İzocam Ticaret ve Sanayi Anonim Şirketi

Transcription

1 İzocam Ticaret ve Sanayi Anonim Şirketi Convenience Translation into English of Condensed Interim Financial Statements As at and For the Nine Month Period Ended (Originally issued in Turkish) This report is 29 pages. 26 October

2 TABLE OF CONTENTS PAGES CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION 1-2 CONDENSED INTERIM STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 3 CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY 4 CONDENSED INTERIM STATEMENT OF CASH FLOW 5 NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENT ORGANIZATION AND OPERATIONS OF THE COMPANY 6 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS 6 3 SEGMENT REPORTING 18 4 RELATED PARTIES 19 5 CASH AND CASH EQUIVALENTS 21 6 SHORT TERM LOANS AND BORROWINGS 22 7 TRADE RECEIVABLES AND PAYABLES 21 8 DEFERRED INCOME 22 9 INVENTORIES PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS COMMITMENTS AND CONTINGENT ASSETS AND LIABILITIES EQUITY REVENUE AND COST OF SALES EXPENSES BY NATURE INCOME TAX EARNING PER SHARE NATURE AND LEVEL OF RISK ARISING FROM FINANCIAL INSTRUMENTS SUBSEQUENT EVENTS 29

3 Condensed Interim Statement of Financial Position As at All amounts are expressed in Turkish Lira ( TL ) unless otherwise stated. Notes Unaudited Audited 31 December ASSETS Current Assets Cash and Cash Equivalents Trade Receivables From Related Parties From Third Parties Other Receivables From Third Parties Inventories Prepaid Expenses Other Current Assets TOTAL CURRENT ASSETS Non-Current Assets Other Receivables From Third Parties Property and Equipment Intangible Assets Other Prepaid Expenses Other Non-Current Assets Deferred Tax Asset TOTAL NON-CURRENT ASSETS TOTAL ASSETS

4 Condensed Interim Statement of Financial Position As at (Continued) Unaudited Audited 31 December Notes LIABILITIES Short-Term Liabilities Short-Term Loans and Borrowings Trade Payables To Related Parties To Third Parties Payables Related to Employee Benefits Other Payables To Third Parties Deferred Income Current Tax Liability Short-term Provisions Other Other Short-Term Liabilities TOTAL SHORT-TERM LIABILITIES Long-Term Liabilities Other Payables To Third Parties Long-term Provisions For Employee Benefits TOTAL LONG-TERM LIABILITIES EQUITY Paid-in Capital Adjustment to Share Capital Share Premiums Items That Will Never Be Reclassified to Profit or Loss ( ) ( ) Actuarial Losses from Defined Pension Plans ( ) ( ) Restricted Profit Reserves Retained Earnings Net Profit for the Period TOTAL EQUITY TOTAL LIABILITIES

5 Condensed Interim Statement of Profit or Loss and Other Comprehensive Income For The Nine Month Periods Ended Unaudited 1 January - 1 July - 1 January - 1 July - Notes PROFIT OR LOSS Revenue Cost of Sales (-) 13 ( ) ( ) ( ) ( ) GROSS PROFIT Administrative Expenses (-) 14 ( ) ( ) ( ) ( ) Selling, Marketing and Distribution Expenses (-) 14 ( ) ( ) ( ) ( ) Impairment (Loss)/ Gain on Trade and Other Receivables ( ) ( ) (44.380) 284 Research and Development Expenses (-) ( ) ( ) Other Operating Income Other Operating Expenses (-) ( ) ( ) ( ) OPERATING PROFIT Expense/ (Income) from Investment Activities (36.062) (21.411) (25.833) OPERATING PROFIT BEFORE FINANCE EXPENSE Finance Income Finance Expenses (-) ( ) ( ) ( ) ( ) Finance Expenses, net ( ) ( ) ( ) ( ) PROFIT BEFORE TAX FROM CONTINUING OPERATIONS Tax Expense of Continuing Operations ( ) ( ) ( ) ( ) Current Tax Expense 15 ( ) ( ) ( ) ( ) Deferred Tax Benefit PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS PROFIT FOR THE PERIOD Earnings Per Share Earnings Per Share From Continuing Operations 16 0,008 0,004 0,004 0,003 Diluted Earnings Per Share Diluted Earnings Per Share From Continuing Operations 16 0,008 0,004 0,004 0,003 OTHER COMPREHENSIVE INCOME Items Not to Be Classified To Profit Or Loss Remeasurement Of Defined Benefit Plans ( ) ( ) ( ) Deferred Tax Effect Of Remeasurement Of Defined Benefit (27.332) OTHER COMPREHENSIVE INCOME ( ) ( ) ( ) TOTAL COMPREHENSIVE INCOME

6 Condensed Interim Statement of Changes in Equity For The Nine Month Periods Ended Other comprehensive income not to be reclassified to profit or loss Accumulated profits Paid-in Capital Adjustment to Share Capital Share Premiums Defined Benefit Remeasurement Losses Restricted Profit Reserves Retained Earnings Net Profit for the Period Total Equity Balance as at 1 January ( ) Transfers ( ) -- Total Comprehensive Income ( ) Other comprehensive income ( ) ( ) Net profit for the period Balance as at ( ) Balance as at 1 January ( ) Adjustment on initial application of TFRS (87.119) -- (87.119) Adjusted balance as at 1 January ( ) Transfers ( ) -- Total Comprehensive Income ( ) Other comprehensive income ( ) ( ) Net profit for the period Balance as at ( )

7 Condensed Interim Statement of Cash Flows For The Nine Month Periods Ended Notes Unaudited 1 January 1 January A. CASH FLOWS FROM OPERATING ACTIVITIES Net Profit For The Period Adjustments for reconciliation of profit for the period Adjustment for depreciation and amortization Adjustment for provision for employee termination benefits Adjustment for provision for unused vacation pay liability Adjustment for provision of doubtful receivables, net Adjustment for provisions ( ) Adjustment for interest expense Adjustment for interest income ( ) ( ) Adjustment for tax expense Loss on sale of property and equipment Changes in working capital ( ) ( ) Adjustments for increase in inventory ( ) ( ) Adjustments for (increase) decrease in trade and other receivables ( ) Adjustments for increase (decrease) in trade and other payables ( ) Adjustments for increase (decrease) in deferred revenue ( ) Adjustments for (increase) decrease in prepaid expenses ( ) Adjustments for decrease in payables related to employee benefits ( ) ( ) Adjustments for increase/ decrease in other current and non-current assets and liabilities ( ) ( ) Taxes paid ( ) ( ) Employee benefit indemnity paid ( ) ( ) B. CASH FLOWS FROM INVESTING ACTIVITIES ( ) ( ) Purchase of property and equipment 10 ( ) ( ) Proceeds from sale of property and equipment Adjustments related to advances given ( ) ( ) C. CASH FLOWS FROM FINANCING ACTIVITIES Increase in bank borrowings and other financial liabilities, net Repayment of borrowings ( ) ( ) Interest paid ( ) ( ) Interest received Blockage accounts ( ) ( ) Net increase/ (decrease) in Cash and Cash Equivalents (A+B+C) ( ) D. CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS AT THE END OF PERIOD (A+B+C+D)

8 Condensed Interim Statement of Cash Flows For The Nine Month Periods Ended 1 ORGANIZATION AND OPERATIONS OF THE COMPANY İzocam Ticaret ve Sanayi Anonim Şirketi ( İzocam or the Company ) was established in 1965 in order to operate in production, importation and exportation of glass wool, stone wool, mineral wool, glass fiber, expanded and extruded polystyrenes, elastomeric rubber, polyethylene, insulated and noninsulated roof and front panels, partition and mezzanine. As at, İzocam Holding Anonim Şirketi s ( İzocam Holding ) share in the Company is to 95,07 percent through acquisition of shares not listed in Borsa İstanbul Anonim Şirketi ( BIST ) from Koç Group on 29 November 2006 and on 10 July 2007 representing 61,16 percent of paid-in capital of İzocam together with the collection of shares traded on BİST which represents 33,91 percent of paid-in capital of İzocam. İzocam Holding is a joint venture of Compagnie de Saint Gobain Group and Alghanim Group by with an equal ownership of 50 percent by both parties. The Company conducts a portion of its operations with related parties of Saint Gobain Group and Alghanim Group companies. The Company has related parties acting as both customers and suppliers (Note 4). The Company is registered at Capital Market Board of Turkey ( CMB ) and its shares are listed in BİST since 15 April As at, 38 percent of the shares are publicly traded at BİST (31 December : 38 percent). As at, total number of employees of the Company is an average basis 469 (31 December : 448) including 208 white collar employees (31 December : 205) and 261 blue collar employees (31 December : 243). The address of the registered office and headquarters of the Company is as follows: Altayçeşme Mahallesi Çamlı Sokak No: 21 Kat: 4, Maltepe/ İstanbul 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS 2.1 Basis of Presentation Preparation of Financial Statements Accompanying financial statements are prepared in accordance with Turkish Accounting Standards ( TAS ) published by Public Oversight Accounting and Auditing Standards Authority ( POA ) together with the provisions of accordance with to CMB s Principles of Financial Reporting in Capital Market dated 13 June 2013 and published in the Official Gazette numbered Series II. No TAS consist of Turkish Accounting Standards, Turkish Financial Reporting Standards ( TFRS ) and related addendums and interpretations to these standards. For the nine months period ended, the Company prepared its condensed interim financial statements in accordance with the Turkish Accounting Standard No. 34 Interim Financial Reporting. Condensed interim financial statements of the Company do not include all the information and disclosures required in the annual financial statements, therefore should be read in conjunction with the Company s annual financial statements as at 31 December. Condensed financial statements are the first financial statements for which TFRS 15 and TFRS 9 applied. The changes in significant accounting policies are explained in note 2.3 The Company s condensed interim statement of financial position as at and condensed interim statement of profit or loss and other comprehensive income for the nine months period ended was authorized for issue by the Board of Directors of the Company on 26 October. 6

9 Condensed Interim Statement of Cash Flows For The Nine Month Periods Ended 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED) 2.1 Basis of Presentation (continued) Preparation of Financial Statements (continued) Functional and Reporting Currency These condensed interim financial statements are presented in Turkish Lira ( TL ), which is the Company s functional currency. Adjustment of Financial Statements in Hyperinflationary Periods As per the 17 March 2005 dated, 11/367 numbered decree of CMB, companies engaged in Turkey and those of which prepare their financial statements in accordance with the CMB Accounting Standards (including IAS/IFRS exercisers), use of inflationary accounting standards have been discontinued effective from 1 January Accordingly, Financial Reporting Standards in Hyperinflationary Economies, ( IAS 29 ) was no longer applied henceforward. 2.2 Standards and interpretations issued but not yet effective as at Standards issued but not yet effective and not early adopted New standards, interpretations and amendments to existing standards are not effective at reporting date and earlier application is permitted; however the Company has not early adopted are as follows. The Company will make the necessary changes if not indicated otherwise, which will be affecting the financial statements and disclosures, after the new standards and interpretations become in effect. TFRS 16 Leases On 16 April, POA issued the new leasing standard which will replace TAS 17 Leases, TFRS Interpretation 4 Determining Whether an Arrangement Contains a Lease, TAS Interpretation 15 Operating Leases Incentives, and TAS Interpretation 27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease and consequently changes to TAS 40 Investment Properties. TFRS 16 Leases eliminates the current dual accounting model for lessees, which distinguishes between onbalance sheet finance leases and off-balance sheet operating leases. Instead, there is a single, on-balance sheet accounting model that is similar to current finance lease accounting. Lessor accounting remains similar to current practice. The standard is effective for annual periods beginning on or after 1 January 2019, with early adoption permitted provided that an entity also adopts TFRS 15 Revenue from Contracts with Customers. The Company is assessing the potential impact on its financial statements resulting from the application of TFRS 16. TFRS Interpretation 23 Uncertainty over Income Tax Treatments On 24 May, POA issued TFRS Interpretation 23 Uncertainty over Income Tax Treatments to specify how to reflect uncertainty in accounting for income taxes. It may be unclear how tax law applies to a particular transaction or circumstance, or whether a taxation authority will accept a company s tax treatment. TAS 12 Income Taxes specifies how to account for current and deferred tax, but not how to reflect the effects of uncertainty. TFRS Interpretation 23 provides requirements that add to the requirements in TAS 12 by specifying how to reflect the effects of uncertainty in accounting for income taxes. The Interpretation is effective from 1 January 2019 with earlier application is permitted. The Company is assessing the potential impact on its financial statements resulting from the application of TFRS Interpretation 23. 7

10 Condensed Interim Statement of Cash Flows For The Nine Month Periods Ended 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED) 2.2 Standards and interpretations issued but not yet effective as at (continued) Standards issued but not yet effective and not early adopted (continued) Amendments to TFRS 9 - Prepayment features with negative compensation On December, POA has issued amendments to TFRS 9 to clarify that financial assets containing prepayment features with negative compensation can now be measured at amortised cost or at fair value through other comprehensive income (FVOCI) if they meet the other relevant requirements of TFRS 9. Under TFRS 9, a prepayment option in a financial asset meets this criterion if the prepayment amount substantially represents unpaid amounts of principal and interest, which may include reasonable additional compensation for early termination of the contract. The amendments are effective for periods beginning on or after 1 January 2019, with earlier application permitted. The Company is assessing the potential impact on its financial statements resulting from the application of the amendments to TFRS 9. Amendments to TAS 28- Long-term Interests in Associates and Joint Ventures On December, POA has issued amendments to TAS 28 to clarify that entities also apply TFRS 9 to other financial instruments in an associate or joint venture to which the equity method is not applied. These include long-term interests that, in substance, form part of the entity s net investment in an associate or joint venture. An entity applies IFRS 9 to such long-term interests before it applies related paragraphs of TAS 28. In applying TFRS 9, the entity does not take account of any adjustments to the carrying amount of long-term interests that arise from applying TAS 28. The amendments are effective for periods beginning on or after 1 January 2019, with earlier application permitted. The Company does not expect that application of the amendments to TAS 28 will have significant impact on its financial statements. The new standards, amendments and interpretations that are issued by the International Accounting Standards Board (IASB) but not issued by POA The following standards, interpretations and amendments to existing IFRS standards are issued by the IASB but these standards, interpretations and amendments to existing IFRS standards are not yet adapted/issued to TFRS by the POA, thus they do not constitute part of TFRS. Such standards, interpretations and amendments that are issued by the IASB but not yet issued by the POA are referred to as IFRS or IAS. The Company will make the necessary changes to its financial statements after the new standards and interpretations are issued and become effective under TFRS. 8

11 Condensed Interim Statement of Cash Flows For The Nine Month Periods Ended 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED) 2.2 Standards and interpretations issued but not yet effective as at (continued) The new standards, amendments and interpretations that are issued by the International Accounting Standards Board (IASB) but not issued by POA (continued) Annual Improvements to IFRSs Cycle Improvements to IFRSs IASB issued Annual Improvements to IFRSs Cycle. The amendments are effective as of 1 January Earlier application is permitted. The Company does not expect that application of these improvements to IFRSs will have significant impact on its financial statements. IFRS 3 Business Combinations and IFRS 11 Joint Arrangements IFRS 3 and IFRS 11 are amended to clarify how a company accounts for increasing its interest in a joint operation that meets the definition of a business. If a party obtains control, then the transaction is a business combination achieved in stages and the acquiring party remeasures the previously held interest at fair value. If a party maintains (or obtains) joint control, then the previously held interest is not remeasured. IAS 12 Income Taxes IAS 12 is amended to clarify that all income tax consequences of dividends (including payments on financial instruments classified as equity) are recognised consistently with the transactions that generated the distributable profits i.e. in profit or loss, other comprehensive income (OCI) or equity. IAS 23 Borrowing Costs IAS 23 is amended to clarify that the general borrowings pool used to calculate eligible borrowing costs excludes only borrowings that specifically finance qualifying assets that are still under development or construction. Borrowings that were intended to specifically finance qualifying assets that are now ready for their intended use or sale or any non-qualifying assets are included in that general pool. Amendments to IAS 19 - Plan Amendment, Curtailment or Settlement On 7 February, IASB issued Plan Amendment, Curtailment or Settlement (Amendments to IAS 19). The amendments clarify the accounting when a plan amendment, curtailment or settlement occurs. A company now uses updated actuarial assumptions to determine its current service cost and net interest for the period; and the effect of the asset ceiling is disregarded when calculating the gain or loss on any settlement of the plan and is dealt with separately in other comprehensive income (OCI). The amendments are effective for periods beginning on or after 1 January 2019, with earlier application permitted. The Company does not expect that application of these amendments to IAS 19 will have significant impact on its financial statements. The revised Conceptual Framework The revised Conceptual Framework issued on 28 March by the IASB. The Conceptual Framework sets out the fundamental concepts for financial reporting that guide the Board in developing IFRS Standards. It helps to ensure that the Standards are conceptually consistent and that similar transactions are treated the same way, so as to provide useful information for investors, lenders and other creditors. The Conceptual Framework also assists companies in developing accounting policies when no IFRS Standard applies to a particular transaction, and more broadly, helps stakeholders to understand and interpret the Standards. The revised Framework is more comprehensive than the old one its aim is to provide the Board with the full set of tools for standard setting. It covers all aspects of standard setting from the objective of financial reporting, to presentation and disclosures. 9

12 Condensed Interim Statement of Cash Flows For The Nine Month Periods Ended 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED) 2.2 Standards and interpretations issued but not yet effective as at (continued) The new standards, amendments and interpretations that are issued by the International Accounting Standards Board (IASB) but not issued by POA (continued) The revised Conceptual Framework (continued) For companies that use the Conceptual Framework to develop accounting policies when no IFRS Standard applies to a particular transaction, the revised Conceptual Framework is effective for annual reporting periods beginning on or after 1 January IFRS 17 Insurance Contracts On 18 May, IASB issued IFRS 17 Insurance Contracts. This first truly globally accepted standard for insurance contracts will help investors and others better understand insurers risk exposure, profitability and financial position. IFRS 17 replaces IFRS 4, which was brought in as an interim Standard in IFRS 4 has given companies dispensation to carry on accounting for insurance contracts using national accounting standards, resulting in a multitude of different approaches. As a consequence, it is difficult for investors to compare and contrast the financial performance of otherwise similar companies. IFRS 17 solves the comparison problems created by IFRS 4 by requiring all insurance contracts to be accounted for in a consistent manner, benefiting both investors and insurance companies. Insurance obligations will be accounted for using current values instead of historical cost. The information will be updated regularly, providing more useful information to users of financial statements. IFRS 17 has an effective date of 1 January 2021 but companies can apply it earlier. The Company does not expect that application of IFRS 17 will have significant impact on its financial statements. 2.3 Changes in significant accounting policies Except as described below, the accounting policies applied in these interim condensed financial statements are the same as those applied in the Company s financial statements as at and for the year ended 31 December. The changes in accounting policies are also expected to be reflected in the Company s financial statements as at and for the year ending 31 December. The Company has initially adopted TFRS 9 Financial Instruments and TFRS 15 Revenue from Contracts with Customers from 1 January. Although there are other standards which are effective from 1 January, these standards do not have any significant effect on the Company's financial statements IFRS 15 Revenue from Contracts with Customers IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaced IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations. 10

13 Condensed Interim Statement of Cash Flows For The Nine Month Periods Ended 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED) 2.3 Changes in significant accounting policies (continued) IFRS 15 Revenue from Contracts with Customers (continued) General model for revenue recognition TFRS 15 requires revenue recognition for all contracts with customers to follow the five-step approach to revenue recognition. Step 1: Identifying the contract A contract exists only if it is legally enforceable, the collection of the consideration is probable, the rights to goods and services and payment terms can be identified, the contract has commercial substance; and the contract is approved and the parties are committed to their obligations. If either contracts were negotiated as a single commercial package, or consideration in one contract depends on the other contract or goods or services (or some of the goods or services) are a single performance obligation the Company accounts the contracts as a single contract. Step 2: Identifying the performance obligations The Company defines performance obligation as a unit of account for revenue recognition. The Company assesses the goods or services promised in a contract with a customer and identifies as a performance obligation either a good or service that is distinct; or a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. A contract may contain promises to deliver a series of distinct goods or services that are substantially the same. At contract inception, an entity determines whether the series of goods or services is a single performance obligation. Step 3: Determining the transaction price In order to determine the transaction price, the Company assesses how much consideration it expects to be entitled to by fulfilling the contract. In arriving at the assessment, the Company considers variable elements of consideration, as well as the existence of a significant financing component. Significant financing component The Company revises the promised amount of consideration for the effect of a significant financing component to the amount that reflects what the cash selling price of the promised good or service. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the entity expects the period between customer payment and the transfer of goods or services to be one year or less. In cases where advance for the services are received and the payment scheme is broadly aligned with the Company s performance throughout the period, the Company concludes that the period between performance and payment is never more than 12 months, therefore the expedient is applied. Variable consideration The Company identifies items such as price concessions, incentives, performance bonuses, completion bonuses, price adjustment clauses, penalties, discounts, credits, or similar items may result in variable consideration if there is any in a customer contract. Step 4: Allocating the transaction price to performance obligations If distinct goods or services are delivered under a single arrangement, then the consideration is allocated based on relative stand-alone selling prices of the distinct goods or services (performance obligations). If directly observable stand-alone selling prices are not available, the total consideration in the service contracts is allocated based on their expected cost plus a margin. 11

14 Condensed Interim Statement of Cash Flows For The Nine Month Periods Ended 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED) 2.3 Changes in significant accounting policies (continued) TFRS 15 Revenue from Contracts with Customers (continued) Step 5: Recognition of revenue The Company recognises revenue over-time if any of the following conditions is met: - customer simultaneously receives and consumes the benefits as the entity performs, or -the customer controls the asset as the entity creates or enhances it, or - Company s performance does not create an asset for which the entity has an use; and alternative there is a right to payment for performance to date. For each performance obligation that is satisfied over time, an entity selects a single measure of progress, which depicts the transfer of control of the goods or services to the customer. The Company uses a method that measures the work performed reliably. The Company uses cost incurred to measure the progress towards to completion of the project where the input method is used and uses units transferred to measure the progress towards to completion of the project where the output method is used. If a performance obligation is not satisfied over time, then the Company recognise revenue at the point in time at which it transfers control of the good or service to the customer. The Company recognises a provision in accordance with TAS 37 Provisions, Contingent Liabilities and Contingent Assets when the unavoidable costs of meeting the obligations under a contract exceed the economic benefits. Contract modifications The Company recognises a contract modification as a separate contract if the modification results in a promise to deliver additional goods or services that are distinct and an increase in the price of the contract by an amount of consideration that reflects the entity's stand-alone selling price of those goods or services adjusted to reflect the circumstances of the contract. If the goods or services are distinct, then the entity accounts for the modification as if it were a termination of the existing contract and the creation of a new contract. If the modification to the contract does not add distinct goods or services, then the entity accounts for it on a combined basis with the original contract, as if the additional goods or services were part of the initial contract. The details of the new significant accounting policies and the nature of the changes to previous accounting policies in relation to the Company s various goods and services are set out below: Type of product/service Revenue from sales of product Nature, timing of satisfaction of performance obligations, significant payment terms The Company generates its revenue from the sale of produced isolation materials. Revenue is recognized when the significant risk of and reward ownership has been transferred to the counter party. Invoices are usually payable within 1 year. Nature of change in accounting policy Under TAS 18, revenue for these contracts or orders was recognized when a reasonable estimate of the returns could be made, provided that all other criteria for revenue recognition were met. If a reasonable estimate could not be made, then revenue recognition was deferred until the return period lapsed or a reasonable estimate of returns could be made. There has been no significant impact in the financial statements resulting from the sale of products due to the application of TFRS 15 accounting policies. 12

15 Condensed Interim Statement of Cash Flows For The Nine Month Periods Ended 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED) 2.3 Changes in significant accounting policies (continued) TFRS 9 Financial Instruments TFRS 9 sets out requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standard replaces TAS 39 Financial Instruments: Recognition and Measurement. The following table summaries the impact, net of tax, of transition to TFRS 9 on the opening balance of reserves, retained earnings. Impact of adopting TFRS on opening balance Retained Earnings Recognition of expected credit losses under TFRS Related tax (24.572) Impact at 1 January The details of new significant accounting policies and the nature and effect of the changes to previous accounting policies are set out below. i. Classification and measurement of financial assets and financial liabilities TFRS 9 largely retains the existing requirements in TAS 39 for the classification and measurement of financial liabilities. However, it eliminates the previous TAS 39 categories for financial assets of held to maturity, loans and receivables and available for sale. The adoption of TFRS 9 has not had a significant effect on the Company s accounting policies related to financial liabilities and derivative financial instruments. The impact of TFRS 9 on the classification and measurement of financial assets is set out below. Under TFRS 9, on initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI debt investment; FVOCI equity investment; or FVTPL. The classification of financial assets under TFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. Derivatives embedded in contracts where the host is a financial asset in the scope of the standard are never separated. Instead, the hybrid financial instrument as a whole is assessed for classification. A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL: it is held within a business model whose objective is to hold assets to collect contractual cash flows; and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL: it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment s fair value in OCI. This election is made on an investment-by-investment basis. 13

16 Condensed Interim Statement of Cash Flows For The Nine Month Periods Ended 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED) 2.3 Changes in significant accounting policies (continued) TFRS 9 Financial Instruments (continued) i. Classification and measurement of financial assets and financial liabilities (continued) All financial assets not classified as measured at amortised for the FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised for the at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise. A financial asset (unless it is a trade receivable without a significant financing component that is initially measured at the transaction price) is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition. The following accounting policies apply to the subsequent measurement of financial assets. Financial assets at FVTPL Financial assets at amortised cost Debt investments at FVOCI Equity investments at FVOCI These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss. These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses (see (ii) below). Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss. These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss. These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss. The effect of adopting TFRS 9 on the carrying amounts of financial assets at 1 January relates solely to the new impairment requirements, as described further below. The following table and the accompanying notes below explain the original measurement categories under TAS 39 and the new measurement categories under TFRS 9 for each class of the Company s financial assets as at 1 January. Financial assets Trade and other receivables Cash and cash equivalents Derivative financial instruments Original classification under TAS 39 New classification under TFRS 9 Original carrying amount under TAS 39 New carrying amount under TFRS 9 Loans and receivables Amortised cost Loans and receivables Amortised cost Available for sale financial asset FVTPL Total financial assets

17 Condensed Interim Statement of Cash Flows For The Nine Month Periods Ended 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED) 2.3 Changes in significant accounting policies(continued) TFRS 9 Financial Instruments (continued) i. Classification and measurement of financial assets and financial liabilities (continued) ii. Trade and other receivables that were classified as loans and receivables under TAS 39 are now classified at amortised cost. An increase of TL in the allowance for impairment over these receivables was recognised in opening retained earnings at 1 January on transition to TFRS 9. Impairment of financial assets TFRS 9 replaces the incurred loss model in TAS 39 with an expected credit loss (ECL) model. The new impairment model applies to financial assets measured at amortised cost, contract assets and debt investments at FVOCI, but not to investments in equity instruments. Under TFRS 9, credit losses are recognised earlier than under TAS 39. The financial assets at amortised cost consist of trade receivables, cash and cash equivalents, and corporate debt securities. Under TFRS 9, loss allowances are measured on either of the following bases: 12-month ECLs: these are ECLs that result from possible default events within the 12 months after the reporting date; and lifetime ECLs: these are ECLs that result from all possible default events over the expected life of a financial instrument. The Company measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured as 12-month ECLs: debt securities that are determined to have low credit risk at the reporting date; and other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition. The Company has elected to measure loss allowances for trade receivables and contract assets at an amount equal to lifetime ECLs. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company s historical experience and informed credit assessment and including forward-looking information. The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 360 days past due. The Company considers a financial asset to be in default when: the borrower is unlikely to pay its credit obligations to the Company in full, without recourse by the Company to actions such as realising security (if any is held). The Company considers a debt security to have low credit risk when its credit risk rating is equivalent to the globally understood definition of investment grade. The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk. 15

18 Condensed Interim Statement of Cash Flows For The Nine Month Periods Ended 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED) 2.3 Changes in significant accounting policies (continued) TFRS 9 Financial Instruments (continued) ii. Impairment of financial assets (continued) Measurement of ECLs ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset. Credit-impaired financial assets At each reporting date, the Company assesses whether financial assets carried at amortised cost and debt securities at FVOCI are credit-impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Presentation of impairment Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is recognised in OCI, instead of reducing the carrying amount of the asset. Impairment losses related to trade and other receivables are presented separately in the statement of profit or loss and OCI. As a result, the Company reclassified impairment losses amounting to TL , recognised under TAS 39, from other operating expenses and other operating income to impairment loss on trade and other receivables in the statement of profit or loss and OCI for the six month ended. Impact of the new impairment model For assets in the scope of the TFRS 9 impairment model, impairment losses are generally expected to increase and become more volatile. The Company has determined that the application of TFRS 9 s impairment requirements at 1 January results in an additional impairment allowance as follows. Loss allowance as at 31 December under TAS Additional impairment recognised at 1 January on; Trade and other receivables as at 31 December Loss allowance as at 31 December under TFRS Trade receivables and contract assets The following analysis provides further detail about the calculation of ECLs related to trade receivables and contract assets on the adoption of TFRS 9. The Company considers the model and some of the assumptions used in calculating these ECLs as key sources of estimation uncertainty. The ECLs were calculated based on actual credit loss experience over the past five years. The Company performed the calculation of ECL rates separately for wholesale customers and other customers. Exposures within each group were segmented based on common credit risk characteristics such as credit risk grade, geographic region and industry for wholesale customers; and delinquency status, geographic region, age of relationship and type of product purchased for other customers. 16

19 Notes to The Condensed Interim Financial Statements As at and For The Nine-Month Periods Ended 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED) 2.3 Changes in significant accounting policies (continued) TFRS 9 Financial Instruments (continued) ii. iii. Impairment of financial assets(continued) The following table provides information about the exposure to credit risk and ECLs for trade receivables and contract assets for other customers as at 1 January. Weighted-average loss rate % Gross carrying amount Loss allowance Current (not past due) days past due days past due days past due days past due days past due The methodology described above has also been used at the end of the interim reporting period. Transition The Company has taken an exemption not to restate comparative information for prior periods with respect to classification and measurement (including impairment) requirements. Differences in the carrying amounts of financial assets and financial liabilities resulting from the adoption of TFRS 9 are recognised in retained earnings and reserves as at 1 January. Accordingly, the information presented for does not generally reflect the requirements of TFRS 9 but rather those of TAS SEGMENT REPORTING Since the Company is only operating in isolation products in Turkey, segment reporting has not been presented. 4 RELATED PARTIES Due from related parties As at and 31 December, due from related parties are as follows: 31 December Saint-Gobain Weber Yapı Kimyasalları Sanayi Ticaret Anonim Şirketi ( Saint-Gobain Weber ) (*) Kuwait Insulating Material Mfg Co Saint-Gobain Adfors CZ S.R.O. (*) Saint-Gobain Isover SA (*) Saint-Gobain Construction Products Neder Saint Gobain İnovatif Malzemeleri ve Aşındırıcı Sanayi ve Ticaret Anonim Şirketi ( Saint Gobain İnovatif ) (*) Saint-Gobain Rigips Alçı Sanayi ve Ticaret Anonim Şirketi ( Saint-Gobain Rigips ) (*) Saint-Gobain Isover CRIR (*) (*) Companies are the group companies of the shareholders of İzocam Holding. 17

20 Notes to The Condensed Interim Financial Statements As at and For The Nine-Month Periods Ended 4 RELATED PARTIES (CONTINUED) Due to related parties As at and 31 December, due to related parties are as follows: 31 December Saint-Gobain Seva AG (*) Saint-Gobain Isover (*) Grunzweig Hartman AG (*) Saint-Gobain Rigips (*) Saint-Gobain Adfors CZ Glass Mat S.R.O.(*) Saint Gobain İnovatif (*) (*) Companies are the group companies of the shareholders of İzocam Holding. Sales to related parties For the nine-month period ended significant sales transactions to related parties comprised the following: 1 January 1 July 1 January 1 July Saint-Gobain Weber (*) Saint Gobain İsover (Fransa) (*) Saint Gobain Adfors CZ Glass Mat S.R.O. (*) Saint-Gobain Rigips (*) Kuwait Insulating Material MFG CO. (*) Saint Gobain Seva (*) Saint-Gobain Isover Iberica S.L. (*) Saint-Gobain İnovatif (*) Saint-Gobain Ppc Italıa S.P.A.(*) (*) Companies are the group companies of the shareholders of İzocam Holding. 18

21 Notes to The Condensed Interim Financial Statements As at and For The Nine-Month Periods Ended 4 RELATED PARTIES (CONTINUED) Purchases from related parties For the nine-month period ended, significant purchase transactions to related parties comprised the following: 1 January 1 July 1 January 1 July Saint-Gobain İsover SA (*) Grunzweig Hartman AG (*) Saint-Gobain Rigips (*) Saint Gobain Isover (Fransa) (*) Saint-Gobain Weber (*) Saint-Gobain Recherche (*) Saint Gobain G+H AG (*) Saint-Gobain Seva AG (*) Saint-Gobain Construction (*) Saint Gobain Glass (Romania) (*) Saint-Gobain Adfors CZ Glass Mat S.R.O. (*) (*)Companies are the group companies of the shareholders of İzocam Holding. Remunerations to the top management For the nine-month period ended remunerations to the top management comprised the following: 1 January 1 July 1 January 1 July Short Term Benefits (Salaries, premiums, housing, company cars, social security, health insurance, vacation pay etc.) Long term benefits (Termination indemnity provisions, long term portion of vacation pay liability, long term premium plans and etc.) Total