TORKIYE IHRACAT KREDI BANKASI A.$. LONG TERM EXPORT FINANCE PROJECT ("LOAN AGREEMENT") SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS AT 31 DECEMBER 2018 TOGETHER WITH INDEPENDENT AUDITOR'S REPORT Long Term Export Finance Project ("Loan Agreement') KPMG Bagimsiz Denetim ve Serbest Muhasebeci Mali MOGavirlik A.$. 1§ Kuleleri Kule 3 Kat:2-9 Levent 34330 Istanbul Tel +90 212 316 6000 Fax +90 212 316 6060 www.kpmg.com.tr INDEPENDENT AUDITORS' REPORT ON THE SPECIAL PURPOSE PROJECT FINANCIAL STATEMENTS OF THE LONG TERM EXPORT FINANCE INTERMEDIARY LOAN (THE "PROJECT" OR "LTEF"), FINANCED UNDER INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ("IBRD") LOAN NO.8630-TR AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2018 To the Board of Directors of Turkiye ihracat Kredi Bankasi Anonim $irketi Opinion We have audited the special purpose project financial statements of Turkiye ihracat Kredi Bankasi Anonim $irketi ("the Bank" or "Eximbank"), which comprise the project balance sheet, designated account statement, summary of uses of funds by participating financial institutions ("PFIs"), summary of uses of funds by Eximbank and the notes as at and for the year ended 31 December 2018 (together "the project financial statements"). In our opinion, the accompanying project financial statements are prepared in all material respects, in accordance with the cash basis of accounting described in Note 3. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the project financial statements section of our report. We are independent of the Bank in accordance with the ethical requirements that are relevant to our audit of the financial statements in Turkey, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other Matters Per Section II of the Operational Manual of the Long Term Export Finance Project agreement, it is mentioned that "maximum debt to equity ratio 85/15 (after receipt and throughout the payback period of the sub-loan) shall be sustained by the sub-borrowers unless otherwise agreed with the IBRD". During our conduct of the audit on the procurement procedures, it has been identified that the sub-borrowers BeyQelik Gestamp Sasi Otomotiv Sanayi Limited 5irketi, Ark Yat i1letmeciligi Ticaret Turizm Sanayi In aat Ithalat ihracat Limited $irketi, Gimas Girgin Makina imalat Montaj ve Mhendislik Sanayi ve Ticaret Anonim $irketi, Tuorul Tarim ve Petrol OrOnleri Ticaret ve Sanayi Anonim $irketi, Yicit Aku Malzemeieri Nakliyat Turizm in§aat Sanayi ve Ticaret Anonim Qirketi, Sarteks Boya Apre Baski Sanayi ve Ticaret Limited $irketi, UrOn Tarim UrOnleri Ithalat Ihracat Ticaret ve Sanayi Limited Qirketi, Durmaz Qelik Sanayi ve Ticaret Anonim Qirketi, Confetti Hali Sanayi Anonim Qirketi, Dost Karde§ler Tekstil Sanayi ve Ticaret Anonim Qirketi and Beta Gida Sanayi ve Ticaret Anonim Qirketi have exceeded the maximum limit of debt to equity ratios. ii. Per Section II of the Operational Manual of the Long Term Export Finance Project agreement, it is mentioned that "minimum debt service coverage ratio 1:1:1 (after receipt and throughout the payback period of the sub-loan) shall be sustained by the sub-borrowers unless otherwise agreed with the IBRD". During our conduct of the audit on the procurement procedures, the ratio could not been calculated for the sub- borrowers Tersan Tersanecilik Sanayi ve Ticaret Anonim Qirketi and Av ar Hall Tekstil Gida UrOnleri Sanayi ve Ticaret Limited 5irketi because the necessary documents for the sub-borrowers have not been delivered. iii. Per Section II of the Operational Manual of the Long Term Export Finance Project agreement, it is mentioned that "minimum debt service coverage ratio 1:1:1 (after receipt and throughout the payback period of the sub-loan) shall be sustained by the sub-borrowers unless otherwise agreed with the IBRD". During our conduct of the audit on the procurement procedures, it has been identified that the sub-borrowers Beyrelik Gestamp $asi Otomotiv Sanayi Limited Qirketi, Karen Kahramanmara§ Elektrik Uretim Anonim Qirketi, Qevkur Qinko Kur§un Madencilik Nakliye Turizm Diy Ticaret Limited $irketi, Ark Yat i*letmeciligi Ticaret Turizm Sanayi in§aat Proje ithalat ve ihracat Limited Qirketi, Assan l Makinalari Yedek Pargalan imalat Sanayi ve Ticaret Limited Sirketi, Qelenlioglu Gida Turizm in aat Sanayi ve Ticaret Limited irketi, Qevikbag Matbaacilik ve Ambalaj Sanayi Anonim irketi, Gimas Girgin Makina imalat Montaj ve Mhendislik Sanayi ve Ticaret Anonim Qirketi, Meklas Otomotiv ithalat ihracat Sanayi ve Ticaret Anonim $irketi, Ozgur Dokum Maden Makina in§aat Mhendislik Momesillik Sanayi Ticaret ithalat ihracat Limited Qirketi, Tu6rul Tarim Ve Petrol OrOnleri Ticaret ve Sanayi Anonim $irketi, Yi0it AkO Malzemeleri Nakliyat Turizm in§aat Sanayi ve Ticaret Anonim $irketi, Atlantik iplik ve Hall Sanayi Ticaret Anonim Qirketi, Sahan Kardepler Hall Tekstil Sanayi ve Ticaret Limited irketi, Urin Tarim OrOnleri ithalat ihracat Ticaret ve Sanayi Limited irketi, Bz Jakarli Dokuma Sanayi Ve Ticaret Limited $irketi, Grand Hall Tekstil Sanayi ve Ticaret Anonim $irketi, Predo Saglik OrOnleri Sanayi ve Ticaret Anonim Qirketi, Yasin Kaplan Tekstil ve Hall Sanayi Ticaret Anonim Qirketi, Durmaz Celik Sanayi ve Ticaret Anonim Qirketi, Kutes Metal Sanayi ve Ticaret Anonim irketi, Soyluser Hall Sanayi ve Ticaret Limited Qirketi, Travertinebros Do al Taq Madencilik Sanayi ve Ticaret Anonim irketi, Topkara Mermer igletmesi Sanayi ve Ticaret Limited Sirketi, Agakim Kimya Sanayi ve Ticaret Anonim Qirketi, Confetti Hall Sanayi Anonim Qirketi, Dost Kardepler Tekstil Sanayi ve Ticaret Anonim Qirketi, Ikon Ambalaj Ofset Matbaa ve ingaat Sanayi Turizm Ticaret Anonim Qirketi, Kardemir Haddecilik Sanayi ve Ticaret Kardemir Haddecilik Sanayi ve Ticaret Anonim $irketi, Altun Brode Tekstil in aat Sanayi ve Ticaret Anonim $irketi, Panayir Tekstil Sanayi ve Ticaret Limited Sirketi, Yarek Tekstil Sanayi ve Ticaret Anonim $irketi, Ayde Al0minyum Sanayi ve Ticaret Anonim $irketi, Beta Gida Sanayi ve Ticaret Anonim 5irketi, Depar Deri Plastik Sanayi ve Ticaret Anonim Sirketi. Filpa Ambalaj ve Di§ Ticaret Anonim $irketi and Seluz Kimya Kozmetik Ticaret ve Sanayi Anonim $irketi are below the minimum limit of debt service coverage ratios. iv. Per Section II of the Operational Manual of the Long Term Export Finance Project agreement, it is mentioned that "To control that the SME or LE which has Sub- financing exceeding $1,000,000 equivalent, shall submit to Eximbank a cash flow statement in accordance with the Operational Manual." For the sub-borrowers Av*ar Hal: Tekstil Gida CrOnleri Sanayi ve Ticaret Limited $irketi, Durmaz Qelik Sanayi ve Ticaret Anonim Sirketi, Soyluser Hali Sanayi ve Ticaret Limited Sirketi, Topkara Mermer ipletmesi Sanayi ve Ticaret Limited 5irketi, Akim Metal Sanayi ve Ticaret Anonim $irketi, Altun Brode Tekstil in aat Sanayi ve Ticaret Anonim $irketi, Arta Tekstil Sanayi ve Ticaret Limited $irketi, Docu Pres Otomotiv ve Teknik Sanayi ve Ticaret Anonim $irketi, Harput Tekstil Sanayi ve Ticaret Anonim Sirketi, Hatipoclu Cam Sanayi ve Ticaret Anonim Sirketi, Marsala Dokuma Boya Sanayi ve Ticaret Anonim $irketi, Panayir Tekstil Sanayi ve Ticaret Limited $irketi, R.B. Karesi ithalat ihracat Tekstil Sanayi ve Ticaret Anonim $irketi and Ybrek Tekstil Sanayi ve Ticaret Anonim $irketi relevant control could not been made because cash flow statements of the sub-borrowers have not been submitted to Eximbank. v. For the sub-borrowers Behram Halh Sanayi ve Ticaret Limited $irketi, Dost Kardepler Tekstil Sanayi ve Ticaret Anonim $irketi, Elastron Kimya Sanayi ve Ticaret Anonim Sirketi, Fitpak Ambalaj ve Kimya Sanayi Ticaret Anonim Qirketi, Ikon Ambalaj Ofset Matbaa ve in aat Sanayi Turizm Ticaret Anonim Qirketi, Kardemir Haddecilik Sanayi ve Ticaret Anonim Sirketi, Lotus D6k6m Makina Sanayi ve Ticaret Limited $irketi, Mega Metal Sanayi ve Ticaret Anonim Qirketi, Ozerdem Mensucat Sanayi ve Ticaret Anonim Qirketi, Reis Halk Tekstil Sanayi ve Ticaret Anonim Qirketi, T6mer Halh Sanayi Ticaret Anonim $irketi, Unye Madencilik Sanayi ve Ticaret Limited Qirketi and Yalgin Karde§ler Hali Tekstil Sanayi ve Ticaret Limited Qirketi's relevant controls required as per the Operational Manual of the Long Term Export Finance Project agreement could not been made, since the documents of the aforementioned sub-borrowers have not been delivered by ONB Finans Finansal Kiralama A.5., Participating Financial Institution (PFI) which has the obligation to furnish the sub-finance documentation to Eximbank. Responsibilities of Management and Those Charged with Governance for the Project Financial Statements Management is responsible for the preparation of the project financial statements in accordance with the cash basis of accounting described in Note 3, this includes determining that the cash basis of accounting is an acceptable basis for the preparation of the project financial statement in the circumstances, and for such internal control as management determines is necessary to enable the preparation of project financial statements that are free from material misstatement, whether due to fraud or error. In preparing the project financial statements, management is responsible for assessing the Bank's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Bank's financial reporting process. Auditors' Responsibilities for the Audit of the Project Financial Statements Our objectives are to obtain reasonable assurance about whether the project financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these project financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the project financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * Obtain an understanding of internal control relevant to the audit 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 Bank's internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank's ability to continue as a going concern. If we conclude that a natel iai uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the project financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Bank to cease to continue as a going concern. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Basis of Accounting and Restriction on Use and Distribution Without modifying our opinion, we draw attention to Note 3 to the project financial statements, which describes the basis of accounting. The project financial statements are prepared to provide information to International Bank for Reconstruction and Development (IBRD). As a result, the project financial statements may not be suitable for another purpose. KPMG Bagimstz Denetim ve Serbest Muhasebeci Mali Mugavirlik Anonim $irketi A member firm of KPMG International Cooperative Orhan Akova, SMMM Partner 22 July 2019 Istanbul, Turkey Tiirkiye ihracat Kredi Bankast (EXIMBANK) IBRD Long Term Export Finance - P156252 Project Balance Sheet for the Semester-ended December, 31, 2018 (USD) ASSETS Designated Account: 62.174,62 Total Extended To PFIs (APEX) 239.250.000,00 Commercial Banks DENIZBANK A.5. 58.051.742,00 QNB FINANS BANK A.$. 12.062.050,00 Participation Banks Leasing Companies AK LEASING 14.545.215,47 DENIZ LEASING 7535.431,38 GARANTI LEASING 35.643.800,62 ING LEASING 21.418,273,94 1$ LEASING 23.128.566,00 QNB FiNANS FINANSAL KiRALAMA 35.600.582,95 YAPI KRED; LEASING 31.264,337,64 Total Extended To EXIMBANK Customers (RETAIL) 46.117.555,80 Total Amount Allocated to Customers, but Not Documented ]i13.882.444,20 Yet Front-end Fee Paid 750.000,001 TOTAL ASSETS 300.000.000,00 LIABILITIES Amount due to World Bank 300.0oo.ooo,00 1Credit Line 299.250.000,00 Front-End F 750.oo,]o [TOTAL LIABILITIES 1300.009.00000 Tiirkiye ihracat Kredi Bankasi (EXIMBANK) IBRD Long Term Export Finance - P156252 Designated Account Statement for the Semester-ended December, 31, 2018 (USD) Opening balance as of Month, Day, Year 62.174,62 IBRD advances during the Semester Less: Refund to IBRD from SA during the Semester * 299.250.000,00 Less: Loans advanced/expenses paid in period 285.367.555,80 Closing balance as of Month, Day, Year 62.174,62 Unexplained Difference, if any** 13.882.444,20 Balance per DA Statement as of Month, Day, Year 62.174,62 * USD 750,000 is upfront fee payment, which is not included in this amount. ** explanation required, if any. 62.174,62 USD is the balance arising from a specific loan program which was rarely used and interest earned on the account. The remaining 13.882.444,20 USD is the amount that our Bank allocated to the exporters but has not documented yet.