ULUSOY ELEKTRİK İMALAT TAAHHÜT VE TİCARET ANONİM ŞİRKETİ AND ITS SUBSIDIARIES

Transcription

1 ULUSOY ELEKTRİK İMALAT TAAHHÜT VE TİCARET ANONİM ŞİRKETİ AND ITS SUBSIDIARIES Convenience Translation Of The Independent Auditor s Review Report And The Condensed Consolidated Financial Statements For The Six-Month Interim Period Ended 30 June 2017

2 (CONVENIENCE TRANSLATION OF INDEPENDENT AUDITOR S REVIEW REPORT AND CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH) REPORT ON REVIEW OF CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION To the Board of Directors of Ulusoy Elektrik İmalat Taahhüt ve Ticaret A.Ş. Ankara Introduction We have reviewed the accompanying condensed consolidated statement of financial position of Ulusoy Elektrik İmalat Taahhüt ve Ticaret A.Ş. and its subsidiaries (together will be referred as the Group ) as of 30 June 2017 and the related condensed consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the six-month period then ended. Group management is responsible for the preparation and presentation of this consolidated interim financial information in accordance with Turkish Accounting Standard 34 Interim Financial Reporting ( TAS 34 ). Our responsibility is to express a conclusion on this consolidated interim financial information based on our review. Scope of Review We conducted our review in accordance with Independent Auditing Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of consolidated interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Independent Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

3 Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim financial information is not prepared, in all material respects, in accordance with TAS 34 Interim Financial Reporting. DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş. Member of DELOITTE TOUCHE TOHMATSU LIMITED Emrehan Demirel Partner Ankara, 10 August 2017

4 CONTENT PAGE CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY... 4 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF 30 JUNE 2017 ASSETS Current Period (Reviewed) Prior Period (Audited) 30 June 31 December Notes Current Assets Cash and Cash Equivalents Financial Assets Due from Third Parties Other Receivables Due from Related Parties Due from Third Parties Inventories Prepaid Expenses Other Current Assets SUB TOTAL Non-Current Assets Investment Properties Property, Plant and Equipment Intangible Assets Prepaid Expenses Deferred Tax Asset Other Non-Current Assets TOTAL ASSETS The accompanying notes form an integral part of these condensed consolidated interim financial statements. 1

6 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF 30 JUNE 2017 LIABILITIES Current Period (Reviewed) Prior Period (Audited) 30 June 31 December Notes Current Liabilities Short-Term Borrowings Trade Payables Due to Related Parties Due to Third Parties Payables for Employee Benefits Other Payables Due to Third Parties Deferred Income Income Tax Liability Short-Term Provisions Provisions for Short-Term Employee Benefits Other Short-Term Provisions Other Short-Term Liabilities SUB TOTAL Long-Term Liabilities Long-Term Provisions Provisions for Employee Benefits Deferred Tax Liability EQUITY Equity attributable to equity holders of the parent Share Capital Share Capital Adjustments Other Comprehensive Income/ Expense that will not be Reclassified Subsequently to Profit or Loss ( ) ( ) Remeasurement of defined benefit obligation ( ) ( ) Restricted Profit Reserves Legal reserves ( ) Retained Earnings / Accumulated Losses Net Profit for the Period Non-Controlling Interests ( ) ( ) TOTAL EQUITY The accompanying notes form an integral part of these condensed consolidated interim financial statements. 2

7 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX-MONTH INTERIM PERIOD ENDED 30 JUNE 2016 (Amounts are expressed in Turkish Lira (TL) unless otherwise stated). (Reviewed) (Reviewed) (Not Reviewed) (Not Reviewed) 1 January- 1 January- 1 April- 1 April- 30 June 30 June 30 June 30 June Notes GAIN OR LOSS PART Sales Cost of Sales (-) 11 ( ) ( ) ( ) ( ) GROSS PROFIT FROM OPERATIONS General Administration Expenses (-) 12 ( ) ( ) ( ) ( ) Marketing Expenses (-) 12 ( ) ( ) ( ) ( ) Research and Development Expenses (-) 12 ( ) ( ) ( ) ( ) Other Income from Operating Activities Other Expenses from Operating Activities (-) ( ) ( ) ( ) ( ) OPERATING PROFIT Income from Investing Activities Expenses from Investing Activities (38.827) (4.970) - (4.970) OPERATING PROFIT /(LOSS) BEFORE FINANCE EXPENSE Finance Expenses (-) ( ) ( ) ( ) INCOME BEFORE TAX Tax Income/Expense from Continuing Operations ( ) ( ) ( ) ( ) Current Tax Expense ( ) ( ) ( ) ( ) Deferred Tax Income/Expense 310 ( ) ( ) PROFIT FOR THE PERIOD Distribution of Profit for the Period Non-Controlling Interests (14.408) ( ) ( ) Owners of the Parent Other comprehensive income/expense that will be Reclassified subsequently to profit or loss (39.681) Translation differences (39.681) Remeasurement of defined benefit obligation OTHER COMPREHENSIVE INCOME / (EXPENSE) (39.681) TOTAL COMPREHENSIVE INCOME / (EXPENSE) Distributon of Total Comprehensive Income Non-Controlling Interests ( ) ( ) Owners of the Parent Earnings per share 0,77 0,24 0,54 0,16 The accompanying notes form an integral part of these condensed consolidated interim financial statements. 3

8 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX- Share Capital Share Capital Adjustment Restricted Reserves Other Comprehensive Income/ Expense that will not be Reclassified Subsequently to Profit or Loss Remeasurement of defined benefit obligation Other Comprehensive Income/Expense to be Reclassified Subsequently to Profit or Loss Translation Reserves Retained Earnings/ Accumulated Loses Net Profit for the Period Equity Attributable to Parent Non- Controlling Interest Total Equity Balance as 1 January ( ) (7.782) Total comprehensive income (27.777) ( ) Transfers ( ) - ( ) - ( ) Dividends ( ) Other ( ) - ( ) - ( ) Balance as 30 June ( ) (35.559) Balance as 1 January ( ) ( ) ( ) Total comprehensive income Transfers ( ) - ( ) - ( ) Dividends (*) ( ) Balance as 30 June ( ) ( ) (*) The Group decided to distribute profit amounting TL as dividend payment from the distributable net profit of 2016 in the General Assembly dated 21 April This amount is planned to be paid until the end of The accompanying notes form an integral part of these condensed consolidated interim financial statements. 4

9 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX-MONTH INTERIM PERIOD ENDED 30 JUNE 2017 Notes Current Period (Reviewed) 1 January- 30 June 2017 Prior Period (Reviewed) 1 January- 30 June 2016 CASH FLOWS FROM OPERATING ACTIVITIES ( ) Profit for the period Profit from continuing activities Adjustments to reconcile profit/loss for the period Adjustments related to depreciation and amortization expenses Adjustments related to impairment /(reversal) Adjustments related to inventory impairment/(reversal) Adjustment related with provisions Provisions and adjustments related to employee benefits Adjustment related with general provisions Adjustments to interest (income)/expenses ( ) ( ) Adjustments related to interest income ( ) ( ) Adjustments related to interest expense Adjustments related to foreign exchange (gains)/loses from translation to functional currency Adjustments related to tax (income)/expense Adjustments related to income/loss on the sale of property, plant and equipment ( ) - - Adjustments related to income/loss on the sale of property, plant and equipment ( ) - Change in working capital ( ) ( ) Adjustments related to (increase)/decrease in trade receivables ( ) ( ) (Increase)/decrease in trade receivables from related parties 4 - ( ) (Increase)/decrease in trade recaivables from third parties ( ) ( ) Adjustments related to (increase)/decrease in other receivables ( ) (Increase)/decrease in other receivables from related parties 3 (35.726) ( ) (Increase)/decrease in other recaivables from third parties ( ) Adjustments related to (increase)/decrease in inventories 5 ( ) Adjustments related to (increase)/decrease in prepaid expense ( ) Adjustments related to increase/(decrease) in trade payables Increase/(decrease) in trade payables from related parties (18.634) Increase/(decrease) in trade payables from third parties Increase/(decrease) in payables of employee benefits Adjustments related to increase/(decrease) in other payables ( ) Increase/(decrease) in other payables from related parties ( ) Increase/(decrease) in other payables from third parties ( ) Adjustments related to increase/(decrease) deferred income Cash Generated From Operating Activities ( ) Interest paid (89.412) ( ) Interest received Employee termination benefits paid 9 ( ) ( ) Payments for other provisions Income tax paid ( ) ( ) Divindend payment ( ) - The accompanying notes form an integral part of these condensed consolidated interim financial statements. 5

10 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX-MONTH INTERIM PERIOD ENDED 30 JUNE 2016 Notes Current Period (Reviewed) 1 January- 30 June 2017 Prior Period (Reviewed) 1 January- 30 June 2016 CASH FLOWS FROM INVESTING ACTIVITIES ( ) ( ) Cash used in capital advances payments of subsidiaries - ( ) Cash generated from sales of intangible asset and property, plant and equipment Cash generated from sales of property, plant and equipment Cash used in intangible asset and property, plant and equipment purchases ( ) ( ) Cash used in purchases of propery, plant and equipment 6 ( ) ( ) Cash used in purchases of intangible asset - (98.405) Cash generated from sales of investment property - CASH FLOWS FROM FINANCING ACTIVITIES ( ) Cash generated from borrowings Cash generated from loans Cash used in repayment of borrowings ( ) ( ) Cash used in loan repayments ( ) ( ) NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS BEFORE THE EFFECT TRANSLATION DIFFERENCES ( ) NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS ( ) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD The accompanying notes form an integral part of these condensed consolidated interim financial statements. 6

11 1. ORGANIZATION AND OPERATIONS OF THE GROUP Ulusoy Elektrik İmalat Taahhüt ve Ticaret A.Ş. (the Company ) was established in 1985 in Ankara, Turkey. The registered address and main field of opearations is 1.Organize Sanayi Bölgesi Oğuz Cad. No: 6 Sincan, Ankara. Metal enclosed modular switchgears, metal-clad switchgears, monoblock concrete and metallic package substations, overhead line load break switches and railway cantilever sets for the electricity transmission and distribution systems, low and medim voltage cable accessories are being produced in the Company s facilities. The Company is registered to Capital Markets Board ( CMB ) and 30% of its shares are publicly traded in Borsa İstanbul as of 30 June The Company carries out its activities in a total area of m², m² of which is indoor area. The investments in Ankara Organize Sanayi Bölgesi in a total area of m² of which m² is indoor area has been completed in With in tihs investment, concrete package substation factory started its operations on 13 May 2015 and transformer factory started its operations on 30 November The total number of personnel of the Company as of 30 June 2017 is 597. (31 December 2016: 585). The main shareholders of the Company who is primarily in control is Ulusoy Family. The Company s subsidiary Sarl UE Algeria, which operates is Algeria in the marketing industry, has been established on 15 October The Company s other subsidiary Bozat Elektrik Üretim A.Ş. which holds an electricity generation license of 4,18 MV, was established in The temporary admission of related facility is completed on 17 October 2014 and the facility started to operate and to sell electricity. The Company s subsidiaries PT Ulusoy Electric Indonesia and PT Ulusoy Electric Industry which established for marketing and producing in Indonesia in The Company and its subsidiaries Sarl UE Algeria, Bozat Elektrik Üretim A.Ş., PT Ulusoy Electric Indonesia and PT Ulusoy Electric Industry together is referred as the Group. The subsidiaries included in the consolidation, their nature of business and the share as of the Company in their capital are as follows: 30 June December 2016 Company Name Field of Operations Share Proportion (%) Sarl UE Algeria Marketing Bozat Elektrik Üretim A.Ş. Electricity production and sales PT Ulusoy Indonesia Marketing PT Ulusoy Industry Producing

12 1. ORGANIZATION AND OPERATIONS OF THE GROUP (cont d) The subsidiary Sarl El Dis presented under long-term financial investments have not been included in the consolidation due to their immaterial effect on the condensed consolidated financial statements. As of 30 June 2017 and 31 December 2016, provision provided for the shares of the Group in Sarl El Dis due to the uncertainty of the activities (Note:13). Group management has signed an agreement regarding the transfer of the shares in Sarl Eldis in August BASIS OF PRESENTATION OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS The approval of the condensed consolidated interim financial statements: Condensed consolidated interim financial statements for the period between 1 January 30 June 2017 are approved by the Board of Directors and have been granted authorization to be published on the date of 10 August No authority other than Board of Directors and General Assembly has the right to modify and change these condensed consolidated interim financial statements. 2.1 Basis of Presentation Statement of Compliance The Company and its Turkish subsidiary maintain their books of account and prepare their statutory financial statements in accordance with accounting principles in the Turkish Commercial Code ( TCC ) and tax legislation. Sarl UE Algeria, which is registered in Algeria, maintains its books of account in Algerian Dinar in accordance with accounting principles in Algeria. PT Ulusoy Indonesia and PT Ulusoy Industry, which are registered in Indonesia, maintain their books of account in Indonesia Rupee ( IDR ) in accordance with accounting principles in Indonesia. The accompanying consolidated financial statements are prepared in accordance with the requirements of Capital Markets Board ( CMB ) Communiqué Serial II, No: 14.1 Basis of Financial Reporting in Capital Markets, which were published in the Official Gazette No:28676 on 13 June The accompanying consolidated financial statements are prepared based on the Turkish Accounting Standards ( TAS ) that have been put into effect by the Public Oversight Accounting and Auditing Standards Authority ( POA ) under Article 5 of the Communiqué. Additionally the consolidated financial statements and disclosures have been prepared in accordance with the formats recommended by the CMB with the promulgations dated 7 June The consolidated financial statements are prepared according to historical cost accounting. In order to determine the historical cost, the fair values paid for assets are considered. Functional Currency The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in Turkish Lira, which is the functional, and presentation currency of the Company and the reporting currency for the consolidated financial statements. 8

13 2. BASIS OF PRESENTATION OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (cont d) Functional Currency (cont d) Subsidiaries of the Group, which will be mentioned further in the report, are measured using the currency that has significant impact on the entity or on the operations of entity, which reflects the economic substance of the underlying events and circumstances relevant to the entity ( the functional currency ). According to TAS 21, balance sheet items (except capital accounts) in terms of all have been included into consolidation by being translated to TL with buying rate applicable as of balance sheet date (30 June 2017: 1 DNR = 0,032 TL, 31 December 2016: 1 DNR = TL 0,032 TL, 30 June IDR = 0,00026 TL, 31 December IDR = 0,00026 TL). Income statement items have been included into consolidation by being translated to TL with monthly average buying rates. Capital and capital reserves are carried forward with their historical nominal costs and any related exchange component of that gain or loss and the translation gain/ (loss) realized during the translation of balance sheet and income statement is also recognized in capital translation gain-loss accounts under equity. 2.2 New and Revised Turkish Accounting Standards a) Amendments to TAS affecting amounts reported and/or disclosures in the condensed consolidated interim financial statements None. b) New and revised TAS applied with no material effect on the condensed consolidated interim financial statements None. c) New and revised TAS in issue but not yet effective The Group has not applied the following new and revised TAS that have been issued but are not yet effective: TFRS 9 Financial Instruments 1 TFRS 15 Revenue from Contracts with Customers 1 1 Effective for annual periods beginning on or after 1 January TFRS 9 Financial Instruments TFRS 9, issued by Public Oversight Authority ( POA ) in 2010, introduces new requirements for the classification and measurement of financial assets. TFRS 9 is amended in 2011 to include requirements for the classification and measurement of financial liabilities and for derecognition. Revised version of IFRS 9 is issued by POA in January 2017 mainly to include a) impairment requirements for financial assets and b) limited amendments to the classification and measurement requirements by introducing a fair value through other comprehensive income ( FVTOCI ) measurement category for certain simple debt instruments. TFRS 9 is effective for the annual periods beginning on or after 1 January Early adoption is permitted. 9

14 2. BASIS OF PRESENTATION OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (cont d) 2.2 New and Revised Turkish Accounting Standards (cont d) c) New and revised TAS in issue but not yet effective (cont d) TFRS 15 Revenue from Contracts with Customers TFRS 15 provides a single, principles based five-step model to be applied to all contracts with customers. The five steps in the model are as follows: Identify the contract with the customer, Identify the performance obligations in the contract, Determine the transaction price, Allocate the transaction price to the performance obligations in the contracts, Recognise revenue when the entity satisfies a performance obligation. TFRS 15 also clarifies three aspects of the standard (identifying performance obligations, principal versus agent considerations, and licensing) and provides some transition relief for modified contracts and completed contracts. The Group evaluates the effects of these standards, amendments and improvements on the consolidated financial statements. 10

15 2. BASIS OF PRESENTATION OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (cont d) 2.3 Summary of Significant Accounting Policies Account policies using in preparing of condensed consolidated financial statements are available with accounting policies using in 1 January-31 December Accompanying condensed consolidated financial statements should be analyzed with consolidated financial statements of 1 January-31 December There is not any material change in significant accounting policies. 3. RELATED PARTY TRANSACTIONS The domestic receivables from related parties usually arise from sales activities with a maturity of days. The receivables are unsecured by nature and bear interest. The interest rate on related receivables is 9,75% (*) as of 30 June 2017 (31 December 2016: 10,50%). The payables to related parties usually arise from purchase activities with a maturity of days and the payables bear interest. The interest rate on related payables is 9,75% (*) as of 30 June 2017 (31 December 2016: 10,50%). The non-trade domestic receivables from related parties and the non-trade payables to related parties do not have specific maturities and they bear interest. The interest rate on related non-trade receivables and non-trade payables is 9,75% (*) as of 30 June 2017 (31 December 2016: 10,50%). Total amount of salaries and other short-term benefits paid for key management is TL as of 30 June 2017 (30 June 2016: TL ). The detail of transactions between the Group and other related parties are disclosed below: 30 June 2017 Receivables Payables Short term Short term Balances With Related Parties Trade Non-Trade Trade Non-Trade Shareholders (**) ( ) Related parties controlled by shareholders Enel Enerji A.Ş ( ) Ulusoy Elektrik Enerji Yatırımları A.Ş Jüpiter Gayrimenkul Yatırım Ltd Kairos Teknoloji Yazılım Sait Ulusoy Sağlık Eğitim ve Teknoloji Indeks A.Ş ( ) (*) Interest rate set by Central Bank of the Republic of Turkey. (**) Related with dividend payments ( ) 11

16 3. RELATED PARTY TRANSACTIONS (cont d) Related Party Transactions Inventory purchases 1 January 30 June 2017 Rent Sale of goods income Other income Other companies controlled by the parent company Enel Enerji A.Ş. (**) Ulusoy Elektrik Enerji Yatırımları Jüpiter Gayrimenkul Yatırım Ltd Indeks A.Ş (**) Consists of raw material purchases to be used in production. 31 December 2016 Receivables Payables Current Current Balances With Related Parties Trade Non-Trade Trade Non-Trade Shareholders(*) ( ) Related parties controlled by shareholders Enel Enerji A.Ş Ulusoy Elektrik Enerji Yatırımları A.Ş (22.703) Jüpiter Gayrımenkul Yatırım Ltd Sait Ulusoy Sağlık Eğitim ve Teknoloji Vakfı Indeks A.Ş. - - (34.253) (34.253) ( ) Transactions With Related Parties Stock purchase 1 January - 30 June 2016 Rental Product sale income Other income Shareholders Related parties controlled by shareholders Enel Enerji A.Ş. (**) Ulusoy Elektrik Enerji Yatırımları A.Ş Jüpiter Gayrimenkul Yatırım Ltd (*) Related with dividend payments. (**) Consists of raw material purchases to be used in production. 12

17 4. TRADE RECEIVABLES AND PAYABLES a) Short-term trade receivables 30 June 31 December Short-term trade receivables Trade receivables Notes receivables Provision for doubtful receivables (-) ( ) ( ) Trade receivables are due between days (31 December 2016: days). No interest charged for the overdue trade receivables. No colleterals are received for domestic customers. Letters of credits are received for large part of overseas sale. Provision for doubtful receivables is set for TL the receivables as of 30 June 2017 (31 December 2016: TL ). Allowances for doubtful receivables are recognised against trade receivables based on estimated irrecoverable amounts determined by reference to past default experience. The movement for doubtful receivables is as follows: 1 January- 1 January- 30 June 30 June The movement for doubtful receivables Opening balance Charge for the period Collections / reversal of provision (17.911) (40.924) Closing balance b) Short-term trade payables 30 June 31 December Short-term trade payables Trade payables Notes payable Due to related parties (Note: 3) The average maturity for the payments of specific purchases is days as of 30 June 2017 (31 December 2016: days). No interest charged for the overdue trade payables. 13

18 5. INVENTORIES 30 June 31 December Raw materials Work-in-progress goods Finished goods Provision for inventories (-) ( ) ( ) 6. PROPERTY, PLANT AND EQUIPMENT Acquisition Cost TL Opening balance as of 1 January Additions Disposals ( ) Closing balance as of 30 June Accumulated Depreciation Opening balance as of 1 January Charge for the period Disposals ( ) Closing balance as of 30 June Net book value as of 30 June TL of the charge for the period have been charged to cost of goods sold, TL to marketing expenses, TL to general administrative expenses, TL to research and development expenses. Acquisition Cost TL Opening balance as of 1 January Additions Disposals ( ) Closing balance as of 30 June Accumulated Depreciation Opening balance as of 1 January Additions Disposals ( ) Closing balance as of 30 June Net book value as of 30 June TL of the charge for the period have been charged to cost of goods sold, TL to marketing expenses, TL to general administrative expenses, TL to research and development expenses. 14

19 7. PROVISIONS, CONTINGENT ASSETS AND LIABILITIES 30 June 31 December Short-term provisions Provision for legal claims January- 30 June 1 January- 30 June Balance at the beginning of the year Charge/reversal for the period - net

20 8. COMMITMENT Guarantees, pledge and mortgage ( GPM ) position of the Group as of 30 June 2017 and 31 December 2016 is as follows: 30 June December 2016 TL Amount TL USD Euro TL Amount TL USD Euro A. Total amount of CPM given on behalf of the legal entity Collateral Pledge Mortgage B. Total amount of CPM given against the subsidiaries included in full consolidation Collateral Pledge Mortgage C. Total amount of CPM given to maintain operations and collect payables from third parties Collateral Pledge Mortgage D. Total amount of other CPM given i. Total Amount of CPM on behalf of the main partner ii. Total amount of CPM given on behalf of other group companies that do not cover B and C iii.total amount of CPM on behalf of third parties that do not cover C Total (*)The ratio of the given other GPM by the Group s equity as of 30 June 2017 is 0%. (31 December 2016: 0%). 16

21 9. EMPLOYMENT BENEFITS Short-term payables for employee benefits: 30 June 31 December Provision for unused vocation Long-term payables for employee benefits: Retirement pay provisions: Under the Turkish Labor Law, the Group is required to pay employment termination benefit to the employees who work at least 1 year and retired with respect to 25 years of work (age of 58 for women, 60 for men), terminate labor contract, leave for military service or die. The amount payable consists of one month s salary limited to a maximum of TL 4.426,16 for each period of service at 30 June 2016 (31 December 2016: TL 4.297,21). The liability is not funded, as there is no funding requirement. The provision has been calculated by estimating the present value of the future probable obligation of the Group arising from the retirement of employees. TAS 19 ( Employee Benefits ) requires actuarial valuation methods to be developed to estimate the entity s obligation under defined benefit plans. Accordingly, the following actuarial assumptions were used in the calculation of the total liability: The principal assumption is that the maximum liability for each year of service will increase parallel with inflation. Thus, the discount rate applied represents the expected real rate after adjusting for the anticipated effects of future inflation. Consequently, in the accompanying financial statements as at 30 June 2017, the provision has been calculated by estimating the present value of the future probable obligation of the Company arising from the retirement of the employees. The provisions at the respective balance sheet dates have been calculated with the assumption of 3,27 % real discount rate (31 December 2016: 3,27%) calculated by using %7,00 annual inflation rate and 10,50 % discount rate. Estimated amount of retirement pay not paid due to voluntary leaves is also taken into consideration as 7,10% for employees with 0-15 years of service, and 0% for those with 16 or more years of service. The amount payable consists of one month s salary limited to a maximum of TL 4.732,48 for each period of service at 1 July 2016 (1 January 2017: TL 4.426,16). The movement for retirement pay provisions is as follows: 1 January- 1 January- 30 June 30 June Balance as at 1 January Cost of service Intereset cost Retirement pays paid ( ) ( ) Balance as at 30 June

22 10. EQUITY 30 June 31 December Shareholders % 2017 % 2016 Sait Ulusoy 46, , Akgül Ulusoy 18, , Kubilay Hakkı Ulusoy 11, , Enis Ulusoy 12, , Other (*) 11, , Nominal capital 100, , Inflation adjustment Adjusted capital (*) 30% of the Group s shares are publicly traded in Borsa İstanbul and as of balance sheet date 11,25% (31 December 2016: 9,1%) of the shares are hold by the investors other than Ulusoy Family. The Company s share capital as of 30 June 2017 comprises of 40 million shares (2016: 40 million shares). The nominal values per share is TL 1 (2016: TL 1 per share). Restricted profit reserves The legal reserves consist of first and second legal reserves, appropriated in accordance with the TCC. The first legal reserve is appropriated out of historical statutory profits of the prior year at the rate of 5% per annum, until the total reserve reaches 20% of the historical paid-in share capital. After the 5% of the dividend is paid to shareholders, 10% of the total distributed to shareholders and employees can be added in general legal reserve. Restricted profit reserves (cont d) As of 30 June 2017, restricted profit reserves consist of legal reserves and amounts to TL (31 December 2016: TL ). Divident Payment Publicly held companies, make dividend payment in accordane with the requirements of CMB Communiqué Serial II, No:19-1 Basis of Dividend Distribution which is published on 1 February Group decided to transfer amounting to TL as dividend from the distributable net profit of 2016 on the General Assembly dated 21 April The Group decided to pay dividend payment on 6 September The remaining amount corresponding to the shares of Ulusoy Family, those are not traded in Borsa İstanbul will be paid without interest. 18

23 11. REVENUE AND COST OF SALES a) Sales 1 January- 1 January- 1 April- 1 April- 30 June 30 June 30 June 30 June Domestic sales Export sales Direct exports Indirect exports Electricty sales Sales returns (-) ( ) ( ) ( ) ( ) Sales discounts (-) ( ) ( ) ( ) ( ) b) Cost of Sales 1 January- 1 January- 1 April- 1 April- 30 June 30 June 30 June 30 June Raw materials used ( ) ( ) ( ) ( ) Employee benefit expenses ( ) ( ) ( ) ( ) Production overheads ( ) ( ) ( ) ( ) Transportation expenses ( ) ( ) ( ) ( ) Depreciation and amortisation expenses ( ) ( ) ( ) ( ) Change in work in progress inventories ( ) ( ) (18.512) Change in finished goods inventories ( ) ( ) ( ) Cost of trade goods sold inventories ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) 12. GENERAL ADMINISTRATIVE, MARKETING, RESEARCH AND DEVELOPMENT EXPENSES 1 January- 1 January- 1 April- 1 April- 30 June 30 June 30 June 30 June General administrative expenses (-) ( ) ( ) ( ) ( ) Marketin expenses (-) ( ) ( ) ( ) ( ) Research and development expenses (-) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) 19

24 12. GENERAL ADMINISTRATIVE, MARKETING, RESEARCH AND DEVELOPMENT EXPENSES (cont d) a) Detail of General Administrativ Expenses 1 January- 1 January- 1 April- 1 April- 30 June 30 June 30 June 30 June Personel expenses ( ) ( ) ( ) ( ) Travel expenses ( ) ( ) (65.169) (74.382) Vehicle expenses ( ) ( ) ( ) (98.234) Amortization and depreciation expenses ( ) ( ) ( ) (26.132) Concultancy expenses ( ) ( ) ( ) ( ) Tax expenses ( ) ( ) ( ) ( ) Outsource (428) (82.317) (405) (9.330) Maintenance expenses ( ) (58.927) ( ) (56.586) Going public expenses (54.880) (41.626) (21.864) (41.626) Rent expenses (78.078) (313) (78.078) (313) Top management benefits ( ) ( ) (88.500) ( ) Office expenses (35.831) (30.429) (15.834) (28.681) Other ( ) ( ) ( ) (25.400) b) Detail of Marketing Expenses ( ) ( ) ( ) ( ) 1 January- 1 January- 1 April- 1 April- 30 June 30 June 30 June 30 June Personnel expenses ( ) ( ) ( ) ( ) Advertisement expenses ( ) ( ) ( ) ( ) Vehicle expenses ( ) ( ) ( ) ( ) Travel expenses ( ) ( ) ( ) ( ) Postpurchase expenses ( ) ( ) ( ) (84.063) Communication expenses (87.850) (87.325) (40.548) (68.494) Amortization and depreciation expenses (21.736) (12.130) (10.073) (6.954) Concultancy expenses (21.755) (81.388) (10.150) (70.929) Other ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) c) Detail of Research and Development Expenses 1 January- 1 January- 1 April- 1 April- 30 June 30 June 30 June 30 June Personnel expenses ( ) ( ) ( ) ( ) Consultancy expenses ( ) ( ) (16.501) (81.439) Purchasing of material expenses ( ) (86.456) (58.693) (58.671) Amortization and depreciation expenses (27.067) (16.520) (13.132) (8.977) Other (97.904) (87.612) (69.123) (40.373) ( ) ( ) ( ) ( ) 20

25 13. FINANCIAL INSTRUMENTS Financial Assets Long-term Financial Assets The subsidiaries and affiliates included in the financial assets, their ownership ratios and amounts are as follows: Company Name Ratio (%) 30 June 2017 Ratio (%) 31 December 2016 Sarl Eldis Provision for impairment (-) (Note:1) ( ) ( ) - - The preceding non-trade listed available for sale investments whose value ranges are indeterminable and these ranges can not be measured precisely, are shown from cost value after deducting the provision for impairment, if exists. 21

26 14. FOREIGN CURRENCY RISK MANAGEMENT Foreign currency denominated transactions cause foreign currency risk. As of 30 June 2017 and 31 December 2016, the distribution of carrying amount of the Group s foreign currency denominated monetary assets and monetary liabilities at the reporting date is as follows: 30 June 2017 TL Equivalent (Functional currency) USD Euro Indonesia Rupiah Trade Receivable Monetary Financial Assets Non-monetary Financial Assets CURRENT ASSETS TOTAL ASSETS Trade Payables Financial Liabilities Other Monetary Liabilities Other Non-Monetary Liabilities CURRENT LIABILITIES TOTAL LIABILITIES Net foreign currency asset / liability position of monetary items December 2016 TL Equivalent (Functional currency) USD Euro Indonesia Rupiah Trade Receivable Monetary Financial Assets Non-Monetary Financial Assets CURRENT ASSETS TOTAL ASSETS Trade Payables Financial Liabilities Monetary Financial Liabilities Non-Monetary Financial Liabilities CURRENT LIABILITIES TOTAL LIABILITIES Net foreign currency asset / liability position of monetary items

27 14. FOREIGN CURRENCY RISK MANAGEMENT (cont d) The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD, EURO and Indonesian Ruppiah. The following table details the Group s sensitivity to a 10% increase and decrease in the TL against the relevant foreign currencies.the sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive number indicates an increase in profit or loss and other equity where the TL strengthens 10% against the relevant currency. 30 June 2017 Profit / Loss Appreciation of Depreciation of foreign currency foreign currency Appreciation of USD against TL by 10% USD denominated net assets/liabilities ( ) Hedged amount against USD risk (-) - - Net effect of USD ( ) Appreciation of EURO against TL by 10% EURO denominated net assets/liabilities ( ) Hedged amount against EURO risk (-) - - Net effect of EURO ( ) Appreciation of OTHER against TL by 10% OTHER denominated net assets/liabilities (66.474) Hedged amount against OTHER risk (-) (66.474) TOTAL ( ) 30 June 2016 Profit / Loss Appreciation of Depreciation of foreign currency foreign currency Appreciation of USD against TL by 10% USD denominated net assets/liabilities ( ) Hedged amount against USD risk (-) - - Net effect of USD ( ) EURO denominated net assets/liabilities ( ) Hedged amount against EURO risk (-) - - Net effect of EURO ( ) Appreciation of OTHER against TL by 10% OTHER denominated net assets/liabilities (48.043) Hedged amount against OTHER risk (-) - - TOTAL ( ) 23

28 15. EXPLANATORY NOTES TO THE STATEMENT OF CASH FLOWS 30 June 31 December Cash Cash in bank Demand deposits Time deposits with a maturity shorter than three months As of 30 June 2017 the Group has a total of TL of time deposit denominated in TL with maturities of July 2017 with interest rates between 9,85% - 14,85%. As of 31 December 2016 the Group has a total of TL of time deposit denominated in TL with maturities of January 2017 with interest rates between 6,75% - 11,60%. 16. EVENTS AFTER THE BALANCE SHEET DATE The Group borrowed loan amounting to to finance its short term payments with a maturity of 365 days and with an interest rate of 1,68% in July