Contents - INDEX Bilgisayar ENG 2015 FINAL_.pdf · contents contents Company 6-21 22-33 34-37 ......

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Company 6-21

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1.1 Summary Info1.2 Capital and Shareholding Structure1.3 Board of Directors, Auditing Board and Auditing Committee1.4 Management Team1.5 Historical Background

Message from the Chairman

Financial Statements and Notes

Independent Audit Report

Operation

Sector of Operation

2.1 Turkish IT Sector2.2 Sub-segments of the IT Sector2.3 Growth of the IT Sector

Subsidiaries

3.1 Datagate Bilgisayar Malzemeleri Tic. A.Ş3.2 Neteks İletişim Ürünleri Dağıtım A.Ş.3.3 İnfin Bilgisayar Ticaret A.Ş.3.4 Teklos Teknoloji Lojistik A.Ş.

Contents

2015 Annual Report

2015 Annual Report

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İstanbul, 16.05.2016

Dear Stakeholders;

Welcome to the General Assembly,

Last year, important advancements both in the world and in our country has taken place. Although being a year in

which two general elections took place, our company Index Computer, located within the Index Group, has made

the most profit of our 27-year history. Index Computer’s net profit in 2015 increased by 78% compared to the pre-

vious year, becoming 44.9 million YTL. 2023 technology lane in Europe aims to be the first in a group of five large

buildings, we renew our IT infrastructure investments in group companies, from start to finish. In this context, we

also completed our transition to SAP. This and other investments we have prepared together with our future-proof

our infrastructure.

The construction of the Seba Office Boulevard Project, which we have implemented with the Seba Building part-

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2015 Annual Report

nership, is progressing rapidly. More than half from the total m2 has been sold. The conclusion of this project will

produce a result in which all our investors will be kept extremely happy.

We have many important plans for the subsequent periods, especially in IOT technology world that is the object

of the internet or ‘connected devices’. In addition, we aim to reach high growth in the mobile space with new in-

vestments and expansion of value-added solutions for this year, wearable technologies, cloud and our activities.

Our devotion to the Index Group motto “profitable, efficient, and growing”, which has been our guide for many

years, will continue. With our policy to have a growing profitable and efficient structure, we intend to continue our

leadership in the coming years. Our investments with changing our digital infrastructure, we have established a

very solid foundation. Therefore, the profits of our investments from 2015 will be more fruitful this year.

Due to our successful investments in 2015 and the good performance we have shown, we enter 2016 with greater

hope in effect. I sincerely believe that this will be a year information technology in the segments will show growth.

In short, I would like to welcome you to some of the figures from the financial statements for the year 2015:

As Index Computer;

• Accordingtotheresultsofend-year2015,theconsolidatednetsaleshaveincreasedby53%becoming

3 billion and 385 million YTL from 206 million YTL.

• Grossprofitof103millionYTLin2014,hasincreasedto153millionYTLwitharateof49%.

• Netsalesratioofoperatingexpensesof2,20%in2014hasdeclinedto1.81%in2015.

• Operatingprofitrosefrom58.5millionYTLto90.9millionYTLwitharateof55%.

• Theconsolidatednetprofitof25.2millionYTLin2014,roseto44.9millionYTLby78%.

• The2016goalwassetto4billionwith18%growth.

Index Computer was ranked 59th among Turkey’s largest 500 companies in Fortune 500, a magazine prepared by

Fortune Turkey which evaluates the companies operating in our country every year under different categories such

as profitability, growth rate, size and worth, in July 2015 according to 2014 results.

I would like to thank all our employees who contributed to our success in our financial results and our business

partners and suppliers and our valuable stakeholders.

Erol Bilecik

Chairman of the Board

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01 THE COMPANY

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1.1 Highlights

• İndeksBilgisayarSistemleriMühendislikSanayiveTicaretA.Ş.,whichwasfoundedin1989tooperateinthecomputerfield,hasbecameacompanydistributingabout200worldwidebran-dsandcooperatingwithover7.500businesspartners,holdingtheleadershippositionofthesectorforalongtime.ItispubliclytradingatIstanbulStockExchangesince2004.

• İndeksactingasaholdingcompanyhas6affiliatesandsubsidiaries,eachofwhichoperatesindifferentfieldsoftechnologyproducts.Thefollowingcompaniesareincludedintheconsoli-datedfinancialstatementsofİndeks.Theproductgroupsofsuchcompaniesareshowninthefollowingtable:

Product Groups by Company

INDEKS DATAGATE ARTIM TEKLOS Datagate International FZE

Indeks International FZE

PC Smart Phone Computer Logistic and Transportation

PC PC

Notebooks Sim Card Software Notebooks NotebooksPrinters GSM Line Computer Spare

PartsServers Servers

Servers TabletPeripherals AccessoriesSoftware Physical TL Credit

(For prepaid phones)

Major Distributorships By Main Product Groups

PC OEMPrinters &

PeripheralsSoftware Smart Devices

Storage & Medium Size

SystemsAcer Airties APC Adobe Apple HPApple AOC Canon IBM Samsung IBMAsus Asus Epson Microsoft HTC Seagate Dell Intel Fujitsu Oracle LG WDFujitsu Kingstone HP Symantec SonyHP LG IBM Tivoli HuwaiIBM Seagate Oki CasperLenovo WD LenovoToshiba Asus

Vestel

Majordistributorshipsundertakenbymainproductgroupsareshownbelow:

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c) Changes in the Share Price throughout the Year:

İNDEKSinISE:HavingheldanIPOinJune2004,ourcompany’ssharesaretradedinIstanbulStockExchange(ISE)nationalmarketunderthecodeof“INDES”.TheISE-100indexopenedat85.448in2015,closedat71.727on31.12.2015withthedecreaseof19%.

TheTRL/USDexchangerateopenedat2,3269atthebeginningoftheyear,hadsomefluctuationsduringtheyearandclosedtheyearat2,9076USDdevaluedby25%withintheyear.

Theyear-endvalueof1sharewasTRL6,29, whereasitsvaluewas 5,26atthebeginningoftheyear.Accordingtotheclosingvalueonthelasttransactiondayoftheyear,thevalueofourCom-panyisTRL 352.240.000.

d) Awards achieved & Distributorships Undertaken in 2015

Company Date Description

Cisco Award-Neteks 29.05.2015Our subsidiary Neteks achieved Cisco Award for its superior performance in distribution in 2015.

Apple watch Disty Contract 23.07.2015Our company signed distribution agreement with Apple to distirbute Apple Watch products in Turkey.

Awards-HP 23.10.2015 Our company achieved award of the best distribütör by largest volume.

f) Data on Financial Structure:

(*) The figures in quarterly financial accounts have been taken into concideration in the calculation of averages.

LIQUIDITY RATIOS 31.12.2015 31.12.2014Current Ratio 1,13 1,14Liquidity Ratio 0,95 0,94

OPERATING RATIOS (*) 31.12.2015 31.12.2014Receivables Turnover 62 72Payables Turnover 67 80Inventory Turnover 21 24

PROFATIBILITY RATIOS 31.12.2015 31.12.2014Gross Profit Margin 4,5% 4,7%Operating Profit Margin 2,7% 2,7%Net Profit Margin 1,3% 1,1%Shareholder’s Equity Profatibility 2,0% 1,7%

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1.2 Capital and Shareholding Structure

ShareholdingstructureofourCompanyisasfollows:

TheupperlimitofauthorizedcapitalofourCompanywasdeterminedasTRL75.000.000anditssharecapital issuedasof31.12.2009 isTRL56.000.000.Covering theallmaximumaut-horizedcapital,i.e.TRL75.000.000,fromtheprofitof2006,anapplicationismadetoCapitalMarketsBoard(CBM)ofTurkeyforissuingshareswithnominalvalueofTRL1.000.000forthecapital increasefromTRL55.000.000toTRL56.000.000andtheapplicationwasapprovedwiththeresolutionofCBMwithno.25/699of28.06.2007.Thecapitalincreasewasregisteredon10.07.2007andannouncedontheTurkishTradeRegisterGazettewithno.6852of16July2007.

Ourcompany’scapitalofTRL56.000.000iscomposedofGroupAregisteredsharesinvalueofTRL318,18andGroupBbearersharesTRL55.999.681,82.

GroupAshareholdersareauthorisedtodeterminehalfplusoneoftheboardmembersandtoreceive5%oftheremainingprofitafterthefirstissuereservefundsandfirstdividend.

FINANCIAL STRUCTURE RATIOS 31.12.2015 31.12.2014Shareholder’s Equity /Total Liabilities 15% 16%Short Term Liabilities / Total Liabilities 80% 80%Long Term Liabilities / Total Liabilities 5% 4%Bank Loans / Total Liabilities 27% 15%

Shareholder’s Name Country Shares %Number of

SharesAmount of

SharesNevres Erol Bilecik T.C. 36,26% 20.306.266 20.306.266Alfanor 13131 AS Norveç 25,70% 14.391.387 14.391.387Public Offer T.C. 38,04% 21.302.347 21.302.347TOTAL 56.000.000 56.000.000

1.3 Board of Directors, Auditing Board, Auditing Committee and Corporate Governance Committee

Board Members

IntheGeneralAssemblyheldon22.05.2012,MembersoftheBoardofDirectorswereelec-tedfordurationofthreeyears,andtheirdutiesandpowersweredeterminedpursuanttotheCompany’sArticlesofAssociationandtherelevantprovisionsoftheTurkishCommercialCode.ResolutionsoftheGeneralAssemblywerepublishedintheTurkishTradeRegisterGazettewithno.8840of12June2015.

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Members of the Auditing Committee

Corporate Governance Committee

Early Risk Detection Committee

Name & Surname Title Term of OfficeNevres Erol Bilecik Chairman 3 YearsSalih Baş Vice Chairman 3 YearsAtilla Kayalıoğlu Board Member 3 YearsAyşe İnci Bilecik Board Member 3 YearsHalil Duman Board Member 3 YearsTomasz Janusz Czechowicz Board Member 3 YearsUlrich Kottmann Board Member 3 YearsBerrin Önder Independent Board Member 3 YearsSedat Sami Ömeroğlu Independent Board Member 3 Years

Name & Surname TitleBerrin Önder Chairman of the CommitteeSedat Sami Ömeroğlu Committee Member

Name & Surname TitleBerrin Önder Chairman of the CommitteeUlrich Kottmann Committee MemberNaim Saraç Committee MemberTuba Bilecik Committee Member

Name & Surname Title

Berrin ÖnderChairman of the Committee

(Independent Member)Salih Baş MemberUlrich Kottmann Member

1.5 Board of Directors

TheBoardofDirectorsofthecompanyconsistsoffivemembers.CurriculumVitaeoftheBoardMembersaregivenbelow.

Nevres Erol Bilecik,Chairman of the Board of Directors:ErolBilecikwasbornin1962andgradu-atedfromIstanbulTechnicalUniversity,DepartmentofComputerEngineering.ErolBilecik,whoestablishedİndeksA.Ş.in1989,actsasthechairmanofthefollowingsubsidiariesofIndex,besi-desourcompany:DespecBilgisayarPazarlamaveTicaretA.Ş.,DatagateBilgisayarMalzemeleriTicaretA.Ş.,NeteksİletişimÜrünleriDağıtımA.Ş.,NeotechTeknolojikÜrünlerDağıtımA.Ş.,DesbilTeknolojikÜrünlerTicaretAŞ.,HomendElektrikliCihazlarSan.VeTicaretAŞ.,İnfinBilgisayarTica-retA.Ş.andTeklosTeknolojiLojistikHizmetleriAŞ.Moreover,betweentheyears2002and2005,

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hepresidedTUBISAD(Turkish Informatics IndustryAssociation)established in1974, theoldestcivil societyorganisation in the ICTsector,membersofwhicharecompanies realising95%ofthetotaltransactionvolumeoftheTurkishICTsector.ErolBilecikismarriedwithtwochildrenandspeaksEnglish.

Salih Baş,Deputy Chairman: SalihBaşwasbornin1965,andgraduatedfromAnadoluUniver-sity,DepartmentofBusinessAdministration.HehasbeenworkingforIndexGroupsince1990.In2003,whilehewasactingastheAssistantGeneralManager-Finance&AccountingforİndeksBilgisayarSistemleriMühendislikSanayiveTicaretA.Ş.,hewasappointedastheGeneralMana-gerandViceChairmanoftheBoardofDirectorsofDatagateBilgisayarMalzemeleriTicaretA.Ş..HecurrenactsastheDeputyChairmanforthecompanies,İndeksBilgisayarSistemleriMühen-dislikSanayiveTicaretAŞ.,TeklosTeknolojiLojistikHizmetleriAŞ.,HomendElektrikliCihazlarSan.VeTicaretAŞ.,İnfinBilgisayarTicaretA.Ş.andDesbilTeknolojikÜrünlerTicaretA.Ş.,andasoneofthemembersoftheBoardofDirectorsforthecompaniesDespecBilgisayarPazarlamaveTicaretAŞ.,NeotechTeknolojikÜrünlerDağıtımA.Ş.andNeteksİletişimÜrünleriDağıtımA.Ş.SalihBaşismarriedwithonechildandspeaksEnglish.

Atilla Kayalıoğlu, General Manager, Board Member:AtillaKayalıoğluwasbornin1952,andgradu-atedfromBoğaziçiUniversity,DepartmentofMechanicalEngineeringin1974;followingthathereceivedamastersdegree fromSyracuseUniversity,Departmentof IndustrialEngineering.HecarriedoutseveraldutiesinIBMTurkbetweentheyears1980-1999;andin1999,whenhewastheGlobalServicesManagerheleftIBMTurkandjoinedIndex.KayalıoğluactsasaBoardMem-berandGeneralManagerofİndeksBilgisayarSistemleriMühendislikSanayiveTicaretA.Ş.;healsoactsasaBoardMemberofthecompaniesofNeteksİletişimÜrünleriDağıtımA.Ş.,DatagateBilgisayarMalzemeleriTicaretAŞ.,İnfinBilgisayarTicaretA.Ş.andTeklosTeknolojiLojistikHizmet-leriAŞ..AtillaKayalıoğluismarriedwithtwochildrenandspeaksEnglish.

Ayşe İnci Bilecik,Board Member,ComputerEngineer:Ayşe İnciBilecikwasborn in1964andgraduatedfromIstanbulTechnicalUniversity,DepartmentofComputerEngineering.ShealsoactsasaBoardMemberofDesbilTeknolojikÜrünlerTicaretA.Ş.,beingasubsidiaryofIndex.BeingoneofthefoundingpartnersofİndeksBilgisayarfoundedin1989,AyşeİnciBilecikusedtoworkasanengineerspecializedinsoftwareintheICTsectorforlongyears.AyşeİnciBilecikismarriedwithtwochildrenandspeaksEnglish.

Halil Duman, Board Member:HalilDumanwasbornin1965,andgraduatedfromMarmaraUni-versity,DepartmentofBusinessAdministration.Hecarriedoutseveralduties inYücelen İnşaatA.Ş.betweentheyears1987and2000;andin2000,whenhewastheManagerofFinance,heleftYücelenİnşaatandjoinedIndexasFinanceDirector.DumanactsasamemberoftheBoardofDirectorsofİndeksBilgisayarSistemleriMühendislikSanayiveTicaretA.Ş.,andalsoactsasaBoardMemberofDatagateBilgisayarMalzemeleriTicaretAŞ.,NeteksİletişimÜrünleriDağıtımAŞ.,TeklosTeknolojiLojistikHizmetleriAŞ.,NeotechTeknolojikÜrünlerDağıtımAŞ.,DespecBilgisayarPazarlamaveTicaretAŞ.,DesbilTeknolojikÜrünlerTicaretA.Ş.HomendElektrikliCihazlarSan.veTicaretAŞ.,İnfinBilgisayarTicaretA.Ş.veAlkımBilgisayarAŞ,andactsasAssistantGeneralManager-FinanceofİndeksBilgisayarSistemleriMühendislikSanayiveTicaretA.Ş.HalilDumanismarriedwithtwochildren.

Tomasz Janusz Gzechowicz,Board Member:AgraduateofWroclawUniversityofTechnology,WarsawSchoolofEconomicsandExecutiveMBAat theUniversityofMinnesota. Intheyears

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1990-1998Co-founder andCEOof JTTComputerSA,whichhebuild into a leadingCentralEuropeanPC-assemblyanddistributionoperationswithUSD100M+revenue.FromMay1998FounderandManagingPartnerofMCIGroup.AfteracquisitionoffundingthrowIPOontheWar-sawStockExchangein2001thevalueofMCI’sinvestmentportfoliogrewfromUSD8MtomorethanUSD350M.MCIGroupspecializesinalternativeassetsmanagementwithafocusonprivateequityinvestmentsacrossCentralEasternEurope,DACHcountries,CIScountriesandTurkeyinfollowingsectors:TMT,e-commerce,fintech,bigdata, IT/consumerelectronics, financialServi-ces.TomaszCzechowiczisalaureateofnumerousprestigiousawards:TheTOPManageroftheYear2007prizeforMr.Tomasz.

CzechowiczisunexceptionableproofthathissuccessfullyaccomplishedstrategywithintheMCIGroupmakeshimoneofthemosteffectivemanagersofinnovativeeconomyintheregionofNewEurope.Alreadyin2001,hisexceptionalfeelingforthemarket,pofessionalism,visionandbusi-nessefficacycausedtheWorldEconomicForumtoawardMr.TomaszCzechowiczwiththetitleofGlobalLeaderforTomorrow.In2000chosenoneoftheTOP-10mostinfluentialpeopleintheEuropeanInternetbyEuropeanEditionofBusinessWeek.

Ulrich Kottmann,Board Member:UlrichKottmann-graduatedinacombinedstudyin“Enginee-ringandBusinessAdministration”fromtheUniversityofAppliedSciencesEsslingen,Germanyin1983.Hestartedhisprofessionalcareer1983–1986intheFinancedepartmentofComputervi-sionProduktionGmbH.From1986to1996atCompaqComputerEMEAHQinMunichinvariousmanagementfunctionsinFinance,ControllingandStrategicPlanningforageographicregionwithrevenuesofapprox.500MioUS$.ManagementmemberoftheBusinessDevelopmentGroupofCompaqandactivelyinvolvedinpioneeringvariousmarketentries,theroll-outofover15subsidi-ariesinEurope,AfricaandtheMiddleEastandmanagingfastandhighgrowthbusinessexpan-sion.Fromtheearly90’sManagementmemberoftheGrouptodevelopthebusinessinCentralEasternEurope.From1996to2000freelanceconsultantmainlyworkingonBusinessDevelop-mentandStrategyprojectsforvariousinternationalITvendorsinCentralEasternEurope.In2000foundationofProcess4ES.A(togetherwithMCIManagementS.A.).inWarsawandmanagingthecompanyuntilMarch2008.In2005thecompanywassuccessfullysoldtoupdatesoftwareAG(LocatedinViennaandlistedonFrankfurtStockExchange).ActivitiesincludedvarioushighprofilestrategyprojectswithintheITindustry,projectmanagementforover100countriesduringthePostMergerIntegrationPhaseoftwoNASDAQlistedGlobalITcompanies,developmentofconsultingservicesrelatedtobusinessprocessmanagementandimplementationofenterpriseclassCRMsoftware.SinceMarch2009amemberandsinceJan2010ChairmanoftheSupervisoryBoardofABCDataS.A.(listedonWarsawStockExchange)aleadingDistributorofITandConsumerElectronicsinPolandandCentralEasternEurope.

Berrin Önder, Independent Board Member: ShewasborninKayseri,in1967.AftergraduationfromKayseriCollage,shegraduatedfromMiddleEastTechnicalUniversity,IndustrialEngineeringDepartment.ShehasdoneherMBAinStateUniversityofWestGeorgia.ShestartedherProfessi-onalcareerinTürkpetrolHoldingA.Ş..Later,sheworkedforGarantiInvestmentBankinCorporateFinanceDepartment,ascountrymanagerforCaspianInvestmentBank,asGeneralManagerforRaymondJamesYatırımMnekulDeğerlerA.Ş.andAkYatırımMenkulDeğerlerA.Ş.,ascountrymanagerforClairmontGobalTurkey.Since2010,sheisactingasshareholderandBoardMem-berforLogosAssetManagement.Shewasspecialisedinfunddevelopment,InvestmentBankingandRealEstatedevelopment.Sheholds3rdlevelCapitalMarketBoardLicense.Sheismember

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ofHighAdvisoryCommitteeinDaruşşafakaUnion.SheisalsoBoardMemberinKayseriCharityUnion.Since2015,sheisourIndependentBoardMember.

Sedat Sami Ömeroğlu, Hewasborninİstanbul,in1956.HegraduatedfromYıldızTechnicalUni-versityin1982,DepartmentofElectricEngineering.AsElectric-ElectronicEngineer,hebecameoneofthefirstengineerswhodealthwithComputersince1980.Aftergraduation,heworkedfortwo technologycompaniesas technicalserviceengineerandexecutivemanager. In1995,heestablishedhisowncompanynamelyEndüstriyelveBilimselTestTeknolojileri,Ar-GeveİleriOto-masyonMühendisliğiSan.veTic.A.Ş.(shortlyE3TAM)thatoperateinartificialvisionandforwardautomation engineering in the basic of computer based test and control systems. E3TAM asthepilotinusageofcomputersintheindustryforcontrolpurposes,hasthetitleofthefirstSMEcompanythatconductsresearchinartificialvision,robotvisiontechnologiesbesidesexecutionofmanyindustrialandscientificprojectsinbothdomesticallyandinternationally.HewasoneofthefoundersinIndustrialAutomationIndustrialistsAssociation–ENOSADthatconductspracticesinIndustrialAutomationfieldin2004.SedatSamiÖmeroğluisthe4thtermpresidentofENOSADsinceMay2011.Heismarriedandhasadaughter.

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Public O�er431 Million $ Revenue

163 Million $ Revenue



4 Million $ Revenue




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1.6 Historical Background

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İndeksBilgisayarSistemleriMühendislikSanayiveTicaretA.Ş.wasfoundedon10.07.1989tooperateinthecomputersector.TheCompanywastransformedintoajointstockcompanyinApril2000.Thehe-adquartersoftheCompany, inwhichGreece-basedPouliadisGroupparticipatedinAugust2000, is inIstanbul.TheCompanyoperatesintheInformationTechnologies(“IT”)sectoranddealswiththepurchase,sales,technicalandsoftwaresupportofcomputers,computersuppliesanddatatransmissionequipment.

The Companymade a distributorship agreement with 3M, being an American company operating inTurkey,for3Mmagneticmediumproductsin1989.TheCompanyincreaseditsmarketshareinthe3Mmagneticproductsmarketfrom1,2%to55%inoneyear.Itachievedaturnoverof875thousandUSDwithonlyastaffof6in1989.Inthenextyear,in1990,itmadeaturnoverof1.380thousandUSDwithastaffof19.Itranked82ndamongtheTurkishITcompaniesin1990.

In1991itmadeacontractwiththeItaliancompanynamedOlivettitoactasthe“AuthorisedSeller”ofOli-vettiPCproducts.Inthesameyear,itincreasedthenumberofstaffto36andmadeaturnoverof2.188thousandUSDin1991.Itranked45th,rising37stepsintherankingoftheTurkishITcompanies.

TheCompanysetupAnkarabranchasitsfirstbranchin1992andstartedmorepermanentactivitiesintheCentralAnatoliaRegion.In1992thenumberofitsstaffincreasedto49anditsturnoverto3.7millionUSD.Itranked30th,rising15stepsintherankingoftheTurkishITcompanies,in1992.

Itclimbedtotherankof20thamongtheTurkishITcompanieswithitsturnoverof9.2millionUSDandstaffof56in1993.

In1994, ithasbecometheTurkishDistributorofHPconsumables,APCUninterruptedPowerSuppliesandSiemensNixdorfPCproducts.Then,itbecamethe19thbiggestITcompanyoftheTurkishmarket.In1994itachievedaturnoverof11.3millionUSDwithitsstaffof61.

ItfoundeditsİzmirbranchinApril1995andsigned“BusinessPartner”contractwithIBMinMay.Justinthesecondhalfofthesameyear,i.e.attheendof1995,itwasgranted“IBMPCBusinessPartnerAward”byIBMduetoitsachievementsasabusinesspartner.Withitssignificant‘channel’activitiesinthesameyear,İndekswon“TheMostActiveDistributorAward”ofINTERPRO,whichisconsideredvaluablebythesector.Itachievedaturnoverof15.9millionUSDwithitsstaffof62in1995.Thereafter,ithasbecomethe16thbiggestITCompanyinthesector.

In1996,IBMchangedthedistributionmodel inPCsalesorganizationandadoptedthe“distributorship”model.Thus,İNDEKShasbecomethefirstTurkishcompanythatmadeadistributorshipcontractwithIBM.Itmade4.127unitsofIBMPCin8daysinAprilofthesameyear,whichwasfirstinthemarket.Bytheendofyear,İndeksreachedtheturnoverof38.7millionUSDwithastaffof70andranked9thbyclimbing7stepsmoreintherankingoftheTurkishITcompanies.ItwasdeservedtoreceivethetiTRLeof“TheMostActiveComputerCompany”oncemorein1996,justlikein1995.

In1997,İndekshasbecomethe8thbiggestITCompanyinTurkey,withaturnoverof58.6millionUSDandastaffof75.

TheCompanymade a distributorship agreement for Lotus & IBMSoftware products, thereby startingdistributionofsoftwarein1998.Inthesameyear,itmadeadistributorshipagreementwithHPA.Ş.fordistributionofhardwareproducts.Inthesameyear,itmadeanewagreementwithIBMandbecamethedistributorofAS/400,beingoneofthemostimportantvalue-addedproductsofTurkey.Towardstheendofthatyear,İndeksmadeadistributorshipagreementwithKingston.In1998,theCompanywon“TheMost

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ActiveITCompanyAward”againafter1995and1996andbecametheonlyITcompanythatachievedtowinthesameawardthirdtimes.InNovember 1998,the“SuppliesDepartment”ofİndeksBilgisayarwasreorganisedasanindependentcompanyandbecame“DESPECTürkiye”withajointinvestmentwithVonDorpDespecGroup,whichwasthe“Number1”initsfieldinEurope.Withitsturnoverof89.4millionUSDwithastaffof131in1998,İndeksclimbedanother2stepsintherankingofTurkishITrankingandbecamethe6thBiggestTurkishITCompany.

In1999,İndeksmadedistributorshipagreementswithmanysignificantproductssuchasCisco,Microsoft,Xerox,IBMPosandEscort;andits“logisticscentre”startedoperationsinJuneofthesameyear.“İndeksLogisticsCentre”,whichissituatedonanareaof2,500sqmandequippedwithhighlyfunctionaltechno-logy,wasoneofthemostimportantinvestmentsofİndeksincanal.TheCompanyreachedtheturnoverof111millionUSDwithastaffof155in1999.

On12April2000,thecompanytransformedfromaLimitedLiabilityCompanyintoaJointStockCompany.InAugust2000,PouliadisandAssociateSocieteAnonymeIndustrialandCommercialofHighTechnologySystemsS.A.(‘PouliadisS.A.’)acquired50%ofİNDEKSBilgisayarwhichtherebybecameacompanywithforeignshareholder. Inthesameyear, İndeksmadeanagreementfordistributorshipofEpsonproductsandaddedEpsonproducts to its increasinglygrowingrangeofproducts. İndeksBilgisayarachievedaturnoverof163millionUSDbytheendof2000.

In2001,theCompanymadeadistributorshipagreementwithCOMPAQ.Withthisagreement, İNDEKSblazedatrailbeingtheonlydistributordealingwithIBM,HPandCOMPAQPCproducts.Inthesameyear,İndeksalsomadedistributorshipagreementsforNovel,SonyandMicrosoftOEMproducts.TheCompanycontinueditsinvestmentsinspiteoftheeconomiccrisisin2001andinMarchofthesameyear,itacquired50.5%ofDatagateBilgisayarMalzemeleriTicaretAŞ.(DATAGATE),whichisaleadingcompanyinCompu-terparts/OEMsector,therebyboostingthemoraleofthesector.Inthesameperiod,itacquired70%ofNeteksİletişimÜrünleriDağıtımA.Ş.(NETEKS),whichisoneofthehighlyexperienceddistributioncompa-niesinnetwork,andcontinueditsgrowthinspiteofthecrisis.IntheTurkeyTop500ICTCompaniesRan-kingperformedbyInterproMedyaA.Ş.in2001,ourcompanyranked1stinthecategoryof“ITHardwareIncomes”,2ndinthecategoryof“TurkishITCompanies”and11thinthegeneralrangingoftheICTSector.In2002,OkiprintersandToshibanotebookandserverproductswere included in the İndeks rangeofproducts.

InJuly2002,allcompaniesofthegrouprelocatedtoitscurrentthree-storeybuildingwithanindoorareaof10.000sqmintheaddressofCendereYolu,No:23Kağıthane.TheturnoveroftheCompanyin2002was189millionUSD.

ProductswithFujitsuSiemensandNecbrandswereaddedtotheproductportfoliooftheCompanyin2003.Further,theshareofİndeksinDATAGATE,ofwhich50.5%shareswereacquiredbyİndeksin2001,therebybeinganaffiliateoftheCompany,wasincreasedto85%.TheconsolidatedturnoveroftheCom-panywasrealizedas323millionUSDasoftheendof2003.

15.34%oftheİndeksBilgisayarshareswasofferedtopubliconISEviaacapitalincreasethroughrightsissueafter restricting theexecutionofpre-emptive rightsofexistingshareholders,on 24.06.2004. TheCompanymadedistributorshipcontractswithKingmaxandAsus formemoryandbareboneproducts,respectively,in2004andstartedtodistributesuchproducts.Inthesameyear,İndeksBilgisayarA.Ş.wasawardedISO9001:2000certificate.

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On02.02.2005, inaccordancewith the resolutionof theBoardofDirectorsdated02.02.2005, İndeksacquired 80% of Neotech Teknolojik Ürünler Dağıtım Anonim Şirketi for wholesale trade of consumerelectronicsandcommunicationproductsasanew fieldofoperationof theCompany. InMarch2005,theRegisteredCapitalSystemwasadopted,anditsmaximumregisteredcapitalwasapprovedasTRL75.000.000.InMay2005,theissuedcapitalofİndekswasincreasedfromTRL17.600.000to45.000.000.InSeptember2005,theCompanymadeanexclusivedistributorshipagreementwithTPVTechnologyLi-mited,whichmanufactures19,5%ofthemonitorsintheglobalmarketandhasrealisedaturnoverof4billionUSDin2004,fordistributionofAOCbrandedLCD,CRTMonitor,PlasmaMonitorandLCDTVpro-ductsinTurkey.AccordingtotheTop500TurkishICTCompaniesreportissuedbyInterproon27.05.2005for2004,ourCompanyranked1stinthecategoriesofNotebooks,DesktopPCs,PrintSystems,Servers,DataBackupandStorageUnits,OfficeSoftwareandOEMand8thintheturnover-basedgeneralrankingofTurkey,inwhichTurkTelekomranked1st.Withtheseresults,İndeksBilgisayarachievedtobetheonlylocalcomputercompanyintheTopTen.

InFebruary2006,30.30%ofthesharesofthesecondbiggestcompanyofthegroupandasubsidiaryofİndeksBilgisayar,namelyDatagateBilgisayarMalzemeleriTicaretA.Ş.,wasofferedtopublicinFebruary2006.ofwasofferedtopubliconISEviaacapitalincreasethroughrightsissueafterrestrictingtheexe-cutionofpre-emptiverightsofexistingshareholders.BegantobetradedonISEon10.02.2006Thus,2companiesofthegrouphavebeenofferedtopublicandbeguntobetradedonISE.PartnershipshareofİndeksBilgisayardecreasedfrom85%to59.2%withthepublicofferingofDatagate.TheissuedcapitalofİndeksBilgisayarwasincreasedfromTRL45.000.000toTRL55.000.000inMay2006.TRL8.718.703outoftheamountofincrease,i.e.TRL10.000.000,iscoveredfromtheprofitoftheperiodof2005andtheremainingTRL1.281.297fromextraordinaryreserves.İndekshasexecutedoneofthemostimportantandgreatestinvestmentsinICTsectorbypurchasingKaradenizOrmeA.S.,whichisfoundedona39.761m2landandhaving18.969m2indoorarea,inordertobeusedasalogisticscentre.ThetradenameofKaradenizOrmeAShasbeenchangedintoTeklosTeknolojiLojistikHizmetlerA.Ş.anditsfieldofactivityhasbeencustomizedtobeabletoworkonthelogisticsservices.Theheadofficeofthecompanymovedtoitsnewlocationon26.10.2006.EVOS(EffectiveEfficientOperationalResult-Oriented)ERPSystemde-velopedbyİndeksA.Ş.in2006wasstartedtobeusedbyİndeksGroupCompanieson01.01.2007.EVOSProjectwasdevelopedbytheSoftwareEngineersGroupofİndeksA.Ş.withinaperiodof9months.OurCompanyanditssubsidiariesincludedintheconsolidatedfinancialstatementsmadedistributorshipag-reementswithCanonforprinter,faxandscannerproducts,withWesternDigitalCorporationforharddiskproducts,withPanasonicforconsumerelectronics,withViewsonicformonitorproductsandwithSonyVaiofornotebookproducts.Accordingtothe2005TurkeyTop500ICTCompaniesreportissuedInterproin2006,İndeksBilgisayar,withitsturnoverof758.634(thousandTRL),againranked1stinthecategoryofcompaniessellingonlycomputers,likein2004.Withthisresult,theCompanykeptitsspecialplaceastheonlylocalcomputercompanyintheTopTen.Moreover,itwasrankedthebiggestcompanyinthecategoryofmarketswithrespecttotheincomesfromServer,PrintSystems,OEM,OperatingSystem,OfficeSoftwareandE-Tradesales.

İndeksBilgisayaranditssubsidiariesmadedistributorshipcontractswithPhilipsformonitorsandPCpe-ripherals,Asusfornotebookproducts,AppleIMCforApplebrandproducts,TrendMicroforsoftwarepro-ductsforinternetsecurityandviruses,NokiaforE-seriesproducts,LGElectronicsfornotebookproductsin2007.TheissuedcapitaloftheCompanywasincreasedfromTRL55.000.000toTRL56.000.000inJuly2007.Theamountofincrease,i.e.TRL1.000.000,iscoveredfromtheprofitoftheperiodof2006.

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On24.07.2007, İndeksBilgisayarand itssubsidiaryDatagateBilgisayarA.Şsold50%of theirshares inNeteksİletişimÜrünleriDağıtımA.Ş.,anaffiliateofİndeksBilgisayar,toWestconGroupEurepeanOperationLimited,oneoftheleadingglobalcompaniesinitsfield.Ofthe50%sharessold,26%and24%wereprovi-dedbyİndeksBilgisayarSistemleriMühendislikSanayiveTicaretA.ŞandDatagateBilgisayarMalzemeleriTicaretA.Ş.,respectively.Followingsuchsale,NeteksbecomeaJVofwhichsharesareheldbyİndeksBilgisayarA.Ş.andWestconGroupon50%-50%basis. Itwas the first time thatwith thisagreement,WestconGroupmadeaninvestmentinTurkeyunderapartnership;untilthen,itwasoperatingonlywithitsfullyownedsubsidiariesin19countriesaroundtheworld.

Accordingtothe2007TurkeyTop500ICTCompaniesRankingperformedbyInterproMedyaA.Ş.,ourcompanyrankedseventh,onestephigherthanthepreviousyear,inthegeneralrankingbasedonturnoverachievedin2006amongthecompaniesincludingtelephoneoperatorsandmobilephonesellers.Ontheotherhand,itrankedfirstwithitssalesincomeof901.778(thousandTRL),likethepreviousyears,inthecategoryofcompaniessellingonlycomputers.Further,itrankedfirstinnineICTcategories.Thecategoriesinwhich İndeksBilgisayar rankedfirstare thePortablecomputerwholesale traderanddistributor,Databackupandstoragehardware,Server,Printsystemswholesaletraderanddistributor,Datacommunicationhardware,OEMproducts,Operatingsystem,OfficesoftwarewholesaletraderanddistributorandE-trade.

In2008,İndeksBilgisayarmadeadistributorshipagreementwithLG,whichisoneofthemostvaluablebrandsoftheworld,fornotebooks,consumerproductsandmonitorsandwithAsustekforAsusbrandedserverproducts.Inthesameyear,Neotech,beingasubsidiaryofİndeksBilgisayar,andDatagatewereappointedasthedistributorsofWacomandBelkinproducts,respectively.OurCompanyrankedsixth,onestephigherthanthepreviousyear,inthegeneralrankingbasedonsalesmadein2007amongthefirst500ICTcompaniesincludingtelephoneoperatorsandmobilephonesellersinTurkey.Ontheotherhand,ourCompanyranked1stwithasalesrevenueofTRL1.022.919thousandTRL,likethepreviousyears,inthecategoryofcompaniessellingonlycomputers.Further,itrankedfirstineightICTcategories.

In 2009,İndeksBilgisayarmadedistributorshipagreementswithIomegaandDellandasupplycontractwithBestBuy.ThecontractsmadebyNeotechA.Ş.,asubsidiaryofİndeksBilgisayar,forAppleandAirtiesproductsweretransferredtoİndeksBilgisayarasaresultofthesegmentadjustmentsinthisyear.Inthesameperiod,Neteks,a50%affiliateofİndeksBilgisayar,madedistributorshipagreementswithJuniper,IBM ISSandAvaya. On theotherhand,DatagateA.Ş.madeadistributorshipagreementwithFujitsuSiemens.İndeksBilgisayarranked7thamongtheTurkeyTop500ICTCompanieswithitssalesincomeof927.893thousandTRLintheturnover-basedgeneralrankingasdeterminedbyInterpromedyaA.Ş.Intheanalysisofthegeneralrankingresults,İndeksBilgisayarranked1st,asthepreviousyears,amongthecompaniesdealingwithcomputertradeonly.Further,itrankedfirstinsixICTcategories.Further,DatagateBilgisayarMalzemeleriTic.A.Ş.,whichisa59%subsidiaryofİndeksBilgisayar,rankedfirstinthecategoryof“OEM(computerparts)”incomesandNeteksİletişimDağıtımÜrünleriA.Ş.,whichisa50%subsidiaryofİndeksBilgisayar,rankedfirstinthecategoryof“DataCommunicationHardware”.

In 2010, ourlogisticcompanycalledTeklosA.Ş.achievedthecontractofTurkishTelecomforstorageanddistributionoftheproductswhichwillbeprovidedtothecustomersofTurkishTelecom.İndeksBilgisayarranked7thamongtheTurkeyTop500ICTCompanieswithitssalesincomeofTRL1.087.422inthetur-nover-basedgeneralrankingasdeterminedbyInterpromedyaA.Ş.Intheanalysisofthegeneralrankingresults,İndeksBilgisayarranked1st,asthepreviousyears,amongthecompaniesdealingwithcomputertradeonly.Further,itrankedfirstinsixdifferentICTcategories.ThesearePersonalcomputer,Mobile,Prin-

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tingsystems,databackupandstorage,monitor,operatingsystemsandB2BE-Trade.Further,DatagateBilgisayarMalzemeleriTic.A.Ş.,whichisa59%subsidiaryofİndeksBilgisayar,rankedfirstinthecategoryof“OEM(computerparts)”incomesandNeteksİletişimDağıtımÜrünleriA.Ş.,whichisa50%subsidiaryofİndeksBilgisayar,rankedfirstinthecategoryof“DataCommunicationHardware”.Furthermore,IndekshasstartednegotiationswithCanonEurasiaLtdforthedistributionofcameras,videocamcordersproductsandtheiraccessoriesinTurkeyasCanonisoneofthebiggestproducerofthesetypesofproductsintheworld.Oursubsidiary,NeteksA.ŞachievedthedistributoroftheyearawardorganizedbyCiscoSystemsin2009.IndeksachievedthemostefficientbusinesspartnerawardwhichwasorganizedbyLenovoinChinain2009.Inaddition,IndekshasbeenawardedthedistributoroftheyearorganizedbyIBMTurkLtdinIstanbul.

In2011,inparalleltoourbusinessplansandtargets,ourcompanyacquired%51ofArtımBilişimÇözümveDağıtımA.Ş.thatprovidesdistributionofvalueaddedsolutionsandsuppliessparepartsinITsector.Forthistransaction,780.000USDwasinvested.

OursubsidiaryNeotechTeknolojikÜrünlerDağıtımA.Ş.signedanagreementwithCanonEurasiaLtdtodistributeCanonbrandedcameras&videocamerasandaccessoriesinTurkey.

Inthemeeting(businesspartnersoftheyear)heldon02.02.2011andorganizedbyIBM,theyearof2010wasreviewed.Ourcompanyhasbeenawardedasthe“Distributorof2010”.

InthemeetingorganizedbyHewlettPackardTurkeyinIstanbul,ourcompanyhasbeenawardedasha-vingthebiggestbusinessvolumeinPSG(personalsystemsgroup)productgroupinDistributorCategorybetween4distributorsbyconsideringparameterssuchasrevenuemadeinthisproductgroup,superiorlogisticservicesgiven,creatingsuccessinthesalesofallHPbrandedproductsinTurkey.

İndeksBilgisayar ranked7thamong theTurkeyTop500 ICTCompanies in the turnover-basedgeneralrankingasdeterminedby InterpromedyaA.Ş.Prizewasgiven toourcompanyon27.06.2011,MondayeveninginİstanbulTechnicalUniversity’sMaslakCampus.

OursubsidiaryNeotechTeknolojikÜrünlerDağıtımA.Ş.signedanagreementwithHTCCorporation todistributeHTCbrandedsmartphones,TabletPCandaccessoriesinTurkey.

OurcompanywasappointedastheonlydistributorofOffice365productsbyMicrosoftTurkeyandEuro-petogether.Theseproductsincludespecificationsofe-mail,MicrosoftOffice,combinedmessagingandfilesharing…etc.

In2012,OurcompanyestablishedacompanycalledIndeksInternationalFZEinSharjahAirportInternati-onalFreeZoneinUAEtooperatemainlyinMiddleEastandAfricainIT.Ourcompanyinis%100ownerof Indeks InternationalFZEwithpaidupcapitalamountof150.000AED.Theprocedure regarding theestablishmentwascompletedon09.05.2012.

Ourcompanypurchased%55ofAlkımBilgisayarSanayiveTicaretA.Şthatprovidesaftersalesservicesfor leading ITbrandsof theWorld intheaccordancewithour longtermstrategictargetsandbusinessplansregardingincreaseofprofitability.3.000.000USDwaspaidforthistransaction.Asitwasestablishedin1996,itprovidesvalueaddedservice,maintenance,fixingservicesofmanybrandsfirstlyHewlettPa-ckard.ThecompanyprovidesguaranteeincludedandexcludedsolutionswiththeservicepointslocatedinIstanbul,Ankara,İzmir.

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İndeksBilgisayarranked8thamongtheTurkeyTop500ICTCompanieswithitssalesincomeof1.513.546(000TRL)intheturnover-basedgeneralrankingin2011asdeterminedbyInterpromedyaA.Ş.Intheanaly-sisofthegeneralrankingresults, İndeksBilgisayarranked1st,asthepreviousyears,amongthecom-paniesdealingwithcomputertradeonly.Besides,itwasranked1stcompanyinsoftwareandhardwaredistributor.Further,itrankedfirstinsixdifferentICTcategories.Thesearedatabackupandstorage,server,Tabletandmobilepc,TabletandmobilepcdistributionandB2BE-Trade.Further,NeteksİletişimDağıtımÜrünleriA.Ş.,whichisa50%subsidiaryofİndeksBilgisayar,rankedfirstinthecategoryof“NetworkandDataCommunicationHardware”.

İndeksBilgisayarSistemleriMühendislikveTicaretA.ŞsignedacontractwithAppleEuropeLtdtodistribu-teiPad,Mac,iPodanditsaccessoriesinTurkey.WepredictthatAppleBrandwillbeverystrategicvalueforourcompany’sfutureasthisbrandmaderevolutioninITandTelecomWorldwithitsdesigned,producedtechnologyandproductsparticularlyinenduserline.OurcompanytargetstodistributeAppleProductsin81citiesinTurkeywithmorethan8000dealerchannels.Byaddingthesehighconsumerdemandedproductstoourproductportfolio,itwillmakehugecontributiontoourgrowth.Theamountoftherevenuewillbeapproximately250millionTRLinourcompany’srevenue.Apple Inc.anditssubsidiariesdesign,produceandmarketmobilecommunicationandmediaappliances,personalcomputerandmobiledigitalmusicplayer.Besides,forthoseproducts,itproducesandsalessoftware,service,peripherals,networksolutions,digitalcontentsandapplicationbelongesthirdparties.ItsproductsandservicesincludesiPho-ne,iPad,Mac,iPod,AppleTV,consumerandprofessionalsoftwareapplicationsportfolio,ios,MacOSXoperatingsystems,, iCloudandmanyaccessories,servicesandsupportsolutions.Besides,thecom-panysalesdigitalcontentsandapplicationswithchannelofiTunesStore,AppStore,iBookstoreandMacAppStore.Applewasestablishedin1977anditsheadofficeisinCalifornia,USA.

Indekshasbeenawardedon20.12.2012thedistributoroftheyearregardingFinishGoodslicenceca-tegoryorganizedbyMicrosoftTurkey in Istanbul.Thisawardwasgiven in revenue,growth,numberofdealersmadepurchasingfromthedistributor,efficiencycategories.

OurChairmanNevresErolBilecikwasauthorizedbyourDirectors’Board toconduct issuessuch thesales,revenueorconstructionareasharingbaseagreementswithconstructioncompaniesorlanddeve-lopment,constructionlicenceforthelandattheaddressofŞişliprovinceAyazağaMah.CendereyoluNo:9thatisownedbyour99,99%oursubsidiaryTeklosTeknolojiLojistikHizmetleriA.ŞandwhereTeklosTeknolojiLojistikHizmetleriA.Şmanagesinventoryandlogisticfacilitiesfor IndexGroup. Inaddition,asourcompany’sheadofficelocatedinthisareaanditsinventoryandlogisticmanagementisdoneinthislocation,makingplanstomove,forthisaim,purchasingnewrealestates,developingprojectsontheserealestates,licenceandconstructionoperations.

Ourcompany’s55%subsidiaryAlkımBilgisayarSanayiveTicaretA.Şwassoldandtransferedaswholewithpurchasingamountof3.000.000USDtoFeridunSabahwhomourcompanyusedtopurchasefrompreviosly.

In2013,

OurcompanysignedadistributioncontractwithCanonwhichisoneofthebiggestphotocopyandprinterproducers.OurcompanysignedfinalagreementwithSebaconstructioncompanytodevelopthe landwhichwaspreviouslyannouncedtostockmarket.According to thisagreement,ourcompanyexpects88,5millionUSDincludingVATfromthesaleoftheprojectwhichwillbedevelopedonourlandbySebaconstructioncompany.OurcompanysignedanagreementwithEulerHermes InsuranceCompany to

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insureitsreceivablesonApril2013.Thisisvalidfor2years.İndeksBilgisayarranked9thamongtheTurkeyTop500ICTCompanieswithitssalesincomeof1.412.201

(000TRL)intheturnover-basedgeneralrankingin2012asdeterminedbyInterpromedyaA.Ş.Intheanaly-sisofthegeneralrankingresults, İndeksBilgisayarranked1st,asthepreviousyears,amongthecom-paniesdealingwithcomputertradeonly.Besides,itwasranked1stcompanyinsoftwareandhardwaredistributor.Further,itrankedfirstinfourdifferentICTcategories.OurcompanysignedanagreementwithAppleforthedistributionofAppleiphoneproductswhichwillmakesignificantcontributiontoourgrowth.

In2014,

OursubsidiaryNeteksachievedCiscoAwardforitssuperiorperformanceindistributionin2013.

Inaddition,oursubsidiaryDatagatesigneddistributionagreementwithAVEAGSMOperatortodistirbuteTelecomproductstosouthernregionofTurkey.

OurcompanyIndekssignedanagreementwithLenovotodistributeLenevoSmartPhonestononTelcochannelinTurkey.Ouryearlysalesexpectartionis100mioTRLfromthisdsitributioncontract.

İndeksBilgisayarSistemleriMühendislikveTicaretA.ŞsignedacontractwithACER,AOCandFujitsutodistributedesktop,laptop,monitör,server,datastorageandperipheralsinTurkey

In2015,

OursubsidiaryNeteksachievedCiscoAwardforitssuperiorperformanceindistributionin2015.Also,OurcompanysigneddistributionagreementwithAppletodistirbuteAppleWatchproductsinTurkey.Indeksachievedawardofthebestdistribütörbylargestvolume.

22

02 SECTOR OF OPERATION

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2.1 IT Sector2.1.1 Turkish IT SectorTheusageofcomputersinTurkeystartedintheendofthe1980’s.Althoughtherewasaveryrapiddevelopmentinthesectorbetweentheyearsof1990and1995,usageofcomputerswerelimitedtomostlyfinancialsector,governmentalunits,bigbusinessesanduniversities.Inthesecondhalfofthe1990’s,theincreaseintheusageofcomputersmadetheITsectoroneofthemostrapidlygrowingsectorsinTurkey.AccordingtothedataissuedbyInternationalDataCorporation(“IDC”),theTurkishInformationandCommunicationTechnologies(“IT”)sectorachievedacompoundan-nualgrowthrate(“CAGR”)of20%between1997and2000.In2000,theTurkishITsectorhasrea-cheditsgreatestbusinessvolumethusfarwith2.3billionUSD,whereasthatfigurereducedto1.2billionUSDwith49%recessionin2001becauseoftheeconomicalcrisisthatwasencounteredintheendof2000andthepostponementofthedemandofITinvestmentsbypublicandprivatesectors.Thefiguresachievedin2000wereagaincaughtonlyin2004,withabusinessvolumeof2.4millionUSD.Inotherwords,ittook4yearstoeliminatetheeffectsofthecrises.However,oneshouldalsoconsiderthatoneofthecausesoftheshrinkageofthebusinessvolumewasthecontinuouslypricereductionofproducts,whichisthestructuralfeatureoftheITIndustry.

Accordingto IDC’sresearch, ITmarketachievedgrowth from2009to2010with10,4%, from2010to2011with8,1%andfrom2011to2012with15%,from2012to2013with%7.In2015,sectorfacedwith%0,5shrinkagebecauseofhighpenetrationofsmartphones.

Turkish IT Market Business Volume (Mio $)

(mio

USD

)

CAGR ( 12-19T ): %2,4

IT Sector Business Volume

% Growth

8000

7000

6000

5000

4000

3000

2000

1000

02012 2013 2014 2015 E 2016 E 2017 E 2018 E 2019 E

5.5416.112 6.261 6.352 6.544 6.721

5.9466.447

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

Accordingtothe2015TurkeyITExpendituresResearchconductedbyIDC,theTurkishITmarketisexpectedtohavea2,4%compoundannualgrowthrate(CAGR)intheperiodbetween2012and2019F,reaching6,7billionUSDin2019.ITinvestmentdemandsdeferredinthe2001crisisperiodhavebeenstartedtoberealizedwiththeappearanceoftheincreasingstableoutlookoftheeconomyandtheseinvestmentexpenditureshavebeenoneofthemostpowerfuldynamicsofthemarketinthefirst5yearsfollowing2001.Newinvestmentsthatincreasedaftermergerand

Source: IDC 2015

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acquisitionoperationsinallsectors,beginninginthefinanceandtelecommunicationsectorsandspreadtoothersectorsfrom2005on,technologyreplacementinvestments,increasedITinvest-mentmadebythegovernmentaspartofe-governmentprojects,increaseintheinternetusageratesandfinally,inthenumberoftheuserswhofollowuptherapidlydevelopingtechnologybe-camethedrivingforcesofthemarketbetween2005and2008.Althoughthefirstquarterof2008startedveryfavourably,thesectorstartedtoloseitsstrengthduetothesuitbroughttocloseAKP,aslowdownwasexperiencedinthethirdquarterwhennotsomanynegativeresultswereobser-ved.However,withthelastquarter,thesectorwasaffectedbytheglobalfinancialcrisisthatstar-tedatthebeginningofOctober,andthus,thequarterwasclosedwithadouble-digitshrinkage.2009wasexperiencedasayearwhenthewoundsofthecrisiswerebandaged;theeffectsofthecrisisinthefirstquarterdiminishedwiththeeffectoftheVATcutappliedfor6months,includingthesecondandthirdquarters,andpositivegrowthwasrecordedinthefourthquarter.In2010,ITsectorachievedquitegradualgrowthafterconstitutionalreferendumparticularlystaticsummerseason.In2011,particularlyinthesecondhalfoftheyear,ITsectorwasaffectednegativelybycurrencyfluctuationssourcedbydebtcrisisofEuropeanCountries.

Ontheotherhand,iftheshareoftheend-usersinthemarketismonitoredintheperiodbetween1995and2005,itwouldbeclearlyseenthatthemarketstructurehaschangedconsiderably.

Changes in the Market Share of End Users

It isestimatedthat therateof thenumberofPCinoperatingstatustothetotalpopulationhasincreasedfrom8%to27%intheperiodbetween1995andendof2010,andthattherateoftheinternetusers to thetotalpopulationhas increasedfrom10%to37%in thesameperiod.ThisindicatesthatPCownershipandinternetusageratesincreasedover3timesinthelast15years.PCownershipandinternetusagerateshaveincreasedby67%and40%,respectivelyinthelast5years.ComparingtothecountrydatapublishedbyITUabove,itisclearthatTurkeyisfarbelowthedevelopedcountrieswithrespecttothePCownershipandinternetusersrateandthatthereisalongdistancetobecoveredinthisfield.ThePCandinternetpenetrationinTurkeybetween

Source: IDC 2015

2014

16%

9%

12%

15%

48%

2015

16%

8%

11%

15%

50%

2016 E

15%

8%

11%

16%

50%

2013

18%

9%

13%

14%

46%

1995

38%

30%

20%

5%

7%

2012

17%

11%

14%

14%

44%

2011

18%

11%

15%

14%

42%

2010

17%

13%

16%

14%

40%

2009

18%

14%

16%

14%

38%

2000

25%

35%

23%

7%

10%

2005

22%

25%

25%

10%

18%

Public Institutions

Finance Sector

Private Sector ( Corporate )

SMEs

Individual User

1995

2000

2005

2009

2010

2011

2012

2013

2014 16% 9% 12% 15% 48%

2015

2016 E

16%

15%

8%

8%

11%

11%

15%

16%

50%

50%

18% 9% 14% 46%

17%

7%

7%

11% 14% 14% 44%

18% 11% 15% 14% 42%

17% 13% 16% 14% 40%

18% 14% 16% 14% 38%

38% 30% 20% 5%

22%

25% 35% 23%

25% 25% 10%

10%

18%

13%

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2005and2017Fhasdevelopedasshowninthefollowinggraphics.

Trends in Internet & PC Penetrations

Accordingtotheresultsof“HouseholdsITUsageResearch”publishedbytheTurkishStatisticalInstitute(TÜİK)inApril2016statedwithbelowchart.

Theagegroupinwhichtherateofcomputerandinternetusageishighestis16-24.Theseratesarehigherinmenthanwomeninallagegroups.Byeducationallevel,thepopulationwhousethecomputerandinternetmostaregraduatesoffirstdegreeandhighereducationlevels.

Accordingtothereportresults,PCandinternetusagerateshaveincreasedby2%and4%,res-pectivelyintheperiodbetween2014and2015.

Comparison of computer and internet usage on area based (Rural & Urban) (%)

(2014-2015)

Computer Usage Rate Change

InternetUsage Rate Change

2014 2015 % 2014 2015 %

Computer and Internet Users Turkey53,5 54,8 2% 53,8 55,9 4%

In the last three months (January-March 2012)

Turkey 46,9 46,5 -1% 48,5 51,6 6%

Between three months and one year Turkey3,0 3,4 15% 2,6 2,1 -16%

Over 1 year Turkey3,6 4,9 35% 2,7 2,2 -21%

Never used Turkey46,5 45,2 -3% 46,5 44,1 -5%

Source:TUIK2014,2015

Source : IDC 2015

80%

70%

60%

50%

40%

30%

20%

10%

0%

25%

2005 2011 2012 2013 2014 2015 2016 T 2017 E

44%

52%58% 60%

65%68%

75%

2005 2011 2012 2013 2014 2015 2016 T 2017 E

15%

34%40%

46%50%

53%57%

60%70%

60%

50%

40%

30%

20%

10%

0%

Internet Penetration PC / Tablet Penetration

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Computer and internet usage

2.1.2. IT Market Comparison in the World and TurkeyAccordingtoIDC’sreportregardinggrowthratesbetweencountries,thehighestshrinkageratefrom2014to2015wasseeninRussiawith-39%andrespectivelyTurkeyandUkrainewith-35%,Egyptwith-31%.ThemainreasonforTurkishmarketdecreasewastheincreaseinmobilephoneusage.

World IT Market – Country Based PC Market Growth Analysis 2014-2015 (Quantity)

Source: TUIK 2015

Source: IDC 2015

Computer Usage Internet Usage

53,5

54,0

54,5

55,0

52,0

52,5

53,0

55,5

56,0

56,5

2014 2015

Countries Russia Turkey Saudi Arabia South Africa UAE Israel Ukraine Egypt Croatia Slovenia

2014 7,907 2,823 1,841 1,707 1,623 773 1,117 674 259 176

2015 4,851 1,836 1,604 1,549 1,395 812 731 467 231 158

Growth % -39% -35% -13% -9% -14% 5% -35% -31% -11% -10%

Dünya BT Pazarı - Ülkeler Arası PC Pazarı Büyüme Analizi 2014-2015 (Adet)

10.000

5.000

0

20142015

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2.2 Sub-segments of the ICT SectorTurkishITsectorisessentiallyseparatedintothreemaingroups,namelyhardware,softwareandITservices.Accordingto theTurkeyresultspublishedby IDC in2015, thebusinessvolumeofthe Turkish Information andCommunication Technologies (IT)market reached 5,4 billionUSDin2012.Thesamereportshowsthattheshareofthe“Hardware”,“Software”and“ITServices”sub-segmentsinthetotalmarketare66,1%,11,7%and22,2%,respectively.ThisindicatesthattheTurkishITsectorhasgotastructurewhere“hardware”ispredominantwithrespecttoincomecreated.

Source: IDC 2015

IT Sector Segments (xm$) 2012 2013 2014 2015E 2016E 2017E 2018E 2019E

Total IT 5,541 $ 5,946 $ 6,447 $ 6,112 $ 6,261 $ 6,352 $ 6,544 $ 6, 721 $

Service 1,038 $ 1,180 $ 1,361 $ 1,358 $ 1,396 $ 1, 483 $ 1,610 $ 1,720 $

Software 592 $ 636 $ 689 $ 713 $ 746 $ 789 $ 842 $ 904 $

Hardware 3, 911 $ 4,130 $ 4,397 $ 4,042 $ 4,119 $ 4,079 $ 4,092 $ 4,098 $

Server 202 $ 197 $ 215 $ 270 $ 285 $ 257 $ 262 $ 266 $

PC 1,997 $ 1,806 $ 1,804 $ 1,490 $ 1,707 $ 1,648 $ 1,608 $ 1,557 $

Tablet 402 $ 768 $ 902 $ 740 $ 529 $ 527 $ 534 $ 547 $

Data Storage 139 $ 159 $ 175 $ 214 $ 221 $ 235 $ 247 $ 256 $

Printers & Peripherals 448 $ 487 $ 572 $ 593 $ 628 $ 650 $ 666 $ 684 $

Network & Telco Units 723 $ 713 $ 729 $ 735 $ 750 $ 762 $ 775 $ 788 $

Source: IDC 2015

15.000

10.000

5.000

2014

2015

0

Countries Germany UK France Italy Spain Poland Holland Turkey Switzerland Belgium Czech Republici

Norway Austria Romania Portugal Greece Ireland

2014 12,946 10,908 9,376 4,542 3,616 3,063 2,896 2,823 1,653 1,593 1,191 1,265 1,036 781 772 746 529

2015 10,251 9,904 8,091 4,114 3,631 2,835 2,490 1,836 1,438 1,325 1,043 1,006 899 765 740 602 522

Growth % -21% -9% -14% -9% 0% -7% -14% -35% -13% -17% -12% -20% -13% -2% -4% -19% -1%

2015 Annual Report

28

IT Sector Segments (x m $ ) 2012 2013 2014 2015E 2016E 2017E 2018E 2019E

Hardware 3,911 $ 4,130 $ 4,397 $ 4,042 $ 4,119 $ 4,079 $ 4,092 $ 4,098 $

Software 592 $ 636 $ 689 $ 713 $ 746 $ 789 $ 842 $ 904 $

Service 1,038 $ 1,180 $ 1,361 $ 1,358 $ 1,396 $ 1,483 $ 1,610 $ 1,720 $

Total IT 5,541 $ 5,946 $ 6,447 $ 6,112 $ 6,261 $ 6,352 $ 6,544 $ 6,721 $

Growth % - 7.3 % 8.4 % -5.2 % 2.4 % 1.4 % 3.0 % 2.7 %

Growth in Segments 2012 2013 2014 2015E 2016E 2017E 2018E 2019E

Hardware - 5.6 % 6.5 % -8.1 % 1.9 % -1.0 % 0.3 % 0.1 %

Software - 7.4 % 8.4 % 3.4 % 4.7 % 5.8 % 6.7 % 7.4 %

Service - 13.6 % 15.4 % -0.3 % 2.8 % 6.2 % 8.6 % 6.8 %

% in Segments 2012 2013 2014 2015E 2016E 2017E 2018E 2019E

Hardware 70.6 % 69.5 % 68.2 % 66.1 % 65.8 % 64.2 % 62.5 % 61.0 %

Software 10.7 % 10.7 % 10.7 % 11.7 % 11.9 % 12.4 % 12.9 % 13.4 %

Service 18.7 % 19.8 % 21.1 % 22.2 % 22.3 % 23.4 % 24.6 % 25.6 %

Smart Phone Market in Turkey (x m $) 2012 2013 2014 2015E 2016E 2017E 2018E 2019E

Smart Phone 2,042 $ 3,425 $ 4,691 $ 6,477 $ 6,159 $ 5,728 $ 5,346 $ 5,051 $

Growth % - 67.8 % 37.0 % 37.4 % -4.5 % -7.0 % -6.7 % -5.5 %

Turkish IT Market 2012-2019F (Mio US$)

2012 2013 2014 2015E 2016E 2017E 2018E 2019E

Total IT & Telecom Market 16,734 $ 19,761 $ 23,856 $ 25,810 $ 26,071 $ 25,980 $ 25,876 $ 25,685 $

Growth % - 18,1 % 20,7 % 8,2 % 1,0 % -0,3 % -0,4 % -0,7 %

IT % 33,1 % 30,1 % 27,0 % 23,7 % 24,0 % 24,4 % 25,3 % 26,2%

Accordingtothe2015TurkeyITExpendituresSurveyconductedbyIDC,theTurkishITmarketisexpectedtohavea2,4%compoundannualgrowthrate(CAGR)intheperiodbetween2012and2019F,reaching6,7billionUSDin2019.Theseestimatesarebasedontheanticipatedgrowthrates,investmentsanticipatedtobemadebycompaniesrapidlyastheyweredeferredduetothecrisesof2001and2008,effectsofITexpendituresincurredbythepublicsectorfore-transfor-mationprojectsonITconsumption,increaseduseofITineducation,anticipatedincreasedrateoftheuseofinternetandmobiletechnologiesandreplacementinvestmentstobecausedbynewtechnologies.Contributionofsmartphoneproductswillbemuchhighertosectorgrowthin2016.

2.2.1 Hardware MarketHardwaremarketinTurkishITsectoristhesub-segmenthavingthebiggestshareregardingthesalesamountsof1999–2009,withtheratioschangingbetween57%and74%.Thehardwaresectordidnotachievegrowthfrom2015to2014.

Source: IDC 2015

2015 Annual Report

29

Growth Rates & Targets of Hardware Expenditures in IT Sector, 2012-2019F (Mio USD,%)

2.2.1.1 PC Market: Thehardwaresub-groupconsistingofDesktopPCs,portablePCs(“LaptopPCs”,“Notebooks”),ServersandPeripherals ismonitored via thesalesdata inPCmarketwhich represent a verysignificantportionof the totalsales.Accordingly, totalsalesof thePCmarketwere realizedas2,823,121 in 2014, whereas such total number (both notebook and desktop) decreased to1.836.747unitswithanshrinkageof35%in2015.

However, when the sales in the PCmarket are considered by quantity excluding the servermarket, it is noticed thatportablePCshavegainedmajority in thismarket for the first time in2009.Beginningfromtheyear2004,supplyingportablePCswithhighperformance,increasedmobilitypossibilitywiththeirlighterstructureandaffordablepricestotheconsumershasenabledsignificant increases in their sales,and finally,salesofportablePCshavesurpassed thoseofdesktopPCsin2009.

The developments at PCmarket are closely related with the ongoing projects in public andeducational sectors. The stable growth in demand of the consumers is also considered asanothersignificantfactoronthisissue.ThegrowingretailchainsandfinancialopportunitiesofferedtotheconsumersbythesechainshavebeenthemostimportantdrivingforcesforthePCsales.Besides,noticingthebenefitsofmobilecomputingsystemsbythecorporatecompaniesisseenasanotherimportantreasonforthegrowth.Atthispoint,onemayclearlyseefromthenmarketsalesfiguresthatthedemandbythesmallandlargeenterprisesseekingproductivityforportablePCsasanimportantpartofmobiledatasystemshasincreased.

Source: IDC 2015

(mio

USD

)


CAGR ( 12-19T ): %2,4

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

4400

4500

4300

4200

4100

4000

3900

3800

3700

36002012 2013 2014 2015 E 2016 E 2017 E 2018 E 2019 E

3.911

4.042

4.119

4.079

4.092 4.0984.130

4.397

2015 Annual Report

30

Turkish IT Market on Main Form Based 2014 – 2015

Besidestheproducerswhichhaveinternationalbrands,aconsiderablepartofhardwareproduc-tionbothinsideandoutsidethecountryisperformedwiththemaincomponentsthatareobtainedfrom theglobalcomputerpartssuppliersbybigandsmall-sizedcompanies.Over time, thesefactorshavetransformedthehardwareproductmarketandtheespeciallyPCmarketintoalowaddedvaluestructureinwhichthecompetitionishighlysensitivetotheprice.

2.2.2 Software MarketThesizeofthesoftwaresub-groupincreasedfromUSD276millionin1999toUSD377.3millionin2000.However,inthe2001crisis,justlikeinhardwaresector,softwaresectordecreasedtoUSD172.3millionwithshrinkageofabout54%andvolumebecame215millionUSDin2002.AccordingtoIDC’s,itisexpectedITSectorsoftwaremarkettoachieveCompoundAnnualGrowthRateof5,4%between2012and2019Fandreach904millionUSD.

Asoftheendof2010,theshareofthesoftwaresub-groupintheentireITmarketintermsofthetotal turnover isatvery low levels incomparisonwithEuropeandAmericawith13,3%share,mainlybecauseofpiratedusages.MicrosoftOffice,beingacommonlyusedprogram,isthemostpiratedprogram.ThelawswhichwereenactedbytheTurkishParliamentin1995forpurposeofensuringtheprotectionoftheregistrationrightsdecreasedthepiratedusagerate.Accordingtotheestimationsofourcompany,while70%ofthesoftwareisillegallyusedinTurkey,thisrateisaround35%intheUSA.

Because the operating system software is purchased as incorporated into the computer, itspiratedusageislessthanothersoftware.Theregistrationrightlawshadinfluenceonthecustom

Source:IDC2015

Desktop

927,382547,602

Mobile PC

1,895,7391,289,145

Total

1,811,8611,836,747

20142015

-41% -32% -35%Growth

Mobile PC

Desktop ■ 2013 ■ 2014 33%33% 30%

67% 70%

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31

suppliersusingpiratedproductsmostfrequently.Mostofthecustomsuppliersusethelicensedoperatingsystemsoftwareatpresent.

IT Sector Software Expenditures Growth Figures and Growth Targets, 2012-2019F (Mio USD,%)

(mio

USD

)


CAGR ( 12-19T ): %2,4

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%1000

800

600

400

200

02012 2013 2014 2015 E 2016 E 2017 E 2018 E 2019 E

592$

713$ 746$ 789$842$

904$

636$689$

2.2.3 IT Services MarketContrary to the hardware and software sub-sectors, IT Services sub-sector s the constant and necessary services relating to the existing IT investments periodically and leasing services. In the 2001 crisis, the Turkish IT Services Market decreased to 288.2 million USD with a decrease of 39% comparing to the previous year. The volume of the Turkish IT Services Market grew faster than the total market in 2002, reaching 403.5 million USD, and the share of the IT Services in the total market increased to a record level of 28.1% in the same year. However, in spite of the pressure of the crisis that deepened in the last quarter of 2008 on the consumption tendencies, the market was realized at 881 million USD in 2009 and achieved 18,6 % growth rate when compared to 2008.

The share of the IT Services in the total market was 17,8 % in 2009, which increased to 18,6 in 2010. In 2011, this rate became 19 %. However, it is expected that this share will increase due to the needs that may arise during the integration of newer technology sys-tems on the existing systems and outsourcing of IT operations by big companies –banks in particular. The Compound Annual Growth Rate between 2012 and 2019F is expected to be 6,5 % and reach 1,720 billion USD.

Source:IDC2015

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32

IT Sector IT Services Growth Figures and Growth Targets, 2012-2019F (Mio USD,%)

Source: IDC 2015

İndeks Bilgisayar in the ICT Sector:

InTurkey,Top500 ICTCompaniesRankingperformedeveryyearby InterproMedyaA.Ş.,ourcompany rankedsixth in thegeneral rankingbasedon turnoverachieved in2014among thecompaniesincludingtelephoneoperatorsandmobilephonesellers.Ontheotherhand,itrankedfirst,likethepreviousyears,inthecategoryofcompaniessellingonlycomputers.Further,itrankedfirstinsevenITcategories.

2014 Top ICT Companies Revenue Range (Sales Revenue)2014 Range Company USD (mio)

1 Turk Telecom 6.2052 Turkcell 5.4943 Vodafone 3.4324 Teknosa 1.2225 Gen-pa 1.0796 Indeks Computer 1.0067 KVK Teknoloji 9268 Brighstar 7689 Penta Teknoloji 61810 Hewlett-Packard 590

(mio

USD

)

CAGR ( 12-19T ): %2,4


2012 2013 2014 2015 E 2016 E 2017 E 2018 E 2019 E-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

1.038$1.180$

1.361$ 1.358$ 1.396$1.483$

1.610$1.720$

500

2000

1000

1500

0

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33

Important Events in the IT Sector in 2015:

ImportanteventsthatoccurredintheTurkishITSectorin2015arelistedbelow:

1.Inparticular,widespreadofTabletsandSmartPhonesaffectedthesalesofmobile

anddesktopPCs.

2.Robotterms.

3.Cloudimplementations(GoogleDrive,Mega,Dropbox)

4.3DPrintingsystems

5.Smartwhitegoods

6.Wearabletechnologies

7.Socialmediaincommunication

34

03 SUBSIDIARIES

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35

3. Subsidiaries

ThefinancialstatementsofDatagateBilgisayarMalzemeleriA.Ş.,ArtımBilişimÇözümveDağitımA.Ş.andTeklosTeknolojiLojistikHizmetleriA.Ş.areconsolidatedbyfullconsolidationmethodandthoseofNeteksİletişimÜrünleriDağıtımA.Ş.byproportionalconsolidationmethod.Thefinancialstatementsof İnfinBilgisayarTicaretA.Ş.andNeteksDışTicaretLtdŞtiarenot includedintheconsolidationbecausetheir lowvolumesofoperationarenot likelytobeofsignificanceforthefinancialstatements.

3.1. Datagate Bilgisayar Malzemeleri Tic. A. Ş.

DatagatebecameadistributorofAVEAGSMOperator.Inthiscontex,itdistributessmartphoneofInternationalandlocalphoneproducers,tablet,simcards,physicalTLcredit(forprepaidphones)andaccessories.

Thepartnershipstartedwiththeacquisitionof50.5%sharesofDatagateBilgisayarMalzemeleriA.Şby İndeksBilgisayarA.Ş. in2001 reached85.00%withanadditionalacquisitionof34.5%bythesamecompanyinNovember2003.PartnershipshareofİndeksBilgisayardecreasedto59.24%withthepublicofferingofDatagateinFebruary2006.

InFebruary2006,thesharesofDatagateBilgisayarMalzemeleriTic.A.Ş.wereofferedtopublicsuccessfully,restrictingthepreferentialrightsoftheexistingshareholders,andbeguntobetradedintheNewEconomyMarketofIstanbulStockExchange.Itscapital,whichwasTRL1,550,000before public offering, has increased to TRL6,600,000 following thepublic offering.With thepublicoffering,thecapitalofDatagateBilgisayarMalzemeleriTic.A.Ş.wasincreasedfromTRL6.600.000toTRL10.000.000in2007,coveringTRL1.910.004fromtheprofitoftheperiod in2006andTRL1.489.996fromtheSharePremiums.Themainproductgroupsandbrandsdistri-butedbyDatagatearelistedbelow:

Group BrandsTelephone Apple, Samsung, Nokia, Sony, HTC, LG, Huawei, Vestel, General Mobile, ZTE, Avea Tablet Apple, Samsung, Casper, Asus, Router ZTEAccessories Apple, Samsung, LG

Name of Subsidiary Percentage of Share Issued CapitalDatagate Bilgisayar Malzemeleri A.Ş 59,24% 10.000.000 TRL Neteks İletişim Ürünleri Dağ. A.Ş. 50,00% 1.100.000 TRL Artım Bilişim Çözüm ve Dağitım A.Ş. 51,00% 1.210.000 TRLİnfin Bilgisayar Ticaret A.Ş. 99,80% 50.000 TRL Neteks Dış Ticaret Ltd. Şti. (*) 49,50% 5.000 TRLTeklos Teknoloji Lojistik A.Ş 99,99% 5.000.000 TRL(*) Neteks Dış Ticaret Ltd. Şti is a 99% owned subsidiary of Neteks İletişim Ürünleri Dağıtım A.Ş.

2015 Annual Report

36

3.2. Neteks İletişim Ürünleri Dağıtım A.Ş.

Netekswasestablishedtoprovidenetworkandcommunicationproductstothemarketthroughitsretailersandbusinesspartnersasadistributorcompanyin1996.Netekshastriedtoprovidecompletenetworksolutionstobusinesspartnersbyaccommodatingthemostexperiencedna-mesintheirfieldsinTurkey.BesidesthecorporatenetworkssystemsanditscomponentsofthecompaniessuchasCisco,NortelNetworks,3Com,HP,JuniperandAvocent,NeteksA.S.alsodistributescorporate telephoneswitchboardsystemsofNortelNetworksandAvaya,structuralcableproductsofHSC,Corning,PanduitandGünko,networksecuritysolutionsofCheckPoint,TrendMicroandIBMISS.

ThemainproductgroupsandbrandsdistributedbyNeteksarelistedbelow:

Product Group BrandsCorporate Network Systems Cisco System, Nortel Networks, 3ComCorporate Telephone Switchboard Systems

HP, Avocent, Nortel Networks, Avaya

Structured Cabling Solutions Corning, HCS, PanduitNetwork Security Solutions Check Point, Trend Micro, F5

70%and24%oftheshareofNetekswereacquiredbyİndeksandDatagateA.Ş.,respectively,in2001.In2007,6%ofNeteksA.Ş.’sshareswhichareheldbyothershareholderswereacquiredbyIndeksA.Ş.atUS$374.000.Ourcompanykept50%ofsharesforitselfandsold26%toWest-conGroupEuropeanOperationLimitedatUS$1.820.000.Accordingtotheagreementsignedbetweentheparties,24%ofthesharesofNeteksİletişimÜrünleriDağıtımA.Ş.heldbyDatagateBilgisayarA.Ş,asa59,24%affiliateofİndeksBilgisayarA.Ş.andlistedinIstanbulStockExchange,weresoldtoWestconGroupEuropeanOperationLimitedatUS$1.680.000.

Ofthe50%sharessold,26%and24%wereprovidedbyİndeksBilgisayarSistemleriMühendislikSanayiveTicaretA.ŞandDatagateBilgisayarMalzemeleriTicaretA.Ş.,respectively. İndeksBil-gisayarA.Ş.andWestconGrouphavehad50-50%ofthesharesofNeteksA.Şafterthesaleofshares.

3.3. Artım Bilişim Çözüm ve Dağitım A.Ş

ArtımBilişimA.Şwasestablishedin2003inIstanbultobevalueaddeddistributorforchannelbusinesspartners.It intendstobetheleaderfirminthecategorythatitoperatesforproductsandservices.ItcontinuesprovidingneedsofITworldwithits2branchesinAnkaraandİzmir.Since2011,itwillcontinuedeliveringitsallsolutionstoitscustomerundertheexcellenceofIndexGroup.

2015 Annual Report

37

Product Group BrandsOracle Solutions OracleSecurity & Printing Solutions Sentinel, Pcounter, Safecom, Follow Me, TroyDocument Management Solutions

Form Port, Smart Printer, Welp, XPress, Nuance Smart Office Scan, Nuance Scan Flow Store, Nuance eCopy PDF Pro Office

Special Solutions TowerTray, Stick and go, P2M, Winsert, Cluster Que, Bardimm, Fax Manager, TroyService Spare Parts Solutions

Hp, Sun Oracle, Dell, Fujitsu, Lenovo

OTVT Solutions Intermec

3.4. İnfin Bilgisayar Ticaret A.Ş.

İnfinBilgisayarTicaretAnonimŞirketiwasestablishedin2001tohelptheretailerswiththeirsalesandexportoperationswithintheframeworkofinvestmentoperationsunderincentivecertificates.

Duetothefactthatitsbiggestpartofpurchaseandsalesofthecompanywasarisenoutofthecompaniesincludedinthefinancialstatements,anditsbusinessvolumewassolowthatdoesnotmakeanyimpactonthefinancialstatements,thiscompanyisleftoutofthesaidstatements.

3.5. Teklos Teknoloji Lojistik A. Ş

ThiscompanywasfoundedunderthenameofKaradenizÖrmeSanayiA.Ş.tooperateintextilesectoron03.01.1973.InMarch2006,İndekshasexecutedanimportantandgreatestinvestmentinITsectorbypurchasingKaradenizOrmeA.S.,whichisfoundedona39,761squaremeterslandandhaving18,969squaremetersindoorarea,inordertobeusedasalogisticsheadqu-arters.ThetradenameofKaradenizOrmeAShasbeenchangedintoTeklosTeknolojiLojistikHizmetlerA.Ş.anditsfieldofactivityhasbeenchangedtoaslogisticsservices.TeklossignedarevenuesharingagreementwithSebaConstructiontodevelopluxuryofficesontheland.Ac-cordingtotheagreement,%40,5incomefromthesaleofdevelopedofficesprojectbelongtoTeklosandthiswillberealiseduntilmay2017.Tekloscontinueitsoperationson23.500metersquareclosedareainTuzla/Şekerpınar(Anatolianside).

TeklosTeknolojiLojistikHizmetlerA.Ş.isprovidinglogisticservicestothecompaniesoperatingintheITsector.

38

04 OPERATION

2015 Annual Report

39

4. Operation

ThesupplyanddistributionstructureofIndeksBilgisayarA.Ş.isshownasfollows:

1.Structure of Product Supply and Distribution:

Indeksoperatesasamaindistributor(“broadlinedistributor”)inITindustry.ItbuysITproductsfromsuppliersatcertainpricesandmaturityperiodsandsubsequentlysellstheproductstothesaleschannelsthatwillsellthemtotheenduser.Thecompanydoesnotplantodevelopasalesstru-cturethatwillincludedirectsalestotheenduserinthenearfuture.

1.1.Suppliers:

Thehardwareandsoftwaresuppliersofthecompanyaregroupedintotwocategories.

• GlobalbrandsthatoperateinTurkey:(APPLE,IBM,HP,LENOVO,INTEL,SEAGATE,CA-NON,OKI,SYMANTEC,MICROSOFT,APC,FUJITSUSIEMENS,EPSON,TOSHIBA,SONY,ASUS).Asthisisthenatureofthebusiness,theseglobalcompaniespreferworkingwithdist-ributorswhicharelessinnumbersinsteadofhandlingdistribution,

• GlobalbrandsthatdonotoperateinTurkey:(KINGSTON,NEC,VIEWSONIC,WESTERNDIGITAL)ThesecompanieshavenotsetupofficesinTurkeyyet.However,thesecompaniesconducttheirimports,salesandmarketingactivitiesthroughthedealershipofdistributors.•

1.2.Distribution Channel:

Asadistributioncompany,Indeksbuystheproductsfromsuppliers.Furthermore,itresellsthemtothesaleschannelswhichselltotheenduser.ThestructureofdistributionchannelswhichIn-dekssellstoandwhichsellITproductstotheenduserinTurkeyissummarisedbelow:

Supplier Supplier Supplier Supplier Supplier Supplier

İNDEKS BİLGİSAYAR A.Ș.

System Integrators

Value AddedDealers Channel

Regular Dealers Retail Channel

Retail Chains

RegularShops E-Commerce

END USER

40

2015 Annual Report

1.2.1. Solution Provider Dealers Channel (System Integrators)

Withrespecttothenumberofpeopletheyemploy,companiesinthischannelhaveatleast100employees.Theyareamong the relativelyoldcompanies in the industry. Theenduser thesecompaniestargetissolelythebigcorporatecustomers.Theyhaveexperienceintheindustryandhaveespeciallyhighservice,salesandproductrecognitioncapabilities.Themaintargetofthecompaniesinthischannelistoadaptnewtechnologiestocorporatecustomers.

Thenumbersofthesecompaniesarenotmorethan100alloverTurkeyatthemoment.

1.2.2. Value Added Dealers:

Withrespecttothenumberofpeopletheyemploy,companiesinthischannelhave25-100emp-loyees.Thesecompaniesaremorelimitedwithrespecttocapitalbutthankstotheiryounganddynamicstructures,theyareabletomakequickdecisionsandoperateonlowmarginsbykeepingcostsdown.Theirtargetgroupismultinationalcompaniesandcorporatecustomerswithgenerallyonelocation.

Distributorssupportthesecompanieswithrespecttofinance,logistics,andproductinformation.Thesecompaniesdonothaveanintensiverelationshipwiththemanufacturers.Thenumbersofthesecompaniesaremorethan500alloverTurkey.

1.2.3. Regular Dealers (Classic):

Theseareprettysmallcompanieswithastaffof5to25.Theydonothavetheirownuniqueso-lutions.TheirtargetisSMEsandthehomemarket.Theynumberatleast4.000to5.000andarethebiggestgroupintheITindustry.

Thesecompaniescarryouttheiroperationsfullywithdistributorcompanyresources.TheirsalesaremoredirectedtowardsOEMproductsandperipheralsthanbrandedproducts.

1.2.4. Retail Channel

Intherecentyears,RetailChainsdiversifiedandreachedhugetransactionvolumewiththereasonofinvestmentsmadebylocalchainsshopsandtheinvestmentalsomadebyinternationalchainsinthiscategory.Furthermore,FoodChainShopsandDowryShopsincreasedtheirbusinessvo-lume.MajorityofhomemarketneedsisprovidedbyabovementionedchainshopsinTurkey.ForIndeks,thereare3typesofretailgroups:

i. Retail Chains:

TheretailchainsarebiggroupshavingmorethanonestoreunderthesamebrandsuchasTek-nosa,Bimeks,Vatan,Gold,MediaMarkt,Darty,Electroworld,BestBuyTeknolojiks,NT,Yalçınlar,Evkur,Metro,Migros,Real,Carrefour,Tesco/Kipa.Themainfunctionofsomegroupsofthisca-tegoryiscomputer,whilesomeofthemsuchfoodmarketsanddowryshopsarechainsdealingwithcomputerasasecondarybusiness.

2015 Annual Report

41

ii. Regular Computer Stores (Classic):

Thesestoresaresmallcompanieswheretheownerofthestoreandafewsalesrepresentativesworkandtheyoperatewithlimitedresources.Theyaretotallyfocusedoncomputers.

iii. E-Retail:

Thischannel isbasedonvirtualmarketswhichopenvirtualstoresandoperate in the internetmedium.Duetothewidespreadusageoftheinternetintherecentyears,thenumberofthecom-paniesoperatinginthischannel is increasinglygrowing.ThecompaniessuchasHepsiburada,e-storearetheexamplesofthistypeofchannel.

2.Logistic

Indeksmakessalesanddistribution via its323employeesandmore than7000dealerswithcompaniesincludedintoconsolidationinitsfinancialstatementsto81provincesofTurkeyfromitslogisticcentresinIstanbul,AnkaraandIzmir.

Thebranchoffices inAnkaraandİzmirestablishedin1992and1995,respectively,operateas“districtoffices”.Havingtheirownlogistic,sales,accounting,finance,currentaccountsandcusto-merservicesdepartments,theyareresponsibleforsalestothedealersanddevelopmentofthesaleschannelsintheircities.AnkaraofficeisresponsibleforthedistrictAnkara,CentralAnatoliaandEasternAnatoliaRegions,İzmirOfficefortheDistrictIzmir,WesternAnatoliaandAegeanRe-gions.TheareasnotincludedtheforegoingshallbeundertheresponsibilityoftheheadquartersinIstanbul.

IndekshasexecutedoneofthemostimportantandgreatestinvestmentsinITsectorbypurcha-singKaradenizOrmeA.Ş.,whichisfoundedona39,761squaremeterslandandhaving18,969squaremetersclosedarea,inordertobeusedasalogisticsheadquarters.ThetradenameofKaradenizOrmeA.Ş.hasbeenchangedintoTeklosTeknolojiLojistikHizmetlerA.Ş.anditsfieldofactivityhasbeencustomizedtobeabletoworkonthelogisticsservices.TeklosTeknolojiLojistikHizmetlerA.Ş. isprovidinglogisticservicestothegroupcompaniesandothercompaniesin ITsectoraswell.Theheadofficeofthecompanymovedtoitsnewlocationon26.10.2006.

TeklossignedarevenuesharingagreementwithSebaConstructiontodevelopluxuryofficesontheland.Accordingtotheagreement,%40,5incomefromthesaleofdevelopedofficesprojectbelongtoTeklosandthiswillberealiseduntilmay2017.Tekloscontinueitsoperationson23.500metersquareclosedareainTuzla/Şekerpınar(Anatolianside).

IndekshasalsodistrictwarehousesinAnkaraandIzmir.

3. Invoicing and Collection

IndeksmakessalestoalmostallcompaniesdealingwithcomputerandITproducts.

Thiskindofdealers,whichareestimatedasnumberabout5,000intotalinTurkey,areconsideredRegularDealer(ClassicDealers).

CreditCommittee:

42

CreditclaimsofthedealersaresubmittedtotheCreditcommitteethatdoesmeetingseveryweekonaregularbasisforthispurpose.ThesemeetingareorganizedwithheadedofCFO(AssistantGeneralManagerresponsibleforFinancialandOperationalAffairs),AssistantCFO,FinanceMa-nager,Credit&RiskManagerandSalesManagersofrelatedcustomers.

4. Technical Support and Customer Service

TheCompanydoesnotprovideaftersaleservice.Instead,itdirectsitscustomerstothecom-paniesofeachproductauthorisedtoprovideservice.Itisbecausethesuppliersprefertheirownsolutionpartnertoprovideservicetotheenduser.

5. Marketing and Sales

DuetothestructureoftheITindustry,thetechnologiesandpricesoftheproductsthat Indeksdistributesaresubjecttofrequentchangesandimprovements.Therefore,anefficientandeffe-ctive inventorymanagementandrateof inventoryturnovermaymakesignificant impactontheoperationalperformanceofcompanies.

Consideringthedynamicstructureoftheindustry,Indeksassignsoneproductmanagerforeachgroupofproduct.Theproductmanagershavethemissionofunderstandingtherequirementsofthesalesgroupswithdifferingtargetsandobjectivesarecomprehendedbetterandtherefore,theCompanyprovidesbetterservicetosuchgroups,followingupthemarketandtechnologytrends,executingthemarketingactivites.

Exchangeofinformationwithcustomersareprovidedviaweb,e-mailandfax.

2015 Annual Report

2015 Annual Report

43

44

06 INDEPENDENT AUDIT REPORT

2015 Annual Report

45

INDEPENDENT AUDIT REPORT To The Board of Directors of İndeks Bilgisayar Sistemleri Mühendislik Sanayi ve Ticaret Anonim Şirketi

Report on the Consolitated Financial Statements

We have audited the accompanying consolidated financial statements of İndeks Bilgisayar Sistemleri Mühendislik Sanayi ve Ticaret Anonim Şirketi, its subsidiaries (together with “Group”) which comprise the consolidated balance sheets at December 31, 2015 and the consolidated income statement, consolidated statement of changes in shareholders’ equity and consolidated statement of cash flows for the years then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Consolitated Financial Statements

The Group’s management is responsible for the preparation and fair presentation of these consolidated fınancial statements in accordance with the Turkish Accounting Standards (“TAS”) published by the Public Oversight Accounting and Auditing Standards Authority (“POA”) and for such internal controls as management determines is necessary to enable the preparation of consolidated fînancial statements that are free from material misstatement, whether due to error and/or fraud.

Auditor’s Responsibility for the Consolitated Financial Statements

Our responsibility is to express an opinion on these consolitated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

Our audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolitated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolitated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolitated 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 audit also includes 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the accompanying consolidated fınancial statements present fairly the fınancial position of İndeks Bilgisayar Sistemleri Mühendislik Sanayi ve Ticaret Anonim Şirketi and its subsidiaries as of 31 December 2015 and its consolitated fınancial performance and consolitated cash flows for the year then ended in accordance with the Turkish Accounting / Financial Reporting Standards (“IAS / IFRS”) framework.

Other Responsibilities Arising From Regulatory Requirements

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 comitee has been submitted to the company’s Board of Directors on March 9, 2016.

In accordance with subparagraph 4 of Article 398 of the “TCC”; no significiant matter has come to our attention that causes us to believe that the Group’s bookkeeping activities for the period January 1 – December 31, 2015 is not in compliance with the code and provisions of the Group’s articles of association in relation financial reporting.

In accordance with subparagraph 4 of Article 398 of the “TCC”; the board of directors provided us the necessary explanations and submitted required documents within the contex of audit.

GÜRELİ YEMİNLİ MALİ MÜŞAVİRLİK VE BAĞIMSIZ DENETİM HİZMETLERİ A.Ş.An Independent Member of BAKER TILLY INTERNATIONAL

Dr. Hakkı DEDECertified Public AccountantIstanbul, March 9, 2016

46

07 FINANCIAL STATEMENTS AND FOOTNOTES

2015 Annual Report

47

FINANCIAL STATEMENTS AND FOOTNOTES

BALANCE SHEET (TL)

ASSETS Notes Audited31 December 2015

Audited31 December 2014

Current Assets 1.257.203.521 962.107.748

Cash and Cash Equivalents 6 136.763.531 111.965.405

Financial Investments 7 - -

Trade Receivables 10 881.469.750 636.440.126

- Receivables from Related Parties 10-37 2.410.177 2.612.603

- Other 10 879.059.573 633.827.523

Other Receivables 11 682.586 860.472

- Receivables from Related Parties 11-37 346.748 274.998

- Other 11 335.838 585.474

Derivative Financial Instruments 12 - 165.039

Inventories 13 206.642.916 170.285.057

Prepaid Expenses 15 8.502.277 7.263.191

Assets Relating to Current Period Tax 25 - 2.366

Other Current Assets 26 23.142.461 35.126.092

Non-Current Assets 129.511.471 97.629.742 Financial Investments 7 63.605 63.605

Trade Receivables 10 67.085.142 43.872.812

- Receivables from Related Parties 10-37 - -

- Other 10 67.085.142 43.872.812

Other Receivables 11 51.685 51.685

- Receivables from Related Parties 11-37 - -

- Other 11 51.685 51.685

Investments Evaluated by Equity Method 16 10.193.899 9.053.260

Investment Properties 17 30.571.138 30.597.609

Tangible Fixed Assets 18 6.840.916 8.472.157

Intangible Fixed Assets 19 5.233.861 2.274.424

- Goodwill 19 1.897.699 1.897.699

-Other 19 3.336.162 376.725

Deferred Tax Assets 35 9.471.225 3.244.190

Total Assets 1.386.714.992 1.059.737.490

The accompanying notes are integral parts of the financial statements.

INDEKS BILGISAYAR SISTEMLERI MUHENDISLIK SANAYI VE TICARET A.Ş. CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2015

2015 Annual Report

48

BALANCE SHEET (TL)


LIABILITIES Note Audited31 December 2015

Audited31 December 2015

Short-Term Liabilities 1.108.294.894 843.017.116 Short-Term Borrowings 8 58.684.728 42.252.403

Short-Term Portion of Long-Term Borrowing 8 196.577.011 49.349.734

Other Financial Liabilities 9 - -

Trade Payables 10 719.866.860 683.603.073

-Trade Payables to Related Parties 10-37 162.404 15.896

-Other 10 719.704.456 683.587.177

Liabilities in the Scope of Employee Benefits 20 485.108 566.066

Other Payables 11 6.811.278 3.969.207

-Other Payables to Related Parties 11-37 - -

-Other Payables to Non-Related Parties 11 6.811.278 3.969.207

Derivative Financial Instruments 12 165.962 -

Deferred Earnings 15 81.772.126 29.854.926

Current Period Profit Tax Liability 35 5.598.029 5.619.205

Short-Term Provisions 22 38.333.792 27.802.502

-Other Short-Term Provisions 22 38.333.792 27.802.502

Other Short-Term Liabilities 26 - -

Long-Term Liabilities 70.580.673 44.797.076 Long-Term Borrowings 8 67.160.341 41.804.265

Long-Term Provisions Regarding Employee Benefits 24 3.293.817 2.783.123

Deferred Tax Liabilities 35 126.515 209.688

SHAREHOLDER’S EQUITY 207.839.425 171.923.298

Shareholders’ Equity Related to Parent Company 27 178.642.621 152.798.427 Paid-in Capital 56.000.000 56.000.000

Share Capital Adjustments 1.064.323 1.064.323

Withdrawn Shares (-) (634.290) (634.290)

Share Premiums - -

Non-Reclassification to profit or loss Accumulated Other

Comprehensive Income or Expenses(374.350) (198.766)

- Defined Benefit Plans and Measurement Revaluation Gains /

Losses(374.350) (198.766)

Reclassification to profit or loss Accumulated Other Comprehensive

Income or Expenses11.404.396 9.065.695

- Foreign Currency Translation Differences 11.404.396 9.065.695

- Hedging 12 - -

Restricted Reserves Assorted from Profit 12.605.752 9.957.469

Previous Years’ Profit/(Loss) 53.656.587 52.370.539

Net Profit/(Loss) for the Period 44.920.203 25.173.457

Non-Controlling Interests 27 29.196.804 19.124.871

TOTAL LIABILITIES 1.386.714.992 1.059.737.490

2015 Annual Report

49

COMPREHENSIVE INCOME STATEMENT (TL)

CONTINUED OPERATIONS Note

Audited

January 1, 2015-

December 31, 2015

Audited

January 1, 2014-

December 31, 2014

Sales 28 3.384.690.880 2.206.019.328

Cost of Sales (-) 28 (3.231.879.393) (2.103.438.874)

GROSS PROFIT 152.811.487 102.580.454General Administrative Expenses (-) 29 (30.868.074) (29.292.476)

Marketing, Sales and Distribution Expenses(-) 29 (30.272.070) (19.283.597)

Other Operating Income 31 97.669.633 88.177.079

Other Operating Expenses (-) 31 (98.408.039) (83.649.695)

OPERATING PROFIT 90.932.937 58.531.765

Share in Profit / (Loss) of Investments Evaluated According to Equity Method (975.527) 767.290

Income from Investing Operations 32 49.929 8.829

Expenses from Investing Operations (-) 32 - (17.941)

OPERATING PROFIT/(LOSS) BEFORE FINANCIAL EXPENSES 90.007.339 59.289.943Financial Income 33 17.584.771 797.947

Financial Expenses (-) 33 (38.260.479) (22.584.911)

CONTINUED OPERATIONS PROFIT BEFORE TAXATION 69.331.631 37.502.979Continued Operations Tax Income / (Expense) (14.182.218) (7.751.532)- Tax Income / (Expense) for the Period 35 (20.447.333) (9.692.518)

- Deferred Tax Income / (Expense) 35 6.265.115 1.940.986

Distribution of Profit / (Loss) of the Period 55.149.413 29.751.447Non-Controlling Interest 10.229.210 4.577.990

Parent Company Share 44.920.203 25.173.457

Earnings / (Loss) Per Share 36 0,802146 0,449526OTHER COMPREHENSIVE INCOME: 2.005.840 169.947Items Not To Be Reclassified in Profit / Loss (180.375) (1.958)Actuarial Gains and Losses from Retirement Plans (175.584) (7.898)

Minority Actuarial Gains and Losses (4.791) 5.940

Items To Be Reclassified in Profit / Loss 2.186.215 171.905

Foreign Currency Exchange Differences 2.186.215 171.905

Cash Flow Hedge Gains / Losses 12-27 - -

Distribution of Other Comprehensive Income 57.155.253 29.921.394Non-Controlling Interest 10.071.933 4.277.169

Parent Company Share 47.083.320 25.644.225


2015 Annual Report

50

NoteAudited

January 1, 2015-December 31, 2015

AuditedJanuary 1, 2014-

December 31, 2014

A) CASH FLOW PROVIDED FROM OPERATIONS (118.723.145) (25.383.676)

Period Profit/(Loss) 55.149.413 29.751.447

Corrections Regarding Period Profit/Loss Reconciliations 64.331.137 47.753.573

Corrections Regarding Depreciation and Amortization 17-18-19 2.559.592 2.346.456

Profit (+) / Loss from Sale of Fixed Assets 18-19 (49.929) 17.941

Increase in Termination Indemnity Provision (+) 24 1.120.870 1.098.568

Termination Indemnity Payments (-) 24 (835.644) (986.133)

Receivables Rediscount Amount (+) 10 16.431.583 10.980.568

Increase (+) / Decrease (-) in Provision for Debts 22 10.531.290 8.425.796

Prediscount on Debts (-) 10 (3.721.260) (143.883)

Provision for Doubtful Receivables for Current Period (+) 10 1.890.484 570.489

Provision for Nullified Doubtful Receivables (-) 10 (61.657) (286.722)

Provision for Decrease in Value of Inventories (+) 13 2.096.206 396.009

Interest Expenses (+) 31-33 71.062.558 40.398.408

Interest Income (-) 31-33 (50.875.174) (22.815.456)

Tax Income / Expenses(-) 14.182.218 7.751.532

Operational Income Before Changes in Working Capital: (281.951.425) (105.140.871)

Corrections Relating to Changes in Inventory 13 (38.454.065) (23.997.558)

Increase in Trade Receivables /Other Receivables (-) 10-11 (286.324.478) (244.627.984)

Increase in Financial Assets Ready for Sale (-) - -

Increase in Trade Payables /Other Payables (-) 10-11 42.827.118 163.484.671

Cash Inflow Provided/(Used) From Operating Activities: (162.470.875) (27.635.851)

Increase (-) / Decrease (+) in Other Current Assets 26 11.983.631 (1.801.636)

Cash Assets from Consolidation - -

Decreases in Other Liabilities (-) / Increase (+) 26 - -

Other Changes (+) / (-) 52.232.608 9.548.505

Tax Payments (-) (20.468.509) (5.494.694)

B) NET CASH USED IN INVESTMENT OPERATIONS (3.811.388) (8.516.565)

Net Tangible Assets Purchases (-) - -

Investment property (-) 17 - (128.713)

Cash Inflow from sale of Tangible and Intangible Assets 18-19 80.567 101.397

Purchase of Assets from Financial Lease (-) 18-19 (711.735) (2.556.292)

Cash Outflow from sale of Tangible and Intangible Assets 18-19 (3.180.220) (5.932.957)

C) CASH FLOW RELATING TO FINANCIAL ACTIVITIES 147.329.173 71.501.007

Change in Short Term Financial Liabilities (+) 8 163.659.602 54.071.390

Change in Long Term Financial Liabilities (+) 8 25.356.076 38.151.891

Dividends Payments (-) (21.239.126) (3.126.257)

Interest Payment (-) (20.447.379) (17.596.017)

Hedging - -

NET INCREASE / DECREASE OF CASH AND CASH EQUİVALENTS

BEFORE THE EFFECT OF FOREİGN CURRENCY TRANSLATİONS24.794.640 37.600.766

NET INCREASE / DECREASE OF CASH AND CASH EQUIVALENTS 24.794.640 37.600.766

D. BEGINNING BALANCE of CASH and CASH EQUIVALENTS 6 111.958.593 74.357.827

ENDING BALANCE of CASH and CASH EQUIVALENTS 6 136.753.233 111.958.593

STATEMENT OF CASHFLOWS (TL)


2015 Annual Report

51

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2015 Annual Report

52

1 ORGANIZATION AND BUSINESS SEGMENT

İndeksBilgisayarSistemleriMühendislikSanayiveTicaretAnonimŞirketiwasestablishedin1989and theactivitiesof theGrouparecomprisedof tradeofall kindsof “InformationTechnology”productsforthepurposeofwholesaletrading.TheCompanyisregisteredtotheCapitalMarketsBoardofTurkeysinceJune2004and15,34%oftheCompany’ssharesaretradedonIstanbulStockExchange.

DetailsregardingtoGroup’ssubsidiaries,whicharesubjecttoconsolidation,areasfollows:

DetailsregardingtoCompany’sjointventures,whicharesubjecttoconsolidation,areasfollows:

ThefinancialstatementsofDatagateBilgisayarMalzemeleriA.Ş.,NeotechTeknolojikÜrünlerDağ.A.Ş., Teklos Teknoloji Lojistik Hizmetleri A.Ş., Artım BilişimÇözüm veDağıtım A.Ş. and İndeksInternationalFZEareconsolidatedaccordingto“thefullconsolidationmethod”.Thefinancialsta-tementsofNeteks İletişimÜrünleriDağıtımA.Ş. isconsolidatedaccordingto“theproportionateconsolidationmethod”.

Company NameField Of

OperationsCapital

% of Direct Ownership

% of Indirect

Ownership

Datagate Bilgisayar Malzemeleri A.Ş. (Datagate )

Purchasing and Selling of Computer and Equipment

10.000.000 59,24 59,24

Neotech Teknolojik Ürünler Dağ. A.Ş. (Neotech)

Purchasing and Selling of Home Electronic Products

1.000.000 80,00 80,00

Teklos Teknoloji Lojistik Hizmetleri A.Ş. (Teklos)

Logistics 5.000.000 99,99 99,99

Artım Bilişim Çözüm ve Dağıtım A.Ş. (Artım) Purchasing and Selling of Spare Parts of IT Products

1.210.000 51,00 51,00

İndeks International FZE (*) (Indeks FZE)Purchasing and Selling of Computer and Equipment

150.000 BAEDirhemi

100 100

Datagate International FZE (***) (Datagate FZE)

Purchasing and Selling of Computer and Equipment

150.000 BAEDirhemi

- 59,24

Company NameField Of

OperationsCapital

% of Direct Ownership

% of Indirect

Ownership

Neteks İletişim Ürünleri Dağıtım A.Ş. (Neteks)

Purchasing and Selling Network

Products1.100.000 50,00 50,00

2015 Annual Report

53

ThemainshareholdersoftheCompanyareNevresErolBilecik(%36,26).Theaveragenumberofemployeesfortheyear2015is325.(2014:330).Allofthepersonnelcarryoutadministrativeduties.

TheCompany’s official address registered in TradeRegistry isMerkezMahallesi ErsevenSo-kakNo:8/1Kağıthane, İstanbul.TheCompany’sheadoffice is in Istanbuland ithasbranchesinAnkara, İzmir,Diyarbakır.TheGroup’s logisticaloperationsareconductedbyTeklosTeknolojiLojistikHizmetleriA.Ş. intheadressofCumhuriyetMahallesiYahyakaptanCaddesiNo:10AD:2Çayırova/KOCAELİ.

2 BASIS OF PRESENTATION

2.01 Basis of Presentation

TheGroupmaintainsitsbooksofaccountsandstatutoryfinancialstatementsinaccordancewithTurkishCommercialCodeandaccountingprinciplesdeterminedintaxlegislations.SerialII-14.1“CommuniquéOnThePrinciplesOfFinancialReportingInCapitalMarkets”,whichwaspublishedinOfficialGazettedated13June2013andnumbered28676,supersededtheCapitalMarketsBoard(“CMB”)“CommuniquéOnThePrinciplesOfFinancialReportingInCapitalMarkets”

TheGroup’s financial positionandoperation results areexpressed inTurkishLira. The interimfinancialstatementsarepreparedinaccordancewithTurkishAccountingStandards/TurkishFi-nancialReportingStandards(“TAS/TFRS”)issuedbyPublicOversightAccountingAndAuditingStandardsAuthority(“POA”)

TheGroup’sconsolidilatedfinancialstatementsbetweenthedatesof1January-31December2015areapprovedby theboardof thedirectorson thedateof 9March2015.TheGeneralassemblyandtherelevantlegalentitieshavetheauthoritytochangetheseconsolitatedfinancialstatements

TheGroup’sfinancialstatementsarepresentedwithenvironmentinwhichtheGroupitsfunctionalcurrencythatisthecurrencyoftheprimaryeconomicoperates.AccordinglytheGroup’sfinancialpositionandoperationresultsareexpressedinTurkishLira.

Asthedateof31December2015,thecurrencyofnon-monetaryitemsinpreparedfinancialsta-tementsareacceptedasUSDuntil30June2013.ThetransactionsafterthisdateaccountedasTLduetochangeinfunctionalcurrencyUSDtoTL.

2.02 Dealing with the Inflation Effects in Hyper-Inflationary Periods

Accordingtothedecision,datedMarch17,2005withNo:11/367,madebytheCapitalMarketBoard,theinflationaccountinghasbeennolongereffectiveasof2005andtheaccompanyingconsolidatedfinancialstatementshasnotbeenadjustedsinceJanuary1,2005.Nonmonetaryvalues,whichareintheaccompanyingconsolidatedfinancialstatements,existwithvaluedasofDecember31,2004inaccordancewithInternationalAccountingStandardsNo.29“FinancialReportingonHyper-InflationistEconomies”.

2015 Annual Report

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2.03 Consolidation Principles

Subsidiariesarethecompanies,whosesharesareheldbytheGroupdirectlyorindirectlythroughsharesofothercompanies.Asaresult,theGroupwithorwithoutover50%ofvotingright,hasthepowerandauthoritytodirectandcontrolthemanagementandpoliciesofthesubsidiarycom-panieswhetherthroughtheownershipofvotingsecurities,bycontractorotherwise.

BalanceSheet and Income statements of the subsidiaries are consolidated according to “fullconsolidationmethod”andbook valueandcapital of theGroup’ssubsidiaryareadjustedac-cordingly.TransactionsandbalancesbetweentheGroupandSubsidiariesareeliminatedduringconsolidation.

Minorityinterestsshowminorityshareholders’shareinthesubsidiaries’assetsandresultofopera-tionsfortherelatedperiod.ThesedetailsaretobeexpressedseparatelyinconsolidatedBalanceSheetandIncomeStatement.

Iflossesrelatedtominorityinterestareoverbenefitsfromsharesofasubsidiaryandifthereisnoboundingliabilitytotheminorities,ingeneral,theselossesrelatedwiththeminoritiesresultagainsttobenefitsoftheminorities.

CompaniesundercommoncontroloftheGrouparedescribedasJointManagingCompanies.TheGrouphassignificantimpactonfinancialandoperatingpoliciesofthesecompanies.

Thecurrentsharesinthesubsidiariesareasfollows:

DetailsregardingtoGroup’sjointventures,whicharesubjecttoconsolidationbyequitymethod,areasfollows:

Company Name Field Of Operations Capital% of Direct Ownership

% of Indirect

Ownership

Datagate Bilgisayar Malzemeleri A.Ş.Purchasing and Selling of Computer and Equipment

10.000.000 59,24 59,24

Neotech Teknolojik Ürünler Dağ. A.Ş. Purchasing and Selling of Home Electronic Products

1.000.000 80,00 80,00

Teklos Teknoloji Lojistik Hizmetleri A.Ş. Logistics 5.000.000 99,99 99,99

İnfin Bilgisayar Ticaret A.Ş.Purchasing and Selling of Computer and Equipment

50.000 99,80 99,80

Artım Bilişim Çözüm ve Dağıtım A.Ş.Purchasing and Selling of Spare Parts of IT

Products 1.210.000 51,00 51,00

İndeks International FZE (Indeks FZE)Purchasing and Selling of Computer and Equipment

150.000 BAEDirhemi

100 100

Datagate International FZE (Datagate FZE)Purchasing and Selling

of Computer and Equipment

150.000 BAEDirhemi

- 59,24

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Acquisitionsofbusinessesareaccountedforusingtheequitymethod.Theconsiderationtrans-ferredinabusinesscombinationismeasuredatfairvalue,whichiscalculatedasthesumoftheacquisition-datefairvaluesoftheassetstransferredbytheGroup,liabilitiesincurredbytheGrouptotheformerownersoftheacquireeandtheequityinterestsissuedbytheGroupinexchangeforcontroloftheacquiree.Acquisition-relatedcostsaregenerallyrecognizedinprofitorlossasincurred.

IftheGroup’slosswhichiscomingfromsubsidiaries’lossisgreaterthanorequaltothegroup’stotalshareonsubsidiaries,bookvalueonsubsidiariesarezeroized(therebyincludeslongterminvestments)andifthereisnotanycommitmentoranypaymentinsteadofthesubsidiary,insuchcases,extralossesarenotaccountedanymore.

Goodwill is theexcessofpurchasepriceoverthefairmarketvalueofacompany’s identifiableassetsandliabilities.Goodwillisincludedininvestment’sbookvalueandbeexaminedintermsofimpairmentasapartoftheinvestment.Ifdefinableassets,liabilitiesandcontingentliabilities’fairvalueisoverthepurchaseorsaleprice,theexcessisaccountedasprofitorlossfortheperioddirectly.

ThefinancialstatementsofDatagateBilgisayarMalzemeleriA.Ş.,NeotechTeknolojikÜrünlerDağ.A.Ş.,TeklosTeknolojiLojistikHizmetleriA.Ş.,ArtımBilişimÇözümveDağıtımA.Ş.andİndeksIn-ternationalFZEareconsolidatedforusingdirectconsolidationmethod,thefinancialstatementsofNeteksİletişimÜrünleriDağıtımA.Ş.isconsolidatedbyusingpartialconsolidationmethod.

Affiliatecompanies’balancesheetsandincomestatmentareconsolidatedbyusingfullconsolida-temethodandthebookvalueandtheshareholdersequityoftheaffiliatecompaniesownedbytheGroupismutuallyclarified.LikewiseinsidegrouptransactionsandtheirbalancesoftheGroupandsubsidiariesduringtheconsolidationwereeliminatedmutually.

Minorityinterestsshowminorityshareholders’equityinthesubsidiaries’assetsandresultofope-rations for the relatedperiod. Thesedetails are expressedseparately in consolidatedbalancesheetandProfit/LossStatement.Iflossesrelatedtominorityinterestareoverbenefitsfromsharesofasubsidiaryandifthereisnoboundingliabilitytotheminorities,ingeneral,theselossesrelatedwiththeminoritiescanresultagainsttobenefitsofthemainshareholders.

Financial Information of Companies which are not Consolidated

Parentandsubsidiarycompanieswhicharenotsubjectedtoconsolidationandthesubsidiaryrelatedwithmanagement,auditing,andcapitalareasfollows:

Company Name Field Of Operations Capital% of Direct Ownership

% of Indirect

Ownership

Neteks İletişim ürünleri Dağıtım A.Ş.Purchasing and Selling

Network Products1.100.000 50,00 50,00

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İnfinBilgisayarTicaretA.Ş.andNeteksDışTicaretLimitedŞirketiwerenotconsolidated to thefact that theyareboth insignificantanddonothavematerialeffecton theGroup’sconsolida-tedfinancialstatements.Thesesubsidiariesareclassifiedasfinancialassetsavailableforsaleinconsolidatedfinancialstatements.ThesummaryfinancialinformationofmentionedcompaniesisdisclosesinNote:7.

Comparisonbetweenfinancialoutcomesofcompanieswhicharenotsubjectedtoconsolida-tionandfinancialoutcomesofconsolidatedfinancialstatementsasofDecember31,2015isasfollows;

Significant part of items,which are located in total asset and sales, are eliminatedduring theconsolidationeven though thesecompaniesaresubjected toconsolidation.Consideredothermatterswhenmentionedcompaniesareexcludedfromtheconsolidation,areasfollows;

Thesecompanieshavenotgotsignificantassetsandliabilitieswhichareoutofbalancesheet.Moreoverthesecompanieshavenotgotsignificantassetssuchasfixedassetsetc.

Onthelightsofabovegivendataallthesecompanieswerenotsubjectedtoconsolidationduetoallquantitativeandqualitativeevaluationsandonthe lightsofabovegivendata indicatethatthesecompaniesdonoteffecttofinancialoutcomessignificantly.

2.04 Comparative Information and Adjustment of the Previous Period Financial Sta-tements

Thecomparativefinancialstatementshavebeenpresentedtoenabletoperformthefinancialposi-tionandtheperformancetrendanalysis.Allnecessaryadjustmentsaremadeinpreviousfinancialstatementstopresentconsistentandcomparativefinancialstatements,ifrequired.

2.05 Offsetting

The financialassetsand liabilities in the financialstatementsareoffsetandthenetamount re-ported in thebalancesheet,where there isa legallyenforceableright tooffset therecognizedamounts,andthereisanintentiontosettleonanetbasisorrealizetheassetandsettletheliabilitysimultaneously.

Financial Outcomes of 2015 Total AssetTotal

EquityNet Sales

Period Income

Companies which are not subjected to consolidation

2.161.269 415.211 11.727.331 747.818

Consolidated Financial Statements 1.386.714.992 207.839.425 3.384.690.880 44.920.203% 0,16% 0,20% 0,35% 1,66%

SubsidiaryParticipation

Rate %OpeningAmout

Translation Differences

31 December

2015İnfin Bilgisayar Ticaret A.Ş. 99,8 63.605 - 63.605Total 63.605 - 63.605

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2.06 Changes in Accounting Policies

Thechangestothecurrentaccountingpoliciescanbeperformedifitisnecessaryorthechangeswillprovidemoreappropriateandreliablepresentationofthetransactionsandeventsrelatedtothefinancialposition,performanceandthecashflowoftheGroupthataffectthefinancialstatementsoftheGroup.Ifthechangesinaccountingpoliciesaffectsthepriorperiods,policyisappliedtothepriorperiodfinancialstatementsasifitisappliedbefore.

2.07 Changes in Accounting Estimates and Errors

Accounting estimates aremade based on reliable information and using appropriate estimati-onmethods.However,ifneworadditionalinformationbecomesavailableorthecircumstances,whichtheinitialestimatesbasedon,change,thentheestimatesarereviewedandrevised,ifne-cessary.Ifthechangeintheaccountingestimatesisonlyrelatedtoasoleperiod,thenonlythatperiod’sfinancialstatementsareadjusted.Ontheotherhand,iftheamendmentsarerelatedtothecurrentaswellastheforthcomingperiods,thenbothcurrentandforthcomingperiods’financialstatementsareadjusted.

Ininstanceswheretheaccountingestimatesaffectbothcurrentandforthcomingperiods,thendescriptionandmonetaryvalueof theestimate isdisclosed in thenotes to the financialstate-ments.However; if theeffect of the accountingestimate to the financial statement cannotbedetermined,thenitisnotdisclosedinthenotestothefinancialstatements.TheGroupisapplyingtheaccountingestimatestodeterminethedoubtfulreceivables,thevaluedecreaseinfixedassetsandinventory,theusefullivesofthefixedassets,contingentliabilities,actuarialassumptionsfortheterminationindemnities,etc.Theexplanationregardingthechangesinaccountingestimatesappliedinthecurrentaredisclosedintherelatedpartsofthenotestothefinancialstatements.

IAS21TheEffectsofChangesinForeignExchangeRatesStandarddefinesthatfunctionalcur-rency is thecurrencyof theprimary economicenvironment inwhich theentity operates. Theprimaryeconomicenvironmentinwhichanentityoperatesisnormallytheoneinwhichitprimarilygeneratesandexpendscash.Anentityconsidersthefollowingfactorsindeterminingitsfunctionalcurrency:thecurrencythatmainlyinfluencessalespricesforgoodsandservices(thiswilloftenbethecurrencyinwhichsalespricesforitsgoodsandservicesaredenominatedandsettled);andofthecountrywhosecompetitiveforcesandregulationsmainlydeterminethesalespricesofitsgoodsandservicesandthecurrencythatmainlyinfluenceslabor,materialandothercostsofprovidinggoodsorservices(thiswilloftenbethecurrencyinwhichsuchcostsaredenominatedandsettled).TheGroupmanagementreviewsaccountingestimationsaboutfunctionalcurrencyandaccountingpoliciesineveryperiod.Accordingtotheevaluationmadeinthiscontextthecur-rentperiodrealizationsandfuturerealizationstheGrouphaschangeditsfunctionalcurrencytotheTLasofJuly1,2013.

2.08 Summary of Significant Accounting Policies

2.08.01 Income

TheGrouprecognizesincomeaccordingtotheaccrualbasis,whentheGroupreasonablydeter-minestheincomeandeconomicbenefitisprobable.Group’sincomemainlyconsistsofsalesofcomputerandcomputerequipmentsasPC,laptop,electronichomeproducts,networking

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products,etc.Allthesalesareoperatedviadealersandtherearenotanydirectsalestoendcus-tomers.Netsalesarecalculatedbydeductingsalesreturnandsalesdiscountsfromtotalsales.

Revenuefromthesaleofgoodsisrecognizedwhenallthefollowingconditionsaregratified:

• Thesignificantrisksandtheownershipofthegoodsaretransferredtothebuyer;

• TheGrouprefrainsthemanagerialcontroloverthegoodsandtheeffectivecontroloverthegoodssold;

• Therevenuecanbemeasuredreasonably;

• Itisprobablethatthetheeconomicbenefitsrelatedtotransactionwillflowtotheentitiy;

• Thecostsincurredorwillbeincurredinconjuctionwiththetransactioncanbemeasuredreliably.

ThemostoftheproductssoldbytheGrouphasforeignorigin.Thepurchasesaremadefromforeign companies, offices of foreign companies in Turkey or domestic companies in Turkey.Dependingupontherealizationofthetargetsgivenbythedomesticorforeigncompanies;asetofpaymentsarereceivedoroffsettingtheaccountsunderthenameof“rebate”,“risturn”,“sellout”,or“bonus”.Thementionedamountsarerecognisedascreditnoteincomeaccrualsinthebalancesheetdependingupontherealizationofthetargetsandconditionsgivenbythesellers.Thedocumentspreparedbysellersunderthenameof“rebate”,“risturn”,“sellout”,“bonus”,and“creditnote”(orInvoicespreparedbytheGroup)iscollectedoroffsetted.Creditnotesobtainedfrominventoriesarediscountedfromcostofinventories.Theremainingbalanceisrecognisedas“OtherSales”inthesalesoftheGroup.

Interestrevenueisaccuredonatimebasis,byreferencetotheprincipaloutstandingandattheeffectiveinterestrateapplicaple,whichistheratethatdiscountstheestimatedfuturecashreceiptsthroughtheexpectedlifeofthefinancialassettothatasset’snetcarryingamount.

Whenthereissignificantamountofcostoffinancingincludedinthesales,thefairvalueisdetermi-nedbydiscoutingallprobablefuturecashflowswiththeyieldrate,whichisembeddedinthecostoffinancing.Thedifferencesbetweenthefairvalueandthenominalvalueisrecordedasinterestincomeaccordingtotheaccrualbasis.

2.08.02 Inventories

Inventoriesarestatedeitheratthelowerofacquisitioncostornetrealizablevalue.Group’sinven-toriesconsistofcomputerandcomputerequipmentslikePC,laptop,electronicalhomeproducts,networkproducts,etc.

TheinventorycostingmethodusedbytheGroupis“FirstinFirstout(FIFO)”.Netrealizablevalueistheestimatedsellingpriceintheordinarycourseofbusinesslesstheestimatedcostsofcomple-tionandtheestimatedcostsnecessarytomakethesale.

2.08.03 Tangible Fixed Assets

ForAssetsacquiredinandafter2005,thetangibleassetsarereflectedtotheconsolidatedfinan-cialstatementsbydeductingtheiraccumulateddepreciationfromtheircost.Forassetsthatwere

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acquiredbeforeJanuary01,2005,thetangiblefixedassetsarepresentedontheconsolidatedfinancialstatementsbasedontheircostvalue,whichisadjustedaccordingtotheinflationaryeffe-ctsasofDecember31,2004.Depreciationiscalculatedusingthestraight-linemethodbasedontheireconomiclives.Thefollowingrates,determinedinaccordancewiththeeconomiclivesofthefixedassets,areusedincalculationofdepreciation.

Landsarenotsubjecttodepreciationsincetheyhaveunlimitedusefullives.

Tangiblefixedassetsarereviewedintermsof impairmentforeachbalancesheetperiod. Ifthecarryingvalueofa tangible fixedasset ismorethan itsexpectednet realizablevalue, thenthecarryingvalueisreducedtoitsnetrealizablevaluebymakingthenecessaryprovisions.Thereisnoprovisionfordecreaseinvalueoftangiblefixedassets.

Theprofitandlossarisenfromfixedassetsalesaredeterminedbycomparingthenetbookvaluewiththesalespriceandtheresultisaddedtotheoperatingprofitorloss.

Maintenanceandrepairexpensesareaccountedasexpenseattheirrealizationdate.Ifthema-intenanceandrepairexpensesclearlyimprovetheeconomicvalueorperformanceoftherelatedassetthentheyarecapitalized.

2.08.04 Intangible Assets

IntangibleAssetscontainsacquiredassetsbysalessuchascomputersoftwareprogramsandcomputersoftwarelicences.Thereisnointangibleassetscreatedwithinthestructureofbusi-ness.

IntangibleassetsacquiredbeforeJanuary1,2005arecarriedathistoricalcostincludinginflatio-naryeffectsasatDecember31,2004,however,purchasesafterJanuary1,2005arecarriedattheirhistoricalcostlessaccumulatedamortizationandimpairment.

Intangibleassetsaredepreciatedonastraight-linebasisovertheirexpectedusefullivesinfiveandtenyear’speriod.

Theestimateduseful lifeandamortizationmethodare reviewedat theendofeachannual re-portingperiod,withtheeffectofanychangesinestimatebeingaccountedforonaprospectivebasis.Ifthenetvalueofanintangibleassetismorethantherecoverablevalue,thenetvalueoftheintangibleassetisdecreasedtorecoverablevaluebymakingprovisions.Thereisnoprovisionforthevaluedecreaseinintangibleassets.

Type December 31, 2015 Rate (%) December 31, 2014 Rate (%)Land Improvements 10 10Buildings 2 2Machinery, Plant and Equipment 10-25 10-25Motor Vehicles 10-25 10-25Furniture and Fixtures 10-33 10-33Leasehold Improvements 10-33 10-33

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2.08.05 Impairment of Assets

Assetssuchasgoodwillwhichhasinfinitelifearenotsubjectedtoamortization.Impairmenttestisappliedfortheseassetsforeachyear.Assetsthataresubjecttoamortizationarereviewedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountmaynotberecoverable.Animpairmentlossisrecognizedfortheamountbywhichtheasset’scarryingamountexceedsitsrecoverableamount.Therecoverableamountisthehigherofanasset’sfairvaluelesscoststosellandvalueinuse.Forthepurposesofassessingimpairment,assetsaregroupedatthelowestlevelsforwhichthereareseparatelyidentifiablecashflows.Non-financialassetsexceptgoodwillthatsufferedimpairmentarereviewedforpossiblereversalofimpairmentateachreportingdate.

AccordingtotheGroupManagement’sassessment;Thereisnosuchasituationthatmaycauseimpairmentfortangible,intangibleassetsandinvestmentproperties.Theseassets’netbookva-luehasbeenpredictedthatthementionedassets’marketvaluesareovertheirnetbookvalues.Theremainingassetsexceptfrommentionedassetsconsistofvehiclesandfurniture&fixturesforadministrativepurposes.Theseassets’ insurancevaluesandreplacementvaluesareovertheirbookvalues.

2.08.06 Research and Development Expenses

None.

2.08.07 Borrowings Costs

Theborrowingcostsarerecognizedasexpensewhentheyare incurred.Borrowingcoststhataredirectlyattributabletotheacquisition,constructionorproductionofaqualifyingassetshallbecapitalizedaspartofthecostofthatasset.Thecapitalizationofborrowingcostsaspartofthecostofaqualifyingassetshallcommence,whenexpendituresandborrowingcostsfortheassetareincurred,continuesuntilthatassetbecomesavailableforsale.Expendituresonaqualifyingassetincludeonlythoseexpendituresthathaveresultedinpaymentsofcash,transfersofotherassetsortheassumptionofinterest-bearingliabilities.Therearenocapitalizedborrowingcostsincurrentperiodrelatedtoqualifyingassets.

2.08.08 Financial Instruments

(i) Financial Assets

Investmentsarerecognizedandderecognizedontransactiondatewherethepurchaseandsalesofaninvestmentisunderacontract,termsofwhichrequiredeliveryoftheinvestmentwithinthetimeframeestablishedbythemarketconcernedandareinitiallymeasuredatfairvalue,netoftran-sactioncostsexceptforthosefinancialassetsclassifiedasfairvaluethroughprofitorlosswhichareinitiallymeasuredatfairvalue.

Financialassetsareclassifiedas“financialassets,whosefairvaluedifferencesarereflectedtotheprofitorloss”,“financialassetsheldtothematurity”,“financialassetsavailablefor-sale”and“loansandreceivables.”

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Prevailing Interest Method;

Prevailinginterestmethodistheassessmentoffinancialassetwiththeiramortizedcostandal-locationof interest incometotherelevantperiod.Prevailinginterestrateisaratethatdiscountstheestimatedcashflowofthefinancialinstrumentsfortheexpectedlifeorwhereappropriatesashorterperiod.

Incomerelatedtofinancialassets,exceptthe“financialassets,whosefairvaluedifferencesarereflectedtotheprofitorloss”,iscalculatedbyusingtheprevailinginterestrate.

a) Financial Assets Whose Fair Value Differences Are Reflected to the Profit or Loss

“Financialassetswhosefairvaluedifferencesarereflectedtotheprofitorloss”,arethefinancialassetsthatareheldfortradingpurposes.Ifafinancialassetisacquiredfortradingpurposes,itisclassifiedinthiscategory.Also,derivativeinstruments,whicharenotexemptfromfinancialrisk,arealsoclassifiedas“Financialassetswhosefairvaluedifferencesarereflectedtotheprofitorloss”.Thesefinancialassetsareclassifiedascurrentassets.

b) Financial Assets Which Will Be Held to the Maturity

Debtinstruments,whichtheGrouphastheintentionandcapabilitytoholdtomaturity,and/orhavefixedordeterminablepaymentarrangement,areclassifiedas“InvestmentsHeldtotheMaturity”.Financialassetthatwillbeheldtothematurity,arerecordedafterdeductingtheimpairmentfromthecostbasis,whichhasbeenamortizedwithprevailinginterestmethod.Allrelevantincomeiscalculatedusingtheprevailinginterestmethod.

c) Financial Assets Available-For-Sale

Financialassets,whichare“Available-for-Sale”,areeitherfinancialassets,whichwillnotbeheldtomaturityorfinancialassets,whicharenotheldfortradingpurposes.FinancialassetsAvailab-le-for-Salearerecordedwiththeirfairvalueiftheirfairvaluecanbedeterminedreliably.Marketablesecuritiesareshownattheircostbasisunlesstheirfairvaluecanbereliablymeasuredorhaveanactivetradingmarket.Profitor losspertainingtothefinancialassetsAvailable-for-Sale isnotrecordedontheincomestatement.Thefluctuationinthefairvalueoftheseassetsisshowninthestatementofshareholders’equity.Wheretheinvestmentisdisposedofor isdeterminedtobeimpaired,thecumulativegainorlosspreviouslyrecognizedisincludedinprofitorlossfortheperiod.ProvisionsrecordedintheincomestatementpertainingtotheimpairmentoffinancialassetAvailable-for-Salecannotbereversedfromtheincomestatementinfutureperiods.

Except equity instruments classified as available-for-sale, if impairment lossdecreases in nextperiodandifthereindecreasingcanberelatedtoaneventoccurredaftertheaccountingofimpa-irmentloss,impairmentlossaccountedbeforecanbecancelledinincomestatement.

d) Loans and Receivables

Tradereceivables,otherreceivables,andloansareinitiallyrecognizedattheirfairvalue.Subsequ-ently,receivablesandloansaremeasuredatamortizedcostusingtheeffectiveinterestmethod.Inthecaseofinterestonloansandreceivablesnegligible,registeredvalueofloanandreceivablesisacceptedasfairvalue.

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Impairment of financial assets

Financialassets,otherthanthoseatfairvaluethroughprofitorloss,areassessedforindicationofimpairmentateachbalancesheetdate.Financialassetsareimpaired,wherethereisobjectiveevidencethat,asaresultofoneormoreeventsthatoccurredaftertheinitialrecognitionofthefinancialasset,theestimatedfuturecashflowsoftheinvestmenthavebeenimpacted.Forfinan-cialassetscarriedatamortizedcost,theamountoftheimpairmentisthedifferencebetweentheasset’scarryingamountandthepresentvalueofestimatedfuturecashflows,discountedattheoriginaleffectiveinterestrate.

Thecarryingamountofthefinancialassetisreducedwiththeimpairmentlossdirectlyforallfinan-cialassetswiththeexceptionoftradereceivables,wherethecarryingamountisreducedthroughtheuseofanallowanceaccount.Whenatradereceivableisuncollectible,itiswrittenoffagainsttheallowanceaccount.Subsequent recoveriesof amountspreviouslywrittenoff are reversedagainst theallowanceaccount.Changes in thecarryingamountof theallowanceaccountarerecognizedinprofitorloss.

Withtheexceptionofavailableforsaleequityinstruments,if,inasubsequentperiod,theamountoftheimpairmentlossdecreasesandthedecreasecanberelatedobjectivelytoaneventoccur-ringaftertheimpairmentwasrecognized,thepreviouslyrecognizedimpairmentlossisreversedthroughprofitorlosstotheextentthatthecarryingamountoftheinvestmentatthedatetheimpa-irmentisreverseddoesnotexceedwhattheamortizedcostwouldhavebeenhadtheimpairmentnotbeenrecognized.

With respect toavailable-for-saleequitysecurities,any increase in fair valuesubsequent toanimpairmentlossisrecognizeddirectlyinequity.

Cash and Cash Equivalents

Cashandcashequivalentsarecash,demanddepositandothershort-termhighlyliquidinvest-ments,whichtheirmaturitiesarethreemonthsor lessfromthedateasofacquisition, thatarereadilyconvertibletoaknownamountofcashandaresubjecttoaninsignificantriskofchangesinvalue.

(ii) Financial Liabilities

Financialliabilitiesandequityinstrumentsareclassifiedaccordingtothecontractualagreementsenteredintoandthedefinitionoffinancial liabilityandequityinstrument.AnequityinstrumentisanycontractthatevidencesaresidualinterestintheassetsoftheGroupafterdeductingalltheliabilities.Accountingpoliciesdeterminedforthefinancial liabilitiesandthefinancial instrumentsbasedonequityareexplainedbelow.

Financialliabilitiesareclassifiedaseither“financialliabilitieswhosefairvaluedifferencesarerefle-ctedtotheprofit/loss”orotherfinancialliabilities.

a) Financial Liabilities Whose Fair Value Differences Are Reflected to the Profit /Loss

“Financialliabilitieswhosefairvaluedifferencesarereflectedtotheprofit/loss”arerecordedwiththeirfairvalueandarere-evaluatedattheendofeachbalancesheetdate.Changesinfairvalues

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arerecordedontheincomestatement.Netearningsand/orlossesrecordedontheincomesta-tementalsoincludeinterestpaymentsmadeforthisfinancialliability.

b) Other Financial Liabilities

Otherfinancialliabilitiesareinitiallyrecognisedwiththeirfairvaluesfreefromtransactioncosts.

Otherfinancialliabilitiesarerecognisedovertheiramortizedcostsusingtheeffectiveinterestmet-hod andwith interest costs calculated over effective interest rate in subsequent periods. Theeffectiveinterestmethodisthecalculationoftheamortizedcostsofthefinancialliabilitiesandthedistributionoftherelatedinterestexpensestorelatedperiods.

(iii) Derivative Financial Instruments

TheGrouphasagreementinforeigncurrencyfuturesmarkets.Derivativefinancialinstrumentsarerecognisedwithitsmarketvalueonthedateofderivativecontractssignedandre-assessedwithitsmarketvalue.

Thedifferencesbetweentheacquisitioncostsandfairvaluesofforwardagreementsarerecordedinequityand/orincomestatementinaccordancewiththepracticesofIAS39hedgeaccountingasofperiodends.

Thegainorlossrealizedfromtheincreaseordecreaseinthefairvalueofthederivativeinstru-mentswhichdonotmeettheconditionsforhedgeaccountingisrecognisedinprofitorloss.

The fair value isdeterminedby theappropriateoneofpossiblevalidmarketvalues,otherwisediscountedcashflowsandoptionpricingmodels.Thederivativeswithpositivefairvalueisrecog-nisedasanassetandwithnegativefairvalueisrecognisedasaliabilityunderthebalancesheet.(Note: 12)

2.08.09 Effects of Currency Fluctuations

Alltransactions,denominatedinforeigncurrencies,areconvertedintoTLbytheexchangerateru-lingatthetransactiondate.AllforeigncurrencydenominatedmonetaryassetsandliabilitiesstatedatthebalancesheetareconvertedintoTLbytheexchangeraterulingatthebalancesheetdate.Foreignexchangegainsand/orlossesasaresultoftheconversionsarerecordedintheincomestatement.Groupusessameforeigncurrencyintheirsalesandpurchasetransaction.ThereforeGroupdoesnotcontainimportantcurrencyrisk.

2.08.10 Earnings per Share

Earningspershareintheincomestatementarecalculatedbydividingnetincomebytheweightedaveragenumberofcommonsharesoutstandingfortheperiod.InTurkey,companiesareallowedtoincreasetheirsharecapitalbydistributing“bonusshares”fromretainedearnings.Thesebonussharesaredeemedasissuedshareswhilecalculatingthenetearningspershare.Accordingly,theretrospectiveeffectforthosesharedistributionsistakenintoconsiderationindeterminingtheweighted-averagenumberofsharesoutstandingusedinthiscomputation.

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2.08.11 Subsequent Events

Subsequenteventscoveralleventsthatoccurbetweenthebalancesheetdateandthepublica-tiondateofthefinancialstatements.Ifthereissubstantialevidencethatthesubsequenteventsexistedorariseafter thebalancesheetdate, theseeventsaredisclosedandexplained in thenotestothefinancialstatements.

2.08.12 Provisions, Contingent Liabilities and Assets

Aprovisionisrecognizedwhenanentityhasapresentobligation(legalorconstructive)asaresultofapastevent;itisprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequiredtosettletheobligation;andreliableestimatecanbemadeoftheamountoftheobligationWheretheeffectofthetimevalueofmoneyismaterial,theamountofaprovisionisthepresentvalueoftheexpendituresexpectedtoberequiredtosettletheobligation.Thediscountrate(orrates) isapre-tax rate (or rates) that reflect(s)currentmarketassessmentsof the timevalueofmoneyandtherisksspecifictotheliability.Theincreaseinprovisionsarisenfromtimedifferencesisrecordedasinterestexpenseincaseofdiscounting.Futureeventsthatmayaffecttheamountrequiredtosettleanobligationshallbereflectedintheamountofaprovisionwherethereissuf-ficientobjectiveevidencethattheywilloccur.Theamountrecognizedasaprovisionisthebestestimateoftheconsiderationrequiredtosettlethepresentobligationatthebalancesheetdate,takingintoaccounttherisksanduncertaintiessurroundingtheobligation.

Contingentliabilitiesandassetsarenotreflectedtoconsolidatedfinancialstatementsbutdisc-losedinthenotestotheconsolidatedfinancialstatements.Theentityrecognizesaprovisionforthepartoftheobligation,forwhichanoutflowofresourcesembodyingeconomicbenefits isprobable,exceptintheextremelyrarecircumstanceswherenoreliableestimatecanbemade.

2.08.13 Leasing Operations

The Group as Lessee

Financial Leases

Financialleasesaredescribedwhichthelessorretainsalltherisksandbenefitspertainingtothegoods.Financialleasesaretakenintotheaccountsaccordingtolowercurrentmarketvalueorminimumleasepayments.

Theliabilityarisingfromafinancialleasingtransactionisseparatedintointerestpayableandprin-cipaldebt inorder todeterminea fixed interest rateon the remainingbalance.Thecostsandexpensesincurredattheinitialacquisitionofthefixedassetsubjecttofinancialleasingareaddedtothecost.Thefixedassetsobtainedthroughfinancialleasingaresubjecttodepreciationovertheirestimatedusefullives.

InformationofnetbookvalueofGroup’sassets,whicharesubjecttolease,statedonNote:18.InformationrelatedwithGroup’sfinancialleasingdebtstatedonNote: 8.

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Operating Leases

Leaseagreementsinwhichthelessorretainsalltherisksandbenefitsrelatingtothegoodaredescribedasoperationalleasing.Leasepaymentsmadeforanoperationalleasingarerecordedasexpenseaccordingtonormalmethodthroughouttheleaseterm.

The Group as Lessor

Operating Leases

TheGrouppresentsassetssubjecttooperatingleasesintheirbalancesheetaccordingtothenatureoftheasset.Leaseincomefromoperatingleasesisrecognizedasincomeaccordingtothenormalmethod.Theinitialdirectcostsincurredduringoperationalleasingarereflectedtoincomestatementasexpense.Group’sLeaseagreementsasalessor,arerelatedwithleasingtosmallpartofthemainbuildingwhereGroup’soperating,toothernon-consolidatedcompaniesandtoanothercompanywhichisnotincludetheGroup,asaofficeandstore.

2.08.14 Related Party Disclosures

Thepartners’oftheCompany,Company’sBoardofDirectors,Company’smanagementperson-nel,Company’sotherdirectors,closefamilymembersinthechargeoftheCompany,andothercompaniesdirectlyorindirectlycontrolledbytheCompanyareconsideredasrelatedparties.ThetransactionswithrelatedpartiesaredisclosedintheNote: 37.

2.08.15 Government Grants and Assistance

None.

2.08.16 Investment Property

InvestmentpropertiesarerecognisedaccordingtothefollowingprincipleasofDecember31,2015andDecember31,2014.

RealEstatesheldtoearnrentincomeareclassifiedasInvestmentPropertiesandtheyarerecog-nisedattheircostvaluelessaccumulateddepreciationandaccumulatedimpairments.Thecostarisingfromthechangeorimprovementofapartofrealestateisaddedtocostofthatrealestateifthegenerallyacceptedconditionsaremet.However,dailymaintenanceexpensesarenotaddedtomentionedcostoftherealestate.

Intangibleassetsaredepreciatedonastraight-linebasisovertheirexpectedusefullivesandthedepreciationrateis%2perannum.

Iftheinvestmentpropertyisoutofuseorsold,theyareremovedfromthebalancesheetandthegainorlossfromsaleofinvestmentpropertyisrecognisedundertheincomestatement.

2.08.17 Taxation and Deferred Tax

Incometaxexpenserepresentsthesumofthetaxcurrentlypayableanddeferredtax.

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Current tax

Thetaxcurrentlypayableisbasedontaxableprofitfortheyear.Taxableprofitdiffersfromprofitasreportedintheincomestatementbecauseitexcludesitemsofincomeorexpensethataretaxableordeductibleinotheryearsanditfurtherexcludesitemsthatarenevertaxableordeductible.TheGroup’sliabilityforcurrenttaxiscalculatedusingtaxratesthathavebeenenactedorsubstantivelyenactedbythebalancesheetdate.

Deferred tax

Deferredtaxisrecognizedondifferencesbetweenthecarryingamountsofassetsandliabilitiesinthefinancialstatementsandthecorrespondingtaxbaseswhichisusedinthecomputationoftaxableprofit,andisaccountedforusingthebalancesheetliabilitymethod.Deferredtaxliabilitiesaregenerallyrecognizedforalltaxabletemporarydifferencesanddeferredtaxassetsarerecogni-zedforalldeductibletemporarydifferencestotheextentthatitisprobablethattaxableprofitswillbeavailableagainstwhichthosedeductibletemporarydifferencescanbeutilized.Suchassetsandliabilitiesarenotrecognizedifthetemporarydifferencearisesfromgoodwillorfromtheinitialrecognition(otherthaninabusinesscombination)ofotherassetsandliabilitiesinatransactionthataffectsneitherthetaxableprofitnortheaccountingprofit.

Deferred tax liabilitiesare recognized for taxable temporarydifferencesassociatedwith invest-mentsinsubsidiariesandassociates,andinterestsinjointventures,exceptwheretheGroupisabletocontrolthereversalofthetemporarydifferenceanditisprobablethatthetemporarydiffe-rencewillnotreverseintheforeseeablefuture.Deferredtaxassetsarisingfromdeductibletempo-rarydifferencesassociatedwithsuchinvestmentsandinterestsareonlyrecognizedtotheextentthatitisprobablethattherewillbesufficienttaxableprofitsagainstwhichtoutilizethebenefitsofthetemporarydifferencesandtheyareexpectedtoreverseintheforeseeablefuture.

Thecarryingamountofdeferredtaxassetsisreviewedateachbalancesheetdateandreducedtotheextentthatitisnolongerprobablethatsufficienttaxableprofitswillbeavailabletoallowallorpartoftheassettoberecovered.

Deferredtaxassetsandliabilitiesaremeasuredatthetaxratesthatareexpectedtoapplyintheperiodinwhichtheliabilityissettledortheassetrealized,basedontaxrates(andtaxlaws)thathavebeenenactedorsubstantivelyenactedby thebalancesheetdate.ThemeasurementofdeferredtaxliabilitiesandassetsreflectsthetaxconsequencesthatwouldfollowfromthemannerinwhichtheGroupexpects,atthereportingdate,torecoverorsettlethecarryingamountofitsassetsandliabilities.

Deferred taxassetsand liabilitiesareoffsetwhen there isa legallyenforceable right tosetoffcurrenttaxassetsagainstcurrenttaxliabilitiesandwhentheyrelatetoincometaxesleviedbythesametaxationauthorityandtheGroupintendstosettleitscurrenttaxassetsandliabilitiesonanetbasis.

Current and deferred tax for the period

Currentanddeferredtaxarerecognizedasanexpenseorincometotheincomestatement,ex-ceptwhentheyrelatetoitemscreditedordebiteddirectlytoequity,inwhichcasethetaxisalso

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recognizeddirectlyintheequity,orwheretheyarisefromtheinitialaccountingforabusinesscom-bination.Inthecaseofabusinesscombination,thetaxeffectistakenintoaccountincalculatinggoodwillordeterminingtheexcessoftheacquirer’sinterestinthenetfairvalueoftheacquirer’sidentifiableassets,liabilitiesandcontingentliabilitiesovercost.

Taxesstatedinfinancialstatementsincludethecurrenttaxanddeferredtaxesfortheperiod.TheGroupcalculatescurrentperiodtaxanddeferredtaxovertheperiodresults.

Offsetting Tax Income and Liabilities

Corporatetaxpayablesareoffsetwithprepaidquarterlyadvancecorporatetaxpaymentsduetothefactthatthesepaymentsareinfactcorporatetaxpayments.Deferredtaxassetsandliabilitiesarealsooffset.

2.08.18 Retirement Pay

AccordingtoTurkishLaborLaw,employeeterminationbenefit isreflectedinthefinancialstate-ments,whentheterminationindemnitiesaredeserved.SuchpaymentsareconsideredasbeingpartofdefinedretirementbenefitplanasperIASNo.19“EmployeeBenefits”.

Terminationindemnityliabilityisreflectedtothefinancialstatementswiththeamountcalculatedforvalueatbalancesheetdateoflumppensioninthenextyearsbydiscountingbyadequateinterestrate.Interestcostaddedtothelumppensionexpenseisshownasinterestexpenseintheresultsofoperations.

2.08.19 Statement of Cash Flow

Cashandcashequivalentsarestatedattheirfairvaluesinthebalancesheet.Thecashandcashequivalentscomprisescashinhand,bankdepositsandhighlyliquidinvestments.

Oncashflowstatement, theGroupclassifiesperiod’scashflowsas investmentand financingactivities.CashinflowprovidedfromoperatingactivitiesdenotescashinflowprovidedfrommainactivitiesoftheGroup.

Cashflowconcernedwithinvestmentactivitiesshowscashusedandprovidedfrominvestmentactivities(assetinvestmentsandfinancialinvestments).

Cashflowconcernedwithfinancialactivitiesrepresentssourcesusedfromfinancialactivitiesandpay-backofthesefunds.

2.08.20 Income Accruals

ThemostoftheproductssoldbytheGrouphasforeignorigin.Thepurchasesaremadefromforeigncompanies,officesofforeigncompaniesinTurkeyordomesticcompaniesinTurkey.De-pendingupontherealizationofthetargetsgivenbythedomesticorforeigncompanies;asetofpaymentsarereceivedoroffsettingtheaccountsunderthenameof“rebate”,“risturn”,“sellout”,or“bonus”.Thementionedamountsarerecognisedascreditnoteincomeaccrualsinthebalancesheetdependingupontherealizationofthetargetsandconditionsgivenbythesellers.

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Thedocumentspreparedbysellersunderthenameof“rebate”,“risturn”,“sellout”,“bonus”,and“creditnote”(orInvoicespreparedbytheGroup)iscollectedoroffset.

2.08.21 Provisions for Warranty

TheGroupisadistributorofinformationtechnologyproductsinTurkey.Thewarrantiesofthepro-ductssoldareprovidedbythecompaniesassignedbytheproducers.TheproductssubmittedtoCompany forwarrantyarereceivedfromdealersandtheseproductsaresent toproducersorcompaniesassignedbytheproducersforrepairmentandmaintenance.Aftertherepairandmaintenance,ifthereisaneedtochangeorgiveanewproducttocustomerswithinthescopeofthewarranty,theamountoftheproductsareinvoicedtoproducercompanies.TheGrouphasnoliabilityofprovisionsforwarranty.

2.09 New and Revised Turkish Financial Reporting Standards

New effective standards, revisions and comments as of January 1, 2015 are below:

Theaccountingpoliciesadopted infinancial tablesoftheperiodendingasofDecember31,2015hasbeenappliedasofJanuary1,2015coherentlywiththenewandrevisedeffectivestandardsandthecommentsusedinpreviousyearsexcepttheonesbyIFRIC.Thesestandar-dsandcommentshadnoeffectonfinancialsituationandperformanceofGroup..

• IAS 19 Plans of Identified Benefits: Employee Benefits (Revision): The revisionexplains thatcompaniesmayrecognizethecontributionsinvestedbyextractingtheservicecostintheyeartheservicesaregiveninsteadofextendingsuchcontributionstoserviceperiodsifthecontribu-tionsinvestedareindependentfromthenumberofyearsinwhichtheservicesaregiven.Thisrevisiondidnothaveanyeffectsonthefinancialtables.Therevisionshallbeappliedretrospec-tively,asofJuly1,2014andtheannualaccountingperiodsstartingafterwards.

Annual Improvements – 2010-2012 Period

TheannualimprovementsidentifiedbelowareeffectivefortheaccountingperiodsstartingafterJuly1,2014.

• IFRS 2 “Share-based Payment” (Revision): Thedefinitionsabouttheprovisionsforprogresspaymenthavebeenchangedandperformanceprovisionsandserviceprovisionshavebeenidentifiedtosolvetheproblems.Therevisionshallbeappliedretrospectively.Therevisionhadnoeffectonthefinancialtables.

• IFRS 3 “Business Combinations” (Revision): ConditionalcostwhichisnotclassifiedasequitycapitalinabusinesscombinationisrecognizedasprofitorlossintheupcomingperiodsbyfairvaluemeasurementnomatterifitisincludedinIFRS9FinancialInstrumentsornot.Therevisionhadnoeffectonfinancialtables.

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• IFRS 8 “Operational Segment” (Revision): Operationalsegmentsincludeprovisionsrelatedtocombiningthestandardconsistentlywithmainprincipals,andconformitybetweenoperationalassetsandtotalassets.Therevisionhadnoeffectonfinancialtables.

• IAS 16 “Property, Plant, and Equipment” and IAS 38 “Intangible Assets” (Revision): Thewayinwhichthereassessmentisdonehasbeenclarified.Therevisionhadnoeffectonthefinancialtables.

• IAS 24 “Related-Party Disclosures” (Revision): Revisionhasclarifiedthattheexecutivecom-panythatprovidesservicesaskeymanagementpersonnelisapartythatissubjectedtocom-pany’srelatedpartyexplanations.Therevisionshallbeappliedretrospectively.

Annual Improvements – 2011- 2013 Period

• IFRS 3 “Business Combinations” (Revision): IthasbeenclarifiedthatjointagreementsarealsoincludedinIFRS3besidesbusinesscombinationsandthisexceptionisapplicablebyrecogni-zingthefinancialtablesofjointagreements.Therevisionhadnoeffectsonthefinancialtables.

• IFRS 13 “Decision Justifications for Fair Value Measurement”: Ithasbeenexplainedthatport-folioexceptioncanbeappliednotonlytofinancialassessmentandfinancialobligationsbutalsotootheragreementsincludedinIAS39.Therevisionhadnoeffectsonfinancialtables.

• IAS 40 “Investment Property” (Revision): ItclarifiesthemutualrelationshipbetweenIFRS3andIAS40inclassificationofpropertyasinvestmentpropertyandpropertyusedbyitsowner.Therevisionhadnoeffectsonfinancialtables.

Issued but non-effective standards and the standards which are not put into effect earlier :

Thestandardsandrevisionsthathavebeenissuedasofthedatewhenthefinancialtableswereconfirmedbuthaven’tbeenputintoeffectyetforthecurrentreportingperiodandhavenotbeenputintoeffectearlierbyGruparebelow.Unlessindicatedotherwise,afterthenewstandardsandcommentsareputintoeffect,Grupisgoingtomakethenecessaryrevisionsinawaythatwillaffectitsfinancialtablesandfootnotes.

• IFRS 9 Financial Instruments (Classification and Explanation)

ItseffecthasbeenpostponeduntilJanuary1,2018.Therevisionshallaffecttheclassificationandmeasurementsoffinancialassets,andthemeasurementsoffinancialcommitmentswhichismeasuredbyreflectingthefairvalueontheprofitorloss.Earlierapplicationispermitted.Thepossibleeffectsonfinancialtablesarebeingevaluated.

• IFRS 11 Obtaining Shares in Joint Activities (Revision)

Ithasbeenrevisedtobeaguideforshareobtainingaccountinginjointactivitieswhoseoperati-onconstitutesabusiness.Therevisionsshallbeappliedtotheannualaccountingperiodswhi-chareafterJanuary1,2016prospectively.Therevisionshallhavenoeffectsonfinancialtables.

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• IAS 16 and IAS 38 Acceptable Depreciation and Clarification of Depreciation Methods (Revision):

The revisionshas forbidden thedepreciationaccounting for financial tangiblepropertiesandlimitedtheuseofdepreciationaccountingbasedonrevenuefornon-financialtangiblesignifi-cantly.TherevisionsshallbeappliedtotheannualaccountingperiodswhichareafterJanuary1,2016prospectively.Therevisionshallhavenoeffectsonfinancialtables.

• Sales or contributions of assets between an investor and its associate or joint venture (IFRS 10, IAS 28- Revisions) :

Therevisionsareabouttherelationshipsofconsolidationandequitycapitalmethodapplicati-ons.ItisabouttheaccountingperiodswhichareafterJanuary1,2016.Earliereffectispermit-ted.Noeffectsbytherevisionsonthefinancialtablesareexpected.

• Equity Capital Management in Individual Financial Tables (IAS 27- Revisions):

Therevisionspermitsthattheequitycapitalmanagementisusedinindividualfinancialtables.ItregardstotheaccountingperiodswhichareafterJanuary1,2016anditshallbeappliedret-rospectively.Noeffectsbytherevisionsonthefinancialtablesareexpected.

• IFRS 14 Regulatory Deferral Accounts:

AccordingtoIFRSDefermentAccountBasedonRegulation,IFRS14RegulatoryDeferralAc-countspermitsanentitywhichisafirst-timeadopterofTurkishFinancialReportingStandardstocontinuetorecognize,withsomelimitedchanges,for‘regulatorydeferralaccountbalances’inaccordancewithitspreviousgenerallyacceptedaccountingstandards,bothoninitialadoptionofIFRSandinsubsequentfinancialstatements.IFRS14causedsomechangesinrelatedpartsofIFRS1standards.Earliereffectispermitted.Noeffectsbytherevisionsonthefinancialtablesareexpected.

• Presentation of Financial Statements (IAS 1- Revisions):

Itclarifies the requirementsprovided in IAS1. Itconcerns theaccountingperiodswhichareafterJanuary1,2016andearliereffectispermitted.Noeffectsbytherevisionsonthefinancialtablesareexpected.

• Investment entities : Application of Consolidation Exemption (IFRS 10, IFRS 12 and IAS 28 – Re-visions):

Asaresultoftherevision,itispermittedthatinterferenceinvestmententitiesareconsolidated.ItisabouttheaccountingperiodswhichareafterJanuary1,2016anditshallbeappliedpros-pectively.Noeffectsbytherevisionsonthefinancialtablesareexpected.

• Agriculture: Bearer plants (IAS 16 and IAS 41 Revisions)

The bearer plants have been extracted from IAS 41 “Agricultural Operations” standard andincludedtoIAS16“FinancialTangibleAssets”standardforthemeasurementandexplanationnecessitiesofthebearerplants.Therefore,acompanymaymeasurethebearerplantsasits

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cost.However, thegoodsonbearerplantsshallbecontinuedtobemeasuredbyextractingsalescostsfromtheirfairvalue.TherevisionsshallbevalidfortheannualaccountingperiodswhichareafterJanuary1,2016andtheyshallbeappliedprospectively.Earlyapplicationofthestandardispermitted.Noeffectsbytherevisionsonthefinancialtablesareexpected.

Annual Improvements – 2012-2014 Period

• IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations” (Revision):

Itgivesannotationsregardingthecaseswheretangibleassetsheldforsaleareclassifiedasanassetheldfordistributiontoownersortheotherwayaroundandthecaseswheretheassetsarestoppedbeingheld fordistribution toowners.The revisionsshallbevalid for theannualaccountingperiodswhichareafterJanuary1,2016andtheyshallbeappliedprospectivelyandearlyapplicationofthestandardispermitted.

• IFRS 7 “Financial Instruments: Explanations” (Revision):

Itgivesadditionalinformationtoclarifyifaserviceagreementiscontinuationoftransferredas-setsandnettingininterimfinancialreports.Therevisionsshallbevalidfortheannualaccoun-tingperiodswhichareafterJanuary1,2016andtheyshallbeappliedprospectivelyandearlyapplicationofthestandardispermitted.

• IAS 34 “Interim Financial Reporting” (Revisions):

Itclarifiestheexplanation‘inanothersegmentininterimfinancialreporting’.ItshallbevalidfortheannualaccountingperiodswhichareafterJanuary1,2016andtheyshallbeappliedpros-pectivelyandearlyapplicationofthestandardispermitted.

• IAS 19 “Employee Benefits” (Revision):

Ioutlinesthatthemarketdepthofhighqualitycorporatebillsshallbeevaluatedinthecurrencyofthecountrythedebthasbeencarriedto,ratherthancurrencyofthecountrythedebtexists.It shallbevalid for theannualaccountingperiodswhichareafterJanuary1,2016and theyshallbeappliedprospectivelyandearlyapplicationofthestandardispermitted.Summaryofthenewandcorrectedstandards,revisionsandcommentsissuedbyInternationalAccountingStandardsInstitution(“UMSK”)buthavenotbeenissuedbyPublicOversightAccountingandAuditingStandardsAuthority(“KGK”):

• IFRS 15 “Revenue from Contracts with Customers”:

IASBhaspublishedIFRS15RevenuefromContractswithCustomersstandardinMay,2014.Thenewfive-stepmodelinthestandardexplainsthenecessitiesrelatedtorevenuerecognitionandmeasurement.Thestandardconstitutesamodelforrecognitionandmeasurementofthesalesofsomenon-financialassets(forexamplefinancialtangibleassetoutlet)whichshallbeappliedtorevenuefromcustomersandwhicharenotrelatedtousualoperationsofacompany.IFRS15shallbeappliedtotheannualaccountingperiodswhichcomeafterJanuary1,2018.Earlyapplicationshallbepossible.Itispossibleeffectsonfinancialtablesarebeingevaluated.

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• IFRS 9 “Financial Instruments” (Final Standard):

ThisstandardisareplacementofIAS39standardwhichwasaboutclassificationandmeasu-rementofassetsandobligations.IFRS9presentstwomodelsrelatedtodepreciatedvalueandfairvalue.Whilealloftheequityinstrumentsaremeasuredbyitsfairvalue,debtinstrumentsaremeasuredbydepreciatedvalue if thecontractualcashrevenueiscollectedbytheCompanyandthiscashrevenueincludesthe interestandthecapital.Fortheobligations,thestandardmaintainsmanyapplicationsincludingdepreciatedcostmanagementanddisintegrationofem-beddedderivatives.ItshallbeappliedonJanuary1,2018ortotheannualaccountingperiodswhichcomeafterJanuary1,2018.Itispossibleeffectsonfinancialtablesarebeingevaluated.

• IFRS 16 “Leases”:

IAS17,IFRSComment4,IASComment15andIASComment27shallbeabolishedwiththestandardissuedinJanuary,2016beingputintoeffect.IFRS16shallbeappliedtotheaccoun-tingperiodsstartingonJanuary1,2019and theaccountingperiodscomingafter thisdate.Earlyapplicationispermitted.ThecompanychoosingtheearlyapplicationhavetoapplyIFRS15standardearly,too.Itispossibleeffectsonfinancialtablesarebeingevaluated.

3 BUSINESS COMBINATIONS

Current Year

None.

Previous Period

None.

4 BUSINESS PARTNERSHIPS

TheCompany’sjointmanagingcompanyNeteksİletişimÜrünleriDağıtımA.Ş.isrecognisedac-cordingtotheequityconsolidationmethod.Thesummaryfinancialinformationofmentionedcom-panyisasfollows.

Financial Statement Item December 31, 2015 December 31, 2014

Current Assets 147.492.938 106.158.657

Non-current Assets 469.809 331.957

Total Assets 147.962.747 106.490.614 Short-term Liabilities 128.707.827 89.539.793

Long-term Liabilities 100.673 77.853

Shareholders’ Equity 19.154.247 16.872.968

Total Shareholders’ Equity 147.962.747 106.490.614

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5 REPORTING FINANCIAL INFORMATION BY SEGMENTS AND

GEOGRAPHIC AREAS

Grouphasreporteditsfinancialinformationbyinformationtechnologiesandlogistics.InformationtechnologiesconsistofsaleofcomputeranditscomponentssuchasPC,notebook,electronicalhomeproducts,networkingproducts,etc.Thegrossprofit/lossinformationofoperationsasofperiod’sendsareasfollows;

January 1-December 31, 2015

January 1 - December 31, 2014

6 CASH AND CASH EQUIVALENTS

CashandCashEquivalentsareasfollows:

Financial Statement ItemJanuary 1, 2015

December 31, 2015

January 1, 2014

December 31, 2014

Sales 320.926.487 240.561.029

Gross Profit 15.671.665 13.632.647

Operating Profit 11.013.474 9.080.445Net Profit (1.951.051) 1.534.580

Income Statements Information Technologies Telecom Logistics Total Elimination Consolidated

Non Interdepartmental Revenue

2.302.154.024 1.077.380.498 5.156.358 3.384.690.880 - 3.384.690.880

Interdepartmental Revenue

- - 23.142.790 23.142.790 (23.142.790) -

Sales Revenue 2.302.154.024 1.077.380.498 28.299.148 3.407.833.670 (23.142.790) 3.384.690.880

Cost of Sales (-) (2.191.468.395) (1.040.009.690) (401.308) (3.231.879.393) - (3.231.879.393)

Gross Profit / Loss 110.685.630 37.370.808 27.897.839 175.954.277 (23.142.790) 152.811.487

Income Statements Information Technologies Telecom Logistics Total Elimination Consolidated

Non Interdepartmental Revenue

1.901.678.269 300.169.328 4.171.730 2.206.019.328 - 2.206.019.328

Interdepartmental Revenue

- - 11.606.656 11.606.656 (11.606.656) -

Sales Revenue 1.901.678.269 300.169.328 15.778.387 2.217.625.984 (11.606.656) 2.206.019.328

Cost of Sales (-) (1.813.411.290) (288.423.609) (1.603.975) (2.103.438.874) - (2.103.438.874)

Gross Profit / Loss 88.266.979 11.745.719 14.174.412 114.187.110 (11.606.656) 102.580.454

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Maturitiesofcreditcardslipsare1or3daysforthecurrentandpriorperiod.

Maturityofreverserepotransactionswere1dayandinterestincomeof10.298TLwasaccrued.ReverserepotransactioncurrencywasmadeinTL,USDandEUROandinterestrateofreverserepotransactionsforUSDwere%0,21-0,72,forTLis%4,25–8,93andforEUROis%0,60asofDecember31,2015.

Maturityofreverserepotransactionswere1-3daysandinterestincomeof6.812TLwasaccrued.Reverserepotransactioncurrencywasmade inTLandUSDand interestrateofreverserepotransactionsforUSDwere%0,72-0,77andforTLis%3,29–8,84asofDecember31,2014.

TherearenoliensandblockedamountsoncashandcashequivalentsasofDecember31,2015(December31,2014:None.)

CashandcashequivalentshavebeenindicatedasaccruedinterestincomedeductedfromcashandequivalentsinGroup’scashflowstatements.

7 FINANCIAL ASSETS & INVESTMENTS

Short- Term Financial Assets & Investments

None.

Long –Term Financial Assets & Investments

AlllongtermfinancialinvestmentsareconsistofFinancialAssetsReadyforSale.

DetailsofFinancialAssetsAvailableforSaleareasfollows:

December 31, 2015 December 31, 2014Shares 63.605 - Quoted Companies’ Shares - - -Unlisted Companies’ Shares 63.605 63.605Total 63.605 63.605

Account Name December 31, 2015 December 31, 2014Cash and Equivalents 136.763.531 111.965.405Accrued Interest Income (-) (10.298) (6.812)Total 136.753.233 111.958.593

Account Name December 31, 2015 December 31, 2014Cash 170.304 75.124 Bank (Demand Deposits) 12.467.815 10.018.424 Financial Assets held until Maturity (Reverse Repo) 123.616.698 101.128.147 Credit card slips 508.714 743.710 Total 136.763.531 111.965.405

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Unlistedshareinvestmentsareasfollows;

Summaryoffinancialinformationrelatedtounlistedshareinvestments;

December 31, 2015

December 31, 2014

8 SHORT-TERM AND LONG-TERM LIABILITIES AND SHORT-TERM PORTIONS OF LONG-TERM LIABILITIES

Short-Termfinancialliabilitiesareasfollows:

Theshort-termportionoflong-termliabilitiesasoftheendofperiodisasfollows:

December 31, 2015 December 31, 2014

Company Name Share Amount RateCompany

NameShare Amount

İnfin A.Ş. 63.605 99,80 63.605 99,80Total 63.605 63.605

Company Name

Total AssetTotal

LiabilitiesTotal Equity Net Sales

Profit for the period

İnfin A.Ş. 3.627.236 3.959.843 (332.607) 12.277.224 (228.130)Total 3.627.236 3.959.843 (332.607) 12.277.224 (228.130)

Company Name

Total AssetTotal

LiabilitiesTotal Equity Net Sales

Profit for the period

İnfin A.Ş. 2.161.269 1.746.058 415.211 11.727.331 747.818Total 2.161.269 1.746.058 415.211 11.727.331 747.818

Account NameDecember 31,

2015 December 31,

2014Short.Por.Long-Term Liab. 196.577.011 49.349.734Total 196.577.011 49.349.734


2015December 31,

2014Bank Loans 57.637.870 41.281.153 Financial Lease Payables 1.140.059 1.196.434 Interest Payables Of Deffered Lease Cost (-) (93.201) (225.184)Total 58.684.728 42.252.403

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OurassociatedpartnerDatagateBilgisayarMalzemeleriTicaretA.Ş.’s4.040TLfromtheirshorttermcreditsand196.577.011TLfromtheirshorttermpartoftheirlongtermcreditshavebeenusedfor12,24and36monthscontractcampaigncellphones’financing.AllthesecreditsareundertheguaranteeofAveaİletişimHizmetleriA.Ş.AtthesametimeAveaİletişimHizmetleriA.Şcollectsreceivablesofdevices fromtheirsubscribers.Ourcompanyusecredit forassignthereceivableswhichariseasaresultofourdevicesalestofinancialcorporations.Requiredbytheassignment,capitalandamountofinterestofthecredithavebeenpaidbyAveaİletişimHizmetleriA.Şatit’smaturity.

ThetransferredreceivableswhicharecollectedbyAveaİletişimHizmetleriarereceivedthroughthedispositionandtheirrevocabletothefactoringfirmsasfromOctober2015.Accordingtothedispositionconditions,theamountofloan’sandfactoring’sprincipalandinterestsarepaidbyAveaİletişimHizmetleriattheirmaturity.

ThedetailsoftheLongTermBankLoansfortheyearsendedareasfollows:

OurassociatedpartnerDatagateBilgisayarMalzemeleriTicaretA.Ş’sall longtermcreditshavebeenusedfor12,24and36monthscontractcampaigncellphones’financing.AllthesecreditsareundertheguaranteeofAveaİletişimHizmetleriA.Ş.AtthesametimeAveaİletişimHizmetleriA.Şcollectsreceivablesofdevicesfromtheirsubscribers.Ourcompanyusecreditforassignthereceivableswhichariseasaresultofourdevicesalestofinancialcorporations.Requiredbytheassignment,capitalandamountofinteresthavebeenpaidbyAveaİletişimHizmetleriA.Şatit’smaturity.

ThedetailsoftheShortTermBankLoansareasfollows:

December 31, 2015

TypeForeign Currency

AmountAmount in TL Annual Interest Rate

(%)Short Term Loans Faizsiz -11,32-16,01TLLoans 15.081.961 15,10-15,11TLFinancialLeasePayables

975.114 5,87

EURFinancialLeasePayables

22.578 71.744

USDLoans 14.636.095 42.555.909 1,6-8,10Total Loans 58.684.728


2015 December 31,

2014Bank Loans 67.085.140 40.905.768 Financial Lease Payables 76.331 992.178 Interest Payables Of Deffered Lease Cost (-) (1.130) (93.681)Total 67.160.341 41.804.265

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December 31, 2014

Detailsoftheshort-termportionoflong-termliabilitiesasoftheendofperiodisasfollows:

December 31, 2015

December 31, 2014

ThedetailsoftheLongTermBankLoansareasfollows:

December 31, 2015


AmountAmount

in TLAnnual Interest Rate

(%)TLLoans 196.577.011 11,48-16,44Total Loans 196.577.011


AmountAmount


(%)Long Term LoansTLLoans 67.085.141 11,55-16,19TLLeasePayables 75.200 15,11Total Loans 67.160.341


AmountAmount


(%)Short Term LoansTLLoans 10.434.112 Faizsiz -10,80-16,09TLFinancialLeasePayables

256.700 16,09-16,10

USDLoans 13.610.587 31.561.591 1,61Total Loans 42.252.403


AmountAmount


(%)TLLoans - 45.879.996 10,8-11,40USDLoans 1.496.286 3.469.738 8,13Total Loans 49.349.734

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December 31, 2014

MaturityInformationofBankLoansLiabilitiesisasfollows;

9 OTHER FINANCIAL LIABILITIES

None.

10 TRADE RECEIVABLES AND PAYABLES

Short-Termtradereceivablesareasfollows:

OurassociatedpartnerDatagateBilgisyarMalzemeleriTicaretA.Ş.’s215.611.566TL’(31Decem-ber201453.099.118TL)fromtheirshorttermpartoftheassignedreceivablesareusedforsales12,24and36monthsforwardcommitmentcampaignsthroughthesubsidiariesofAveaİletişimHizmetleri A.Ş and thesemobile devices receivables are under the guarantee of Avea İletişim


2015December 31,

2014Trade Receivables 696.331.515 476.066.722 Due from Related Parties (Note:37) 2.410.177 2.612.603 Other Receivables 693.921.338 473.454.119 -Other Receivables 478.309.772 420.355.001 -Assigned Receivables 215.611.566 53.099.118Notes Receivables 204.944.767 167.705.809Rediscount on Receivables (-) (19.806.532) (7.332.405)Doubtful Receivables 11.218.666 9.389.839Provision for Doubtful Receivables (-) (11.218.666) (9.389.839)Total 881.469.750 636.440.126

31 December 2015 31 December 20140-12 months 58.684.728 42.252.4033-12 months 67.160.341 49.349.73412-60months 322.422.080 41.804.265Total 322.422.080 133.406.402


AmountAmount


(%)Long Term LoansTLLoans 40.080.362 10,8-11,40TLLeasePayables 898.498 16,09-16,10USDLoans 355.947 825.405 8,13Total Loans 41.804.265

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79

HizmetleriA.Ş.AtthesametimeAveaİletişimHizmetleriA.Şcollectsreceivablesofdevicesfromtheirsubscribers.Ourcompanyuse196.581.051TL(31December201446.018.137TL)partofcreditforassignthereceivableswhichariseasaresultofourdevicesalestofinancialcorporati-ons.Requiredbytheassignment,capitalandamountofinteresthavebeenpaidbyAveaİletişimHizmetleriA.Şatit’smaturity.


Short-termassignedreceivablesmaturitiesareasfollows:

Long-Termtradereceivablesareasfollows:

OurassociatedpartnerDatagateBilgisyarMalzemeleriTicaretA.Ş.’s79.655.935TL(31Decem-ber201452.486.149TL)fromtheirlongtermpartoftheassignedreceivablesareusedforsales12,24and36monthsforwardcommitmentcampaignsthroughthesubsidiariesofAveaİletişimHizmetleriA.ŞandthesemobiledevicesreceivablesareundertheguaranteeofAveaİletişimHiz-metleriA.Ş.67.085.142TL(31December201443.872.812TL)ofthisamount,aspartofthesamecampaign,isassignedtobanksasassignofthecreditsthatbeenusedupbythecompany.

Ourcompanyusecreditforassignthereceivableswhichariseasaresultofourdevicesalestofinancialcorporations.Requiredbytheassignment,capitalandamountofinteresthavebeenpaidbyAveaİletişimHizmetleriA.Şatit’smaturity.


Termstructureoftheshorttermdispositionsareasfollows;


2015 December 31,

2014Trade Receivables 79.655.935 52.486.149 Due from Related Parties - - Other Receivables 79.655.935 52.486.149Rediscount on Assigned Receivables (-) (12.570.793) (8.613.337)Total 67.085.142 43.872.812

Assigned Receivables December 31, 2015 December 31, 2014 0-3 month 54.181.963 13.290.6273-12 month 161.429.603 39.808.491Total 215.611.566 53.099.118

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Asthedateof31December2015,295.267.501TLamount,aspointoutaboveisthepartof881.469.750TLshorttermand67.085.142TLlongtermonthebrinkoftotalamountof948.554.892TLreceivables,isundertheguaranteeofAveaİletişimHizmetleriA.Şandtheassurancewastakenfromcustomersof thegroupfor46.524.462TLreceivables.340.782.598TLof theremainingreceivableswhichis606.762.929TLarewithinthescopeofEulerHermes’assurance.

As the date of 31December 2014, 105.585.267 TL amount , as point out above is the partof 636.440.126 TL short term and 43.872.812 TL long term on the brink of total amount of680.312.938TLreceivables,isundertheguaranteeofAveaİletişimHizmetleriA.Şandtheassuran-cewastakenfromcustomersofthegroupforreceivablesamountof52.021.681TL.278.417.075TLoftherestofreceivablesarewithinthescopeofEulerHermes’assurance.Theinformationsabout“thequalificationsandlevelofrisksattradereceivablescanbefoundinNote:38.

CompanyandEulerHermescompanyhaveagreedtoinsuranceuponCompany’straderecei-vableswithinthebordersofTurkey.Thedetailsareherinbelow;

-Policyisbetween01March2015-31March2016,anditispreparedannually.

-AllthedamagessubjecttopolicyareshowninUSD.

-Warrantratioisdeterminedby%90ofthecreditlimitdemandedtradereceivables.

The movement of Doubtful Receivables is as follows:

Maturity analysis of trade receivable overdue that is not assessed for impairment is as follows;

Explanationsconcerning thenature risk and level of riskof trade receivables aredisclosed inNote:38

December 31, 2015 December 31, 2014 Up to 3 Months 3.347.413 3.379.126 Between 3- 12 Months 36.821 46.492 Total 3.384.234 3.425.618

Assigned Receivables 31 December 2015 31 December 2014 12-36 month 79.655.935 52.486.149Total 79.655.935 52.486.149

January 1, 2015 December 31, 2015

January 1, 2014 December 31, 2014

Opening Balance (9.389.839) (9.106.072)Collections in current period (+) 61.657 286.722Exchange Difference - -Period Expenses (-) (1.890.484) (570.489)Period-end Balance (11.218.666) (9.389.839)

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DetailsofTradepayablesfortheyearendedareasfollows:

Therearenotanylong-termtradepayablesfortheyearsendedDecember31,2015andDecem-ber31,2014.

AverageMaturityofTradereceivablesandpayablesareunderthreemonths.ThetradereceivablesandpayablesinTLwerediscountedusingthecompoundinterestratespecifiedinGovernmentBonds.ReceivablesandpayablesinUSDandEUROarediscountedusingLiborandEuroLiborratesrespectivelyTL%11,0USD%1,1780andEURO%0,05929.(December31,2014RatesTL%8,4,USD%0,62880,EURO%0,29357)

11 OTHER RECEIVABLES AND PAYABLES

Short-termotherreceivablesareasfollows:

Long-termotherreceivablesareasfollows:

Explanationsconcerning thenature risk and level of riskof trade receivables aredisclosed inNote:38

Short-termotherpayablesfortheyearsendedareasfollows:

Account Name December 31, 2015 December 31, 2014Suppliers 644.547.088 643.609.275 Other Suppliers 644.384.684 643.593.379 Due to Related Suppliers (Note:37) 162.404 15.896Notes Payable 84.541.440 45.494.206Rediscount on Payable (-) (9.221.668) (5.500.408)Total 719.866.860 683.603.073

Account Name December 31, 2015 December 31, 2014Deposits and Guarantees Given 51.685 51.685Total 51.685 51.685

Account Name December 31, 2015 December 31, 2014Deposits and Guarantees Given 14.105 13.145 Other Receivables 100.728 352.101 Due From Personnel 221.005 220.228Non-commercial Receivables Due From Related Parties (Note:37)

346.748 274.998

Total 682.586 860.472

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12 FINANCIAL INSTRUMENTS

FinancialInstrumentsfoundinCurrentAssets

TheGroupasofDecember31,2014hasmadea4.464.564USD foreigncurrencypurchaseagreement.Alloftheamount’smaturityis0-3months.ThefairvalueoftheseagreementsasofDecember31,2014is10.187.838TLandthevaluationdifferenceof165.039TLhasbeenwrittenasincome.

DerivativeFinancialInstrumentsfoundinShort-TermLiabilities;

TheGroupasofDecember31,2015hasmadea11.115.416USDforeigncurrencypurchaseagreement.Alloftheamount’smaturityis0-3months.ThefairvalueoftheseagreementsasofDecember31,2015is32.485.146TLandthevaluationdifferenceof165.962TLhasbeenwrittenasexpense.

13 INVENTORIES

Inventoriesfortheperiodsendedareasfollows:

Inventorieswhoseinvoicesarereceivedatanearlierdatethantheirphysicalentryinthewarehou-sesareclassifiedundertheaccount“GoodsinTransit”

Account Name December 31, 2015 December 31, 2014Taxes, Duties Payable and Other Fiscal Liabilities 6.799.671 3.959.351Non-commercial Payables Due to Related Parties (Note:37) - -Other 11.607 9.856Total 6.811.278 3.969.207

Account Name December 31, 2015 December 31, 2014Ticari Mallar 180.751.779 148.680.625Yoldaki Mallar 31.191.599 24.808.688Stok Değer Düşüklüğü Karşılığı (-) (5.300.462) (3.204.256)Toplam 206.642.916 170.285.057

Account Name December 31, 2015 December 31, 2014Derivative Financial Instruments Receivables - 165.039 Total - 165.039

Account Name December 31, 2015 December 31, 2014Derivative Financial Instruments Payables 165.962 -Total 165.962 -

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TheMovementsinProvisionforDecreaseinValueofInventories

Theprovision fordecrease invalueofstocks iscalculatedwith increasingpercentages for thegoodswaiting in the inventorymore than3monthsdependingupon increase in the inventoryturnoverrate.

AsofDecember31,2015,17.232.190TLoftheinventoriesispresentedwiththeirnetrealizablevalueandtheremainingbalanceispresentedwiththeircostinthefinancialstatements.(AsofDe-cember31,2014,14.327.425TLoftheinventoriesispresentedwiththeirnetrealizablevalueandtheremainingbalanceispresentedwiththeircostinthefinancialstatements.)

Thereisnoinventorygivenasaguaranteeforaliability.

TotalAmountofInsurancesonAssetsisdisclosedinNote:22.

Theinformationrelatedtoinventoriesrecognisedasexpenseinthecurrentperiodisdisclosedin

Note:28.

14 BIOLOGICAL ASSETS

None.

15 PREPAID EXPENSES AND DEFERRED INCOME

Short-Term:

PrepaidExpensesasofDecember31,2015andDecember31,2014areasfollows:

Explanation December 31, 2015 December 31, 2014Cost 22.532.652 17.531.681 Provision for Decrease in value of Inventories (5.300.462) ( 3.204.256) Net Realizable Value (a) 17.232.190 14.327.425 Inventory presented with its cost value (b) 189.410.726 155.957.632 Total Inventories (a+b) 206.642.916 170.285.057

01 January 2015 31 December 2015

01 January 2014 31 December 2014

Opening Balance (-) (3.204.256) (2.826.065)Translation Differences - 17.818Provision for the Period(-) (2.096.206) (396.009)Period-End Balance (5.300.462) (3.204.256)

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84

DeferredIncomeareasfollows:

Asthedateof31December2015,58.585.837TLamountoftheadvancesoriginatedfrompro-pertysalesadvancesofTeklosTeknolojiLojistikHizmetleriA.Ş.Theamountof5.299.995TLisalsooriginatedfromreceivedadvancesforunitsalesofDatagateBilgisayarMalzemeleriA.Ş.

Asthedateof31December2014,16.793.450TLamountoftheadvancesoriginatedfrompro-pertysalesadvancesofTeklosTeknolojiLojistikHizmetleriA.Ş.Theamountof2.503.995TLisalsooriginatedfromreceivedadvancesforunitsalesofDatagateBilgisayarMalzemeleriA.Ş.

Amounts thathavebeen invoicedhowevernotdeliveredarerecorded in the“incomefromfol-lowingmonths”account.ThisisbecausetheIAS18requirements(delivery,transferofrisk,etc)havenotbeenfulfilled.

16 INVESTMENTS EVALUATED BY EQUITY METHOD

Investmentsaccounted forusing theEquityMethodhavebeenshownbelow through theFairValueMovementScheduleasfollows:

InformationregardingInvestmentsaccountedforusingtheEquityMethodcanbefoundinNote:4.

Account Name December 31, 2015 December 31, 2014Work Advances Received 68.714.203 22.841.331Income Relating to Future Mon. 13.057.923 7.013.595Total 81.772.126 29.854.926

Company Name Participation Rate December 31, 2015 December 31, 2014Neteks 50 10.193.899 9.053.260Total 10.193.899 9.053.260

December 31, 2015 December 31, 2014January 1 Opening 9.053.260 7.611.172Share from Period Profit (975.527) 767.290Foreign Currency Translation Differences 2.116.166 674.798December 31 Closing 10.193.899 9.053.260

Account Name December 31, 2015 December 31, 2014Prepaid Expenses for Following Mon. 3.965.920 1.644.983Work Advances Given 4.536.357 5.618.208Total 8.502.277 7.263.191

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17 INVESTMENT PROPERTIES

December 31, 2015

Cost

Accumulated Depreciation

TeklosA.Ş,3landownersandcontractorfirmSebaİnşaatA.Şhaveagreedonrevenuesharingproportions%40,5,%6and%53,5respectively.

- Time of completion has determined 36 months as from permit date and the deadline is19.01.2018.

-Projectisallaboutworkplace;constructon24.651m2land,totalconstructionareais106.330m2,sellablelandareais62.362m2andtheprojectismadeupof204independentpartsintotal.

-Withreceivingthebuildinglicense,ourassociatedpartnerTeklosA.Ş’sestimatedgain(includesVAT)iscalculatedover90millionsUSDapproximately.

-“Buildinglicense’’hastakenfromSarıyerMunicipalityonthedateof19.01.2015.

Byyear31December2015,thispropertyisstartedtobeclassifiedasinvestmentpropertywithresignationdesolately to the construction firm for thepurposeof construction.Previously, thispropertyisclassifiedastangibleassetsbecauseitisusedforcompanyactivities.Itisinfinancialstatementwithpropertyamountandthebookvalueis27.757.030TL.Therest2.814.107TLofpropertieswithbookvaluearecomposedofacquisitionofpropertiesfromreceivablesonthepartofsubsidiariesinİstanbulandTekirdağ.TheGroupassumesthattheresidualcostofbuildingsinTekirdağisclosetotheirmarketvalue.

Hesap Adı January 1, 2015 Amortization DisposalsTransfer

(*)December

31, 2015 Land Improvements (44.297) - - - (44.297)Buildings (5.032.910) (26.471) - - (5.059.381)Total (5.077.207) (26.471) - - (5.103.678)Net Value 30.597.609 30.571.138

Account NameJanuary 1,

2015Purchases Disposals Transfer (*) 31 Aralık 2015

Arsa ve Araziler 19.434.414 - - - 19.434.414 Yer Altı Yer Üstü 44.297 - - - 44.297 Binalar 16.196.105 - - - 16.196.105 Toplam 35.674.816 - - - 35.674.816

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Theinformationsaboutredemptionanddepreciationexpenses’accountedaccomptsareplacedinNote:30-31.

Theinformationsoftheinvestmentproperties’depreciationratiosandtheirmethodsareplacedinNote:2.08.16.

Rentalincomeoftheinvestmentpropertiesincurrentperiodisnon-available.

Theexpensesofinvestmentpropertiesareaccountedfromwithinoperationalexpenses.(Note:31)

Everymortgage,limitationsandexegesiscanbefoundinNote:22.Apartformthatthereisnolimi-tationovertheliquidityofpropertiesandusageofcashwhichcomefromrevenues.AssurancesonassetvalueareplacedinNote:22.

December 31, 2014

Cost


18 TANGIBLE FIXED ASSETS

TheFixedAssetsdetailsfortheyearsendedareasfollows

December 31, 2015

Cost Value


2014Purchases Disposals Transfer

December 31, 2014

Arsa ve Araziler 1.571.150 - - 17.863.264 19.434.414Yer Altı ve Yer Üstü - - - 44.297 44.297Binalar 1.194.802 128.713 - 14.872.590 16.196.105Toplam 2.765.952 128.713 - 32.780.151 35.674.816


2014Amortization Disposals Transfer

December 31, 2014

Land Improvements - - - (44.297) (44.297)Buildings (28.266) (25.825) - (4.978.819) (5.032.910)Total (28.266) (25.825) - (5.023.116) (5.077.207)Net Value 2.737.686 30.597.609

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December 31, 2014

Cost Value


2014Additions Sales (-)

Foreign Exchange


TransferDecember 31, 2014

Lands and parcels 17.863.263 - - - (17.863.263) - Land Improvements 44.297 - - - (44.297) - Buildings 14.616.569 256.018 - - (14.872.587) - Machinery, Plants&Equipments

1.546.552 2.544.041 (33.927) (22) - 4.056.644

Motor Vehicles 2.690.547 229.388 (114.893) (819) - 2.804.223Furniture & Fixtures 6.057.426 709.994 (100.183) (5.179) - 6.662.058Leasehold improvements

305.706 4.506.471 - (69) - 4.812.108

Total 43.124.360 8.245.912 (249.003) (6.089) (32.780.147) 18.335.033


2015Additions

Disposals (-)

TransferDecember 31,

2015Machinery, Plants&Equipments

4.056.644 - - - 4.056.644

Motor Vehicles 2.804.223 31.340 (101.152) - 2.734.411Furniture & Fixtures 6.662.058 584.341 (13.603) - 7.232.796Leasehold improvements 4.812.108 267.807 (1.700) - 5.078.215Total 18.335.033 883.488 (116.455) - 19.102.066


2015Amortization

Disposals (-)

TransferDecember 31,

2015Machinery, Plants&Equipments

(1.905.934) (480.911) - - (2.386.845)

Motor Vehicles (2.013.650) (354.516) 84.262 - (2.283.904)Furniture & Fixtures (5.098.134) (692.757) 1.498 - (5.789.393)Leasehold improvements

(845.158) (955.907) 57 - (1.801.008)

Total (9.862.876) (2.484.091) 85.817 - (12.261.150)Net Value 8.472.157 6.840.916

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88


Other Information

ThedepreciationandamortizationexpensesarerecognisedundertheoperationalexpensesTheAmountofmortgageonbuildingswhicharestatedinassetsis1.133.299USDTotalAmountofInsurancesonAssetsisdisclosedinNote:22.

19 INTANGIBLE FIXED ASSETS

December 31, 2015

Cost Value



2014Amortization Disposals (-)

Foreign Exchange


TransferDecember 31, 2014

Land Improvements (44.297) - - - 44.297 -Buildings (4.842.259) (136.560) - - 4.978.819 -Machinery, Plants&Equipments

(1.519.200) (412.765) 26.010 21 - (1.905.934)

Motor Vehicles (1.623.247) (427.707) 36.414 890 - (2.013.650)Furniture & Fixtures (4.491.487) (678.971) 67.240 5.084 - (5.098.134)Leasehold improvements

(198.297) (646.928) - 67 - (845.158)

Total (12.718.787) (2.302.931) 129.664 6.062 5.023.116 (9.862.876)Net Value 30.405.573 8.472.157

Account Name January 1, 2015 Additions Disposals (-)December 31,

2015Rights 916.407 3.008.467 - 3.924.874Other Intangible Fıxed Assets

130.810 - - 130.810

Total 1.047.217 3.008.467 - 4.055.684

Account Name January 1, 2015 Amortization Disposals (-) December 31, 2015

Rights (670.492) (49.030) - (719.522)Total (670.492) (49.030) - (719.522)Net Value 376.725 3.336.162

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89

Other intangibleassetsconsistofartobjects.Theyarenotsubjecttodepreciationduetotheirindefiniteusefullife.

December 31, 2014

Cost Value


Otherintangibleassetsconsistofartobjects.Theyarenotsubjecttodepreciationduetotheirindefiniteusefullife.

Thedepreciationandamortizationexpensesarerecognisedundertheoperationalexpenses.

Thegoodwillamount,whichisalsotheopeningbalance,isrelatedtoDatagateBilgisayarA.Ş.,oneoftheparticipationsoftheCompany.Thegoodwillamountisreviewedatleastoncean-nually.ThelastevaluationofDatagatewasmadeonDecember31,2014andnoimpairment


2014Additions Disposals (-)

Foreign Exchange


December 31, 2014

Rights 674.306 243.338 - (1.237) 916.407Other Intangible Fıxed Assets

130.810 - - - 130.810

Total 805.116 243.338 - (1.237) 1.047.217


2014Amortization

Disposals (-)

Foreign Exchange


December 31, 2014

Haklar (654.049) (17.700) - 1.257 (670.492)Toplam (654.049) (17.700) - 1.257 (670.492)Net Değer 151.067 376.725

Goodwill December 31, 2015 December 31, 2014

Opening Balance 1.897.699 1.897.699Additions - -Disposals/ Sales - -Translation Difference - -Closing balance 1.897.699 1.897.699

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90

wasdetermined.TherewasnotanyimpairmentforthegoodwillasofDecember31,2015.Thegoodwillamountforthiscompanyisreviewedateachbalancesheetdate.Duringreviewofgo-odwill,thepresentvalueofthecashamounts,whichareobtainedbythementionedcompany,iscalculated.

20 LIABILITIES IN THE SCOPE OF EMPLOYEE BENEFITS

TheLiabilitiesintheScopeofEmployeeBenefitsfortheperiodsendedDecember31,2015and

December31,2014areasfollows:

21 GOVERNMENT GRANT AND ASSISTANCE

None.

22 PROVISIONS, CONTINGENT ASSETS AND LIABILITIES

Account Name December 31, 2015 December 31, 2014Payables to Employees 248 131.630SGK Payable 484.860 434.436Total 485.108 566.066

Account Name December 31, 2015 December 31, 2014Provisions for Price Differences 37.441.935 25.566.310 Provisions for TT Net Campaign - 342.197 Provision for Litigations 891.857 1.893.995 Total 38.333.792 27.802.502

December 31, 2015Provision for Litigations

Price Differences

Provisions for TT Net Campaign

Total

As of January 1 1.893.995 25.566.310 342.197 27.802.502Additions (24.386) 37.441.935 - 37.417.549Payments / Offsetting - (25.566.310) (342.197) (25.908.507)Terminated Provisions (977.752) - - (977.752)As of December 31, 2015 891.857 37.441.935 - 38.333.792

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91

TherewasanagreementmadebetweenTTNetA.Ş.,İndeksBilgisayarA.Ş.andDatagateBilgi-sayarA.Ş.forthe4thComputerCampaign.Withthisagreement,somekindofproductssalesaremadewithtermsof24-36monthsbetweenduringApril2011-April2012.TTNetprovisionamountconsistofsalespremiumsandcommisisonswhichwillbepaidtovendorandTTNet.

Pricedifferenceinvoicesaretakenfromcustomersfortheproductssoldindifferentpricesfrompreviousperiodandprovisionsaremadeforthem.Alsotargetshavebeengiventocustomersinordertoincreasethesalesandturnoverpremium,creditnote,pricedifference,etc.invoicesaretakenfromcustomersintheeventoftargetsachievedbythecustomersandprovisionsaremadeforthem.

ii) Contingent Assets and Liabilities;

December 31, 2015

AsofDecember31,2015,forthelawsuitsinitiatedagainstGroup,provisionamountTL891.857isreflectedtothefinancialstatements.Almostalloftheprovisionsforlitigationsconsistofcustomlawsuits.

December 31, 2014

AsofDecember31,2014,forthelawsuitsinitiatedagainstGroup,provisionamountTL1.893.995isreflectedtothefinancialstatements.Almostalloftheprovisionsforlitigationsconsistofcustomlawsuits.

iii) Contingent Liabilities and Commitments:

December 31, 2015

December 31, 2014Provision for Litigations

Price Differences

Provisions for TT Net Campaign

Total

As of January 1 1.798.788 13.684.473 3.893.445 19.376.706Additions 246.544 25.566.310 - 25.812.854Payments / Offsetting - (13.684.473) (3.551.248) (17.235.721)Terminated Provisions (151.337) - - (151.337)As of December 31, 2014 1.893.995 25.566.310 342.197 27.802.502

TL USD EUROBailment Given 149.349.126 7.550.000 -Guarantee Letters given 128.635.400 9.265.000 1.400.000 Total 277.984.526 16.815.000 1.400.000

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December 31, 2014

Guaranteelettersaregiventosomepublicinstitutions,domesticandforeignsellerswhichGrouppurchasefrom.Theyaretheguaranteeofliabilitiesobtainedfrompurchaseofgoods.Thereisnocashout-flowrelatedwiththeguaranteelettersduetotheliabilitiesarepaidontheirmaturity.

iv) Total Insurance Coverage on Assets;

December 31, 2015

AdditionalinformationsrelatedtradereceivablesinsuranceareenclosedinNote:10.

December 31, 2014

TL USD EUROBailment Given 79.367.376 5.000.000 -Guarantee Letters given 68.965.943 11.715.000 2.300.000 Total 148.333.319 16.715.000 2.300.000

Type of Insured Assets USD TL Trade goods 111.291.962 -Vehicles - 2.481.342 Plants machinery and equipment 6.480.874 -Total 117.772.836 2.481.342

Type of Insured Assets USD TL Trade goods 91.082.501 - Vehicles - 2.528.285 Plants machinery and equipment 6.477.770 - Total 97.560.271 2.528.285

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v ) The ratio of Mortgages and Guarantees Given to Shareholders’ Equity is as fol-lows;

AmountsstatedintheabovetablearetheamountsinTLattheendoftheperiod.

TheratioofMortgagesandGuaranteesGiventoShareholders’Equityis0%.(0%asofDecem-ber31,2014)

23 COMMITMENTS

None.

24 EMPLOYEE BENEFITS

Mortgages & Guarantees Given by the Group

December 31, 2015

December 31, 2015

December 31, 2014

December 31, 2014

Foreign

Currency

Amount

TL Amount

Foreign

Currency

Amount

TL Amount

A. Total amount of M&G Given on behalf of the Group - 160.022.954 - 102.619.467

Guarantee Letter (USD) 9.265.000 26.938.914 11.715.000 27.165.914

Guarantee Letter (EURO) 1.400.000 4.448.640 2.300.000 6.487.610

Guarantee Letter (TL) 128.635.400 128.635.400 68.965.943 68.965.943

Guarantee notes and cheques(TL)

Lien

Mortgage(USD)

B. Total amount of M&G Given on behalf of the Subsidiaries and

Affiliated Companies subject to full consolidation- 171.301.506 - 90.961.876

Bailment (USD) 7.550.000 21.952.380 5.000.000 11.594.500

Bailment (EURO) - - - -

Bailment (TL) 149.349.126 149.349.126 79.367.376 79.367.376

C. Total Amount of M&G Given on behalf of the third person

liability in order to sustain usual business activities.- - - -

D. Total Amount of other M&G Given - - - -

i. Total Amount of M&G Given on behalf of main shareholder - - - -

ii. Total Amount of M&G Given on behalf of other affiliated

companies which cannot be classified under section B and C.- - - -

iii. Total Amount of M&G Given on behalf of the third person

that cannot be classified under section C.- - - -

Total - 331.324.460 - 193.581.343

Account Name December 31, 2015 December 31, 2014Provision for Employment Termination 3.293.817 2.783.123Total 3.293.817 2.783.123

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Under theTurkishLaborLaw, theGroup is required topayemployee terminationbenefits to

each employee, who has entitled to receive provisions for employee termination benefits in

accordancewiththeeffectivelaws.AdditionallytheCompanyisrequiredtopayemployeewho

has the right of severance with termination indemnity. The maximum employee termination

benefitpayableasofJanuary1,2016isTL4.092,53(December31,2014:TL3.541,37)and

takenintoconsiderationinthecalculationsoftheGroup’sprovisionforterminationindemnities.

Terminationindemnitypayableiscalculatedbyforecastingthepresentvalueofcurrentlywor-kingemployee’spossiblefutureliabilities.IAS19(“EmployeeTerminationBenefits”)predictstobuildupGroup’sliabilitieswithusingactuarialvaluationtechniquesincontextofdefinedbenefitplans.Accordingtothesepredictions,actuarialassumptionsusedincalculationoftotalliabilitiesareasfollows.

Theprincipalassumptionisthatthemaximumliabilityforeachyearofservicewill increaseinlinewiththeinflation.Therefore,thediscountrateappliedrepresentstheexpectedrealrateafteradjustingfortheanticipatedeffectsoffutureinflation.Consequently,inthefinancialstatementsdatedasofDecember31,2015,theprovisionwascalculatedbyestimatingthepresentvalueofthefutureprobableobligationoftheGrouparisingfromtheretirementoftheemployees.Theprovisionsatthebalancesheetdateshavebeencalculatedassuminganannualinflationrateof6,5%andadiscountrateof10,5%.Withthattherealdiscountrateof3,76%(December31,2014:3,77%)wasusedinthecomputation.Theseexpectationsarereviewedeverybalancesheetperiodandrevisedifrequired.

Asthedate31December2015,Theprobabilityofmakenotprovisioninrelationtobenefitob-ligationisapproximately%97,22.(31December2014:%97,17)

Provisionexpenseforterminationindemnitiesisrecognisedundertheoperationalexpenses.

AccordingtotheregulationunderIAS19releasedonJanuary1,2013actuariallossesandgainsaretoberecordedunderothercomprehensiveincomeinShareholder’sEquity.

TheactuarialgainsexpensedinthecurrentperiodareTL225.468Theportionofdeferredtax

January 1, 2015December 31, 2015


January 1 2.783.123 2.682.494Service Cost 391.527 243.113Actuarial Profit 225.468 2.448Interest Cost 278.312 268.249Nullifed Provisions - (14.255)Difference Between Previous Period Provision and Current Period Termination Indemnity Paid

451.031 587.207

Payments (-) (835.644) (986.133)Closing Balance 3.293.817 2.783.123

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incomethatrelatestothisexpensehasalsobeenrecordedsimilarlyinothercomprehensiveinco-me,asaresult,othercomprehensiveexpenseisTL180.375.

Previousterm,theamountof2.448TLisaccountedasactuarialgain.Asaresultofdeferredtaxincomewhichisrelatedtothisamountisaccountedasthesameasactuarialgainandthenewcomprehensiveincomebecame1.958TLbecauseofthistransaction.

TherecordedaccountsforthecurrentperiodTerminationIndemnityProvisionExpenses(Income)areasfollows:

25 ASSETS AND LIABILITIES RELATED TO CURRENT PERIOD TAX

Theassetsandliabilitiesrelatedtothecurrentperiodtaxareasfollows:

26 OTHER ASSETS AND LIABILITIES

OtherCurrentAssetsfortheyearsended,areasfollows:



General and Administrative Expenses (1.120.870) (1.098.568)Other Real Operating Expenses - - Income/ (Expense) Recorded in Profit and Loss (1.120.870) (1.098.568)Actuarial Losses (*) Recorded in Other Comprehensive Income (225.468) (2.448)Total Period Expense/ (Income) (1.346.338) (1.101.017)



Actuarial Losses Recorded in Other Comprehensive Income (225.468) (2.448)Tax Effect % 20 45.093 490Amount (180.375) (1.958)Minority Actuarial Gain 4.791 (5.940)Net Amount (175.584) (7.898)

Account Name December 31, 2015 December 31, 2014Prepaid Taxes (Temporary Taxes to be Refunded) - 2.366Total - 2.366

Account Name December 31, 2015 December 31, 2014Credit Note Income Accrual 22.931.348 28.922.641Deferred VAT 119.514 6.031.764Advances Given For Purchases 91.599 171.687Total 23.142.461 35.126.092

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27 SHAREHOLDERS’ EQUITY

i) Minority Shares / Minority Shares Profit / (Loss)

ii) Capital / Share Capital / Elimination Adjustments

ThesharecapitaloftheCompanyis56.000.000TLandthesharecapitalconsistof56.000.000per-shareswhicheachof1nominalvalue.ThepaidincapitaloftheCompany,whichis56.000.000TL,consistsofAGroupsharesissuedtothenameaspaid-incapitalis318,18TL,BGroupsha-resissuedtothebearaspaid-incapitalis55.999.681,82TL.AGroupofshareholdershavetherightstoappointonemoreofthehalfmemberoftheExecutiveBoard.Afterthe initialdividendisgivenfromthedistributionofprofit,AgroupShareholdershasalsotherightstoget%5oftheremainingpart.

TheCompanyaccepts theRegisteredSharecapitalSystemwith theJanuary20,2014datedpermissionofCapitalMarketBoardanddetermined theRegisteredShareCapitalceiling raisefrom75.000.000TLtoTL150.000.000.ThedecisionacceptedatRegularMeetingShareholdersoftheGroupdatedMay9,2014.ThepermissionoftheRegisteredShareCapitalceilingbelongstobetween2014-2018years.

ThesharecapitalshownintheconsolidatedbalancesheetisthesharecapitaloftheCompany.Theamountsofsharecapitalofthesubsidiariesandthesubsidiaryaccountareeliminatedmu-tually.

TheultimatecontrollingpartyoftheGroupisNevresErolBilecikandhisfamilymembers.

December 31, 2015 December 31, 2014

ShareholderShare

Percentage%

Share Amount

Share Percentage

%

Share Amount

Nevres Erol Bilecik % 35,93 20.120.551 % 35,93 20.120.551Alfanor 13131 AS % 20,00 11.200.000 % 20,00 11.200.000Public Shares % 41,70 23.351.994 % 41,70 23.351.994Other % 2,37 1.327.455 % 2,37 1.327.455Total % 100 56.000.000 % 100 56.000.000

Account Name December 31, 2015 December 31, 2014Minority Shares 29.196.804 19.124.871Total 29.196.804 19.124.871

Account NameJanuary 1, 2015

December 31, 2015January 1, 2014

December 31, 2014Opening 19.124.871 14.847.702Minority Shares Profit - (Loss) 10.229.210 4.577.990Foreign Exchange Translation Differences (152.486) (306.761)Actuarial Gains/Losses from Retirement Plans (4.791) 5.940Total 29.196.804 19.124.871

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97

iii) Capital Reserves

None.

iv) Accumulated Other Comprehensive Income or (Expense) not to be Reclassified in

Profit or Loss

TheanalysisAccumulatedOtherComprehensiveIncomeor(Expense)nottobeReclassifiedinProfitorLossareasfollows:

v) Accumulated Other Comprehensive Income or (Expense) to be Reclassified in Pro-

fit or Loss

TheForeignCurrencyExchangeDifferencesMovementScheduleisasfollows:

vi) Restricted Reserves from Profit

Restrictedreservesfromprofitsconsistoflegalreserves.

Thelegalreservesconsistoffirstandsecondlegalreserves,appropriatedinaccordancewiththeTurkishCommercialCode(TCC).TheTCCstipulatesthatthefirstlegalreserveisappropriatedoutofhistoricalstatutoryprofitsattherateof5%perannum,untilthetotalreservereaches20%oftheCompany’shistoricalpaid-insharecapital.Thesecondlegalreserveisappropriatedattherateof10%perannumofallcashdistributionsinexcessof5%ofthehistoricalpaid-insharecapital.UnderTCC,the legal reservesarenotavailable fordistributionunlesstheyexceed50%of thehistoricalpaid-insharecapitalbutmaybeusedtooffsetlossesintheeventthathistoricalgeneralreserveisexhausted.

Account Name 31 December 2015 31 December 2014January 1 Opening (198.766) (190.868)Actuarial Gains and (Losses) (Note:24) (225.468) (2.448)Tax Effect (Note:24, Note:35) 45.093 490Minority Share Actuarial Gains 4.791 (5.940)Actuarial Gains and Losses (Net) (374.350) (198.766)Revaluation Gains and Losses (374.350) (198.766)Other Gains and Losses - -Accumulated Other Comprehensive Income or (Expense) not to be Reclassified in Profit or Loss

(374.350) (198.766)

Account Name 31 December 2015 31 December 2014January 1 Opening 9.065.695 8.587.029Additions/Disposals 2.338.701 478.666End of Period Balance 11.404.396 9.065.695

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vii) Previous Years’ Profits / (Losses)

Profitsofpreviousyearsconsistofextraordinaryreserves,miscellaneousinflationdifferencesandprofitsofotherpreviousyears.InaccordancewiththeCMB’sdecisionnumbered7/242datedonFebruary25,2005;iftheamountofnetdistributableprofitbasedontheCMB’srequirementontheminimumprofitdistributionarrangements,whichiscomputedoverthenetprofitdeterminedbasedontheCMB’sregulations,doesnotexceedthenetdistributableprofitinthestatutoryaccounts,thewholeamountshouldbedistributed,otherwise;alldistributableamountinthestatutoryac-countsaredistributed.However,noprofitdistributionwouldbemadeifanyfinancialstatementspreparedinaccordancewiththeCMBoranystatutoryaccountscarryingnetlossfortheperiod.

Shareholders’Equityasofperiodsendedisasfollows:

Thenumberofwithdrawnsharesare162.402andthiswithrawntransactionoccuredin2013.

InthefinancialstatementspreparedaccordingtothestandardsoftheCMB,theGroup’scurrentperiodprofitwas53.656.587TL.TheCompany’sdistributableprofit instatutoryfinancialstate-ments for current period is 21.204.478 TLCompany’s distributable dividend (includes currentperiodprofit/loss)frompreviousperiodprofitsislimitedwiththisamount.Inflationadjustmentsonsharecapitalandrealestate’ssalesprofits,whichareheldinfundtobeaddedtothesharecapital,werenottakenintoconsiderationduringcalculationoftotaldistributableprofit.

Account Name December 31, 2015 December 31, 2014Share capital 56.000.000 56.000.000Capital Conversion Differences 1.064.323 1.064.323Withdrawn Shares (-) (634.290) (634.290)Other Comprehensive Income/Expense not to be Reclassified in Profit/Loss

(374.350) (198.766)

- Revaluation Gains/Losses (374.350) (198.766)Other Comprehensive Income/Expense to be Reclassified in Profit/Loss

11.404.396 9.065.695

- Hedging (Not:9) - - - Foreign Currency Translation Differences 11.404.396 9.065.695Restricted Reserves From Profit 12.605.752 9.957.469-Legal Reserves 11.458.702 8.810.419 - Profit from sale of affiliates except from Corporate Tax 1.147.050 1.147.050Previous Years’ Profits 53.656.587 52.370.539Net Period Loss/ Profit 44.920.203 25.173.457Parent Company Shareholders' Equity 178.642.621 152.798.427Minority Shares 29.196.804 19.124.871Total Shareholders’ Equity 207.839.425 171.923.298

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28 SALES AND COST OF SALES

SalesandcostofsalesdetailswhichbelongtwelvemonthsaccountingperiodoftheGroupareasfollows:

29 RESEARCH AND DEVELOPMENT, MARKETING, SALES & DIST-RIBUTION EXPENSES


December 31, 2015January 1, 2014

December 31, 2014Domestic Sales 3.436.720.003 2.245.404.631 Foreign Sales 8.358.011 5.548.828 Other Sales 57.707.854 42.858.273 Sales Returns (-) (82.607.468) (62.705.256)Sales Discounts (-) (30.217.362) (20.252.020)Other Discounts (-) (5.270.158) (4.835.128)Net Sales 3.384.690.880 2.206.019.328 Cost of Sales (-) (3.231.879.393) (2.103.438.874)Gross Profit / (Loss) 152.811.487 102.580.454


December 31, 2015

January 1, 2014December 31,

2014General Administrative Expenses (-) (30.868.074) (29.292.476)Marketing, Selling and Distribution Expenses (-) (30.272.070) (19.283.597)Total Operating Expenses (61.140.144) (48.576.073)

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30 EXPENSES RELATED TO THEIR NATURE

ExpensesRelatedtoTheirNatureoftheGroupasareasfollows:

Depreciationandamortisationexpensesandpersonnelexpensesarerecognisedinoperational

expenses.

31 OTHER OPERATING INCOME / EXPENSE


December 31, 2015


2014Marketing, Selling and Distribution Expenses and General Administrative Expenses(-)

(61.140.144) (48.576.073)

- Personnel Expenses (32.716.923) (24.271.625) - Logistic and storage expenses (4.839.609) (4.466.015) - Depreciation expenses (2.559.107) (1.709.892) - Rental Expense (5.766.651) (4.947.357) - Communication Expense (324.769) (402.595) - Travelling Expenses (546.643) (694.834)- Transportation Expenses (1.064.368) (1.036.690) - Consultancy and Audit Expenses (828.911) (732.501) - Insurance Expenses (4.989.863) (3.199.044) - Advertisement Expense (597.260) (890.251)- Taxes, Duties, Charges Expenses (352.826) (1.217.130)- Provisions for termination indemnities expenses (1.120.869) (1.098.568) - Other Expenses (5.432.345) (3.909.571)Total Operating Expenses (61.140.144) (48.576.073)

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101

OtheroperatingIncome/Expensewhichbelongtwelvemonthsaccountingperiod,oftheGroupareasfollows:

32 INCOME/EXPENSES FROM INVESTMENT OPERATIONS

Financialincomefortheperiodsendedisasfollows:

33 FINANCIAL INCOME/ EXPENSES

FinancialIncomesandexpensesoftheGroupareasfollows:


December 31, 2015


2014Other Income from Operations 97.669.633 88.177.079 Nullified Doubtful Receivables Provisions 1.041.156 - Insurance Claim Income 203.757 - Eliminated Interest from Sales 46.931.289 22.017.509 Current Period Accrued Income 9.221.669 5.500.410 Prior Period Rediscount Cancellation 4.331.755 4.965.175 Foreign exchange differences Income (trade receivables and payables)

35.290.885 55.417.032

Other Income and Profits 649.122 276.953Operating from the Other Expenses (-) (98.408.039) (83.649.695) Interest Eliminated from Purchases (40.641.027) (19.469.977) Current Period Rediscount Expenses (7.673.723) (4.331.755) Prior Period Rediscount Cancellation (5.501.940) (5.356.526) Foreign currency exchange losses (trade receivables and payables)

(43.911.360) (53.936.320)

Other Expenses and Losses (-) (679.989) (555.117)Other Income/Expense (net) (738.406) 4.527.384


December 31, 2015


2014Inome from Investment Operatiıns 49.929 8.829Profit from Fixed Asset Sales 49.929 8.829Investment Operatiıns Expense (-) - (17.941)Other Income/Expense (Net) 49.929 (9.112)

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102

TherearenocapitalizedfinancialexpensesofCompanyforcurrentperiod.

34 FIXED ASSETS HELD FOR SALE PURPOSES AND DISCONTI-NUED OPERATIONS

None.

35 TAX ASSETS AND LIABILITIES

TheCompany’staxincome/(expense)arecomposedofcurrentperiod’scorporatetaxexpenseanddeferredtaxincome/(expense).

ThetaxassetsandliabilitiesoftheCompanyareasfollows:

i) Provision for Current Period Tax

CompaniescalculatetheirtemporarytaxesontheirquarterlyfinancialprofitsinTurkey.Corporateincomeasofthetemporarytaxperiods,temporarytaxrateof20%overthecorporateincomewascalculatedandprepaidtaxesdeductedfromtaxationonincome.


2015December 31,

2014Provision for Current Period Tax (20.447.333) (9.692.518)Deferred Tax Income / (Expense) 6.265.115 1.940.986Total Tax Income / (Expense) (14.182.218) (7.751.532)

Account Name January 1, 20151 Ocak-

31 Aralık 2014Bank and Interest Expenses December 31, 2015 January 1, 2014Foreign Exchange Translation Expense December 31, 2014 (1.656.480)Total Financial Expenses (38.260.479) (22.584.911)

Account Name December 31, 2015 December 31, 2014Provision for Current Period Tax 20.447.333 9.692.518Prepaid Taxes (-) (14.849.304) (4.073.313)Total Net Tax Payable 5.598.029 5.619.205


December 31, 2015


2014Interest Income December 31, 2015 797.947Foreign Exchange Translation Income 13.640.886 - Total Financial Income 17.584.771 797.947

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103

AccordingtoTurkishCorporateTaxLaw,lossescanbecarriedforwardtooffsetthefuturetaxableincomeforamaximumperiodof5years.Ontheotherhand,suchlossescannotbecarriedbacktooffsetprioyears’profits.

AccordingtoCorporateTaxLaw’sArticle:24,thecorporatetaxisimposedbythetaxpayer’staxreturns.Thereisnoprosedureforafinalanddefinitiveagreementontaxassessments.Annualcorporatetaxreturnsaresubmitteduntilthe25thofAprilfollowingtheclosingoftheaccountingyear.Moreover,thetaxauthoritieshavetherighttoexaminethetaxreturnsandtherelatedac-countingrecordswithinfiveyears.

IncomeWithholdingTax:

Inadditiontocorporatetax,Groupshouldalsocalculateincomewithholdingtaxonanydividendsandincomedistributed,exceptforresidentcompaniesinTurkeyreceivingdividendsfromresidentcompaniesinTurkeyandTurkishbranchesofforeigncompanies.Therateofwithholdingtaxhasbeenincreasedfrom10%to15%upontheCabinetdecisionNo:2006/10731,whichwaspublis-hedinOfficialGazetteonJuly23,2006.

ii) Deferred Tax

Thedeferredtaxassetandtaxliabilityisbasedonthetemporarydifferences,whicharisebetweenthe financialstatementspreparedaccording toCMB’saccountingstandardsandstatutory taxfinancialstatements.ThesedifferencesusuallyduetotherecognitionofrevenueandexpensesindifferentreportingperiodsfortheCMBstandardsandtaxpurposes.

Account Name

Dec. 31, 2015Accumulated

Temporary Differences

Dec. 31, 2015Deferred

Tax Assets / (Liabilities)

Dec. 31, 2014Accumulated

Temporary Differences

Dec. 31, 2014Deferred

Tax Assets / (Liabilities)

Fixed Assets (1.881.615) (376.323) (2.068.425) (413.685)Rediscount Expense 46.383.306 9.276.661 15.227.186 3.045.437 Provision for Termination Indemnity

3.293.817 658.763 2.783.123 556.625

Provision for Value Decrease in Inventories

5.300.462 1.060.092 3.204.256 640.850

Rediscount Income (8.092.708) (1.618.542) (4.785.172) (957.034)Derivatives 165.962 33.192 (165.039) (33.008)Other 1.554.326 310.867 976.583 195.317 Deferred Tax Asset / Liability 9.344.710

3.034.502

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104

Thetaxprovisionreconciliationforthe12-monthperiodisasfollows:

36 NET EARNINGS PER SHARE

Earningspershareintheincomestatementarecalculatedbydividingnetincomebytheweightedaveragenumberofcommonsharesoutstandingfortheperiod.Company’searningspersharearecalculatedfortheperiodsareasfollows:

December 31, 2015

December 31, 2014

Deferred Tax Asset / Liability at the beginning of the period 3.034.502 1.095.814

Minority Actuarial Gains and Losses 43.895 1.975Foreign Currency Translation Differences 1.198 (1.485)Deferred Tax Income / (Expense) - (2.788)Hedging Fund 6.265.115 1.940.986Deferred Tax Asset / Liability at the end of the period - -Deferred Tax Asset / Liability at the end of the period 9.344.710 3.034.502



Net Profit For The Period / (Loss) 44.920.203 25.173.457Weighted Average Number of Common Shares Outstanding 56.000.000 56.000.000Earnings / (Loss) per Share 0,802146 0,449526 Corresponding to the Preference Shares Gain 7.058,93 3.955,85The earnings attributable to Common Shares 0,762043 0,427052


2015December 31,

2014Deferred Tax Receivables 9.471.225 3.244.190Deferred Tax Payables (-) (126.515) (209.688)Deferred Tax Recei./Payable. 9.344.710 3.034.502

Reconciliation of Tax ProvisionJanuary 1, 2015

December 31, 2015 January 1, 2014

December 31, 2014 Profits obtained from continuing operations 69.331.631 37.502.979Income tax rate %20 (13.866.326) (7.500.596)Tax effect: - --The effect of equity items due to foreign currency translation (437.243) (34.381)- Non-Deductible Income/Expenses 121.351 (216.555)Income Statement Tax Provision Expense (14.182.218) (7.751.532)

2015 Annual Report

105

37 EXPLANATIONS OF RELATED PARTIES

a) Receivables and Payables of Related Parties:

January 1, 2015– December 31, 2015


Therearenoguaranteesormortgagesfortherelatedpartyreceivablesorpayables.Thereisnoprovisionmadefordoubtfulreceivablesfortherelatedpartyreceivables.İnfinA.Ş.isthesubsidiarywhichisnotincludedintheconsolidation,NeteksDışTicaretA.Ş.istheaffiliateevaluatedbyequitymethod,Desbil,DespecandHomendareotherrelatedparties.

Therelatedpartybalancesgenerallyconsistfromtradetransactions.Butinsomeconditionstherearecashusagesbetweentherelatedparties.Thebalancesconsistfromnon-tradetransactionsareclassifiedasnon-tradereceivablesorpayablesinthefinancialstatements.Interestiscalcu-latedforthebalancesandinvoicedquarterly.AsofDecember31,2015theinterestrateforUSDis%3,5EURis%3,5andTLis%14.(December31,2014USDis%2,5EURis%2,5andTLis%10)

December 31, 2014Receivables Liabilities

Commercial Non-Commercial Commercial Non-Commercial Shareholders - - - -Neteks A.Ş. 441.785 - 7.673 -Homend A.Ş. 104 5.763 8.039 -Desbil A.Ş. 27.945 269.235 - -İnfin A.Ş. 1.824.045 - - -Neteks Dış Tic. - - 27 -Despec A.Ş. 318.724 - 157 -Total 2.612.603 274.998 15.896 -

December 31, 2015Receivables Liabilities

Commercial Non-Commercial Commercial Non-Commercial Shareholders - - - -Neteks A.Ş. 731.992 - 9.822 -Homend A.Ş. 8.007 1.927 209 -Desbil A.Ş. 49.368 344.821 - -İnfin A.Ş. 1.109.903 - 152.373 -Neteks Dış Tic. 265 - - -Despec A.Ş. 510.642 - - -Total 2.410.177 346.748 162.404 -

2015 Annual Report

106

b) Purchases from Related Parties and Purchases from Related Parties:



Sales to Related PartiesGoods and

Service SalesCost

Allocation

Interest and Foreign Exchange Income

Total Expense/ Purchases

Desbil A.Ş. - 343 62.298 62.641 Despec A.Ş. 2.148.550 2.063.151 46.521 4.258.222 Homend A.Ş. 61.762 251.398 5.581 318.741 İnfin A.Ş. 6.671.322 36.161 187.646 6.895.129 Neteks A.Ş. 1.228.054 5.953.386 251.478 7.432.918 TOTAL 10.109.688 8.304.439 553.524 18.967.651

Purchases From Related PartiesGoods and

Service SalesCost

Allocation



Desbil A.Ş. - - 18.591 18.591 Despec A.Ş. 892.764 123.860 39.837 1.056.461 Homend A.Ş. 50.294 62.065 1.562 113.921 İnfin A.Ş. 272.072 414.899 1.122.052 1.809.023 Neteks A.Ş. 503.268 57.094 375.039 935.401 TOTAL 1.718.398 657.918 1.557.081 3.933.397

Sales to Related PartiesGoods and

Service SalesCost

Allocation



Desbil A.Ş. - - 116.626 116.626 Despec A.Ş. 3.029.824 1.359.166 91.275 4.480.265 Homend A.Ş. 26.354 20.337 1.026 47.717 İnfin A.Ş. 7.444.487 - 400.627 7.845.114 Neteks Dış Ltd.Şti. - 254 - 254 Neteks A.Ş. 238.661 4.985.073 422.060 5.645.794 TOTAL 10.739.326 6.364.830 1.031.614 18.135.770

2015 Annual Report

107

c) Benefits and wages provided to Management Staff

BenefitsandwagesprovidedtoManagementStaffcontainwagesofgeneralmanagerandvicegeneralmanagers.

38 NATURE AND LEVEL OF RISKS ARISING OUT OF FINANCIAL INSTRUMENTS

(a) Capital Risk Management

TheGroup,whiletryingtomaintainthecontinuityofitsactivitiesincapitalmanagementononehand,aimstoincreaseitsprofitabilitybyusingthebalancebetweendebtsandresourcesontheotherhand.ThecapitalstructureoftheGroupconsistsofdebtscontainingthecreditsexplainedinnote8,cashandcashequivalentsexplainedinnote6andresourceitemscontainingrespectivelyissuedcapital,capitalreserves,profitreservesandprofitsofpreviousyearsexplainedinnote27.

Risks,associatedwitheachcapitalclass,andthecapitalcostareevaluatedbytheseniorma-nagement.Itisaimedthatthecapitalstructurewillbestabilizedbymeansofnewborrowingsorrepayingtheexistingdebtsaswellasdividendpaymentsandnewshareissuancesbasedontheseniormanagementevaluations.

TheGroupfollowsthecapitalbyusingdebt/totalcapitalrate.Thisrate isfoundbydividingthenetdebtbytotalcapital.Thenetdebtiscalculatedbyexcludingthecashandcashequivalentamountsfromthetotaldebtamount(includingcredits,leasingandcommercialdebtsasindicatedinthebalancesheet).Totalcapital iscalculatedasresourcesplusnetdebtas indicated inthebalancesheet.

Purchases From Related PartiesGoods and

Service SalesCost

Allocation



Desbil A.Ş. - - 34.295 34.295 Despec A.Ş. 637.133 207.302 49.214 893.649 Homend A.Ş. 47.879 7.732 2.431 58.042 İnfin A.Ş. 3.818.971 - 370.908 4.189.879 Neteks A.Ş. 486.339 306.433 268.747 1.061.519 TOTAL 4.990.322 521.467 725.595 6.237.384

Account NameJanuary 1, 2015–

December 31, 2015 January 1, 2014–

December 31, 2014Short term benefits provided to employees 5.703.696 3.633.231Employment Termination Benefits - -Other long term benefits - -Total 5.703.696 3.633.231

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108

GeneralstrategyoftheGroupbasedonresourcesisnotdifferentfromthepreviousyears.

(b) Important Accounting Policies

TheCompany’s importantaccountingpoliciesrelating to financial instrumentsarepresented intheNote2.

(c) Risks Exposed

Becauseofitsoperations,theGroupisexposedtofinancialrisksrelatedtoexchangeratesandinterestrates.TheGroupasitholdsthefinancialinstrumentsalsocarrytheriskofotherpartynotmeetingtherequirementsoftheagreement.MarketrisksseenatthelevelofGrouparemeasuredaccordingtothesensitivityanalysisprinciple.MarketrisksfacedbytheCompanyincurrentperiodortheprocessofundertakingthefacedrisksortheprocessofthemeasureoffacedriskswasnotchangedaccordingtopreviousyear.

(c1) Foreign currency risk management

Transactions in foreign currencies expose theGroup to foreign currency risk. This riskmainlyarisesfromfluctuationofforeigncurrencyusedinconversionofforeignassetsandliabilitiesintoTurkishLira.Foreigncurrencyriskarisesasaresultoftradingtransactionsinthefutureandthedifferencebetweentheassetsandliabilitiesrecognized.

TheCompanyismainlyexposedtoforeigncurrencyriskduetodeposits,receivablesandpayab-les

December 31, 2015 December

31, 2014Total Debt 1.178.875.567 887.814.192 Minus (-) Cash and Equivalent (136.763.531) (111.965.405)Net Debt 1.042.112.036 775.848.787 Total Shareholder’s Equity 207.839.425 171.923.298 Total Share capital 1.249.951.461 947.772.085 Rate % (Net Debt / Total Share Capital) 83,37% 81,86%

2015 Annual Report

109

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sset

s To

tal (

1+2+

3)

403

.264

.560

137

.439

.704

1.1

47.0

53

387

.350

.236

1

66.0

53.2

29

811

.643

5. T

rade

Rec

eiva

bles

-

-

-

-

-

-

6a. M

onet

ary

Fina

ncia

l Ass

ets

-

-

-

-

-

-

6b. N

on-M

onet

ary

Fina

ncia

l Ass

ets

-

-

-

-

-

-

7. O

ther

-

-

-

-

-

-

8. F

ixed

Ass

ets

Tota

l (5+

6+7)

-

-

-

-

-

-

9. T

otal

Ass

ets

(4+

8)

403

.264

.560

137

.439

.704

1.1

47.0

53

38

7.35

0.23

6

1

66.0

53.2

29

8

11.6

43

10. T

rade

Pay

able

s

(276

.351

.083

)

(93.

225.

015)

(1

.664

.788

)

(

349.

188.

499)

(

149.

994.

008)

(4

84.7

71)

11. F

inan

cial L

iabi

lities

(

42.6

26.6

57)

(1

4.63

5.95

2)

(

22.3

95)

(3

5.03

1.32

9)

(1

5.10

6.87

4)

-

12a.

Oth

er M

onet

ary

Liab

ilitie

s

(11

.965

.028

)

(4

.114.

447)

(586

)

(10.

034.

730)

(4.

327.

367)

-

12b.

Oth

er N

on-M

onet

ary

Liab

ilitie

s

-

-

-

-

-

-

13. T

otal

Sho

rt T

erm

Lia

bilit

ies

(10+

11+1

2)

(330

.942

.767

)

(111

.975

.414

)

(1.6

87.7

69)

(394

.254

.558

)

(16

9.42

8.24

9)

(484

.771

)

14. T

rade

Pay

able

s

-

-

-

-

-

-

15. F

inan

cial L

iabi

lities

-

-

-

(82

5.40

5)

(

355.

947)

-

16a.

Oth

er M

onet

ary

Liab

ilitie

s

-

-

-

-

-

-

16b.

Oth

er N

on-M

onet

ary

Liab

ilitie

s

-

-

-

-

-

-

17. T

otal

Lon

g Te

rm L

iabi

litie

s (1

4+15

+16)

-

-

-

(82

5.40

5)

(

355.

947)

-

18. T

otal

Lia

bilit

ies

(13+

17)

(3

30.9

42.7

67)

(1

11.9

75.4

14)

(1

.687

.769

)

(3

95.0

79.9

63)

(

169.

784.

196)

(4

84.7

71)

19. N

et A

sset

/ (Li

abili

ty) P

ositi

on o

f Der

ivat

ive

Inst

rum

ents

off

the

Bala

nce

Shee

t (19

a-19

b)

(32

.319

.183

)

(11.

115.

416)

-

(1

0.18

7.83

8) (4

.393

.392

) -

19a.

Tot

al Am

ount

of H

edge

d As

sets

-

-

-

- -

-

19b.

Tot

al Am

ount

of H

edge

d Li

abilit

ies

32.3

19.1

83

1

1.115

.416

-

10.1

87.8

38 4

.393

.392

-

20. N

et F

orei

gn E

xcha

nge

Asse

t / (L

iabi

lity)

Pos

ition

(9-1

8+19

)

40

.002

.610

14.

348.

875

(540

.716

) (1

7.91

7.56

5) (8

.124

.359

)32

6.87

2

21. M

onet

ary

Item

s N

et F

orei

gn E

xcha

nge

Asse

t / (l

iabi

lity)

pos

ition

(1+

2a+

5+6a

-10-

11-1

2a-1

4-15

-16a

)

72

.321

.793

25.

464.

291

(540

.716

) (1

8.69

9.58

1) (8

.461

.595

) 3

26.8

72

22. T

otal

Fai

r Val

ue o

f Fin

anci

al In

stru

men

ts U

sed

for t

he F

orei

gn E

xcha

nge

Hedg

e

--

-

23. T

he A

mou

nt o

f Hed

ged

part

of F

orei

gn E

xcha

nge

Asse

ts

(32

.485

.145

)

(11.

172.

495)

-

(1

0.35

2.87

7) (1

1.95

0.38

0) -

23. T

he A

mou

nt o

f Hed

ged

part

of F

orei

gn E

xcha

nge

Liab

ilitie

s

-

-

-

-

-

-

23. E

xpor

t

8

.358

.011

-

-

18.0

41.1

64 -

-

24. I

mpo

rt

229

.941

.180

-

-

431.

627.

478

-

-

2015 Annual Report

110

CRED

IT T

YPES

INCU

RRED

IN R

ESPE

CT O

FFIN

AN

CIA

L IN

STRU

MEN

T TY

PES

CURR

ENT

PERI

OD

Rece

ivab

les

Foot

Not

eBa

nk D

epos

its

and

Repo

sFo

otN

ote

Trad

e Re

ceiv

able

sO

ther

Rec

eiva

bles

Rela

ted

Part

yO

ther

Rela

ted

Part

yO

ther

Max

imum

cre

dit r

isk

incu

rred

as

of th

e da

te o

f rep

ortin

g (A

+B+

C+D+

E) (*

)2.

612.

603

633.

827.

523

274.

998

44.5

09.9

71

111.

146.

571

-

The

part

of m

axim

um ri

sk s

ecur

ed b

y gu

aran

tee

etc.

- 33

0.43

8.75

6-

-

A. N

et b

ook

valu

e of

fina

ncia

l ass

ets

whi

ch a

re u

ndue

or w

hich

did

not

dec

line

in v

alue

(2)

2.61

2.60

363

0.40

1.90

527

4.99

844

.509

.971

10-1

1 1

11.1

46.5

716

B. N

et b

ook

valu

e of

ass

ets,

ove

rdue

but

did

not

dec

line

in v

alue

. (6)

-

2.85

4.42

6-

-10

-11

-6

- The

par

t sec

ured

by

guar

ante

e et

c.

-

57

1.19

2-

--

C. N

et b

ook

valu

es o

f ass

ets

decl

ined

in v

alue

(4)

-57

1.19

2-

-10-11

-6

- O

verd

ue (g

ross

boo

k va

lue)

-

-

-

-

-

-

Dec

line

in v

alue

(-)

-

9.38

9.83

9

-

-

10-1

1

-

6

-

The

part

of n

et v

alue

sec

ured

by

guar

ante

e et

c.-

(9.3

89.8

39)

--

10-11

-6

- U

ndue

(gro

ss b

ook

valu

e)-

-10-11

-6

-

Dec

line

in v

alue

(-)

-

-

-

-

10-1

1

-

6

-

The

part

of n

et v

alue

sec

ured

by

guar

ante

e et

c.10-11

-6

D. E

lem

ents

con

tain

ing

cred

it ris

k of

f the

bal

ance

she

et (5

)10-11

-6

PREV

IOUS

PER

IOD

Rece

ivab

les

Foot

Not

eBa

nk D

epos

its

and

Repo

sFo

otN

ote

Trad

e Re

ceiv

able

sO

ther

Rec

eiva

bles

Rela

ted

Part

yO

ther

Rela

ted

Part

yO

ther

Max

imum

cre

dit r

isk

incu

rred

as

of th

e da

te o

f rep

ortin

g (A

+B+

C+D+

E) (*

)2.

350.

908

444.

953.

219

579.

095

264.

944

73

.470

.493

- T

he p

art o

f max

imum

risk

sec

ured

by

guar

ante

e et

c.-

223.914.676

- -

A. N

et b

ook

valu

e of

fina

ncia

l ass

ets

whi

ch a

re u

ndue

or w

hich

did

not

dec

line

in v

alue

(2)

2.35

0.90

8 44

1.52

8.59

257

9.09

5 26

4.94

4 10

-11

73

.470

.493

6

B. N

et b

ook

valu

e of

ass

ets,

ove

rdue

but

did

not

dec

line

in v

alue

. (6)

-

2.94

9.10

0 -

-10

-11

-6

- The

par

t sec

ured

by

guar

ante

e et

c.

-

47

5.52

7 -

--

C. N

et b

ook

valu

es o

f ass

ets

decl

ined

in v

alue

(4)

-475.527

--

10-11

-6

- O

verd

ue (g

ross

boo

k va

lue)

-

-

-

-

-

-

Dec

line

in v

alue

(-)

-

9.10

6.07

2

-

-

10-1

1

-

6

-

The

part

of n

et v

alue

sec

ured

by

guar

ante

e et

c.-

(9.106.072)

--

10-11

-6

- U

ndue

(gro

ss b

ook

valu

e)-

-10-11

-6

-

Dec

line

in v

alue

(-)

-

-

-

-

10-1

1

-

6

-

The

part

of n

et v

alue

sec

ured

by

guar

ante

e et

c.10-11

-6

D. E

lem

ents

con

tain

ing

cred

it ris

k of

f the

bal

ance

she

et (5

)10-11

-6

c2 )

Cre

dit

Ris

k an

d M

anag

emen

t

(*) D

urin

g th

e as

sess

men

t, th

e el

emen

ts s

uch

as g

uara

ntee

s re

ceiv

ed w

hich

can

incr

ease

the

cre

dib

ility

are

not

take

n in

to c

onsi

der

atio

n.

2015 Annual Report

111

(c3) Management of interest rate risk

Group’sfixed interest financial instruments liabilitiesarestated inNote:8.Group’sfixed interestassets(depositetc.)arestatedinNote:6.

Ifthereisa%1increaseonTLinterestrateandothervariablesarefixedasofDecember31,2015,profitbeforetaxwillbelesswiththeamountof1.988.054TL.(December31,2014:TL322.783)ImportantpartofGroup’sfinancialassetsandliabilitieswithfixedinterestrateareshort-term.Con-sequently the financialassetsand liabilitieswith fixed interest rateare taken intoconsideration.Thereisnointerestrateriskifonlyfinancialassetsandliabilitieswithfloatingratearetakenintoconsideration.

(c4) Liquidity risk management

TheGrouptriestomanagetheliquidityriskbymaintainingthecontinuationofsufficientfundsandloanreservesbymeansofmatchingthefinancialinstrumentsandtermsofliabilitiesbyfollowingthecashflowregularly.

Liquidity Risk Tables

Prudentliquidityriskmanagementsignifiesmaintainingsufficientcash,theutilityoffundsourcesbysufficientcredittransactionsandtheabilitytocloseoutmarketpositions.

Riskofexistingorfuturepossibledebtrequirementsbeingfundableismanagedbymaintainingthecontinuationofavailabilityofsufficientnumbersandhighqualitycreditproviders.

Thetablebelowindicatesthetermdivisionsofderivativeandnon-derivativefinancialliabilitiesoftheGroupinTLcurrency.

Table of Interest Position Current Period Previous PeriodFixed Interest Financial InstrumentsFinancial Assets 123.616.698 101.128.147Financial Liabilities 322.422.080 133.406.402Floating Rate Financial InstrumentsFinancial Assets - -Financial Liabilities - -

Contract Terms Defter DeğeriSözleşme

Uyarınca Nakit Çıkışlar Toplamı

3 Aydan Kısa 3-12 ay arası 1-5 yıl arası 5 yıldan uzun

Non-derivative Financial Liabilities

1.049.100.217 1.083.194.702 847.085.152 156.365.994 79.743.556 -

Bank Loans 321.300.021 346.134.428 110.900.185 155.578.308 79.655.935 - Debt Instrument Issue - - - - - - Financial Lease Liabilities 1.122.059 1.160.469 285.162 787.686 87.621 - Trade Payables 719.866.859 729.088.527 729.088.527 - Other Payables 6.811.278 6.811.278 6.811.278 - Other - - - - - -

2015 Annual Report

112

(*)Theamountof forward transactionsconsistsof 11.115.416USDtoTL. In liabilitycalculation,derivativecashoutflowiscalculatedusingexchangeratesvalidattheendofterm.DerivativecashinflowiscalculatedusingtheexchangeratevalidonDecember31,2015.Actualprofitorlosswillariseattheendofterm.

December 31, 2014

(*)Theamountofforwardtransactionsconsistsof4.464.564USD.Inliabilitycalculation,derivativecashoutflowiscalculatedusingexchangeratesvalidattheendofterm.DerivativecashinflowiscalculatedusingtheexchangeratevalidonDecember31,2014.Actualprofitorlosswillariseattheendofterm.

Contract Terms Book Value

Cash Outflows Total As Per the

Agreement

Less than 3 Months 3-12 Months 1-5 Years More than 5

Years

Derivative Financial Liabilities

165.039 126.130 126.130 - - -

Derivative Cash Inflows 10.352.877 10.352.877 10.352.877 - - -Derivative Cash Outflows (10.187.838) (10.226.747) (10.226.747) - - -



Agreement

Less than 3 Months 3-12 Months 1-5 Years More than 5

Years

Derivative Financial Liabilities

(165.962) (440.675) (440.675) - - -

Derivative Cash Inflows 32.319.184 32.319.184 32.319.184 - - -Derivative Cash Outflows (32.485.146) (32.759.859) (32.759.859) - - -



Agreement

Less than 3 Months 3-12 Months 1-5 Years More than

5 Years

Non-derivative Financial Liabilities

820.978.682 837.662.610 747.526.700 40.159.334 49.976.576

Bank Loans 131.536.655 142.401.805 54.191.450 39.371.648 48.838.707 -Debt Instrument Issue - - - - - -Financial Lease Liabilities 1.869.747 2.188.117 262.562 787.686 1.137.869 -Trade Payables 683.603.073 689.103.481 689.103.481 - - -Other Payables 3.969.207 3.969.207 3.969.207 - - -Other - - - - - -

2015 Annual Report

113

c5 Analyses of other Risks

Risks Related to Financial Instruments, Stocks Etc.

Grouphasnostocksorsimilarmarketablesecuritiesevaluatedbyfairvalueinthecurrentperiod.

39 FINANCIAL INSTRUMENTS (DECLARATIONS WITHIN THE CONTEXT OF FAIR VALUE AND HEDGING)

Aims at financial risk management

ThefinancedepartmentoftheGroupisresponsibleformaintainingtheaccesstofinancialmar-ketsregularlyandobservingandmanagingthefinancialrisksincurredinrelationwiththeactivitiesoftheGroup.Thesaidrisksincludemarketrisk(includingforeignexchangerisk,fairinterestrateriskandpricerisk),creditrisk,liquidityriskandcashreceivingrisk.

Fair Value of Financial Instruments

Fairvalueistheamountforwhichafinancialinstrumentcouldbeexchangedexceptcompulsorysaleorliquidationprocessbetweenwillingpartiesanditisdeterminedwithitsmarketvalueifthereisaquotedprice.

TheGrouphasdeterminedtheestimatedvaluesoffinancialinstrumentsbytakingintoconside-rationthepresentmarketinformationandpropervaluationmethods.Butdeterminationofmarketinformationandestimationoffairvaluerequireinterpretationanddiscernment.Consequentlytheestimationspresentedarenotalwaystheindicatorsofthevaluescouldberealizedfromacurrentmarkettransaction.

Themethodsandassumptionsusedforthedeterminationofthefairvalueofthefinancialinstru-mentsareasfollows;

Monetary Assets

BalancesdenominatedinforeigncurrenciesareconvertedintoTurkishLirabytheexchangeraterulingatthebalancesheetdate.Itispredictedthatthesebalancesareconsideredtoapproximatetotheirnetbookvalue.

Financialinstrumentsinwhichcashandcashequivalentsareincludedarecarriedbytheircostvalueanditispredictedthattheirnetbookvalueareconsideredtoapproximatetotheirfairvaluesduetotheirshort-termmaturity.

Itispredictedthatthenetbookvalueoftradereceivableswithprovisionsmadefordoubtfulrece-ivablespresenttheirfairvalues.

2015 Annual Report

114

Monetary Liabilities

BalancesdenominatedinforeigncurrenciesareconvertedintoTurkishLirabytheexchangeraterulingatthebalancesheetdate.Itispredictedthatthesebalancesareconsideredtoapproximatetotheirnetbookvalue.

Itispredictedthatnetbookvalueofbankloansandothermonetaryliabilitiesareconsideredtoapproximatetheirfairvaluesduetotheirshort-termmaturity.

Itispredictedthatthenetbookvalueoftradepayablespresenttheirfairvaluesduetotheirshort-termmaturity.

Fair Value Assessment:

TheGrouphasappliedtheamendmentsinIFRS7relatedwiththefinancialinstrumentsevaluatedbyfairvalueinthebalancesheeteffectivefromthedateofJanuary1,2009.Theamendmentinfairvaluecalculationsisdisclosedinaccordancewiththestepsofhierarchyforfairvaluementionedbelow;

Level1:Quotedpricesinactivemarketsforidenticalassetsandliabilities.

Level2:InputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,eitherdirectly(i.e.asprices)orindirectly(i.e.derivedfromprices).

Level3:Inputsfortheassetorliabilitythatisnotbasedonobservablemarketdata.

ItispredictedthatnetbookvalueofforeigncurrencybalanceswhichareconvertedtoTLattheendoftheyearareconsideredtoapproximatetotheirfairvalues.

TheGrouppresentsitsfinancialinvestmentswiththeirfairvaluesinthefinancialstatementsasofDecember31,2015andDecember31,2014.(Level2)(Note:7)

Itisacceptedthatthediscountednetbookvalueoffinancialassetssuchascashandcashequ-ivalentspresenttheirfairvaluesduetotheirshort-termmaturity.

Tradereceivablesandpayablesaremeasuredattheirdiscountedcostusingtheeffectiveinterestmethodanditisacceptedthatthenetbookvalueofthesebalancesareconsideredtoapproxi-matetheirfairvalues.

40 SUBSEQUENT EVENTS

None.

41 OTHER ISSUES

None.

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