Acıbadem Sağlık Hizmetleri ve Ticaret

Acıbadem Sağlık Hizmetleri ve Ticaret

Anonim Şirketi and Its Subsidiaries

Convenience Translation into English of

Consolidated Financial Statements as at

and for the year ended

31 December 2012

With Independent Auditor‘s Report

Thereon

Akis Bağımsız Denetim ve Serbest Muhasebeci Mali

Müşavirlik Anonim Şirketi

18 February 2013 This report includes 2 pages of independent auditors‘

report and 76 pages of consolidated financial statements

together with their explanatory notes .

Independent Auditors’ Report

To the Board of Directors of

Acıbadem Sağlık Hizmetleri ve Ticaret Anonim Şirketi

We have audited the accompanying consolidated statements of financial position of Acıbadem

Sağlık Hizmetleri ve Ticaret Anonim Şirketi ( ―The Company‖) and its subsidiaries (―the

Group‖) at 31 December 2012 and the related consolidated statements of comprehensive

income, changes in equity, cash flows for the year then ended and significant accounting

policies with the notes to the consolidated financial statements.

Company Management’s Responsibility for the Consolidated Financial Statements

The Company management is responsible for the preparation and fair presentation of the

consolidated financial statements in accordance with the financial reporting standards of Capital

Market Board (―CMB‖). This responsibility includes: designing, implementing and maintaining

internal control relevant to the preparation and fair presentation of financial statements that are

free from material misstatement, whether due to fraud or error; selecting and applying

appropriate accounting policies, and making accounting estimates that are reasonable in the

circumstances.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on

our audit. We conducted our audit in accordance with the auditing standards promulgated by

CMB. 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.

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the consolidated financial statements. The procedures selected depend on our

judgment, including the assessment of the risks of material misstatement of the consolidated

financial statements, whether due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the Group‘s preparation and fair presentation of the

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 Group‘s internal

control. Our Independent Audit also includes evaluating the appropriateness of accounting

policies used and the reasonableness of accounting estimates made by the company, as well as

evaluating the overall presentation of the consolidated 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 financial statements give a true and fair view of

the consolidated financial position of Acıbadem Sağlık Hizmetleri ve Ticaret Anonim Şirketi

and its subsidiaries as at 31 December 2011 and the related consolidated statement of

comprehensive income, changes in equity and cash flows for the year then ended in accordance

with the financial reporting standards (please see Note 2) promulgated by CMB.

Additional paragraph for convenience translation to English

Accounting policies applied by the Group may differ from the accounting principles generally

accepted in countries other than Turkey in material aspects and the effects of such differences

have not been quantified in the accompanying consolidated financial statements. Accordingly,

the accompanying consolidated financial statements are not intended to present the financial

position and results of operations, and changes in cash flow of the Group in accordance with the

accounting principles generally accepted in such countries of the users of these financial

statements.

İstanbul, 18 February 2013

Akis Bağımsız Denetim ve Serbest

Muhasebeci Mali Müşavirlik A.Ş.

Serkan Ercin

Partner

Acıbadem Sağlık Hizmetleri ve Ticaret Anonim Şirketi

and Its Subsidiaries

Table of Contents

Independent Auditor‘s Report

Consolidated Statement of Financial Position

Consolidated Statement of Comprehensive Income

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

Table of Contents PAGE

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 1

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 2

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 3

CONSOLIDATED STATEMENT OF CASH FLOWS 4

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 5-78

1 Organization and Nature of Business 5

2 Basis of presentation of the consolidated financial statements 17 3 Segment reporting 28 4 Cash and cash equivalents 29 5 Financial Liabilities 30 6 Trade receivables and payables 34 7 Other Receivables and Payables 36 8 Inventories 36 9 Property and equipment 37 10 Intangible Assets 39 11 Goodwill 41 12 Provisions 44 13 Commitments 45 14 Employee benefits 48 15 Post employment benefits 49 16 Other assets and liabilities 49 17 Equity 50

18 Revenues and Cost of Revenues 52 19 Selling, marketing and distribution expenses, general administrative expenses 52 20 Expenses by nature 53 21 Other operating income and expenses 533 22 Financial income 54 23 Financial expenses 54 24 Tax assets and liabilities 54 25 Earnings per share 58 26 Related parties 58 27 Nature and level of risks arising from financial instruments 62

28 Financial Instruments: Fair Value Disclosure 74

29 Operational Leases 76 30 Subsequent events 76

Acıbadem Sağlık Hizmetleri ve Ticaret Anonim Şirketi and Its Subsidiaries

Consolidated Statement of Financial Position

As at 31 December 2012 Amounts expressed in Turkish Lira (“TL”) unless otherwise stated

1

Audited

Notes 31 December 2012

31 December 2011

ASSETS Current Assets

272,863,854

239,353,162

Cash and Cash Equivalents 4 41,217,242

44,020,443

Financial Investments 28 --

7,663,242

Trade Receivables

145,947,567

120,167,171

- Due from Related Parties 26 12,130,087

9,514,773

- Other Trade Receivables 6 133,817,480

110,652,398

Other Receivables

9,686,129

1,309,659

- Other Receivables from Related Parties 26 20,984

251,970

- Other Receivables 7 9,665,145

1,057,689

Inventories 8 24,739,462

21,914,405

Other Current Assets 16 51,273,454

44,278,242

Non-Current Assets

834,398,796

746,595,773

Other receivables 7 432,515

6,867,703

Tangible Assets 9 607,024,646

547,122,837

Intangible Assets 10 20,903,936

7,449,473

Goodwill 11 169,659,985

143,933,905

Deferred Tax Assets 24 20,945,243

26,231,493

Other Non-Current Assets 16 15,432,471

14,990,362

TOTAL ASSETS

1,107,262,650

985,948,935

LIABILITIES

Current Liabilities

477,558,428

359,266,824

Financial Liabilities 5 170,958,492

115,814,216

Other Financial Liabilities 28 6,896,554

5,211,751

Trade Payables

134,474,792

152,192,050

- Due to Related Parties 26 32,541,356

29,156,434

- Other Trade Payables 6 101,933,436

123,035,616

Other Payables

66,442,798

21,983,557

- Due to Related Parties 26 29,478,619

578,943

- Other Payables 7 36,964,179

21,404,614

Corporate tax payable 24 6,136,102

374,769

Provisions 12 56,776,281

24,165,423

Other Current Liabilities 16 35,873,409

39,525,058

Non Current Liabilities

418,999,787

504,065,964

Financial Liabilities 5 384,800,280

445,996,829

Other Financial Liabilities

861,413

--

Trade Payables

6,980,597

8,399,726

- Other Trade Payables 6 6,980,597

8,399,726

Other Payables

13,599,164

36,860,388

- Other Payables 7 13,599,164

36,860,388

Employee Benefits 14 2,307,081

1,933,424

Deferred Tax Liabilities 24 7,140,871

5,937,060

Other Non-Current Liabilities 16 3,310,381

4,938,537

EQUITY

210,704,435

122,616,147

Shareholders’ Equity

197,140,423

117,309,352

Paid in Capital 17 100,000,000

100,000,000

Translation Reserves (49,222)

(28,862)

Legal Reserves 17 9,679,133

8,448,697

Retained Earnings 17 7,415,951

16,157,070

Net Income/Loss of the Period 80,094,561

(7,267,553)

Non - Controlling Interest 17 13,564,012

5,306,795

TOTAL LIABILITIES AND EQUITY

1,107,262,650

985,948,935

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


Consolidated Statement of Comprehensive Income

As at and for the year ended 31 December 2012 Amounts expressed in Turkish Lira (“TL”) unless otherwise stated.

2

Audited

1 January -

1 January -

Note 31 December 2012

31 December 2011

Revenues, net 18 1,260,830,323

1,009,476,468

Cost of Revenues 18 (1,046,043,779)

(793,348,551)

GROSS PROFIT

214,786,544

216,127,917

Selling, Marketing and Distribution Expenses 19 (35,314,881)

(30,793,586)

General Administrative Expenses 19 (57,769,305)

(45,312,332)

Other Operating Income 21 14,395,417

8,152,887

Other Operating Expense 21 (18,680,332)

(22,875,167)

OPERATING PROFIT

117,417,443

125,299,719

Finance Income 22 41,325,993

16,073,327

Finance Expense 23 (55,261,591)

(142,416,252)

INCOME/(LOSS) BEFORE TAX

103,481,845

(1,043,206)

Tax Expense

(21,053,553)

(5,356,267)

Current Tax Expense 24 (14,576,424)

(4,169,704)

Deferred Tax Expense 24 (6,477,129)

(1,186,563)

NET INCOME/(LOSS)

82,428,292

(6,399,473)

Other Comprehensive Loss

(20,360)

(28,862)

TOTAL COMPREHENSIVE INCOME

82,407,932

(6,428,335)

Net Income / (Loss) Attributable to

82,428,292

(6,399,473)

Non-Controlling Interest

2,333,731

868,080

Owners of the Company

80,094,561

(7,267,553)

Total Comprehensive Income Attributable to

82.359.385

(6.428.335)

Non-Controlling Interest

2.285.184

839.218

Owners of the Company

80.074.201

(7.267.553)

Earnings/ (Loss) per Share (for 1000 shares) 25 800.95

(72.68)

Diluted and Basic Earnings / (Losses) per Share (for

1000 shares)

800.95

(72.68)



Consolidated Statement of Shareholder’s Equity

As at and for the year ended 31 December 2012 Amounts expressed in Turkish Lira (“TL”) unless otherwise stated.

3

Note Paid in

Capital

Business

under

common

control

Share

Premium

Other

Reserves

Legal

Reserves

Translation

Reserve

Retained

Earnings

Net Income/

(Loss)

Total before

Non-

Controlling

Interest

Non-

controlling

Interest Total

Balances at 1 January 2011 100.000.000 -- -- -- 7.079.766 -- 7.176.607 11.453.399 125.709.772 5.613.910 131.323.682

Total comprehensive income

Profit for the year

-- -- -- -- -- -- -- (7,267,553)

(7,267,553) 868,080 (6,399,473)

Other comprehensive income

-- -- -- -- -- (28,862) -- -- (28,862) -- (28,862)

Total other comprehensive income

-- -- -- -- -- (28,862) -- -- (28,862) -- (28,862)


-- -- -- -- -- (28,862) --

(7,267,553)

(7,296,415)

868,080

(6,428,335) Capital increase

-- -- -- -- -- -- -- -- -- -- --

Acquisition of subsidiary

-- -- -- -- -- -- -- -- -- 651,516 651,516

Acquisition of non-controlling

interests without a change in control

-- -- -- -- -- -- (1,104,005) -- (1,104,005) (649,948) (1,753,953)

Dividends

-- -- -- -- -- -- -- -- -- (1,176,763) (1,176,763)

Transfers

-- -- -- -- 1,368,931 -- 10,084,468 (11,453,399) -- -- --

Balances at 31 December 2011 17 100,000,000 -- -- -- 8,448,697 (28,862) 16,157,070 (7,267,553) 117,309,352 5,306,795 122,616,147

Balances at 1 January 2012

100,000,000 -- -- -- 8,448,697 (28,862) 16,157,070 (7,267,553) 117,309,352 5,306,795 122,616,147


Profit for the year

-- -- -- -- -- -- -- 80,094,561 80,094,561 2,333,731 82,428,292

Other comprehensive income

(20,360)

(20,360)

(20,360)

Total other comprehensive income

(20,360) (20,360) (20,360)


-- -- -- -- -- (20,360) -- 80,094,561 80,074,201 2,333,731 82,407,932

Capital increase

-- -- -- -- -- -- -- -- -- -- --

Acquisition of subsidiary

-- -- -- -- -- -- -- -- -- 7,221,254 7,221,254

Acquisition of non-controlling

interests without a change in control

-- -- -- -- -- -- (243,130) -- (243,130) (70,891) (314,021)

Dividends -- -- -- -- 1,230,436 --

-- -- (1,226,877) (1,226,877)

Transfers -- -- -- -- -- (8,497,989) 7,267,553 -- -- --

Balances at 31 December 2012 17 100,000,000 -- -- -- 9,679,133 (49,222) 7,415,951 80,094,561 197,140,423 13,564,012 210,704,435



Consolidated Statements of Cash Flows

As at and for the years ended 31 December 2012 Amounts expressed in Turkish Lira(“TL”) unless otherwise stated

4

Audited

2012

2011

A. CASH FLOWS FROM OPERATING ACTIVITIES Note

Net Income / (Loss)

82,428,292

(6,399,473)

Adjustments:

Amortisation and depreciation 9,10

87,583,486

77,613,807

Provision for employee termination benefits 14

5,746,275

2,449,437

Provision for doubtful receivables 6

3,326,865

3,197,914

Unrealized finance income/(loss)

70,050

(417,553)

Patient income accruals

(7,103,525)

(3,591,363)

Doctor expense accruals 12

48,944,435

18,587,294

Other expense provisions 12

4,157,679

1,344,109

Deferred tax expense

6,477,129

807,100

Corporate tax provision

14,576,424

4,169,704

Provisions related to forward transactions

10,209,458

(6,847,609)

Interest income 22

(1,694,207)

(1,203,181)

Interest expense 23

26,522,814

21,409,906

Foreign exchange differences on fixed assets

1,216,965

--

Gain on sale of property and equipment (net)

5,688,987

(213,914)

Net operating profit before changes in

288,151,127

110,906,178

Change in trade receivables

(21,745,128)

(33,247,801)

Change in inventory

(2,648,375)

(7,174,514)

Change in other receivables

(1,941,460)

(6,696,733)

Change in other current assets

108,313

2,805,746

Change in other non-current assets

(442,109)

(9,681,216)

Change in trade payables

(29,716,033)

22,128,002

Change in due to related parties

229,183

19,705,220

Change in expense accruals

(716,344)

462,052

Corporate taxes paid

(8,815,091)

(6,448,761)

Change in other payables

(9,095,357)

(8,618,848)

Change in other liabilities

(5,279,806)

18,990,911

Employee severance indemnity paid

(5,372,618)

(3,003,714)

Provisions paid

(19,774,912)

(15,962,438)

Net cash generated from operating activities

182,941,390

84,164,084

B. CASH FLOW FROM INVESTING ACTIVITIES

Interest received

1,694,206

1,206,633

Acquisition of property and equipment 9

(112,584,767)

(84,189,997)

Proceeds from sale of property and equipment

5,549,469

13,941,575

Acquisition of intangible assets 10

(13,691,227)

(4,616,262)

Proceeds from sale of intangible assets

7,460

6,656

Cash outflow from acquisition of subsidiaries

(15,826,285)

(51,248,730)

Net cash (used in)/from investing activities

(134,851,144)

(124,900,125)

C. CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from bank borrowings

109,921,727

166,332,876

Repayment of bank borrowings

(143,702,565)

(82,023,807)

Finance lease liabilities, net

(16,387,328)

(1,689,321)

Proceeds from borrowings obtained from related parties

28,899,676

75,342

Acquisition of non-controlling interest

(314,021)

(1,131,299)

Interest paid

(28,084,060)

(21,615,780)

Change in restricted cash balance

1,200,666

(14,126,304)

Dividends paid

(1,226,877)

(1,176,763)

Net cash (used in)/from financing activities

(49,692,782)

44,644,944

Net decrease (increase) in cash and cash equivalents

(1,602,535)

3,908,903

Cash and cash equivalents at 1 January

13,381,926

9,473,023

Cash and cash equivalents at 31 December

11,779,391

13,381,926




As at and for the years ended 31 December 2012 Amounts expressed in Turkish Lira (“TL”) unless otherwise stated.

5

1 Organization and Nature of Business

Acıbadem Sağlık Hizmetleri ve Ticaret A.Ş. (―the Company‖) was incorporated in 1991 in İstanbul.

The Company provides health services in sixteen hospitals (Kadıköy, Bakırköy, Kozyatağı, Fulya,

Eskişehir, Bursa, Kocaeli, Maslak, Kayseri, Adana, International Hospital, John F. Kennedy,

Göztepe Şafak, Sistina Hospital, Ankara, Bodrum), twelve medical centers (Ataşehir, Beylikdüzü,

Bağdat, Etiler, Göktürk, Konur Sağlık, Gemtıp, Bodrum Medikal, Medlife, Sesu, Turgutreis, Tolga

Sağlık), central laboratories (Labmed Klinik Laboratuvarları, Merkez Patoloji Laboratuvarı, Genetik

Tanı and Hücre Tedavı Merkezi, Labvital Gıda Kontrol Laboratuvarı) and branches located in thirty

two different areas. In addition to its core business, the Company organizes courses and seminars on

first aid, diabetics, smokeless living and infant care.

The Company complies with ―Joint Commission International‖ accreditation standards and ISO

9001 Quality Management System standards in its services in order to provide better quality care

and security for the patients.

The Company is registered to Capital Markets Board (―CMB‖). As a result of the Company‘s

requests dated 24 April 2012 and 19 September 2012 regarding the delisting of the Company‘s

shares traded at national stock exchange market in accordance with the CMB‘s ―Principles and

Conditions Regarding the Voluntary Delisting of Publicly Traded Companies‖;

* Following the delisting request of the Company from the Istanbul Stock Exchange (―ISE‖), a

tender offer was made in conjunction with purchases of investor shares.

* In accordance with CMB‘s regulations dated 30 July 2010, a blockaded reserve account of TL

9,016,073.42 at İMKB Takas ve Saklama Bankası A.Ş. for the purpose of acquiring the shares of

investors whom did not respond to the tender offers for a period of three years commencing from the

ISE board resolution date was considered.

Based on the ISE‘s board resolution dated 27 August 2012, it is decided that the shares representing

the Company‘s paid-in capital of TL 100,000,000 were suspended from trading at ISE in accordance

with ISE‘s Quotation Procedures Article 25 and CMB‘s regulations of delisting as stated above.

Trading activity ceased following the second session of the exchange at 4 October 2012.

The head office of the Company is located at ―Tekin Sok. No.8, Üsküdar/İstanbul.‖

As at 31 December shareholder structure of the Company is as follows:

31 December

2012

31 December

2011

Shareholder’s Name Share (%) Share (%)

Almond Holding Anonim Şirketi 98.65 91.97

Other individuals 1.19 5.52

Publicly owned shares 0.13 2.11

Mehmet Ali Aydınlar 0.03 0.4

Hatice Seher Aydınlar(*) 0 0

100.00 100.00

(*) Represents a single share.




6

1 Organization and Nature of Business (continued)

On 24 January 2012, 60% and 15% of the shares of Acıbadem Sağlık Yatırımları Holding A.Ş.

(―ASYH‖) which owns 100% shares of Almond Holding Anonim Şirketi (―Almond‖), the main

shareholder of the Company, were acquired by IHH Berhad and Bagan Lalang Ventures Sdn. Bhd.

respectively. As a result of mandatory tender offer held between 27 March - 9 April and voluntary

tender offer held between 3 August – 16 August which is triggered in accordance with CMB‘s

delisting regulations and purchase of shares subsequent to the delisting of the Company, Almond‘s

ownership share in the Company increased to 98,65%.

Acıbadem Kadıköy Hospital

The hospital is located in Acıbadem- İstanbul. Indoor area of 17,600 m² and seven-story hospital

building has been rented for 25 years starting from 1 July 1995. The hospital is the Company‘s first

hospital and has been operating since 1991.

Acıbadem Bakırköy Hospital

The hospital was located at the Carousel Shopping Centre in Bakırköy- İstanbul and started to

provide health care services in July 2000. The hospital has 15 floors and is built over a total area of

17,500 m². The hospital building has been rented for 15 years starting from 1 July 1999.

Acıbadem Kozyatağı Hospital

The hospital building is located in Kozyatağı- İstanbul .Indoor area of 14,000 m² has been rented for

a period of 15 years starting from 1 May 2001. The hospital started to accept patients on 29 June

2004 and specialized in a neurology and cancer treatment.

Acıbadem Fulya Hospital

Acıbadem Fulya Hospital commenced its operations on 20 September 2010. The hospital has an

indoor area of 22,000 m². The hospital building has been rented from Beşiktaş Jimnastik Kulübü

Derneği for 20 years and hospital infrastructure and medical equipment were provided directly by

the Company.

Acıbadem Eskişehir Hospital

Acıbadem Eskişehir Hospital started its operations in 20 September 2010. The hospital has an indoor

area of 20,000 m². The hospital building has been rented for 20 years and hospital infrastructure and

equipment investments have been directly made by the Company.

Acıbadem Bursa Hospital

Acıbadem Bursa Hospital is a ten story building and built over an indoor area of 30,000 m². The

hospital has commenced its operations on 19 February 2006.




7

1 Organization and Nature of Business (continued) Acıbadem Kocaeli Hospital

Acıbadem Kocaeli Hospital has commenced its operations in November 2006. An indoor area of

6,500 m² and 6 floors is rented for a period of ten years starting from 23 April 2006.

Acıbadem Maslak Hospital

Acıbadem Maslak Hospital has commenced its operations on 2 March 2009. The hospital is serving

in all branches of medicine, infertility treatment and in vitro fertilization, the third level infant

intensive care and provides service with rapid arc technology in oncology treatments. The primary

aim of the hospital is to provide healthcare services in general surgery, obstetrics, gynecology,

internal diseases and infant diseases. Besides the hospital has a high level diagnosis and treatment

laboratory of electrophysiology and interventional radiology.

Acıbadem Adana Hospital

Acıbadem Adana Hospital started to accept patients on 17 February 2009. The hospital has an indoor

area of 20,000 m².

Acıbadem Kayseri Hospital

Acıbadem Kayseri Hospital started to accept patients on 23 March 2009 and it has an indoor area of

20,000 m².

Acıbadem Bodrum Hospital

Acıbadem Bodrum Hastanesi started to accept patients on 11 June 2012. The hospital provides

services with an indoor area of 12.000 m² .

Acıbadem Ankara Hospital

Acıbadem Ankara Hospital Acıbadem Bodrum Hastanesi started to accept patients on 27 November

2012. The hospital provides services with an indoor area of 11.000 m². Advanced diagnostic and

treatment services are provided to the patients via Flash CT, fast and low radiation tomography

device and digital mammography equipment with 3D tomosenthesis capability. In addition,

advanced level radiology methods include digital x-rays, 1.5 Tesla MR, Meme US, colored doppler,

panoramic x-rays with sefalometry capability.




8


For the year ended 31 December 2012, The Group has commenced the construction of greenfield

hospital and hospital expansion projects in Halkalı-İstanbul, Maslak-İstanbul and Altunizade-

İstanbul.

At 31 December 2012 consolidated subsidiaries of the Company comprised the following:

- Acıbadem Labmed Sağlık Hizmetleri Anonim Şirketi (―Acıbadem Labmed‖)

- Acıbadem Mobil Sağlık Hizmetleri Anonim Şirketi (―Acıbadem Mobil‖)

- Acıbadem Orta Doğu Sağlık Yatırımları Anonim Şirketi (―Acıbadem Orta Doğu‖)(*)

- Acıbadem Poliklinikleri Anonim Şirketi (―Acıbadem Poliklinikleri‖)

- Acıbadem Sistina Medikal Kompani Doo Skopje" (―Acıbadem Sistina Medikal‖)

- BLAB Laboratuvar Hizmetleri Anonim Şirketi (―BLAB Laboratuvar‖) (*)

- Bodrum Medikal Özel Sağlık Hizmetleri Sanayi ve Ticaret Anonim Şirketi(‗‗Bodrum Medikal‘‘)(*)

- Bodrum Tedavi Hizmetleri Anonim Şirketi (‗‗Bodrum Tedavi‘‘) (*)

- Clinical Hospital Acibadem Sistina Skopje (―Acıbadem Sistina Hastanesi‖)

- Gemtıp Özel Sağlık Hizmetleri Sanayi ve Ticaret Limited Şirketi (―Gemtıp‖)

- International Hospital İstanbul Anonim Şirketi (―International Hospital‖)

- Konur Sağlık Hizmetleri Anonim Şirketi (―Konur Sağlık‖)

- Medlife Clinic Ambulance ve Özel Sağlık Hizmetleri Anonim Şirketi (‗‗Medlife‘‘) (*)

- Özel Turgutreis Poliklinik Hizmetleri Ticaret Anonim Şirketi (‗‗Turgutreis‘‘) (*)

- Sesu Özel Sağlık Hizmetleri Tıbbi Malzemeler ve Ticaret Anonim Şirketi. (‗‗Sesu‘‘) (*)

- Tolga Sağlık Hizmetleri Anonim Şirketi. (―Tolga Sağlık‖) (*)

- Turuncu Grup Sağlık Hizmetleri Danışmanlık İnşaat Ticaret Anonim Şirketi (―Turuncu Sağlık‖) (*)

- Yeni Sağlık Hizmetleri ve Ticaret Anonim Şirketi (―Yeni Sağlık‖)

(*) Company is acquired in 2012.

The Company and its consolidated subsidiaries are collectively named as ―Group‖.




9

1 Organization and Nature of Business (continued) The nature of the activities of the consolidated subsidiaries is as follows:

Acıbadem Poliklinikleri

Acıbadem Poliklinikleri provides healthcare services to outpatients with five polyclinics located at

Etiler-İstanbul, Bağdat Caddesi- İstanbul, Ataşehir-İstanbul, Göktürk-İstanbul and Beylikdüzü-

İstanbul. Etiler, Bağdat Caddesi, Ataşehir, Göktürk and Beylikdüzü polyclinics were leased on 1

May 2006, 1 May 2004, 1 May 2008, 1 February 2007 and 1 April 2006, respectively.

Acıbadem Göz Sağlığı Hizmetleri Anonim Şirketi was established in June 2003 in İstanbul and

merged with Acıbadem Poliklinikleri, on 24 October 2008. .

Acıbadem Labmed

Acıbadem Labmed was established on 28 August 2001 under the name of Acıbadem Sağlık

Yönetimi Anonim Şirketi, in İstanbul. On 24 February 2004 the name of the company was changed

to Acıbadem Labmed Sağlık Hizmetleri A.Ş and a partnership was established with Labmed

Dortmund Gmbh-Germany to engage in laboratory services. The company has two branches located

in Adana and Antalya.

International Hospital

International Hospital was established in 1989. The hospital provides inpatient, outpatient and

emergency care services with the indoor area of 19,300 m² located on Yeşilköy-İstanbul. Acıbadem

Sağlık acquired International Hospital, 50% shares of International Hospital on 20 August 2005 and

increased its shares to 90% of total shares by acquiring 40% additional shares on 27 March 2009.

Acıbadem Sistina Hospital and Acıbadem Sistina Medikal

Acıbadem Sistina Hospital was incorporated on 21 October 2011 in Skopje – Macedonia. The

company provides cardiology, heart surgery, general surgery, internal medicine, gynecology,

urology and orthopedics services. The hospital has radiofrequency and laser applications, ultrasonic

systems, diametric applications, diagnosis laboratories, nuclear medicine applications, anesthesia

and intensive care units.

Acibadem Sistina Medikal is the owner of hospital building located in Skopje and medical equipments

which are leased by Acıbadem Sistina Hospital. Acıbadem Sistina Medikal was acquired on 21

October 2011 by the Group.




10


Yeni Sağlık

Yeni Sağlık operates two general purpose hospitals namely Özel Göztepe Şafak and John F. Kennedy.

Özel Göztepe Şafak Hospital has a total closed area of 6.000 m2 and started operations in 2004 April.

Following the merger with the Group in 1 April 2011, Özel Göztepe Şafak Hastanesi adopted the

quality standards of the Group. Göztepe Şafak Hospital‘s operations was suspended on 17 April 2012

due to required stabilization work for the building.

John F. Kennedy Hospital has commenced its operations on December 1999 and equipped with latest

technology medical equipments.

Konur Sağlık

Konur Sağlık was acquired by the Group on 2010 and provides inpatient and outpatient services in

Bursa. In 1996, the center awarded with the Hospital Certificate of Proficiency by Turkish Standards

Institution. The medical services provided at the medical center are internal medicine, general

surgery, neurology, neuropsychiatry, neurosurgery, pediatrics, pediatric surgery, cardiovascular

surgery, gynecological and delivery surgery, plastic surgery, micro and hand surgery, urology,

otorhinolaryngology diseases, eye, orthopaedics, traumatology, dermatology, physiotherapy,

microbiology, inflectional diseases, pathology, nuclear medicine, radiology, biochemistry, algology,

acupuncture, anesthesiology and reanimation.

Gemtıp

Gemtıp Gemlik Tıp Merkezi was acquired on 14 March 2011 and provides healthcare services in

Hamidiye, Bursa. Gemtıp has contracts with private health insurance companies, public entities and

Social Security Institution. The medical services provided at the medical center are general surgery,

pediatrics, gynecological and delivery surgery, internal medicine, orthopaedics, traumatology and

physical therapy and rehabilitation.

Acıbadem Mobil

Acıbadem Mobil provides emergency health care services and ambulatory services since 7 July 2008.

Acıbadem Orta Doğu

The Company was established on 28 May 2012 and the main purpose of the company is investing in

foreign hospital, medical center and other healthcare related projects in Middle East region.

Bodrum Tedavi

Bodrum Tedavi Hizmetleri was established on 21 July 2012 and acquired by the Group on 7 August

2012. Bodrum Tedavi controls Medlife, Sesu, Turgut Reis and Bodrum Medikal which provides

outpatient services at four separate locations in three districts of Bodrum-Muğla (Bodrum Central,

Gümbet and Turgutreis).

Turuncu Sağlık

Turuncu Sağlık was acquired by the Group on 5 November 2012 for the purpose of the acquisition of a

hospital license.

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Tolga Sağlık

Tolga Sağlık was acquired by the Group on 1 December 2012 and provides outpatient services in

Levent,-İstanbul under the name of Acıbadem Levent Tıp Merkezi. The medical center provides

internal medicine, general surgery, neurology, dentistry, dermatology, obstetrics and gynecology,

metabolic balance, ENT, orthopaedics and traumatology services in addition to laser epilation, ultra

shape and aesthetic dermatology services.

BLAB

The Company was incorporated on 14 December 2012 and the main purpose of the BLAB is to

provide laboratory services.

The related parties of the Group are as follows:

- SZA Gayrimenkul Yatırım İnşaat ve Ticaret A.Ş. previously known as Acıbadem Holding Anonim

Şirketi

(―SZA Gayrimenkul‖)

- Acıbadem Sağlık ve Hayat Sigorta Anonim Şirketi (―Acıbadem Sigorta‖)

- Acıbadem Proje Yönetimi Anonim Şirketi (―Acıbadem Proje‖)

- Aplus Hastane ve Otelcilik Hizmetleri Anonim Şirketi (―Aplus Otelcilik‖)

- Acıbadem Sağlık Yatırımları Holding Anonim Şirketi (―Acıbadem Sağlık Yatırım‖)

- Almond Holding Anonim Şirketi (―Almond Holding‖)

- Akademia Sağlık Hizmet ve Sistemleri Yönetim ve Danışmanlık Anonim Şirketi (―Akademia‖)

- Çamlıca Turizm ve Yatçılık Anonim Şirketi (―Çamlıca Turizm‖)

- Acıbadem Eğitim ve Sağlık Vakfı (―Acıbadem Vakfı‖)

- Telepati Tanıtım Hizmetleri Anonim Şirketi (―Telepati Tanıtım‖)

- Acıbadem Üniversitesi (―Acıbadem Üniversite‖)

- Kerem Aydınlar Vakfı (―Kerem Aydınlar‖)

- Aydınlar Sağlık Hizmetleri Limited Şirketi (―Aydınlar Sağlık‖)

- Acıbadem Grubu Sigorta Aracılık Hizmetleri Anonim Şirketi (―Acıbadem Sigorta Aracılık‖)

- IHH Berhad ve iştirakleri (became related parties on 24 January 2012)

- Bagan Lalang Ventures Sdn. Bhd. (Related parties after 24 January 2012)

- Abraaj (Related party until 24 January 2012)

- Acıbadem Diş Limited Şirketi (―Acıbadem Diş Limited‖)

- BLAB Laboratuvar Hizmetleri Anonim Şirketi (―BLAB‖, related party until 14 December 2012)

- Çukurova Bilim Laboratuarları Anonim Şirketi (―Çukurova Bilim‖)

The companies listed above have neither direct nor indirect capital and management relationships

with Acıbadem Sağlık Hizmetleri Anonim Şirketi (―Acıbadem Sağlık‖) and not consolidated with

the Group in the accompanying financial statements.

As at 31 December 2012, the Group employed 10,427 personnel (31 December 2011: 9,383),

consisting of 1.177 administrative personnel (31 December 2011: 966), 7.421 doctors, nurses and

medical personnel (31 December 2011: 6,788), and 1,829 personnel employed on contractual basis

(31 December 2011: 1,629).

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12

2 Basis of presentation of the consolidated financial statements

2.1 Basis of presentation

2.1.1 Statement of compliance

The Group maintains the consolidated companies‘ book of accounts and prepares thier statutory

financial statements in TL except subsidiaries located abroad in accordance with the Turkish

Uniform Chart of Accounts promulgated by Capital Markets Board of Turkey (―CMB‖), Turkish

Commercial Code and Turkish Tax Code.

According to the reflection the truth principle of financial statements, the accompanying

consolidated financial statements, classification and adjustments based on the legal records are

prepared in conformity with the principle of CMB accounting and reporting published by the

appropriate authorities. The Group's accompanying consolidated financial statements was prepared

in accordance with the provisions of Capital Market Board ("CMB") 9 April 2008, and 26842 of the

Official Gazette Series XI, 29 No. "Basis for Financial Reporting in the Capital Markets‖

("Communiqué No:XI-29").

According to the Article 5 of the Communiqué, companies will apply The International

Accounting/Financial Reporting Standards (―IAS / IFRS‖) adopted by the European Union.

However, according to the Transitional Article 2 included in the same Communiqué, IAS/IFRS will

be applied until the differences between IAS/IFRS that are adopted by European Union and

IAS/IFRS that are adopted by International Accounting Standards Board (―IASB‖), are announced

by Turkey Accounting Standards Board (―TASB‖). Within this context, consolidated financial

statements as of 31 December 2012 were prepared in accordance with IAS / IFRSs.

With the governing decree law numbered 660 published in official gazette on 2 November 2011, the

establishment article of TASB stated in the 2499 numbered law with an additional article number

one has been superseded and the Council of Ministers decided to establish Public Oversight

Accounting and Auditing Standards Agency (―Oversight Agency‖). In accordance with the

transitional article number one of the governing decree law, until the date of the issuing of standards

and regulations by Oversight Agency, the existing regulations will be applied. Accordingly, as of

reporting date, the Basis of Presentation has not been changed.

The accompanying consolidated financial statements of the Group have been approved by the Board

of Directors of the Group on 18 February 2013. The general assembly of the shareholders and legal

authorities has the authority to change the accompanying consolidated financial statements.

On 17 March 2005, CMB have taken the decision, for the companies that are operating in Turkey

and the CMB Accounting Standards financial statements prepared for, 1 January 2005 with effect

from the application of inflation accounting is no longer required has been announced.

Therefore, in the accompanying consolidated financial statements, since January 1, 2005, published

by TASB No. 29 "Financial Reporting in hyperinflationary economies" standard ("TAS 29") is not

implemented. The consolidated financial statements have been prepared on the historical cost basis

except for derivative financial instruments which are measured at fair value and balance sheet items

affected by the implementation of IAS 29.

Additional paragraph for convenience translation to English:

The differences between accounting principles, as described in the preceding paragraphs, and the

accounting principles generally accepted in countries, in which the accompanying consolidated

financial statements are to be distributed, may have significant influence on the accompanying

consolidated financial statements. Accordingly, the accompanying consolidated financial statements

are not intended to present the financial position and results of operations in accordance with the

accounting principles generally accepted in such countries.




13

2 Basis of presentation of the consolidated financial statements (continued)

2.1.2 Functional and presentation currency

These consolidated financial statements are presented in TL, which is the Group‘s functional

currency. All financial information presented in TL unless otherwise stated. All other currencies are

stated full unless otherwise stated.

2.1.3 Basis of consolidation

The accompanying consolidated financial statements include the accounts of Acıbadem Sağlık

Hizmetleri Anonim Şirketi and its subsidiaries and the basis set out in sections below. The financial

statements of the entities included in the consolidation have been prepared as at the date of the

consolidated financial statements.

(i) Subsidiaries

Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are

included in the consolidated financial statements from the date that control commences until the date

that control ceases.

The accounting policies of subsidiaries have been changed when necessary to align them with the

policies adopted by the Group. Losses applicable to the non-controlling interests in a subsidiary are

allocated to the non-controlling interests even if doing so causes the non-controlling interests to have

a deficit balance.

As at 31 December, the subsidiaries in which the Group owns direct or indirect control their

operations and the ownership interests are given below:

Ownership percentage (%)

Subsidiary 31 December 2012 31 December 2011

Acıbadem Poliklinikleri 99.99 99.99

Acıbadem Labmed 49.99 49.99

International Hospital 90.00 90.00

Tolga Sağlık 99.99 --

BLAB 99.99 --

Turuncu Sağlık 99.99 --

Acıbadem Orta Doğu 60.00 --

Acıbadem Mobil 99.99 99.99

Konur Sağlık 99.99 92.50

Gemtıp 68.00 58.00

Yeni Sağlık 99.90 99.90

Bodrum Tedavi 60.00 --

Medlife 99.99 --

Bodrum Medikal 99.99 --

Sesu 99.71 --

Turgutreis 99.99 --

Acıbadem Sistina Hastanesi 50.32 50.32

Acıbadem Sistina Medikal 50.00 50.00

As at 31 December 2012, subsidiaries are consolidated with full consolidation method and non-

controlling interests on the subsidiaries are reflected as a non-controlling interest.




14


2.1.3 Basis of consolidation (continued)

(ii) Acquisition of non-controlling interests

Acquisitions of non-controlling interests are accounted for as transactions with owners in their

capacity as owners and therefore no goodwill is recognised as a result. The adjustments to non-

controlling interests are based on a proportionate amount of the net assets of the subsidiary.

(iii) Acquisitions through business combinations:

Business combinations are accounted for using the acquisition method as at the acquisition date– i.e.

when control is transferred to the Group. Control is the power to govern the financial and operating

policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes

into consideration potential voting rights that are currently exercisable.

The Group measures goodwill at the acquisition date as:

The fair value of the consideration transferred; plus

The recognised amount of any non-controlling interests in the acquiree; plus

If the business combination is achieved in stages, the fair value of the pre-existing equity

interest in the acquiree; less

The net recognised amount (generally fair value) of the identifiable assets acquired and

liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

The consideration transferred does not include amounts related to the settlement of pre-existing

relationships. Such amounts are generally recognised in profit or loss.

(iv) Loss of control

On the loss of control, the Group derecognizes the assets and liabilities of the subsidiary, any non-

controlling interests and the other components of equity related to the subsidiary. Any surplus or

deficit arising on the loss of control is recognized in profit or loss. If the Group retains any interest in

the previous subsidiary, then such interest is measured at fair value at the date that control is lost.

Subsequently, it is accounted for as an equity-accounted investee or as an available-for-sale financial

asset depending on the level of influence retained.

(v) Transaction eliminated on consolidation

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-

group transactions, are eliminated in preparing the consolidated financial statements.

Consolidation adjustments

The balance sheets and income statements of subsidiaries are consolidated by using the full

consolidation method and investments in subsidiaries and related share capital reflected in the equity

are eliminated. Net assets of the subsidiaries which are not directly and /or indirect under the control

of the parent company are reflected as “Non-controlling Interest” line of the balance sheet, and the

net profit or loss which is not under the control of the parent company, is reflected as “Non-

controlling Interest” line in the income statement. Transactions and balances between consolidated

companies are eliminated during consolidation. Profit and loss occurred transactions of participation,

main partnership and consolidated subsidiaries, were classified/ arranged in accordance with share of

main partnership in participation. However, if losses after all these transactions showed the decline

of value, then classification/arrangement did not exercise.

2.1.4 Comparative Information

The group applied accounting policies and estimates consistent with prior year during the preparation

of its 31 December 2012 financial statements.




15


2.1.5 Changes in accounting policies

The accounting policies have been applied consistently by the Group to all periods presented in the

consolidated financial statements. The Group consistently recognizes measures and presents the

transactions, other events and situations with the same nature. Material changes in accounting

policies or material errors (if any) are corrected, retrospectively; restating the prior period


2.1.6 Changes in accounting estimates

Effect of changes in accounting estimates affecting current period (if any) is recognized in the

current period; effect of changes in accounting estimates affecting current and future periods is

recognized in the current and also in future periods.

2.1.7 Changes in IFRS

New Standards and Interpretations Not Yet Adopted As At 31 December 2012

IFRS 10 ―Consolidated Financial Statements‖ standard is effective for annual periods beginning on

or after 1 January 2013 and are applied on a modified retrospective basis. This new Standard may be

adopted early, but IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities

should be also adopted early.

IFRS 11 ―Joint Arrangements‖ standard is effective for annual periods beginning on or after 1

January 2013 and are applied on a modified retrospective basis. This new Standard may be adopted

early, but IFRS 10 ―Consolidated Financial Statements‖ and IFRS 12 ―Disclosure of Interests in

Other Entities‖ should be also adopted early. The standard describes the accounting for joint ventures

and joint operations with joint control. Among other changes introduced, under the new standard,

proportionate consolidation is not permitted for joint ventures. The Company does not expect that

this standard will have a significant impact on the financial position or performance of the Company.

Amendment of IFRS12 ‗‘Disclosure of Interests in Other Entities‘‘ standard is effective for the

periods after 1 January 2013 with earlier application is permitted. IFRS 12 includes all of the

disclosures that were previously in IAS 27 ―Consolidated and Separate Financial Statements‖ related

to consolidated financial statements, as well as all of the disclosures that were previously included in

IAS 31 ―Interests in Joint Ventures‖ and IAS 28 ―Investment in Associates‖. These disclosures relate

to an entity‗s interests in subsidiaries, joint arrangements, associates and structured entities. Under

the new standard it is expected that more comprehensive disclosures will be given for interests in

other entities.

Revised IFRS 13 ―Fair Value Measurement‖ provides guidance on how to measure fair value under

IFRS but does not change when an entity is required to use fair value. It is a single source of

guidance under IFRS for all fair value measurements. The new standard also brings new disclosure

requirements for fair value measurements. IFRS 13 is effective for annual periods beginning on or

after 1 January 2013 and will be adopted prospectively. Early application is permitted. The new

disclosures are only required for periods beginning after IFRS 13 is adopted — that is, comparative

disclosures for prior periods are not required. The Company is in the process of assessing the impact

of the new standard on the financial position or performance of the Company.

The Company is not planning to early adoption of those standards.




16


2.1.7 Changes in IFRS (continued)

New Standards and interpretations not yet Adopted As At 31 December 2012(continued)

The amendments to IAS 1 ―Presentation of Financial Statements‖ are effective for annual periods

beginning on or after 1 January 2013. The amendments to IAS 1 change only the grouping of items

presented in other comprehensive income. Items that could be reclassified to profit or loss at a future

point in time would be presented separately from items which will never be reclassified.

Amended IAS 19 ―Employee Benefits‖ standard is effective for annual periods beginning on or after

1 January 2013, with earlier application permitted. With very few exceptions retrospective

application is required. Numerous changes or clarifications are made under the amended standard.

Among there numerous amendments, the most important changes are removing the corridor

mechanism and making the distinction between short-term and other long-term employee benefits

based on expected timing of settlement rather than employee entitlement. The Company is in the

process of assessing the impact of the new standard on the financial position or performance of the

Company

IAS 27 Consolidated and Separate Financial Statements addresses the accounting for consolidated

financial statements. A new definition of control is introduced, which is used to determine which

entities are consolidated. This is a principle based standard and require preparers of financial

statements to exercise significant judgment. This amendment will not have any impact on the

financial position or performance of the Group.

As a consequential amendment to IFRS 10, the IASB also amended IAS 27, which is now limited to

accounting for subsidiaries, jointly controlled entities, and associates in separate financial statements.

Transitional requirement of this amendment is similar to IFRS 10. A new definition of control is

introduced, which is used to determine which entities are consolidated. This is a principle based

standard and require preparers of financial statements to exercise significant judgment. This

amendment will not have any impact on the financial position or performance of the Group. The

amendment will be effective for annual periods beginning on or after 1 January 2013.

IAS 28 ‗‘Investments in Associates and Joint Ventures‘‘ (2011), is replaced with the old standard

issued in 2008 and effective after the period 1 January 2013.

IFRS 7 Financial Instruments: Disclosures - Enhanced Derecognition Disclosure Requirements is

amended. The purpose of this amendment is to allow users of financial statements to improve their

understanding of transfer transactions of financial assets (e.g. securitizations), including

understanding the possible effects of any risks that may remain with the entity which transferred the

assets. The amendment also requires additional disclosures if a disproportionate amount of transfer

transactions are undertaken around the end of a reporting period. Comparative disclosures are not

required. The amendment affects disclosures only and did not have any impact on the financial

position or performance of the Group. Amended standard is effective for annual periods beginning

on or after 1 January 2013, with earlier application permitted. With very few exceptions

retrospective application is required.




17


2.1.7 Changes in IFRS (continued)

New Standards and Interpretations Not Yet Adopted As At 31 December 2012(continued)

IFRS 9 Financial Instruments – Classification and measurement is amended. As amended in

December 2011, the new standard is effective for annual periods beginning on or after 1 January

2015. Phase 1 of this new IFRS introduces new requirements for classifying and measuring financial

instruments. The amendments made to IFRS 9 will mainly affect the classification and measurement

of financial assets and measurement of fair value option (FVO) liabilities and requires that the

change in fair value of a FVO financial liability attributable to credit risk is presented under other

comprehensive income. Early adoption is permitted. This standard has not yet been endorsed by the

EU. The Group is in the process of assessing the impact of the amendment on financial position or

performance of the Group.

IAS 32 Financial Instruments: Presentation - Offsetting Financial Assets and Financial liabilities is

amended. The amendments clarify the meaning of - currently has a legally enforceable right to set-

off‖ and also clarify the application of the IAS 32 offsetting criteria to settlement systems (such as

central clearing house systems) which apply gross settlement mechanisms that are not simultaneous.

These amendments are to be retrospectively applied for annual periods beginning on or after 1

January 2014. The Group does not expect that these amendments will have significant impact on the

financial position or performance of the Group.

2.1.8 Offsetting

The Group‘s financial assets and liabilities are offset and the net amount is presented in the balance

sheet when and only when there is a legally enforceable right to set off the amounts and there is an

intention to settle on a net basis or to realize the asset and settle the liability simultaneously.

2.2 Summary of Significant Accounting Policies

Significant accounting policies applied during the preparation of the consolidated financial

statements are summarized as follows:

2.2.1 Revenue

Revenue of the Group comprised the income from the inpatient/outpatient services given at the

hospitals, polyclinics, laboratories and eye centers of the Group. The revenues for these services are

mostly realized in cash or collectible from the insurance companies and the fair value of sales price

is calculated by reducing the present value of these receivables. The interest rate which reduces the

nominal value of the related service to its cash sale price is used to determine the present value of the

receivables. The difference between the nominal value of the sale price and the fair value obtained

by this way is reflected as interest income to the related periods.

Revenue from rendering of services is recognised in profit or loss in proportion to the stage of

completion of the transaction at the reporting date. The stage of completion is assessed with

reference to surveys of work performed.

When an uncertainty arises about the collectability of an amount already included in revenue, the

doubtful receivable amount is recognized as an expense, rather than as an adjustment of the revenue

already recognized. Net sales represents invoiced gross sales amount minus returns and discounts.




18


2.2.2 Inventories

Inventories are stated at the lower of cost or net realizable value. Cost elements included in

inventories are all procurement costs, conversion costs and all other relevant costs in bringing the

inventories into their current state of location. The unit cost of inventories is determined on the

weighted average basis. Net realizable value is the estimated selling price in the ordinary course of

the business, less the selling expenses.

2.2.3 Property and equipment

i) Recognition and measurement

The costs of property and equipment purchased before 1 January 2005 are restated for the effects of

inflation current at 31 December 2004 less accumulated depreciation and impairment losses. The

costs of tangible assets purchased after 31 December 2004 are carried at cost less accumulated

depreciation and impairment losses if any. Cost includes expenditure that is directly attributable to

the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct

labor, any other costs directly attributable to bringing the asset to a working condition for its intended use,

and capitalized borrowing costs.

ii) Subsequent expenditures

The cost of replacing part of an item of property and equipment is recognised in the carrying amount

of the item if it is probable that the future economic benefits embodied within the part will flow to

the Group. The costs of the day-to-day servicing of tangible asset are recognised in the consolidated

statement of income comprehensive as incurred.

iii) Depreciation

Depreciation is recognized on a straight-line basis over the useful lives of the tangible assets from

the date of acquisition or assembly. Leasehold improvements are depreciated on a straight-line basis

over the lease period. Leasehold improvements are amortized on a straight-line basis over the shorter

of the lease term, which generally includes reasonably assured option periods, or the estimated useful

lives of the assets. Depreciation expenses are presented under cost of sales, general and

administrative expenses and selling, marketing expense on the consolidated statement of

comprehensive income. Land is not depreciated, since useful live of it is accepted as infinite.

The estimated useful lives are as follows:

Buildings

50 years

Machinery and equipments 3-20 years

Vehicles 4-7 years

Furniture and fixtures 3-10 years

Leased Assets 5-12 years

Other tangible assets 5 years

Leasehold improvements 2-25 years

Depreciation methods, useful lives and residual values are reviewed at each reporting period end and

adjusted if appropriate.

iv) Disposal

Gains or losses on disposals of property and equipment are included in the relevant income and

expense accounts and the cost and accumulated depreciation of property and equipment has been

derecognized from the relevant accounts as appropriate.




19


2.2.4 Intangible assets

Intangible assets consist of acquired software and other intangible assets. The costs of intangible

assets purchased before 1 January 2005 are restated for the effects of inflation current at 31

December 2004 less accumulated amortization and impairment losses. The costs of intangible assets

purchased after 31 December 2004 are carried at cost less accumulated amortization and impairment

losses, if any. The carrying amount of an intangible asset is reduced to its recoverable amount if there

is impairment.

i) Amortization

Intangible assets are amortized on a straight-line basis in the income statement over their estimated

useful lives for a period.

The estimated useful lives are as follows:

Software 3-10 years

Other intangible assets 3-10 years

2.2.5 Goodwill

After 1 January 2005, in accordance with IFRS 3 ―Business Combinations‖, the excess amount of

fair value of identified assets, liabilities and conditional liabilities that are acquired purchasing price

over is recorded as goodwill. The goodwill arising from the merger is not amortized. Goodwill is

subject to impairment test once a year or more frequently when there is an indication of impairment.

Goodwill is measured at cost less accumulated impairment losses. In respect of equity accounted

investees, the carrying amount of goodwill is included in the carrying amount of the investment, and

any impairment loss is allocated to the carrying amount of the equity accounted investee as a whole.

Each unit or group of units to which the goodwill is so allocated represents the lowest level within

the entity at which the goodwill is monitored for internal management purposes. Impairment losses

are determined by assessing the recoverable value of cash-generating unit or group related to

goodwill. Impairment loss is recognized even if the recoverable amount of the cash-generating unit

connected to the unit less than the amount of the cash generating unit. Impairment losses relating to

goodwill cannot be reversed in future periods.

2.2.6 Impairment of Assets

i) Financial Assets

A financial asset is considered to be impaired if objective evidence indicates that one or more events

have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the

difference between its carrying amount and the present value of the estimated future cash flows

discounted at the original effective interest rate.

Individually significant financial assets are tested for impairment on an individual basis. The

remaining financial assets are assessed collectively in groups that share similar credit risk

characteristics. All impairment losses are recognized in the consolidated statement of comprehensive

income.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after

the impairment loss was recognized. The reversal of the impairment in respect of the discounted

financial assets is recognized in the consolidated statement of comprehensive income.




20


2.2 Summary of Significant Accounting Policies (continued)

2.2.6 Impairment of Assets (continued)

ii) Non-financial assets

At each balance sheet date the Group reviews the carrying amount of the assets to determine whether

there is an indication of impairment. If any such indication exists then the asset‘s recoverable amount

is estimated.

Impairment losses are recognized if the carrying amount of the assets or the cash generating unit

exceeds its estimated recoverable amount. Assets are grouped together into the smallest group of

assets that generates cash inflows from continuing use that are largely independent of the cash

inflows of other assets or groups of assets. Impairment losses are recognized in the consolidated

statement of comprehensive income.

Impairment losses recognized in respect of the cash generating units are allocated first to reduce the

carrying amount of goodwill then to reduce the carrying amounts of the other assets in the unit

(group of units) on a pro rata basis.

The recoverable amount of an asset or cash generating unit is the greater of its value in use and its

fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted

to their present value using a pre-tax discount rate that reflects current market assessments of the

time value of money and the risks specific to that asset.

In respect of other assets, impairment losses recognized in prior periods are assessed at each

reporting date for any indications that the loss has decreased or no longer exists. An impairment loss

is reversed if there has been a change in the estimates used to determine the recoverable amount. An

impairment loss is reversed only to the extent that the asset‘s carrying amount does not exceed the

carrying amount that would have been determined, net of depreciation or amortization, if no

impairment loss had been recognized.

According to TAS 36 ―The Standard on Impairment of Assets‖, if there are changes in conditions

and circumstances that would be an indication of impairment in goodwill, the impairment tests are

performed more frequently than once a year.




21



2.2.7 Financial instruments

i) Non derivative financial assets

The Group initially recognizes loans and the receivables on the date they are originated. All other

financial assets are recognized initially on the trade date at which the Group becomes a party to the

contractual provisions of the inflows.

The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset

expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a

transaction in which substantially all the risks and rewards of ownership of the financial asset are

transferred. Any interest in transferred financial assets that is created or retained by the Group is

recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net amount presented in the statement of financial

position when, and only when, the Group has a legal right to offset the amounts and intends either to

settle on a net basis or to realize the asset and settle the liability simultaneously.

Non-derivative financial assets of the Group comprise trade and other receivables, cash and cash

equivalents.

Cash and Cash Equivalents

Cash and cash equivalents comprise cash balances and call deposits with maturities of three months

or less from the acquisition date that are subject to an insignificant risk of changes in their fair value,

and are used by the Group in the management of its short-term commitments.

Trade and Other Receivables

Trade receivables are previously recognized at invoice value. Nevertheless, after the initial The fair

values of trade and other receivables, excluding construction work in progress, are estimated at the

present value of future cash flows, discounted at the market rate of interest at the measurement date.

Short-term receivables with no stated interest rate are measured at the original invoice amount if the

effect of discounting is immaterial. Fair value is determined at initial recognition and, for disclosure

purposes, at each annual reporting date.

ii) Non derivative financial liabilities

Financial assets and liabilities are offset and the net amount presented in the statement of financial

position only if the Group has a legal right to offset the amounts and intends either to settle on a net

basis or to realize the asset and settle the liability simultaneously.

Non-derivative financial liabilities of the Group comprise loans and trade payables and other

payables.

Financial liabilities are initially recorded at their initial costs less any transaction costs. In the periods

subsequent to their initial recognition the difference between their initial amounts their present value

as determined by discounting their repayment amounts by applying the effective interest rate is

reflected in the consolidated statements of comprehensive income.




22



2.2.7 Financial instruments

iii) Paid-in capital

Ordinary shares are classified as paid-in capital.

iv) Derivative financial instruments

The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk

exposures.

Derivatives are recognised initially at acquisition cost; attributable transaction costs are recognised in

profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value.

The Group‘s derivative financial instrument consists of mainly forward transactions and interest rate

swap. Although these financial instruments provide effective economic protection against risks, they

are accounted for as derivative financial instruments reflected as trading securities or other financial

liabilities because they do not meet the hedge accounting criteria under IAS 39.

2.2.8 Foreign Currency Transactions

Transactions in foreign currencies have been translated to TL at the exchange rates prevailing at the

dates of the transactions. Monetary assets and liabilities denominated in foreign currencies have been

translated into TL at the exchange rates prevailing at the balance sheet dates. Foreign exchange gains

or losses arising from the settlement of such transactions and from the translation of monetary assets

and liabilities are recognized in the consolidated statement of comprehensive income. Non-monetary

assets and liabilities denominated in foreign currencies are translated to TL with the exchange rates

at the dates of transaction.

As at 31 December, Central Bank of the Republic of Turkey ("Central Bank")‘s buying foreign

currency rates are as follows::

31 December 2012 31 December 2011

American Dollar (―USD‖) 1,7826 1,8889

European Union Currency (―EUR‖) 2,3517 2,4438

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising

on acquisition, are translated to TL at exchange rates at the reporting date. The income and expenses

of foreign operations are translated to TL at exchange rates at the dates of the transactions.

Foreign currency differences are recognised in other comprehensive income, and presented in the

foreign currency translation reserve (translation reserve) in equity. However, if the foreign operation

is a non-wholly owned subsidiary, then the relevant proportion of the translation difference is

allocated to non-controlling interests. When a foreign operation is disposed of such that control,

significant influence or joint control is lost, the cumulative amount in the translation reserve related

to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When

the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while

retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling

interests. When the Group disposes only part of its investment in an associate or joint venture that

includes a foreign operation while retaining significant influence or joint control, the relevant

proportion of the cumulative amount is reclassified to profit or loss.




23



2.2.8 Foreign Currency Transactions (continued)

When the settlement of a monetary item receivable from or payable to a foreign operation is neither

planned nor likely in the foreseeable future, foreign currency gains and losses arising from such item

are considered to form part of the net investment in the foreign operation and are recognised in other

comprehensive income, and presented in the translation reserve in equity.

2.2.9 Earnings per share

Earnings per share disclosed in the consolidated statement of comprehensive income is determined

by dividing net earnings by the weighted average number of shares that have been outstanding

during the related period concerned.

In Turkey, companies can increase their share capital by making a pro-rata distribution of shares

("bonus shares") to existing shareholders from retained earnings and inflation adjustments on equity

items. Such bonus shares are taken into consideration in the computation of earnings per share as

issued share certificates. For the purpose of earnings per share computations, the weighted average

number of shares outstanding during the period has been adjusted in respect of bonus shares issued

without a corresponding change in resources, by giving them retroactive effect for the year in which

they were issued and each earlier year.

2.2.10 Events after the reporting date

If there has been events after the reporting date that would require the restatement of the

consolidated financial statements; the Group restates the consolidated financial statements

accordingly. If such events are significant but do not require the restatement of the consolidated

financial statements, they are disclosed in the related notes.

2.2.11 Provisions, contingent assets and liabilities

A provision is recognized in the accompanying consolidated financial statements if as a result of a

past event, the Group has a present legal or constructive obligation that can be estimated reliably and

it is probable that an outflow of economic benefits will be required to settle the obligation.

Contingent liabilities are reviewed to determine if there is a possibility that the outflow of economic

benefits will be required to settle the obligation. Except for the economic benefit outflow possibility

is remote such contingent liabilities is disclosed in the notes to the financial statements. If the inflow

of economic benefits is probable contingent assets have been disclosed in the notes to the financial

statements. If the inflow of the economic benefit is more than likely to occur such asset and income

statement effect has been recognized in the financial statements at the relevant period that income

change effect occurs.




24



2.2.13 Related parties

Subsidiaries, shareholders of the Company and companies of the shareholders, and also other

companies managed by these companies or related to these companies and managers and directors of

these companies are referred to as related parties. Group is managing transactions with its

subsidiaries due to common operations.

(a) A person or a close member of that person‘s family is related to a reporting entity if that person:

(i) has control or joint control over the reporting entity;

(ii) has significant influence over the reporting entity; or

(iii) is a member of the key management personnel of the reporting entity or of a

parent of the reporting entity.

(b) An entity is related to a reporting entity if any of the following conditions applies:

(i) The entity and the reporting entity are members of the same group (which means that each parent,

subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a

member of a group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party.

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third

entity.

(v) The entity is a post-employment benefit plan for the benefit of employees of either the reporting

entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the

sponsoring employers are also related to the reporting entity.

(vi) The entity is controlled or jointly controlled by a person identified in (a).

(vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key

management personnel of the entity (or of a parent of the entity).

2.2.12 Leasing transactions

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are

classified as finance leases. The property and equipment acquired through financial leasing in the

Group’s consolidated balance sheet are recorded on the asset side at the lower of its fair value or the

present value of the minimum lease payments, and related obligation is reflected on the liability side

at the present value of the minimum lease payments. Interest element included in the lease

installments are reflected in the consolidated income statement. The tangible assets obtained by way

of financial leases are depreciated through their useful lives.

When the lease period is shorter than the useful life of the leased asset and it is not certain whether

the Group will purchase the leased asset at the end of the lease period, it is depreciated during the

period of lease. When the leased asset’s useful life is shorter than leased period, leased assets are

depreciated during the useful life.

The lease transactions are classified as operational leasing where the risks and rewards are on the

part of the lessor. Operational lease payments are recorded as expense in the consolidated statement

of comprehensive income on a linear basis.




25



2.2.14 Segment reporting

IFRS 8 requires that a measure of segment assets be disclosed only if the amounts are regularly

provided to Chief Decision Maker, consistent with the equivalent requirement for the measure of

segment liabilities.

The Group‘s main business activity consists of hospital and healthcare services. As a result of the

activity variation, the Group revenues are allocated as hospital, healthcare and non-healthcare branches.

All Group revenues have been realized in domestic basis except as subsidiaries in Macedonia.

The operating segments of the Group are presented in Note 3.

2.2.15 Taxes

Income tax comprises current and deferred tax. Income tax expense is recognised in profit or loss

except to the extent that it relates to a business combination, or items recognised directly in equity or

in other comprehensive income. Current tax is the expected tax payable on the taxable income for the

year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax

payable in respect of previous years.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of

assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax is not recognised for the following temporary differences: the initial recognition of

assets or liabilities in a transaction that is not a business combination and that affects neither

accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly

controlled entities to the extent that it is probable that they will not reverse in the foreseeable future.

In addition, deferred tax is not recognised for taxable temporary differences arising on the initial

recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to

the temporary differences when they reverse, based on the laws that have been enacted or

substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a

legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes

levied by the same tax authority on the same taxable entity, or on different tax entities, but they

intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be

realized simultaneously. A deferred tax asset is recognised for unused tax losses, tax credits and

deductible temporary differences, to the extent that it is probable that future taxable profits will be

available against which they can be utilized. Deferred tax assets are reviewed at each reporting date

and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Transfer pricing regulations

In Turkey, the transfer pricing provisions have been stated under the Article 13 of the Corporate Tax

Law with the heading of ―disguised profit distribution via transfer pricing‖. The General

Communiqué on disguised profit distribution via Transfer Pricing, dated 18 November 2007 sets

details about implementation. If a taxpayer enters into transactions regarding the sale or purchase of

goods and services with related parties, where the prices are not set in accordance with the arm‘s

length principle, then related profits are considered to be distributed in a disguised manner through

transfer pricing. Such disguised profit distributions through transfer pricing are not accepted as tax

deductible for corporate income tax purposes.




26



2.2.16 Employee Benefits

In accordance with the existing Labor Law in Turkey, the Group entities operating in Turkey are

required to make lump-sum payments to employees who have completed one year of service and

whose employment is terminated without cause or who retire, are called up for military service or in

the event of death. In the accompanying consolidated financial statements, the Group has used

actuarial valuation method to estimate its obligation.

As at 31 December, the following assumptions were used in the calculation of the total liability:


Discount rate %2.76 %3.91

Turnover rate for the calculation of retirement %77.00 %77.00

Reserve for employee termination benefits is calculated based on the ceiling amount which is

determined by the Government. As at 31 December 2012 and 31 December 2011, the ceiling amount

has been limited to TL 3.034 and TL 2.732 per year of employment, respectively. The liability is not

funded, as there is no funding requirement.

2.2.17 Statement of Cash Flows

Cash flows for the period are reported based on operating, investing and financing activities. Cash

flows from operating activities represent the Group‘s cash flows generated from operating activities.

The Group presents the cash flows by using the indirect method such as adjusting the accruals for

cash inflows and outflows from gross profit/loss, other non-cash transactions, prior and future

transactions or deferrals.

Cash flows from investing activities represent the cash flows used in/provided from investing

activities (capital expenditures).

Cash flows from financing activities represent the funds used in and repayment of the funds during

the period.

Cash and cash equivalents, represents on cash on hand and deposits at banks with a maturity less

than three months and investments which have a maturity less than three months at the date of initial

recognition. Cash and cash equivalents included in the cash flow statement comprise cash and bank

deposits and financial assets which mature in less than three months.

2.2.18 Expenses

Expenses are accounted for on accrual basis. Expenses related to cost of sales and operating

expenses are recognized as they incur. Rent payments are recorded as expense on installments in the

consolidated comprehensive income statement during the rent period

Financial incomes and expenses

Interest income and expenses in income statement are accounted on accrual basis considering the

effective interest rate and applicable variable interest rate on the related asset.

Interest income and expenses consist of the present value of the difference or premium or discount of

the accounted value of an interest bearing instrument and the due date value calculated with the

effective interest rate system. Finance expenses related to the investment cost can be capitalized

during the investment process.




27


2.3 Accounting Estimates and Judgments

Preparation of consolidated financial statements requires management to implement the policies and

to make estimations and judgments which affect the income and expense amounts, assets and

liabilities. Actual results may be differ from this estimated amounts.

Estimations and judgments which form a basis for these assumptions are reviewed on a regular basis.

Updates in accounting estimations are recorded in the period of update and following periods which

are affected from these judgments.

Significant estimations and assumptions used by Group to prepare financial statements are shown in

the notes below:

Note 2.2.3- 2.2.4 - Useful lifes of tangible and intangible assets

Note 2.2.7 - Financial derivative instruments

Note 6 - Allowance for trade receivables

Note 11 - Goodwill impairment tests

Note 12 - Provisions, contingent assets and liabilities

Note 14 - Employee benefits

Note 24 - Tax assets and liabilities

Note 28 - Financial instruments-fair value disclosures




28

3 Segment reporting

Main business activity of the Group is defined as providing of healthcare services. The Group

defined its operating segments as hospital and other healthcare related activities.

1 January– 31 December 2012

Hospital Healthcare Total

External revenues 1,148,621,951 148,847,211 1,297,469,162

Inter-segment revenue -- 36,638,839 36,638,839

Reportable segment revenue 1,148,621,951 112,208,372 1,260,830,323

Reportable segment cost of revenue (947,266,205) (98,777,574) (1,046,043,779)

Reportable segment gross profit 201,355,746 13,430,798 214,786,544

Operating expenses (93,084,186)

Other operating income/expense (net) (4,284,915)

Financial income/expense (net) (13,935,598)

Tax expense (21,053,553)

Net income for the period 82,428,292

31 December 2012

Hospital

Healthcare Total

Reportable segment assets

1,011,904,502

95,358,148 1,107,262,650

Capital expenditures

(159,201,653)

(6,158,810) (165,360,463)

Reportable segment liabilities

843,134,767

53,423,448 896,558,215

Amortization and depreciation

(82,270,035)

(5,313,451) (87,583,486)

1 January– 31 December 2011

Hospital Healthcare Total

External revenues 936,652,079 111,763,578 1,048,415,657

Inter-segment revenue -- 38,939,189 38,939,189

Reportable segment revenue 936,652,079 72,824,389 1,009,476,468

Reportable segment cost of revenue (732,803,641) (60,544,910) (793,348,551)

Reportable segment gross profit 203,848,438 12,279,479 216,127,917

Operating expenses (76,105,918)

Other operating income/expense (net) (14,722,280)

Financial income/expense (net) (126,342,925)

Tax expense (5,356,267)

Net income for the period (6,399,473)

31 December 2011

Hospital

Healthcare Total

Reportable segment assets

927,634,970

58,313,965 985,948,935

Capital expenditures

(95,393,653)

(1,078,287) (96,471,940)

Reportable segment liabilities

833,369,979 29,962,806 863,332,785

Amortization and depreciation

(72,545,759)

(5,068,048) (77,613,807)




29

3 Segment Reporting (continued)

Geographical Information

The Hospital and healthcare segments are primarily operates in Turkey and Macedonia. According to

geographical segment reporting, revenue and assets geographic are presented with respect to the

geographical locations of customers. As at 31 December, total geographical area of risk

concentrations are indicated below:

2012

Revenue Non-current assets(*)

Turkey 1,217,769,574 609,651,798

Macedonia 43,060,749 18,276,784

1,260,830,323 627,928,582

2011

Revenue Non-current assets (*)

Turkey 1,000,533,472 532,589,725

Macedonia 8,942,996 21,982,585

1,009,476,468 554,572,310

(*) Non-current assets comprises of tangible assets and intangible assets.

4 Cash and Cash Equivalents

As at 31 December, cash and cash equivalents comprised the following:


Cash on hand 329,852 982,281

Banks – demand deposits 5,020,333 2,940,688

Banks – time deposits 30,738,782 35,723,160

Mutual fund (B type liquid fund) 454,077 484,910

Credit card receivables 4,674,198 3,889,404

41,217,242 44,020,443

As at 31 December 2012, maturities for TL range between 2-18 days (31 December 2011: 2-10 days)

and 29 days for USD. Interest rates range between %5,00 - %8,10 for TL (31 December 2011: %4,50

- %9,75) and %2,50 for USD.

As at 31 December 2012, the Group has blocked deposits at an amount of TL 27,639,600 (31

December 2011: TL 30,039,668) for the purpose of servicing semi-annual principal and interest

payments of bank borrowing amounting to USD 154,000,000 obtained from a commercial bank

located in Turkey and the Group has blocked deposits at an amount of USD 1,008,780 (31 December

2011: USD 317,036) in purpose of servicing of semi-annual interest payments of bank borrowing

amounting to USD 25,904,032.




30

4 Cash and cash equivalents (continued)

For purposes of the statement of cash flows, cash and cash equivalents include bank deposits and

short-term investments that are easily convertible to cash with high liquidity and with a maturity of

up to three months.

Cash and cash equivalents included in the statement of cash flows for the years ended 31 December

is comprised of the following:


Cash on hand 329,852 982,281

Banks – demand deposits 5,020,333 2,940,688

Banks – time deposits 30,738,782 35,723,160

Mutual fund (B type liquid fund) 454,077 484,910

Credit card receivables 4,674,198 3,889,404

Restricted cash (29,437,851) (30,638,517)

11,779,391 13,381,926

5 Financial Liabilities

As at 31 December, short term financial liabilities comprised the following:


Short term bank borrowings and short term

portion of long term bank borrowings 141,986,823

95,339,861

Financial lease liabilities, net 28,971,669 20,474,355

170,958,492 115,814,216

As at 31 December, long term financial liabilities comprised the following:


Long term bank borrowings 282,287,855 362,684,232

Financial lease liabilities, net 102,512,425 83,312,597

384,800,280 445,996,829




31

5 Financial liabilities (continued)

Bank borrowings

31 December 2012 the details of bank borrowings comprised the following:

Type Collateral Currency Maturity

31 December 2012

Face Value

31 December 2012

Carrying Value

Investment

Secured

USD 2019

7,048,058

7,048,058

Investment

Secured

USD 2014

8,913,000

8,913,000

Investment

Secured

USD 2018

320,696,928

320,696,928

Operating

Secured

USD 2013

3,565,200

3,565,200

Operating

Secured

MKD 2014

6,679,179

6,679,179

Investment

Secured

MKD 2016

1,957,222

1,957,222

Operating

Secured

MKD 2013

8,288,230

8,288,230

Operating

Secured

TL 2013

60,361,543

60,361,543

Operating

Secured

TL 2014

91,350

91,659

417,600,710 424,274,678

As at 31 December 2012, interest rates range between Libor+ 1.75% - 6.35% for USD denominated

bank borrowings, 5.5%-6.0% for MKD denominated bank borrowings and 0% - 9.0% TL

denominated bank borrowings.

As at 31 December 2012, repayment schedule of the long term bank borrowings of the Group is as

follows:

Years

Currency

Original Currency Amount

TL Amount

2014

USD 35,396,545 63,097,881

2015

USD 32,896,545 58,641,381

2016

USD 32,896,545 58,641,381

2017

USD 32,896,545 58,641,381

2018

USD 18,904,963 33,699,988

2019

USD 470,152 838,092

2014

MKD 109,510,801 4,188,098

2015

MKD 71,730,752 2,743,249

2016

MKD 44,583,925 1,705,054

2014

TL 91,350 91,350

282,287,855

As at 31 December 2012, the maturities of bank borrowings of the Group are as follows:

Maturity 31 December 2012

0 – 3 month 50,560,562

3 month – 1 year 91,426,261

1 – 5 year 247,749,775

Above 5 year 34,538,080

424,274,678




32

5 Financial liabilities (continued)

According to the USD 200,000,000 loan agreement with a commercial bank located in Turkey, the

Group has to meet certain covenant limits. As at 31 December 2012, the Group met its all covenants.

As at 31 December 2012, the guarantees given related to the bank borrowings are as follows:

31 December 2012

Type of Guarantee Currency Original Currency Amount TL Amount

Mortgages USD 163,515,000 291,481,839

Blocked deposit USD 1,008,780 1,798,251

Blocked deposit TL -- 27,639,600

Commercial Pledge TL -- 600,000,000

164,523,780 920,919,690

As at 31 December 2011, the details of bank borrowings comprised the following:

Type Collateral Currency Maturity

31 December 2011

Face Value

31 December 2011

Carrying Value

Investment

Secured

USD 2018

352,504,913

350,877,294

Investment

Secured

USD 2014

14,195,006

14,195,006

Investment

Secured

USD 2018

53,607,592

53,607,592

Operating

Secured

USD 2012

3,814,361

3,814,361

Investment

Secured

EUR 2012

3,886,050

3,874,450

Investment

Secured

EUR 2012

2,601,883

2,601,883

Investment

Secured

MKD 2016

15,981,905

15,981,905

Operating

Secured

MKD 2012

802,493

802,493

Operating

Secured

TL 2012

11,953,841

11,953,841

Tax

Unsecured

TL 2012

315,268

315,268

459,663,312 458,024,093

As at 31 December 2011, interest rates for rage between Libor+ %3.90 - %6.35 for USD

denominated borrowings; Euribor + 0.625% - 7.5% for EUR denominated bank borrowings, 5.5% -

9.75% for MKD denominated bank borrowings and 10.0% - 15.25% for TL denominated bank

borrowings.




33

5 Financial Liabilities (continued)

As at 31 December 2011, repayment schedule of the long term bank borrowings of Group is as

follows:

Years Currency

Original Currency

Amount TL Amount

2013 USD 34,815,936 65,763,821

2014 USD 34,815,936 65,763,821

2015 USD 32,315,936 61,041,571

2016 USD 32,315,936 61,041,571

2017 USD 32,315,936 61,041,571

2018 USD 18,324,354 34,612,873

2013 MKD 105,302,901 4,240,647

2014 MKD 108,609,263 4,373,797

2015 MKD 82,558,019 3,324,689

2016 MKD 36,747,879 1,479,871

362,684,232

As at 31 December 2011, the maturities of bank borrowings are as follows:

As at 31 December 2011, the guarantees given related to the bank borrowings are as follows:

Type of Guarantee Currency Type Original Currency Amount TL Amount

Mortgages USD 164,865,000 311,413,499

Blocked Deposit USD 317,036 598,849

Blocked Deposit TL -- 30,039,668

Commercial Pledge TL -- 600,000,000

165,182,036 942,052,016

Finance lease liabilities:

As at 31 December, short term finance lease liabilities are as follows:

31 December 2012 31December 2011

Financial lease liabilities 35,564,643 25,638,695

Deferred financial lease liabilities (-) (6,592,974) (5,164,340)

28,971,669 20,474,355

Maturity 31 December 2011

0 - 3 month 36,021,899

3 month – 1 year 59,317,962

1 - 5 year 267,029,788

Above 5 year 95,654,444

458,024,093




34

5 Financial Liabilities (continued)

As at 31 December, long term finance lease liabilities are as follows:


Financial lease liabilities 115,183,812 94,505,526

Deferred financial lease liabilities (-) (12,671,387) (11,192,929)

102,512,425 83,312,597

As at 31 December, the maturities of finance lease liabilities are as follows:

2012 2011

Future

minimum

lease

payments Interest

Present value

of minimum

lease

payments

Future

minimum

lease

payments Interest

Present value

of minimum

lease

payments

Less than 1 year 35,564,643

6,592,974

28,971,669

25,638,695 5,164,340 20,474,355 1 - 5 year 107,309,469

12,098,184

95,211,285

80,980,612 10,133,149 70,847,463 5 year and more 7,874,343

573,203

7,301,140

13,524,914 1,059,780 12,465,134

150,748,455

19,264,361 131,484,094 120,144,221 16,357,269 103,786,952

6 Trade Receivables and Payables


Trade receivables 132,995,629 109,984,583

Notes receivables 805,943 667,815

Doubtful receivables 10,620,755 8,387,210

Allowance for doubtful receivables (-) (10,620,755) (8,387,210)

Other trade receivables 15,908 --

133,817,480 110,652,398

The Company has borrowed a loan amounting to USD 200,000,000 based on an agreement signed

with a commercial bank located in Turkey on 10 January 2008. The purpose of the loan was funding

new investments and the restructuring of existing loans at that time. The Company has ceded 80% of

the trade receivables as a guarantee for the remaining amount of bank loans of USD 154,000,000 of

the USD 200,000,000 loan.

As at 31 December, the aging analysis of the trade receivable is as follows:


Overdue receivables 47,806,668 15,248,945

Receivables not overdue 86,010,812 95,403,453

133,817,480 110,652,398

As at 31 December 2012, overdue receivables are amounting to TL 47,806,668 (31 December 2011:

TL 15,248,945). No allowance has been recorded for these receivables as they were found to be

overdue due to commercial reasons and were expected to be collected within a time period.




35

The aging analysis of overdue trade receivable as at 31 December is as below:

31 December 2012

31 December 2011

Between 1-30 days 13,302,256

5,495,533

Between 31-60 days 13,755,819

2,728,839

61 days and more 20,748,593

7,024,573

47,806,668 15,248,945

The Group records allowance for doubtful receivable on customer terms. Allowances comprised the

customers which are not expected to repay. For the years ended 31 December, the movement of the

allowances for doubtful receivable is as follows:

31 December 2012

31 December 2011

Beginning balance 8,387,210

5,473,602

Additions 3,326,865

3,197,914

Collections (-) (1,093,320)

(283,163)

Write-offs (-) --

(1,143)

10,620,755 8,387,210

Group‘s impairment of trade and other receivables, credit and currency risk is explained in Note 27.

As at 31 December, short term trade payables comprised the following:

31 December 2012

31 December 2011

Payable to suppliers

91,403,616

114,274,994

Notes payable

10,529,820

8,760,622

101,933,436 123,035,616

As at 31 December, long term trade payables comprised the following:

31 December 2012

31 December 2011

Payable to suppliers

6,980,597

6,200,306

Notes Payable

--

2,199,420

6,980,597 8,399,726

As at 31 December, the aging analysis of trade payables is as follows:

31 December 2012

31 December 2011

0 - 3 month

69,282,436

92,091,592

3 month -1 year

32,651,000

30,944,024

1 year-5 year

6,980,597

8,399,726

108,914,033 131,435,342

Credit and currency risk the Group‘s trade and other payables exposed to are explained in Note 27.




36

7 Other Receivables and Payables

As at 31 December, other short-term receivables comprised the following:


Orka Holding AD (*) 5,946,950 --

Receivables from tax office 597,434 450,202

Advances given to personnel 203,288 204,320

Deposits and guarantees given 190,403 181,773

Others 2,727,070 221,394

9,665,145 1,057,689

As at 31 December, other long-term receivables comprised the following:


Deposits and guarantees given 339,701 204,204

Orka Holding AD(*) -- 6,267,210

Receivables from personnel -- 396,289

Other 92,814 --

432,515 6,867,703

(*) Receivables from Orka Holding AD were classified as short term in accordance with payment plan.

As at 31 December, other short-term payables comprised the following:


Payables arising from acquisition of Yeni Sağlık 21,318,151 16,892,910

Payables arising from acquisition of Bodrum Tedavi 8,956,539 --

Advances received from patients 5,754,139 3,776,828

Other payables to Orka Holding AD 574,642 303,113

Other 360,708 431,763

36,964,179 21,404,614

As at 31 December, other long-term payables comprised the following:


Payables arising from acquisition of Yeni Sağlık 12,760,116 35.597.523

Advances received 839,048 1.262.865

13,599,164 36,860,388

8 Inventories

As at 31 December, inventories comprised the following:

31 December 2012

31 December 2011

Medical materials and medicine 24,248,218

20,612,271

Other inventories

491,244

1,328,438

Provision for inventories

--

(26,304)

24,739,462 21,914,405




37

9 Property and equipment

For the year ended 31 December 2012, the movements in property and equipment are as follows:

Cost Land Buildings Machinery and

equipments Vehicles Furniture

and fixture Leased assets Leasehold

improvements

Other

tangible

assets Construction

in progress Total

1 January 2012 33,780,497 183,902,854 331,527,154 5,081,893 89,481,542 121,502,629 206,297,243 2,070,761 29,568,931 1,003,213,504

Acquisition through business combination --

-- 1,113,310 885,301 1,196,439 -- 838,864 -- -- 4,033,914

Additions -- 7,029,402 25,252,408 956,283 6,102,553 44,084,470 19,379,865 -- 53,864,255 156,669,236

Disposals -- (12,524,365) (10,739,509) (1,696,639) (1,198,896) (126,469) (122,637) (16,118) (111,654) (26,536,287)

Translation difference -- (2,739) (884,552) (8,686) (140,903) (6,813) -- (75,874) -- (1,119,567)

Transfer(*) -- 26,788,064 10,174,448 192,348 10,056,481 18,302,876 14,226,617 21,687 (79,785,093) (22,572)

As at 31 December 2012 33,780,497 205,193,216 356,443,259 5,410,500 105,497,216 183,756,693 240,619,952 2,000,456 3,536,439 1,136,238,228

Accumulated depreciation

1 January 2012 -- 25,032,608 237,772,466 2,914,561 56,104,458 57,548,804 76,618,492 99,278 -- 456,090,667

Acquisition through

business combination -- 436,929 293,404 818,719 -- 197,825 -- -- 1,746,877

Charge for the year -- 4,593,429 26,632,524 734,962 10,190,360 23,721,783 20,829,549 9,518 -- 86,712,125

Disposals -- (3,032,907) (10,121,857) (1,313,829) (728,632) (30,958) (1,776) (16,118) -- (15,246,077)

Translation difference -- (12) (29,506) (1,202) (5,214) (2,323) (51,753) -- (90,010)

As at 31 December 2012 -- 26,593,118 254,690,556 2,627,896 66,379,691 81,237,306 97,644,090 40,925 -- 529,213,582

Net book value

607,024,646

(*) Fixed assets amounting to TL 22,572 TL have been transferred to intangible assets. As at 31 December 2012, property and equipment have been insured to the extent of TL 1,005,811,324 (31 December 2011: TL 974,520,407)

For the year ended 31 December 2012, depreciation expenses amounting to TL 84,011,357 (31 December 2011: TL 72,914,412) have been recognised under cost of revenue and TL 2,576,528 (31 December

2011: TL 3,913,307) has been included under administrative expenses and TL 124,240 (31 December 2011: TL 131,976) has been included under selling, marketing and distribution expenses.

As at 31 December 2012, property and equipment are pledged to the extent of TL 291,481,839 (31 December 2011: TL 311,413,499).

For the year ended 31 December 2012, the Company utilizes property and equipment which have nil net book value on its accounts (31 December 2012: TL 244,585,338, Accumulated Depreciation: TL 244,585,338; 31 December 2011 Cost: TL 226,783,910, Accumulated Depreciation: TL 226,783,910).




38

9 Property and equipment (continued)

For the period ended 31 December 2011, the movements in property and equipment are as follows:

Cost Land Buildings Machinery and

equipments Vehicles Furniture

and fixture Leased assets Leasehold

improvements

Other

tangible

assets Construction

in progress Total

1 January 2011 31,645,702 181,523,816 294,741,728 4,388,225 77,213,252 117,483,640 202,253,250 563,536 2,249,366 912,062,515

Acquisition through

business combination -- 38,428 14,642,780 143,806 2,304,409 112,794

--

1,256,204

18,498,421

Additions 2,134,795 2,340,610 24,608,622 869,108 10,485,130 3,906,195 19,940,632 251,021 27,319,565 91,855,678

Disposals -- -- (2,465,976) (319,246) (521,249) -- (15,896,639) -- -- (19,203,110)

As at 31 December 2011 33,780,497 183,902,854 331,527,154 5,081,893 89,481,542 121,502,629

206,297,243

2,070,761

29,568,931

1,003,213,504

Accumulated depreciation

1 January 2011 -- 20,841,603 215,476,593 2,373,310 48,112,446 36,076,951 62,016,019 78,917 -- 384,975,839

Acquisition through

business combination -- -- -- 17,598 6,039 20,444

--

--

44,081

Charge for the year -- 4,191,005 24,374,345 745,800 8,476,399 21,451,409 17,700,376 20,361 -- 76,959,695

Disposals -- -- (2,078,472) (222,147) (490,426) -- (3,097,903) -- -- (5,888,948)

As at 31 December 2011 -- 25,032,608 237,772,466 2,914,561 56,104,458 57,548,804

76,618,492

99,278

--

456,090,667

Net Book Value

547,122,837



As at and for the years ended 31 December 2012 Amounts expressed in TL otherwise stated.

39

9 Property and equipment (continued)

Construction in progress

31 December 2012

Project Actual Cost Expected Project

Costs (TL)

Acıbadem Bodrum Hospital (2nd phase) 2,730,564 15,000,000

Acıbadem Halkalı Hospital 514,630 95,000,000

Acıbadem Altunizade Hospital 291,245 180,000,000

3,536,439 290,000,000

Acıbadem Bodrum Hospital (2.stage)

Acıbadem Sağlık has an expansion project for Bodrum Hospital building which is planned to be

completed in 2013.

Acıbadem Halkalı Hospital

Acıbadem Sağlık has a hospital project which is located in Halkalı with a total closed area of 55.000 m2.

This project is planned to be completed in last quarter of 2013.

Acıbadem Altunizade Hospital

Acıbadem Sağlık has a hospital project, which is located in Altunizade with a total closed area of 75.000

m2. This project is planned to be completed in 2015.

10 Intangible Assets

For the year ended 31 December 2012, movements in the intangible assets are as follows:

Rights

Other intangible

assets Total

Cost

1 January 2012 5,386,681 7,528,100 12,914,781

Acquisition through business combination 5,830,155 -- 5,830,155

Additions 7,959,406 731,821 8,691,227

Disposals (7,460) (23) (7,483)

Effects of movements in exchange rates -- (137,531) (137,531)

Transfers 4,055 18,517 22,572

31 December 2012 19,172,837 8,140,883 27,313,721

Accumulated Amortization

1 January 2012 1,642,315 3,822,993 5,465,308

Acquisition through business combination 75,017 -- 75,017

Charge for the year 480,237 391,124 871,361

Disposals -- (23) (23)

Effects of movements in exchange rates -- (1,878) (1,878)

31 December 2012 2,197,569 4,212,216 6,409,785

Net Book Value 20,903,396




40

10 Intangible assets (continued)

Details of the license obtained through the acquisition of Turuncu Sağlık which is recognized under rights

is summarized below:

Consideration transferred 4,997,751


For the year ended 31 December 2011, movements in the intangible assets are as follows:

Rights Other intangible assets Total

Cost

1 January 2011 2,428,831 5,424,893 7,853,724

Acquisition from business combination 36,867 414,728 451,595

Additions 2,921,783 1,694,479 4,616,262

Disposals (800) (6,000) (6,800)

31 December 2011 5,386,681 7,528,100 12,914,781

Accumulated Amortization

1 January 2011 1,353,963 3,455,903 4,809,866

Acquisition from business combination -- 1,474 1,474

Charge for the year 288,396 365,716 654,112

Disposals (44) (100) (144)

31 December 2011 1,642,315 3,822,993 5,465,308


For the year ended 31 December 2012, amortization expenses amounting to TL 871,361 (31 December

2011: TL 654,112) have been included in administrative expenses.

As at 31 December, Acıbadem Sağlık utilizes intangible assets which have nil net book value on its

accounts (31 December 2012 Cost: TL 4,561,696, Accumulated Amortization: TL 4,561,696; 31

December 2011 Cost: TL 4,062,829, Accumulated Amortization: TL 4,062,829).




41

11 Goodwill

As at 31 December, the goodwill was recognized as a result of the acquisitions shown below:

31 December

2012 31 December

2011

Acıbadem Sistina Hospital and Medikal 50,441,981 50,441,981

Yeni Sağlık 46,417,257 46,417,257

International Hospital 39,292,955 39,292,955

Bodrum Tedavi Hizmetleri 7,200,000 --

Medlife 7,684,264 --

Bodrum Medikal 5,507,482 --

Acıbadem Poliklinikleri 6,234,605 6,234,605

Tolga Sağlık 2,686,849 --

Sesu 2,520,969 --

Konur Sağlık 1,547,107 1,547,107

Özel Turgutreis 92,769 --

Blab 33,747 --

169,659,985 143,933,905

The details of the acquisitions in year 2012 are given below:

Acıbadem Orta Doğu

Acıbadem Sağlık along with its subsidiaries (Mobil, Acıbadem Poliklinikleri and Labmed) took over the

90% shares of unconsolidated related party on 14 May 2012. At the General Assembly of Acıbadem Diş

Sağlığı Hizmetleri A.Ş. held on 28 May 2012, it was resolved that the company name would be changed

as Acıbadem Orta Doğu Sağlık Yatırımları A.Ş. Acıbadem Ortadoğu ‗s core business is to design, realize

domestic and international construction projects, even the investment for those projects. The Group‘s

effective share is 90%. The detail of bargain purchase gain computed is as follows:

Consideration transferred 482.178

Subsidiaries net book value (90%) (483.647)

Bargain purchase gain (1.469)

Bodrum Tedavi Hizmetleri

On 7 August 2012, Acıbadem Poliklinikleri, a subsidiary of the Group, acquired 60.00% of Bodrum

Tedavi by a total consideration of TL 18,075,000. Accordingly, the goodwill has been computed on the

total net asset of the Bodrum Tedavi Hizmetleri. The detail of goodwill computed is as follows:

Consideration transferred 18.075.000

Subsidiaries net book value (60.00%) (10.875.000)

Goodwill 7.200.000




42

11 Goodwill (continued)

Medlife

On 7 August 2012, Bodrum Tedavi, a subsidiary of the Acıbadem Poliklinikleri, acquired 100.00% of

Medlife by a total consideration of TL 8,269,667. Accordingly, the goodwill has been computed on the

total net asset of the Medlife. The detail of goodwill computed is as follows:


Subsidiaries net book value (100.00%) (585,403)

Goodwill 7,684,264

Bodrum Medikal

Bodrum Tedavi Hizmetleri, subsidiary of Acibadem Poliklinikleri, acquired 100 % shares of Bodrum

Medikal on 07 August 2012. Details of goodwill recorded in the accompanying consolidated financial

statements for Bodrum Medikal are stated below:


Subsidiaries net book value (100.00 %) (1,324,188)

Goodwill 5,507,482

Sesu

Bodrum Tedavi Hizmetleri, subsidiary of Acibadem Poliklinikleri, acquired 99,71 % shares of Sesu Özel

Sağlık Hizmetleri on 07 August 2012. Details of goodwill recorded in the accompanying consolidated

financial statements for Sesu Özel Sağlık Hizmetleri are stated below:


Subsidiaries net book value (99.71%) (195,824)

Goodwill 2,520,969

Özel Turgutreis

Bodrum Tedavi Hizmetleri, subsidiary of Acibadem Poliklinikleri, acquired 99,99 % shares of Özel

Turgutreis on 07 August 2012. Details of goodwill recorded in the accompanying consolidated financial

statements for Özel Turgutreis are stated below:

Consideration transferred 99,577

Subsidiaries net book value (99.99 %) (6,808)

Goodwill 92,769

BLAB

The Group acquired 100 % of Blab Laboratuvar Hizmetleri on 14 December 2012. Details of goodwill

recorded in the accompanying consolidated financial statements for Blab Laboratuvar Hizmetleri are

stated below:


Subsidiaries net book value (100.00 %) (1,366,253)

Goodwill 33,747




43


Tolga Sağlık

On 1 December 2012, Acıbadem Sağlık, a subsidiary of the Group, acquired 100.00% of Tolga Sağlık by

a total consideration of TL 2,671,500. Accordingly, the goodwill has been computed on the total net asset

of Tolga Sağlık. The detail of goodwill computed is as follows:


Subsidiaries net book value (100.00 %) 15,349

Goodwill 2,686,849

Acquisition of non controlling interests without a change in control:

Konur Sağlık

Acıbadem Poliklinikleri, one of the subsidiaries of the Group, acquired 2,5% of the remaining shares

from third parties based on the board resolution on 02 March 2012 and 5% of the remaining shares based

on the board resolution on 20 December 2012 and increased its shares to 100% as of that date. The agreed

amounts for these acquisitions are TL 117,707 and TL 265,815 respectively. The difference arising from

acquisition of additional shares is presented under ―Retained Earnings‖ in accordance with the revised

provisions of IFRS 3.


Subsidiaries net book value (additional %2.5 share) (39,949)

Subsidiaries net book value (additional %5 share) (105,443)

Amount recorded in Accumulated Losses 238,130

Gemtıp

Konur Sağlık, one of the subsidiaries of the Group, acquired 10% of the remaining shares from third

parties based on the board resolution on 1 December 2012 and increased its shares to 68% as of that date.

The agreed amount for this acquisition is TL 30,000. The difference arising from acquisition of additional

shares is presented under ―Retained Losses‖ in accordance with the revised provisions of IFRS 3.


Subsidiaries net book value (additional %10 share) (25,000)

Amount recorded in Accumulated Losses 5,000




44


Impairment testing for cash-generating units containing goodwill1

For the purpose of impairment testing, goodwill is allocated to Group‘s four cash generating units

(―CGU‖) namely Acıbadem Sistina, International, Yeni Sağlık and Acıbadem Poliklinikleri. All CGU‘s

impairment tests were based on value in use in as at 31 December 2012 which was estimated using

discounted cash flow projections.

5 year business plan prepared by the management was used in the value in use analysis of CGUs. The

growth in business plan of is driven by the opportunities in companies‘ businesses, increase in patient

volume and opening of new Acıbadem hospitals.

As a result of the impairment testing performed on CGU basis, no impairment loss was recognised as at

31 December 2012.

Key assumptions used in Discounted Cash Flow Projections

Key assumptions used in calculation of recoverable amounts are discount rates and terminal growth rates.

These assumptions are as follows:

Discount Rate

Terminal

Growth Rate

Compound annual

EBITDA Growth

Rate Acıbadem Sistina %10,6 %5 14%

International %12,2 %5 5%

Yeni Sağlık %12,2 %5 26%

Acıbadem Poliklinikleri %12,2 %5 14%

EBITDA growth rates were determined based on the following:

Revenue growth was estimated based on the growth during 2012 for the first year of projection period. In

addition, historical growth rates and impact of new investments was considered regarding the cash flows

between the years 2013-2017. Prices are estimated to increase in line with the inflation rate.

For the goodwill impairment test of companies acquired close to the end of 2012, the Company evaluated

in respect to the acquisition date values and any changes from the acquisition through the end of the year.

There was no indication of impairment for the entities acquired during 2012.

Discount Rate

The discount rates used in discounted cash flows are the weighted average cost of capital (―WACC‖) of

the companies.

Terminal growth rates for all companies are determined as 5%. Due to the different cost of equity and

cost of debt of Acıbadem Sistina, the discount rate is determined as 10.6%.

12 Provisions

As at 31 December, provisions comprised the following:


Provision for doctor payments 48,944,435 18,587,294

Lawsuit provisions 6,084,343 4,816,801

Provision for miscellaneous expenses 164,275 101,493

Accruals for inventories 452,905 146,294

Other 1,130,323 513,541

56,776,281 24,165,423




45

12 Provisions (continued)

There are 130 lawsuits (31 December 2011: 95) against the Group amounting to TL 19,936,844 (31

December 2011: TL 17,560,461) and 172 lawsuits related to personnel (31 December 2011: 164)

amounting to TL 2,392,794 (31 December 2011: TL 951,933). The Group has provided provisions in the

amount of TL 6,084,343 (31 December 2010: TL 4,816,801) for the lawsuits in the accompanying


The movement of provisions for year ended 31 December 2012 is as follows:

1 January

2012 Additions Payments Reversals 31 December

2012

Provision for

doctor payments 18,587,294 48,944,435 (18,587,294) -- 48,944,435

Lawsuit

provisions 4,816,801 2,410,176 (426,290) (716,344) 6,084,343

Expense accruals 101,493 164,275 (101,493) -- 164,275

Accruals for

inventory 146,294 452,905 (146,294) -- 452,905

Others 513,541 1,130,323 (513,541) -- 1,130,323

24,165,423 53,102,114 (19,774,912) (716,344) 56,776,281

The movement of provisions for year ended 31 December 2011 is as follows:

1 January

2011 Additions

Payments

Reversals

31 December

2011 Provision for doctor

payments

13,564,343

18,587,294

(13,564,343)

--

18,587,294

Lawsuit provisions 3,677,494

1,344,109 (12,750)

(192,052)

4,816,801

Expense accruals 264,311

101,493

(264,311)

--

101,493

Accruals for

inventories 107,224

146,294

(107,224)

--

146,294

Consultancy

provisions 669,953

--

(669,953)

--

--

Other 1,451,081

513,541 (1,451,081)

--

513,541

19,734,406

20,692,731

(16,069,662) (192,052) 24,165,423




46

13 Commitments

According to the decision 28/780 of CMB on 9 September 2009 related to the commitments of publicly

owned companies given to the guarantee third party‘s debts;

The commitments given;

i) For their own corporate identities,

ii) In favor of consolidated subsidiaries,

iii) In favor of third parties to continue their operations will not be limited.

After the decision is published at the Public Disclosure Platform, publicly owned companies will not give

commitments to real people or corporations other than mentioned at the bullets (i) and (ii) above or to

third parties other than mentioned at the bullet (iii). If any commitments are already given they will be

reduced to nil until 31 December 2014.

As at 31 December 2012, commitments given are as follows:

31 December 2012

TL

Equivalent TL USD

A Commitments given on behalf of own corporate identities 908,567,322 615,302,883 164,515,000

B Commitments given on behalf of consolidated

subsidiaries

61,110,023 41,314,250 11,105,000

C Commitments given on behalf of third parties to continue

its operations

-- -- --

D Other commitments given 4,358,670 4,270,000 50,000

- on behalf of parent company

- on behalf of group companies other than mentioned in

bullets B and C

4,358,670 4,270,000 50,000

- on behalf of third parties other than mentioned in bullet C -- -- --

Total 974,036,015 660,887,133 175,670,000

31 December 2011

TL

Equivalent TL USD

A Commitments given on behalf of own corporate identities 955,733,902 643,721,555 165,182,036

B Commitments given on behalf of consolidated

subsidiaries

39,503,795 22,494,250 9,005,000

C Commitments given on behalf of third parties to continue

its operations

-- -- --

D Other commitments given 1,564,445 1,470,000 50,000

- on behalf of parent company

- on behalf of group companies other than mentioned in

bullets B and C

1,564,445 1,470,000 50,000

- on behalf of third parties other than mentioned in bullet C -- -- --

Total 996,802,142 667,685,805 174,237,036




47

13 Commitments (continued)

The total value of mortgages and pledges on the Group‘s land and buildings are as follows:

Mortgages

Collateral Type

Duration

Cause of collateral and place

Pledged asset

31 December

2012 (USD)

Mortgage 1st degree

Relevance of the mortgage

Loan Collateral


77.000.000

Mortgage 1st degree

Relevance of the

mortgage

Loan Collateral

Acıbadem Küçükyalı building

12.000.000

Mortgage 1st degree

Relevance of the

mortgage

Loan Collateral

Acıbadem Kozyatağı warehouse

2.000.000

Mortgage 1st degree

Relevance of the

mortgage

Loan Collateral


24.000.000

Mortgage 1st degree


Loan Collateral


32.000.000

Mortgage 1st degree

Relevance of the

mortgage

Loan Collateral

Erkan Apt. various flats and

apartments

1.820.000

Mortgage 1st degree

Relevance of the

mortgage

Loan Collateral

Manolya Apt. No: 2-3

1.695.000

Mortgage 1st degree


Loan Collateral


13.000.000

163.515.000

Collateral Type

Duration

Cause of collateral and place

Pledged asset

31 December

2011 (USD)

Mortgage 1st degree

Relevance of the

mortgage

Loan Collateral


77,000,000

Mortgage 1st degree

Relevance of the

mortgage

Loan Collateral

Acıbadem Küçükyalı building

12,000,000

Mortgage 1st degree

Relevance of the

mortgage

Loan Collateral

Acıbadem Kozyatağı warehouse

2,000,000

Mortgage 1st degree

Relevance of the

mortgage

Loan Collateral


24,000,000

Mortgage 2nd degree

Relevance of the

mortgage

Loan Collateral

Cumhuriyetköy Acıbadem Eğitim

ve Sosyal Tesisleri

1,350,000

Mortgage 1st degree


Loan Collateral


32,000,000

Mortgage 1st degree

Relevance of the

mortgage

Loan Collateral

Erkan Apt. various flats and

apartments

1,820,000

Mortgage 1st degree

Relevance of the

mortgage

Loan Collateral

Manolya Apt. No: 2-3

1,695,000

Mortgage 1st degree


Loan Collateral


13,000,000

164,865,000

Pledges and commitments that are currently placed on Group‘s assets are listed as below:

Pledges

The Group ceded 80% of account receivable and blockage on the bank deposit amounting to TL

30,845,163 related with the long term bank borrowings from a commercial bank located in Turkey. In

accordance with the provisions of loan agreement, there is a first degree share pledge on Almond

Holding‘s 91.97% shares in Acıbadem Sağlık. Besides, %90,00 share of International Hospital has been

pledged at first degree, %49,99 share of Labmed has been pledged at first degree, 99,99% share of

Acıbadem Poliklinikleri has been pledged at first degree regarding the loans obtained from banks.




48

13 Commitments (continued)

Annotations

There is a decision which was given by the Bakırköy Municipality to demolish the supplement of

International Hospital building. On the same property there are two annotations of 99 yearly rent

statements in favor of (―TEIAS‖) and in favor of Turkish Electricity Distribution A.Ş. (―TEDAS‖).

Additionally, there are two annotations of 99 yearly rent statements in favor of Istanbul Public

Transportation Administration (―IETT‖) and also two annotations in favor of Istanbul Metropolitan

Municipality on the Avcılar land.

Total amount of letter of guarantees that the Group provided to different institutions is TL 15,302,883 and

USD 1,782,600 (31 December 2011: TL 13,681,887).

14 Employee benefits Reserve for Employment Termination Benefits Under the Turkish Labor Law, the Company and its subsidiaries are required to pay termination benefits

to each employee who has completed one year of service and whose employment is terminated without

due cause, is called up for military service, dies or who retires after completing 25 years of service (20

years for women) and reaches the retirement age (58 for women and 60 for men).

The termination benefits is calculated as one month gross salary for every employment year and as at 31

December 2012 the ceiling amount has been limited to TL 3,034 (31 December 2011: TL 2,732).

Termination benefits is computed and reflected in the financial statements on a current basis. The reserve

has been calculated by estimating the present value of future probable obligation of the Company and its

Turkish subsidiaries and joint ventures arising from the retirement of the employees. The calculation was

based upon the retirement pay ceiling announced by the government.

The provision has been calculated by estimating the present value of the future probable obligation of the

Company and its subsidiaries arising from the retirement of employees. IFRSs require actuarial valuation

methods to be developed to estimate the Group‘s obligation. Accordingly, the following actuarial

assumptions were used in the calculation of the total liability:

The principal assumption is that the maximum liability for each year of service will increase in line with

inflation. Thus, the discount rate applied represents the expected real interest rate after adjusting for the

anticipated effects of future inflation. Consequently, in the accompanying consolidated financial

statements as at 31 December 2012, the provision has been calculated by estimating the present value of

the future probable obligation of the Group arising from the retirement of the employees. The provision at

31 December 2012 has been calculated assuming an annual inflation rate of 5,10 % and a discount rate of

8 % resulting in a real discount rate of approximately 2.76 % (31 December 2011: annual inflation rate of

5 % and a discount rate of 9.11 % resulting in a real discount rate of approximately 3.91 %).

31 December 2012

31 December 2011

Opening Balance 1,933,424 2,111,563

Additions through acquisition of subsidiaries 51,933 --

Interest 124,565 134,998

Cost of Services 276,908 238,260

Payments made during the period (5,372,618) (3,003,714)

Actuarial gains / (losses) 5,292,869 2,452,317

2,307,081 1,933,424




49

14 Employee benefits (continued) Actuarial gains or losses arise from the changes in interest rates and changes in expectations about the

salary increases. Actuarial differences are recorded as incurred. As at 31 December 2012, TL 5,349,849 of

interest cost, cost of services and actuarial gains or losses are recorded as cost of revenues (31 December

2011: TL 2,472,308), TL 316,871 is recorded as general administrative expenses (31 December 2011: TL

350,498) and TL 79,510 is recorded as selling, marketing and distribution expenses (31 December 2011:

TL 2,769).

15 Post Employee benefits

None.

16 Other assets and liabilities

As at 31 December, other current assets comprised the following:


Income accrual for inpatients 16,349,663 9,246,138

Income accrual for SGK receivables 15,482,205 13,841,917

VAT receivable 4,503,512 1,637,723

Prepaid insurance expense 4,355,228 4,774,805

Advances given to personnel 2,955,266 2,250,869

Advances given for inventory 2,637,768 1,657,567

Prepaid advertisement expenses 2,019,190 235,428

Prepaid rent expenses 1,837,292 5,768,133

Others 604,294 430,977

Prepaid taxes and funds 326,933 4,266,845

Prepaid maintenance expense 202,103 167,840

51,273,454 44,278,242

As at 31 December, other non-current assets comprised the following:


Prepaid rent 10,216,745 9,965,137

Advances given 3,390,658 2,695,987

Prepaid insurance expense 1,737,634 --

Other prepaid expenses 87,434 15,011

Advances given for fixed assets (*) -- 2,314,227

15.432.471 14.990.362

(*) The balance comprises of advances given for equipments of ongoing hospital development projects.




50

16 Other assets and liabilities

As at 31 December, other current liabilities comprised the following:


Social security and taxes payable 18.654.671 23.796.898

Payable to personnel 15.500.075 14.208.151

Deferred income (*) 1.616.485 1.520.009

Other 102.178 --

35.873.409 39.525.058

(*)This amount consists of short term portion of income according to the bank agreement related to

assignment of salary payment rights.

As at 31 December 2012, other long term liabilities amounting to TL 3,310,381 (31 December 2011: TL

4,938,537) consists the income according to the bank agreement related to assignment of salary payment

rights.

17 Equity

Paid-in capital

As of 31 December 2012, Group‘s paid-in-capital is TL 100,000,000 (31 December 2011: TL

100,000,000) and is divided into 100.000.000 shares with par value of 1 TL each. (31 December 2011:

100.000.000 shares). As at 31 December, the composition of shareholders and their respective percentage

of ownership are summarized as follows: 31 December 2012 31 December 2011

Name of the shareholder Share (%) Amount Share (%) Amount

Mehmet Ali Aydınlar(*) 0.03 30,001 0,40 395,826

Hatice Seher Aydınlar 0.00 1 0,00 1

Almond Holding Anonim Şirketi 98.65 98,653,016 91,97 91,969,122

Other individuals 1.19 1,187,674 5,52 5,521,272

Publicly owned shares 0.13 129,308 2,11 2,113,779

100.00 100,000,000 100,00 100,000,000

(*)Mehmet Ali Aydınlar is the Chairman and the CEO of Almond Holding A.Ş.

Series Type Registered/Bearer Nominal Value (TL) Privilege

3, 4, 5 A Registered (Almond Holding A.Ş.) 4,249,973 Right to nominate

board members,

right to vote

3, 4, 5 B Bearer 95,750,027 --

The favorable vote of Group A shares is required in order to increase in share capital. Group A

shareholder has the right to nominate four out of five board members, and Group B shareholders has the

right to nominate one out of five board members. Each Group A share has 100 votes against one vote of

Group B shareholders

The registered share capital of the Company is TL 250,000,000. Capital Market Board approved the

registered share capital system with the permission dated 9 August 2001 and numbered 37/1033




51

17 Equity (continued)

Pledges on Shares

According to the Share Pledge Agreements amounted 200,000,000 USD which are signed on 10 January

2008 and additional amendments of the agreements which are signed on 6 February 2008 and 6 August

2008, the shares of, Acıbadem Sağlık owned by Almond Holding and shares of certain subsidiaries of

Acıbadem Sağlık were pledged (1st degree) on behalf of a commercial bank located in Turkey as the

guarantee of the loan.

Reserves

Legal reserves:

The legal reserves consist of first and second legal reserves in accordance to the Turkish Commercial

Code (―TCC‖). The first legal reserves are generated by annual appropriations amounting to 5 percent of

income disclosed in the Company‘s statutory accounts until it reaches 20 percent of paid-in share capital.

If the dividend distribution is made in accordance with CMB regulations, a further 1/10 of dividend

distributions, in excess of 5 percent of paid-in capital is to be appropriated to increase second legal

reserves. If the dividend distribution is made in accordance with statutory records, a further 1/11 of

dividend distributions, in excess of 5 percent of paid-in capitals are to be appropriated to increase second

legal reserves. Under the TCC, the legal reserves can be used only to offset losses and are not available

for any other usage unless they exceed 50 percent of paid-in capital. As at 31 December 2012, the

Group‘s legal reserves amounting to TL 9,679,133 (31 December 2011: TL 8,448,697).

Dividend distribution: According to the general assembly of shareholders held on 29 June 2012, the Company decided not to

distribute any dividend due to loss occurred in 2011. There is no requirement for profit distribution in

year 2011 for the Company, meanwhile the company decided to distribute dividends for three consecutive

years starting from 2011 in accordance with the announced dividend distribution policy.

Retained Earnings / (Accumulated Losses)

31 December 2012

31 December 2011

Extraordinary reserves 55,218,612 55,548,253

Retained earnings / (Accumulated losses) (47,802,661) (39,391,183)

7,415,951 16,157,070

In accordance with IAS 29, amounts exist during the initial reconciliation of financial statements adjusted

for inflation and recorded on ―retained earnings‖ shall be considered as a discount item for distribution of

profits based on inflation adjusted financial statements in accordance with CMB‘s regulations around

distribution of profits. In addition, this respective amount maintained under ―retained earnings‖, current

period profit if any and undistributed prior period earnings could be offset against the reserve balances

arising from the inflation adjustment of extraordinary reserves, legal reserves and capital amounts

The movement of retained earnings / (accumulated losses) is as follows:

31 December 2012

31 December 2011

Opening balance 16.157.070 7.176.607

Transfer to legal reserves (1.230.436) --

Change in non-controlling interest (243.130) (1.104.005)

Transfer from net income for the year (7.267.533) 10.084.468

7.415.951 16.157.070




52

18 Revenues and Cost of Revenues

For the years ended 31 December, revenues and cost of revenues comprised the following:

2012 2011

Gross Sales 1,358,769,593 1,103,602,305

Unearned finance expense (-) (4,677,917) (4,675,533)

Sales returns and discounts (-) (93,399,153) (89,450,304)

Net revenues 1,260,830,322 1,009,476,468

Cost of revenues (-) (1,046,043,779) (793,348,551)

Gross Profit 214,786,544 216,127,917

19 Selling, marketing and distribution expenses, general administrative expenses

Selling, marketing and distribution expenses

For the years ended 31 December, selling, marketing and distribution expenses comprised the following:

2012 2011

Advertisement and sponsorship expenses 15,129,131 15,142,285

Personnel expenses 8,491,008 5,863,774

Commission expenses 4,275,873 4,808,372

Representation expenses 2,208,277 1,006,434

Published material expenses 1,080,618 846,792

Travel expenses 982,299 751,177

Communication expenses 309,752 219,816

Others 2,837,923 2,154,936

35,314,881 30,793,586

General administrative expenses

For the years ended 31 December, general administrative expenses comprised the following:

2012 2011

Personnel expenses 35,285,662 29,644,347

Depreciation and amortization 3,447,889 4,567,419

Consultancy, legal and notary expenses 3,163,535 1,913,810

Communication and other office expenses 2,731,057 1,330,273

Rent expense 2,078,168 1,754,713

Representation and travel expenses 1,907,572 839,228

Cleaning and catering expenses 1,709,673 1,474,402

Energy and heating expenses 1,237,980 964,961

Repair and maintenance expenses 1,015,731 751,999

Others 5,192,038 2,071,180

57,769,305 45,312,332




53

20 Expenses by nature

For the years ended 31 December, expenses by nature comprised the following:

Amortization and depreciation expenses 2012

2011 Cost of sales 84,011,357 72,914,412

General administrative expenses 3,447,889 4,567,419

Selling, marketing and distribution expenses 124,240 131,976

87,583,486

77,613,807

Personnel expenses 2012 2011

Cost of sales 569,067,584

439,083,715

General administrative expenses 35,285,662

29,644,347

Selling, marketing and distribution expenses 8,491,008

5,863,774

612,844,254 474,591,836

21 Other operating income and expenses

For the years ended 31 December, other operating income comprised the following:

2012 2011

Insurance compensation gain 5,911,321 3,810,569

Rental income 3,360,858 2,237,771

Premium from bank related salary payment right assignment (*) 1,456,568 699,433

Recovery of impairment for doubtful receivables 1,093,320 283,163

Gain on sale of property and equipment -- 269,789

Other income 2,573,350 852,162

14,395,417

8,152,887

(*)The premium arose from assignment of the salary payment rights as a result of an agreement with a

commercial bank located in Turkey.

For the years ended 31 December, other operating expense comprised the following:

2012 2011

Loss on sale of property and equipment 5,688,987 --

Damage loss 4,566,920 5,788,104

Allowance for doubtful receivables 3,326,865 3,197,914

Provision for lawsuits 1,267,542 1,139,307

Donations 3,755,614 10,658,556

Tax expenses regarding law number 6111 -- 405,822

Other expense 74,404 1,685,464

18,680,332 22,875,167




54

22 Financial income For the years ended 31 December, financial income comprised the following:

2012 2011 Foreign exchange gain 33,310,152 --

Imputed interest on cost of revenue 4,739,261 5,710,082

Discount on trade payables 1,452,920 1,455,549

Interest income on time deposits 1,694,207 1,203,181

Net change in fair value of derivatives -- 7,663,242

Others 129,453 41,273

41,325,993 16,073,327

23 Financial expenses For the years ended 31 December, financial expenses comprised the following:

2012 2011

Foreign exchange loss -- 104,876,198

Interest expense on bank loans 26,522,814 21,409,906 Change in fair value of derivatives 10,209,458 5,211,751 Credit card commission expenses 7,705,956 5,196,785 Interest expense on leases 6,191,453 2,028,041 Imputed interest on revenue 3,190,302 1,726,086 Letter of credit and other bank commission expenses 1,115,214 1,772,206 Others 326,394 195,279 55,261,591 142,416,252

24 Tax assets and liabilities Corporate income tax

Corporate tax is applied on taxable corporate income, which is calculated from the statutory accounting

profit by adding non-deductible expenses, and by deducting dividends received from resident companies,

other exempt income and investment incentives utilized. Corporate income tax rate at 31 December 2012

is 20%.

There is also a withholding tax on the dividends paid and is accrued only at the time of such payments.

The withholding tax rate on the dividend payments other than the ones paid to the non-resident

institutions generating income in Turkey through their operations or permanent representatives and the

resident institutions is 15 percent. In applying the withholding tax rates on dividend payments to the non-

resident institutions and the individuals, the withholding tax rates covered in the related Double Tax

Treaty Agreements are taken into account. Appropriation of retained earnings to capital is not considered

as profit distribution and therefore is not subject to withholding tax.

According to the Corporate Tax Law, 75 percent of the capital gains arising from the sale of property and

equipment and investments owned for at least two years are exempted from corporate tax on the condition

that such gains are reflected in equity from the date of the sale. The remaining 25 percent of such capital

gains are subject to corporate tax.

The transfer pricing law is covered under Article 13 ―disguised profit distribution via transfer pricing‖ of

the Corporate Tax Law. The General Communiqué on disguised profit distribution via transfer pricing

dated 18 November 2007 sets details about implementation. If a tax payer enters into transactions

regarding sale or purchase of goods and services with related parties, where the prices are not set in

accordance with arm‘s length basis, then related profits are considered to be distributed in a disguised

manner through transfer pricing. Such disguised profit distributions through transfer pricing are not

accepted as a tax deductable for corporate income tax purposes.

In Turkey, the tax legislation does not permit a parent company and its subsidiaries to file a consolidated

tax return. Therefore, provision for taxes shown in the consolidated financial statements reflects the total

amount of taxes calculated on each entity that are included in the consolidation.




55

24 Tax assets and liabilities (continued)

Corporate income tax (continued)

Under the Turkish taxation system, tax losses can be carried forward to be offset against future taxable

income for up to five years. Tax losses cannot be carried back.

In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Companies file

their tax returns within four months following the close of the accounting year to which they relate. Tax

returns are open for five years from the beginning of the year that follows the date of filing during which

time the tax authorities have the right to audit tax returns, and the related accounting records on which

they are based, and may issue re-assessments based on their findings.

Investment allowance

The Temporary Article 69 added to the Income Tax Law no.193 with the Law no.5479, which became

effective starting from 1 January 2006, upon being promulgated in the Official Gazette no.26133 dated 8

April 2006, stating that taxpayers can deduct the amount of the investment allowance exemption which

they are entitled to according to legislative provisions effective at 31 December 2005 (including rulings

on the tax rate) only from the taxable income of 2006, 2007 and 2008. Accordingly, the investment

incentive allowance practice was ended as of 1 January 2006. At this perspective, an investment

allowance which cannot be deducted partially or fully in three years time was not allowed to be carried

forward to the following years and became unavailable as of 31 December 2008. On the other side, the

Article 19 of the Income Tax Law was annulled and the investment allowance practice was ended as of 1

January 2006 with effectiveness of the Article 2 and the Article 15 of the Law no.5479 and the investment

allowance rights on the investment expenditures incurred during the period of 1 January 2006 and 8 April

2006 became unavailable.

However, at 15 October 2009, the Turkish Constitutional Court decided to cancel the clause no.2 of the

Article 15 of the Law no.5479 and the expressions of ―2006, 2007, 2008‖ in the Temporary Article 69

related to investment allowance mentioned above that enables effectiveness of the Law as of 1 January

2006 rather than 8 April 2006, since it is against the Constitution. Accordingly, the time limitations for

the carried forward investment allowances that were entitled to in the previous period of mentioned date

and the limitations related with the investments expenditures incurred between the issuance date of the

Law promulgated and 1 January 2006 were eliminated. According to the decision of Turkish

Constitutional Court, cancellation related with the investment allowance became effective with

promulgation of the decision on the Official Gazette and the decision of the Turkish Constitutional Court

was promulgated in the Official Gazette no.27456 dated 8 January 2010.

According to the decision mentioned above, the investment allowances carried forward to the year 2006

due to the lack of taxable income and the investment allowances earned through the investments started

before 1 January 2006 and continued after that date constituting economic and technical integrity will be

used not only in 2006, 2007 and 2008, but also in the following years. In addition, 40% of investment

expenditures that are realized between 1 January 2006 and 8 April 2006, within the context of the Article

19 of the Income Tax Law will have the right for investment allowance exemption.

Macedonian corporate income tax is levied at a rate of 10% on dividend distribution and tax on non

deductible items. Unless there is a dividend distribution, no corporate tax is levied. Losses cannot be

carried forward in determining corporate tax base. Corporate taxpayers should pay tax on their non-

deductible items at a rate of %10. The tax base established on the basis of unrecognized expenditures for

tax purposes is decreased by the amount of the expenditures subject to taxation for which the time period

for their recognition has matured. If formed tax base for the tax period is less than the amount of its

decrease for the same tax period, than the taxpayer shall declare tax loss. Tax losses can be carried

forward for five years according to the amendment on tax legislation




56


As at 31 December, corporate tax payable comprised the following:

31 December 2012

31 December 2011 Corporate tax liability 14.576.424 4.169.704 Prepaid taxes and funds (8.440.322) (3.794.935) 6.136.102 374.769

For the years ended 31 December, tax expenses comprised the following:

2012

2011 Corporate tax expense (14,576,424) (4,169,704) Deferred tax income / (expense) (6,477,129) (1,186,563)

(21,053,553) (5,356,267)

The reported tax expense for the years ended 31 December is different than the amounts computed by

applying statutory tax rate to profit before tax as shown in the following reconciliation

2012

2011

%

%

Profit/(loss) before tax 103,481,845

(1,043,206)

Tax rate

20

20

Tax computed on profit per statutory tax rate (20,696,369)

(20,00) 208,641

(20,00)

Effect of different tax rates in foreign jurisdictions 86,350

0,08 (8,362)

0,80

Tax effect of non-deductible expenses (3,048,325)

(2,87) (2,352,654)

225,52

Donations 9,376

0,01 (2,131,662)

204,34

Tax exempt income 278,169

0,26 --

--

Change in on investment allowance 1,625,433

1,53 (325,036)

31,16

Recognition of previously unrecognized tax losses (86,232)

(0,08) (658,986)

63,17

Foreign patient incentives 801,019

0,75 --

--

Others (22,974) (0,02) (88,208) 8,46

Taxation credit/ (charge) (21,053,553) (19,83) (5,356,267) 513,44

Deferred tax assets and liabilities

The Group recognizes deferred tax assets and liabilities based upon temporary differences arising between

the financial statements prepared in accordance with the Communiqué No: XI-29 and the statutory tax

financial statements. Related temporary differences are subject to different period records according to

articles and to tax laws for profit and lost items.

According to the decision of the Turkish Constitutional Court promulgated in the Official Gazette

no.27456 dated 8 January 2010, the investment allowances carried forward to the year 2006 due to the

lack of taxable income and the investment allowances earned through the investments started before 1

January 2006 and continued after that date constituting economic and technical integrity will be used not

only in 2006, 2007 and 2008, but also in the following years. In addition, 40% of investment expenditures

that are realized between 1 January 2006 and 8 April 2006, within the context of the Article 19 of the

Income Tax Law will have the right for investment allowance exemption

Deferred tax assets and liabilities deducted for the factors that there is a legally applicable right to deduct

the current year tax assets and liabilities and there is intent of the occurrence of the current year tax assets

and liabilities concurrently are valid.

The unrecorded deferred taxes are re-evaluated at every balance sheet date. If it is possible to make

profits in the future the unrecorded deferred tax assets are reflected to the financial statements.




57


Deferred tax assets and liabilities (continued)

Deferred tax assets and deferred tax liabilities as at 31 December were attributable to the items detailed in

the table below:


Deferred Tax

Base

Deferred Tax

Asset / (Liability)

Deferred Tax

Base

Deferred Tax

Asset / (Liability)

Property, equipment and

intangible assets (8,270,237) (1,654,047) (4,849,138) (969,828)

Financial liabilities (1,151,878) (230,376) (1,639,220) (327,843)

Employee benefits 2,307,081 461,416 1,933,425 386,685

Investment allowance -- -- 57,701,175 11,540,235

Trade and other receivables (24,174,706) (4,834,941) (5,945,825) (1,189,165)

Financial investments at fair

value - Interest rate swaps 3,424,635 684,927 5,211,750 1,042,350

Financial investments at fair

value – Forwards 4,333,332 866,666 (7,663,240) (1,532,648)

Provisions 62,371,474 12,474,295 23,464,060 4,692,812

Retained losses 30,182,159 6,036,432 33,259,175 6,651,835

69,021,860 13,804,372 101,472,162 20,294,433

Under the Turkish taxation system, tax losses can be carried forward to be offset against future taxable

income for up to five years. Tax losses cannot be carried back to offset profits from previous periods. The

Group management estimated that there will be taxable profits in the following years. Therefore, as at 31

December 2012, deferred tax asset is recognized in the accompanying consolidated financial statements for

tax losses carried forward amounting to TL 30,182,159 (31 December 2011: TL 33,259,175). Annual

timeout distributions of applicable financial losses are as follows:


2017 15,518,367 --

2016 12,536,098 12,545,733

2015 977,935 1,827,009

2014 1,149,759 17,853,331

2013 -- 995,117

2012 -- 37,985

30,182,159 33,259,175


Deferred tax assets 20,945,243 26,231,493

Deferred tax liabilities (7,140,871) (5,937,060)

Deferred tax assets, net 13,804,372 20,294,433

For the years ended 31 December, the movement of the deferred tax assets/(liabilities) are as follows:

2012 2011

Opening balance 20.294.433

21.480.996 Taxation credit/ (charge) (6.477.129)

(1.186.563)

Ending balance 13.804.372

20.294.433




58

25 Earnings per share

The calculation of basic and diluted earnings/ (losses) per share was calculated by dividing the income

attributable to ordinary shareholders in consolidated statement of comprehensive income to the weighted

average number of ordinary shares outstanding:

2011

2010 Net income/ (loss) for the year 80,094,561 (7,267,553)

Weighted average number of shares 100,000,000 100,000,000

Basic and Diluted Earnings/ (losses) per 1.000 Shares) 800.95 (72.68)

26 Related parties

As at 31 December, short-term trade receivables from related parties are as follow:

31 December 2012

31 December 2011

Trade receivables 12,130,087 9,514,773

Other receivables 20,984 251,970

12,151,071 9,766,743

As at 31 December, short-term trade payables to related parties as follow:


Trade payables 32,541,356 29,156,434

Other payables 29,478,619 578,943

62,019,975 29,735,377

Since intra-group balances and transactions between the Company and its subsidiaries are eliminated at

the preparation of the consolidated financial statements they are not disclosed in this note.


Trade

Receivables Other

Receivables

Trade

Receivables Other

Receivables

Shareholders

Receivables from other

shareholders -- -- -- 11

Related Parties

Acıbadem Sigorta 11,314,523 -- 9,289,366 160,910

SZA Gayrimenkul 689,582 9,386 -- 60

Acıbadem Diş Limited 72,512 3,146 55,419 389

Aydınlar Sağlık Hizmetleri 36,717 425 25,537 92

Acıbadem Proje 15,635 1,223 80,648 --

Kerem Aydınlar Vakfı 843 645 3,064 11

Acıbadem Vakfı 275 10 -- --

Acıbadem Holding -- -- 52,578 1,170

Akademia -- 191 7,282 731

Acıbadem Sigorta Aracılık -- -- 879 --

Acıbadem Üniversitesi -- -- -- 12,616

Aplus -- 1,197 -- 73,038

Telepati Tanıtım -- -- -- 2,466

Acıbadem Sağlık Yatırımları -- 4,763 -- 60

BLAB -- -- -- 416

12,130,087 20,986

9,514,773 251,970

Acıbadem Sigorta: Company has receivables due to the treatment of Acıbadem Sigorta‘s customers at

Acıbadem hospitals and outpatient clinics.




59

26 Related parties (continued)

Due to related parties

31 December 2012

31 December 2011

Trade Payables Other payables Trade Payables Other Payables

Shareholders

Mehmet Ali Aydınlar -- 17.826 -- 18.888

Hatice Seher Aydınlar -- 1.783 -- 1.889

Said Haifawi -- 160.487 -- 520.798

Other -- 1.992 -- 2.098

Group Companies

A Plus 19.339.213 -- 13.872.341 --

Acıbadem Proje 7.765.348 92.652 8.938.931 18.478

Telepati Tanıtım 4.416.705 -- 1.206.912 --

Almond Holding 487.025 28.546.368 -- --

Acıbadem Sigorta 309.196 627.396 1.080.179 325

Çukurova Bilim 113.608 10.696 -- --

Acıbadem Üniversitesi 46.211 -- 51.770 --

Acıbadem Diş Limited 36.662 19.419 288.617 13.522

Acıbadem Sigorta Aracılık 25.215 -- 3.238.720 --

Akademia 2.173 -- 2.271 --

Aydınlar Sağlık Hizmetleri -- -- 455.556 --

SZA Gayrimenkul -- -- 21.137 437

Acıbadem Vakfı -- -- -- 2.508

32.541.356 29.478.619 29.156.434 578.943

A Plus: Company provides laundry, catering and cleaning services for various Acıbadem hospitals and outpatient clinics. Acıbadem Proje: Company provides services related with renovation/improvement of hospital buildings

of Acıbadem Sağlık.

Telepati Tanıtım: Company provides advertisement and sponsoring service to Acibadem Sağlık.

Almond Holding: Company has provided financing to Acıbadem Sağlık for operational purposes.

Related party transactions (Sales)

For the years ended 31 December, sales to related parties are as follows:

2012

Sale of services Other

Acıbadem Sigorta 84.727.033 184.612

Acıbadem Sağlık Yatırımları 99.703 3.600

Aplus 77.017 1.116.690

Acıbadem Proje Yönetimi 31.283 230.723

Acıbadem Üniversitesi 43.215 --

Aydınlar Sağlık 340 197.249

Telepati Tanıtım Hizmetleri -- 55.950

Akademia -- 9.925

Almond Holding -- 3.600

SZA Holding -- 262.947

84.978.591 2.065.296




60


2011

Sale of services Other

Acıbadem Sigorta 66.035.990 524.008

Aplus 103.313 4.059.500

Acıbadem Proje Yönetimi 16.591 239.123

Acıbadem Üniversitesi 12.262 --

Acıbadem Holding 1.179 259.040

Acıbadem Diş 1.179 37.424

Aydınlar Sağlık -- 112.711

Telepati Tanıtım Hizmetleri -- 73.786

Akademia -- 9.900

Çukurova Bilim -- 3.300

Acıbadem Sağlık Yatırımları -- 3.240

Almond Holding -- 3.240

66.170.514 5.325.272

Related party transactions (Purchases)

For the years ended 31 December, purchases from related parties are as follows:

2012

Purchase of services Other

Aplus 57.521.972 --

Acıbadem Proje -- 45.214.949

Acıbadem Sigorta 19.002.434 --

Telepati Tanıtım 6.446.428 --

Aydınlar Sağlık 1.568.505 --

Acıbadem Sigorta Aracılık 28.454 --

Acıbadem Üniversitesi 4.992.240 --

SZA Holding 2.878.110 --

Almond Holding 412.733 --

Acıbadem Sağlık Yatırımları 378 --

Mehmet Ali Aydınlar -- 1.115.221

Zeynep Aydınlar

-- 663.593

Seher Aydınlar

-- 534.780

92.851.254 47.528.543




61


2011

Purchase of services Other

Aplus 45.002.029 685.747 Acıbadem Proje -- 27.669.736 Acıbadem Sigorta 13.547.288 56.124 Telepati Tanıtım 2.188.909 -- Aydınlar Sağlık 1.102.417 -- Acıbadem Diş 557.267 -- Acıbadem Üniversitesi 47.796 -- Akademia 11.393 --

62.457.099 28.411.607

A Plus: Comprises of purchases related with the laundry, catering and cleaning services.

Acıbadem Proje purchases include the services related with renovation/improvement of hospital buildings

Acıbadem Sigorta purchases include insurance policies related with health and medical equipment.

Guarantees and similar obligations

As at 31 December 2012, the details of the guarantees given as security for the loans used by related

parties are as follows:

Guarantee given Date Type of Foreign Currency

Original

Amount Amount TL

Aplus 12.02.2008 -- -- 500,000

Aplus 06.09.2007 -- -- 420,000

Aplus 05.10.2007 -- -- 200,000

Aplus 20.09.2006 -- -- 150,000

Aplus 02.07.2012 -- -- 350,000

Aplus 27.08.2012 -- -- 350,000

Aplus 30.07.2012 -- -- 350,000

Aplus 01.10.2012 -- -- 350,000

Acıbadem Proje 28.12.2005 -- -- 200,000

Acıbadem Proje 27.01.2005 USD 50,000 89,130

Acıbadem Proje 19.10.2012 -- -- 350,000

Acıbadem Proje 17.08.2012 -- -- 350,000

Acıbadem Proje 19.09.2012 -- -- 350,000

Acıbadem Proje 02.07.2012 -- -- 350,000

4,359,130

As at 31 December 2012, the Acıbadem Poliklinikleri, a consolidated subsidiary, has given guarantees on

behalf of International Hospital regarding to cash credit line up to USD 6,000,000 and on behalf of

Acıbadem Sağlık regarding to cash credit line up to TL 14,134,500 and Euro 5,289,899 from a

commercial bank located in Turkey, which are available for use in the future.

Key management compensation

For the year ended 31 December 2012 , sum of the compensation including salaries and similar type of

payments to the board of directors and key management amounted to TL 9,313,846 (2011: TL

8,045,686).




62

27 Nature and level of risks arising from financial instruments

Financial Risk Management Policies

The main financial instruments of the Group are bank loans, cash and short term bank deposit. The main

reason for the usage of these financial instruments is providing funds for the Group‘s activities. The

Group also has trade receivables and trade payables that directly occur during the main activities.

The financial risks are currency risk, interest risk, credit risk and liquidity risk. The Group management

manages these risks as explained below:

Capital Risk Management

The primary objective of the Group is ensuring the continuity of operations while increasing profitability

by using the balance between liabilities and equity in a most effective way. The capital structure of the

Group is consists of the items which include the liabilities, cash and cash equivalents, paid-in capital

which is explained in Note 17, capital reserves and profit reserves.

27 Nature and level of risks arising from financial instruments (continued)

Capital Risk Management (continued)

The cost of capital and the risks associated with each share capital component are evaluated by the key

management of the Group. During these evaluations, if the acceptance of Board of Directors is needed,

the key management represents the evaluation to the Board of Directors for their evaluation.

The general policy and procedure of the Group is not different from the prior periods

Major Accounting Policies

The Group‘s major accounting policies about financial instruments are explained in Note 2 (Bases of

presentation of the consolidated financial statements)

Credit Risk

Credit risk is the risk of handling a financial loss which is caused by another related party by not fulfilling

the obligations regarding to a financial instrument.

Having the financial instruments gives the risk of not fulfilling the requirements of the agreement by the

other parties. The collection risk of the Group is mainly caused from its trade receivables. Trade

receivables are evaluated by management according to the Group‘s procedure and policies and are carried

in the balance sheet as the net of impairment provision (Note 6).




63

27 Nature and Level of Risks Arising from Financial Instruments (continued)

Credit Risk (continued)

As at 31 December 2012, details for credit risk are as follows:

Receivables

Bank

deposits Other

31 December 2012

Trade Receivables Other Receivables

Related

party Other

party Related

party Other party

Maximum exposure to credit risk at the reporting

date (A+B+C+D+E) 12,130,087 133,817,480 20,984 10,097,660 35,759,115 5,128,275

- Secured portion of maximum credit risk with

collateral -- -- -- -- -- --

A, Carrying amount of financial assets that are not

overdue and not impaired 12,130,087 86,010,812 20,984 10,097,660 35,759,115 5,128,275

B, Carrying amount of financial assets whose

terms were renegotiated, otherwise are overdue

and impaired -- -- -- -- -- --

C, Carrying amount of assets that are overdue but

not impaired --

47,806,668 -- -- -- --

- Carrying amount secured with collateral -- -- -- -- -- --

D, Carrying amount of assets that are impaired -- -- -- -- -- --

- Overdue (gross carrying amount) -- 10,620,755 -- -- -- --

- Impairment (-) -- (10,620,755) -- -- -- --


- Not overdue (gross carrying amount) -- -- -- -- -- --

- Impairment (-) -- -- -- -- -- --


E, Factors that include off balance sheet credit

risks -- -- -- -- -- --




64

27 Nature and Level of Risks Arising from Financial Instruments (continued)

Credit risk (continued)

As at 31 December 2011, details for credit risk are as follows:

Receivables

Bank

deposits Other

31 December 2011

Trade receivables Other receivables

Related party Other party Related

party Other

party

Maximum exposure to credit risk at the

reporting date (A+B+C+D+E) 9,514,773 110,652,398 251,970 7,925,392 38,663,848 4,374,314

- Secured portion of maximum credit risk

with collateral -- -- -- -- -- --

A, Carrying amount of financial assets

that are not overdue and not impaired 9,514,773 95,403,453 251,970 7,925,392 38,663,848 4,374,314

B, Carrying amount of financial assets

whose terms were renegotiated, otherwise

are overdue and impaired -- -- -- -- -- --

C, Carrying amount of assets that are

overdue but not impaired -- 15,248,945 -- -- -- --


D, Carrying amount of assets that are

impaired -- -- -- -- -- --

- Overdue (gross carrying amount) -- 8,387,210 -- -- -- --

- Impairment (-) -- (8,387,210) -- -- -- --

- Carrying amount secured with

collateral -- -- -- -- -- --

- Not overdue (gross carrying amount) -- -- -- -- -- --

- Impairment (-) -- -- -- -- -- --

- Carrying amount secured with

collateral -- -- -- -- -- --

E, Factors that include off balance sheet

credit risks -- -- -- -- -- --

Liquidity Risk

The Group manages its liquidity needs by regularly planning its cash flows or by maintaining sufficient

funds and borrowing sources by matching the maturities of liabilities and assets.

Liquidity risk is probability of unable to fulfill funding obligations of the Group. Prudent liquidity risk

management implies maintaining sufficient cash, securing availability of funding through an adequate

amount of committed credit facilities and the ability to close out market positions. The Group manages its

present and future funding risk by maintaining a balance between continuity and availability of funding

through obtaining sufficient cash and cash equivalents.




65


Liquidity risk (continued)

The tables listed below represents the maturities of non-derivative financial liabilities.

As at 31 December 2012, maturities of non-derivative financial liabilities are as follows:

Contractual

maturities Carrying value

Total cash outflow per

agreement (=I+II+III))

Less than 1 year

(I)

Between 1-5

years (II)

More than 5

years (III)

Payable on

demand

Financial liabilities

Financial liabilities 424.274.678 446.832.469 147.273.701 264.667.624 34.891.144 --

Financial lease

liabilities 131.484.094 150.748.455 35.564.643 107.309.469 7.874.343 --

Other financial

liabilities 7.757.967 8.869.164 8.027.525 868.639 -- --

Expected maturities Carrying value

Expected total cash

outflows (=I+II+III)

Less than 1 year

(I)

Between 1-5

years (II)

More than 5

years (III)

Payable on

demand

Non-derivative financial liabilities

Trade payables

108,914,033 110,125,205 102,807,011 7,318,194 -- --

Due to related parties

62,019,975 62,163,443 62,163,443 -- -- --

Other payables (*)

117,187,739 117,187,739 103,588,575 13,599,164 -- --

(*)Other payables comprise of other non-current payables amounting to TL 13,599,164, accruals amounting to TL 56,776,281, other current payables amounting

to TL 36,964,179 and other current liabilities amounting to TL 35,873,409. From this total, advances received from patients amounting to TL 5,754,139, social

security and taxes payable amounting to TL 18.654.671 and deferred income amounting to TL 4.926.866 are deducted.




66


Liquidity risk (continued)

As at 31 December 2011, maturities of non-derivative financial liabilities are as follows:

Contractual

maturities Carrying value

Total cash outflow per

agreement (=I+II+III)

Less than 1 year

(I) 1-5 years (II)

More than 5

years (III)

Payable on

demand


Financial liabilities 458,024,093 511,026,679 100,664,582 310,140,208 100,221,889 --

Financial lease

liabilities 103,786,952 120,144,221 25,638,695 80,980,612 13,524,914

Other financial

liabilities 5,211,751 5,254,493 5,254,493 -- -- --

Expected maturities Carrying value

Expected total cash

out flow (=I+II+III)

Less than 1 year

(I) 1-5 years (II)

More than 5

years (III)

Payable on

demand

Non-derivative financial liabilities

Trade payables 131,435,342 132,304,335 92,904,807 30,968,529 8,430,999 --

Payables to related

parties 29,156,434 29,278,050 20,660,244 8,617,806 -- --

Other payables 69,275,269 69,275,269 14,208,152 18,206,729 36,860,388 --

Financial investments 7,663,242 7,726,088 7,726,088 -- -- --

.




67


Market risk

The Group is exposed to market risk arising from changes in interest rates, foreign currency or in the fair value of financial assets and other financial contracts that may affect the Group adversely. The major risks for the Group are currency risk and interest rate risk, which result from operating activities

Foreign currency risk and related sensitivity analysis

Foreign exchange risk of Group mainly results from that the Group has liabilities denominated in

USD and Euro

Additionally, the Group has foreign exchange risk resulting from the transactions it makes.

These risks are derived from good purchases and sales and use of loans and finance leases in

foreign currency which is different from the Group‘s functional currency.

As at 31 December 2012 and 2011, the net foreign currency position of the Group is TL

506,096,554 (short) and TL 550,348,979 (short) position respectively.


Foreign currency assets 4,798,849 1,821,240

Foreign currency liabilities (575,069,003) (621,115,069)

(570,270,154) (619,293,829)

Liabilities in foreign currency that are

hedged against foreign currency risk 64,173,600 68,944,850

Net short position (506,096,554) (550,348,979)




68


Market risk (continued)

FX POSITION TABLE

31 December 2012

CONSOLIDATED

TL Equivalent

(Functional

currency) USD EURO MKD GBP CHF OTHER

1. Trade receivables 402,303 13,579 160,776 -- -- -- --

2a. Monetary financial assets (include cash and bank

deposit) 3,226,827 1,440,049 257,244 -- 13,212 8,701 --

2b. Non-monetary financial assets -- -- -- -- -- -- --

3. Other 1,153,230 641,545 4,087 -- -- -- --

4. Current Assets (1+2+3) 4,782,360 2,095,173 422,107 -- 13,212 8,701 --

5. Trade receivables -- -- -- -- -- -- --

6a. Monetary financial assets 16,489 9,250 -- -- -- -- --


7. Other -- -- -- -- -- -- --

8. Non Current Assets (5+6+7) 16,489 9,250 -- -- -- -- --

9. Total Assets (4+8) 4,798,849 2,104,423 422,107 -- 13,212 8,701 --

10. Trade payables 13,748,359 5,382,036 893,024 -- -- 1,057,240 --

11. Financial liabilities 108,134,097 39,098,902 9,566,494 188,554,658 -- 4,491,942 --

12a. Other monetary liabilities 1,227,113 364,989 245,135 -- -- -- --

12b. Other non-monetary liabilities 28,546,367 16,013,894 -- -- -- -- --

13. Current Liabilities (10+11+12) 151,655,936 60,859,821 10,704,653 188,554,658 -- 5,549,182 --

14. Trade payables 425,620 -- 180,984 -- -- -- --


16a. Other monetary liabilities 34,917,207 19,117,167 356,740 -- -- -- --

16b. Other non-monetary liabilities -- -- -- -- -- -- --




69


Market Risk (Continued)

17. Non-Current Liabilities (14+15+16) 423,413,067 176,987,717 26,659,782 161,230,779 -- 20,099,276 --

18. Total Liabilities (13+17) 575,069,003 237,847,538 37,364,435 349,785,437 -- 25,648,458

19. Off balance sheet foreign currency 64,173,600 36,000,000 -- -- -- -- --

denominated derivatives --

net assets/liabilities position (19a-19b) --

19a. Off balance sheet foreign currency 64,173,600 36,000,000 -- -- -- -- --

denominated derivatives assets amount -- -- -- -- -- -- --

19b. Off balance sheet foreign currency -- -- -- -- -- -- --

denominated derivatives liabilities amount -- -- -

20. Net foreign currency denominated assets

/(liabilities) position (9-18+19) (506,096,554) (199,743,115) (36,942,328) (349,785,437) 13,212 (25,639,757) --

21. Monetary accounts net foreign currency

denominated assets /(liabilities) position (1+2a+5+6a-

10-11-12a-14-15-16a) (541,723,787) (219,729,221) (36,942,328) (349,785,437) 13,212 (25,639,757) --

22. Fair value of hedging financial instruments -- -- -- --

23. Hedged foreign currency denominated assets -- -- -- -- -- --

24. Hedged foreign currency denominated -- -- -- -- -- --

Liabilities -- -- -- -- -- --

25. Export -- -- -- -- -- --

26. Import -- -- -- -- -- --

-- -- -- -- -- --

423,413,067 176,987,717 26,659,782 161,230,779 -- 20,099,276 --

575,069,003 237,847,538 37,364,435 349,785,437 -- 25,648,458




70


Market Risk (Continued)

FX POSITION TABLE

31 December 2011

CONSOLIDATED

TL Equivalent

(Functional

currency) USD EURO MKD GBP CHF Other

1. Trade receivables 57,380 7,620 17,590 -- -- -- --

2a.Monetary financial assets (include cash and

bank deposit) 1,559,834 420,330 312,277 -- 225 1,035 --


3. Other -- -- -- -- -- -- --

4. Current Assets (1+2+3) 1,617,214 427,950 329,867 -- 225 1,035 --

5. Trade receivables -- -- -- -- -- --

6a. Monetary financial assets 204,026 -- 83,487 -- -- -- --


7. Other -- -- -- -- -- -- --

8. Non Current Assets (5+6+7) 204,026 -- 83,487 -- -- -- --

9. Total Assets (4+8) 1,821,240 427,950 413,354 -- 225 1,035 --

10. Trade payables 16,674,007 3,093,216 4,410,041 -- 18,503 -- --


12a. Other monetary liabilities -- -- -- -- -- -- --

12b. Other non-monetary liabilities 16,892,910 8,943,253 -- -- -- -- --

13. Current Liabilities (10+11+12) 135,812,630 53,444,440 8,558,830 130,833,453 18,503 4,297,976 --

14. Trade payables 5,451,601 2,876,000 7,826 -- -- -- --


16a. Other monetary liabilities 35,597,523 18,845,637 -- -- -- -- --

16b. Other non-monetary liabilities -- -- -- -- -- -- --




71


17. Non-Current Liabilities (14+15+16) 485,302,439 210,695,224 10,045,841 333,622,773 - 24,591,218 --

621,115,069 264,139,664 18,604,671 464,456,226 18,503 28,889,194 -- 18. Total Liabilities (13+17)

19. Off balance sheet foreign currency

68,944,850 36,500,000 -- -- -- -- --

denominated derivatives

net assets/liabilities position (19a-19b)

19a. Off balance sheet foreign currency

68,944,850 36,500,000 -- -- -- -- --

denominated derivatives assets amount

19b. Off balance sheet foreign currency

-- -- -- -- --

denominated derivatives liabilities amount

20. Net foreign currency denominated assets

/(liabilities) position (9-18+19) (550,348,979) (227,211,714) (18,191,317) (464,456,226) (18,278) (28,888,159) --

21. Monetary accounts net foreign currency

denominated assets /(liabilities) position (1+2a+5+6a-

10-11-12a-14-15-16a) (602,400,919) (263,711,714) (18,191,317) (464,456,226) (18,278) (28,888,159) --

22. Fair value of hedging financial instruments -- -- -- -- --

23. Hedged foreign currency denominated assets

-- -- -- -- -- -- --

24. Hedged foreign currency denominated

-- -- -- -- --

25. Export -- -- -- -- -- -- --

26. Import -- -- -- -- -- -- --




72


Market risk (continued)

The foreign currency risk of the Group is related to the bank loans borrowed and financial lease liabilities.

The Group has a pricing policy that changes according to the deviations in the long term borrowings and

volatility of foreign exchange rates for minimizing this risk. Furthermore, Acıbadem Sağlık hedges 18

months portion of principals and the related interest payments related to the long term bank loans of USD

154,000,000 used from a commercial bank located in Turkey at the ―Future Transactions Market‖.

Maturities of the forward agreements are January and July 2013 and January 2014 in the amount of USD

189,000,000.

The changes in foreign currency position of the Group as of the balance sheet date are as follows:

Foreign currency sensitivity analysis

31 December 2012

Profit/Loss

Comprehensive

Income/Loss

Increase of foreign

currency

Decrease of

foreign currency

Increase of

foreign

currency

Decrease of

foreign

currency

Change of USD exchange rate against TL by 10%:

1- USD denominated net assets/liabilities (42.023.568) 42.023.568

2- Hedged amount against USD Dollar risk (-) 6.417.360 (6.417.360)

3- Net effect of USD (1+2) (35.606.208) 35.606.208

Change of Euro exchange rate against TL by 10%:

4- Euro denominated net assets/liabilities (8.687.727) 8.687.727

5- Hedged amount against Euro risk (-) -- --

6- Net effect Euro (4+5) (8.687.727) 8.687.727

Change of other currencies against TL by 10%:

7- Other foreign currency denominated net

assets/liabilities (6.315.721) 6.315.721 4.922 (4.922)

8- Hedged amount against other foreign risk

(-) -- -- -- --

9- Net effect of other foreign currency

(7+8) (6.315.721) 6.315.721 4.922 (4.922)

TOTAL (3+6+9) (50.609.656) 50.609.656 4.922 (4.922)




73


Foreign currency sensitivity analysis

31 December 2011

Profit/Loss

Comprehensive

Income/Loss

Increase of foreign

currency

Decrease of

foreign currency

Increase of

foreign

currency

Decrease of

foreign

currency

Change of USD exchange rate against TL by 10%:

1- USD denominated net assets/liabilities (46.920.120) 46.920.120 -- --

2- Hedged amount against USD Dollar risk (-) 6.417.360 (6.417.360) -- --

3- Net effect of USD (1+2) (40.502.760) 40.502.760 -- --

Change of Euro exchange rate against TL by 10%:

4- Euro denominated net assets/liabilities (4.278.052) 4.278.052 -- --

5- Hedged amount against Euro -- -- -- --

6- Net Effect Euro (4+5) (4.278.052) 4.278.052 -- --

Change of other currencies against TL by 10%:

7- Other foreign currency denominated net

assets/liabilities (7.394.469) 7.394.469 2.862 (2.862)

8- Hedged amount against other foreign risk

(-) -- -- -- --

9- Net effect of other foreign currency

(7+8) (7.394.469) 7.394.469 2.862 (2.862)

TOTAL (3+6+9) (52.175.281) 52.175.281 2.862 (2.862)

Interest rate risk

The Group is exposed to interest rate risk arising from its interest bearing liabilities and assets. As part of

its fund management policy, the interest risk of interest bearing assets is calculated by performing

sensitivity analysis. The sensitivity of interest sensitive assets in response to changes in market interest

rates is computed based on the average maturities and average interest sensitive assets; the interest rate

risk arising from the securities portfolio held as part of fund management function is monitored within

expectations of market rates by closely watching the financial markets.

Additionally, as at 31 December 2012, the Company has interest rate swap transactions which are

hedging USD 69,300,000 portion of outstanding USD 154,000,000 facility used from a commercial bank

located in Turkey from the risk of interest rate changes. The interest rate position table is as follows:

Interest Rate Position


Fixed interest bearing financial instruments

Financial assets Time deposits 30.738.782 35.723.160

Financial liabilities 125.661.919 192.549.027

Variable interest bearing financial instruments

Financial assets -- --

Financial liabilities 430.096.853 368.946.750




74


Interest rate risk (continued)

As at 31 December 2012, an increasing change at interest rate of 100 basis points would have an impact of

TL 2,060,757 (31 December 2011: TL 1,951,996) decrease on the net income amount as stated on the

consolidated statement of comprehensive income. If the interest rates applied to Group decrease by 100

basis points, the net profit of the period would increase by TL 2,196,645 TL (31 December 2011: TL

1,951,996).

28 Financial Instruments: Fair Value Disclosure

As at 31 December, fair value of financial assets and liabilities are as below:

31 December 2012

31 December 2011

Note

Carrying

Amount

Fair Value

Carrying

Amount

Fair Value

Financial Assets

Cash and cash equivalents (*) 4 40.887.390

40.887.390

43.038.162

43.038.162

Trade receivables 6 133.817.480

133.817.480

110.652.398

110.652.398

Trade receivables from related parties 26 12.130.087

12.130.087

9.514.773

9.514.773

Other receivables from related parties 26 20.984

20.984

251.970

251.970

Other receivables (**) 7 9.567.556

9.567.556

7.539.415

7.539.415

Other current and non-current assets

(***) 16 604.294

604,294

430.977

430.977

197.027.791 197.027.791

171.427.695 171.427.695

(*) Cash on hand amount is excluded

(**) For the fair value measurement, deposits and guarantees given are excluded

(***) For the fair value measurement; various prepaid expenses, income accruals, VAT receivables and

advances given are excluded from other current and non-current assets.

Note 31 December 2012

31 December 2011


Carrying

Amount

Fair Value

Carrying

Amount

Fair Value

Financial liabilities 5 555,758,772

553,369,911

561,811,045

561,811,045

Other trade payables 6 108,914,033

108,914,033

131,435,342

131,435,342

Trade payables to related parties 26 32,541,356

32,541,356

29,156,434

29,156,434

Other payables to related parties 26 29,478,619

29,478,619

578,942

578,942

Other payables (*) 7 43,970,156

43,970,156

53,225,309

53,225,309

Other liabilities 16 15,602,253

15,602,253

14,208,152

14,208,152

786,265,189 783,876,328

790,415,224 790,415,224

(*) For the fair value measurement, social security, other taxes payable, advances received and deferred income are excluded from other liabilities.




75

28 Financial Instruments: Fair value disclosure (continued)

Fair value is the amount which can be measurable with closest market price that can be obtained in a sale

process except forced sale or liquidation in which there are applicants for both selling and buying.

The estimated fair values of financial instruments have been determined using available market

information by the Group, using appropriate valuation methodologies. However, the management of the

Group has used available market information in estimating the fair values; the market information may not

be fully reflective of the value that could be realized in the current circumstances. The following methods

and assumptions are used for the determination of fair values of financial instruments:

Fair values of cash and cash equivalents, including accrued interest, and other financial assets are assumed

to approximate their carrying amounts due to their short-term maturity and being subject to insignificant

credit risk. Fair values of trade receivables net of doubtful receivables are assumed to approximate their

carrying amounts.

Classification of fair value measurement

Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical assets or

liabilities.

Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are

observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3: Fair value measurements using inputs for the assets or liability that are not based on observable

market data (i.e. unobservable inputs).

The classification of fair value measurements of financial assets and liabilities measured at fair value is as

follows:

31 December 2012 Level 1

Level 2

Level 3

Interest rate swap -- 3,424,635 --

Forward contracts -- 4,333,332 --

Mutual funds 454.077

-- --

31 December 2011 Level 1

Level 2

Level 3

Interest rate swap -- 5,211,751 --

Forward contracts -- 7,663,242 --

Mutual funds 484,910 -- --

Capital management policies

The Group‘s capital management is to ensure that it maintains a strong credit rating and healthy capital

ratios in order to support its business and maximize shareholder value. The Group monitors the return on

capital as well as the level of dividends to ordinary shareholders. No changes have been made in the

objectives, policies or processes during the years 2012 and 2011




76

29 Operational Leases

As at 31 December 2012, the future minimum lease payments under non-cancellable operating leases are

payable as follows.

31 Dec. 2012 31 Dec. 2011

Less than one year 39.570.496 37.136.386

Between one and five years 179.605.761 120.252.248

More than five years 398.177.616 158.181.671

617.353.873 315.570.305

Group leases certain properties for its operations such as hospital and polyclinics buildings, apartments and

lodgments via operating leases. Some of leasing agreements includes additional lease payments based on

the local indexes. Maturity date of all the leasing and sub-leasing agreements are finalized in the year 2031

and before 2031.

30 Subsequent events

The protocol regarding the purchase of 65% shares of Jinemed Sağlık Hizmetleri A.Ş. with an amount of

TL 13,650,000 was terminated on 10 January 2013 in view of non-fulfillment of certain conditions

precedent as stipulated in the share purchase agreement.

After negotiations held with Labmed, subsidiary of Acıbadem Sağlık, a Share Purchase Agreement was

signed for the remaining 50% shares on 15 January 2013 at a purchase price of EUR 3,250,000. The share

transfer was executed on the same date.

Acıbadem Sağlık Hizmetleri ve Ticaret

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