484 Other 211,026 501,501

Total 8,603,857 10,566,342







35

NOTE 19 - EXPENSES BY NATURE 1 January - 1 January - 31 December 2016 31 December 2015

Personnel expenses 36,926,385 33,236,792 Paper and envelope expenses 10,214,959 5,072,501 Maintenance and repair expenses 6,421,648 3,405,669 Depreciation and amortization expenses 5,050,665 3,765,000 Commission expenses 4,250,348 736,322 Consultancy expenses 4,158,217 7,292,782 Printing and enveloping expenses 3,344,129 3,912,009 Rent expenses 1,614,608 1,486,434 Card personalization expenses 916,593 1,296,047 Comunication expenses 817,300 953,120 Tax and duties 735,821 900,741 Travel expenses 478,058 483,082 Other 3,555,594 3,321,700

Total 78,484,325 65,862,199

NOTE 20 - OTHER OPERATING INCOME AND EXPENSES

a) Other operating income 1 January - 1 January - 31 December 2016 31 December 2015

Foreign exchange gains 1,030,667 2,648,553 Special fund 104,439 - Gains on the adjustments of confirmation reconciliations - 372,401 Others 70,145 210,941

Total 1,205,251 3,231,895 b) Other operating expenses 1 January - 1 January - 31 December 2016 31 December 2015

Foreign exchange losses (1,422,471) (1,439,836) Provision for doubtful trade receivables (711,705) (311,263) Losses on the adjustments of confirmation reconciliations (90,152) - Provision losses (81,000) - Provision for impairment expense on other receivables (*) - (2,500,000) Other (317,272) (367,896)

Total (2,622,600) (4,618,995)

(*) Within the scope of the Operation Service Agreement signed between the Company and Ininal Elektronik Ödeme ve Para Hizmetleri A.Ş. (Ininal) on 01 August 2013, the Company provides operation, software, hardware, and system infrastructure services for Ininal Kart branded payment cards. In return for mentioned services, income related to Ininal Kart activities and agreed costs are shared equally between the Company and Ininal. As per the agreement signed between the Company and Ininal on 08 August 2015, the Company lent TRY2,500,000 to Ininal to be used for capital increase. As of 31 December 2016, the Group has started negotiations with Ininal related to the collection of the receivables and continued to work on the redemption schedule of receivables. As of the date of the report, the written agreement on the redemption schedule of receivables has not been completed yet.







36

NOTE 21 - FINANCE INCOME AND EXPENSES

a) Finance income



Foreign exchange gains 2,677,763 1,532,203 Interest income 847,930 1,148,416

Total 3,525,693 2,680,619

b) Finance expenses



Foreign exchange losses (2,029,242) (1,556,558) Bank commissions (251,144) (254,102) Interest expense (244,863) (468,712) Other - (14,204)

Total (2,525,249) (2,293,576)

NOTE 22 - TRANSACTIONS AND BALANCES WITH RELATED PARTIES a) Key management compensation



Short-term benefits 2,063,447 4,753,700 Post-employement benefits - - Other long-term benefits - - Employment termination benefits 2,972,926 - Shared-based payments - - Total 5,036,373 4,753,700

b) Trade receivables from related parties

2016 2015 Mastercard - Su Damlaları 86,840 - c) Other receivables from related parties

2016 2015 Mastercard - Su Damlaları 285,000 -







37

NOTE 22 - TRANSACTIONS AND BALANCES WITH RELATED PARTIES (Continued) d) Trade payables to related parties

2016 2015

Mastercard Europe SPRL 249,955 - Mastercard International 233,907 - Mastercard Asia Pasific 3,448 2,849 Total 487,310 2,849

e) Service given to related parties


31 December 2016 31 December 2015 Mastercard Europe SA - 226,422

f) Service received from related parties


31 December 2016 31 December 2015 Mastercard Europe SA 349,126 302,369

NOTE 23 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

23.1 Financial risk factors

The Group is exposed to market risk (foreign exchange risk and interest rate risk), credit risk, and liquidity risk due to its operations The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance of the Group.

a) Market risk

i) Foreign currency risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US Dollars (“USD”) and Euro (“EUR”). Foreign exchange risk arises from recognised assets and liabilities. The relevant risk is managed with analyse foreign currency position.







38


(Continued)

i) Foreign currency risk (Continued)

TRY equivalent of assets and liabilities denominated in foreign currency held by the Group at 31 December 2016 and 2015 were as follows: 2016 2015

Assets 8,925,265 14,820,926 Liabilities (10,449,206) (14,074,090)

Net foreign currency position (1,523,941) 746,836

31 December 2016

USD EUR Other TRY equivalent

Assets: Cash and cash equivalents 543,594 211,947 2,401 2,709,688 Trade receivables 1,377,938 368,295 - 6,215,577

Total assets 1,921,532 580,242 2,401 8,925,265

Liabilities: Borrowings (419,408) (458,750) - (3,177,899) Trade payables (1,363,572) (357,703) (7,551) (6,158,337) Other liabilities - (300,000) - (1,112,970)

Total liabilities (1,782,980) (1,116,453) (7,551) (10,449,206)

Net foreign currency position 138,552 (536,211) (5,150) (1,523,941)

31 December 2015

USD EUR Other TRY equivalent

Assets: Cash and cash equivalents 1,907,324 38,907 515 5,671,582 Trade receivables 2,128,510 656,836 - 8,276,016 Other receivables 300,360 - - 873,328

Total assets 4,336,194 695,743 515 14,820,926

Liabilities: Borrowings (750,372) - - (2,181,782) Trade payables (3,485,918) (277,096) (901) (11,020,028) Other liabilities (300,000) - - (872,280)

Total liabilities (4,536,290) (277,096) (901) (14,074,090)

Net foreign currency position (200,096) 418,647 (386) 746,836







39

NOTE 23 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (Continued)

i) Foreign currency risk (Continued)

Analysis of foreign currency sensitivity at 31 December 2016 is as follows:

31 December 2016 Profit/(loss) Equity

Appreciation of Depreciation of Appreciation of Depreciation of foreign foreign foreign foreign

currency currency currency currency

Change of USD against TRY by 10%: 1. USD net assets / liabilities 48,759 (48,759) - - 2. USD hedged from risks (-) - - - -

3. USD net effect (1+2) 48,759 (48,759) - -

Change of EUR against TRY by 10%: 4. EUR net assets / liabilities (198,929) 198,929 - - 5. EUR hedged from risks (-) - - - -

6. EUR net effect (4+5) (198,929) 198,929 - -

Change of other foreign currency against TRY by 10%: 7. Other foreign currency net assets / liabilities (2,224) 2,224 - - 8. Other foreign currency hedged from risks (-) - - - -

9. Other foreign currency net effect (7+8) (2,224) 2,224 - -

Total (3+6+9) (152,394) 152,394 - -

31 December 2015

Profit/(loss) Equity Appreciation of Depreciation of Appreciation of Depreciation of

foreign foreign foreign foreign currency currency currency currency

Change of USD against TRY by 10%: 1. USD net assets / liabilities (58,180) 58,180 - - 2. USD hedged from risks (-) - - - -

3. USD net effect (1+2) (58,180) 58,180 - -

Change of EUR against TRY by 10%: 4. EUR net assets / liabilities 133,030 (133,030) - - 5. EUR hedged from risks (-) - - - -

6. EUR net effect (4+5) 133,030 (133,030) - -

Change of other foreign currency

against TRY by 10%: 7. Other foreign currency net assets / liabilities (166) 166 - - 8. Other foreign currency hedged from risks (-) - - - -

9. Other foreign currency net effect (7+8) (166) 166 - -

Total (3+6+9) 74,684 (74,684) - -







40


(Continued) ii) Interest rate risk (Continued)

The Group is exposed to interest rate risk through the impact of rate changes on interest bearing assets and liabilities. The Group manages interest rate risk by using natural hedges that arise from offsetting interest rate of assets and liabilities or derivative financial instruments. Certain parts of the interest rates related to borrowings are based on market interest rates; therefore the Group is exposed to interest rate fluctuations on domestic and international markets. The Group’s exposure to market risk for changes in interest rates relates primarily to the Group’s debt obligations. The financial instruments of the Group which are sensitive to interest rates are stated in the following:

31 December 2016

Fixed interest rates Floating interest rates Total

Financial liabilities: Financial leasing liabilities 3,177,898 - 1,475,982

ii) Interest rate risk (Continued)

31 December 2015

Fixed interest rates Floating interest rates Total

Financial assets: Cash and cash equivalents 7,700,000 - 7,700,000

Financial liabilities: Financial leasing liabilities 2,181,781 - 2,181,781

b) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Group’s credit risk is mainly arised from trade receivables The Group managed the relevant risk arising from customers, credit limits for customers with guarantees received. The utilisation of credit limits is regularly monitored and the credit quality of customers, taking into account their financial position, past experience and other factors are assessed by the Group. The trade receivables are assessed with considering Group’s policy and procedure and trade receivables are indicated in balance sheet after deducted provision doubtful receivables.

CONVENIENCE TRANSLATION INTO ENGLISH OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH





41


Trade receivables Other recevables Deposite in

31 December 2016 Related party Other Related party Other bank

Maximum exposed credit risk as of

reporting date (A+B+C+D) (*) 86,840 20,098,690 285,000 378,888 14,319,912

- Secured portion of the maximum credit risk by guarantees, etc.

A. Net book value of financial assets that are either not due or not impaired 86,840 11,639,538 285,000 378,888 14,319,912

- Secured portion by guarantees, etc - - - - -

B. Net book value of the expired but not impaired financial assets - 8,459,152 - - - - Secured portion by guarantees, etc - - - - -

C. Net book value of impaired assets - - - - - - Overdue (Gross book value) - 3,036,193 - 2,500,000 -

- Impairment (-) - (3,036,193) - (2,500,000) -

- Secured portion of the net value by guarantees, etc

- Not overdue (Gross book value) - - - - -

- Impairment (-) - - - - -


D. Off balance sheet items with credit risk - - - - -

(*) Factors that increase the credit reliability, such as; guarantees received, are not considered in the calculation.

CONVENIENCE TRANSLATION INTO ENGLISH OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH





42


Trade receivables Other recevables Deposite in

31 December 2015 Related party Other Related party Other bank

Maximum exposed credit risk as of

reporting date (A+B+C+D) (*) - 16,914,785 - 236,886 21,136,438

- Secured portion of the maximum credit risk by guarantees, etc. - - - - -

A. Net book value of financial assets that are either not due or not impaired - 9,256,293 - 236,886 21,136,438

- Secured portion by guarantees, etc - - - - -

B. Net book value of the expired but not impaired financial assets - 7,658,492 - - - - Secured portion by guarantees, etc - - - - -

C. Net book value of impaired assets - - - - - - Overdue (Gross book value) - 2,324,488 - 2,500,000 -

- Impairment (-) - (2,324,488) - (2,500,000) -


- Not overdue (Gross book value) - - - - -

- Impairment (-) - - - - -


D. Off balance sheet items with credit risk - - - - -

(*) Factors that increase the credit reliability, such as; guarantees received, are not considered in the calculation.







43


(Continued)

c) Liquidity risk

Liquidity risk is the risk that an entity will be unable to meet its net funding requirements. The risk is mitigated by matching the cash in and out flow volume supported by committed lending limits from qualified credit institutions. The analysis of the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date are as follows: Total contractual

cash

outflows Less than 3 to 12 1 to 5 above

31 December 2016 Carrying value (=I+II+III+IV) 3 months (I) months (II) years (III) 5 years (IV)

Financial leasing liabilities 3,177,898 3,253,607 1,551,691 486,924 1,214,992 - Trade payables 20,232,156 20,232,156 20,232,156 - - - Employee benefits payables 596,176 596,176 596,176 - - - Other payables 417,364 417,364 - 417,364 - - Total 24,423,594 24,499,303 22,380,023 904,288 1,214,992 -

Total contractual

cash

outflows Less than 3 to 12 1 to 5 above

31 December 2015 Carrying value (=I+II+III+IV) 3 months (I) months (II) years (III) 5 years (IV)

Financial leasing liabilities 2,181,781 2,360,610 334,682 814,555 1,211,373 - Trade payables 18,096,515 18,096,515 18,096,515 - - - Employee benefits payables 514,562 514,562 514,562 - - - Other payables 116,304 116,304 - 116,304 - - Total 20,909,162 21,087,991 18,945,759 930,859 1,211,373 -

23.2 Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. If any the Group has profit, the management of Group is used to finance for growing of Group. Dividend distribution for the ordinary shares is not expected in the near future. If it happens, the dividend distribution is realized with the approval of Board of Directors.







44

NOTE 24 - EVENTS AFTER REPORTING PERIOD It was decided to increase capital amount from TRY105,449,628 to TRY145,490,598 at Extraordinary General Assembly Meeting held on 6 March 2017. The capital increase was paid in cash at 30 March 2017.

................................

mastercard payment transaction services turkey …

Documents