ÇuhadaroĞlu metal sanayİ ve pazarlama a.Ş. and its …€¦ · convenience translation into...

ÇUHADAROĞLU METAL SANAYİ VE PAZARLAMA A.Ş. AND ITS

SUBSIDIARY

CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR

ENDED DECEMBER 31, 2019 TOGETHER WITH INDEPENDENT

AUDITORS’ REPORT

(Convenience translation of the independent auditors’ report and consolidated financial

statements originally issued in Turkish)

CONVENIENCE TRANSLATION INTO ENGLISH OF INDEPENDENT AUDITOR’S REPORT

ORIGINALLY ISSUED IN TURKISH

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors of Çuhadaroğlu Metal Sanayi ve Pazarlama A.Ş.

1) Opinion

We have audited the accompanying consolidated financial statements of Çuhadaroğlu Metal Sanayi ve

Pazarlama A.Ş (the “Company”) and its subsidiary (collectively referred to as the “Group”), which

comprise the consolidated statement of financial position as at 31 December 2019 and the consolidated

statement of profit or loss, consolidated statement of other comprehensive income, consolidated statement

of changes in equity and consolidated statement of cash flows for the year then ended and the notes to the

consolidated financial statements and a summary of significant accounting policies and consolidated

financial statement notes.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial

position of the Group as at 31 December 2019, and its financial performance and its cash flows for the

year then ended in accordance with Turkish Financial Reporting Standards (“TFRS”).

2) Basis For Opinion

Our audit was conducted in accordance with the Standards on Independent Auditing (the “SIA”) that are

part of Turkish Standards on Auditing issued by the Public Oversight Accounting and Auditing Standards

Authority (the “POA”). Our responsibilities under these standards are further described in the “Auditor’s

Responsibilities for the Audit of the Consolidated Financial Statements” section of our report. We hereby

declare that we are independent of the Group in accordance with the Ethical Rules for Independent

Auditors (the “Ethical Rules”) and the ethical requirements regarding independent audit in regulations

issued by POA that are relevant to our audit of the financial statements. We have also fulfilled our other

ethical responsibilities in accordance with the Ethical Rules and regulations. We believe that the audit

evidence we have obtained during the independent audit provides a sufficient and appropriate basis for

our opinion.

3) Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our

audit of the consolidated financial statements of the current period. Key audit matters were addressed in

the context of our independent audit of the consolidated financial statements as a whole, and in forming

our opinion thereon, and we do not provide a separate opinion on these matters.

.

Key Audit Matters How our audit addressed the key audit matter

Trade Receivables

Explanations on the Group’s trade receivables are

included in Note 9. Trade Receivables consist of

28% of the Company’s total assets in financial

statements as of 31 December 2019. The risk of

material misstatement of completeness and

assestment of the regarding component is

considered as a significant risk due to vast number

of subaccounts and transactions which compose

the regarding component.

Within the scope of our audit work, the procedures

we have taken to address the risk of material

misstatement include the following:

Group’s trade receivables balances have

been tested by sending letters of

confirmation after sampling process,

Compliance of invoices issued by the

Group with the accounting records have

been controlled by sampling of issued

invoices,

Compliance of the collection of Group’s

trade receivables within the related fiscal

year with the accounting records have

been controlled by procuring payment

receipts,

Group’s rediscount and trade receivables

turnover rate works have been controlled,

Group’s doubtful receivables components

have been reviewed and tested to

determine whether there are any doubtful

receivables except the regarding

components,

Currency valuations on Group’s foreign

currency receiavbles have been controlled.

Inventories

Explanations on the Group’s inventories are

included in Note 12. Company’s inventories

possess a significant value as they consist of 28%

of company’s total assets in the financial

statements as of 31 December 2019. This, makes

the efforts to control the group’s stocktaking

process, whether the stock costs have been

calculated accurately and to determine whether

there are worthless inventories,important.The risk

of material misstatement of placing inventories in

financial statements and completeness and

assestment of the regarding component is

considered as a significant risk.

Within the scope of our audit work, the procedures

we have taken to address the risk of material

misstatement include the following:

The physical presence, unrecorded exits,

storage conditions, usability of inventories

have been controlled during the year-end

stocktaking process that was observed by

us,

Representing of sales and deliveries in

legal books have been controlled by

comparing sales invoices in accounting

records with related delivery notes,

Previous and current periods’ inventories’

amounts have been compared to control

whether adjustments for inactive

inventories components have been

represented in financial statements.

The representing of impairments regarding

finished goods and trade goods in financial

statements have been controlled by

comparing the unit prices in company’s

inventory with the unit prices in

company’s sales invoices.

The representing of impairments regarding

raw material components in financial

statements have been controlled by

comparing the unit prices in company’s

inventory with the unit prices in

company’s purchase invoices.

4) Responsibilities of Management and Those Charged with Governance for the Consolidated

Financial Statements

The Group management is responsible for the preparation and fair presentation of the consolidated

financial statements in accordance with TFRS, and for such internal control as management determines is

necessary to enable the preparation of consolidated financial statements that are free from material

misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s

ability to continue as a going concern, disclosing, as applicable, matters related to going concern and

using the going concern basis of accounting unless management either intends to liquidate the Group or to

cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

5) Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Responsibilities of independent auditors in an independent audit are as follows:

Our aim is to obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to issue an independent auditor’s report that

includes our opinion. Reasonable assurance expressed as a result of an independent audit conducted in

accordance with SIA is a high level of assurance but does not guarantee that a material misstatement will

always be detected. Misstatements can arise from fraud or error. Misstatements are considered material if,

individually or in the aggregate, they could reasonably be expected to influence the economic decisions of

users taken on the basis of these consolidated financial statements.

As part of an independent audit conducted in accordance with SIA, we exercise professional judgment

and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement in the consolidated financial statements, whether

due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit

evidence that is sufficient and appropriate to provide a basis for our opinion. (The risk of not detecting

a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may

involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal

control.)

Assess the internal control relevant to the audit in order to design audit procedures that are appropriate

in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the

Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis, based on the audit

evidence obtained, whether a material uncertainty exists related to events or conditions that may cast

significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material

uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in

the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion.

Our conclusions are based on the audit evidence obtained up to the date of our independent auditor’s

report. However, future events or conditions may cause the Group to cease to continue as a going

concern.

Evaluate the overall presentation, structure and content of the consolidated financial statements,

including the disclosures, and whether the consolidated financial statements represent the underlying

transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or

business activities within the Group to express an opinion on the consolidated financial statements. We

are responsible for the direction, supervision and performance of the group audit. We remain solely

responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope

and timing of the audit and significant audit findings, including any significant deficiencies in internal

control that we identify during our audit.

We have reported to those responsible for senior management that we comply with ethical requirements

for independence. In addition, we have communicated all relations and other issues that may be

considered to have an impact on independence, and any relevant measures, to those charged with

governance.

From the matters communicated with those charged with governance, we determine those matters that

were of most significance in the audit of the consolidated financial statements of the current period and

are therefore the key audit matters. We describe these matters in our auditor’s report unless law or

regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we

determine that a matter should not be communicated in our report because the adverse consequences of

doing so would reasonably be expected to outweigh the public interest benefits of such communication

Other Responsibilities Arising From Regulatory Requirements

Auditors’ report on Risk Management and Risk Committee prepared in accordance with paragraph 4

of Article 398 of Turkish Commercial Code (“TCC”) 6102 is submitted to the Board of Directors of

the Company on 09 March 2020

1) According to subparagraph 4 of Article 402 of Turkish Commercial Code (“TCC”) no significant

matter has come to our attention to believe that the Company’s bookkeeping activities concerning

the period from 1 January to 31 December 2019 period are not in compliance with the TCC and

provisions of the Company’s articles of association related to financial reporting

2) In accordance with subparagraph 4, Article 402 of the TCC, the Board of Directors submitted to

us the necessary explanations and provided required documents within the context of audit.

.

The responsible auditor who conducted and finalized this independent audit is Atilla Zaimoğlu.

AC İSTANBUL ULUSLARARASI BAĞIMSIZ DENETİM VE SMMM A.Ş.

Atilla ZAİMOĞLU, SMMM

Sorumlu Denetçi

İstanbul, 09 March 2020

NOTES Current Period Previous Period

31.12.2019 31.12.2018

ASSETS

Current Assets 212.356.396 235.736.331

Cash and Cash Equivalents 6 18.807.158 63.801.291

Trade Receivables 83.773.637 67.677.763

-Trade Receivables From Related Parties 9, 38 4.213 -

-Trade Receivables From Unrelated Parties 9 83.769.424 67.677.763

Other Receivables 3.660.411 637.727

- Other Receivables From Related Parties 10, 38 40.775 10.998

- Other Receivables From Third Parties 10 3.619.636 626.729

Receivables from Ongoing Construction Contract 3.219.348 27.117.692

Contractual Assets Arising From Construction in Progress and Contracting Activities 14 3.219.348 27.117.692

Inventories 12 85.586.294 60.241.441

Prepaid Expenses 13.490.602 13.213.722

- Prepaid Expenses to Unrelated Parties 13 13.490.602 13.213.722

Current Tax Assets 36 166.933 223.354

Other Current Assets 3.652.013 2.823.341

- Other Current Assets from Unrelated Parties 27 3.652.013 2.823.341

Non-Current Assets 90.349.951 91.278.906

Investment Property 16 510.000 510.000

Tangible Fixed Assets 17 61.978.200 63.693.994

Right of use assets 20, 38 18.396.896 21.024.896

Intangible Fixed Assets 18 3.153.438 953.971

Prepaid Expenses 44.201 77.574

- Prepaid Expenses to Unrelated Parties 13 44.201 77.574

Deferred Tax Assets 36 1.622.975 -

Non-Current Assets Related to Period Tax 36 4.644.241 5.018.471

TOTAL ASSETS 302.706.347 327.015.237

ÇUHADAROĞLU METAL SANAYİ VE PAZARLAMA A.Ş. AND ITS SUBSIDIARY

(All Amounts, if not stated otherwise, expressed in Turkish Lira “TL”)

The accompanying accounting policies and explanatory notes are an integral part of these consolidated statements

CONVENIENCE TRANSLATION INTO ENGLISH OF CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF 31 DECEMBER 2019

Audited



CONVENIENCE TRANSLATION INTO ENGLISH OF CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF 31 DECEMBER 2019

Audited

NOTES Current Period Previous Period

31.12.2019 31.12.2018

LIABILITIES

Short-Term Liabilities 138.116.769 169.063.262

Short-Term Borrowings 8 9.181.440 8.871.429

Short-Term Portion of Long-Term Borrowings 8 - 2.437.723

Trade Payables 34.433.888 30.175.472

-Trade Payables to Related Parties 9, 38 29.984 -

- Trade Payables to Unrelated Parties 9 34.403.904 30.175.472

Liabilities From Employee Benefits 26 3.618.387 2.816.262

Other Payables 1.364.128 1.159.424

- Other Payables to Unrelated Parties 10 1.364.128 1.159.424

Liabilities from Ongoing Construction Contract 3.122.240 -

Contractual Liabilities Arising from Construction in Progress and Contracting Activities 14 3.122.240 -

Deferred Income (Except Ongoing Construction Contracts) 13 81.112.308 119.815.731

- Deferred Income From Unrelated Parties 81.112.308 119.815.731

Tax Liability of the Period 36 1.487.319 668.563

Short Term Provisions 3.797.059 3.118.658

- Short Term Provisions for Employee Benefits 26 2.452.951 1.947.550

- Other Short-Term Provisions 24 1.344.108 1.171.108

Long Term Liabilities 4.190.342 4.817.240

Long-Term Borrowings 8 - 1.205.600

Long-Term Provisions 4.190.342 2.640.506

- Long Term Provisions for Employee Benefits 26 4.190.342 2.640.506

Deferred Tax Liabilities 36 - 971.134

EQUITY 160.399.236 153.134.735

Shareholders' Equity 154.844.721 144.441.985

Paid-in Capital 28 71.250.000 71.250.000

Share Premium (Discount) 28 6.649.019 6.649.019

Other Comprehensive Income or Expenses not to be Reclassified on Profit or Loss 15.340.286 16.266.646

Gains (Losses) on Revaluation and Remeasurement 15.340.286 16.266.646

- Revaluation Gain / (Loss) on Tangible Assets 28 17.591.537 17.591.537

- Defined Benefit Plans Remeasurement Gains / (Losses) 28 (2.251.251) (1.324.891)

Restricted Reserves Appropriated from Profits 18.694.408 18.131.949

-Legal Reserves 28 18.694.408 18.131.949

Retained Earnings/(Losses) 28 31.581.912 32.683.453

Net Profit /(Loss) for the period 37 11.329.096 (539.082)

Non-controlling Shares 28 5.554.515 8.692.750

TOTAL LIABILITIES AND EQUITY 302.706.347 327.015.237


NOTES

Current Period Previous Period

01.01.-31.12.2019 01.01.-31.12.2018

PROFIT (LOSS)

Revenue 29 351.652.702 275.612.157

Cost of Sales (-) 29 (296.815.113) (239.258.342)

GROSS PROFIT/LOSS FROM COMMERCIAL ACTIVITIES 54.837.589 36.353.815

GROSS PROFIT/LOSS 54.837.589 36.353.815

General Administrative Expense (-) 30 (18.451.356) (16.263.529)

Marketing Expense (-) 30 (26.010.157) (20.564.936)

Research and Development Expense (-) 30 (158.065) (2.367.784)

Other Operating Income 32 47.489.554 62.369.164

Other Operating Expense (-) 32 (44.183.071) (57.380.757)

OPERATING PROFIT/LOSS 13.524.494 2.145.973

Income from Investing Activities 33 874.925 200.041

Expenses from Investment Activities - -

OPERATING PROFIT/LOSS BEFORE FINANCING INCOME AND EXPENSES 14.399.419 2.346.014

Financing Income 34 367.420 4.595.255

Financing Expenses (-) 34 (4.246.346) (11.311.770)

ONGOING ACTIVITIES PROFIT/LOSS BEFORE TAX 10.520.493 (4.370.501)

Tax Income/(Expense) From Ongoing Activities (2.245.575) (688.868)

-Tax For Period 36 (4.587.081) (1.948.348)

-Deferred Tax Income/ (Expense) 36 2.341.506 1.259.480

ONGOING ACTIVITIES PROFIT/LOSS 8.274.918 (5.059.369)

DISCONTINUED OPERATIONS PERIOD PROFIT/LOSS - -

PROFIT/ (LOSS) FOR THE PERIOD 8.274.918 (5.059.369)

Distribution of the Profit / (Loss) for the Year:

Non-controlling Shares 28 (3.054.178) (4.520.287)

Parent Company Shares 37 11.329.096 (539.082)

Earnings Per Share

- Earnings Per Share from Ongoing Activities 37 0,159 (0,008)

CONVENIENCE TRANSLATION INTO ENGLISH OF CONSOLIDATED INCOME STATEMENT FOR THE PERIOD 01.01-31.12. 2019

PROFIT/ (LOSS) FOR THE PERIOD 8.274.918 (5.059.369)

OTHER COMPREHENSIVE INCOME

Items not to be reclassified to profit or loss (1.010.412) (344.670)

Defined Benefit Plans Remeasurement Gains / (Losses) 26 (1.263.015) (430.837)

Taxes on Other Comprehensive Income or Expenses not to be Reclassified on Profit or Loss 252.603 86.167

Deferred Tax Income (Expense) 36 252.603 86.167

OTHER COMPREHENSIVE INCOME (EXPENSE) (1.010.412) (344.670)

TOTAL COMPREHENSIVE INCOME 7.264.506 (5.404.039)

Appropriation of period income

Non-Controlling Interests (3.138.230) (4.545.913)

Parent Company Share 10.402.736 (858.126)



CONVENIENCE TRANSLATION INTO ENGLISH OF CONSOLIDATED INCOME STATEMENT FOR THE PERIOD 01.01-31.12. 2019



Audited


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD 01.01 - 31.12.2019

Shareholder's Equity

Non-Controlling

Shares Equity

Paid-in Capital

Share Premium /

Discount

Other comprehensive income items not to be

reclassified to profit or loss Restricted Reserves Retained Earnings

Revaluation and Remeasurements

Gain / (Loss)

Profit / Loss from Previous

Years

Net Period Profit /

(Loss)

NotesRevaluation Gain / (Loss) on

Tangible Assets

Identified Benefit Plans Remeasurement

Gains/(Losses)

PREVIOUS PERIOD

Balances as of January 1, 2018 (opening) 28 71.250.000 6.649.019 17.591.537 (1.005.847) 16.585.690 16.585.690 16.668.519 27.423.544 10.796.548 38.220.092 149.373.320 13.254.208 162.627.528

Amendments to mandatory changes in accounting policies - - - - - - - (181.956) - (181.956) (181.956) (15.545) (197.501)

TFRS 9 impact due to policy change, net (181.956) (181.956) (181.956) (15.545) (197.501)

Amount After Adjustments 71.250.000 6.649.019 17.591.537 (1.005.847) 16.585.690 16.585.690 16.668.519 27.241.588 10.796.548 38.038.136 149.191.364 13.238.663 162.430.027

Transfers - - - - - - 1.463.430 9.333.118 (10.796.548) (1.463.430) - - -

Total Comprehensive Income 37 - - - (319.044) (319.044) (319.044) - - - - (319.044) (4.545.913) (4.864.957)

Period Profit (Loss) - - (539.082) (539.082) (539.082) - (539.082)

Dividens - - - - - - - (3.891.253) - (3.891.253) (3.891.253) - (3.891.253)

Balance as of December 31, 2018 (closing) 28 71.250.000 6.649.019 17.591.537 (1.324.891) 16.266.646 16.266.646 18.131.949 32.683.453 (539.082) 32.144.371 144.441.985 8.692.750 153.134.735

CURRENT PERIOD

Balances as of January 1, 2019 (opening) 28 71.250.000 6.649.019 17.591.537 (1.324.891) 16.266.646 16.266.646 18.131.949 32.683.453 (539.082) 32.144.371 144.441.985 8.692.750 153.134.735

Transfers - - - - - - 562.459 (1.101.541) 539.082 (562.459) - - -

Total Comprehensive Income 37 - - - (926.360) (926.360) (926.360) - - - - (926.360) (3.138.235) (4.064.595)

Period Profit (Loss) - - - - - - - - 11.329.096 11.329.096 11.329.096 - 11.329.096

Balance as of December 31, 2019 (closing) 28 71.250.000 6.649.019 17.591.537 (2.251.251) 15.340.286 15.340.286 18.694.408 31.581.912 11.329.096 42.911.008 154.844.721 5.554.515 160.399.236

Audited



Notes Current Period Previous Period

01.01.-31.12.2019 01.01.-31.12.2018

A.CASHFLOWS FROM OPERATING ACTIVITIES (32.549.112) 37.865.879

Profit/(Loss) for the period 11.329.096 (539.082)

Period Profit (Loss) from Ongoing Activities 37 11.329.096 (539.082)

Adjustments to Reconcile Net Profit/(Loss) 5.192.795 (162.452)

Adjustments for Depreciation and Amortisation Expense 9.998.484 9.237.240

Adjustments for Provisions 294.716 (1.874.028)

- Adjustments for (Reversal of) Provisions Related with Employee Benefits 26 1.128.877 888.850

- Adjustments for (Reversal of) Other Provisions 32 (834.161) (2.762.878)

Adjustments for Interest (Income) Expenses (457.359) 205.019

- Adjustments for Interest Income 9 (1.302.347) (1.291.535)

-Adjustments for Interest Expense 9 844.988 1.496.554

Adjustments for Tax (Income) Expenses, 36 (1.504.811) (3.709.313)

Other Adjustments for Non-Cash Items 17 - 524.543

Other Adjustments to Reconcile Profit (Loss) 28 (3.138.235) (4.545.913)

Changes in Working Capital (48.402.440) 43.105.217

Adjustments for Increase (Decrease) in Trade Receivables (16.106.701) 5.295.536

- Change in Receivables from Related Parties 9, 38 (4.213) -

-Change in Receivables from Third Parties 9 (16.102.488) 5.295.536

Adjustments for Increase (Decrease) in Other Receivables (3.022.684) (561.170)

-Change in Other Receivables from Related Parties 10, 38 (29.777) (6.236)

-Change in Other Receivables from Third Parties 10 (2.992.907) (554.934)

Adjustments for Increase (Decrease) in Receivables Arising from Customer Contracts 14 23.898.344 (3.475.806)

Adjustments for Increase (Decrease) in Inventories 12 (25.344.853) (13.428.354)

Increase / Decrease in Prepaid Expenses 13 (243.507) (7.610.937)

Adjustments for Increase (Decrease) in Trade Payables 5.560.763 (13.471.934)

-Change in Trade Payables Due to Related Parties 9, 38 29.984 -

-Change in Trade Payables Due to Third Parties 9 5.530.779 (13.471.934)

Increase / Decrease in Employee Benefit Liabilities 26 802.125 (1.157.809)

Adjustments for Increase (Decrease) in Liabilities Arising from Customer Contracts 14 3.122.240 -

Adjustments for Increase (Decrease) in Other Payables 10,38 204.704 (29.646)

- Change in Other Payables Due to Third Parties 204.704 (29.646)

Increase / Decrease in Deferred Income(Except Liabilities Arising from Customer Contracts) 13 (38.703.423) 77.230.229

Adjustments for Increase (Decrease) in Working Capital 1.430.552 315.108

- Increase / Decrease in Other Assets Related to Activities 1.257.552 -

-Increase / Decrease in Other Liabilities Related to Activities 24 173.000 315.108

Cash Flows from Operating Activities (31.880.549) 42.403.683

Dividend Payments - (3.891.253)

Tax Payments / Refunds (668.563) (646.551)

B. CASH FLOW FROM INVESTING ACTIVITIES (9.111.709) (10.276.725)

Proceeds from Tangible and Intangible Asset Sales (+) 1.842.336 9.761

-Proceeds from Sale of Tangible Assets 17 1.842.336 9.761

Cash Outflows from Tangible and Intangible Asset Purchases (10.954.045) (10.286.486)

- Purchases of Tangible Assets 17 (8.159.463) (9.893.572)

- Purchases of Intangible Assets 18 (2.794.582) (392.914)

C.CASH FLOWS FROM FINANCING ACTIVITIES (3.333.312) 6.162.300

Proceeds from Borrowings 8 (3.333.312) 6.162.300

-Proceeds from Loans (3.333.312) 6.162.300

NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTSBEFORE CURRENCY

TRANSLATION DIFFERENCES (A+B+C) (44.994.133) 33.751.454

D. EFFECTS OF UNREALIZED EXCHANGE LOSS/ (GAIN)ON CASH AND CASH EQUIVALENTS - -

NET DECREASE/(INCREASE) IN CASH ANDCASH EQUIVALENTS (A+B+C+D) (44.994.133) 33.751.454

E. CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 6 63.801.291 30.049.837

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD (A+B+C+D+E) 6 18.807.158 63.801.291




CONVENIENCE TRANSLATION INTO ENGLISH OF CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD 01.01 - 31.12.2019

Audited

ÇUHADAROĞLU METAL SANAYİ VE PAZARLAMA A.Ş. AND IT’S SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE

YEAR ENDED DECEMBER 31, 2019 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated)

CONTENTS

1. ORGANISATION AND ACTIVITIES .............................................................................................................. 1

2. BASIS OF PRESENTATION OF THE FINANCIAL STATEMENTS ............................................................. 1

3. BUSINESS COMBINATIONS ......................................................................................................................... 24

4. SHARES IN OTHER ENTERPRISES ............................................................................................................. 24

5. SEGMENT REPORTING ................................................................................................................................. 24

6. CASH AND CASH EQUIVALENTS .............................................................................................................. 28

7. FINANCIAL INVESTMENTS ......................................................................................................................... 29

8. FINANCIAL BORROWINGS .......................................................................................................................... 29

9. TRADE RECEIVABLES AND PAYABLES .................................................................................................. 31

10. OTHER RECEIVABLES AND PAYABLES................................................................................................. 32

11. DERIVATIVE FINANCIAL INSTRUMENTS ............................................................................................. 33

12. INVENTORIES ............................................................................................................................................... 33

13. PREPAID EXPENSES AND DEFERRED REVENUES ............................................................................... 34

14. CONSTRUCTION CONTRACTS.................................................................................................................. 34

15. INVESTMENTS ACCOUNTED WITH EQUITY METHOD ...................................................................... 35

16. INVESTMENT PROPERTIES ....................................................................................................................... 35

17. TANGIBLE FIXED ASSETS ......................................................................................................................... 35

18. INTANGIBLE FIXED ASSETS ..................................................................................................................... 38

19. GOODWILL .................................................................................................................................................... 39

20. RIGHT OF USE ASSETS ............................................................................................................................... 39

21. IMPAIRMENT OF ASSETS .......................................................................................................................... 39

22. GOVERNMENT GRANTS ............................................................................................................................ 39

23. BORROWING COSTS ................................................................................................................................... 40

24. PROVISIONS, CONTINGENT ASSETS AND LIABILITIES ..................................................................... 40

25. COMMITMENTS ........................................................................................................................................... 43

26. EMPLOYEE BENEFITS ................................................................................................................................ 43

27. OTHER ASSETS AND LIABILITIES ........................................................................................................... 44

28. CAPITAL, RESERVES AND OTHER EQUITY COMPONENTS............................................................... 45

29. REVENUE ...................................................................................................................................................... 46

30. GENERAL ADMINISTRATIVE EXPENSES,MARKETING EXPENSES,RESEARCH AND

DEVELOPMENT EXPENSES ............................................................................................................................. 47

31. EXPENSES BY NATURE .............................................................................................................................. 49

32. OTHER INCOME AND EXPENSES FROM OPERATING ACTIVITIES .................................................. 50

33. INCOME AND EXPENSES FROM INVESTING ACTIVITIES ................................................................. 50

34. FINANCIAL INCOME AND EXPENSES .................................................................................................... 51

35. NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS ............................ 51

36. INCOME TAXES ........................................................................................................................................... 51

37. EARNINGS PER SHARE............................................................................................................................... 54

38. RELATED PARTY DISCLOSURES ............................................................................................................. 54

39. QUALITIES AND LEVEL OF RISKS FROM FINANCIAL INSTRUMENTS ........................................... 57

40. FINANCIAL INSTRUMENTS (FAIR VALUE OF FINANCIAL RISK MANAGEMENT

DISCLOSURES) ................................................................................................................................................... 66

41. POST BALANCE SHEET EVENTS .............................................................................................................. 67

42. DISCLOSURE OF OTHER MATTERS ........................................................................................................ 67




1

1. ORGANISATION AND ACTIVITIES

Çuhadaroğlu Metal Sanayi ve Pazarlama A.Ş. (“Company”) was established in İstanbul, Turkey. Company’s

Head Office is located in Yakuplu Mah. Hürriyet Bulvarı No:6-8 34524 Beylikdüzü / İstanbul.

The Company and its subsidiary (the "Group") operate in all manner of aluminum profiles, facades, doors and

windows, architectural applications fields.

The company shares have been traded on Istanbul Stock Exchange (ISE) since 18.02.2016, and as of 31

December 2019, % 25,96 of shares are in circulation according to Central Registry Agency (CRA) records.

(Note 28).

As of 31 December 2019, 610 people has been employed by the Group. (31.12.2018: 644)

The ultimate parent and controlling party of Group is Çuhadaroğlu Family.

Companies included in full consolidation;

Company Name

Nature of

Business

Field of

Operations

Establishment

Place

Çuhadaroğlu Alüminyum Sanayi ve

Ticaret A.Ş. (*)

Aluminum-

Commitment

Service

Turkey

(*) The company has been obtained the shares of Çuhadaroğlu Aliminyum in 2012 in consequence

of merging with Çuhadaroğlu Holding A.Ş.

2. BASIS OF THE PRESENTATION OF THE FINANCIAL STATEMENTS

A. Basic Standards of Presentation

Basis of Presentation of the Consolidated Financial Statements

The consolidated financial statements of the Group have been prepared in accordance with the Turkish

Accounting Standards/Turkish Financial Reporting Standards, (“TAS/TFRS”) and interpretations as adopted in

line with international standards by the Public Oversight Accounting and Auditing Standards Authority of

Turkey (“POA”) in line with the communiqué numbered II-14.1 “Communiqué on the Principles of Financial

Reporting In Capital Markets” (“the Communiqué”) announced by the Capital Markets Board of Turkey

(“CMB”) on June 13, 2013 which is published on Official Gazette numbered 28676. TAS/TFRS are updated in

harmony with the changes and updates in International Financial and Accounting Standards (“IFRS”) by the

communiqués announced by the POA.

In accordance with article 5th of the CMB Accounting Standards, companies should apply Turkish Accounting

Standards/Turkish Financial Reporting Standards (“TAS/TFRS”) and interpretations regarding these standards

as adopted by the Public Oversight Accounting and Auditing Standards Authority (“POA”).

The Company maintaines its books of accounts and prepare its statutory consolidated financial statements in

Turkish Lira (TL) in accordance with financial legislations and Uniform Chart Of Accounts (UCA) adopted by

the Ministry of Finance.

The consolidated financial statements are based on the statutory records, with adjustments and reclassifications

for the purpose of fair presentation in accordance with the Accounting Standards of the POA and are presented

in TL.

In order to prepare financial statements in accordance with TFRSs, certain assumptions affecting notes to the

financial statements and critical accounting estimations related to assets, liabilities, contingent assets and

contingent liabilities are required to be used.

.




2

2. BASIS OF PRESENTATION OF THE FINANCIAL STATEMENTS (continued)

A. Basic Standards of Presentation (continued)

Basis of Presentation of the Consolidated Financial Statements (continued)

Although these estimations are made upon the best afford of the management by interpreting the cyclical

circumstances, actual results may differ from the forecasts. Issues that are complex and needs further

interpretation, which might have a critical impact on financial statements. There is no change in judgements and

critical accounting estimates used in interim condensed consolidated financial statements as of 31 December

2019.

There are not any seasonal and cyclical changes that affect the Group’s activities significantly.

Financial statements, except for the revaluation of financial instruments, lands and buildings have been prepared

on the historical cost basis..

Preparation of Financial Statements in Hyperinflationary Periods

Based on CMB’s resolution No: 11/367 issued on 17 March 2005, companies operating in Turkey and preparing

their financial statements in accordance with the POA Accounting Standards, are not subject to inflation

accounting effective from 1 January 2005. Therefore, starting from January 2005, TAS 29 “Financial Reporting

in Hyperinflationary Economies” is not applied in the accompanying consolidated financial statements.

Comparative information, changes in accounting policies and restatement of prior period financial

statements

In order to allow the determination of financial position and performance of the Group,consolidated financial

statements of the current period are prepared comparatively with prior period consolidated financial statements.

In order to comply with the presentation of the consolidated financial statements for the period necessary,

comparative figures are reclassified.

- The Group has made some classifications in previous period consolidated financial statements to conform

with the presentation of the current period consolidated financial tables. The nature of the classification, reason

and amounts are as follows:

- In compliance with the remaining rent period, rent amount of TL 18.396.896 which had been classified as

“Prepaid Expense”in previous period financial statements, has been reclassified as “Right of Use Asset” in

current period financial statements.

Going Concern

The consolidated financial statements including the accounts of the group have been prepared assuming that the

Group will continue as a going concern on the basis that the entity will be able to realize its assets and discharge

its liabilities in the normal course of business

Netting / Offsetting

Financial assets and liabilities are reported with their net values in the consolidated balance sheet in case they

are legally entitled to be netted or paid net or recoverable or the realization of the liability and the realization of

the asset can happen simultaneously

.




3



New and amended standards and interpretations

The accounting policies adopted in preparation of the consolidated financial statements as at December 31, 2019

are consistent with those of the previous financial year, except for the adoption of new and amended TFRS and

IFRIC interpretations effective as of January 1, 2019. The effects of these standards and interpretations on the

Group’s financial position and performance have been disclosed in the related paragraphs

i) The new standards, amendments and interpretations which are effective as at January 1, 2019 are as

follows:

TFRS 16 Leases

CIn April 2018, POA has published a new standard, TFRS 16 'Leases'. The new standard brings most leases on-

balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases.

Lessor accounting however remains largely unchanged and the distinction between operating and finance leases

is retained. TFRS 16 supersedes TAS 17 'Leases' and related interpretations and is effective for periods

beginning on or after January 1, 2019, with earlier adoption permitted.

Lessees have recognition exemptions to applying this standard in case of short-term leases (i.e., leases with a

lease term of 12 months or less) and leases of ’low-value’ assets (e.g., personal computers, office equipment,

etc.). At the commencement date of a lease, a lessee measures the lease liability at the present value of the lease

payments that are not paid at that date (i.e., the lease liability), at the same date recognizes an asset representing

the right to use the underlying asset (i.e., the right-of-use asset) and depreciates it during the lease term. The

lease payments shall be discounted using the interest rate implicit in the lease, if that rate can be readily

determined. If that rate cannot be readily determined, the lessee shall use the lessee’s incremental borrowing

rate. Lessees are required to recognize the interest expense on the lease liability and the depreciation expense on

the right-of-use asset separately.

Lessees are required to remeasure the lease liability upon the occurrence of certain events (e.g. a change in the

lease term, a change in future lease payments resulting from a change in an index or rate used to determine those

payments). Under these circumstances, the lessee recognizes the amount of the remeasurement of the lease

liability as an adjustment to the right-of-use asset.

The regarding new standard’s influence on the Group’s financial status and performance has been explained in

section 2C.

Amendments to TAS 28 “Investments in Associates and Joint Ventures” (Amendments)

In December 2017, POA issued amendments to TAS 28 Investments in Associates and Joint Ventures. The

amendments clarify that a company applies TFRS 9 Financial Instruments to long-term interests in an associate

or joint venture that form part of the net investment in the associate or joint venture. TFRS 9 Financial

Instruments excludes interests in associates and joint ventures accounted for in accordance with TAS 28

Investments in Associates and Joint Ventures. In this amendment, POA clarified that the exclusion in TFRS 9

applies only to interests a company accounts for using the equity method. A company applies TFRS 9 to other

interests in associates and joint ventures, including long-term interests to which the equity method is not applied

and that, in substance, form part of the net investment in those associates and joint ventures. These amendments

are applied for annual periods beginning on or after 1 January 2019. The amendments did not have a significant

impact on the financial position or performance of the Group.




4



New and amended standards and interpretations(continued)

TFRIC 23 Uncertainty over Income Tax Treatments

The interpretation clarifies how to apply the recognition and measurement requirements in “TAS 12 Income

Taxes” when there is uncertainty over income tax treatments.

When there is uncertainty over income tax treatments, the interpretation addresses:

(a) whether an entity considers uncertain tax treatments separately;

(b) the assumptions an entity makes about the examination of tax treatments by taxation authorities;

(c) how an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax

rates; and

(d) how an entity considers changes in facts and circumstances.

The interpretation is effective for annual reporting periods beginning on or after 1 January 2019. The

interpretation did not have a significant impact on the financial position or performance of the Group.

Annual Improvements – 2015–2017 Cycle

In January 2019, POA issued Annual Improvements to TFRS Standards 2015–2017 Cycle, amending the

following standards:

• TFRS 3 Business Combinations and TFRS 11 Joint Arrangements — The amendments to TFRS 3 clarify that

when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in

that business. The amendments to TFRS 11 clarify that when an entity obtains joint control of a business that is

a joint operation, the entity does not remeasure previously held interests in that business.

• TAS 12 Income Taxes — The amendments clarify that all income tax consequences of dividends (i.e.

distribution of profits) should be recognised in profit or loss, regardless of how the tax arises.

• TAS 23 Borrowing Costs — The amendments clarify that if any specific borrowing remains outstanding after

the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity

borrows generally when calculating the capitalization rate on general borrowings. The amendments are effective

from annual periods beginning on or after 1 January 2019. The amendments did not have a significant impact on

the financial position or performance of the Group.

Plan Amendment, Curtailment or Settlement (Amendments to TAS 19)

In January 2019, the POA published Amendments to TAS 19 “Plan Amendment, Curtailment or Settlement”

The amendments require entities to use updated actuarial assumptions to determine current service cost and net

interest for the remainder of the annual reporting period after a plan amendment, curtailment or settlement

occurs. These amendments are applied for annual periods beginning on or after 1 January 2019.




5



New and amended standards and interpretations (continued)

Prepayment Features with Negative Compensation (Amendments to TFRS 9)

The POA issued minor amendments to TFRS 9 Financial Instruments to enable companies to measure some

prepayable financial assets at amortized cost.

Applying TFRS 9, a company would measure a financial asset with so-called negative compensation at fair

value through profit or loss. Applying the amendments, if a specific condition is met, entities will be able to

measure at amortized cost some prepayable financial assets with so-called negative compensation.

These amendments are applied for annual periods beginning on or after 1 January 2019. The amendments are

not applicable for the Group and did not have an impact on the financial position or performance of the Group.

ii) Standards issued as of 31 December 2019 but not yet effective and not early adopted

Standards, interpretations and amendments to existing standards that are issued but not yet effective up to the

date of issuance of the interim consolidated financial statements, are as follows. The Group will make the

necessary changes if not indicated otherwise, which will be affecting the consolidated financial statements and

disclosures, when the new standards and interpretations become effective.

TFRS 10 and TAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint

Venture (Amendments)

In December 2017, POA postponed the effective date of this amendment indefinitely pending the outcome of its

research project on the equity method of accounting. Early application of the amendments is still permitted. The

Group will wait until the final amendment to assess the impacts of the changes.

TFRS 17 - The new Standard for insurance contracts

The PAO issued TFRS 17 in February 2019, a comprehensive new accounting standard for insurance contracts

covering recognition and measurement, presentation and disclosure. TFRS 17 model combines a current balance

sheet measurement of insurance contract liabilities with the recognition of profit over the period that services are

provided. TFRS 17 will become effective for annual reporting periods beginning on or after 1 January 2021;

early application is permitted. The standard is not applicable for the Group and will not have an impact on the

financial position or performance of the Group.

Definition of a Business (Amendments to TFRS 3)

In May 2019, the PAO issued amendments to the definition of a business in TFRS 3 Business Combinations.

The amendments are intended to assist entities to determine whether a transaction should be accounted for as a

business combination or as an asset acquisition.

The amendments:

- clarify the minimum requirements for a business;

- remove the assessment of whether market participants are capable of replacing any missing elements;




6




Definition of a Business (Amendments to TFRS 3) (continued)

- add guidance to help entities assess whether an acquired process is substantive;

- narrow the definitions of a business and of outputs; and

- introduce an optional fair value concentration test.

The amendments to TFRS 3 are effective for annual reporting periods beginning on or after 1 January 2020 and

apply prospectively. Earlier application is permitted. The Group is assessing the amendment’s probable

influence on the Group’s financial status and performance.

Definition of Material (Amendments to TAS 1 and TAS 8)

In June 2019, the PAO issued amendments to TAS 1 Presentation of Financial Statements and “TAS 8

Accounting Policies, Changes in Accounting Estimates and Errors” to align the definition of ‘material’ across

the standards and to clarify certain aspects of the definition. The new definition states that, ’Information is

material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the

primary users of general purpose financial statements make on the basis of those financial statements, which

provide financial information about a specific reporting entity. The amendments clarify that materiality will

depend on the nature or magnitude of information, or both. An entity will need to assess whether the

information, either individually or in combination with other information, is material in the context of the

financial statements.

The amendments to TAS 1 and TAS 8 are required to be applied for annual periods beginning on or after 1

January 2020. The amendments must be applied prospectively and earlier application is permitted. The Group is

assessing the amendments’ probable influence on the Group’s financial status and performance.

Amendments to TFRS 9, TAS 39 and TFRS 7- Interest Rate Benchmark Reform

The amendments issued to TFRS 9 and TAS 39 which are effective for periods beginning on or after January 1,

2020 provide certain reliefs for four fundamental matters in connection with interest rate benchmark reform.

These reliefs are related to hedge accounting as follows:

- Highly probable requirement

- Prospective Assessments

- Retrospective Assessments

- Separately identifiable risk components

Reliefs used as a result of amendments in TFRS 9 and TAS 39 is aimed to be disclosed in financial statements

based on the amendments made in TFRS 7.

iii) The new standards, amendments and interpretations that are issued by the International Accounting

Standards Board (IASB) but not issued by Public Oversight Authority (POA)

On January 23, 2020, the IASB issued amendments to “IAS 1 Presentation of Financial Statements”. The

amendments issued to IAS 1 which are effective for periods beginning on or after 1 January 2022, clarify the

criteria




7


A.Basic Standards of Presentation (continued


Amendments to TFRS 9, TAS 39 and TFRS 7- Interest Rate Benchmark Reform (continued)

iii) The new standards, amendments and interpretations that are issued by the International Accounting

Standards Board (IASB) but not issued by Public Oversight Authority (POA) (continued)

for the classification of a liability as either current or non-current. Amendments must be applied retrospectively

in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. Early application

is permitted.. The Group is assessing the amendments’ probable influence on the Group’s financial status and

performance.

Consolidation Principles

The consolidated financial statements include the accounts of the parent company, its subsidiary on the basis set

out in sections below. Control is obtained by controlling over the activities of an entity's financial and operating

policies in order to benefit from those activities.

Subsidiary

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed, or has rights

or has variable returns from its involvement with the entity and has the ability to affect those returns through its

power over the entity. Financial statements of subsidiaries are included in the consolidated financial statements

since the date on which control obtained.

In order to be consistent with accounting policies accepted by the Group, accounting policies of the subsidiaries

are modified where necessary. Total comprehensive income is transferred to the parent shareholders and non-

controlling interests even if the situation will result in a reverse balance in non-controlling interests.

As of 31 December 2018, direct and indirect participation rate of subsidiaries subject to consolidation are as

follows:

Subsidiaries Location Main Activity

Functional

Currency 31.12.2019 31.12.2018

Çuhadaroğlu Alüminyum

Sanayi ve Ticaret A.Ş. Turkey

Aluminum -

Commitment Turkish Lira 66,54 66,54

Effective Share Rate in

Capital%

Elimination Transactions On the Consolidation

Unrealized Income and Expenses arise from intragroup transactions, intragroup transactions and intragroup

balances erase mutually while preperation of consolidated financial statements. Profits and Losses arise from

transactions between parent and subsidiaries subject to consolidation offsets as far as parent’s share on

subsidiary.

Full Consolidation Method::

The Company’s and its subsidiaries’ paid-in capital and balance sheet items were collected. The collection

process, the consolidation of the subsidiaries' receivables and payables decreased from each other.




8


A.Basic Standards of Presentation (continued)

Consolidation Principles (continued)

Elimination Transactions On the Consolidation (continued)

- The consolidated balance sheet of the Company's paid in capital and paid-in capital of subsidiary are not

included in the consolidated balance sheet.

- Income statement items of the company and its subsidiaries are collected separately and during the collection,

the sale amounts of the sales to one another of partnerships subject to consolidation method, have been

deducted from total sales and cost of goods sold amounts. The profit arising from purchase-sale of goods

between partnerships subject to consolidation method have been deducted from inventories and added to cost of

goods sold while loss amount have been added to inventories and deducted from cost of goods sold in the

consolidated financial statements. The portion of the net profit or loss of the subsidiary within the scope of

consolidation, hitting the shares other than the subsidiary,has been reported in the account group “Non-

controlling Shares” after net consolidated period profit.

- Corrections have been made to make financial stetments of subsidiaries compatible with other group

companies’ accounting principles, where necessary.

Principles of Preparaion of Consolidated Balance Sheet and Income Statement

- The Company's and its subsidiary’s income statements are separately collected and consolidation of the

process of collecting the goods and services subject to the sales of companies that they have made to each other,

the total sales amounts and reduced the cost of goods sold. Consolidation of subsidiary’s stocks, profit from the

trading of goods between these partnerships on the consolidated financial statements, inventories added by

subtracting the cost of goods sold, cost of goods sold if the damage has been reduced by adding to inventories.

Formed due to the consolidation of subsidiary's income and expenses related to transactions with each other,

mutual accounts have been eliminated.

- The net profit or loss of consolidated subsidiaries other than the shares of companies subject to the portion that

corresponds to the consolidation method, the consolidated net profit for the "Minority Interests" group name is

shown.

- Adjustment has been made on subsidiary’s financial statement to bring in compliance with accounting policies

used by intragroup companies under necessity.

B. Changes in Accounting Policies

- TFRS 16 Leases

The company has applied TFRS 16 as of 1 January 2019. The company has changed its accounting policy As it

is explained below.

The Company , benefitting all simplifying terms at transition has used the modified retrospective approach

resulting in determination of right of use assets and lease liability in equal amounts. Accordingly, the

comparative information within the scope of TAS 17 and regarding interpretations have not been restated for

2018. Details of changes in accounting policies have been explained below.




9


B. Changes in Accounting Policies (continued)

Definition of Lease

At first, the Company has determined whether the contract included a lease at the beginning of the contract.

The company assesses whether the contract includes a lease in terms of TFRIC 4. According to TFRS 16 a

contract is accepted as a lease should it gives the right of control of the use of an identified asset for a period of

time.

During transition to TFRS 16 The Company preferred to apply the amendment without reassessing whether the

contracts meet the ‘lease’ definition in the simplified approach, regarding which transactions are classified as

leases. The contracts which do not include lease in terms of TAS 17 and TFRIC 4 have not been reassessed to

determine whether they include a lease process Therefore, lease definition within TFRS 16 have been applied

only to contracts made or amended on 01 January 2019 or later.

As a lessee,

The Group leases realties.

As a lessee, the company despite having classified lease as operating lease or financial lease depending on the

assessment of whether risks and benefits of possessing the asset have been transferred, before, have included

right of use assets and financial liabilities in the financial statements for most of the lease operations according

to TFRS 16 . In other words lease transactions are represented in the statement of financial position.

Significant Accounting Policies and Transition

The building used by the Group as a lessee was built on the land owned by the Group partners with building

costs covered by the Group. According to the contract concluded between the parties, the asset subject to lease

has been leased to the Group for a long time, lease amounts have been decided to be granted by deducting

construction costs perodically from lease amounts. For this reason, no lease liability has been reflected in

financial statements as of the date the lease virtually started.

In compliance with the remaining lease period, lease amount of TL 18.396.896 which had been classified as

“Prepaid Expense”in previous period financial statements, has been reclassified as “Right of Use Asset” in

current period financial statements. The right of use asset is initially calculated at cost and subsequently

deducting accumulated depreciation and impairment losses.

C. Changes in Accounting Estimates and Errors

The preparation of consolidated financial statements requires management to affect the reported amounts of

assets and liabilities in the balance sheet at the date of the possible liabilities and commitments and the amounts

of revenue and expenses during the reporting period required to make certain assumptions and estimates. These

estimates and assumptions are based on management's best knowledge of current events and transactions despite

the actual results may vary.

Changes in accounting estimates, if only for one period, changes are made in the current period, if they relate to

future periods, as well as in the period of change in future periods, are applied prospectively. There has not been

any significant change in accounting estimates within the current year.

Significant accounting errors are applied retrospectively and prior period financial statements are restated.




10


D. Summary of Significant Accounting Policies

Revenue

Sale of Goods Revenue from the sale of goods is recognized when all of the following conditions are met:

- The Group transfers all important risks and gains related to property to the buyer

- The Group does not have an ongoing administrative involvement associated with the property and no effective

control over the goods sold

- Reliable measurement of income amount,

- It is probable that the economic benefits associated with the transaction will flow to the business, and

- Reliable measurement of costs arising from or to be caused by the transaction.

Presentation of service The income obtained from the service delivery contract is accounted according to the completion stage of the

contract. The stage of completion of the contract is determined as follows:

- Aluminum commitment projects are accounted according to the completion stage. The stage of completion is

determined as the ratio of the time elapsed as of the balance sheet date to the estimated total time for the

completion of the commitment,

- The service fees included in the prices of the goods sold are accounted for according to the total cost of the

service offered for the goods sold, taking into account the number of services provided in previous goods sales, and

- Revenues from contracts that depend on the time spent are accounted for at contract charges as working hours

and direct expenses occur.

Construction contract activities

Contract income and expenses are recorded as income and expense item when the return of the construction

contract can be accurately estimated. Contract revenues are reflected in the financial statements in accordance

with the method of completion ratio of the contract. The ratio of total contract expenditures incurred as of the

period, to the total estimated cost of the contract indicates the percentage of completion of the contract. This

ratio is used to reflect the portion of the total income of the contract corresponding to the current period in the

financial statements.

Income arising from cost plus profit type contracts are reflected in the records with the profit margin calculated

over the resulting cost.

Construction contract costs include indirect costs such as all initial material - material and direct labor costs,

indirect labor related to contract performance, materials, repairs and depreciation costs. Sales and general

administrative expenses are charged as soon as they occur. Expense provisions for estimated losses in

incomplete contracts are allocated in the periods when these losses are detected. Changes in business

performance, business conditions, and contractual provisions and estimated profitability due to final agreement

arrangements can result in cost and income revisions. These revisions are reflected in the consolidated financial

statements in the period determined. Profit incentives are included in income when their realization is

reasonably guaranteed.




11


D.Summary of Significant Accounting Policies (continued)

Revenue (continued)

Construction contract activities (continued)

Contractual assets arising from ongoing construction and commitment works indicate how much the income

amount reflected in consolidated financial statements exceed the amount of invoices issued, contractual liabilities

arising from ongoing construction commitment works indicate how much the amount of invoices issued exceed

the income amount reflected in consolidated financial statements.

Lease Income

Lease income from real estates is accounted in line with the linear method throughout the relevant lease

agreement..

Dividend and Interest Income

Dividend income from stock investments is journalised when the shareholders are entitled to receive dividends (as

long as it is possible for the Group to obtain economic benefits and to measure revenue reliably).

Interest income from financial assets is recorded as long as it is possible for the Group to obtain economic

benefits and to measure revenue reliably. Interest income is accrued in the relevant period in proportion to the

remaining principal balance and the effective interest rate, which reduces the estimated cash inflows to be

obtained from the financial asset during the expected life to the book value of that asset.

Inventories

It is the component that shows assets that are held for sale in the normal course of business, that are being

produced for sale or that are found in the form of items and materials to be used in the production process or

service delivery. Advances given for purchases are classified in prepaid expenses until the relevant stock is

recognised.

Inventories are stated at the lower of cost and net realizable value. Cost of Inventories; includes all purchasing

costs, conversion costs and other costs incurred to bring stocks to their current state and position. Conversion

costs of inventories include costs directly related to production, such as direct labor costs. These costs also

include the amounts distributed systematically from the fixed and variable general production costs incurred in

the conversion of the raw material and supplies into finished product.

Net realizable value is obtained by deducting the total of the estimated completion cost and the estimated costs

that must be incurred in order to realize the sale, from the estimated sales price occurring in the ordinary

commercial activity. Inventories cannot be monitored in the financial statements at a price higher than the

amount expected to be obtained as a result of their use or sale. When the net realizable value of the inventories

falls below their cost, the inventories are reduced to their net realizable value and reflected to the income

statement in the year when the impairment occurs.

In cases where the conditions leading to the reduction of inventories to net realizable value have expired or there

has been an increase in net realizable value due to changing economic conditions, the provision for impairment

is canceled. The canceled amount is limited by the amount of impairment previously reserved (Note 12).

The Group uses the moving average cost method to calculate the cost of inventories.




12



Tangible Fixed Assets

The physical items of the Group, which are used for the production or supply of goods and services, to be leased

to others (for non-real estate assets) or to be used for administrative purposes, are stated with their cost values

within

the framework of the cost model. Cost value of the tangible asset; The purchase price consists of, import taxes, non-refundable taxes and charges

to make the tangible fixed asset ready for use.

Expenditures such as repair and maintenance after the use of the tangible fixed asset are reported in the income

statement as an expense in the period they occur.

If the expenditures provide an economic increase in the future use of the related tangible fixed asset, these

expenditures are added to the cost of the asset.

Leasehold Improvements include the expenditures made for the leased real estate, and in cases where the useful

life is longer than the term of the lease, it is depreciated over the useful lives during the lease period. Depreciation is separated from the date on which the tangible assets are ready for use. Depreciation is continued

to be reserved in the period when the relevant assets are idle. Economic lifetime and depreciation method are regularly reviewed, accordingly, it is checked whether the

method and the depreciation period are in line with the economic benefits to be obtained from the related asset

and correction is made when necessary (Note 17).

Revaluation Model

Land and buildings that are kept in use for the production or supply of goods or services or for administrative

purposes are expressed in revalued amounts. The revalued amount is determined by deducting the accumulated

depreciation and accumulated depredation that occurs in the periods after the fair value determined on the

revaluation date. Revaluations are carried out at regular intervals in a way that the book value does not differ

significantly from the fair value that will be determined at the balance sheet date. Buildings reported in tangible

assets are shown over their revalued amount.

The fair value of the buildings was determined by an independent valuation company licensed by the Capital

Markets Board. The revalued amount is calculated from the fair value at the revaluation date by deducting

subsequent accumulated depreciation and subsequent accumulated impairment losses. Increases in revalued

value are reported in equity.

If an asset's book value increased as a result of revaluation, this increase is accounted for in other

comprehensive income and it is collected under the name of revaluation increase in direct equity account group.

However, a revaluation appreciation is recognized as income to the extent that it reverses the revaluation

purchase of the same asset previously associated with profit or loss.

If the carrying amount of an asset has decreased as a result of revaluation, this decrease is recognized as an

expense. However, this decrease is accounted within the scope of all types of receivable balances in revaluation

surplus related to this asset in other comprehensive income. This decrease in other comprehensive income

reduces the amount accumulated in equity under the heading of revaluation surplus (Note 17).

The depreciation of the revaluated buildings is included in the income statement. When the revaluated property

is sold or withdrawn, the remaining balance in the revaluation fund is transferred directly to undistributed

profits. No transfer is made from the revaluation fund to undistributed profits, unless the asset is derecognised.




13



Tangible Fixed Assets (continued)

Revaluation Model(continued)

Assets that are under construction for leasing or administrative purposes or for other purposes not already

determined are reported by deducting the impairment loss, if any, from their cost values. Legal fees are included in the cost. Such assets, like the depreciation method used for other fixed assets, are

subject to depreciation when they are ready for use.

Cost Method

Vehicles, fixtures and other property, plant and equipment that are reported in tangible fixed assets are carried at

cost less accumulated depreciation and accumulated impairment losses.

Rental or administrative purposes, or for purposes not yet determined the course of construction assets are

carried at cost less any recognized impairment loss. The cost of legal fees are also included. Such assets, the

depreciation method used for other fixed assets, as well as when they are ready for use are depreciated.

Land and construction in progress, except for the cost of tangible fixed assets to their estimated useful lives are

amortized using the straight-line method. The estimated useful lives, residual values and depreciation method

are reviewed at each year for the possible effects of changes in estimates if a change in estimate being accounted

for on a prospective basis.

The gain or loss arising from the disposal of property, plant and equipment or the removal of a property, plant

and equipment from service is determined as the difference between the sales proceeds and the carrying amount

of the asset and is included in the income statement.

The economic life and depreciation method is regularly monitored and accordingly the method and the

depreciation rate are considered to be in line with the economic benefits to be gained from the related asset.

Intangible Fixed Assets

Purchased intangible assets

Purchased intangible assets are carried at cost less accumulated amortization and accumulated impairment losses.

These assets are amortized using the straight-line method based on their expected useful lives. The estimated

useful life and amortization method are reviewed at the end of each annual reporting period and the changes in the

estimates are accounted for on a prospective basis.

Development Costs

Project costs related to the development of new products or testing and design of developed products are considered as intangible assets if the project can be successfully applied commercially and technologically and the costs can be determined reliably. Other development and research costs are recorded as expense when realized. Development expense recorded in the previous period cannot be activated in the next period. Activated development expenses are amortized by applying the straight line method in 2-10 years after the commercial production of the product begins.

Computer Software

Purchased computer software is capitalized on the basis of costs incurred during the purchase and at the time of

purchase until ready for use.




14



Intangible Fixed Assets (continued)

Derecognition of Intangible Assets

If an intangible asset is disposed of or if no future economic benefits are expected to be derived from its use or

sale, it will be excluded from the balance sheet. Any gain or loss arising from the derecognition of an intangible

asset is calculated as the difference between the net proceeds from disposal of assets and the book values, if any.

This difference is recognized in profit or loss when the asset is excluded from the balance sheet.

Investment Property

Investment property, rental income and / or capital appreciation is held in order to obtain the cost of the initial

values and are measured at cost, including transaction. Subsequent to initial recognition, investment property,

which reflects market conditions at the reporting date are measured at fair value.

Investment properties derecognised if they are sold or become unusable and it is determined that there will be no

future economic benefits from their sale. The retirement or disposal of an investment property and the profit /

loss is included in the income statement in the period.

Fair Value Method

The group, after the initial recognition process, has chosen the fair value model and all investment property have

been measured with fair value model (Note 16).

Gain or loss from the change in fair value of investment property is included in profit or loss within the period

of formation.

Transfers are made when there is a change in use of the investment property. Monitored on the basis of the fair

value of investment property, owner occupied property is a transfer to the transfer, the deemed cost for

subsequent accounting, the fair value of the aforementioned property at the date of change in use. Owner-

occupied property, will be shown on the basis of the fair value of an investment property in the event of

conversion, the company, up to the date of change in use " Property Plant And Equipment" applies the

accounting policies applied.

Right of Use Asset

The right to use asset is first accounted for using the cost method and includes:

a) Amount of the initial measurement of the lease liability,

b) Any lease payments made at or before the commencement date, less any lease incentives received

c) Any initial direct costs incurred by the Group and

d) An estimate of costs to be incurred by the lessee for restoring the underlying asset to the condition

required by the terms and conditions of the lease (unless those costs are incurred to produce inventories).




15



Investment Property (continued)

Right of Use Asset (continued)

The Group re-measures the right of use asset:

a) After netting-off depreciation and reducing impairment losses from right of use asset

b Adjusted for certain re-measurements of the lease liability recognized at the present value.

The Group applies TAS16 “Property, Plant and Equipment” to amortize the right of use asset and to asses for

any impairment..

To determine whether the right of use asset is impaired and to recognize any impairment loss, IAS 36 applies

the "Impairment of Assets" standard

Lease Liabilities

The Group measures the lease liabilities at the present value of the lease payments that are not paid at the

commencement date.

The lease payments included in the measurement of the lease liability at the date of the lease actually consist of

the following payments to be made for the right to use the underlying asset during the lease period and which

have not been paid on the date the lease actually started.:

a) Fixed payments,

(b) Variable lease payments that depend on an index or a rate, initially measured using the index or rate as the commencement date,

(c) Amounts expected to be paid by the Group within the scope of residual value commitments

(d) The exercise price under a purchase option that the Group is reasonably certain to exercise,

(e) Penalties for early termination of a lease unless the Company is reasonably certain to terminate early. Variable lease payments that do not depend on an index or rate are recorded as expenses in the period when the event or condition that triggered the payment occurred.

The Group determines the revised discount rate for the remainder of the lease term as this rate if the implicit

interest rate in the lease can be easily determined.; if it cannot be determined easily, the Group determines the

alternative borrowing interest rate on the date of re-evaluation.

The Group measures the lease liability after the lease actually starts as follows:

(a) Increases the carrying amount to reflect interest on lease liability and,

(b) Reduces the carrying amount to reflect the lease payments made. In addition to that, remeasures the carrying

amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payment.

Impairment of Assets

Assets that have an indefinite useful life such as goodwill are not subject to amortization. These assets are tested

for impairment annually. As for redeemable assets,impairment test is conducted in cases when book value

cannot be regained. If the carrying amount exceeds the recoverable amount of the asset provision is recognized

for the impairment. The recoverable amount is fair value less costs to sell or value in use is the one obtained.

For purposes




16



Impairment of Assets (continued)

of assessing impairment, assets are grouped at the lowest level of identifiable cash flows (cash-generating units).

Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the

impairment at each reporting date.

Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset

which requires substantial period of time to get ready for its intended use or sale shall be capitalized over the

cost of the asset. Other borrowing costs shall be recognized as an expense in the period it incurs.

Related Parties

The related parties of the Group include organizations that can directly or indirectly control or significantly

influence the other party through shareholding, contractual rights, family relations or similar means.

In the accompanying consolidated financial statements, the Group's shareholders and the companies owned by

these shareholders and their key management personnel and other companies known to be related are defined

as related parties.

In the presence of one of the following criteria, the party is considered associated with the Group:

i) through one or more intermediaries of that party, directly or indirectly:

- Controls the Group,or is controlled by the Group;

- Is under common control with, the Group (this includes parents, subsidiaries and fellow subsidiaries);

- Has an interest in the Group that gives it significant influence over the Group; or has joint control over the

Group;

ii) The party is an associate of the Group;

iii) The party is a joint venture in which the Group is a venture;

iv) The party is member of the key management personnel of the Group or its parent;

v) The party is a close member of the family of any individual referred to in (i) or (iv);

vi) the party is an entity that is controlled, jointly controlled or significantly influenced by, or for which

significant voting power in such entity resides with, directly or indirectly, any individual referred to in (iv)

or (v); or

vii) The party has a post-employment benefit plan for the benefit of employee of the Group, or of an entity

that is a related party of the Group.

The transaction with the related parties is the transfer of the resources, services or liabilities between the related

parties regardless of whether or not they are paid (Note 38).

Financial Assets

Financial assets that are bought and sold in the normal way are recorded or issued at the transaction date.

The Company classifies financial assets as the ones measured by reflecting the change in fair value to

comprehensive income or reflecting fair value to profit or loss with respect to (a) Business model used to

manage financial assets (b) Amortized cost of the financial asset based on contractual cash flows of the asset.

When an entity changes the business model, it uses only for the management of financial assets, it reclassifies

all financial assets affected by this change. Reclassification of financial assets is applied prospectively from

the




17



Financial Assets (continued)

reclassification date. In such cases, no adjustments are made to earnings, losses (including impairment gains or

losses) or interests previously included in the financial statements.

Classification of Financial Assets

Financial assets meeting the following conditions are measured over their amortized costs:

• retaining the financial asset under a business model aimed at collecting contractual cash flows; and

• contractual conditions related to financial assets lead to cash flows that only include interest payments

arising from principal and principal balance on certain dates.

Financial assets that meet the following conditions are measured by reflecting the fair value change to other

comprehensive income:

• holding the financial asset under a business model that aims to collect contractual cash flows and sell the

financial asset; and

• contractual conditions related to financial assets lead to cash flows that only include interest payments

arising from principal and principal balance at certain dates.

If a financial asset is not measured at amortized cost or by reflecting fair value change in other comprehensive

income, fair value change is measured by reflecting profit or loss. For the first time in the financial statements, the Company may make an irreversible preference for the

subsequent changes in fair value of its investment in equity instruments that are not held for commercial

purposes in other comprehensive income.

(i) Amortised Cost and Effective Interest Method

Interest income for financial assets that are shown at amortized cost is calculated using the effective interest

method. The effective interest method is the method of calculating the amortized cost of a debt instrument and

distributing the interest income to the relevant period. This income is calculated by applying the effective

interest rate to the gross book value of the financial asset, except for:

a) Financial assets with credit-impairment when purchased or created. For such financial assets, the entity

applies the effective interest rate corrected according to credit to the amortized cost of the financial

asset, since it is included in the financial statements for the first time.

b) Financial assets that are not financial assets with credit-impairment when purchased or created, but

subsequently became financial assets with credit-impairment. For such financial assets, the entity applies

the effective interest rate to the amortized cost of the asset in subsequent reporting periods.

Interest income is accounted by using the effective interest method for debt instruments reflected in other

comprehensive income, amortized costs and fair value change in subsequent recognition.

Interest income is recognized in profit or loss and is shown in the item "financing income - interest income".

(ii) Financial assets with fair value reflected on profit or loss




18




Classification of Financial Assets (continued)

Are measured on amortized cost or financial assets that do not meet the criterion of fair value through other

comprehensive income are measured by reflecting fair value change to profit or loss.

Financial assets whose fair value change is reflected to profit or loss are measured at their fair values at the end

of each period and all fair value changes are accounted in profit or loss, unless relevant financial assets are part

of hedging transactions.

Foreign Exchange Gain or Loss

The book value of financial assets in foreign currency is determined by the relevant foreign currency and is

converted at the current exchange rate at the end of each reporting period. Especially,

• for financial assets that are shown at amortized cost an that are not part of a defined hedging transaction,

currency differences are recognized in profit or loss;

• foreign exchange differences calculated on the amortized costs of borrowing instruments that are not part of

a defined hedging transaction, measured at fair value through other comprehensive income, are recognized in

the period profit or loss. All other foreign exchange differences are recognized in other comprehensive

income;

• foreign exchange differences related to financial assets that are not part of a defined hedging transaction,

measured at fair value through profit or loss, are recognized in profit or loss for the period ; and

• foreign exchange differences of equity instruments measured at fair value through other comprehensive

income are recognized in other comprehensive income.

Impairment of Financial Assets

The Company reserves impairment in its financial statements for borrowing instruments, lease receivables, trade

receivables, assets arising from contracts with customers as well as expected credit losses related to investments

in financial collateral agreements, which are shown at amortized costs or measured at fair value through other

comprehensive income. Expected credit loss amount is updated to reflect the changes in credit risk since the

related financial asset is first included in the financial statements in each reporting period. The Company calculates the impairment provisions equal to the expected credit loss for the life of the related

financial assets, by making use of the simplified approach for commercial receivables, assets arising from

contracts with customers and lease receivables that are not important financial assets.

The Company recognizes lifetime expected credit losses for all other financial instruments since the first

recognition, if there has been a significant increase in credit risk. However, if the credit risk of the financial

instrument has not increased significantly since initial recognition, the Company recognises provision for the

loss, as much as the expected credit loss amount of 12 months for that financial instrument.

Measurement and Recognition of Expected Credit Losses

Measurement of expected credit losses is a function of probability of default, loss in default (eg loss of default if

there is default, and amount subject to risk in default. The probability of default and assessment of loss in

default is based on historical data, corrected with forward-looking information. The amount of financial assets

subject to risk in case of default is reflected on the gross book value of the related assets at the reporting date.




19




Measurement and Recognition of Expected Credit Losses (continued)

The expected credit loss of financial assets is the present value calculated over initial effective interest rate of

the difference between all of the cash flows to be realised as they are due and all of the cash flows the Company

expects to collect.

Derecognition of Financial Assets

The Company excludes the financial asset from the financial statement only when the contractual rights related

to the cash flows arising from the financial asset expire or when it transfers any risks and returns arising from

the financial asset and ownership of the financial asset to another enterprise.

When a financial asset measured at amortized cost is excluded from the financial statement, the difference

between the book value of the asset and the amount collected and to be collected is recognized in profit or loss.

In addition, in the exclusion of a debt instrument whose fair value change is reflected in other comprehensive

income, the total gain or loss previously accumulated in the revaluation fund for the relevant vehicle is

reclassified in profit or loss. In the event that an equity instrument that the Company prefers to measure by

reflecting the fair value change to other comprehensive income in the initial recognition, the total gain or loss

accumulated in the revaluation fund is not recognized in the profit or loss, but directly transferred to the

accumulated profits.

Financial Liabilities

The entity measures its financial liability at fair value for the first time when it is included in the financial

statements. At the first measurement of liabilities other than those whose fair value changes are reflected to

profit or loss, transaction costs that can be directly associated with their acquisition or issuance are also added to

the fair value.The entity classifies all its financial liabilities other than the following as measured from its

amortized cost in subsequent recognition.:

a. Financial liabilities at fair value through profit or loss: These liabilities are measured at fair value in

subsequent recognition, including derivatives.

b. Financial liabilities arising if the transfer of financial assets does not meet the derecognition conditions or

if the ongoing relationship approach is applied: In the event that the company continues to present an

asset in the financial statement to the extent of its ongoing relationship, it also reflects a related liability in

the financial statement. The transferred asset and the related liability are measured to reflect the rights and

obligations that the business continues to hold.Liability related to the transferred asset is measured in the

same manner as the net book value of the transferred asset.

c. Contingent consideration in the financial statements by the acquirer in a business combination where

TFRS 3 is applied: After being included in the financial statements for the first time, fair value changes in such

contingent consideration are measured by reflecting the profit or loss.

The entity does not reclassify any financial obligations.

Derecognition of Financial Liabilities

The Company's financial liabilities are excluded from the financial statements only when the Company's

liabilities are eliminated, canceled or expired. The difference between the carrying amount of the financial

liability excluded




20



Financial Liabilities (continued)

Derecognition of Financial Liabilities (continued)

from the financial statement and the amount paid or to be paid, including the transferred non-cash assets or

liabilities assumed, is recognized in profit or loss.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits with original maturities of 3 months from

the date of acquisition is less than 3 months, the risk of significant value change readily convertible to cash and

other short-term highly liquid investments (Note 6). Bank deposits with a maturity of more than 3 months and

less than 1 year are classified under short-term financial investments.

Trade Receivables

Trade receivables are accounted for at amortized cost in the financial statements.

Trade receivables that are created as a result of providing products or services to the buyer are recognized at

amortized cost using the effective interest method. Short-term receivables with no stated interest rate are

measured at the original invoice amount unless the effect of imputing interest is significant. A simplified

approach (is applied for the impairment of trade receivables, which are recognized at amortized cost in the

financial statements and which do not include a significant financing component (less than one year). In cases

where the trade receivables are not impaired due to certain reasons (except for the realized impairment losses),

the provisions for losses related to trade receivables are measured by an amount equal to the expected credit

losses. In case of collecting all or part of the receivable amount that is impaired following the provision for

impairment, the collected amount is deducted from the main activities to other income by deducting the amount

deducted from the provision for impairment. Income / expense related to commercial transactions and foreign

exchange gains / losses are accounted for under the other operating income / expenses in the consolidated

statement of profit or loss.

Trade Payables

Trade payables are payments to be made arising from the purchase of goods and services from suppliers within

the ordinary course of business. Trade payables are recognized initially at fair value and subsequently measured

at amortized cost using the effective interest method (Note 9)

Foreign currency transactions

The financial statements of the company were presented in the currency (functional currency unit) valid in the

basic economic environment in which it operates.

The Company's financial status and operating results are expressed in TL, which is the Company's current

currency and the presentation unit for the financial statements. During the preparation of the Company's financial statements, transactions in foreign currency (currencies other

than TL) are recorded based on the exchange rates at the date of the transaction.. Foreign currency indexed

monetary assets and liabilities in the balance sheet are converted into Turkish Lira by using the exchange rates

valid on the balance sheet date. Non-monetary items recognised in foreign currency that are monitored with their

fair value are converted into TL, based on the exchange rates on the date the fair value is determined. Non-

monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.




21



Foreign currency transactions (continued)

Foreign exchange differences are recognized in profit or loss in the period they occur except for the following

situations:

- Exchange differences, which are related to assets being built for future use and which are considered as a

correction item to interest costs on debts denominated in foreign currency and included in the cost of such assets.,

- Exchange differences arising from transactions carried out to provide financial protection against risks arising

from foreign currency,

-

- Foreign exchange differences arising from foreign debt and receivables arising from foreign operations, which

are part of the net investment in foreign activity, accounted for in the reserve reserves and associated with profit or

loss in the sale of net investment, without intention to pay or probability.

Earnings Per Share

Earnings per share Earnings / loss amount, profit / loss, earnings per share from continuing operations / loss

amount, the continuing operations profit / loss for the period of time in the Company's shares is calculated by

dividing the weighted average number of common shares.

In Turkey, companies can increase their capital by "bonus shares" that they distributed to existing shareholders

from retained earnings. This type of "bonus share" distributions, earnings per share, are regarded as issued

shares. Accordingly, the weighted average number of shares used in the calculations, giving retroactive effect to

the stock in question is taken into consideration.

In the calculation of earnings per share, there are no preferred stock or potential shares with dilution effect that

will require to make the necessary corrections to the of, or None (Note 37).

Events after the Balance Sheet Date

Events after the balance sheet date are defined as, events that occur in favor or against the Company between

the approval date of the publication of the consolidated financial statements and the balance sheet date.

Whether to make a correction, according to the two types of situations can be identified:

- Adjusting events after the balance sheet, showing evidence of conditions that existed at the reporting date on

situations in which the conditions,

- About the events that are indicative of conditions that arose after the balance sheet date (non-adjusting events

after the balance sheet)

Adjusting events after balance sheet date have been recognized in the accompanying consolidated financial

statements of the Group, and non-adjusting events indicated in the balance sheet notes (Note 41).




22



Provisions, Contingent Liabilities and Contingent Assets

Provisions

If there is a present legal or constructive obligation as a result of past events, and resources embodying

economic benefits to settle the obligation and it is probable that they kept the company is expected to have a

safe manner in the event of liability, provisions should be recognized in the consolidated financial statements.

The provisions are calculated by the Company's management with the most realistic estimates of the

expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where

the effect is material.

Contingent Liabilities

Obligations under this group, within the control of the entity arising from past events, and the presence of one or

more uncertain future events on the realization of the non-existence, will be confirmed as the assessed liabilities.

Contingent liabilities are not included in the consolidated financial statements. Because, to settle the obligation,

Provisions, Contingent Liabilities and Contingent Assets (continued)

there are no possibility of an outflow of resources of embodying economic benefits or the amount of obligation

can not be measured with sufficient reliability. Contenget Liabilities are indicated in notes to the consolidated

financial statements unless the Too far from the entity of resources of embodying economic benefits are likely

to come out from entity (Note 24).

Contingent Assets

The Group within the control of the entity arising from past events, and the presence of one or more uncertain

events, which will be confirmed by the realization of assets, is considered as a contingent asset. If an inflow of

resources embodying economic benefits is not certain contingent assets described in the notes to the

consolidated financial statements..

The amount to be collected in cases where all or part of the economic benefits used to pay for the provision

amount is expected to be covered by third parties, is recognized and reported as an asset if the reimbursement of

this amount is certain and is calculated reliably.

Segment reporting

The reportable segment is an industrial segment or geographic segment where segment information must be

disclosed. Industrial segments are departments that have different characteristics from other departments of the

Group in terms of providing a certain good or service or a group of related goods or services, or in terms of risk

and benefit.

Government Grants

Government grants, are recognized in financial statements at fair value when there is reasonable assurance that

the entity will comply with the conditions attaching to them, and the grants will be received. (Note 22).

Government grants relating to costs are deferred and recognized in the income statement over the period

necessary to match them with the costs that they are intended to compensate.

Government grants relating to property, plant and equipment are included in non-current liabilities as deferred

government grants and are credited to the income statement on a straight- line basis over the expected lives of

the related assets.




23



Taxation on Income

The tax expense for the year comprises current and deferred tax. Tax is recognized in the statement of profit or

loss, except to the extent that it relates to items recognized directly in equity. In such case, the tax is also

recognized in shareholders’ equity. (Note 36).

The current income tax charge is calculated in accordance with the tax laws enacted or substantively enacted at

the balance sheet date in the countries where the subsidiaries of the Group operate.

Deferred income tax is provided in full, using the liability method, on all temporary differences arising

between the tax bases of assets and liabilities and their carrying values in the consolidated financial

statements. However, except for business combinations, deferred tax assets or liabilities are not included in

the financial statements if assets and liabilities that do not affect both commercial and financial profit or loss

are included in the financial statements for the first time.

Deferred tax assets and liabilities are calculated over the tax rates expected to be applied in the period when

the tax asset is to be realized or the liability will be performed, taking into account the tax rates and tax

legislation that are in force or effective as of the reporting period.

The main temporary differences arise from the difference between the registered values of the tangible fixed

assets and tax values, tax deductions and exemptions that are not deductible / taxable, and unused.

Deferred tax liabilities are recognized for all taxable temporary differences, whereas deferred tax assets

resulting from deductible temporary differences are calculated to the extent that it is probable that future

taxable profit will be available against which the deductible temporary difference can be utilized.

Deferred tax assets and liabilities are offset against each other if the same country is subject to tax legislation and there is a legally enforceable right to offset current tax assets against current tax liabilities.

Employee Benefits and Severance Pay

Employment termination benefits, as required by the Turkish Labor Law and the laws applicable in the

countries where the subsidiaries operate, represent the estimated present value of the total reserve of the future

probable obligation of the Company arising in case of the retirement of the employees, termination of

employment without due cause, call for military service, be retired or death upon the completion of a

minimum one year service. Provision which is allocated by using defined benefit pension's current value is

calculated by using prescribed liability method. Actuarial gains and losses are recognized as other

comprehensive income or loss in shareholders’ equity in the period in which they arise (Note 26).

Reporting of cash flows

The Group organizes the cash flow statements to inform the users of the financial statements about the changes

in the net assets, the financial structure and the ability to direct the amount and timing of the cash flows

according to changing conditions. In the cash flow statement, cash flows for the period are classified and

reported based on operating, investment and financing activities.

Cash flows from operating activities are those resulting from the Group’s main activities. Cash flows from

investment activities indicate cash inflows and outflows resulting from property, plant and equipments and

financial investments. Cash flows from financing activities indicate the resources used in financing activities and

the repayment of these resources.

Cash and cash equivalents comprise of cash in hand accounts, bank deposits and short-term, highly liquid

investments that are readily convertible to known amounts of cash with maturities equal or less than three months.




24


Dividends

Ordinary shares, are classified as equity. Dividends payable are declared as an element of profit in the period are

reflected as liabilities in the financial statements

E. Evaluation of Significant Accounting Estimates and Assumptions

The preparation of consolidated financial statements requires management to affect the reported amounts of assets

and liabilities in the balance sheet at the date of the possible liabilities and commitments and the amounts of

revenue and expenses during the reporting period required to make certain assumptions and estimates. These

estimates and

assumptions are based on management's best knowledge of current events and transactions despite the actual

results may vary. Estimates are revised regularly and any necessary corrections are made and are reflected in the

income statement in the periods.

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet

date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities

within the next financial year, are discussed below:

a) Severance pay provision calculates under actuerial estimations (discount rate, future salary increases and

employee leave rate)

b) Doubtful receivable provisions reflects future loss of possible uncollectible receivable amounts as at

balance sheet date.While the determination impariement of receivables, past performans of third party

receivables, market credibilities and performanses from balance sheet date until the confirmation of

financial statements taking into consideration.

c) While the determination provision for lawsuits, Company’s legal advisor’s and Company Management’s

opinions regarding possibility of lose lawsuits and liabilities in case of lose took into

consodiration.Company Managament determine lawsuit provision according to best estimations.

d) The Company Management have made important assumptions in accordance with the experience of its

technical team in determining the useful economic lives of tangible and intangible assets.

3. BUSINESS COMBINATIONS

None (31.12.2018: None).

4. SHARES IN OTHER ENTERPRISES

Subsidiaries Main Activity Location 31.12.2019 31.12.2018

Çuhadaroğlu Alüminyum

Sanayi ve Ticaret A.Ş.

Aluminum -

Commitment İstanbul 66,54% 66,54%

Effective Share Rate in Capital%

5. SEGMENT REPORTING

By the chief operating decision-making authority determined the operating segments based on internal reports

that are regularly reviewed.

The competent authority to decide the Group, to make decisions about resources to be allocated to

departments and divisions in order to evaluate the performance and results of operations on a product basis




25

5. SEGMENT REPORTING (continued)

and examines the basis of geographical distribution. The distribution of the Group's product lines are as

follows: Aluminium profiles and door and window manufacturing (“Metal Profile”), facades and architectural

applications (“Aluminum Commitment”).

Informations on operating segments of the Group are as follows:




26


31.12.2019 Metal Aluminium Commitment

Consolidation

Adjustments Total

Revenue 235.211.592 138.869.844 (22.428.734) 351.652.702

Cost of Salesi (-) (187.947.448) (130.290.145) 21.422.480 (296.815.113)

Gross Profit 47.264.144 8.579.699 (1.006.254) 54.837.589

General Administrative

Expense (-) (9.280.508) (9.171.041) 193 (18.451.356)

Marketing Expense (-) (25.134.775) (999.481) 124.099 (26.010.157)

Research and Development

Expense (-) (158.065) - - (158.065)

Other Operating Income 20.284.254 27.205.300 - 47.489.554

Other Operating Expense (-) (10.314.862) (33.895.502) 27.293 (44.183.071)

Operating Profit/Loss 22.660.188 (8.281.025) (854.669) 13.524.494

Income From Investing

Activities 1.028.302 678.223 (831.600) 874.925

Expense From Investing

Activities (-) - - - - Operating Profit/(Loss) Before

Financing Income

And Expenses23.688.490 (7.602.802) (1.686.269) 14.399.419

Financing Income 13.000 354.420 - 367.420

Financing Expenses (-) (255.389) (3.990.957) - (4.246.346)

ONGOING ACTIVITIES

PROFIT/LOSS

BEFORE TAX

23.446.101 (11.239.339) (1.686.269) 10.520.493

Tax Income/(Expense) From

Ongoing Activities

-Tax For Period (4.587.081) - - (4.587.081)

-Deferred Tax Income/

(Expense) 230.028 2.111.478 - 2.341.506

PROFIT/ (LOSS) FOR THE

PERIOD 19.089.048 (9.127.861) (1.686.269) 8.274.918

Investment Expenditures

Property, Plant and Equipment 3.917.863 4.242.759 (1.159) 8.159.463

Intangible Fixed Assets 2.785.251 9.331 - 2.794.582

Depreciation Expenses (6.608.964) (2.794.405) - (9.403.369)

Redemption (410.145) (184.970) - (595.115)

Other Details

-Assets Total 223.978.402 137.298.048 (58.570.103) 302.706.347

- Liabilities Total 223.978.402 137.298.048 (58.570.103) 302.706.347




27


31.12.2018 Metal

Aluminium

Commitment

Consolidation

Adjustments Total

Revenue 158.114.711 139.153.238 (21.655.792) 275.612.157

Cost of Salesi (-) (126.726.142) (135.269.462) 22.737.262 (239.258.342)

Gross Profit 31.388.569 3.883.776 1.081.470 36.353.815

General Administrative Expense (-)(8.576.451) (7.775.362) 88.284 (16.263.529)

Marketing Expense (-) (19.332.739) (1.232.197) - (20.564.936)

Research and Development Expense (-)(2.367.784) - - (2.367.784)

Other Operating Income 26.791.304 35.946.518 (368.658) 62.369.164

Other Operating Expense (-) (15.854.814) (41.894.603) 368.660 (57.380.757)

Operating Profit/Loss 12.048.085 (11.071.868) 1.169.756 2.145.973

Income From Investing Activities758.021 198.020 (756.000) 200.041

Expense From Investing Activities (-) - - - -

Operating Profit/(Loss) Before Financing

Income

And Expenses12.806.106 (10.873.848) 413.756 2.346.014

Financing Income 3.512.975 1.082.280 - 4.595.255

Financing Expenses (-) (7.739.157) (3.572.613) - (11.311.770)

ONGOING ACTIVITIES PROFIT/LOSS

BEFORE TAX

8.579.924 (13.364.181) 413.756 (4.370.501)

Tax Income/(Expense) From Ongoing

Activities

-Tax For Period (1.948.348) - - (1.948.348)

-Deferred Tax Income/ (Expense) 1.404.827 (145.347) - 1.259.480

PROFIT/ (LOSS) FOR THE PERIOD8.036.403 (13.509.528) 413.756 (5.059.369)

Investment Expenditures

Property, Plant and Equipment 7.242.760 2.651.490 (678) 9.893.572

Intangible Fixed Assets 213.847 179.067 - 392.914

Depreciation Expenses (6.258.978) (2.533.750) - (8.792.728)

Redemption (235.988) (208.524) - (444.512)

Other Details

-Assets Total 210.982.934 171.276.293 (55.243.991) 327.015.236

- Liabilities Total 210.982.934 171.276.293 (55.243.991) 327.015.236




28


Segment information related to customers constitutes more than 10% of the Group’s revenue within the periods

between 01.01.-31.12.2019 and 01.01.-31.12.2018 are as follows :

01.01.- 31.12.2019

Operation Segment Activity

Amount in Gross

Revenue

Share in Gross

Revenue

Aluminium Commitment Project Commitment 41.562.743 30%





01.01.- 31.12.2018

Operation Segment Activity

Amount in Gross

Revenue

Share in Gross

Revenue





6. CASH AND CASH EQUIVALENTS

31.12.2019 31.12.2018

Cash 60.521 65.711

Banks

-Demand Deposits 4.670.507 3.235.367

Time Deposits (Maturity less than 3 Months) 14.076.130 60.455.843

Other Cash and Cash Equivalents - 44.370

Total 18.807.158 63.801.291

31.12.2019 31.12.2018

TL Deposit 3.239.975 3.173.733

USD Deposit 11.237.682 58.650.324

EURO Deposit 4.268.980 1.867.153

Total 18.746.637 63.691.210

As of 31.12.2019 and 31.12.2018, details of time deposit are as follows:

Currency Interest Rate (%) Maturity 31.12.2019

TL 8,00 02.01.2020 2.900.000

USD 0,50 - 1,50 02.01.2020 - 13.01.2020 11.176.130

Time Deposits Total 14.076.130




29

6. CASH AND CASH EQUIVALENTS (continued)

Currency Interest Rate (%) Maturity 31.12.2018

TL 20,00 - 23,00 02.01.2019 2.681.551

USD 3,25-4,50 02.01.2019 - 21.01.2019 57.774.292

Time Deposits Total 60.455.843

There is not any blocked amount in bank accounts of the company. (31.12.2018 : None).

Information on the nature and level of risks in cash and cash equivalents disclosed in the note 39.

7. FINANCIAL INVESTMENTS

Short-Term Financial Investments

None (31.12.2018:None).

Long-Term Financial Investments

None (31.12.2018:None).

8. FINANCIAL BORROWINGS

Financial Borrowings

Weighted Effective

Interest Rate (%) 31.12.2019

Weighted Effective

Interest Rate (%) 31.12.2018

a) Bank Loans 0 - 3 9.179.294 1,25-6,84 12.513.469

b) Credit Cards - 2.146 - 1.283

Total 9.181.440 12.514.752

a) Bank Loans:

Currency

Average Interest

Rate (%)

Short Term

Short-Term Portion of Long

Term Loans

Long Term

TL - 1.167.316 - -

EUR 1,40 - 3,00 8.011.978 - -

Total 9.179.294 - -

31.12.2019

Currency

Average Interest

Rate (%) Short Term

Short-Term Portion of Long

Term Loans

Long Term

USD 3,95 1.329.234 - -

EUR 1,25 - 3,00 7.540.912 2.437.723 1.205.600

Total 8.870.146 2.437.723 1.205.600

31.12.2018




30

8. FINANCIAL BORROWINGS (continued)

31.12.2019 31.12.2018

Payable within one year 9.179.294 11.307.869

Payable within 1 - 2 years - 1.205.600

Payable within 2 - 3 years - -



Total 9.179.294 12.513.469

The fair value of short-and long-term debt is equal to the book value due to the effect of discounting is

immaterial.




31

9. TRADE RECEIVABLES AND PAYABLES

a) Trade Receivables:

As of balance sheet date, the details of Group's trade receivables are as follows:

Short Term Trade Receivables 31.12.2019 31.12.2018

Customers (*) 62.949.191 29.585.397

Notes Receivables and Postdated Checks (*) 10.934.337 29.809.270

Less: Unrealized Finance Income (436.817) (1.084.012)

Other Trade Receivables 10.252.715 9.369.102

Doubtful Trade Receivables (**) 10.278.700 7.732.195

Less: Provisions for Dobtful Trade Receivables (10.278.700) (7.732.195)

Income Accruals 69.998 (1.994)

Trade Receivables from Related Parties (Not 38) (*) 4.213 -

Total 83.773.637 67.677.763

As of 31.12.2019 the weighted avarage of interest rate respectivly 10,67 % and 1,91 % and 0,00 % used to

calculate unearned finance income for short-term trade receivables in term of TL, USD and EUR and weighted

avarage maturity is 73 days. (2018: 57 days).).

(*)Detail of maturities for short-term trade receivables and notes receivables are as follows:

Customers and Notes Receivables 31.12.2019 31.12.2018

1-3 Months 65.712.754 49.773.196

3-6 Months 7.670.774 6.880.187

6-9 Months 500.000 2.740.296

9-12 Months - 988

Total 73.883.528 59.394.667

Group has been received amounting to TL 13.416.585 colleteral for undued trade receivables. (31.12.2018: TL

6.868.392).

(**) Movement of the Group’s doubtful trade receivables provision table is as follow:

Doubtful Trade Receivables 31.12.2019 31.12.2018

Beginning Of Period 7.732.195 7.528.246

Term Expense 2.526.519 1.808.897

Currency Valuation 292.759 121.430

Minus: Canceled in the Period (272.773) (1.726.378)

End of Period 10.278.700 7.732.195




32

9. TRADE RECEIVABLES AND PAYABLES (continued)

Long Term Trade Receivables

None (31.12.2018: None).

The nature and level of risks of Trade payables are described in Note 39.

.

b) Trade Payables:

As of balance sheet date, the details of Group's trade payables are as follows:

Short Term Trade Payables 31.12.2019 31.12.2018

Suppliers (*) 30.780.067 23.700.336

Notes Payables (*) 3.842.172 6.883.307

Less: Unrealized Financing Expense (218.335) (408.171)

Subtotal 34.403.904 30.175.472

Trade Payables to Related Parties 29.984 -

Total 34.433.888 30.175.472

As of 31.12.2019 the weighted avarage of interest rate respectivly 10,67 % and 1,83 % and 0,00 % used to

calculate unearned finance expense for short-term trade payables in term of TL, USD and EUR and weighted

avarage maturity is 54 days. (2018: 42 days, TL % 22.92, USD % 2,49, EUR% 0,00).

(*) The maturity details of sellers' and debt securities are as follows:

Suppliers and Notes Payables 31.12.2019 31.12.2018

0-6 Months 34.652.223 30.583.643

6-9 Months - -

9-12 Months - -

Total 34.652.223 30.583.643

Long-Term Trade Payables

None (31.12.2018: None).

The nature and level of risks of Trade payables are described in Note 39

10. OTHER RECEIVABLES AND PAYABLES

Short-Term Other Receivables 31.12.2019 31.12.2018

Deposits and Guarantees Given 1.025.593 352.318

Due from Personnel 43.963 42.877

Other Miscellaneous Receivables 2.550.080 231.534

Subtotal 3.619.636 626.729

Due from Shareholders (Note 38) 40.775 10.998

Total 3.660.411 637.727




33

10. OTHER RECEIVABLES AND PAYABLES (continued)

As of 31 December 2019, there is no provision doubtful receivables for other receivables. (31.12.2018: None).

(**) Movement of the Group’s doubtful other receivables provision table is as follows::

Provision For Doubtful Trade Receivables 31.12.2019 31.12.2018

Beginning of Period - 3.619

Less: Cancelled within the Period - (3.619)

End of Period - -

Long-Term Other Receivables

None (31.12.2018: None).

Short-Term Other Payables 31.12.2019 31.12.2018

Taxes and Funds Payable 1.341.041 1.143.147

Other Payables 23.087 16.277

Total 1.364.128 1.159.424

Long-Term Other Payables

None (31.12.2018: None).

11. DERIVATIVE FINANCIAL INSTRUMENTS

None (31.12.2018: None).

12. INVENTORIES

31.12.2019 31.12.2018

Raw Materials 41.213.568 31.632.749

Semi-Manufactured 115.288 107.637

Finished Goods 35.875.522 17.136.716

Inventories Related to Project Commitments 1.123.247 3.829.825

Merchandise 7.286.728 7.666.072

Other Inventories 460.618 267.473

Provision for Inventories (488.677) (399.031)

Total 85.586.294 60.241.441

As of 31 December 2019, there is amounting to TL 21.389.660 insurance coverage for inventories. (31.12.2018:

TL 28.365.000).

As of 31 December 2019, there is not any inventory pledged as collateral for the loans (31.12.2018: None).

.




34

13. PREPAID EXPENSES AND DEFERRED REVENUES

Short-Term Prepaid Expenses 31.12.2019 31.12.2018

Advances Given for Inventories 1.175.256 10.953.916

Other Advances Given 391.838 26.697

Advances Given for Services 11.402.337 1.589.740

Prepaid Expenses for Future Months 521.171 643.369

Total 13.490.602 13.213.722

Long-Term Prepaid Expenses 31.12.2019 31.12.2018

Prepaid Expenses for Future Years 44.201 77.574

Total 44.201 77.574

Short-Term Deferred Income 31.12.2019 31.12.2018

Advances Received 81.112.308 119.815.731

Total 81.112.308 119.815.731

Long-Term Deferred Income

None (31.12.2018:None).

14. CONSTRUCTION CONTRACTS

31.12.2019 31.12.2018

Assets Related to Ongoing Construction Contracts 3.219.348 27.117.692

Total 3.219.348 27.117.692

The details of the assets related to the ongoing construction contracts are as follows:

31.12.2019 31.12.2018

Assets Related to Ongoing Construction Contracts

- Assets related to domestic construction contracts - -

- Unearned assets for domestic construction contracts (*) 3.219.348 27.117.692

(*) Unearned assets in order to obtain reasonable assurance that the Company will fulfill the necessary

conditions are formed, which may be taken out of the fair value of the consolidated financial statements on an

accrual basis.

.

31.12.2019 31.12.2018

Liabilities Related to Ongoing Construction Contracts 3.122.240 -

Total 3.122.240 -

The details of the liabilities related to the ongoing construction contracts are as follows:

31.12.2019 31.12.2018

Liabilities Related to Ongoing Construction Contracts

-Progress billing amounts related to ongoing construction contracts - -

- Amounts invoiced in excess related to ongoing construction contracts 3.122.240 -

Total 3.122.240 -




35

15. INVESTMENTS ACCOUNTED WITH EQUITY METHOD

None (31.12.2018:None).

16. INVESTMENT PROPERTIES

01.01.2019 31.12.2019

Cost Value

Opening

Balance

Increase in

Value Closing Balance

Land 510.000 - 510.000

Investment Property 510.000 - 510.000

01.01.2018 31.12.2018

Cost Value Opening BalanceIncrease in

ValueClosing Balance

Land 510.000 - 510.000

Investment Property 510.000 - 510.000

The fair value of investment properties of the Group is determined by independent valuation company Ekspertur

Gayrimenkul Değerleme ve Danışmanlık A.Ş. on 24 December 2017. The valuation company is authorized by

Capital Board of Turkey and it offers real estate valuation services under the legislation of capital market and it

has sufficient experience and qualifications for the fair value valuation of the regions concerned. The fair value

of the lands owned are determined by comparative approach which reflects current market trading prices for

similar real estates.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2019 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated)

36

17. TANGIBLE FIXED ASSETS

31.12.2019

Cost Value

Underground and

Overland Plants Buildings

Plants Machinery

and

Equipment

Vehicles Fixtures

Leasehold

Improvements

Ongoing

Investments

Total

Opening Balance 45.710 30.881.194 73.440.194 4.674.886 5.658.575 15.400.823 190.989 130.292.371

Purchases - - 2.341.514 2.308.237 745.280 187.411 2.577.021 8.159.463

Disposals - - (575.273) (1.209.365) (26.698) - (31.000) (1.842.336)

Transfers - - 33.440 156.477 - 739.776 (929.693) -

Closing Balance 45.710 30.881.194 75.239.875 5.930.235 6.377.157 16.328.010 1.807.317 136.609.498

Accumulated Amortisation

Opening Balance (40.031) (6.736.154) (46.538.205) (3.519.852) (3.123.635) (6.640.500) - (66.598.377)

Period Expense (2.782) (537.141) (5.052.661) (897.402) (927.084) (1.986.299) - (9.403.369)

Disposals - - 344.158 1.013.759 12.531 - - 1.370.448

Closing Balance (42.813) (7.273.295) (51.246.708) (3.403.495) (4.038.188) (8.626.799) - (74.631.298)

Tangible Fixes Assets, net

2.897 23.607.899 23.993.167 2.526.740 2.338.969 7.701.211 1.807.317 61.978.200

As of 31 December 2019, there is amounting to TL 100.655.810 insurance covarage on tangible fixed assets. (31.12.2018: TL 102.001.552)



37

17. TANGIBLE FIXED ASSETS (continued)

Cost Value

Underground and

Overland Plants

Buildings

Plants Machinery

and

Equipment

Vehicles Fixtures

Leasehold

Improvements

Ongoing

Investments

Total

Opening Balance 45.710 30.881.194 68.303.196 4.912.478 5.111.804 8.025.932 4.046.353 121.326.667

Purchases - - 5.044.794 81.846 557.232 102.522 4.107.178 9.893.572

Disposals - - - (319.438) (10.461) - (524.543) (854.442)

Transfers - - 92.204 - - 7.272.369 (7.437.999) (73.426)

Closing Balance 45.710 30.881.194 73.440.194 4.674.886 5.658.575 15.400.823 190.989 130.292.371


Opening Balance (33.569) (6.161.194) (41.618.844) (3.148.403) (2.227.547) (4.936.230) - (58.125.787)

Period Expense (6.462) (574.960) (4.919.361) (690.887) (896.788) (1.704.270) - (8.792.728)

Disposals - - - 319.438 700 - - 320.138

Closing Balance (40.031) (6.736.154) (46.538.205) (3.519.852) (3.123.635) (6.640.500) - (66.598.377)

Tangible Fixes Assets, net 5.679 24.145.040 26.901.989 1.155.034 2.534.940 8.760.323 190.989 63.693.994

31.12.2018

As of 31.12.2019 and 31.12.2018, there is not any property, plant and equipment purchased with financial leasing.

The fair value of buildings of the Group is determined by independent valuation company Rehber Gayrimenkul Değerleme ve Danışmanlık A.Ş. on 09 February

2018. The valuation company is authorized by Capital Board of Turkey and it offers real estate valuation services under the legislation of capital market and it has

sufficient experience and qualifications for the fair value valuation of the regions concerned. The fair value of the lands owned are determined by comparative

approach which reflects current market trading prices for similar real estates.




38

17. TANGIBLE FIXED ASSETS (continued)

Economic lifes of the tangible fixed assets are as follows :

Economic Life

Underground and Overland Plants 7-20 Years

Buildings 50 Years

Plants Machinery and Equipment 3-14 Years

Vehicles 4-10 Years

Fixtures 3-14 Years

Leasehold Improvements 5-14 Years

Total depreciation expenses for the current period is amounting to TL 9.403.369 (31.12.2018: TL 8.792.728).

Amounting to TL 7.023.279 (31.12.2018: TL 6.622.779) of this amount is included in cost of goods sold (Note

29), amounting to TL 1.321.198 (31.12.2018: TL 1.414.034) is included in marketing expenses, amounting to

TL 1.058.892 (31.12.2018: TL 633.622) is included in general aministrative expenses,amounting included in

research and development expenses : None (31.12.2018: TL 122.292) (Note 30).

18. INTANGIBLE FIXED ASSETS

Cost Value Rights

Research and

Development

Other Intangible

Fixed Assets

Total

Opening Balance 3.004.325 - 493.138 3.497.463

Purchases 1.154.944 1.624.215 15.423 2.794.582

Transfers from Construction in Progress

- - - -

Closing Balance 4.159.269 1.624.215 508.561 6.292.045

Accumulated Amortisation and Depletion

Expenses

Opening Balance (2.287.587) - (255.905) (2.543.492)

Period Expense (313.436) (158.065) (123.614) (595.115)

Closing Balance (2.601.023) (158.065) (379.519) (3.138.607)

Intangible Fixed Assets, net 1.558.246 129.042 3.153.438

31.12.2019

Cost Value Rights

Research and

Development

Other Intangible

Fixed Assets

Total

Opening Balance 2.677.374 - 373.265 3.050.639

Purchases 321.891 - 71.023 392.914

Çıkışlar 5.060 - 48.850 53.910

Closing Balance 3.004.325 493.138 3.497.463

Accumulated Amortisation and Depletion

Expenses

Opening Balance (1.965.033) - (133.947) (2.098.980)

Period Expense (322.554) - (121.958) (444.512)

Closing Balance (2.287.587) - (255.905) (2.543.492)

Intangible Fixed Assets, net 716.738 - 237.233 953.971

31.12.2018




39

18. INTANGIBLE FIXED ASSETS (continued)

Economic life of intangible fixed assets are as follows;:

Economic Life

Rights 3-15 years

Other Intangible Fixed Assets 5 years

Total redemption expenses for the current period is TL 595.115 (31.12.2018: TL 444.512). Amounting to TL

232.182 of this amount is included in cost of goods sold (Note 29) (31.12.2018: TL 277.128), amounting to TL

68.456 is included in marketing expenses (31.12.2018: TL 71.923), amounting to TL 136.412 is included in

general administrative expenses (31.12.2018 : TL 95.461),amounting to TL 158.065 is included in research and

development expenses) (Note 30).

19. GOODWILL

None. (31.12.2018: None.)

20. RIGHT OF USE ASSETS

Cost Value Factory Building Total Factory Building Total

TFRS 16 Opening Effect 26.280.000 26.280.000 26.280.000 26.280.000

Purchases - - - -

Closing Balance 26.280.000 26.280.000 26.280.000 26.280.000


Opening Balance (5.255.104) (5.255.104) (2.627.104) (2.627.104)

Period Expense (2.628.000) (2.628.000) (2.628.000) (2.628.000)

Disposals - - - -

Closing Balance (7.883.104) (7.883.104) (5.255.104) (5.255.104)

Tangible Fixes Assets, net 18.396.896 18.396.896 21.024.896 21.024.896

01.01. - 31.12.2019 01.01. - 31.12.2018

The Total of current period depreciation expenses is TL 2.628.000 (31.12.2018: TL 2.628.000).

21. IMPAIRMENT OF ASSETS

31.12.2019 31.12.2018

Provision for Doubtful Trade Receivables (Note 9) 10.278.700 7.732.195

Provision for Inventory Impairement (Note 12) 488.677 399.031

Total 10.767.377 8.131.226

22. GOVERNMENT GRANTS

Incentive Details 31.12.2019 31.12.2018

Fair Incentive 288.728 216.223

Tübitak R&D Incentive 239.925 108.746

Market Research Incentive 22.153 10.356

Total 550.806 335.325

Government grants are shown under other income from operating activities (Note 32).




40

23. BORROWING COSTS

There is not any borrowing costs that directly related to construction, production or obtaining a featured asset.

(31.12.2018: None).

24. PROVISIONS, CONTINGENT ASSETS AND LIABILITIES

Short Term Debt Provisions 31.12.2019 31.12.2018

Provisions for Lawsuits 1.344.108 1.171.108

Total 1.344.108 1.171.108

Contingent Assets and Liabilities

Number Amount Number Amount

Ongoing Lawsuits in favor of Company 6 27.368.693 6 10.129.604

Lawsuits and Execution Proceedings in favor of

Company

43 16.347.395 26 4.690.331

Ongoing Lawsuits against Company 32 2.857.908 22 3.077.908

31.12.2019 31.12.2018

The Group has a contract as the subcontractor of projects Inistanbul Topkapı Phase 1-2-dated 24.10.2016 and

Phase 3-4 dated 08.02.2018 whose main contractors are İş Gayrimenkul Yatırım Ortaklığı A.Ş and Timur

Gayrimenkul Geliştirme Yapı ve Yatırım A.Ş. (“Timur”) with Sera Yapı Endüstrisi ve Ticaret A.Ş. (“Sera

Yapı”) who is the subcontractor of the project. Phases 1-2 are completed, Significant parts of phases 3-4 have

come to an end, related to this project, execution proceedings have been initiated against Sera Yapı in 2019

regarding the Group's receivables from Sera Yapı and total amount of USD 744.505 and TL 3.889.213 included

in the attached tables. By signing a protocol between Sera Yapı, Timur and the Group on 01.10.2019,

contracting parties have agreed that all of the receivables of the Group' from Sera Yapı and some of their

receivables not yet due will be undertaken by Timur, and some of them will be paid in cash and some by real

estate delivery. Some of the mentioned receivables have been collected, and as of 31.12.2019 the total amount

of current and collateral receivables that have not been collected yet is TL 7.988.047.

Regarding the amount of the receivable in question, in the scope of the protocol dated 01.10.2019 TL 4.000.000

have been collected, in the event that the collection of the balance part cannot be realized, Timur Gayrimenkul

Geliştirme Yapı ve Yatırım A.Ş. debt claims will be replaced action of debt. Since the Group Management

thinks that the receivable will be collected until 30.06.2020, no provision has been provided for these

receivables in the accompanying financial statements.

Collateral, Pledges, Mortgages, Bail

As of 31 December 2019 and 31 December 2018, the Group's collateral / pledge / mortgage and bail position are

as follows:

31.12.2019

USD EURO TL TL Equivalent

Guarantee Letters Received 1.419.038 326.451 14.787.579 25.388.044

Collateral Bill Received 20.149 - 4.548.151 4.667.840

Guarantee Checks Received - - 3.633.918 3.633.918

Mortgages - - 5.090.000 5.090.000

Total 1.439.187 326.451 28.059.648 38.779.802




41

24. PROVISIONS, CONTINGENT ASSETS AND LIABILITIES (continued)

31.12.2018

USD EURO TL TL Equivalent

Guarantee Letters Received 1.239.722 1.213.707 8.222.222 22.060.501

Collateral Bill Received 20.149 134.762 4.782.367 5.700.714

Guarantee Checks Received 277.595 - 5.116.021 6.576.421

Mortgages - - 3.350.000 3.350.000

Total 1.537.466 1.348.469 21.470.610 37.687.636

31.12.2019

CPMB's given by the Company (Collaterals,

Pledges, Mortgages, Bails) TL Equivalent USD EUR TL

A) CPMB’s given for Company’s own legal

personality 206.559.109

18.160.314

6.377.353 56.269.988

B) CPMB’s given on behalf of fully

consolidated companies

-

-

-

-

C) CPMB’s given on behalf of third parties for

ordinary course of business - - - -

D) CPMB's given within the scope of

Corporate Governance Communiqué's 12/2

clause - - - -

E) Total amount of other CPMB's - - - -

i) Total amount of CPMB's given on behalf of

majority shareholder - - - -

ii)Total amount of CPMB’s given on behalf of

other Group companies which are not in scope

of B and C - - - -

iii) Total amount of CPMB’s given on behalf

of third parties which are not in scope of C - - - -

Total 206.559.109

18.160.314 6.377.353

56.269.988




42


31.12.2018

CPMB's given by the Company (Collaterals,

Pledges, Mortgages, Bails) TL Equivalent USD EUR TL

A) CPMB’s given for Company’s own legal

personality 175.503.955 19.873.068 9.855.503 11.544.760

B) CPMB’s given on behalf of fully consolidated

companies - - - -

C) CPMB’s given on behalf of third parties for

ordinary course of business - - - -

D) CPMB's given within the scope of Corporate

Governance Communiqué's 12/2 clause

E) Total amount of other CPMB's

i) Total amount of CPMB's given on behalf of

majority shareholder - - - -

ii)Total amount of CPMB’s given on behalf of

other Group companies which are not in scope of

B and C - - - -

iii) Total amount of CPMB’s given on behalf of

third parties which are not in scope of C - - - -

Total 175.503.955 19.873.068 9.855.503 11.544.760

Other CPMB’s given by the Group ratio to Group’s equity is equal to % 0. (31.12.2018: % 0).

As of 31.12.2019 and 31.12.2018, the details of CPMB’s are as below;.

Collaterals 166.439.109 18.160.314 6.377.353 16.149.988

Mortgage 40.000.000 - - 40.000.000

Notes 120.000 - - 120.000

Total 206.559.109 18.160.314 6.377.353 56.269.988

USD EUR

Total

TL Equivalent

TLCollateral, Pledges, Mortgages, Bail

31.12.2019




43


Collaterals 170.944.878 19.304.079 9.615.675 11.424.760

Notes 120.000 - - 120.000

Cheque 4.439.077 568.989 239.828 -

Total 175.503.955 19.873.068 9.855.503 11.544.760

Total

TL Equivalent

USD

31.12.2018

EUR TLCollateral, Pledges, Mortgages, Bail

25. COMMITMENTS

None (31.12.2018: None).

26. EMPLOYEE BENEFITS

Short-Term Provisions Related to Employee Benefits 31.12.2019 31.12.2018

Unused Vacation Provision 2.452.951 1.947.550

Total 2.452.951 1.947.550

Long-Term Provisions Related to Employee Benefits 31.12.2019 31.12.2018

Severance Pay Provision 4.190.342 2.640.506

Total 4.190.342 2.640.506

Liabilities Related to Employee Benefits 31.12.2019 31.12.2018

Payables to Personnel 2.314.332 1.751.482

Social Security Premiums Payable 1.304.055 1.064.780

Total 3.618.387 2.816.262

Under the Turkish Legislations, the Company is required to pay termination benefits to each employee who has

completed one year of service and whose employment is terminated without due cause, is called up for military

service, dies or who retires after completing 25 years of service for men and reaches the retirement age 20 years

for woman (58 for women and 60 for men).

Retirement pay liability is not subject to any kind of funding legally. Provision for retirement pay liability is

calculated by estimating the present value of probable liability amount arising due to retirement of employees.

IAS 19 (“Employee Benefits”) stipulates the development of Company’s liabilities by using actuarial valuation

methods under defined benefit plans:

As at balance sheet date provisions calculated according to assumption % 7,00 expected salary increasing rate

and % 11,50 discount rate and about %4,21 real discount rate and retiring assumption as follows (31 December

2018: respectively % 9,30 % 15,20 and % 5,40)

31.12.2019 31.12.2018

Annual Discount Rate (%) 4,21 5,40

Possibility of Retirement (%) 93,64 89,8




44

26. EMPLOYEE BENEFITS (continued)

The main assumption, the maximum liability for each year of service will only grow in line with inflation.

Therefore, the discount rate applied represents the expected real rate after adjusting for the effects of future

inflation. Therefore, as of 31 December 2019 the accompanying financial statements provisions for the future

probably obligation arising from the retirement of employees is calculated by estimating the present value.

Severance pay ceiling amounting to TL 6.380 (31.12.2018: TL 5.434) used on calculation of retirement

pay provision with the effective from 01 July 2019.

The movement of provision for severance pay are as follows:

1 January- 31 December

2019

1 January-31

December 2018

Provision as at 1st January 2.640.506 1.936.995

Service Cost 591.534 599.077

Interest Cost 142.534 77.117

Severance Pay Cancelled (447.247) (403.520)

Defined Benefit Plans Remeasurement Gain / Loss (*) 1.263.015 430.837

Total Provision at the End of Period 4.190.342 2.640.506

(*) As at 31 December 2019, defined benefit plans remeasurement gain and losses amounting to TL 1.263.015

(31.12.2018: TL 430.837) is recognized in other comprehensive income statement.

The amounting to TL 285.821 (31.12.2018: TL 329.391) is included in general administrative expenses and

amounting to TL 448.247 (31.12.2018: TL 346.803) is included in the cost of goods produced

27. OTHER ASSETS AND LIABILITIES

Other Current Assets 31.12.2019 31.12.2018

Deferred VAT 2.911.486 2.438.096

Other VAT 643.521 292.545

Work Advances 97.006 83.059

Employee Advances - 9.641

Total 3.652.013 2.823.341

Other Fixed Assets 31.12.2019 31.12.2018

Future Expenses 44.201 77.574

Total 44.201 77.574

Other Short-Term Liabilities

None. (31.12.2018: None).

Other Long-Term Liabilities

None. (31.12.2018: None)




45

28. CAPITAL, RESERVES AND OTHER EQUITY COMPONENTS

a) Capital

As of 31 December 2019 and 31 December 2018, Company’s capital structure are as follows:

Shareholders Share Amount TL Share Rate Share Amount TL Share Rate

Murat Ruhi Çuhadaroğlu 23.082.917 32,40 23.082.917 32,40

Halil Nejat Çuhadaroğlu 23.082.917 32,40 23.082.917 32,40

Public section (*) 18.500.000 25,96 18.500.000 25,96

Sevim Çuhadaroğlu 6.584.166 9,24 6.584.166 9,24

Capital 71.250.000 100,00 71.250.000 100,00

Distinction from Share Capital - -

Paid-in Capital 71.250.000 100,00 71.250.000 100,00

31.12.2019 31.12.2018

(*) Group’s publicly traded portion of equity are being traded in BIST (Istanbul Stock Exchange)

The Company is subject to authorized capital system and the equity ceiling is TL 300.000.000.

Company’s paid in capital is amounting to TL 71.250.000. (31.12.2018: TL 71.250.000) Capital consist of

71.250.000 registered shares and each share has TL 1 nominal value and 6.200.000 pcs. of shares are

nominative A Group and 65.050.000 pcs. of shares are nominative B Group shares.

In general and extraordinary general meetings of the company, each of the group B shareholders are entitled to

vote 1 (one) and A group of shareholders are entitled to vote 15 (fifteen) except for the selection of board

members of each A group of shareholders.

If the board of directors consist of 5 members, 2 of them, if 6 or 7 members 3 of them, if 8 or 9 members 4 of

them are selected from the candidates nominated by A group of registered shares.

b)Share Premium / Discount 31.12.2019 31.12.2018

Share Premium / Discount 6.649.019 6.649.019

c) Other Comprehense Income or Expenses not to be Reclassified

to Profit or Loss 31.12.2019 31.12.2018

Defined Benefit Plans Re-measurement Gains / (Losses) (2.251.251) (1.324.891)

Revaluation and Classification Gains / (Losses) 17.591.537 17.591.537

Total 15.340.286 16.266.646

d) Restricted Reserves 31.12.2019 31.12.2018

Legal Reserves 18.694.408 18.131.949

Total 18.694.408 18.131.949

e) Retained Earnings/(Losses) 31.12.2019 31.12.2018

Extraordinary Reserves 88.713.649 78.026.925

Retained Earnings/(Losses) (57.131.737) (45.343.472)

Total 31.581.912 32.683.453




46

28. CAPITAL, RESERVES AND OTHER EQUITY COMPONENTS (continued)

f) Non-controlling Shares 31.12.2019 31.12.2018

Balance as at 1st January 8.692.750 13.254.208

Additions (84.057) (25.626)

TFRS 9 correction effect - (15.545)

Profit / (Loss) from Consolidated Participations (3.054.178) (4.520.287)

Total 5.554.515 8.692.750

Dividend Distribution

Listed companies distribute dividend in accordance with the Communiqué No, II-19.1 issued by the CMB

which is effective from February 1, 2014.

Companies distribute dividends in accordance with their dividend payment policies settled and dividend

payment decision taken in general assembly and also in conformity with relevant legislations. The communiqué

does not constitute a minimum dividend rate. Companies distribute dividend in accordance with the method

defined in their dividend policy or articles of incorporation. In addition, dividend can be distributed by fixed or

variable instalments and advance dividend can be paid in accordance with profit on interim financial statements

of the Company..

In accordance with the Turkish Commercial Code (TCC), unless the required reserves and the dividend for

shareholders as determined in the article of association or in the dividend distribution policy of the company are

set aside, no decision may be made to set aside other reserves, to transfer profits to the subsequent year or to

distribute dividends to the holders of usufruct right certificates, to the members of the board of directors or to

the employees; and no dividend can be distributed to these persons unless the determined dividend for

shareholders is paid in cash.

Equity inflation adjustment differences and registered values of extraordinary reserves can be used in bonus

capital increase, cash profit distribution or loss deduction. However, equity inflation adjustment differences will

be subject to corporate tax if used in cash profit distribution.

29. REVENUE

Sales Income (Net) 01.01.-31.12.2019 01.01.-31.12.2018

Aluminium Domestic Project Sales 100.269.595 120.908.373

Aluminium Overseas Project Sales 35.651.704 23.008.630

Aluminium Profile Sales 210.375.892 124.369.025

Accessory Sales 21.647.154 21.136.891

Interax Automatic Door Sales 11.167.379 7.894.088

Aluminum Joinery Sales 1.147.006 365.962

Scrap Sales 475.844 348.622

Interwall Sales 2.882.284 -

Other Sales 3.854.683 1.174.896

Total Revenue 387.471.541 299.206.487

Sales Return (-) (1.563.331) (886.908)

Sales Discounts (-) (34.255.508) (22.707.422)

Sales Income, Net 351.652.702 275.612.157




47

29. REVENUE (continued)

Cost of Sales (-) 01.01.-31.12.2019 01.01.-31.12.2018

Cost of Aluminium Project (127.881.837) (137.937.546)

Cost of Accessory (13.431.648) (12.046.595)

Cost of Aluminium Profile (131.185.362) (71.254.933)

Depreciation Expenses (5.993.592) (6.622.779)

Redemption Expenses (232.182) (656.346)

Cost of Aliminium Joinery (1.209.476) (350.915)

Unused Vacation Provision Expenses (244.202) (260.883)

Severance Pay Expenses (354.934) (346.803)

Automatic Door Cost (12.650.840) (8.959.679)

Cost of Interwall (2.953.633) -

Other Expenses (677.407) (821.863)

Cost of Sales (296.815.113) (239.258.342)

Gross Income / (Loss) 54.837.589 36.353.815

30. GENERAL ADMINISTRATIVE EXPENSES, MARKETING EXPENSES, RESEARCH AND

DEVELOPMENT EXPENSES

01.01.-31.12.2019 01.01.-31.12.2018

General Administartion Expenses (-) 18.451.356 16.263.529

Marketing Expenses (-) 26.010.157 20.564.936

Research and Development Expenses (-) 158.065 2.367.784

Total 44.619.578 39.196.249

General Administartion Expenses (-) 01.01.-31.12.2019 01.01.-31.12.2018

Personnel Expenses 10.998.136 9.562.039

Depreciation Expenses 1.058.892 634.022

Consultancy Expenses 704.149 846.273

Attendance Fee Expenses 653.732 745.777

Vehicle Rent Expenses 609.550 451.301

Rent Expenses 551.290 418.377

Travel and Accomodation Expenses 342.580 247.062

Severance Pay Provision Expenses 379.134 329.391

Unused Vacation Provision Expenses 261.199 243.500

Redemption Expenses 136.412 422.018

Other Expenses 2.756.282 2.363.769

Total 18.451.356 16.263.529




48

30. GENERAL ADMINISTRATIVE EXPENSES, MARKETING EXPENSES, RESEARCH AND

DEVELOPMENT EXPENSES (continued)

Marketing Expenses (-) 01.01.-31.12.2019 01.01.-31.12.2018

Personnel Expenses 10.228.253 10.727.355

Transportation Expenses 4.298.278 1.805.719

Depreciation Expenses 1.321.198 1.414.034

Exhibition and Fair Expenses 1.124.745 975.102

Travel and Accommodation Expenses 1.198.447 791.064

Commission Expenses 960.653 38.508

Rent Expenses 947.431 810.127

Sample Expenses 761.978 218.896

Export Expenses 682.211 381.441

Advertising and Promotion Expenses 509.915 451.058

Consultancy Expenses 182.798 289.534

Maintenance and Repair Expenses 266.508 284.639

Vehicle Rent Expenses 367.395 277.388

Vehicle Gasoline Expenses 301.443 273.673

Vehicle Expenses 285.453 243.726

Subscription/Contribution Expenses 109.740 228.878

Electricty, Water and Heating Expenses 323.375 213.443

Representation and Hospitaly Expenses 166.540 121.058

Redemption Expenses 68.456 96.923

Other Expenses 1.905.340 922.372

Total 26.010.157 20.564.936

Research and Development Expenses (-) 01.01.-31.12.2019 01.01.-31.12.2018

Depreciation Expenses 158.065 122.292

R&D Expenses - 330.257

Personnel Expenses - 1.264.166

Mould Expenses - 256.765

Consultancy Expenses - 124.469

Sample Expenses - 61.835

Redemption Expenses - 41.009

Rent Expenses - 35.990

Vehicle Rent Expenses - 23.667

Maintenance and Repair Expenses - 16.510

Transportaion Expenses - 16.080

Insurance Expenses - 13.987

Other Expenses - 60.757

Total 158.065 2.367.784




49

31. EXPENSES BY NATURE

Depreciation Expenses 01.01.-31.12.2019 01.01.-31.12.2018

Cost Of Sales 7.023.279 6.622.779

General Administration Expenses 1.058.892 634.022

Marketing Expenses 1.321.198 1.414.034

Research and Development Expenses - 122.292

Total 9.403.369 8.793.128

Redemption Expenses 01.01.-31.12.2019 01.01.-31.12.2018

Cost Of Sales 232.182 277.128

General Administration Expenses 136.412 95.461

Marketing Expenses 68.456 71.923

Research and Development Expenses 158.065 -

Total 595.115 444.512

Personnel Expenses 01.01.-31.12.2019 01.01.-31.12.2018

Salary and Wages 38.777.351 37.541.087

Social Security Expenses 6.335.527 5.722.292

Severance Pay Expenses 977.156 346.803

Unused Vacation Provision Expenses 505.401 260.883

Other Social Benefits 6.404.659 4.950.231

Total 53.000.094 48.821.296




50

32. OTHER INCOME AND EXPENSES FROM OPERATING ACTIVITIES

Other Income From Operating Activities 01.01.-31.12.2019 01.01.-31.12.2018

Exchange Difference Income 29.798.762 38.227.184

Unrealized Finance Income 1.302.347 1.291.535

Provisions No Longer Required 834.161 2.762.878

Price Difference Income 1.839.471 338.742

Late Charge Income 3.323.794 12.410.696

Interest Income 1.402.277 515.962

Insurance, Freight Income 4.596.357 2.497.993

Government Incentives and Grants 550.806 335.325

Other Income and Profit 3.841.579 3.988.849

Total 47.489.554 62.369.164

Other Expenses From Operating Activities 01.01.-31.12.2019 01.01.-31.12.2018

Exchange Difference Expense (-) (30.905.119) (41.743.196)

Unrealized Finance Expense (-) (844.988) (1.496.554)

Doubtful Receivable Provision Expense (-) (3.070.305) (2.599.141)

Lawsuit Provision Expense (-) (128.000) (380.108)

Late Charge Expense (-) (4.619.004) (10.742.404)

Lawsuit Expense (-) - (49.426)

Price Difference Expenses (-) (1.575.373) (418.445)

Other Expenses and Losses (-) (3.040.282) 48.517

Total (44.183.071) (57.380.757)

33. INCOME AND EXPENSES FROM INVESTING ACTIVITIES

Income from Investing Activities 01.01.-31.12.2019 01.01.-31.12.2018

Rent Income 2.518 -

Income from Fixed Assets Sales 872.407 200.041

Total 874.925 200.041

Expenses from Investing Activities

None (31.12.2018: None).




51

34. FINANCIAL INCOME AND EXPENSES

Financial Income 01.01.-31.12.2019 01.01.-31.12.2018

Exchange Difference Income from Bank Deposits 367.420 4.595.255

Total 367.420 4.595.255

Financial Expenses(-) 01.01.-31.12.2019 01.01.-31.12.2018

Loan Interest Expenses (-) (24.623) (200.311)

Interest and Commission Expense (-) (46.791) (22.306)

Exchange Difference Expense from Bank Deposits (-) (87.575) (7.319.922)

Project Financing Expense (-) (3.990.957) (3.572.613)

Other Financing Expense (-) (96.400) (196.618)

Total (4.246.346) (11.311.770)

35. NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

None (31.12.2018: None).

36. INCOME TAXES

Current Assets Related to Period Tax 31.12.2019 31.12.2018

Prepaid Taxes and Funds 166.933 223.354

Non-Current Assets Related to Period Tax 31.12.2019 31.12.2018

Prepaid Taxes and Funds 4.644.241 5.018.471

Period Profit Tax Liability 31.12.2019 31.12.2018

Current Period Tax Liabilities 4.587.081 1.948.348

Less: Prepaid Taxes and Funds (3.099.762) (1.279.785)

Current Period Tax Liabilities 1.487.319 668.563

Tax Provision 31.12.2019 31.12.2018

Current Period Corporate Tax Provision (-) (4.587.081) (1.948.348)

Deferred Tax Provision Income / (Expense) 2.341.506 1.259.480

Total (2.245.575) (688.868)

Corporate Tax

The Group is subject to Turkish corporate tax. The estimated tax liabilities of the Group's results for the period

is recognized in the accompanying consolidated financial statements.

The corporate tax rate on taxable profit will be accrued after deduction of expense in determining accounting

profit and tax-exempt, non-deductible expenses, gains and other non-taxable income deductions (prior year

losses and investment incentives) on taxable income

The effective tax rate on 2019 is %22. (2018: %22).

The tax legislation provides for a temporary tax (prepaid tax) of 22% (22% in 2018) to be calculated and paid

based on earnings generated for each quarter. The amounts thus calculated and paid are offset against the final

tax liability for the year.Losses could be deducted from taxable profit within maximum 5 years. However could

not be deducted from previous year profits.




52

36. INCOME TAXES (continued)

Corporate Tax (continued)

According to the Corporate Tax Law, financial losses shown on the declaration can be deducted from the

corporate tax base of the period not exceeding 5 years. However financial losses cannot be carried back.

As stated in Article 91 of the Law No. 7061 published on the Official Gazette dated 5 December 2017,

numbered 7061, "Amendments to Certain Tax Laws and Other Certain Other Laws", pursuant to provisional

article 10 added to the Tax Act No.5520, the rate of 20% in the first paragraph shall be applied as 22% for the

corporate earnings of the taxation periods of the institutions in 2018, 2019 and 2020 (for the accounting periods

starting in the related year for the institutions appointed for the special accounting period).

In Turkey, there is not any certain consensus related to tax assessment. Companies prepares corporate tax

declerations until 1-25 April of following year. Tax declerations and legal accounting books could be

investigated and changed by Tax Office within 5 years.

Income Tax Withholding

In addition to corporate taxes, their share of the profit from the distribution of dividends in the event of the

company's income in the statements, including non-resident institutions and branches of foreign companies in

Turkey on any dividends distributed, except for the calculation of income tax withholding is required. Income

tax 24 April 2003 - 22 July 2006 was 10% in all companies. This rate is from 22 July 2006 2006/10731 15% by

the Council of Ministers. Undistributed dividends incorporated in share capital are not subject to income tax

withholding.

A reconciliation of income tax expense in the period are as follows:

31.12.2019 31.12.2018

Profit / (Loss) before Tax 10.520.493 (4.370.501)

Taxable Profit / (Loss) 10.520.493 (4.370.501)

Corporate Tax Rate (2019: % 22, 2018: % 22) 22% 22%

Calculated Tax (2.314.508) 961.510

Nonallowable Charges (2019: % 22, 2018: % 22) (57.599) (51.151)

Other 126.532 (1.599.227)

Total (2.245.575) (688.868)

Deferred Tax

Deferred tax is accounted for using the liability method in respect of temporary differences arising from

differences between the carrying amounts of assets and liabilities in the financial statements and the

corresponding tax basis used in the computation of taxable (statutory) profit.Deferred tax is calculated using tax

rates that have been enacted in the period in which assets acquired and/or liabilities carried out and included in

the statement of income as income or expense.

The tax rate used in the calculation of deferred tax assets and liabilities is 22% for the taxable income to be

realized between 2018 and 2020 and 20% for the following (31 December 2018: 2018-2020 22%), 20% for the

following).




53

36. INCOME TAXES (continued)

Deferred Tax (continued)

31.12.2019 31.12.2018 31.12.2019 31.12.2018

Deferred Tax Assets

Doubtful Receivables Provision 3.060.888 967.663 673.396 212.886

Book Value and Tax Basis Difference of Tangible

and Intangible Assets 438.463 433.339 87.693 86.668

Severance Pay Adjustment 4.190.342 2.640.506 838.069 528.101

Unused Vacation Provision 2.452.951 1.947.550 539.650 428.461

Loan Interest Accruals - 497 - 109

Unearned Interest Income 436.817 1.084.012 96.100 238.483

Cost Adjustment of Long Term Construction

Projects 220.893.910 88.725.347 48.596.660 19.519.576

Inventories Impairement 488.677 399.031 107.509 87.787

Lawsuit Provision 1.344.108 1.171.108 295.704 257.644

Other Adjustment 370 3.242 81 713

Total 233.306.526 97.372.295 51.234.862 21.360.428

Deferred Tax Liabilities

Increase on Revaluation (19.546.152) (19.546.152) (1.954.615) (1.954.615)

Book Value and Tax Basis Difference of Tangible

and Intangible Assets (9.840.900) (9.671.995) (1.631.468) (1.597.687)

Unerned Interest Expense (218.335) (408.171) (48.034) (89.798)

Income Adjustment of Long Term Construction

Projects (208.987.693) (84.954.599) (45.977.292) (18.690.012)

Other Adjustment (2.172) 2.502 (478) 550

Total (238.595.252) (114.578.415) (49.611.887) (22.331.562)

Deferred Tax Assets/(Liabilities), net (5.288.726) (17.206.120) 1.622.975 (971.134)

Deferred Tax Expense/(Income) 2.594.109 1.401.352

Included to Actuarial (Gain) / Loss Fund (252.603) (86.167)

Accounting Policy Change - (55.704)Deferred Tax Income/(Expense) for the Period 2.341.506 1.259.481

Deferred Tax

Temporary Differences Assets /(Liabilities)

Deferred tax movement table:

31.12.2019 31.12.2018

Reported as of January 1 (971.134) (2.372.487)

Change of Accounting Policy - 55.705

Revised January 1 (971.134) (2.316.782)

Debt / (Receivable) Record in Current Period Income Statement 2.341.506 1.259.480

Defined Benefit Plans Recalculation Earnings / Losses 252.603 86.167

End of Term 1.622.975 (971.134)




54

37. EARNINGS PER SHARE

01.01.-31.12.2019 01.01.-31.12.2018

Period Profit / (Loss) , Net 11.329.096 (539.082)

Weighted Average Number of Shares 71.250.000 71.250.000

Profit / (Loss) Per Share from Operating Activities 0,159 (0,008)

Diluted Profit / (Loss) Per Share from Operating Activities 0,159 (0,008)

38. RELATED PARTY DISCLOSURES

Transactions between subsidiaries and Company have been eliminated on consolidation and does not disclosed

in this note..

Details of transactions between the Group and other related parties are disclosed below.



55

38. RELATED PARTY DISCLOSURES (continued)

Long Term Long Term

Balances with related parties

Non

Trade

Non

Trade

Trade

Non

Trade

Non

Trade

Related Parties

Çuhadaroğlu Yapı Taahhüt San. ve Tic. A.Ş. 4.213 - 29.984 - -

Shareholders

Murat Ruhi Çuhadaroğlu 40.775 9.198.448 - 10.998 10.512.448

Halil Nejat Çuhadaroğlu - 9.198.448 - - 10.512.448

Total 44.988 18.396.896 29.984 10.998 21.024.896

31.12.2018

Receivables Right of Use Assets

Short Term

31.12.2019

Receivables Right of Use Assets Payables

Short Term Short Term

(*) Group built a factory building over the land owned by Murat Ruhi Çuhadaroğlu and Halil Nejat Çuhadaroğlu, which are partners of the Group, according to

"Rent Equity Construction Contract" signed in 2014 and the protocol prepared in addition to this contract in 2016. The construction cost is to be met by Group and to

offset the lease cost payable over the fair value for a period of 10 years after completion of the construction. The factory building was completed in 2016 and

classified as prepaid expenses to related parties by being billed to shareholders.



56


Details of transactions between the Group and other related parties for the periods 01.01.- 31.12.2019 and 01.01.- 31.12.2018 between are disclosed as below:

Transaction between related parties

Purchase of

Services Sales of Services Purchase of Services Sales of Services

Related Parties

Çuhadaroğlu Yapı Taahhüt San. ve Tic. A.Ş. 148.995 3.683 138.600 1.251

Shareholders

Murat Ruhi Çuhadaroğlu - 45.660 - 31.598

Related Person

Kenan Aracı - - - 1.540

Total 148.995 49.343 138.600 34.389

01 January - 31 December 2019 01 January - 31 December 2018




57


The Group’s senior managers are Chairman and Board and Board Members, general manager and vice general

manager. For the period 1 January – 31 December 2019 and 1 January – 31 December 2018, benefits provided

to top management s are as follows::

Benefits to Key Management Personnel 01.01-31.12.2019 01.01-31.12.2018

Benefits to Top Management 3.334.138 3.036.542

Total 3.334.138 3.036.542

39. QUALITIES AND LEVEL OF RISKS FROM FINANCIAL INSTRUMENTS

a) Equity Risk Method

The aims of Group are to be beneficial for all shareholders and maintaining the best capital combination to

reduce capital cost and keeping on entitiy when managing the capital. The Group's capital risk management,

calculating as disclosed in note 8 and 10 including loans, debts, and, respectively, of cash and cash equivalents

as disclosed in note 6 , paid-in capital, defined benefit plans, re-measurement gains / losses, capital reserves,

profit reserves and retained earnings / (loss) comprising shareholders' equity are taken into account and as

disclosed in note 28.

Group capital cost and each risks regarding capital evaulate by executives.According to the evaulate company

aim to equalise the capital structure by borrowing, redemption, dividend payment and issuance of shares.

The Group uses Liabilities / Equity rate while they follow capital sufficiency. This rate is found by net liabilities

divided by total equity. Net liabilities is counted by cash and cash equivalents minus total liabilities which

appears in balance sheet.

As of 31 December 2019 and 31 December 2018, equity rate to debts are as follows:

31.12.2019 31.12.2018

Total Payables 142.307.111 173.880.502

Less: Cash and Cash Equivalents (18.807.158) (63.801.291)

Net Debt 123.499.953 110.079.211

Total Eqıity 160.399.236 153.134.735

Debt/ Equity Ratio 0,77 0,72

Group management aims to achieve higher profitability and equity levels to manage the amount of existing

debt..

The current period capital risk management strategy of the Group does not differ compared to previous period.

b) Financial Risk Factors

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair

value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The

Company’s overall risk management program focuses on the unpredictability of financial markets and

seeks to minimise potential adverse effects on the Group’s financial performance.




58

39. QUALITIES AND LEVEL OF RISKS FROM FINANCIAL INSTRUMENTS

b) Financial Risk Factors (continued)

b.1) Credit Risk

Financial losses due to Group’s receivables and financial assets which result from not implementing agreement

clauses related to financial assets by a customer or other party constitutes credit risk. Group try to decrease

credit risk by making operations with confidential parties and attain enough collateral.

Trade receivables contain lots of customers rathered on different sector and geographical area. Credit

consideration making over Custumer’s trade receivables permanently.



59

39. QUALITIES AND LEVEL OF RISKS FROM FINANCIAL INSTRUMENTS (continued)

Cash and Cash

Equivalents

31.12.2019

Current Period

The maximum amount of exposure to credit risk at the end of the reporting

(A+B+C+D) (1)

- Total receivable that have been secured with collaterals, other credit - 13.416.585 - - - 13.416.585

A. Net book value of financial assets neither

overdue nor impaired (2)

4.213 83.769.424 40.775 3.619.636 18.746.637 106.180.685

B. Net Book Value of financial assets that are past due as at the end of reporting

period but not impaired

- - - - - -

C. Net Book Value of financial assets that are impaired (3) - - - - - -

- Overdue (gross book value) - 10.278.700 - - - 10.278.700

- Impairement (-) - (10.278.700) - - - (10.278.700)

- Net value guaranteed with collateral etc. - - - - - -

- Not overdue (gross book value) - - - - - -

- Impairement (-) - - - - - -


D. Off balance sheet credit risk amount - - - - - -

18.746.637 3.619.636 106.180.685

Other PartiesBank Deposits

Receivables

Trade Receivables Other Receivables

4.213 83.769.424 40.775

TOTAL

Related Parties Other Parties Related Parties



60


Cash and Cash

Equivalents

31.12.2018

Previous Period

The maximum amount of exposure to credit risk at the end of the reporting

(A+B+C+D) (1)

- Total receivable that have been secured with collaterals, other credit - 6.868.392 - - - 6.868.392

A. Net book value of financial assets neither

overdue nor impaired (2)

- 67.677.763 10.998 626.729 63.691.210 132.006.700

B. Net Book Value of financial assets that are past due as at the end of reporting

period but not impaired

- - - - - -

C. Net Book Value of financial assets that are impaired (3) - - - - - -

- Overdue (gross book value) - 7.732.195 - - - 7.732.195

- Impairement (-) - (7.732.195) - - - (7.732.195)


- Not overdue (gross book value) - - - - - -

- Impairement (-) - - - - - -


D. Off balance sheet credit risk amount - - - - - -

626.729 10.998

Receivables

132.006.700

Trade Receivables Other Receivables

- 63.691.210 67.677.763

TOTAL

Bank DepositsRelated Parties Other Parties Related Parties Other Parties

(1) It was not considered collaterals taken which is raising credit reliability when the amounts was determined.

(2) All of the trade receivables are receivables from clients. The Group management predicted that It would not be encountered any problem regarding Collection of Receivables because of considering

their past experiences.

(3) The impairment test, the Group's customers, which is one of receivables determined by the management of doubtful receivables have been made in the framework of policy




61



b.2) Liquidity Risk Management

Liquidity risk is that an entity will be unable to meet its net funding requirements The Group’s objective is to

maintain a balance between current assets and liabilities through close monitoring of payment plans and cash

projections. The Group manages short, medium and long term funding and liquidity management requirements

by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring

forecast and actual cash flows and matching the maturity profile of financial assets and liabilities.

The table below summarizes the maturity profile of the Group’s financial liabilities based on contractual

payments. The Group does not have any derivative liabilities..

Tables related liquidity risk are as follows:

Book Value Up to 3 months (I) 3 to 12

months (II)

1 to 5 years (III Over 5 years

(IV)

Demand

Bank Loans 9.179.294 9.179.294 1.167.316 8.011.978 - - -

Trade Payables 34.433.888 34.433.888 27.967.245 6.466.643 - - -

Other Payables 1.364.128 1.364.128 1.341.041 23.087 - - -

- -

Terms According to Agreements

Non-derivative financial

liabilities44.977.310 44.977.310 30.475.602 14.501.708

Total Cash

Outflows According

to the Contracts

(=I+II+III+IV)

31.12.2019

-

Book Value Up to 3 months

(I)

3 to 12 months

(II)

1 to 5 years (III Over 5 years

(IV)

Demand

Bank Loans 12.513.469 12.513.469 6.028.000 5.279.869 1.205.600 - -

Trade Payables 30.175.472 30.175.472 24.183.367 5.992.105 - - -

Other Payables 1.159.423 1.159.423 1.143.147 16.276 - - -

1.205.600 -

Terms According to Agreements

Non-derivative financial

liabilities43.848.364 43.848.364 31.354.514 11.288.250 -

31.12.2018

Total Cash

Outflows

According to the

Contracts

(=I+II+III+IV)




62



b.3) Market Risk Management

The market risk is the risk that the fair value or future cash flows of a financial instrument will flactuate because

of changes in market prices. Market risk comprises three types of risk; currency risk, interest rate risk and other

price risk.

In the current year, the Group's exposure to market risk or exposure risk management and assessment, has not

changed compared to the previous year.

.

b.3.1) Foreign Exchange Risk Management

Foreign currency transactions expose the Group to foreign currency risk. These risks are monitored and limited

by the analysis of foreign currency position.

The group's foreign currency denominated monetary and non-monetary assets and liabilities as of the date of the

balance sheet are as follows:

1. Trade Receivables 49.803.139 3.949.915 3.959.371 - 1.849

2a. Monetary Financial Assets 15.503.633 1.891.292 641.894 - -

2b. Non-Monetary Financial Assets 9.886.320 1.020.163 574.871 400 -

3. Other 8.016.804 250.863 980.986 321 -

4. Current Assets (1+2+3) 83.209.895 7.112.233 6.157.121 720 1.849

5. Non-Monetary Financial Assets - - - - -

6. Other - - - - -

7. Fixed Assets (5+6) - - - - -

8. Total Assets (4+6) 83.209.895 7.112.233 6.157.121 720 1.849

9. Trade Payables 10.126.322 1.191.099 458.749 - -

10. Financial Liabilities 8.011.978 - 1.204.700 - -

11a. Other Monetary Liabilities - - - - -

11b. Other Non-Monetary Liabilities 80.392.161 11.857.586 1.496.967 - -

12. Short-Term Liabilities (9+10+11) 98.530.460 13.048.685 3.160.416 - -

13. Financial Liabilities - - - - -

14. Long-Term Liabilities (13) - - - - -

15. Total Liabilities (12+14) 98.530.461 13.048.685 3.160.416 - -

16. Net Foreign Currency Assets /

(Liability)

Position (8-15

(15.320.566) (5.936.452) 2.996.705 720 1.849

17. Monetary Items Net Foreign

Currency

Asset / (Liability) Position

47.160.812 4.650.108 2.937.816 - 1.849

Euro Gbp AUD

31.12.2019

TL Equivalent

(Functional

Currency USD




63



b.3) Market Risk Management (continued)

b.3.1) Foreign Exchange Risk Management (continued)

1. Trade Receivables 31.086.988 1.962.135 3.444.657

2a. Monetary Financial Assets 60.521.659 11.148.394 310.397

2b. Non-Monetary Financial Assets 9.426.655 901.887 776.695

3. Other 7.417.017 813.293 520.631

4. Current Assets (1+2+3) 108.452.319 14.825.709 5.052.380

5. Non-Monetary Financial Assets - - -

6. Other - - -

7. Fixed Assets (5+6) - - -

8. Total Assets (4+6) 108.452.319 14.825.709 5.052.380

9. Trade Payables 9.754.717 934.270 802.856

10. Financial Liabilities 11.261.425 250.000 1.650.000

11a. Other Monetary Liabilities - - -

11b. Other Non-Monetary Liabilities 109.084.095 15.086.358 4.929.707

12. Short-Term Liabilities (9+10+11) 130.100.236 16.270.628 7.382.563

13. Financial Liabilities 1.205.600 - 200.000

14. Long-Term Liabilities (13) 1.205.600 - 200.000

15. Total Liabilities (12+14) 131.305.837 16.270.628 7.582.563

16. Net Foreign Currency Assets / (Liability)

Position (8-15

(22.853.517) (1.444.919) (2.530.183)

17. Monetary Items Net Foreign Currency

Asset / (Liability) Position

69.386.907 11.926.259 1.102.198

TL Equivalent

(Functional Currency

31.12.2018

USD Euro

The Group is exposed to foreign exchange risk arising primarily with respect to transactions denominated in USD and EURO.

The following table details the Company’s sensitivity to a 10% increase and decrease in the TL against USD

and Euro. 10% is used in the reporting of currency risk to the key management and it represents the

management’s expectation on the potential exchange rate fluctuations. Sensitivity analysis can only made on the

year-end outstanding foreign currency denominated monetary items and it shows the year-end effects of the

10% of exchange currency fluctuation on the related items..




64





Equity Equity

Foreign Foreign Foreign Foreign

currency

appreciation

currency

depreciation

currency

appreciation

currency

depreciation

1- U S Dollar net assets / liabilities (3.526.371) 3.526.371 - -

2- U S Dollar Hedged (-) - - - -

3- USD Dollar Net Effect (1+2) (3.526.371) 3.526.371 - -

4- EUR net assets / liabilities 1.992.989 (1.992.989) - -

5- EUR Hedged (-) - - - -

6- EUR Net Effect (4+5) 1.992.989 (1.992.989) - -

7- AUD net assets / liabilities 766 (766) -

8- AUD Hedged (-) - - -

9- AUD Net Effect (4+5) 766 (766) -

10- GBP net assets / liabilities 560 (560) - -

11- GBP Hedged (-) - - - -

12- GBP Net Effect (4+5) 560 (560) - -

TOTAL (3+6+9+12) (1.532.057) 1.532.057 - -

10% change in AUD against TL:

Exchange Rate Sensitivity Analysis Table

31.12.2019

10% change in USD against TL:

10% change in GBP against TL:

Profit/Loss

10% change in EUR against TL:

Equity Equity

Foreign Foreign Foreign Foreign

currency

appreciation

currency

depreciation

currency

appreciation

currency

depreciation

1- U S Dollar net assets / liabilities (760.157) 760.157 - -

2- U S Dollar Hedged (-) - - - -

3- USD Dollar Net Effect (1+2) (760.157) 760.157 - -

4- EUR net assets / liabilities (1.525.194) 1.525.194 - -

5- EUR Hedged (-) - - - -

6- EUR Net Effect (4+5) (1.525.194) 1.525.194 - -

TOTAL (3+6) (2.285.352) 2.285.352 - -

10% change in USD against TL:

10% change in EUR against TL:

Profit/Loss

Exchange Rate Sensitivity Analysis Table

31.12.2018




65





The Group does not hedge its foreign exchange liabilities arising from operations through the use of derivative

financial instruments.

b.3.2) Interest Rate Risk Management

The value of a financial instrument will fluctuate as a result of changes in market prices. The Company’s

interest rate risk is primarily attributable to its borrowings. The interest-bearing financial liabilities have variable

interest rates, whereas the interest bearing financial assets have a fixed interest rate and future cash flows

associated with these financial instruments will not fluctuate in amount. The Company is subject to interest risk

due to financial liabilities and finance lease obligations. Policy of the Company is to manage this risk through

fixed and variable rates borrowings..

As of 31.12.2019 and 31.12.2018, Group’s interest position table is as follows:

31.12.2019 31.12.2018

Financial assets fair value differences reflected to profit / loss - -

Financial Assets Cash and Cash Equivalents 14.076.130 60.455.843

9.181.440 12.514.752

- -

- -

Floating-rate financial instruments

Financial Assets


Interest Position Table

Fixed Rate Financial Instruments


As at 31.12.2019, Group does not exposed to interest rate risk because does not has any variable interested financial instrument. (31.12.2018: None).



66

40. FINANCIAL INSTRUMENTS (FAIR VALUE OF FINANCIAL RISK MANAGEMENT DISCLOSURES)

31 December 2019

Financial Assets

Cash and Cash Equivalents - - 18.807.158 18.807.158 6

Trade Receivables - - 83.773.637 83.773.637 9, 38


Financial Payables - - 9.181.440 9.181.440 8

Trade Payables - - 34.433.888 34.433.888 9, 38

31 Aralık 2018

Financial Assets

Cash and Cash Equivalents - - 63.801.291 63.801.291 6

Trade Receivables - - 67.677.763 67.677.763 9, 38


Financial Payables - - 12.514.752 12.514.752 8

Trade Payables - - 30.175.472 30.175.472 9, 38

Fair Value Differences measured by

reflecting in other comprehensive

income

Fair Value Differences

measured by reflecting

through P/L

Fair Value Differences measured

at amortised cost Book Value Notes

Group management thinks that the recorded values of financial instruments reflect their reasonable values.




67

40. FINANCIAL INSTRUMENTS (FAIR VALUE OF FINANCIAL RISK MANAGEMENT

DISCLOSURES (continued)

Financial Instrument fair values are determined as follows;

First Level: Financial Instruments valuated with market values of the similar instruments which traded on

active market.

Second Level: Financial Instruments valuated with data uses to find price which observable directly or

indirectly on the market in addition to first level.

Third Level: Financial Instruments valuated with data which not based on data uses to find fair value of the

instruments on the market..

There are no financial instruments that are shown at their fair values.

41. POST BALANCE SHEET EVENTS

None.

42. DISCLOSURE OF OTHER MATTERS

None (31.12.2018: None).

ÇuhadaroĞlu metal sanayİ ve pazarlama a.Ş. and its …€¦ · convenience translation into...

Documents