AKDENİZ GÜVENLİK HİZMETLERİ A.Ş. AND ITS SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND NOTES AS OF

AKDENİZ GÜVENLİK HİZMETLERİ A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH AS OF 01.01-30.09.2017

CONSOLIDATED FINANCIAL STATEMENTS AND NOTES AS OF 30.09.2017 CONTENTS CONSOLIDATED BALANCE SHEETS CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY CONSOLIDATED STATEMENTS OF CASH FLOWS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 ORGANIZATION AND NATURE OF OPERATIONS OF THE GROUP... 1 NOTE 2 - PRINCIPLES OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS... 3 NOTE 3 BUSINESS COMBINATIONS... 17 NOTE 4 SHARES IN OTHER ENTITIES... 17 NOTE 5 SEGMENT REPORTING... 17 NOTE 6 RELATED PARTY DISCLOSURES... 18 NOTE 7 TRADE RECEIVABLES AND PAYABLE... 26 NOTE 8 RECEIVABLES AND PAYABLES FROM FINANCIAL OPERATIONS... 26 NOTE 9 OTHER RECEIVABLES AND PAYABLES... 27 NOTE 10 INVENTORIES... 28 NOTE 11 BIOLOGICAL ASSETS... 28 NOTE 12 PREPAID EXPENSES AND DEFERRED INCOME... 28 NOTE 14 PROPERTY, PLANT AND EQUIPMENTS... 29 NOTE 15 RIGHTS ON SHARES OF DECOMMISSION, RESTORATION AND ENVIRONMENTAL REHABILITATION FUNDS... 31 NOTE 16 SHARES OF MEMBERS IN COOPERATIVE BUSINESSES AND RELATED FINANCIAL INSTRUMENTS... 31 NOTE 17 INTANGIBLE ASSETS... 32 NOTE 18 GOODWILL... 32 NOTE 19 INVESTIGATION AND EVALUATION OF MINERAL RESOURCES... 32 NOTE 20 LEASING... 32 NOTE 21 PREFERRED SERVICE AGREEMENTS... 32 NOTE 22 IMPAIRMENT OF ASSETS... 32 NOTE 23 GOVERNMENT GRANTS... 32 NOTE 24 BORROWING COSTS... 32 NOTE 25 PROVISIONS, CONTINGENT ASSETS AND LIABILITIES... 33 NOTE 26 COMMITMENTS... 34 NOTE 27 PROVISIONS FOR EMPLOYEE TERMINATION BENEFITS... 35 NOTE 28 OTHER ASSETS AND LIABILITIES... 36 NOTE 29 EQUITY... 37 NOTE 30 SALES... 40 NOTE 31 CONSTRUCTION CONTRACTS... 40 NOTE 32 GENERAL ADMINISTRATIVE EXPENSES, MARKETING, SELLING AND DISTRIBUTION EXPENSES AND RESEARCH AND DEVELOPMENT EXPENSES... 40 NOTE 33 OTHER INCOME / (EXPENSES) FROM OPERATING ACTIVITIES... 41 NOTE 34 INCOME AND EXPENSES FROM INVESTING ACTIVITIES... 42 NOTE 35 EXPENSES BY NATURE... 43 NOTE 36 FINANCING INCOME / (EXPENSES)... 43 NOTE 37 FIXED ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS... 44 NOTE 38 TAX ASSETS AND LIABILITIES... 44 NOTE 39 EARNINGS PER SHARE... 47 NOTE 40 SHARE BASED PAYMENT... 47 NOTE 41 INSURANCE CONTRACTS... 47 NOTE 42 DERIVATIVE FINANCIAL INSTRUMENTS... 47 NOTE 43 FINANCIAL INSTRUMENTS... 47 NOTE 44 NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS... 48 NOTE 45 FINANCIAL INSTRUMENTS (EXPLANATIONS FOR FAIR VALUES AND EXPLANATIONS WITHIN THE FRAMEWORK OF ACCOUNTING FOR PROTECTION FROM FINANCIAL RISK)... 56 NOTE 46 SUBSEQUENT EVENTS... 56 NOTE 47 DISCLOSURES OF OTHER MATTERS... 56 NOTE 48 SUPPLEMENTARY CASH FLOW INFORMATION... 56 NOTE 49 EXPLANATIONS RELATED TO STATEMENT OF CHANGES IN EQUITY... 56

AS OF 30.09.2017 AND 31.12.2016 CONSOLIDATED FINANCIAL STATEMENTS (All amounts in Turkish Lira ("TL") unless indicated otherwise.) ASSETS Revised and Unaudited Audited Note 30.09.2017 31.12.2016 CURRENT ASSETS 105,984,440 103,723,524 Cash and Cash Equivalents 48 7,707,151 3,315,449 Trade Receivables - Trade receivables from related parties 6 7 7,266,594 10,575,095 - Trade receivables from third parties 7 48,514,345 59,261,694 Other Receivables - Other receivables from related parties 6 9 14,587,990 18,073,739 - Other receivables from third parties 9 4,767,065 1,261,104 Inventories 10 7,792,194 4,053,752 Prepaid expenses 12 1,174,143 2,941,637 Other current assets - Other current assets from related parties 6-28 7,216,485 663,211 - Other current assets from third parties 28 6,958,473 3,577,843 105,984,440 103,723,524 NON-CURRENT ASSETS 37,842,230 34,489,258 Other Receivables - Other receivables from third parties 9 3,001 3,001 Tangible assets - Land 14 3,873,550 3,873,550 - Buildings 14 8,519,025 8,662,971 - Machinery and equipments 14 32,528 34,636 - Vehicles 14 1,378,130 775,932 - Furniture and fixtures 14 5,396,529 3,946,393 - Leasehold improvements 14 8,056,260 8,600,707 Intangible assets - Licences 17 114,096 117,023 - Other intangible assets 17 6,419,361 7,883,237 Prepaid expenses 12 3,474,595 -- Deferred tax assets 38 575,156 591,808 37,842,231 34,489,258 TOTAL ASSETS 143,826,671 138,212,782 The accompanying notes form an integral part of these consolidated financial statements. (*): These consolidated financial statements have been approved for issue by the Board of Directors on 09.11.2017.

AS OF 30.09.2017 AND 31.12.2016 CONSOLIDATED FINANCIAL STATEMENTS (All amounts in Turkish Lira ("TL") unless indicated otherwise.) Revised and Unaudited Audited Note 30.09.2017 31.12.2016 LIABILITIES SHORT TERM LIABILITIES 74,780,392 69,395,500 Short-term borrowings 43 14,632,776 9,588,228 Short term portion of long-term borrowings 43 4,675,608 6,690,140 Trade payables - Trade payables to related parties 6 7 301,401 293,084 - Trade payables to third parties 7 5,066,063 3,931,618 Payables related to employee benefits 27 40,272,211 37,876,075 Other Payables - Other payables to related parties 6-9 714,144 -- - Other payables to third parties 9 662,268 1,985,338 Current tax liabilities 38 648,726 436,911 Other short-term liabilities 28 7,807,195 8,594,107 74,780,392 69,395,500 LONG-TERM LIABILITIES 1,957,015 1,729,895 Long-term borrowings 43 1,092,027 877,527 Long-term provision - Long-term provisions for employee benefits 27 112,955 74,873 Deferred tax liability 38 752,033 777,495 1,957,015 1,729,895 EQUITY 67,089,264 67,087,387 Equity of Parent Company Share Capital Paid 29 31,000,000 31,000,000 Treasury Shares (-) 29 (1,130,941) (1,130,941) Share Premium/Discount 29 11,523,840 11,523,840 Other Comprehensive income or expenses that will not be reclassified subsequently to profit or loss - Revaluation and Measurement Gain / Loss 29 6,678,692 6,678,692 - Other Gain / Loss 29 (49,073) (36,731) Other Comprehensive income or expenses that will be reclassified subsequently to profit or loss Restricted Reserves 29 4,895,637 4,123,592 Retained Earnings / Loss 29 6,456,028 4,080,582 Net Profit / Loss for the Period 39 5,719,959 8,988,797 TOTAL EQUITY OF PARENT COMPANY 65,094,142 65,227,831 Non-controlling Interest 29 1,995,122 1,859,556 TOTAL EQUITY 67,089,264 67,087,387 TOTAL LIABILITIES 143,826,671 138,212,782 The accompanying notes form an integral part of these consolidated financial statements. (*): These consolidated financial statements have been approved for issue by the Board of Directors on 09.11.2017.

CONSOLIDATED STATEMENTS OF INCOME FOR THE PERIODS ENDED 01.01-30.09.2017 AND 01.01-30.09.2016 (All amounts in Turkish Lira ("TL") unless indicated otherwise.) CONTINUING OPERATIONS Note Unaudited Unaudited Unaudited Unaudited 01.07.- 01.07.- 30.09.2017 30.09.2017 30.09.2016 30.09.2016 Revenue 30 223,702,452 76,782,485 356,069,704 128,698,687 Cost of Sales (-) 30 (214,669,654) (73,577,069) (341,848,178) (123,070,614) Gross Profıt/Loss 9,032,798 3,205,416 14,221,526 5,628,073 GROSS PROFIT/LOSS 9,032,798 3,205,416 14,221,526 5,628,073 General Administrative Expenses (-) 32 (7,284,127) (2,871,406) (7,683,807) (2,227,307) Other Operating Incomes 33 7,239,174 3,432,024 6,482,545 1,695,014 Other Operating Expenses (-) 33 (311,543) (53,434) (1,559,530) (1,145,052) OPERATING PROFIT/LOSS 8,676,302 3,712,600 11,460,734 3,950,728 Income from Investing Activities 34 101,319 18,317 546,096 (1) Expenses from Investing Activities (-) 34 (2,043) -- (180,675) -- OPERATING PROFIT / LOSS BEFORE FINANCING EXPENSES 8,775,578 3,730,917 11,826,155 3,950,727 Financial Expenses (-) 36 (2,375,645) (866,103) (2,836,118) (930,875) Financial Income 36 1,111,029 204,929 1,421,104 411,796 PROFIT/LOSS BEFORE TAX FROM CONTINUING OPERATIONS 7,510,962 3,069,743 10,411,141 3,431,648 Tax expense/ income from continued operations (1,655,437) (858,797) (2,098,150) (689,574) - Tax Expense / Income for the Period 38 (1,661,162) (910,037) (1,896,973) (616,632) - Deferred Tax Expense(-)/Income 38 5,725 51,240 (201,177) (72,942) PROFIT/LOSS FROM CONTINUING OPERATIONS 5,855,525 2,210,946 8,312,991 2,742,074 NET PROFIT/LOSS FOR THE PERIOD 5,855,525 2,210,946 8,312,991 2,742,074 Distribution of Profit / Loss for the Period Non-controlling Interest 29 135,566 108,285 112,204 (134,681) Equity Holders of Parent 39 5,719,959 2,102,661 8,200,787 2,876,755 Earnings Per Share Earnings Per Share From Continuing Operations Diluted Earnings Per Share Diluted Earnings Per Share From Continuing Operations 39 0.185 0.068 0.265 0.093 39 0.185 0.068 0.265 0.093 OTHER COMPREHENSIVE INCOME: Items not to be Reclassified Under Profit or Loss Other Comprehensive Income/ (Losses) not to be Reclassified Under Profit or Loss 27 (15,421) -- (26,002) (5,569) Tax Effect of Other Comprehensive Income / (Loss) not to be Reclassified to Profit or Loss - Deferred Tax Expense(-)/Income 38 3,085 -- 5,200 1,113 OTHER COMPREHENSIVE INCOME (12,336) -- (20,802) (4,456) TOTAL COMPREHENSIVE INCOME 5,843,189 2,210,946 8,292,189 2,737,618 Attributable to: Non-Controlling Interests 135,566 108,285 112,204 (134,681) Equity Holders of Parent 5,707,623 2,102,661 8,179,985 2,872,299 The accompanying notes form an integral part of these consolidated financial statements. (*): These consolidated financial statements have been approved for issue by the Board of Directors on 09.11.2017.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY FOR THE PERIODS 30.09.2017 AND 30.09.2016 (All amounts in Turkish Lira ("TL") unless indicated otherwise.) Note Capital Paid Treasury Shares Share Premiums Discounts Other comprehensive loss not to be reclassified to profit or loss Revaluation and Measurement Gain Loss Other Gain / (Loss) Restricted Reserves Previous Year's Profit / (Loss) Retained earnings Net Profit / Loss for the Period Equity Holders of the Parent Balance at 01 January 2016 -- 11,523,840 6,678,692 (11,829) 2,662,647 3,592,989 7,197,423 62,643,762 1,105,291 63,749,053 Change in non-controlling interests 29 -- -- -- -- -- (6,960) 6,960 -- -- -- -- Transfer to reserves and previous year's profits / loss 29 -- -- -- -- -- 14,201 7,183,222 (7,197,423) -- -- -- Treasury shares 29 -- (1,130,941) -- -- -- -- -- -- (1,130,941) -- (1,130,941) Dividend paid -- -- -- -- -- -- -- -- -- -- -- Revaluation differences -- -- -- -- (20,802) -- -- -- (20,802) -- (20,802) Total comprehensive income / (expenses) 39 -- -- -- -- -- -- -- 8,200,787 8,200,787 112,204 8,312,991 Balance at 30 September 2016 31,000,000 (1,130,941) 11,523,840 6,678,692 (32,631) 2,669,888 10,783,171 8,200,787 69,692,806 1,217,495 70,910,301 Noncontrolling Interests Total Equity Balance at 01 January 2017 - reported 31,000,000 (1,130,941) 11,523,840 6,678,692 (36,731) 3,100,566 5,103,608 8,988,797 65,227,831 1,859,556 67,087,387 Adjustments related to changes in accounting policies -- -- -- -- -- 1,023,026 (1,023,026) -- -- -- -- Balance at 01 January 2017 - revised 31,000,000 (1,130,941) 11,523,840 6,678,692 (36,731) 4,123,592 4,080,582 8,988,797 65,227,831 1,859,556 67,087,387 Change in non-controlling interests 29 (637,000) -- -- -- -- 633,717 3,283 -- -- -- -- Close-down effect of AFM Joint Venture (663,000) -- -- -- -- -- 1,894 -- (661,106) -- (661,106) Transfer to reserves and previous year's profits / loss 29 -- -- -- -- -- 775,328 8,213,469 (8,988,797) -- -- -- Capital advance 1,300,000 -- -- -- (637,000) -- -- 663,000 -- 663,000 Dividend paid 29 -- -- -- -- -- -- (5,843,200) -- (5,843,200) -- (5,843,200) Revaluation differences -- -- -- -- (12,342) -- -- -- (12,342) -- (12,342) Total comprehensive income / (expenses) 39 -- -- -- -- -- -- -- 5,719,959 5,719,959 135,566 5,855,525 Balance at 30 September 2017 31,000,000 (1,130,941) 11,523,840 6,678,692 (49,073) 4,895,637 6,456,028 5,719,959 65,094,142 1,995,122 67,089,264 The accompanying notes form an integral part of these consolidated financial statements. (*): These consolidated financial statements have been approved for issue by the Board of Directors on 09.11.2017.

CONSOLIDATED STATEMENTS OF CASH FLOW AND 30.09.2016 (All amounts in Turkish Lira ("TL") unless indicated otherwise.) Note Unaudited 30.09.2017 Unaudited 30.09.2016 A. CASH FLOWS FROM OPERATING ACTIVITIES 10,375,505 14,515,577 Profit / (loss) for the period 5,855,525 8,312,991 Adjustments Regarding Profit/(Loss) for the Period 5,193,434 4,648,640 Depreciation and amortization 14 3,491,983 2,530,967 Changes in other provisions - Provision for employment termination benefits 27 22,661 24,945 Interest ıncome and expenses - Interest income 58,746 40,797 - Interest expense (35,393) (46,219) Tax income / (expenses) 38 1,655,437 2,098,150 Changes in Working Capital 775,893 2,911,930 (Increase) / decrease in inventories 10 (3,738,442) 5,939,565 Increase/(decrease) in trade receivables - Trade receivables from related parties 6 3,308,501 78,921 - Trade receivables from third parties 7 10,747,349 (21,577,282) Increase/(decrease) in other receivables regarding operations - Other receivables from related parties 9 3,485,749 1,535,521 - Other receivables from third parties 9 (3,505,961) 869,569 (Increase) / decrease in trade payables - Trade payables to related parties 6 8,317 (76,021) - Trade payables to third parties 7 1,134,445 (651,215) Increase/(decrease) in other payables regarding operations - Other payables to related parties 6 714,144 (377,094) - Other payables to third parties 9 (1,323,070) 1,472,685 Increase/(decrease) in payables regarding employee benefits 27 2,399,215 15,293,076 Other increase/(decrease) in working capital (12,454,354) 404,205 Cash flow from provided operating activities 11,824,852 15,873,561 Tax paid/ tax refund 38 (1,449,347) (1,357,984) B. CASH FLOWS FROM INVESTMENT ACTIVITIES (3,387,013) (13,302,529) Cash inflow from sale of tangible and intangible assets 14, 17 (3,408,995) 180,676 Cash outflow from purchase of tangible and intangible assets 14, 17 21,982 (13,483,205) C. CASH FLOWS FROM FINANCING ACTIVITIES (2,596,790) (2,095,390) Cash outflow from purchase of the Company's own shares 29 -- (1,130,941) Changes in financing liabilities 43 3,244,516 (964,449) Dividends paid 29 (5,843,200) -- Other cash inflow / outflow 1,894 -- NET INCREASE DECREASE IN CASH AND CASH EQUIVALENTS BEFORE THE EFFECT OF CURRENCY TRANSLATION RESERVES 4,391,702 (882,342) D. THE EFFECT OF CURRENCY TRANSLATION RESERVES ON CASH AND CASH EQUIVALENTS -- -- NET INCREASE /DECREASE IN CASH AND CASH EQUIVALENTS 4,391,702 (882,342) E. CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 48 3,315,449 2,698,044 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 48 7,707,151 1,815,702 The accompanying notes form an integral part of these consolidated financial statements. (*): These consolidated financial statements have been approved for issue by the Board of Directors on 09.11.2017.

1 NOTE 1 ORGANIZATION AND NATURE OF OPERATIONS OF THE GROUP Akdeniz Güvenlik Hizmetleri A.Ş. ("Akdeniz Güvenlik or "Group") started its commercial life under the trade name of Akdeniz Güvenlik Hizmetleri Ltd. Şti. in 2001 and made a change of legal form on March 20, 2012 and its name was changed as Akdeniz Güvenlik Hizmetleri A.Ş. Akdeniz Güvenlik provides private/exclusive protection and security services, installation and management of security systems and technical support within the scope of Law no.5188 called Private Security Services. Akdeniz Güvenlik renders service in Public Organizations and Institutions, Airports, Public Transportation Services, Residence Site and Home Security, Security for Business Place and Facilities and Stadium Security in both domestic and foreign countries. Akdeniz Güvenlik has Private Security Company License, Service Adequacy Certificate, Certificate of Installation and Monitoring Alarm Center, Brand Registration Certificate, International Quality Standard Certificate, Certificate of Permission to Operating Trap- Skeet Rifle Ranges and Gun and Rifle Shooting Galleries for Legal and Natural Persons and Facility Safety Certificate which are all required to render private security service. Akdeniz Güvenlik shares are traded on the Istanbul Stock Exchange since 2012. The average number of employees of the Group as of 30 September 2017 and 31 December 2016 are given below: 30 September 2017 31 December 2016 Head office personnel 31 33 Security personnel 8,231 12,650 8,262 12,683 The details of the Company's subsidiaries are as follows: Listed in SecuritiesExchange Types of Operations Subsidaries Atak Koruma ve Güvenlik Ltd. Şti.(1) -- Service Akdeniz Teknoloji Güvenlik ve Sistemleri A.Ş.(2) -- Production-Service Nature of Operations Protection and security services Supplying equipment for the defense industry (1) Atak Koruma ve Güvenlik Hizmetleri Ltd. Şti. ("Subsidiary ) operates as security consultancy and renders private security services, give private security trainings and establish training schools within the scope of Law no.5188 called Private Security Services. Atak Koruma had joined to the Group in 2010. (2) Akdeniz Teknoloji Güvenlik ve Savunma Sistemleri Sanayi ve Ticaret A.Ş. ("Subsidiary") was established on 12 October 2011 in Istanbul under the trade name of Akdeniz Savunma Teknolojileri Sanayi A.Ş. The name was changed to Akdeniz Teknoloji Güvenlik ve Savunma Sistemleri Sanayi ve Ticaret A.Ş. with the decision was taken in general assembly meeting dated 11 October 2012.

2 The main operation is to engage in defense industry by purchase, sale, import and export all types of main materials, devices and spare parts for defense industry under a license of a company or as project-based providing that permission shall be obtained from related authorities and reserving the Sub clause 2 of Law no.3763 and Legislation/Regulation with the decision no. 199/12028 about explosives and munitions list published in the official gazette dated February 01, 1995 and no.22188 of the Law no.1762 about the Control of Facilities rendering service in War, Rifle and Munitions Industry in Turkey. Akdeniz Teknoloji Güvenlik ve Savunma Sistemleri Sanayi ve Ticaret A.Ş opened Ankara branch in the Ankara Trade Registry with registry numbered 366767 and dated January 23, 2014 in order to develop company activities. Akdeniz Teknoloji has joined the Group in August 08, 2012. The details of the Group's joint operations are given below. Joint operations have been established as a profit partnership and execution of the operation. Traded in Exchange Types of Operations Nature of Operations Joint Operations Akdeniz - Erpa Özel Güvenlik Eğitim Hizmetleri Ltd. Şti. (1) -- Service Protection and security services Pusula - Akdeniz Özel Güvenlik Hizmetleri Ltd. Şti.(2) -- Service Protection and security services (1) Akdeniz-Erpa Joint Agreement ("Joint Agreement ) started its activities in 2009 and is a company which renders services as project-based, security consultancy and renders private security services give private security trainings and establish training schools within the scope of Law no.5188 called Private Security Services. The Joint Agreement is renewed as covering on 31.03.2017 and prolonged as covering the period between 01.01.2013-31.12.2016. (2) Pusula - Akdeniz Güvenlik Joint Agreement Pusula Özel Güvenlik Hizmetleri Ltd. Şti- Akdeniz Güvenlik Hizmetleri Anonim Şirketi (Joint Agreement) started its activities at September, 29 2014 in order to perform and complete the work which pledged for protecting and security service with the subject of Istanbul Water and Sewerage Administration. The Joint Agreement is valid at between 01, October 2014 and 01,October 2016. The area of activity is to renders services as project-based, security consultancy and renders private security services give private security trainings and establish training schools within the scope of Law no.5188 called Private Security Services.

3 NOTE 2 - PRINCIPLES OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS 2.1 Principles for Presentation Declaration of conformity to IAS Financial statements attached are prepaid in accordance with the 13 June 2013 and number 28786 declaration of Capital Markets Board ( CMB ) with the 5th item of the series number II, 14.1 Rules of Declaration related with the financial reporting in CMB ( Declaration ) and the Turkish Accounting Standards/Turkish Financial Reporting Standards and the attachments and comments related with these standards (TAS/TFRS) are based on. In addition financial statements and disclosures are presented in accordance with the format described by CMB at 07 June 2013. Financial statements are prepared in convenience with historical cost principles except revaluation of buildings. To determine the historical cost is generally based on the fair value of the consideration paid for the assets. Approval of Financial Statements The related consolidated financial statements were approved by the Board of Directors and authorized for issue on 09 November 2017. The General Assembly of the Group has the authority to modify the financial statements. Currency Financial statements of the Group are represented with currency that is valid within the basic economic framework in which it engages in activity (functional currency). Financial situation of the company and result of the activity are mentioned in TL which is valid currency of the Group that is also used in the presentation of financial statements. Comparative Information and Adjustment Financial Statements of Previous Period The consolidated financial statements of the Group have been prepared comparatively with the prior period in order to give information about financial position and performance. If the presentation or classification of the consolidated financial statements is changed, in order to maintain consistency, financial statements of the prior periods are also reclassified in line with the related changes. In the consolidated audit report as of 31.12.2016, the Group s Restricted Reserves was reported as TL 3,100,566, which is now adjusted to TL 4,123,592. This adjustment is related to statutory allocation of legal reserves relating to Buy-Back Shares according as per article 20 published in the official gazete dated 03 January 2014.

4 Basis of Consolidation The details of the Group s subsidiaries at 30 September 2017 and 31 December 2016 are as follows: Share Ratio (%) Subsidiaries Located Currency 30.09.2017 31.12.2016 Atak Koruma ve Güvenlik Ltd. Şti. İstanbul TL 100.00 100.00 Akdeniz Teknoloji Güvenlik ve Sistemleri A.Ş. İstanbul TL 51.00 51.00 The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries. Control is achieved when the Company: Has power over the investee; Is exposed, or has rights, to variable returns from its involvement with the investee, and Has the ability to use its power to affect its returns. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company s voting rights in an investee are sufficient to give it power, including: The size of the Company s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; Potential voting rights held by the Company, other vote holders or other parties; Rights arising from other contractual arrangements; and any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders meetings. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group s accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in scope of consolidation.

5 Changes in shares in the subsidiaries Changes in a parent's ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary are equity transactions When the proportion of the equity held by non-controlling interests changes, the carrying amounts of the controlling and non-controlling interests area adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the parent. If control over a subsidiary is lost, profit or loss after sale, i) the sum of the fair value of consideration received and the fair value of remaining interest and ii) assets (including goodwill), liabilities and the previous carrying amount of non-controlling interest of the subsidiary, is recognized in net income. The amounts previously recognized in other comprehensive income and accumulated in equity are booked according to accounting method up on the assumption that the related assets are sold (i.e :directly booked as profit or loss, otherwise directly booked under retained earnings). After the sales of the subsidiary, the fair value of the remaining investment is recognized as its fair value calculated by using TAS 39 Financial Instruments: Recognition and measurement or if applicable, it is recognized as its cost value. Joint Venture A joint venture is a joint arrangement whereby the parties that have joint control have rights to the assets and liabilities. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions on financial and operating or business policies require the unanimous consent of the parties sharing control. The details of the joint ventures as of 30 September 2017 and 31 December 2016 are as follows: Joint Agreements Location Currency 30 September 2017 Share ratio (%) 31 December 2016 Akdeniz Erpa Müşterek Anlaşması İstanbul TL 51.00 51.00 Atak - AFM Müşterek Anlaşması İstanbul TL -- 50.00 Akdeniz - Pusula Müşterek Anlaşması İstanbul TL 47.00 47.00 A joint operator recognizes in relation to its interest in a joint operation; Its assets, including its share of any assets held jointly; Its liabilities, including its share of any liabilities incurred jointly; Its revenue from the sale of its share of the output of the joint operation; Its share of the revenue from the sale of the output by the joint operation; and Its expenses, including its share of any expenses incurred jointly. A joint operator accounts for the assets, liabilities, revenues and expenses relating to its involvement in a joint operation in accordance with the relevant TAS. 2.2 Changes in the Accounting Policies Significant changes in accounting policies are applied retrospectively and previous period financial statements are readjusted. Group has not changed accounting policies because of the changes in current period on standard.

6 2.3 Changes in Accounting Policies Estimates and Errors If the application of changes to the accounting estimates affects the financial results of a specific year, the accounting estimate change is applied in that specific year, if they affect the financial results of current and following years; the accounting policy estimate is applied prospectively in the year in which such change is made. The Group did not have any major changes in the accounting estimates during the current year. In the consolidated financial statements as of 30.06.2017, the economic life of Other Intangible Assets (at the amount of TL 10,244,920) is restated as 10 years by the decision of Board of Directors of the Group (31.12.2016: 5 years). If this change had been done as of 31.12.2016, the depreciation charge for the period would have been less by TL42,499. 2.4 Amendments in Turkey Financial Reporting Standards a) The new standards, amendments to published standards and interpretations effective applicable as of 30 September 2017: - Amendments to IAS 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 IASB s Disclosure Initiative, which continues to explore how financial statement disclosure can be improved. - Amendments IAS 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. - IFRS 1, First-time adoption of IFRS, regarding the deletion of short-term exemptions for first-time adopters regarding IFRS 7, IAS 19, and IFRS 10 effective 1 January 2018. - IFRS 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. - IAS 28, Investments in associates and joint ventures regarding measuring an associate or joint venture at fair value effective 1 January 2018. b) The new standards, amendments and interpretations introduced to the prior Financial Statements as of 30 September 2017, however will be effective after 1 October 2017: - IFRS 9 Financial instruments, effective from annual periods beginning on or after 1 January 2018. 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. - IFRS 15 Revenue from contracts with customers, effective from annual periods beginning on or after 1 January 2018. IFRS 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. - IFRS 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 IASB has also included additional practical expedients related to transition to the new revenue standard.

7 - IFRS 16, Leases, effective from annual periods beginning on or after 1 January 2019 with earlier application permitted if IFRS 15, Revenue from Contracts with Customers, is also applied. This standard replaces the current guidance in IAS 17 and is a far-reaching change in accounting by lessees in particular. Under IAS 17, lessees were required to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance sheet). IFRS 16 now requires lessees to recognise a lease liability reflecting future lease payments and a rightof- use asset for virtually all lease contracts. The IASB 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 IASB 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 IFRS 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 IFRS 4, Insurance contracts regarding the implementation of IFRS 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 IFRS 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 IFRS 9 will continue to apply the existing financial instruments standard IAS 39. - Amendment to to IAS 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. - Amendments to IFRS 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 IFRS 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. - IFRS 17, Insurance contracts, effective from annual periods beginning on or after 1 January 2021. This standard replaces IFRS 4, which currently permits a wide variety of practices in accounting for insurance contracts. IFRS 17 will fundamentally change the accounting by all entities that issue insurance contracts and investment contracts with discretionary participation features. - IFRIC 22, Foreign currency transactions and advance consideration, effective from annual periods beginning on or after 1 January 2018. This IFRIC 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.

8 - IFRIC 23, Uncertainty over income tax treatments, effective from annual periods beginning on or after 1 January 2019. This IFRIC clarifies how the recognition and measurement requirements of IAS 12 Income taxes, are applied where there is uncertainty over income tax treatments. The IFRS IC had clarified previously that IAS 12, not IAS 37 Provisions, contingent liabilities and contingent assets, applies to accounting for uncertain income tax treatments. IFRIC 23 explains how to recognise and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment. An uncertain tax treatment is any tax treatment applied by an entity where there is uncertainty over whether that treatment will be accepted by the tax authority. For example, a decision to claim a deduction for a specific expense or not to include a specific item of income in a tax return is an uncertain tax treatment if its acceptability is uncertain under tax law. IFRIC 23 applies to all aspects of income tax accounting where there is an uncertainty regarding the treatment of an item, including taxable profit or loss, the tax bases of assets and liabilities, tax losses and credits and tax rates. The effects of these standard on the financial position and performance of the Group will be evaluated by the Company management. 2.5 Summary of Significant Accounting Policies Related Parties A related party is a person or entity that is related to the entity that is preparing its financial statements (a) A person or a close member of that person's family is related to a reporting entity if that person: i. Has control or joint control over the reporting entity; ii. Has significant influence over the reporting entity; or iii. 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) (iv) (v) (vi) (vii) 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. 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 defined 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). 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 related parties, regardless of whether a price is charged. Revenue Revenue, by considering commercial discount, and quantify discount applied by the company, is measured with the fair value of sale price. If, price is cash or cash equivalents, amount of revenue becomes amount of cash or cash equivalent that has been taken or shall be taken. However, in case of postpone of entering cash and cash equivalent; fair value of sales price is determined with the way of imputed rate of interest and discount of all collection. Rate stated in the agreement as imputed rate of interest and/or bank rate which is effective similar financial means has been taken. Difference between nominal amount of sale price and the fair value have been recorded as interest earned.

(a) Sale of Goods 9 Revenue in sale of goods, is deemed to have occurred in the time of important risk related to proprietorship and returns transferred to buyer, not be concerned in a way of management, ownership of goods subject to sale of the buyer and not be concerned with necessary control, determination of reliable expenses incurred in connection with amount of revenue and sale, economic benefits related to sales may be obtained by the seller, and providing a combination of possible conditions. Net sales consist of invoiced sales price after deducting discounts, commissions. (b) Sale of Services In case of reliably estimating of a transaction in related to the rendering of services, revenue in related with transaction has been reflected to the financial statement by considering level of completion as of balance sheet date. In case of not reliably estimating of a transaction in related to the rendering of services, revenue has only been reflected to financial statements as much as amount of recoverable. (c) Royalty Royalty income is booked on accrual bases according to substance of the agreement (if the future economic benefit is exist and the income can be measured reliably.) The royalty that determined by time rates, is recognized straight line throughout agreement term. Production, sales and other measurements are booked according to the related agreement s points. (d) Dividend and Interest Income Dividend income which is resulted from investments on stocks, are booked when the shareholders has right to get dividend. (If the future economic benefit is exist and the income can be measured reliably.) Interest income is recognised while the Group has future economic benefit and the income can be measured reliably. Interest income is accrued in the related period with the discounted amount of estimated cash inflows. (e) Rent Income The rent income gained from intangibles, is recognized straight line throughout agreement term. Inventories Inventories are stated at the lower of cost or net realizable value. Costs, including an appropriate portion of fixed and variable overhead expenses, are assigned to inventories according to their inventory classes and valuation method of inventories is weighted average out method. Net realizable value represents the estimated selling price which occurred in the ordinary course of business, less all estimated costs of completion and costs necessary to make a sale. When the net realizable value of inventory is less than cost, if the inventory is written down to the net realizable value and the expense is included in statement of comprehensive income in the year the writedown or loss occurred. When the circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an increase in net realizable value because of the changes in economic circumstances, the amount of the write-down is reversed. The reversal amount is limited to the amount of the initial write-down.

Tangible Assets 10 (a) Revaluation Method In the provision of goods or services or for administrative purposes held in use land and buildings revalued amounts is expressed. In subsequent periods, the fair value of the revalued amount at the date of revaluation, determined and subtracted formed is determined by accumulated depreciation and accumulated impairment. Revaluations at the balance sheet date the carrying value will not show a significant difference from the fair value determined at regular intervals. The revaluation of land and buildings in question resulting from the increase in shareholders ' equity in the revaluation reserve is recorded. Increase in value as a result of revaluation, plant and equipment asset impairment profit or loss previously shown in the table, in case of impairment are recognized in profit or loss in proportion to the first question. A decrease in the revaluation of land and buildings in question the previous revaluation of the asset book value of the balance in the revaluation reserve are recognized in profit or loss exceeds for whenever. For administrative purposes, or undefined for any other purposes treated as a reduction of construction assets in the course of the impairment loss, if any, are shown. Legal fees are included in the cost. For assets that need considerable time to be ready for use or sale, are capitalized borrowing costs. Construction was completed and when they are ready to use of these assets property, plant and equipment are classified into an item. For other fixed assets, such as depreciation method is used, are depreciated when they are ready to use. Depreciation of revalued buildings are stated in profit and loss statements. When the real estate is sold or the service is being pulled from when the balance remaining in the revaluation reserve is transferred directly to retained earnings. The transfer from the revaluation reserve to retained earnings unless the asset off the balance sheet will not be made. Except for land and construction in progress, intangible assets gross carrying amount based on cost or their estimated useful lives on a straight-line depreciated using the method. Estimated useful life, residual value and depreciation method are reviewed at each year, resulting in estimates for the possible effects of changes in estimates are accounted for on a prospective basis and if there is a change. Assets acquired under finance lease is depreciated according to their expected useful life. If the ownership at the end of the lease period is not certain, the lower of estimated useful lives and lease term is used for depreciation. The asset is disposed of or when no future economic benefits are expected from use or sale is not to be obtained in the event the statement of financial position (balance sheet) is off. Disposal of tangible assets gain or loss resulting from any asset or service to be taken from the proceeds of the sale and the carrying value of the asset is determined as the difference between profit or loss and recognized in the statement. (b) Cost Method Property, plant and equipment are carried at cost less accumulated depreciation and any accumulated impairment losses. Land is not depreciated and carried at cost less accumulated impairment. Properties at construction stage are carried at cost, less any recognized impairment loss. Directly attributable costs are included in the cost of properties. For assets that need considerable time to be ready for sale or usage, borrowing costs are capitalized in accordance with the Group s accounting policy. As it is for the other fixed assets, depreciation of these assets commences when the assets are ready for their intended use.

11 Except for land and construction in progress, intangible assets gross carrying amount based on cost or their estimated useful lives on a straight-line depreciated using the method. Estimated useful life, residual value and depreciation method are reviewed at each year, resulting in estimates for the possible effects of changes in estimates are accounted for on a prospective basis and if there is a change. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives. An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss. Intangible Assets (a) Intangible assets acquired separately Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Those who have purchased an unlimited life of intangible assets at cost, less accumulated impairment losses after deduction of the amount shown. (b) Computer Software Acquired trademarks and licenses are shown at historical cost. Trademarks and licenses have a finite useful life and are carried at cost less accumulated amortization. Amortization is calculated using the straight-line method to allocate the cost of trademarks and licenses over their estimated useful lives. Costs associated with developing or maintaining computer software programs are recognized as an expense as incurred. Costs that are directly associated with the development of identifiable and unique software products controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognized as intangible assets. Software development costs include employee costs and an appropriate portion of relevant overheads. Computer software development costs recognized as assets are amortized over their estimated useful lives. (c) Customer Relations on Agreements Contractual customer relationships acquired in a business combination, accounted for by the fair value at the date of purchase. Contractual customer relationships less accumulated amortization and cost by deducting the share of a specific economic life has accounted. Redemption share, over the estimated life of the customer relationship, the straight-line method is calculated using. Impairments of Intangibles except goodwill and tangibles At the end of each reporting period, The Group is required to assess whether there is any indication that an asset may be impaired. Recoverable amount should be determined for the individual asset, if possible. If it is not possible to determine the recoverable amount for the individual asset, then determine recoverable amount for the asset's cash-generating unit. In determining a reasonable and consistent allocation basis, the Group's assets are allocated to cash-generating units is distributed. This is not possible in cases where a reasonable and consistent basis of allocation of the assets of the group for the determination of the smallest cash-generating units is distributed.