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Financial instruments | 12 Months Ended
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Dec. 31, 2018
Text block [abstract] |
Financial instruments |
35. | Financial instruments
Credit risk Exposure to credit risk: The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date is:
|  |  |  |  | 2018 |  |  | 2017 |
Trade receivables |  |  | 19 |  |  |  | 2,620,991 |  |  |  | 3,004,206 |
Contract assets |  |  |  |  |  |  | 715,441 |  |  |  | — |
Receivables from financial services |  |  | 20 |  |  |  | 4,170,929 |  |  |  | 4,248,120 |
Cash and cash equivalents* |  |  | 24 |  |  |  | 7,419,095 |  |  |  | 4,712,141 |
Participating cross currency swap and FX swap contracts |  |  | 32 |  |  |  | 1,356,062 |  |  |  | 981,396 |
Other current assets** |  |  | 22 |  |  |  | 287,469 |  |  |  | 316,042 |
Held to maturity investments |  |  |  |  |  |  | — |  |  |  | 11,992 |
Financial asset at fair value through profit or loss |  |  |  |  |  |  | 9,409 |  |  |  | — |
Financial asset at fair value through other comprehensive income |  |  |  |  |  |  | 42,454 |  |  |  | — |
Due from related parties |  |  | 37 |  |  |  | 13,533 |  |  |  | 5,299 |
|  |  |  |  |  |  | 16,635,383 |  |  |  | 13,279,196 |
* | Cash in hand is excluded from cash and cash equivalents.
** | Prepaid expenses, receivable from personnel, receivable from the Ministry of Transport and Infrastructure of Turkey, other and advances given are excluded from other current assets and other non-current assets.
Credit quality: The maximum exposure to credit risk for trade and subscriber receivables, other assets and cash and cash equivalent arising from sales transactions including those classified as due from related parties at the reporting date by type of customer is:
Other Assets at 31 December 2018(*) |  | Not Due |  |  | More Than 30 Days Past Due |  |  | More Than 60 Days Past Due |  |  | More Than 90 Days Past Due |  |  | More Than 120 Days Past Due |  |  | More Than 150 Days Past Due |  |  | More Than 150 Days -3 years Past Due |  |  | More Than 3 - 4 years Past Due |  |  | More Than 4 - 5 years Past Due |  |  | Total |
Gross Carrying Amount |  |  | 8,656,954 |  |  |  | 214,351 |  |  |  | 80,762 |  |  |  | 57,761 |  |  |  | 43,038 |  |  |  | 25,543 |  |  |  | 755,982 |  |  |  | 272,547 |  |  |  | 319,298 |  |  |  | 10,426,236 |
Loss Allowance |  |  | 24,864 |  |  |  | 4,567 |  |  |  | 5,238 |  |  |  | 4,900 |  |  |  | 6,368 |  |  |  | 6,028 |  |  |  | 214,893 |  |  |  | 182,431 |  |  |  | 281,522 |  |  |  | 730,811 |
(*) | Other Assets includes trade receivables, subscriber receivables, other assets, cash and cash equivalent and due from related parties.
Contract Assets at 31 December 2018 |  | Not Due |  |  | More Than 30 Days Past Due |  |  | More Than 60 Days Past Due |  |  | More Than 90 Days Past Due |  |  | More Than 120 Days Past Due |  |  | More Than 150 Days Past Due |  |  | More Than 150 Days - 3 years Past Due |  |  | More Than 3 - 4 years Past Due |  |  | More Than 4 - 5 years Past Due |  |  | Total |
Gross Carrying Amount |  |  | 715,441 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 715,441 |
Loss Allowance |  |  | 7,370 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 7,370 |
Credit quality:
Other Assets as at 1 January 2018(*) |  | Not Due |  |  | More Than 30 Days Past Due |  |  | More Than 60 Days Past Due |  |  | More Than 90 Days Past Due |  |  | More Than 120 Days Past Due |  |  | More Than 150 Days Past Due |  |  | More Than 150 Days - 3 years Past Due |  |  | More Than 3 - 4 years Past Due |  |  | More Than 4 - 5 years Past Due |  |  | Total |
Gross Carrying Amount |  |  | 6,021,990 |  |  |  | 194,517 |  |  |  | 81,804 |  |  |  | 35,799 |  |  |  | 52,851 |  |  |  | 20,493 |  |  |  | 823,359 |  |  |  | 208,127 |  |  |  | 141,717 |  |  |  | 7,580,657 |
Loss Allowance |  |  | 24,936 |  |  |  | 6,136 |  |  |  | 5,662 |  |  |  | 4,279 |  |  |  | 9,766 |  |  |  | 7,076 |  |  |  | 323,124 |  |  |  | 158,198 |  |  |  | 122,751 |  |  |  | 661,928 |
(*) | Other Assets includes trade receivables, subscriber receivables and other assets.
Contract Assets as at 1 January 2018 |  | Not Due |  |  | More Than 30 Days Past Due |  |  | More Than 60 Days Past Due |  |  | More Than 90 Days Past Due |  |  | More Than 120 Days Past Due |  |  | More Than 150 Days Past Due |  |  | More Than 150 Days - 3 years Past Due |  |  | More Than 3 - 4 years Past Due |  |  | More Than 4 - 5 years Past Due |  |  | Total |
Gross Carrying Amount |  |  | 514,223 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 514,223 |
Loss Allowance |  |  | 5,128 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5,128 |
Impairment losses Individual receivables which are known to be uncollectible are written off by reducing the carrying amount directly. The other receivables are assessed collectively to determine whether there objective evidence that an impairment has been incurred but not yet is been identified. The Group considers that there is evidence of impairment if any of the following indicators are present:
| • |  | significant financial difficulties of the customer
| • |  | probability that the customer will enter bankruptcy or financial reorganisation, and
| • |  | default or delinquency in payments
Receivables for which an impairment provision was recognized are written off against the provision when there is no expectation of recovering additional cash. Impairment losses are recognized in profit or loss within net impairment losses on financial and contract assets (Note 10). Subsequent recoveries of amounts previously written off are credited against Net impairment losses on financial and contract assets (Note 10). Movements in the provision for impairment of trade receivables and due from related parties are as follows:
|  | 31 December 2018 Contract Asset |  |  | 31 December 2018 Other Asset** |
Opening balance |  |  | — |  |  |  | 705,440 |
IFRS 9 effect |  |  | 5,128 |  |  |  | (43,512 | )
Provision for impairment recognized during the year |  |  | 2,242 |  |  |  | 416,557 |
Amounts collected |  |  | — |  |  |  | (166,641 | )
Unused amount reversed (*) |  |  | — |  |  |  | (73,023 | )
Receivables written off during the year as uncollectible |  |  | — |  |  |  | (118,553 | )
Exchange differences |  |  | — |  |  |  | 10,540 |
Disposal of subsidiaries |  |  | — |  |  |  | 3 |
Closing balance |  |  | 7,370 |  |  |  | 730,811 |
|  | 31 December 2017 Contract Asset |  |  | 31 December 2017 Other Asset** |
Opening balance |  |  | — |  |  |  | 964,311 |
Provision for impairment recognized during the year |  |  | — |  |  |  | 180,948 |
Amounts collected |  |  | — |  |  |  | (224,460 | )
Unused amount reversed (*) |  |  | — |  |  |  | (79,958 | )
Receivables written off during the year as uncollectible |  |  | — |  |  |  | (138,529 | )
Exchange differences |  |  | — |  |  |  | 3,128 |
Closing balance |  |  | — |  |  |  | 705,440 |
(*) | The Company signed a transfer of claim agreement with a debt management company to transfer some of its doubtful receivables stemming from the years between 1998 to 2016, Transferred doubtful receivables comprise of balances that the Company started legal proceedings.
(**) | Other Assets includes trade receivables, subscriber receivables and other assets.
Movements in the provision for impairment of receivables from financial services are as follows:
|  | 31 December 2018 |  |  | 31 December 2017 |
Opening balance |  |  | 72,992 |  |  |  | 10,170 |
IFRS 9 effect |  |  | 52,951 |  |  |  | — |
Provision for impairment recognized during the year |  |  | 190,509 |  |  |  | 117,293 |
Amounts collected |  |  | (96,278 | ) |  |  | (37,503 | )
Unused amount reversed (*) |  |  | (19,901 | ) |  |  | (16,968 | )
Closing balance |  |  | 200,273 |  |  |  | 72,992 |
(*) | The Company signed a transfer of claim agreement with a debt management company to transfer some of its doubtful receivables stemming from the year 2017. Transferred doubtful receivables comprise of balances that the Company started legal proceedings.
. Liquidity risk The table below analyses the Group’s financial liabilities into relevant maturity groupings based on their contractual maturities for:
| • |  | all non-derivative financial liabilities, and
| • |  | gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of the timing of the cash flows,
|  | 31 December 2018 |  |  | 31 December 2017 |
|  | Carrying |  |  | Contractual |  |  | 6 months |  |  | 6-12 |  |  | 1-2 |  |  | 2-5 |  |  | More than 5 |  |  | Carrying |  |  | Contractual |  |  | 6 months |  |  | 6-12 |  |  | 1-2 |  |  | 2-5 |  |  | More than 5 |
|  | Amount |  |  | cash flows |  |  | or less |  |  | Months |  |  | years |  |  | years |  |  | Years |  |  | Amount |  |  | cash flows |  |  | or less |  |  | months |  |  | years |  |  | years |  |  | Years |
Non-derivative financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Secured bank loans |  |  | 4,180 |  |  |  | (4,712 | ) |  |  | (1,272 | ) |  |  | (1,209 | ) |  |  | (2,231 | ) |  |  | — |  |  |  | — |  |  |  | 4,390 |  |  |  | (5,011 | ) |  |  | — |  |  |  | (1,117 | ) |  |  | (2,045 | ) |  |  | (1,849 | ) |  |  | — |
Unsecured bank loans |  |  | 13,526,847 |  |  |  | (14,353,989 | ) |  |  | (4,354,548 | ) |  |  | (2,065,424 | ) |  |  | (3,587,398 | ) |  |  | (2,503,531 | ) |  |  | (1,843,088 | ) |  |  | 10,533,518 |  |  |  | (11,094,697 | ) |  |  | (3,275,230 | ) |  |  | (955,637 | ) |  |  | (2,575,807 | ) |  |  | (3,035,914 | ) |  |  | (1,252,109 | )
Finance lease liabilities |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 122,720 |  |  |  | (133,570 | ) |  |  | (18 | ) |  |  | (17,429 | ) |  |  | (16,789 | ) |  |  | (38,933 | ) |  |  | (60,401 | )
Debt securities issued |  |  | 5,210,562 |  |  |  | (7,733,943 | ) |  |  | (228,838 | ) |  |  | (149,564 | ) |  |  | (299,128 | ) |  |  | (897,385 | ) |  |  | (6,159,028 | ) |  |  | 1,875,521 |  |  |  | (2,753,486 | ) |  |  | (54,221 | ) |  |  | (54,221 | ) |  |  | (108,442 | ) |  |  | (325,326 | ) |  |  | (2,211,276 | )
Lease liabilities |  |  | 1,413,956 |  |  |  | (2,497,426 | ) |  |  | (372,682 | ) |  |  | (273,273 | ) |  |  | (410,826 | ) |  |  | (666,760 | ) |  |  | (773,885 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Trade and other payables* |  |  | 2,372,512 |  |  |  | (2,440,300 | ) |  |  | (2,440,300 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,527,152 |  |  |  | (2,548,365 | ) |  |  | (2,548,365 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Due to related parties |  |  | 45,331 |  |  |  | (45,331 | ) |  |  | (45,331 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 6,980 |  |  |  | (6,980 | ) |  |  | (6,980 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Consideration payable in relation to acquisition of Belarusian Telecom (Note 35) |  |  | 358,304 |  |  |  | (526,090 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (526,090 | ) |  |  | — |  |  |  | 323,691 |  |  |  | (377,190 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (377,190 | ) |  |  | — |
Derivative financial liabilities Participating Cross Currency Swap and FX swap contracts |  |  | 165,265 |  |  |  | 97,761 |  |  |  | 55,377 |  |  |  | — |  |  |  | 12,960 |  |  |  | 14,522 |  |  |  | 14,902 |  |  |  | 107,862 |  |  |  | 23,428 |  |  |  | 18,982 |  |  |  | — |  |  |  | 4,446 |  |  |  | — |  |  |  | — |
Buy |  |  |  |  |  |  | 3,444,271 |  |  |  | 2,519,383 |  |  |  | — |  |  |  | 193,800 |  |  |  | 249,288 |  |  |  | 481,800 |  |  |  |  |  |  |  | 1,838,554 |  |  |  | 1,471,106 |  |  |  | — |  |  |  | 367,448 |  |  |  | — |  |  |  | — |
Sell |  |  |  |  |  |  | (3,346,510 | ) |  |  | (2,464,006 | ) |  |  | — |  |  |  | (180,840 | ) |  |  | (234,766 | ) |  |  | (466,898 | ) |  |  |  |  |  |  | (1,815,126 | ) |  |  | (1,452,124 | ) |  |  | — |  |  |  | (363,002 | ) |  |  | — |  |  |  | — |
Currency forward contracts |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,246 |  |  |  | (2,246 | ) |  |  | (2,246 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Buy |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 190,185 |  |  |  | 190,185 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Sell |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (192,431 | ) |  |  | (192,431 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
TOTAL |  |  | 23,096,957 |  |  |  | (27,504,030 | ) |  |  | (7,387,594 | ) |  |  | (2,489,470 | ) |  |  | (4,286,623 | ) |  |  | (4,579,244 | ) |  |  | (8,761,099 | ) |  |  | 15,504,080 |  |  |  | (16,898,117 | ) |  |  | (5,868,078 | ) |  |  | (1,028,404 | ) |  |  | (2,698,637 | ) |  |  | (3,779,212 | ) |  |  | (3,523,786 | )
* | Advances received, license fee accruals, taxes and withholding taxes payable are excluded from trade and other payables.
Foreign exchange risk The Group’s exposure to foreign exchange risk at the end of the reporting period, based on notional amounts, was as follows:
|  | 31 December 2018 |
|  | USD |  |  | EUR |  |  | RMB |
Foreign currency denominated assets |  |  |  |  |  |  |  |  |  |  |  |
Other non-current assets |  |  | 222 |  |  |  | 11 |  |  |  | — |
Financial asset at fair value through other comprehensive income |  |  | — |  |  |  | 7,043 |  |  |  | — |
Due from related parties-current |  |  | 1,965 |  |  |  | 223 |  |  |  | — |
Trade receivables and contract assets |  |  | 15,786 |  |  |  | 52,140 |  |  |  | — |
Other current assets |  |  | 70,710 |  |  |  | 18,977 |  |  |  | — |
Cash and cash equivalents |  |  | 786,322 |  |  |  | 384,800 |  |  |  | — |
|  |  | 875,005 |  |  |  | 463,194 |  |  |  | — |
Foreign currency denominated liabilities |  |  |  |  |  |  |  |  |  |  |  |
Loans and borrowings-non current |  |  | (481,438 | ) |  |  | (748,142 | ) |  |  | (224,519 | )
Debt securities issued-non- current |  |  | (921,102 | ) |  |  | — |  |  |  | — |
Lease obligations-non-current |  |  | (4,719 | ) |  |  | (24,068 | ) |  |  | — |
Other non-current liabilities |  |  | (68,107 | ) |  |  | — |  |  |  | — |
Loans and borrowings-current |  |  | (390,876 | ) |  |  | (523,595 | ) |  |  | (29,244 | )
Debt securities issued-current |  |  | (55,074 | ) |  |  | — |  |  |  | — |
Rent lease obligations-current |  |  | (2,951 | ) |  |  | (8,223 | ) |  |  | — |
Trade and other payables-current |  |  | (233,805 | ) |  |  | (32,946 | ) |  |  | (70,553 | )
Due to related parties |  |  | (686 | ) |  |  | (52 | ) |  |  | — |
|  |  | (2,158,758 | ) |  |  | (1,337,026 | ) |  |  | (324,316 | )
Exposure related to derivative instruments |  |  |  |  |  |  |  |  |  |  |  |
Participating cross currency swap and FX swap contracts |  |  | 1,082,036 |  |  |  | 811,167 |  |  |  | 202,600 |
Net exposure |  |  | (201,717 | ) |  |  | (62,665 | ) |  |  | (121,716 | )
|  | 31 December 2017 |
|  | USD |  |  | EUR |
Foreign currency denominated assets |  |  |  |  |  |  |  |
Other non-current assets |  |  | 72 |  |  |  | 2,681 |
Due from related parties-current |  |  | 571 |  |  |  | 407 |
Trade receivables and accrued income |  |  | 18,890 |  |  |  | 57,283 |
Other current assets |  |  | 43,039 |  |  |  | 35,049 |
Cash and cash equivalents |  |  | 688,717 |  |  |  | 237,697 |
|  |  | 751,289 |  |  |  | 333,117 |
Foreign currency denominated liabilities |  |  |  |  |
Loans and borrowings-non current |  |  | (557,180 | ) |  |  | (960,629 | )
Debt securities issued-non- current |  |  | (469,387 | ) |  |  | — |
Other non-current liabilities |  |  | (85,816 | ) |  |  | — |
Loans and borrowings-current |  |  | (206,535 | ) |  |  | (285,827 | )
Debt securities issued-current |  |  | (27,848 | ) |  |  | — |
Trade and other payables-current |  |  | (328,323 | ) |  |  | (29,442 | )
Due to related parties |  |  | (1,172 | ) |  |  | (394 | )
|  |  | (1,676,261 | ) |  |  | (1,276,292 | )
Exposure related to derivative instruments |  |  |  |  |  |  |  |
Participating cross currency swap and FX swap contracts |  |  | 937,011 |  |  |  | 748,650 |
Currency forward contracts |  |  | 50,000 |  |  |  | — |
Net exposure |  |  | 62,039 |  |  |  | (194,525 | )
Sensitivity analysis The basis for the sensitivity analysis to measure foreign exchange risk is an aggregate corporate-level currency exposure. The aggregate foreign exchange exposure is composed of all assets and liabilities denominated in foreign currencies, the analysis excludes net foreign currency investments. 10% strengthening/weakening of the TL, UAH, BYN against the following currencies at 31 December 2018 and 31 December 2017 would have increased/ (decreased) profit or loss before by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.
Sensitivity analysis |
31 December 2018 |
|  | Profit/(Loss) |  |  | Equity |
|  | Appreciation of foreign currency |  |  | Depreciation of foreign currency |  |  | Appreciation of foreign currency |  |  | Depreciation of foreign currency |
1- USD net asset/liability |  |  | (106,121 | ) |  |  | 106,121 |  |  |  | — |  |  |  | — |
2- Hedged portion of USD risk (-) |  |  | — |  |  |  | — |  |  |  | (9,596 | ) |  |  | 9,596 |
3- USD net effect (1+2) |  |  | (106,121 | ) |  |  | 106,121 |  |  |  | (9,596 | ) |  |  | 9,596 |
4- EUR net asset/liability |  |  | (37,775 | ) |  |  | 37,775 |  |  |  | — |  |  |  | — |
5- Hedged portion of EUR risk (-) |  |  | — |  |  |  | — |  |  |  | (23,613 | ) |  |  | 23,613 |
6- EUR net effect (4+5) |  |  | (37,775 | ) |  |  | 37,775 |  |  |  | (23,613 | ) |  |  | 23,613 |
7- Other foreign currency net asset/liability (RMB) |  |  | (9,275 | ) |  |  | 9,275 |  |  |  | — |  |  |  | — |
8- Hedged portion of other foreign currency risk (-) (RMB) |  |  | — |  |  |  | — |  |  |  | 364 |  |  |  | (364 | )
9- Other foreign currency net effect (7+8) |  |  | (9,275 | ) |  |  | 9,275 |  |  |  | 364 |  |  |  | (364 | )
Total (3+6+9) |  |  | (153,171 | ) |  |  | 153,171 |  |  |  | (32,845 | ) |  |  | 32,845 |
Sensitivity analysis |
31 December 2017 |
|  | Profit/(Loss) |  |  | Equity |
|  | Appreciation of foreign currency |  |  | Depreciation of foreign currency |  |  | Appreciation of foreign currency |  |  | Depreciation of foreign currency |
1- USD net asset/liability |  |  | 23,400 |  |  |  | (23,400 | ) |  |  | — |  |  |  | — |
2- Hedged portion of USD risk (-) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
3- USD net effect (1+2) |  |  | 23,400 |  |  |  | (23,400 | ) |  |  | — |  |  |  | — |
4- EUR net asset/liability |  |  | (87,838 | ) |  |  | 87,838 |  |  |  | — |  |  |  | — |
5- Hedged portion of EUR risk (-) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
6- EUR net effect (4+5) |  |  | (87,838 | ) |  |  | 87,838 |  |  |  | — |  |  |  | — |
7- Other foreign currency net asset/liability (RMB) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
8- Hedged portion of other foreign currency risk (-) (RMB) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
9- Other foreign currency net effect (7+8) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total (3+6+9) |  |  | (64,438 | ) |  |  | 64,438 |  |  |  | — |  |  |  | — |
Interest rate risk As at 31 December 2018 and 2017 the interest rate profile of the Group’s variable rate interest-bearing financial instruments was:
|  |  |  |  | 31 December 2018 |  |  | 31 December 2017 |
|  |  |  |  | Effective |  |  | Carrying |  |  | Effective |  |  | Carrying |
| Interest |  |  | interest |
|  | Note |  |  | Rate |  |  | Amount |  |  | rate |  |  | Amount |
Variable rate instruments |  |  | 28 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
USD floating rate loans |  |  |  |  |  |  | 4.3 | % |  |  | (4,589,157 | ) |  |  | 3.2 | % |  |  | (2,880,615 | )
EUR floating rate loans |  |  |  |  |  |  | 2.1 | % |  |  | (6,975,890 | ) |  |  | 2.1 | % |  |  | (5,511,579 | )
Sensitivity analysis Cash flow sensitivity analysis for variable rate instruments: An increase/decrease of interest rates by 100 basis points would have (decreased)/increased equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign exchange rates, remain constant. The analysis is performed on the same basis at 31 December 2018 and 2017:
|  | Profit or loss |  |  | Equity |
|  | 100 bps increase |  |  | 100 bps decrease |  |  | 100 bps increase |  |  | 100 bps decrease |
31 December 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Variable rate instruments (financial liability) |  |  | (234,196 | ) |  |  | 234,196 |  |  |  | — |  |  |  | — |
Cash flow sensitivity (net) |  |  | (234,196 | ) |  |  | 234,196 |  |  |  | — |  |  |  | — |
31 December 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Variable rate instruments (financial liability) |  |  | (83,922 | ) |  |  | 83,922 |  |  |  | — |  |  |  | — |
Cash flow sensitivity (net) |  |  | (83,922 | ) |  |  | 83,922 |  |  |  | — |  |  |  | — |
Fair values Fair value of the Group’s financial assets and financial liabilities that are measured at fair value on a recurring basis This section explains the judgements and estimates made in determining the fair values of the financial instruments that are recognized and measured at fair value in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Group has classified its financial instruments into the three levels prescribed under the accounting standards. An explanation of each level is as follows:
| • |  | Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
| • |  | Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
| • |  | Level 3 inputs are unobservable inputs for the asset or liability.
Valuation inputs and relationships to fair value The following table summarizes the quantitative information about the significant unobservable inputs used in level 3 fair value measurement of contingent consideration,
|  | Fair value at |  |  |  | Inputs |  |
|  | 31 December 2018 |  | 31 December 2017 |  | Unobservable Inputs |  | 31 December 2018 |  | 31 December 2017 |  | Relationship of unobservable inputs to fair value
Contingent consideration |  | 358,304 |  | 323,691 |  | Risk-adjusted discount rate |  | 9,5% |  | 4,8% |  | A change in the discount rate by 100 bps would increase/decrease FV by TL (13,582) and TL 14,250 respectively,
|  |  |  |  |  | Expected settlement date |  | first quarter of 2023 |  | first quarter of 2021 |  | If expected settlement date changes by 1 year FV would increase/decrease by TL (31,047) and TL 33,896 respectively,
Changes in the consideration payable in relation to acquisition of Belarusian Telecom for the years ended 31 December 2018 and 31 December 2017 are stated below:
|  | 2018 |  |  | 2017 |
Opening balance |  |  | 323,691 |  |  |  | 295,062 |
Gains recognized in profit or loss |  |  | 34,613 |  |  |  | 28,629 |
Closing balance |  |  | 358,304 |  |  |  | 323,691 |
Financial assets: Carrying values of significant portion of financial assets do not differ significantly from their fair values due to their short-term nature. Financial liabilities: Fair values of financial liabilities are assumed to approximate their carrying values due to their short term nature and floating interest rates. As at 31 December 2018, the fair value of debt securities issued by the Company in 2015 with a nominal value of USD 500,000 and fixed interest rate (Note 28), is TL 2,380,855 (31 December 2017:2,063,972). As at 31 December 2018, the fair value of debt securities issued by the Company in 2018 with a nominal value of USD 500,000 and fixed interest rate (Note 28), is TL 2,329,011 (31 December 2017:None). Fair value of cash and cash equivalents and debt securities issued are classified as level 1 and fair value of other financial assets and liabilities are classified as level 2.

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