MILLI REASURANS ANNUAL REPORT 2018

Millî Reasürans Türk Anonim Şirketi NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2018 (Currency: Turkish Lira (TL)) (Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1) Foreign currency translation differences Foreign currency translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations. As of December 31, 2018, foreign currency translation loss amounting to TL 43.734.932 (December 31, 2017: TL 28.441.170 loss) stems from Singapore Branch whose functional currency is US Dollars. Other capital reserves “According to TAS 16 - “Property Plant and Equipment”, property, plant and equipment are initially recorded at cost and can be subsequently measured at their fair values. The Company has started to show based on the revaluation model by measuring over fair value as of the third quarter of 2015 by making changes in the use of the property which is measuring the cost model in the financial statements before. According to expertise reports, fair value of building for own use is calculated as TL 179.340.000 and revaluation differences amounted TL 162.300.435 is recognized in ‘Other Capital Reserves’ account under equity amounting to TL 146.070.394 with net tax effect in financial statements as of December 31, 2018 (December 31, 2017: TL 117.058.884). As of December 31, 2018, the other capital reverses that are accounted according to the equity method amounting to TL 17.679.452 (December 31, 2017: 16.842.305 TL) Valuation of financial assets As of December 31, 2018 and 2017 detailed change of fair value of marketable securities, debt securities and subsidiaries classified as available for sale financial assets is as following: December 31, 2018 December 31, 2017 Fair value reserves at the beginning of the period 52.911.798 31.358.130 Change in the fair value during the period (Note 4.2) (79.511.110) 27.983.813 Deferred tax effect (Note 4.2) 4.183.047 (3.992.089) Net gains transferred to the statement of income (Note 4.2) (20.482.905) (3.047.570) Deferred tax effect (Note 4.2) 4.506.239 609.514 Fair value reserves at the end of the period (38.392.931) 52.911.798 Profit for the period that is extraneous from the distribution In accordance with tax legislation, 75% of profits from sales of participation shares and 50% of profit from real states included in the assets of companies is exempt from corporate tax provided that it is classified under a special fund for full five years. The exempt gains cannot be transferred to another account other than a capital increase or cannot be withdrawn from the entity for five years. In the direction of sector announcement made by Treasury dated October 27, 2008 and numbered 2008/41, the Company classified the gain on sale dated April 10, 2015 from the land in real estate amounting to TL 23.723.323 as of December 31, 2016. As of December 31, 2018, profit for the period that is extraneous from the distribution that are accounted according to the equity method amounting to TL 522.188 (December 31, 2017: None.) 16 Other reserves and equity component of discretionary participation As of December 31, 2018 and 2017, other reserves are explained in detail in Note 15 - Equity above. As of December 31, 2018 and 2017, the Company does not hold any insurance or investment contracts which contain a discretionary participation feature. Millî Reasürans Annual Report 2018 142 / Unconsolidated Financial Statements and Independent Auditors’ Report