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) For the period then ended as of December 31, 2018 and 2017, a reconciliation of tax expense applicable to profit from operating activities before income tax at the statutory income tax rate to income tax expense at the Company’s effective income tax rate is as follows: Profit before taxes December 31, 2018 December 31, 2017 304.081.473 Tax rate (%) 237.732.965 Tax rate (%) Taxes on income per statutory tax rate 66.897.924 22,00 47.546.593 20,00 Tax exempt income (49.106.105) (16,15) (33.269.201) (13,99) Non-deductible expenses 8.076.242 2,66 20.433.228 8,60 Total tax expense recognized in profit or loss 25.868.061 8,51 34.710.620 (14,60) 36 Net foreign exchange gains Net foreign exchange gains are presented in Note 4.2 - Financial Risk Management above. 37 Earnings per share Earnings per share are calculated by dividing net profit of the year to the weighted average number of shares. 2018 2017 Net profit for the period 278.213.412 203.022.345 Weighted average number of shares 66.000.000.000 66.000.000.000 Earnings per share (TL) 0,0042 0,0031 38 Dividends per share Dividend distribution policy of the Company stated its Articles of Association are as follows: Net profit for the year presents remaining amount of total income of the year after deducting operating expenses, amortisation, provisions, taxes and other similar obligations and prior year losses if any. Net profit is divided and distributed in accordance with order as follows. -- 5% of legal reserve is divided from annual net profit, until it reaches 20% of share capital. -- Amounts described by a and b clauses of 2 nd paragraph of 519 th article of the Turkish Commercial Law will be added to general legal reserves, after legal limit is reached. -- 10% of the remaining net profit amount is distributed to shareholders, as first dividend. -- If the company has acquired his share, according to 520 th article of the Turkish Commercial Law, legal reserve is divided to meet the acquiring amount. -- Reserve for natural disasters and catastrophe might be allocated, if deemed necessary, based on the suggestion of the Board of Directors and decision of the General Assembly, -- After the allocation of first legal reserves, first dividend to shareholders and statutory reserves, up to 3% of the remaining amount not exceeding three-wages is distributed to personnel. -- After the allocation of above mentioned reserves and dividends, second dividend to shareholders might be allocated, based on the suggestion of the Board of Directors and decision of the General Assembly. -- According to c clause of 2 nd paragraph of 519 th article of the Turkish Commercial Law, 10% of total amount distributed to people have share of profit will be added to general legal reserves. -- The fate of remaining amount will be determined by the General Assembly. Judgements of 3 rd paragraph of 519 th article of Turkish Commercial Law are reserved. Other legal reserves can not be divided, profit can not be transferred to next year and share of profit can not be distributed to members of the Board of Directors, founders or workers, unless legal reserves have to be divided according to laws and first dividend for shareholders is divided, in accordance with the Articles of Association. Millî Reasürans Annual Report 2018 Unconsolidated Financial Statements and Independent Auditors’ Report / 151