CONVENIENCE TRANSLATION INTO ENGLISH OF CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2014 TOGETHER WITH INDEPENDENT AUDITOR S REPORT

Transcription

1 CONVENIENCE TRANSLATION INTO ENGLISH OF CONSOLIDATED FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITOR S REPORT

2 CONVENIENCE TRANSLATION INTO ENGLISH OF INDEPENDENT AUDITOR S REPORT ORIGINALLY ISSUED IN TURKISH INDEPENDENT AUDITOR S REPORT To the Board of Directors of MCT Danışmanlık Anonim Şirketi; Report on the Consolidated Financial Statements 1. We have audited the accompanying consolidated financial statements of MCT Danışmanlık A.Ş. (the Company ) and its Subsidiary (collectively referred to as the Group ), which comprise the consolidated balance sheet as at 31 December 2014 and the consolidated statement of profit or loss, consolidated statement of other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the period then ended and a summary of significant accounting policies and other explanatory notes. Management s Responsibility for the Consolidated Financial Statements 2. The Group s management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Turkish Accounting Standards and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Independent Auditor s Responsibility 3. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. Our audit was conducted in accordance with standards on auditing issued by the Capital Markets Board of Turkey and Independent Auditing Standards that part of Turkish Standards on Auditing issued by the Public Oversight Accounting and Auditing Standards Authority. Those standards require that ethical requirements are complied with and that the audit is planned and performed to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement. An independent audit involves performing procedures to obtain evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on independent auditor s professional judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to error or fraud. In making those risk assessments, the independent auditor considers internal control relevant to the entity s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An independent audit includes also evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the independent audit evidence we have obtained during our audit is sufficient and appropriate to provide a basis for our audit opinion. Başaran Nas Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. a member of PricewaterhouseCoopers BJK Plaza, Süleyman Seba Caddesi No:48 B Blok Kat 9 Akaretler Beşiktaş İstanbul-Turkey Telephone: +90 (212) Facsimile: +90 (212)

3 Opinion 4. In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of MCT Danışmanlık A.Ş. and its Subsidiary as at 31 December 2014 and their financial performance and cash flows for the period then ended in accordance with Turkish Accounting Standards. Other Responsibilities Arising From Regulatory Requirements 5. In accordance with subparagraph 4 of Article 398 of the Turkish Commercial Code ( TCC ) No: 6102; auditor s report on the early risk identification system and committee has been submitted to the Company s Board of Directors on 2 March In accordance with subparagraph 4 of Article 402 of the TCC; no significant matter has come to our attention that causes us to believe that the Company s bookkeeping activities for the period 1 January - 31 December 2014 is not in compliance with the code and provisions of the Company s articles of association in relation to financial reporting. 7. In accordance with subparagraph 4 of Article 402 of the TCC; the Board of Directors submitted to us the necessary explanations and provided required documents within the context of audit. Başaran Nas Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. a member of PricewaterhouseCoopers ORIGINALLY ISSUED IN TURKISH Beste Gücümen, SMMM Partner Istanbul, 2 March 2015

4 CONTENTS TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTENTS PAGE CONSOLIDATED BALANCE SHEETS CONSOLIDATED STATEMENTS OF INCOME... 3 CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME... 4 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY... 5 CONSOLIDATED STATEMENTS OF CASH FLOWS

5 CONSOLIDATED BALANCE SHEETS AND 2013 (Amounts expressed in Turkish Lira ( TRY ), unless otherwise indicated.) ASSETS Restated(*) Notes Current assets: Cash and cash equivalents 3 3,478,355 3,452,855 Trade receivables - Trade receivables 4 3,563,773 3,262,922 Other receivables - Due from related parties 5 370, Other receivables 6 21,872 30,418 Inventories 7 87,500 80,500 Current tax assets 21-42,794 Prepaid expenses 8 497, ,929 Other current assets - 3,712 Total current assets 8,019,097 7,220,130 Non-current assets: Property, plant and equipment , ,978 Intangible assets - Goodwill , ,744 - Other intangible assets 13 2,053,020 2,160,468 Total non-current assets 3,118,374 2,839,190 Total assets 11,137,471 10,059,320 (*) Note 2.5. The accompanying notes form an integral part of these consolidated financial statements. 1

6 CONSOLIDATED BALANCE SHEETS AND 2013 (Amounts expressed in Turkish Lira ( TRY ), unless otherwise indicated.) LIABILITIES AND EQUITY Restated(*) Notes Current liabilities: Trade payables - Trade payables 4 453, ,517 Other payables - Due to related parties 5 8,920 11,846 - Other payables 6 109, ,052 Deferred income 9 537, ,852 Current income tax liabilities ,998 - Other current liabilities , ,806 Total current liabilities 2,365,519 1,482,073 Non-current liabilities: Long-term provisions Provision for employment termination benefits , ,039 Deferred tax liabilities , ,147 Total non-current liabilities 419, ,186 Total liabilities 2,784,664 1,949,259 EQUITY Equity attributable to owners of the parent 8,093,858 8,093,858 Paid-in share capital 15 5,141,000 5,141,000 Share premium 15 1,919,845 1,919,845 Other comprehensive loss not to be reclassified to profit or loss - Actuarial losses regarding benefits to employees 15 (2,770) (7,161) Treasury shares (-) 15 (704,896) (344,993) Restricted reserves , ,498 Retained earnings ,229 (156,952) Net profit for the year ,464 1,079,621 Non-controlling interests 15 15,437 16,203 Total equity 8,352,807 8,110,061 Total liabilities and equity 11,137,471 10,059,320 (*) Note 2.5. The accompanying notes form an integral part of these consolidated financial statements. 2

7 CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED 31 DECEMBER 2014 AND 2013 (Amounts expressed in Turkish Lira ( TRY ), unless otherwise indicated.) Restated(*) Notes Revenue 17 15,242,213 15,180,452 Cost of sales (-) 17 (8,832,958) (10,548,508) Gross profit 6,409,255 4,631,944 General and administration expenses (-) 18 (4,667,817) (3,150,961) Marketing expenses (-) 18 (690,577) (621,445) Other operating income , ,415 Other operating expenses (-) 19 (268,615) (230,924) Operating profit 1,158,397 1,263,029 Income from investing activities 20 73, ,316 Operating profit before financial income and expenses 1,231,888 1,391,345 Tax expense for the period (267,719) (311,099) Taxes on income 21 (331,200) (325,256) Deferred tax income 21 63,481 14,157 Net profit for the year 964,169 1,080,246 Attributable to Non-controlling interests 3, Equity holders of the parent 960,464 1,079,621 Earnings per share (*) Note 2.5. The accompanying notes form an integral part of these consolidated financial statements. 3

8 CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME FOR THE YEARS ENDED 31 DECEMBER 2014 AND 2013 (Amounts expressed in Turkish Lira ( TRY ), unless otherwise indicated.) Notes Net profit for the year 964,169 1,080,246 Other comprehensive income not be reclassified to profit or loss Actuarial losses regarding benefits to employees 14 4,391 (7,161) Other comprehensive income/(loss) 4,391 (7,161) Total comprehensive income 968,560 1,073,085 Attributable to Non-controlling interest 3, Equity holders of the parent 964,855 1,072,460 The accompanying notes form an integral part of these consolidated financial statements. 4

9 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED 31 DECEMBER 2014 AND 2013 (Amounts expressed in Turkish Lira ( TRY ), unless otherwise indicated.) Net profit Non- Paid-in Share Treasury Restricted Actuarial Retained for the controlling Total share capital premium shares reserves losses earnings year Total interests equity Balances at 1 January ,141,000 1,919,845 (148,476) 218,593 - (946,833) 1,188,016 7,372,145 26,584 7,398,729 Transfers , ,111 (1,188,016) Dividends paid (154,230) - (154,230) (11,006) (165,236) Total comprehensive income (7,161) - 917, , ,584 Treasury shares (Not 16) - - (196,517) (196,517) - (196,517) Balances at 31 December ,141,000 1,919,845 (344,993) 462,498 (7,161) (156,952) 917,120 7,931,357 16,203 7,947,560 Balances at 1 January 2014 (Previously reported) 5,141,000 1,919,845 (344,993) 462,498 (7,161) (156,952) 917,120 7,931,357 16,203 7,947,560 Effect of restatement(*) , , ,501 Balances at 1 January 2014 (Restated) 5,141,000 1,919,845 (344,993) 462,498 (7,161) (156,952) 1,079,621 8,093,858 16,203 8,110,061 Transfers ,079,621 (1,079,621) Dividends paid (361,440) - (361,440) (4,471) (365,911) Total comprehensive income , , ,855 3, ,560 Treasury shares (Not 16) - - (359,903) (359,903) - (359,903) Balances at 31 December ,141,000 1,919,845 (704,896) 462,498 (2,770) 561, ,464 8,337,370 15,437 8,352,807 (*) The effects of restatement is defined Note 2.5 The accompanying notes form an integral part of these consolidated financial statements. 5

10 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED 31 DECEMBER 2014 AND 2013 (Amounts expressed in Turkish Lira ( TRY ), unless otherwise indicated.) Cash flows from operating activities Notes Net income for the year 964,169 1,080,246 Adjustments Depreciation and amortization 12, , ,152 Provision for employment termination benefits 14 70,556 23,343 Taxes on income , ,099 Interest income 20 (73,491) (72,424) Operating profit before changes in operating assets and liabilities 1,596,529 1,724,416 Trade receivables (300,851) 816,261 Inventories Prepaid expenses (7,000) (150,182) (56,500) (44,886) Other receivables and other assets (358,228) 55,407 Trade payables 55,667 (98,801) Other payables and other liabilities 325,036 (766,517) Deferred income 222,745 (92,825) Due to personnel 14 (50,725) (59,786) Taxes paid (8,408) (529,846) Net cash flows from operating activities 1,324, ,923 Investing activities: Purchases of property, plant and equipment 12 (543,002) (40,761) Purchases of intangible assets 13 (103,758) (81,891) Interest received 73,491 72,424 Net cash flows from investing activities (573,269) (50,228) Financing activities: Dividends paid (365,911) (165,236) Purchase of treasury shares (359,903) (196,517) Net cash out flows from financing activities (725,814) (361,753) Net change in cash and cash equivalents 25, ,942 Cash and cash equivalents at the beginning of the year 3 3,452,855 2,917,913 Cash and cash equivalents at the end of the year 3 3,478,355 3,452,855 The accompanying notes form an integral part of these consolidated financial statements. 6

11 NOT 1 - ORGANIZATION AND NATURE OF BUSINESS MCT Danışmanlık A.Ş. ( the Company or the Parent ) was established in 18 March 1998 under the name of MCT Müşavirlik Danışmanlık ve Dış Ticaret Limited Şirketi. The Company changed its commercial title as MCT Müşavirlik Danışmanlık ve Dış Ticaret Anonim Şirketi in 10 June 2005, and in 30 December 2011 the Company has been entitled as MCT Danışmanlık A.Ş. The Company was established in order to serve to private and public industry and their top management, personnel of those by increasing effectiveness in their operations and provide rational modern way of doing business, fisibility, investment, management, consulting, quality, production, marketing, promotion, administrative, legal, financial, economic and technical subjects related to import and export trade. The Group has been registered with the Turkish Capital Market Board ( CMB ) and quated on the Borsa Istanbul Turkey ( BIST ) since May, Issued share capital of the Group is TRY 5,141,000 and represented below. The value of each issued share is 1 TRY and consists of 5,141,000 shares. 3,900,225 of issued share is A Group nominative shares, 1,240,775 of issued share is B Group bearer shares. Group A shares have fifteen voting rights for each share and Group B shares have one voting right for each share. Share Share Share Share Name (TL) (%) (TL) (%) Middle East Management Centre Sprl 3,900, ,900, Tanyer Sönmezer 218, , Publicly traded 771, , Other 251, , Total share 5,141, ,141, As of 31 December 2014 and 2013, consolidated financial statements of the Group, consist the Company and Eventus Organizasyon Fuarcılık ve Ticaret A.Ş ( Eventus or the Subsidiary ). Information about the subsidiary is represented below: Subsidiary Share (%) Nature of Business Location Eventus Organizasyon Organazation and Fuarcılık ve Ticaret A.Ş exhibition İstanbul The average number of personnel of the Group is 40 as of 31 December 2014 (2013: 47). Headquarter of the Group is located in Abbasağa Mahallesi, Yıldız Caddesi, Sungurlar İş Merkezi No: 45/5 Yıldız Beşiktaş / İstanbul, Türkiye. 7

12 NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS 2.1 Basis of Presentation: Basis of preparation and presentation of the consolidated financial statements The accompanying consolidated financial statements are prepared in accordance with Communiqué Serial II, No: 14.1, Principles of Financial Reporting in Capital Markets ( the Communiqué ) published in the Official Gazette numbered on 13 June According to Article 5 of the Communiqué, consolidated financial statements are prepared in accordance with the Turkish Accounting Standards issued by Public Oversight Accounting and Auditing Standards Authority ( POAASA ). TAS contains Turkish Accounting Standards, Turkish Financial Reporting Standards ( TFRS ). The consolidated financial statements of the Group are prepared as per the CMB announcement of 7 June 2013 relating to financial statements presentations. Comparative figures are reclassified, where necessary, to conform to changes in the presentation of the current year s consolidated financial statements. In accordance with the CMB resolution issued on 17 March 2005, listed companies operating in Turkey are not subject to inflation accounting effective from 1 January Therefore, the financial statements of the consolidated financial statements of the Group have been prepared accordingly The Company (and its subsidiary) maintains its accounting records and prepares its statutory financial statements in accordance with the Turkish Commercial Code (the TCC ), tax legislation and the uniform chart of accounts issued by the Ministry of Finance. The consolidated financial statements, except for the financial asset and liabilities presented with their fair values, are maintained under historical cost conversion in TRY. These consolidated financial statements are based on the statutory records, which are maintained under historical cost conversion, with the required adjustments and reclassifications reflected for the purpose of fair presentation in accordance with the TAS/TFRS. Functional and Reporting Currency The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in TRY, which is the functional and presentation currency of the Group. As of 31 December 2014 exchange rates declared by Central Bank of the Republic of Turkey; 1 Euro = TRY, 1 USD= TRY. (2013: 1 Euro= TRY, 1 USD= ). In the period of 1 January- 31 December 2014 average of exchange rates declared by Central Bank of the Republic of Turkey; 1 Euro = TRY, 1 USD= TRY. (2013: 1 Euro= TRY, 1 USD= TRY). 8

13 NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2.2 Basis of Consolidation: (a) Subsidiaries Subsidiaries are the companies that parent company has control over. Control of parent company, provides to be exposed and have right to variable returns and lead those rights. Subsidiaries are included in the scope of consolidation starting from the date the control on their activity passed to the parent company and are no longer consolidated firm from the date that control ceases The Group combines individual income and expenses, assets and liabilities and cash flows of subsidiaries on a line-by-line basis with similar items in the consolidated financial statements. Intercompany transactions, balances and unrealised gains/losses on transactions between group companies are eliminated on consolidation. 2.3 Offsetting Financial assets and liabilities are offset and the net amount are reported in the consolidated financial statements when there is a legally enforceable right to set-off the recognized amounts and there is an intention to settle on a net basis or realize the assets and settle the liabilities simultaneously. 2.4 Significant changes in the Accounting Policies Accounting policy changes are applied retrospectively and the previous year financial statements are arranged. In order to allow the determination of financial position and performance, the Group's consolidated financial statements are prepared in comparison with the previous period (Note 2.5). In order to comply with the presentation of consolidated financial statements the current period when deemed necessary, comparative information is classified, and describes important differences. 2.5 Comparatives and restatement of prior periods financial statements In order to allow for the determination of the financial situation and performance trends the Group s consolidated financial statements have been presented comparatively with the previous year. Where necessary, comparative figures have been reclassified to conform to the changes in presentation in the current period. The Group is defined an error in 31 December 2013 corporate tax calculation in Corporate Tax Declaration which is prepared after 31 December 2013 consolidated financial statements are published, the effect of error is corrected by retrospectively in accordance with Turkish Accounting Standards 8 - Accounting Policies, Changes in Accounting Estimates and Errors ( TAS 8 ). 9

14 NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2.5 Comparatives and restatement of prior periods financial statements (Continued) Corporate tax expense of the Group is less realized TRY 162,501 in Corporate Tax Declaration prepared in 29 April 2014 than accounted in 31 December 2013 consolidated financial statements. The effect of the restatements in 31 December 2013 consolidated balance sheets and consolidated income statements as is follow; 31 December 2013 Effect of 31 December 2013 (previous reported) Restatement (Restated) Net profit for the period 917, ,501 1,080,246 Current Income Tax Liabilities 119,707 (119,707) - Current Tax Assets - 42,794 42, Amendments in International Financial Reporting Standards The Group has implemented the new and revised standards and interpretations effective from 1 January 2014 which are related to its main operations. (a) Standards, Amendments and IFRICs applicable to 31 December 2014 year ends - Amendment to TAS 32, Financial instruments : Presentation, on offsetting financial assets and financial liabilities, effective from annual periods beginning on or after 1 January This amendment updates the application guidance in TAS 32, Financial instruments: Presentation, to clarify some of the requirements for offsetting financial assets and financial liabilities on the balance sheet. - Amendments to TAS 36, Impairment of assets, effective from annual periods beginning on or after 1 January These amendments address the disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal. - Amendment to TAS 39 Financial instruments: Recognition and measurement, on novation of derivatives and hedge accounting, effective from annual periods beginning on or after 1 January These narrow-scope amendments allow hedge accounting to continue in a situation where a derivative, which has been designated as a hedging instrument, is novated to effect clearing with a central counterparty as a result of laws or regulation, if specific conditions are met. - IFRIC 21, Levies, effective from annual periods beginning on or after 1 January This interpretation is on TAS 37, Provisions, contingent liabilities and contingent assets. TAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for the entity to have a present obligation as a result of a past event (known as an obligating event). The interpretation clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. 10

15 NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2.6 Amendments in International Financial Reporting Standards (Continued) - Amendments to TFRS 10, Consolidated financial statements, TFRS 12 and TAS 27 for investment entities, effective from annual periods beginning on or after 1 January These amendments mean that many funds and similar entities will be exempt from consolidating most of their subsidiaries. Instead, they will measure them at fair value through profit or loss. The amendments give an exception to entities that meet an investment entity definition and which display particular characteristics. Changes have also been made TFRS 12 to introduce disclosures that an investment entity needs to make. (b) New TFRS standards, amendments and IFRICs effective after 1 January Annual improvements 2012; effective from annual periods beginning on or after 1 July These amendments include changes from the cycle of the annual improvements project that affect 7 standards: - TFRS 2, Share-based payment - TFRS 3, Business Combinations - TFRS 8, Operating segments - TFRS 13, Fair value measurement - TAS 16, Property, plant and equipment and TAS 38, Intangible assets - TFRS 9, Financial instruments, TAS 37, Provisions, contingent liabilities and contingent assets, and - TAS 39, Financial instruments - Recognition and measurement - Annual improvements 2013; effective from annual periods beginning on or after 1 July These amendments include changes from the cycle of the annual improvements project that affect 4 standards: - TFRS 1, First time adoption - TFRS 3, Business combinations - TFRS 13, Fair value measurement and - TAS 40, Investment property. - TFRS 14 Regulatory deferral accounts, effective from annual periods beginning on or after 1 January TFRS 14, Regulatory deferral accounts permits first-time adopters to continue to recognise amounts related to rate regulation in accordance with their previous GAAP requirements when they adopt TFRS. However, to enhance comparability with entities that already apply TFRS and do not recognise such amounts, the standard requires that the effect of rate regulation must be presented separately from other items. - Amendment to TFRS 11, 'Joint arrangements' on acquisition of an interest in a joint operation, effective from annual periods beginning on or after 1 January This amendment adds new guidance on how to account for the acquisition of an interest in a joint operation that constitutes a business. The amendments specify the appropriate accounting treatment for such acquisitions. 11

16 NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2.6 Amendments in International Financial Reporting Standards (Continued) - Amendment to TAS 16, 'Property, plant and equipment' and TAS 38, 'Intangible assets', on depreciation and amortisation, effective from annual periods beginning on or after 1 January In this amendment, it has clarified that the use of revenue based methods to calculate the depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. It is also clarified that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. - Amendments to TAS 27, Separate financial statements on the equity method, effective from annual periods beginning on or after 1 January These amendments allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. (b) New TFRS standards, amendments and IFRICs effective after 1 January 2015 (Continued) - Amendments to TFRS 10, Consolidated financial statements and IAS 28, Investments in associates and joint ventures, effective from annual periods beginning on or after 1 January These amendments address an inconsistency between the requirements in IFRS 10 and those in IAS 28 in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognised when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognised when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. - TFRS 15 Revenue from contracts with customers, effective from annual periods beginning on or after 1 January TFRS 15, Revenue from contracts with customers is a converged standard from the IASB and FASB on revenue recognition. The standard will improve the financial reporting of revenue and improve comparability of the top line in financial statements globally. - TFRS 9 Financial instruments, effective from annual periods beginning on or after 1 January This standard replaces the guidance in IAS 39. It includes requirements on the classification and measurement of financial assets and liabilities; it also includes an expected credit losses model that replaces the current incurred loss impairment model. - Amendments to TAS 16 Property, plant and equipment, and TAS 41, Agriculture, regarding bearer plants, effective from annual periods beginning on or after 1 January These amendments change the financial reporting for bearer plants, such as grape vines, rubber trees and oil palms. It has been decided that bearer plants should be accounted for in the same way as property, plant and equipment because their operation is similar to that of manufacturing. Consequently, the amendments include them within the scope of TAS 16, instead of TAS 41. The produce growing on bearer plants will remain within the scope of TAS

17 NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2.6 Amendments in International Financial Reporting Standards (Continued) - Amendment to TAS 19 regarding defined benefit plans, effective from annual periods beginning on or after 1 July These narrow scope amendments apply to contributions from employees or third parties to defined benefit plans. The objective of the amendments is to simplify the accounting for contributions that are independent of the number of years of employee service, for example, employee contributions that are calculated according to a fixed percentage of salary. - Annual improvements 2014, effective from annual periods beginning on or after 1 January These set of amendments impacts 4 standards: - TFRS 5, Non-current assets held for sale and discontinued operations regarding methods of disposal. - TFRS 7, Financial instruments: Disclosures, (with consequential amendments to TFRS 1) regarding servicing contracts. - TAS 19, Employee benefits regarding discount rates. - TAS 34, Interim financial reporting regarding disclosure of information. The Group will evaluate the effect of the aforementioned changes within its operations and apply changes starting from effective date. 2.7 Summary of Significant Accounting Policies Revenue Revenues are recognized on an accrual basis at the fair values of consideration received or receivable incurred or to be incurred. Net sales represent the invoiced value of trading goods and services given, less sales discounts and returns. 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 operating income. 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. Dividend Income Dividend income is recorded as income of the collection right transfer date. Dividend payables are recognized in the period that the profit distribution is declared. 13

18 NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2.7 Summary of Significant Accounting Policies (Continued) Rent Income Rent income acquired from real estates is recorded throughout the related rental agreement period, in accordance with linear method. Property, plant and equipment Property, plant and equipment are carried at cost less accumulated depreciation and any impairment in value. 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 of the property, plant and equipment. For assets that need considerable time to be ready for sale or use, borrowing costs are capitalized in accordance with the Group s accounting policy. As it is for the other fixed assets, such assets are depreciated when the assets are ready for their intended use. Cost amounts of property, plant and equipment assets excluding land and construction in progress are subject to amortization by using the straight-line method in accordance with their expected useful life. There is no depreciation allocated for lands due to indefinite useful lives. Expected useful life, residual value and amortisation method are evaluated every year for the probable effects of changes arising in the expectations and are accounted for prospectively. Gain or losses on disposal of property, plant and equipment are included in the related operating income or expense line item and are determined as the difference between the carrying value and amounts received. Treasury shares If an entity reacquires its own equity instruments, those instruments treasury shares shall be deducted from equity. No gain or loss shall be recognised in profit or loss on the purchase, sale, issue or cancellation of an entity's own equity instruments. Such treasury shares may be acquired and held by the entity or by other members of the consolidated group. Consideration paid or received shall be recognised directly in equity. Intangible assets Intangible assets acquired separately are carried at cost, less accumulated amortization and any accumulated impairment losses. Amortization is charged on a straight-line basis over their estimated useful lives. Estimated useful life and amortization method are reviewed at the end of each year and the effect of any change in the estimate is accounted for on a prospective basis. 14

19 NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2.7 Summary of Significant Accounting Policies (Continued) Financial assets Classification The group classifies its financial assets in the following categories: loans and receivables, availablefor-sale financial assets and held to maturity financial assets. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. a) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are either acquired for generating a profit from short-tem fluctuations in price or dealer s margin, or included in a portfolio in which a pattern of short-term profit making exists. These include investments and derivative contracts that are not designated as effective hedging instruments. Financial assets at fair value through profit or loss initially recognized at cost and are subsequently premeasured at fair value based on quoted bid prices. All related gains and losses are included in the income statement b) Borrowings and Receivables Receivables and borrowings 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 statement of financial position date. Those with maturities greater than 12 months are classified as non-current assets. The Group s receivables are classified as trade and other receivables and cash and cash equivalents in the statement of financial position c) Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the related investments within 12 months of the statement of financial position date. 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 carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the income statement. 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. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method. Changes in the fair value of monetary and non-monetary securities classified as available for sale are recognised in other comprehensive income. When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the income statement as Gains and losses from investment securities. 15

20 NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2.7 Summary of Significant Accounting Policies (Continued) Cash and Cash Equivalents Cash and cash equivalents comprise cash in hand, bank deposits and short-term investments, which can easily be converted into cash for a certain amount, has high liquidity with original maturities of 3 months or less. The deposits with the original maturities more than 3 months are classified to financial investments. The amounts paid under reverse repurchase agreements are included in the cash and cash equivalents. Foreign Currency Transactions The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in Turkish Lira ( TRY ), which is the functional currency of the Group, and the presentation currency for the consolidated financial statements. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Foreign currency exchange differences are recorded as profit or loss in the period they occured except that circumtances indicated below: Exchange differences which are associated with assets under construction for future use, regarded as an adjustment to interest costs that are recorded as foreign currency amounts, and incorporated into asset costs, Exchange differences due to maintain hedging against risks that are generated from foreign currency. Exchange differences that constitute a part of net investment in the foreign operations, accounted in the translation reserves and associated with the profit or loss in the sale of net investment, and arose from the receivables and payables resulted from foreign operations and expected to be unpaid. Earnings per Share Earnings per share disclosed in the accompanying consolidated statement of income is determined by dividing net income by the weighted average number of shares circulating during the year concerned. In Turkey, companies can raise their share capital by distributing Bonus Shares to shareholders from retained earnings. In computing earnings per share, such Bonus Share distributions are assessed as issued shares. Accordingly, the retrospective effect for those share distributions is taken into consideration in determining the weighted-average number of shares outstanding used in this computation. 16

21 NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2.7 Summary of Significant Accounting Policies (Continued) Events after the Reporting Date The Group adjusts the amounts recognized in its financial statements to reflect adjusting events occurring after the reporting date. If non-adjusting events after the reporting date have material influence on the economic decisions of users of the financial statements, they are disclosed in the notes to the consolidated financial statements. Provisions, Contingent Assets and Liabilities Provisions are recognized when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date considering the risks and uncertainties surrounding the obligation. Contingent Assets and Liabilities Contingent liabilities are not recognized in the financial statements, but are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not recognized in the financial statements, but disclosed when an inflow of economic benefits is probable. Related Parties: A related party is a person or entity that is related to the entity that is preparing its financial statements (in this Standard referred to as the reporting entity ). (a) A person or a close member of that person s family is related to a reporting entity if that person: (i) (ii) (iii) has control or joint control of the reporting entity, has significant influence over the reporting entity; or, is a member of the key management personnel of the reporting entity or of a parent of the reporting entity. (b) An entity is related to a reporting entity if any of the following conditions applies: (i) (ii) (iii) The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others). One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member). Both entities are joint ventures of the same third party. 17

22 NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2.7 Summary of Significant Accounting Policies (Continued) Related Parties (Continued): (iv) (v) (vi) One entity is a joint venture of a third entity and the other entity is an associate of the third entity. The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity. The entity is controlled or jointly controlled by a person identified in (a) (vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). A related party transaction is a transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged Current and deferred income tax The tax expense for the period comprises current and deferred tax. Tax is recognized in the statement of income, except to the extent that it relates to items recognized directly in equity. In such case, the tax is recognized in shareholders equity. Deferred tax liability or asset is recognized on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases which are used in the computation of taxable profit. 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 tax regulations that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. The main temporary differences are from the time differences between carrying amount of tangible assets and their tax base amounts, the available expense accruals that are subject to tax and tax allowances that are not utilized. Deferred tax liabilities are recognized for all taxable temporary differences, where deferred tax assets resulting from deductible temporary differences are recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary difference can be utilized. When the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority and there is a legally enforceable right to set off current tax assets against current tax liabilities, deferred tax assets and deferred tax liabilities are offset accordingly 18

23 NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2.7 Summary of Significant Accounting Policies (Continued) Employment Termination Benefits The Group provied its personnel vacation, education, incentive, food, maternity, marriage and death allowances in addition to salaries. Employment termination benefits, as required by the Turkish Labor Law and the laws applicable in the countries where the subsidiaries operate, represent the estimated present value of the total reserve of the future probable obligation of the Group arising in case of the retirement of the employees. According to Turkish Labor Law and other laws applicable in Turkey, the Group is obliged to pay employment termination benefit to all personnel in cases of termination of employment without due cause, call for military service, retirement or death upon the completion of a minimum one year service. The provision which is allocated by using the defined benefit pension s current value is calculated by using the estimated liability method. All actuarial profits and losses are recognized in the consolidated statements of income. 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. Share Capital and Dividends Ordinary shares are classified as equity. Marginal costs related to the issuance of new shares and options, are demonstrated in equity with a reduction of tax effect. Dividends distributed to shareholders of the Group are reflected as a liability to the consolidated financial statements of the Group by the time they are approved by shareholders of the Group. Decisions, estimations and anticipations that are used for the preparation of consolidated financial statements are regularly evaluated and based on the facts that have reasonable proves by considering the historical knowledge and conditions. Significant accounting estimations The Group has estimations for the future. Accounting estimations have exactly the same results with rarely realized conditions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities for the next reporting period are outlined in the consolidated financial statements. 19

24 NOTE 3 - CASH AND CASH EQUIVALENTS Cash on hand 1,043 8,901 Demand deposits 1,039,313 2,109,595 Time deposits 2,437,999 1,334,359 The Group does not have any restricted deposit as of 31 December 2014 and ,478,355 3,452,855 The annually weighted average effective interest rate for the bank deposit based on US Dollar is 1,97% (2013: 2.17%). As of 31 December 2014 and 2013, the maturity date of time deposits are 1 January 2015 and 1 January 2014 by respectively. NOTE 4 - TRADE RECEIVABLES AND PAYABLES Details for trade receivables and payables as of 31 December 2014 and 31 December 2013 are as follows: Short term trade receivables Trade receivables 3,580,782 3,270,081 Notes receivable 9,126 14,838 Unearned financial income from credit sales (-) (26,135) (21,997) 3,563,773 3,262,922 Trade receivable and payable maturity days are shorther than a month as of 31 December 2014 and Trade payables Trade payables 453, , , ,517 20

25 NOTE 5 - RELATED PARTY TRANSACTIONS As of December 31, 2014 and 2013, related party transactions are as follows: a) Due from related parties MCT Yatırım Holding A.Ş. 332,843 - Alper Utku 37, ,486 - b) Due to related parties Tanyer Sönmezer 8,920 11,304 Erhan Feridun ,920 11,846 c) Board of Director s and key management remuneration 1,606,057 1,659,369 1,606,057 1,659,369 Provision for employee termination benefits to key management is 124,363 TRY as of 31 December 2014 (2013: 115,277 TRY). NOTE 6 - OTHER RECEIVABLES AND PAYABLES As of 31 December 2014 and 2013, other receivables are as follows: Short term other receivables Deposits and guarantee given 10,000 11,112 Other receivables 11,872 - Due from personnel - 19,306 21,872 30,418 21

26 NOTE 6 - OTHER RECEIVABLES AND PAYABLES (Continued) Short - term other payables Payable for tangible assets 109,555 - Due to personnel - 101, , ,052 NOTE 7 - INVENTORIES As of 31 December 2014 and 2013, details of inventories are as follows: Stationery and editions 87,500 80,500 87,500 80,500 NOTE 8 - PREPAID EXPENSES As of 31 December 2014 and 2013, other prepaid expenses are as follows: Advances given 436, ,265 Prepaid expenses 60, , , ,929 NOTE 9 - DEFERRED INCOME Deferred income (*) 537, , , ,852 (*) The Group s deferred income arisen from the management consultancy services concerning months. 22

27 NOTE 10 - OTHER CURRENT LIABILITIES Taxes and social security premium payables 637, ,086 Other 338, , , ,806 NOTE 11 - GOODWILL Goodwill balance is amounting to 378,744 TRY as of 31 December 2014 and The goodwill balance coming from the acquisition of Eventus Organizasyon Fuarcılık ve Ticaret A.Ş. is composed of the difference between the fair value of net assets by 3,066,309 TRY and total acquisition price by TRY 3,445,053. Acquisition is recognized in accordance with the article TFRS 3 Business Combinations and the goodwill calculated after the acquisition is presented to the consolidated financial statements. Goodwill amount of the Group is caused by acquisition of Eventus Organizasyon Fuarcılık ve Ticaret A.Ş. Goodwill balance is caused that the Company will be create synergy and market penetration in the sector and economic benefits while acquiring the Subsidary. The Group management performs goodwill impairment test. NOTE 12 - PROPERTY, PLANT AND EQUIPMENT As of 31 December 2014 and 2013, the movements of property, plant and equipment are as follows: 1 January 2014 Additions Disposals 31 December 2014 Cost Vehicles 429, ,257 Furniture and fixtures 1,050, ,639-1,155,126 Leasehold improvements 133, , ,556 1,612, ,002-2,155,939 Accumulated depreciation Vehicles (250,591) (51,245) - (301,836) Furniture and fixtures (942,248) (64,698) - (1,006,946) Leasehold improvements (120,120) (40,427) - (160,547) (1,312,959) (156,370) - (1,469,329) Net book value 299, ,610 23