CONDENSED INTERIM CONSOLİDATED FINANCİAL 30 … · · 2016-08-10The Company management is...
Transcript of CONDENSED INTERIM CONSOLİDATED FINANCİAL 30 … · · 2016-08-10The Company management is...
(CONVENİENCE TRANSLATİON OF CONDENSED İNTERIM
CONSOLIDATED FINANCİAL STATEMENTS
ORJGINALLY ISSUED İN TURKISH - SEE NOTE 17)
EREĞLİ DEMİR VE ÇELİKFABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
CONDENSED INTERIM CONSOLİDATED FINANCİALSTATEMENTS FOR THE PERIOD 1 JANUARY - 30 JUNE 2016 ANDREVIEW REPORT
EYGüney Bağımsız Denetim ve TeL t +902123153000SMMMAŞ Fax+902122308291Eski Büyükdere Cad ey camOrjın Maslak No:27 1icare Sicıl Na 679920-427502
Buıldıng a befter MasLak. Sarıyer 34398workıng world IstanbuL - Turkey
(Convenience Translation into English of lndependent Auditor’s Review Report Originaliy lssued inTurkish)
Review Report on the Interim Condensed Consolidated Financial Information
To the Board of Directors of Ereğli Demir ve Çelik Fabrikaları TAŞ.;
lntroduction
We have reviewed the accompanying condensed consolidated financial information of Ereğli Demir veÇelik Fabrikaları TAŞ. (“the Company”) and its subsidiaries (ali together referred to as ‘the Group”)as of June 30, 2016, which comprise the consolidated statement of financial position and theconsolidated statement of profit or loss and other comprehensive income, consolidated statement ofchanges in equity, the consolidated statement of cash flows for the six-month-period then ended andits explanatory disclosures. The Company management is responsible for the preparation and fairpresentation of this interim condensed financial information in accordance with Turkish AccountingStandards 34- Interim Financial Reporting (“TAS 34”). Our responsibility is to express a conclusionon this interim condensed financial information based on our review.
Scope of a Review
We conducted our review in accordance with the Standard on Review Engagements (SRE) 2410,“Limited Review of Interim Financial Information Performed by the lndependent Auditor of the Entity”.A review of condensed interim financial infomiation consists of making inquiries, primarily of persons
responsible for financial reporting process, and appiying analytical and other review procedures. Areview of condensed interim financial information is substantially less in scope than an independentaudit performed in accordance with the Independent Auditing Standards of Turkey and the objective ofwhich is to express an opinion on the financial statements. Consequently, a review on the condensedinterim financial information does not provide assurance that the audit flrm will be aware of alIsignificant matters which would have been identifled in an audit. Accordingly, we do not express anaudit opinion.
Conclusion
Based on our review, nothing has come to our attention which may cause us to believe that theaccompanying interim condensed consolidated financial information are not prepared, in ali materialrespects, in accordance with TAS 34.
A member n,ı oF Ernst e. Young aıobeı Lim]ıcd
EYBuilding a betterworking world
Emphasis of Matter
We draw attention to the matter in Note 7 ta the accompanying interim condensed consolidatedfinancial statements. The court cases related to Capital Market Board’s (“CMS”) claim that theCompany had prepared ta December 31, 2005 flnancial statements in accordance with internationalFinancial Reporting Standards instead of CommuniquĞ Serial Xi, No:25 on “Accounting Standards inCapital Markete” without taking the permission of the CMB in prior years were concluded against theCompany at Council of State and such conclusions deciared to the Company via notifications sent inJuly 2012. On August 1, 2012, the Company applied to the Administrative Court to remove theconflicting decisions of this court; but the Administrative Court decided to reject the appiication by thenotification made on February 17, 2014. However, lawsuit filed by the Pdvatization Administration(:ıpAıı) of The Turkish Republic is st the stage of appeal st the Supreme Court and e pending as of thedate of our review report. However, this matter e not basis for our review conclusion.
Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim ŞirketiA member firrnof.Eçnst a Young Global Limited
(2)
MeUn.Çntğı4lEngage]iıentPaı
August 10, 2016Istanbul, Turkey
ırenzer ,, ol Errst a Yiımç G:abal L.rted
TABLE OF CONTENTS PAGE
CONSOLİDATED STATENIENT OF FINANCİAL POSITİON 1-2
CONSOLIDATED STATENIENT OF PROFIT OR LOSS - 3
CONSOLIDATED STATEMENT OF OTHER COMPREHENSİVE İNCOME 4
CONSOLIDATED STATENWNT OF CHANCES İN EQUİTY -
CONSOLİDATED STATEMENT OF CASH FLOW 6
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FİNANCIAL STATEMENTS Ü... 7-41
NOTE 1 GROUP’S ORGANEATION AND NATURE OF OPERATIONS 7-8NOTE 2 BASIS OF PRESEKFATİON OF THE CONSOJJDATED FINANCİAL STATEMENTS 8-12NOTE 3 RELATED PARfl’ TRANSAOIONS 13-14NOTE4 NVENTORrnS 14-15NOTE5 TANGLE AND NTANGmLEASSETS 15-16NOTE 6 BORROWINGS 17-18NOTE 7 PROVISIONS 18-24NOTE 8 EMPLOYEE BENEFITS 24-26NOlI 9 CONUvIHNENTS AND CONTP1GENCIES 27NOTE 10 TAX ASSETS AND LIABILrnES 28-30Nail ii EQUFFY 31NOTE 12 SALES AND COST OF SALES 32-33NOTE 13 OPERATfl4G E)U’ENSES AND OlilEk OPERATING INCOME / (EXPENSES) 34-36NOTE 14 FINANCLAL INCOME / EXPENSES 37NOTE 15 NATURE AND LEVEL OF IUSKS DERİVED FROM FINANCİAL ll’1STRUMENTS 3831NO1E 16 SUBSEQUENT EVENTS 41NOTE 17 OflrnR ISSUES AFFECTING THE CONDENSED fl’TER1M CONSOLIDAUDFANClAL
STATEMENTS MATERIALLY OR THOSE REQUED Tü BE DISCLOSED FOR A CLEARUNDERSTANDAİ3LE AND INTERPREFABLE PRESENTATİON 41
(Convenicnce Translation into Enghsh of Condensed lalenin Consolidaled Financial Slatements (kıginallyIssued in Turkish — Sec Note Il)
ERELi DEMiR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
CONSOLIDATED STATEMENTS OF FINANCIAL POSEFİON AS OF 30 JUNE 2016
(Arnoıınls ırc cxprcsscd in thousands of Tmkish Lira (“TRY Thousand’) unlcss olhcnvisc indicated.)
(Revicncd) (Reviewed) (Audited) (Audited)
Cuncnt Pedod Curreni Pedod Prevjous Pcdod Pnnlous Pedod
30 June 30 June 31 Docomher 31 Decemher
2016 2016 2015 2015
ASSfl’S Note USD’OOO fltY’OOO USD000 TRY000
Cuntnt Assets 2.627.508 7.602.955 2.751.401 7.999.975
Cnsh and Cash Equivabfls 1.011.156 3.012.688 1.009.321 2.934.703
fhmncıal Dawativc Insıruments 11.015 31.873 15.286 44.445
irade Receivables 395.212 1.432.945 561.504 1.632.629
Duc Frnn, Relaled Parties 3 13.849 40.073 14.833 43.130
Other Trude Receivables 381.363 1.392.572 536.670 1.589.399
Odıer Receivables 732 2.118 712 2.069
Inventorics 4 1.023.206 2.960.748 1.113.595 3.237.890
Prepaid Eenses 24.455 70.764 18.143 52.754
Other Curren: kise(s 31.732 91.819 32.840 95,485
Non Cuın’nt Assets 3.632.658 10.511.460 3.657.49<) 1(1.633.515
Other Rcccables 5.205 15.061 5.183 15.069
Fhnncial lavesırnents 27 78 27 79
FandaI Denivative Inswurnents 8.092 23.414 14.639 42.564
Investment Propenles 26.961 78.015 24.670 71.731
Propeny, PbnL and Equipment 5 3.509.377 10.154.734 3.530.218 10.264.461
Irnaneihle Assets 5 58.090 168.090 59.453 172.865
Prqaid £Ncnscs 15.309 44.299 15.112 43.939
Deferred Tax .4sscts 10 9597 27.769 8.188 23.807
TOTAL ASSETS 6.260.166 18.114.415 6.408.891 18.634.490
The detalis of presenlailon cunency translation tü TRY explained in Noıe 2.1.
The accornpanying notes lbrm an intcçral pan of tljese cundensed intenim consolidaied financial statcınenls.
(Convenience Tumsiation mm English of Condensed lıficrim Consolidated Financial Slatcmcnts Originaliylssued in Turkish — Sec Note 17)
ERELİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
CONSOLIDATED STATEMENTS OF FINANCİAL POSITİON AS OF 30 JUNE 2016
(Aınoonıs art expresscd in thousands of Turkish Lira (‘TRY Timosand’) unlcss othcrwise indicated.)
(Rcvirwed) (Rcviewed) (Andited) (Audiled)
Currnnt Pedod Cürrest Period Preious Period Prevous Prıiod3OJww 3OJurw 31 Dctccmiwr 31 Decemhor
2016 2016 21115 20(5LRBILITIES Note USD000 IRV000 USD1610 TRY’01flI
Cuneot Liahihtks 981862 2.843.010 899.513 2.615.423
SIKntToınbonouines 6 214.858 621.714 8.353 24.286
Shon Tm Ponion of Long Tam Borrowinus 6 421.686 1.220.191 360.179 1.047.256
FüanciaI Daj’ativcInsmnnncnıs 8.917 25.802 6.705 19.495
TradcPayahI 164.766 476.767 200.135 582.203
DUL> lo Related Pardes 3 8.158 23.606 9.159 26.630
Othcr TmdePayabks 156.608 453.161 191.076 555.573
Oıhc, Payabl 1449% 41.952 11.583 33,680
Dd’awdRc’cnuc 43.191 123978 12.115 93.377
Curaml Tax LinhiIiıi 10 30 59% %8.538 73.896 217.769
Shen Tmo Provisirms 7 38.219 11(1.590 150.298 437.007
rayables for Employ Bcncfiı.s 8 34 398 99.534 41.168 119.700
Oıha Curroıt Liahiliıies 11.731 33.944 13.981 4(1.650
Non Currvnt Liahihhics 1.167.372 3.377.906 1.197.164 3.480.875
Leng Tam Borowings 6 604.356 1.748.765 654.960 1.904.361
Fmancial Dcrivamivc Instmrncm(s 98% 2.859 7.345 21.355
Prnvisitnıs lör Fışioyir Bencfits 8 195.524 565.769 173.997 505.915
DcfLırcdTnx Liabiitics 10 366.362 1.060.106 360.711 1.048.802
OıhaNonCunLınLiahilımics 142 407 151 442
EQUITV 4.109.932 11.892.499 4.312.214 (2.538.192
Equib’ Attflhutahle to Equity Holden of tIx Parcut 3.991.853 11.550.826 4.189.170 (2.180.429
ShareCapiıal Il 1.818.371 3.500.000 1.818.371 3,500.000
lnflaıion Adjusuaııt 10 Capiıal 81.366 156.613 81.366 156.613Trcasuıy Simres (.) (60.387) (116.232> (60.387) (116.232)
Share Isçııc Prtüım (Discounts) 55.303 106,447 55.303 106.447
Otha Conwrchcıısıve lncome’Expcasc Nol to be
Reciassıfial ıı, Profiı/ (Loss) (42.34!> (98.682) (36.155) (80.580)
Rnuluallun Resern, qf Tangible Asseis 12.690 27.206 11.623 27.215Acıı,ğul aoss)/ Gulo funds (55.031) (125.888) <38.778> (107.795)
Otha Coışrdaui’c 1ıvoıı’Expac la k
Redassifidıoprofjı/(Lass) (28.517) 3.934.479 (31.383) 4.01(1.257
Cash Rrnr Uedglng Gal;, (Zvss, (117> ı34Q (754 0.192>
Foreign Cmrowr Trunskıı fon Resencs (28.300) 3.934.819 (30. 729,i 3.012 439
Rımricıcd RcsavesAçsortd froınProflı 516.714 1.166.197 441.058 950.83!
Rcıaiıwd Larnines 1.486.278 2.420.078 1.506.960 2 527.184)
Ncı Profit for the Penod 165.066 481.926 414.137 1.125.913
Non-Controllinglnterests 118.079 341.673 123.1134 357.763
TOTAL LIABILITIES AND EQIİTY 6.260.166 18.114.315 6.408.891 18.634.3%
Thc dcıails of prcscnıation currencv translation 10 TRY cxplained in Note 2.!.
Thc accompanying notcs !brm an intcaI pan of thcsc cundcnscd intcrim consolidaıcd financial statcrncnt.
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venl
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onde
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rim
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tem
enls
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ssue
din
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kish
—Se
eN
ote
17)
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pany
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ay20
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olid
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atem
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.5
(Convcnicnce Translation iııto English of Condensed Inıcrim Consolidaıed Financial Staternents OriinaIIy lssucd inTurkish — Sec Note 17)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
CONSOLIDATED STATEMENTS OF CASH FLOWFOR THE SD( MONTHS PERİOD ENDED 30 JUNE 2016
(Anounts aıc exprcssed in Ihousands of Turkish Lira t”TRY Thousand’) unleas othcniscindica(cd.)
c ts(( flOWs FROM OPERITING ACTIV(flESPrim ü..i for Rt P.rkdAdI..Im,a(, la R.n.ılk Profil (Lui)
Ad,ıısur,eıa, Os Dcporcra(ıorı and Aı,alt.£ktı £zpaıleıAdrıçlocufo for (nqıuinnoıl 1os iRc.mal of bopainn<rn tsas)
Ad)uıtmc.TflforPrmüıon (R,venalo(Porvumn> for Recrnübk,
Adn:,m,rms for Pro,üion 8m-snat orüıon(for in on/one:AdylaıcIs for Pmvısa,cs
4dpsşnrorts for P5v cara t. IRnersa! ofhoı-oıo.şı for En.p1oı Tcrm,nn(ıooAd<uıtmct.n for Froı6von (Retenalofp,vr,rnn) for Pcrdrng (1mm. aı,d Dr Lnw’uı(;
Adpııbucıl. for Inlorur <l,ıcorne) mil EıjıcuaAdpnpneroforjntercsrlaa’mcAd)ırrmş.oforlntcrcstEr;ım,ocUra,m,d Fiim t Irromefrom 0W,)’: Lue,
Adiu,bocto for Ganabad Fooriz, Emdoran DiltaarnAd:ı:ıUncnU 8w Van V.kw (Galası
.4ıta,r.,r.ofor fr,r (Wo,, iGDır.,; Sana. a.ş Denvoih Fı.ıancı,,t lıu,rumcı.u
Ad900ııaalfcw Tı 0ıcnıw) ExpcısesAd9nbnaSs x hat (Gain) nI DisıouI nt Nc.-ümrnl Aa,cis
.Idj,ımmcnofor ton,,, )Glin,> a.ş Dapmao(Pn>psh, flam aüEçtimcnt
.(d,s.ımcno for ü,,,,, (6 alı..) ii:. D(rpo.ataf b,vesMrİnt 15-apa-nınChauı1n in SVı,rtio£ (ıpilal
Ad:’ıio:,aıU fr, Drotase (bıcrcose) in Trade RcceiorIıIesD.crcasc i,.cr,a,g> t, bnde Rcce,vohicsfrom Re1,,ıaI Port,,,,D<cr.as, (1nc,emc) in irade Recc.vah)e.from V,ırdPor<zss
Ad uslırıaı(s for Oa,rnsr (liıcıcnr( in ((din KraivobI,, RcIakd ftııı Opaaüa,,Dccnvsr (hureoıc) un Othcr Rerösobtesfram Operationo/rom TIııM Para,,
Decıcase çinut.ıc) in DnivaI,vc Fin,ııcüaI IıLgrnrnnılı
Ad(,ısruıcnb for Dcarasr Oncıa.sc) in b:vcııtairsDaıtnc (rcra,r) in foepaul LxpenstAd(:ıuına:b for Inotase (Deczc,ısr) in Indr Prn,(,Ie,
I,crcaJc (D ccıvan> in imde I’ajtı 5k tv R,Iawd Parti,,ler, Çare (Drcraarc) in fr,), Pa,ohk ta flird Fazıl,,.
A:I<sısrırıovs for hınemse )Dcnoısr( ili ( din I’uıblrs Kobra! (corn OpendorısIızrre,n,’ )Dn-reos,9 in (3,5cr Petı5/ea tü ThrnI I’orties Rehırniftom Opernt.on..
botase (Dranse) in Daivalıve UaIıılilraAdjva(nıınds for 0)6cc lııcorast mnansc) in Wırki,ıg C,Iıiral
Demin:,, (larreas e) in 0,5,, luca Rdowdfrom Oprraoonalar,,,,,, (Decreine> in Ot4cFccrohkr Rehrredfnnı Opera/in..
tuh Has.. Provld.d by Upcratlnz Acılviila.Parvcıı(s Rclarrd tv Pmo6sioıu for Eınşılovvo Taınioar,vn Brorfiisl’arvc,ıia Rclurıl (0 Olun l5cıviıireısl,ırnıı,r Tarrç Rcfııııl (Paıd)
risli FLflV5 nİOM INTESUNG A(TIVITIESCnğ, (nunn fra’şı, Sakı ofPıopdnv. Pinıt Eqııq,şncııl and Intangıbir Assc(.s
r055 Infloafrom Sa)., ofPropcr, P)nn< and £qı,şrnıentCisl, Oıpıflnw 6onı J>rncbroc ofPrnpcıy, Plan!. Eqniıannıi aııI (afoapıblc Asari:
(<oh (hııfloırfiom Momhrac ofPınpnn. l’hrnt ard £-jınprne,.t
(a1, Oudiorr fm,, h,rc5aae af ktvngib/e .4ş.ret,Cadı (nOon [mu Sıks of İır.osrnran PımıaIyCadı Advanm and İkNa Gir,,
0:5m- Ga,( idi-e,,-,, ardfl.hn rOse..
Cisl! şıoı’s FKOM RNANCING iCfl9TIEsCadı [miOmir bır
Caıhirjioırfr,mıLoar,
Cadı OulOor OıırnRqvıııarcis of Dcflrraıra.(c,h Osnıoıi Tmo Vur 8çın-rnrıı
Dı’ıdaıds (‘ordİnlcöı Pdİı/ar%( Rccnved
NET İNCKLSE (DECREASE)LN t Asil AND CASH EQUWALTS REFORL EEFELT
OF EXCILSNCE 11.81£ CIIANGES
Olar, af Earhıncr R,arChanrna Ca,h and Cnıh £qınsaıU
NET INCRLIS£ (DECREASE) İN CASH AND CASU EQflVALENTS
FASII AND C5sH EOLİVALENİSATTI{E BEGNNN009flIE PERİOD
SIl %ND CASH EQflVM£NTS AT THE FM) OF THE PERİOD
195 577 1 076- (16 (33<
373.625 394225<90653 1(6152
3037 (32497181396 /89791
(2636) 4335<2 556> 4 3353<307 5611
267(1)5 (83 837(7.04<) 188
(102.633) (7753)(3021) 3090
<99609) (1(1544)(11.1557 (1(1418)(1? 155) (10418<ç21.656) (1 (‘8)29.205 72.889
3 656 (3 466,25.539 31353
1.333.061 904118(24.085) (8521)
(2(7379) t44b0)(223 760) (91) 58<(265.782) (56279)
‘70 4 ‘215516 1321
(219 05) (67956)(257573) (‘033)
<1531) <921,• 4967
(<1233) (7611)12233ı
(323.0141 (54.724)1616(19 55! lim16468)9 sSi 786
(1 012.’4 1) (573 6(3)<1022541, (873 683>(1 038 434) (510 173>
(il 412) 70 833,52574 7.389
2.’ 12.786799.274521.169263 077
4 820
2 5131947
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8 2396719)5 2465216
200 632(30_32)
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20 830)£50’
(29.13)>(27.986)<37 986)(7110)85349(5939)92288
2.379.451(22 393)(11291)
(222.78)3)(1453>59)
11.1>6311 (>05
(174001)<>7) 613>
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‘20 145>
(l.1I13182)2 708 731
2305’33
(2736957)(2346957)(1 407.8’()
(77 9-7)1)45 72
The accompan39ng notes form an integral pat( ot thesc condensed interim eonsolidated financial sLaıcıucıus.
(Revlened> (RevI.na!) (RtvimneıI> 0(rvIcue.I)
Ci,reni (‘şrIol Corrcnı Perlad Prrriaoo PrrIo.I Prerlo., Prrkd
1 January- 1 Janıaaı’- 1 Jatıjar. 1 J.nuan’.
30 3.., 20>6 30 Suat 2016 30 Jim, 2015 30 Souc 2015
nk 9 %1)1(00 TRV’b)OIl 18001(0 11(1000
277.470171.0M16127,
‘l1 110192(7701)
4 (4353,
7.5638 209167 <13353<
(920)13 05 %3>13 16930
155
35374 3537
41033lOS
(66.137499.431419.908321.716((0.866)
220!(/3907<22 0806) 06>
(38 985)
(26(9)(5256’,4942?
4504013
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121.831577
80(1803311.155198336(02.743
181
>112760
244<,33,385
3 015
(2471‘1’611)16505
3 605
(2624)10492 049
73156(l3.75ı1)
129.12265.885
1.05664 832
(9<8)<9)8>
10.81892 482(2437)
(35 469)(1 015)
(34 1241(3(55)(3855>(7 484)(009312618826
461.4638 (8250)7 (9843!)0 (77.3(2)
01.072)19<0
513 19)0(88.737)
5 (8822215 <525>
(4235)<1 233<
(153.741)(24
5.59 114<303 373)<355 373;<363900)(17.610)1(011
32-658 1183(4< 190.9110 558145
(115) (40096) 17 10 4iI 7(2
31.815 77.915 247.230 1.010.107
11813721 :93370.; 113048 : 1(6810
(.041.185 3.012.688 1.190.261 3.197.417
6
(Coııvenience Translation into English of Condensed Inlerim Consolidaıed Financial Statements Originally lssued inTurkish — See Note 17)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE SDC MONTHS PERİOD ENDED 30 JUNE 2016
(Amounts ait expressed in thousands of Turkiah Lira “TRY Thousand” unleas oıhenvise indicated.)
NOTE 1- GROUP’S ORGANIZATİON AND NATURE OF OPERATİONS
Erdemir Grubu (“Group”), is composed of Ereğh Demir ve Çelik Fabrikaları T.A.Ş. (“Erdemir” or “theCompany”), and its subsidiaries which it owns the rnajority of their shares or has a signiflcant in1uenceon ıheir management structure.
The immediate parent and ultimate controlling party of the Group are Arner Holding A.Ş. and OrduYardımlaşma Kurumu (OYAKJArmcd Forccs Pension Fund), respcctivelv.
OYAK 1405 incorporatcd on 1 March 1961 under the Act No. 205 as a private entity under its own lawsubject to Turkish eivil and commercial codes and autonomous in financial and adminisırative matters.OYAK. being an “aid and retirement fund” for Turkish Armed Forces’ members, provides varioussen’ices and benefits within the framework of social seeurity concept anticipated by TurkishConstiıution. OYAK has nearly sixty dircet and indirect subsidiaries in industry, finance and service
secıors. The delailed information about OYAK can be found on its ofilcial wcbsiıe (www.oyak.com.tr).
The Company was incorporated in Turkey as a joint stock company in 1960. The principal activilies ofthe Company are produeıion of iron and sıcel rolled producıs, alloyed and non-alloycd iron, sıeel andpig iron castings, cast and pressed products, coke and their by-products.
The Company’s shares have becn traded in Istanbul Stock Exchange sinee the establishment of theIstanbul Stock Exchange (year 1986).
The main operations of the companics ineluded in the consolidation and the share percentage of theGroup for these companies are as follows:
Country of 3OJune 3lDecemberOperation Operaüon 2016 2015
Name of the Company Share% Shnıt %
iskendcn Demir ve Çelik A.Ş. Turkey Sıcel Production 95,07 95,07Erdemir Madencilik Sna ve Tie. A.Ş. Turkev han Ore and Pellet 90 90Erdemir Çelik Servis Merkezi San. ve Tie. A.Ş. Turkey SIeel Srnwice Cenkı 100 100Erdemir Mühendislik Yön. ve Daıi. Fbı A.Ş. Turkey Manageınent and
Consultaney 100 100Erdemir Rornanlu S.R.L. Romania Silicon Sleel lkoduction 100 100Erdemir Asin Pacific Pılvate Limited Sıngaporc Trading 100 100
The registered address of the Company is Barbaros Mahallesi Ardıç Sokak No:6 Ataşehir / İstanbul.
7
(Convenience Translation into English of Condensed ln(erim Coıısolidaled Financial Statenwnts Originally Issued inTurkish — 5cc Note 17)
ERECLİ DEMiR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
NOTES TO THE CONDENSED CONSOLIDATED FNANC1AL STATEMENTSFOR THE SD( MONTHS PERIOD ENDED 30 JUNE 2016
(Anıounti are expressed in lIiouands ofTurkish Lira “TRY Thousand”) unkss oıhenvise indicated.)
NOTE 1- GROUP’S ORGANIZATİON AND NATURE OF OPERATIONS (con(’iJ)
Ereğli Demir ve Çelik Fab.T.A.Ş.
Iskenderun Demir ve Çelik A.Ş.
Erdemir Madencilik San. ve Tie. AŞ.Erdemir Çelik Servis Merkezi San, ve Tie. AŞ.Erdemir Mühendislik Yönetim ve Dumşmanlik ilinErdemir Romania S.R.L.Erdemir Asia Pacille Private Limited
_________________ _________________ ___________________
Ereğli Demir ve Çelik Fab.T.A.Ş.Iskenderun Demir ve Çelik A.Ş.Erdemir Madencilik San. ve Tie. A.Ş.Erdemir Çelik Servis Merkezi San, ve Tie. A.Ş.Erdemir Mühendislik Yön, ve Dan. liz. A.Ş.Erdemir Romanla S.R.L.Erdemir Asla Paeiflc Private Limiled
__________________ __________________ _____________________
The Company and alI its subsidiaries in Turkey mainlain their Icgal books of aeeount and prepare thcirslaıutory financial siatements (“Stalulory Financiai Stalements”) in accordance wiih accountingprinciples issued by the Turkish Commercial Code (“TCC”) and lax legislation.
The Group’s condensed consolidated financial statemenis and disclosures have been prepared inaccordance with the communiqud numbered 11-14,1 “ComrnuniquĞ on the Principles of FinancialReporting in Capital Markets” (“the Comnıuniqud”) announced by the Capital Markets Board (“CMB”)(hereinafter wili be referred to as “the CMB Accounting Standards”) on 13 June 2013 which ispublished on Official Gazette numbered 28676. The financial slatements are prepared on cost basis,except the derivative financial instruments and iron ore and silicon stcel used in the production of flxedassets canied on fair valuc measured al busincss at acquisition dale.
in accordance wilh arliclc 5h of the CMB Reporling Standards, companies shouid apply TurkishAccounting Standards/Turkish Financial Reporting Standards and its interprctations issued by thePublic Oversıght Accounting and Auditin2 Standards Authority of Turkey (“POA”).
in aceordance with the Turkish Accounting Standard No: 34 “Interim Financial Reporting”. entities areallowed to prepare a eomplete or condensed set of interim financial staıemcnts. in this respect, theGroup has preferred 10 prepare condensed interim consolidated financial statements in the interimperiod. Accordingly, ıhcsc condensed interim consolidaled financial statcmcnts should be read inconjunction with the annual consolidated financial staıements for the year ended 31 December 2015.
The number of the personnd empioyed by the Group as al 30 Juncas follows:
2016 and 31 December 2015 are
Paid Hourlv Paid Mondy 30 June 2016Personnel Personnel Personnel
4.472 1.773 6.2453.323 1.777 5.100
126 125 251218 89 307
- 232 232215 50 265
- 4 48.354 4.050 12.404
Paid Hourly Paid Montly 31 Decemher 2015Personnel Personnel Penonnel
4.530 1.797 6.3273.446 1.816 5.262
128 127 255215 87 302
- 240 240218 50 268
- 5 58.537 4.122 12.659
NOTE 2 - BASIS OF PRESENTATİON OF THESTATEMENTS
2.1 BasLs of Prcsentation
CONSOLIDATED FINANCİAL
8
(Convcniencc Translation into English of Condcnsed Intcnm Consolidated Financial Statenıcnts Originaliy lssued inTurkish — Sec Note 17)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
NOTES TO THE CONDENSED CONSOLIDATED F[NANCIAL STATEMENTSFOR THE SD< MONTHS PEMOD ENDED 30 JUNE 2016
(ArnountN are cprsscd in ıhousands ofTurkısh Lira t’TRY Tbousand”) unks% nthcnvisc indicated.)
NOTE 2- BASIS OF PRESENTATİON OF THE CONSOLIDATED FINANCİALSTATEMENTS (cont’d)
2.1 Basis of Presentation (cont’d)
Functional and rcportinu currenev
The functional cunency of the Company and üs subsidiarics’ Iskenderun Demir ve Çelik A.Ş. “İsdemir”and Erdemir Çelik Servis Merkezi San. ve Tie. A.Ş “Ersem” are US Dollars; Erdemir Madencilik San.ve Tie. A.Ş. “Ennaden” and Erdemir Mühendislik Yönetim ve Danışmanlık Hizmetleri A.Ş. are TRY.
Funetional currcncyfor the subsidiarv abroad
The functional eurency of the foreign subsidiaries Erdemir Asla Pacific Private Limited “EAPPL” andErdemir Romania S.R.L is US Dollars and EUR respectively.
Presentation eunency franslation
Presentalion currency of the consolidated financial smtements is Turkish Lira, According in TAS 21 (“TheEffects of Changes in Foreign Exchange Raıes’ financial statements, that areprepared in USD Dollars forthe Company, lsdemir, Etsem and EAPPL: in Euro for Erdemir Roınania. have been translated in TRY asthe following method:
a) The assets and liabilüies on financial position as of 30 June 2016 are translated from USDDollars into TRY using the Cenlral Bank of Turkeys exchange rate whieh is TRY 2,8936US 51 and TRY 3,2044=EUR 1 on the balanee sheet dale (31 December 2015: TRY 2,9076= US 5 1,TRY 3,1 776=EUR 1).
b) For the six months period ended 30 June 2016, income statements are translated from theaverage TRY 2,9196 = US 5 1 and TRY 3,2569EUR 1 rates of 2016 January - June period (30June 2015: TRY 2,5605 = US $ 1 TRY 2,8577 = 1 EUR).
e) Exchange differences are shown in other comprchensive income as of foreign currency translationresene.
d) The differenees between presentation of statutory and historical figures ait recognised astranslation dillerences under eguity. AlI capital, capital nwasures and other measures arerepresented with their statutory figures, other cquity accounts are represenled with their historiccosl figures in the accompanying financial statemcnts.
USD amounts presented ın the condensed interim financial statements
The figures in USD amounts presented in the accompanying condensed interim consolidated financialstatemenıs comprising the statements of financial position as of 30 June 2016 and 31 December 2015,consolidated statement of income and other comprehensıve income and consolidated statement of cashflows for the interim period ended 30 June 2016 represent the consolidated financial statementsprepared according ta USD reponing currency within the frame of functional eurrency change that theCompany has made, which is effcctive as of July 1, 2013, prepared in accordance with the TAS 21-Effects of Changes in Foreign Exchange Rates.
Going concern
The Group prepared eondensed interim consolidated financial statements in aceordance with thegoing eoneern assumption.
Approval of the consolidated financial statemcnts
The condensed interim consolidated financial statemenıs have been approved and authorized to bepublished on 10 August 2016 by the Board of Direetors. The General Assembly has the authodty torevise the financıal statements.
9
(Convenicncc Translation inıo Englislı of Condensed Inıcrim Consolidated Finmıcial Statemenıs Originafly Issued inTurkish — Sec NuR 17)
EREĞLİ DEMiR VE ÇELİK FABRİKALARI T.A$. AND ITS SUBSIDIARWS
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE SD( MONTHS PERİOD ENDED 30 JUNE 2016
(Anıounts art cxpressed in thousands ofTurkish Lira (TRY Thousand”) unlcss ntherwise indicated.)
NOTE 2- BASIS OF PRESENTATİON OF THE CONSOLIDATED FINANCİALSTATEMENTS (cont’d)
2.2 Compantive Jnforma6on and Restatemcnt of Consolidatcd flnancial Statcments with PriorPeriods
The Group’s condensed ınterim consolidated financial slatements are presented in accordance wiih the“2016 TAS taxonomy” announced by the Public Oversight Authority (POA) in comparison with theprevious period in order to allow for the detennination of the financial position and performance trendsin accordance wiıh a new illusırative fmancial smıernents.
Reclassiflcation of balance sheet is as follows:
(P reviouslyRepoded) (Restated) (Differcnce)
Account 31 December 2015 31 December 2015 31 December 2015
Property, Plant and Equipment 10.234.969 10.264.461 29.492
IntanbIeAssets t’) 202.357 172.865 (29.492)
(1) Exploration costs and other asseis with spesific useful life amounting to TRY 29.492 thousand thatwas reported under LLlntnngible Assets”, is reclassifed under “Property, Planı and Equipmcnt” inconsolidated financial staıements as of 3] December 2015.
2.3 Adoption of New and Revised Financial Rcporting Standards
The accounting policies adopted in the preparation of the condensed interim consolidated financialstaternents as of 30 June 2016 are consistenı with those of the previous financial year. except for theadoption of new and arnended TFRS and WRIC intcrpreıations elTective as of 1 Januaıy 2016summarized below.
Standards. amendmcnts and interpretations effective as of 1 January 2016:
• TFRS Il Acguisiuon of an Interest in a Joint Operation (Amendmenı)• TAS 16 and TAS 38 - Clarifleation of Acccptable Methods of Depreciation and Amortisation
(Arnendments to TAS 16 and TAS 38)• TAS 16 Propcrty. Planı and Equipmenl and TAS 41 Agriculture (Amendmcnt) — Bearer Plants• TAS 27 Equity Method in Separate Financial Statements (Amendments to TAS 27)• TFRS 10 aıd TAS 2%: Sale or Contribution of Assets between an lnvestor and its Associate or
Joint Venture (Amcndments)• TFRS 10, TFRS 12 and TAS 2%: Investrnent Entities: Applying the Consolidation Exception
(Amcndrnents to IFR5 10 and IAS 28)• TAS 1: Disclosure Initiative (Anıendments to TAS J)• TFRS 14: Regulaıory Deferral Accounts
The anıendments did not have an impact on the financial position or perforrnancc of the Group.
la
(Convenicnce Translation into Enulish of Condensed Inıcrim Consolidated Financial Statcments Originnfly Issued infurkish — See Note 17)
ERELİ DEMİR VE ÇELiK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE 5W MONTHS PERİOD ENDED 30 JUNE 2016
(Arnonnıs ait cxpresscd in thous3nds of Turkish Lira (‘TRY Tbousand’) unkss oiherwisc indicaled.)
NOTE 2- BASIS OF PRESENTATİON OF THE CONSOLIDATED FINANCİALSTATEMENTS (cont’d)
2.3 Adoption of Ncw and Reviscd Financial Reporting Standards (cont’d)
Annual Improvemcnts to TFRSs - 2012-2014 Cyclc
POA issued, Annual lmprovements to TFRSs 2012-2014 Cycle. The documcnt sets out fivearncndments to four smndards, excluding those standards that are conscquentially amended, and therelated Basis for Conelusions. The standards altecıed and the subjects of the arncndments are:
• IFRS 5 Non-currenı Asseis Held for Sale and Discontinued Operations — ciarifles ıhat changesin methods of disposal (through sale or distribution to owners) would not be considered a newplan of disposal. rather it is a continuation of the original plan
• IFRS 7 Financial Instruments: Diselosures — clarilies that i) the assessment of servicingcontracis Ihat includes a fec for the continuing involvement of financial assets in accordanccwith IFRS 7; ii) the ollsetting disclosure rcquirements do not apply to condensed interimfinancial statements, unlcss such disclosures provide a signiflcant update to the informationreported in the most recent annual report
• IAS 19 Employee Benefits — ciarifles that market depth of high quality corporate bonds isasscsscd based on the currency in which the obligation is denominated, rather than the countrywhere the obligation 15 located
• IAS 34 lnterim Financial Reporting —clarifies that the required interim disclosurcs must eitherbe in the interim financial staternents or ineorporaled by cross-reference betwcen the interimfinancial statcments and wherever they are includcd within the intetim financial report
Standards issued but not yeL effective and not cariy adopted:
Standards. interpretations and amendments to existing standards that are issued but not yel effective up10 the date of issuance of the intcrim eondensed consolidated financial statcments are as follows. TheGroup wilI makc the necessary changes if not indicated otherwise. which wili be affecting theconsolidated financial statements and disclosures, when the new sbndards and interprctations becomeeffective.
• TFRS 9 Financial Insımmenıs — Classification and measurement
The new standards, arncndments and interprelations that are issued bv the International AceountintzStandards Board (1ASB but not issued by Publie Oversieht Aulhority (P0M
The following standards, interpretations and amendments to cxisting WRS standards are issued by theIASB but not yeL effective up to the date of issuanec of the financial statements. However, thesestandards, intcrpretations and amendments to cxisting IFRS standards are not yel adaptedlissued by thePOA, thus they do not constitute part of TFRS. The Group wilI make the neeessaıy ehanges to itsconsolidated financial statcments after the new standards and interpretations are issued and becorneeffective under TFRS.
Annual lmprovcments — 2010—2012 Period
• IFRS 13 Fair Value Measurement
Annual Improvcmcnts — 2(111—2013 Period
• IFRS 15 Revenue from Contracts with Customers• Clarifications to IFRS 15 ‘Revenue from Contracis with Customers’ (Amendment)• IFRS 9 Financial Instruments - Final standard (2014)
Il
(Convenicnce Translation into Enclish of Condensed Interim Consolidated Financial Statements Originaliy lssued inTurkish — Sec Note 17)
ERELİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
NOTES TÜ THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE SD< MONTHS PERİOD ENDED 30 JUNE 2016
(Arnount ait cxpröscd in thousands ofTurksh Lira (TRY Thousand”) unkss oibcnvise indicaled.)
NOTE 2- BASIS OF PRESENTATJON OF THE CONSOLIDATED FINANCİALSTATEMENTS (cont’d)
2.3 Adoption of New and Revised Financial Reporting Standards (cont’d)
The new slandards. amendmenls and interpretations that are issued by the international AccountinuStandards Board (IASB) but not issued bv Public Oversiuht Auıhodtv (P0M (cont’d)
Annual Improvements — 2011—2013 Period (cont’d)
• IFRS 16 Leases• IAS 12 Ineome Taxes: Recognition of Deferred Tax Assets for Unrealised Losses
(Amendments)• IAS 7 Statement of Cash F]ows (Amendments)• IFRS 2 Ciassificafion and Measurement of Share-based Payment Transactions (Amendments)
ilie Group is in the proccss of assessin the ımpact of the standard on financial position or performanceof the Group.
2.4 Summa of Significant Accounting Policies
The condensed interim consolidated financial statemcnts for the six months period ended 30 June 2016have bcen prepared in aceordanee wiih TAS 34. The accounting policies used in the prcparntion ofthese condensed interim consolidated financial statements for the period ended 30 June 2016 areconsistent with those used in the preperation of annaal consolidated financial statements for the yearended 31 December 2015. Accordingly, thcse eondensed interim consolidated financial statemenısshould be read in conjunction with the annual consolidated financial statemcnts for the year ended 3 1December 2015.
There has been no change in total ownership interests and effective intcrests of the subsidiaries,included in the scope of eonsolidation as of 30 June 2016, from the interesıs reported as of 31December 2015.
2.5 Rcstatement and errors in the accounting pollcies and estimates
Any changc in the aecounting policies resulted from the first time adoption of a new sıandards is madeeithcr retrospeciiveiy or prospectively in aceordance wiih the transition requirements of the standards.Changes withouı any transition requirement, material changcs in aceounting policies or material errorsare coneeted, retrospectively by restating the prior period consolidated financial statcments. If ehangesin accounting estirnates are related 10 only one period, ıhey are recoşized in the period whcn ehangesare applicd; if ehanges in estimates are related to future periods, they are recognized both in the periodwhere the change is applied and future periods prospectively.
The accounting policies, estimations and assumptions used in the preparation of these eondensedinterim consolidated financial statements for the period ended 30 Jane 2016 are consistent with thoseused in the preparation of annual consolidated financial statements for the year ended 31 December2015.
2.6 Segment Reporfing
The operations of the Group in İskenderun and Ereğli have becn defined as geographical segrncnts.However. the segments with similar eeonomic charactcristics have becn combined into a singleoperating scgınent considering the nature of the producıs and the production processes, meıhods toaliocate the products and the type of customers or to provide senkes.
12
(Coııvcnicncc Translation into English ot’ Condensed Interim Coıısolidated Finaııcial StaLcnıcnts Originally lssued in‘furkish — Sec Note 17)
EREtLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE SD< MONTHS PERIOD ENDED 30 JUNE 2016
(Anıounts art cxproısd in (housands of Turkigh Lira ç”TRY Thousand”) unlcss olbrnvise indirated.)
NOTE 3 -RELATED PARTY DISCLOSURES
The immediate parent and uhimate controlling parties of the Group are Ataer Holding A.Ş. and OrduYardımlaşnu Kurumu respeciiveiy (Note 1).
The transactions betwcen the Group and its subsidiaries. which are related parties of the Group. havebeen eliminatcd in the consolidation and therefore are not diselosed in ıliis note.
The dctails of transactions between the Group and other related parties are disclosed below:
Duc from related parties (short term 30 June 31 December20152016
Oyak Renault Otomobil Fab. AŞ.t2>
Bolu Çimento Sanayi A.Ş.t11
Adana Çimenıo Sanayi T.A.Ş. <‘>
Other
____________________
The irade receivables from related partles mainly arise from sales of iron. steel and by-products.
Duc ta related partles (short term 30 Jane 3 1 December2016 2015
Omsan Lojistik A.Ş.W
Omsan Denizcilik AŞ.0>
Oyak Pazarlama Hizmet ve Turizm A.Ş.01
Oyak Savunma ve Güvenlik Sistemleri
Other
____________________ ____________________
Trade pavables 10 related parties mainly arise from purchased service transactions.
Maior sales ta rebted parties
Ovak Renault Otomobil Fab. AŞ.<1
Adana Çimento Sanayi T.AŞ.<»
Bolu Çimento Sanayi A.Ş.1
Aslan Çimento A.Ş.01
Other
27.936 30.868
6.261 6.060
5100 6.068
776 134
40.073 43.130
6.411 6.286
5.373 6.162
6.528 8.954
3.450 3.542
1.844 1.686
23.606 26.630
1 Januaıy - 1 Januaıy -
3OJune2Ol6 3OJune2Ol5
71.986 72,818
7.035 9.822
7.017 9.004
- 994
2.297 1.74088.335 94.378
The major sales to related parties are generally due to the sales transactionsproduets.
<» Subsidiaries of the parent company(2) Joint venture of the parenı eompany
of iron, steel and by
13
(Convenience Translailon into English ol’Condensed Inwrim Coıısolidated Financial Staternents Originally Issued inTurkish — Sec Note 17)
ERELİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE SD< MONTHS PERİOD ENDED 30 JUNE 2016
(Anıounts ait exprcsscd in thous,nds of Iurkish [in (TRY Thousand”) unlcss othcnvise indicMcd.)
NOTE 3 -RELATED PARTY DJSCLOSURES (cont’d)
Major purchases from related parties
Omsan Denizcilik A.Ş.°
Oyak Pazarlama Hizmet ve Turizm
Omsan Lojistik AŞ.<’
Oyak Savunma ve Güvenlik SsıcmıeriOnısan Loistica sRıj’
Other
____________________ ____________________
The major purehases frorn related parties are generaliy due to the purelıased sen’iee transactions.
> Subsidiaries of the parent company
The terms and polieies applied to the transaetions with related parties performed:
The period end balanees are un-secured and their eolleetions wiil be in eash. As of 30 June 2016, theGroup provides rio provision for dıe receivables frorn related partles (3 1 December 2015: None).
Salaries. bonuses and other beneflis of the key management:
For the six months period ended 30 June 2016, the total compensation consisting of short term benefltssuch as salaries, bonuses and other beneflts of the key management of the Group is TRY 15.144thousand(30 June 2015: TRY 17.088 thousand).
NOTE 4- INVENTORIES
As of the balanee shcet date. the delails of the Group’s inventories are as follows:
Raw nıaterials
Work in progress
Finished goods
Spare paris
Goods in transit
Other inventories
Allowance for impairmeni on inventories (-)
_____________________ _____________________
1 Januaıy - 1 Januan’ -3OJune2Ol6 3OJune2Ol5
40.696 37.903
32.228 30.685
29.897 16.063
15.224 14.635
4.183 4.498
6.100 4.413
128.328 108.197
201630 June 3 1 December
2015
750.160 730.302
450.521 473.829
671.727 890.682
653.655 603.435
306.780 409.524
282.655 298.551
(154.750) (168.433)
2.960.748 3.237.890
14
(Convenicncc Translation into English of Condensed Interim Coıısolidated Financial Staternents Originaliy Issued inTurkish — Sec Note 17)
ERELİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIAR[ES
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE SD< MONTHS PERİOD ENDED 30 JUNE 2016
(Anıounts ar cxpressed in Ilıuusands of Turkisb Lira (‘TRY Thousand”) unIes nıbcnvisc indicaled.)
NOTE 4— INVENTORIES (cont’d)
The movement of the allowance for inıpairment on inventories:
Openin balanceProvision for the periodProvision released (-)Translation difference
_____________________ _____________________
Closing balance
The Group has provided an allowancc for the impairrncnt on the inventories of finished goods, work inprogress and raw materlais within the seope of aging reporıs and for slow moving inventories in thecases whcn thcir net realizable values are lower than their costs. The provision released has beenrecognized under cost of saks (Note 12).
NOTE 5- TANGİBLE AND INTANGIBLE ASSETS
The movemcnt of tangible assets for the periods 1 January — 30 June 2016 and 1 Januan’ — 30 June2015 is as follows:
OpLrnüm balance as ol’ 1 JanuarvCostAccurnulated depreciation
_____________________ _____________________
Net hook valtıe
Net book valuc al the begin.of the periodAdditions (‘)Disposals (-)
Co.vı of divposa/vıl ccmnııloıcd depreci oli on of disposais
Transfers tv miangıhle assets
Trmısfers lo investnıent propenies (*1
Curreney translation diffimnceCosı dnrrenfl ırun.üation dijfl’rence
A ccarn ulaled depreci ali on currenev Irans lalion dıjJrcnce
Ctıncnct penod deprecialion (-)
___________________ ___________________
Net book value al dıe end of the period
C1osin halance as of
CostAccunıulaled depreciationNet hook valuc
24.780589 22.482.789
(14625.855) (13065.508)10.154.734 9.417.281
(*) The amounı of capitalized borowing cost is TRY 2.808 thousand for the cunent period (30 June
2015: TRY 353 thousand).
1 January -30 June 2016
1 Januarv -30 Jane 2015
168.433 111.752
16.496 9.762(29.503) (7.815)
(676) 17.556
154.750 131.255
3OJune 3OJune2016 2015
24.664.476 19.371.670
(14,400.015) (11.139.097)10.264.461 8.232.573
10.264.461 8.232.573260.38! 173.284
(6.153) (11.677)(16350,) (56447)
10.197 34.770
(3.871) (14)(6.689) -
(47.956) 1.285.996(117.358) 2.994.296
69.402 (1. 70300,)
(305.439) (262.8% 1)10.154.734 9.417.281
15
(Convenicnce Translation into English of Condensed Interim Coıısolidated Financial Staterncnts Originally Issued inTurkish — Sec Note 17)
ERELİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE 513< MONTHS PERIOD ENDED 30 JUNE 2016
(Arnounts ait txprtssed in thousands of Turkish Lira ç’TRY Thousand”) unlcss niheovige indicated.)
NOTE 5- TANGIBLE AND INTANGIBLE ASSETS (cont’d)(**) Lands of Erdemir Çelik Servis Merkezi San, ve Tie. A.Ş. on Kmkkale transfers tü investmentpropertles according to decision ıaken. on board meeting dated 18 April 2016.
As of balance sheet dale, the Group has no collaterais or pledges upon iıs tanible assets. (30 June 2015:None).
Oneninn balance as of 1 JanuarvCosıAccurnulated amoriisationNet book value
Net book valuc al the begn.of the period
AdditionsDisposals (-)üst disposaisAccumuhııed depreciatiotı disposais
Tmnsfcrs from tanwble asselsCurrency (ranslation difference
Cost curreııc,y ıra,ıslan air dıjTererıceAccınnzdoıed dcpreciario ir cıırreııcy translalion difl’rence
Curreııcl penod amodisation (-)Net book valuc nt ıhe end of the period
Cbsinc baLınce end of neriodCostAccımıulaıed amortisationNet book valuc
As of balance slıcet date. the Group has no collaterals or pledges upon its intangible assets. (30 June2015: None).
The brcakdown of depreciation expenscs related to tangible and intangible assets are as follows:
Associated with cost of production
General administrative expenses
Marketing expcnses
Research and development cxpenses
30 June 30 June
2016 2015
296.948 256.237
7.153 4.897
10.107 8.768
630 342314.838 270244
The movernent of intangiblc asscts for the periods 1 January — 30 June2015 is as follows:
2016 and 1 January— 30 June
30 June2016
30 June2015
348.133 262.231(175.268) (126.888)
172.865 135.343
172.865 135.343
1.532 1.070- (2.148)- (4.119)- 1.971
3.871 14(779) 20.719
(1.659) 39.673881) (18.954)
(9.399) (7.363)168.090 147.635
351.877 298.869
(183.787) (151.234)168.090 147.635
16
(Convenience Translation into English of Condensed Inwrim Cotısolidated Financial Statenıents Originally Issued inTurkish — Sec Note 17)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE SD( MONTHS PERIOD ENDED 30 iliNE 2016
(An,ounıs urc cxprcsscd in thousands ofTurkish ün (‘TRY Thousnd”) unlcss otbenise indicated.)
-- ________
NOTE 6- BORROWINGS
Breakdown of borrongs is as fol]ows:
Short temı borrowingsCurrent portion of long term borrowingsTotal short term bonowings
hong term bonowüıgsTotal long tcrm borrowings
30 June 31 December2016 2015
621.714 24.286
1.220.191 1.047.2561.841.905 l.07L542
1.748.765 1.904.361
1.748.765 1.904.361
3.590.670 2.975.903
As of 30 June 2016. the breakdown of the Group’s loans with their oduinal cureney and ıheir weightedaverage interest rates is presented as follows:
Weıtcd
Interest Type
No interest
Type of Average Rate of Slıort Tcrn Long TerıııC’uRency Interest (% Portion 1>oıtion 30 June 2016
TRY 53.518 - 53.518
Fıxcd TRY 9,65 - 59.944
Fixed US Dollars 2,21
FL’<ed FURO 2,82
Floaiing US Dollars Libor+2
Fionling FURO Euribor+I,47
Fionihıg Japanese Yen JPY Lihor+0,22
59.944
428.721 96.383 525.104
5.530 75.424 80.9541.158.286 1.223.194 2.381.480
100.610 336.612 437.222
35.296 17.152 52.4481.841.905 1.748.765 3.590.670
As of 31 December 2015, the breakdown of the Group’s loans withweighted avcrage interest rates is presented as follows:
Type ofCugencv
WeiızhtedAvenıt Rale of
Interest (°b)
Shori TermPortion
thcir original eurrency and thcir
Long TernıPortion 31 Dceeınber2ül5Interest Iye
No interest TRY -
I:ixed TRY 9.26Fixed US Dollars 3,99
Fi’<ed EURO 3.27
Eleating US Dollars Libor±2,03
Floııin1 FURO Euril>or+0.5
Finating Japanese Yen JPY Lihor+0.22
24.286 - 24.286170.482 12.865 183.34722.925 52.523 75.448
2.422 46.725 49.147
717.249 1.619.418 2.336.667
103.824 143.919 247.745
30.354 28.911 59.2651.071.542 1.904.361
.--. ——
2.975.903
17
(Convenicnce Translation into English of Condensed Inteıim Consolidated Financial Statenıents Orıginaliy Issued inTurkish — See Note 17)
EREtLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE SD( MONTHS PERİOD ENDED 30 JUNE 2016
(Auıounts ait expresscd in Lhousands of Turkish Lira (“TRY Thousand”) unless ohnse indicated.)
NOTE 6- BORROWINGS (cont’d)
Breakdown of ban rcpayment is as follows:
Within 1 year
Betwecn 3-2 yearsBetween 2-3 yearsBeıween 3-4 ycars
Betwccn 4-5 years
Five years or more
____________________ ____________________
NOTE 7- PROVISIONS
The Group’s short terrn provisions are as follows:
31 Dcceınbcr
_________________
2015
Provision for lawsuilsProvision for İcrmination fec of long Ierm contracı
Penalıy prov. for ernploymcnt shortagc of disabled pcrs.
Provision for staic righl on mining activitiesProvision for land occupation
30 June 31 December2016 2015
1.841.905 1.071.542
622.114 921.923485.677 488.184391.051 328.902
161.315 163.914
88.608 1.4383.590.670 2.975.903
30 June2016
95.400 88.280- 218.070
5.428 5.434
1 .298 2.589
8.464 122.634110.590 437.007
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19
(Convenience Tumslation mm English of Condensed Interim Consolidated Financial Statements Originaliy lssuedin Turkish — See Note 17)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSFOR THE SIX MONTHS PERİOD ENDED 30 iliNE 2016
(Amounts ara cxprcsscd in thnusands nfTurkish Lira (‘TRY Tlıousand”) unless oıhcnvisc indicated.)
NOTE 7— PROVISIONS (cont’d)
Provision for Iawsuits
As of 30 June 2016 and 31 December 2015, lawsuits filed by and against the Group are as follows:
30 June 31 December2016 2015
Lawsuits filed by tim Group 483.750 474.468
Provision for Iawsuits filed by the Group 54.832 54.849
The provision for the Iawsuits filed by the Group represents the doubtful trade rcccivabks.
30 Jıme 31 December2016 2015
Lawsufts filed aainst the Group 297.411 2Ç.3.I56
Provision for kwsuits filed agast the Group 95.100 210.914
The Company. prcpared üs consolidated financial smtements as of 31 March 2005, 30 June 2005 and30 September 2005 according to CMB’s Communiqud Serial X1 No 25 on “Accountin Standards tobe implemented in Capital Markets” which is not in effect today, whereas its consolidated financialstatements of 31 December 2005 was prepared according to international Financial ReportingStandards by vinue of the Artıcle 726 and Temporary Anicle 1 of the aforementioned Comrnuniqud,and CMB’s letter no. SPK.017!83-3483 dated 7 March 2006, sent to the Group Management. Theaforementioned Communiqu (Serial X1 No. 25 on the “Accounting Smndards to be implernented inCapital Markets”), and Cornmuniqucis inserting some provisions thereto together with theComrnuniquds arnending it, becarne effective starting with the consolidated financial staternents of thefirst interim period cnding after 1 Januaıy 2005.
CMB asked the Company mo prepare üs consolidated financial statements of 31 December 2005 alIovcr again aceording to the same accounting standards set used during the period, to publish thosestatements, and to submit thern to the General Assembly Approval as soon as possible, by stating onüs decision no. 21/526 dated 5 May 2006 that the Company’s ehanging the accounting sbndards setused during the term (Serial XI, No 25) aL the end of the same term (IFRS) caused decrease amount ofTRY 152.330 ıhousand on the period due to negative goodwill income.
The Cornpany ehallenged the aforernentioned decision before the 1 lth Adrninistrative Court of Ankara(E. 2006/1396). This Iawsuit was rejected on 29 March 2007. but the Cornpany appealed this rejectionon il September 2007. I3th Charnber of the Council of State rcjected the appeal on 12 May 2010:howcver the Cornpany also appealed ıhis rejection on 2 September 2010. However, l3th Chamber ofthe Council of State also dismissed this appeal against rejection on 6 June 2012 with üs decision No.E. 2010/4196, K. 2012/1499. This decision ‘yas notifled to the Cornpany’s Iawyers on 16 July 2012.
20
(Convenience Translatıon inlo English of Condensed Interim Consolidaled Financial Staıcments Originaliy Issuedin Turldsh — Sec Note 17)
ERECLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDJARWS
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE SIX MONTHS PERİOD ENDED 30 JUNE 2016
(Amount ara cxprcsscd in thousands otTurkish Lim (‘TRY Thousand’] unlcss oıbcnvisa indicated.)
NOTE 7— PROVISIONS (cont’d>
Provision for Iawsuits (cont’d)
Ctvm. prepared the Company’s consolidated financial statements as of3l December 2005, which hadbcen prepared according 10 the IFRS. by adding the negative goodwill of TRY 152.330 thousand, thathad previously been added to the aceumulated eamings, to the profit of 2005 on its own motion andaccount, and published thern on Istanbul Stoek Exchange Bulletin on 15 August 2006: with therationale ıhat the Company had not fuIflhled its due demand on grounds thal “Article 726 andTemporary Provision 1 of CMB’s Communigud SeılaI X1, No. 25 autbodze the use of IFRS onconsolidated financial slaternents of 2005, although CMB had giyen the Company a ‘permission’ No.SPK.0.l7/83-3483 of 7 March 2006, and the Iawsuits regarding ıhis issue are stili pending”. TheCornpany challenged CMB’s aforementioned decision by a separatc Iawsuit on 10 Oetober 2006. 1 lthAdministrative Court of Ankara rejected this case on 25 June 2007. The Company appealed thisrejection Il October 2007; I3th Charnber of the Council of State, accepted the appeal request andabolished the rejection judgment. CMB appealed the Charnber’s decision on 6 September 2010. l3thChamber of the Council of State accepted CMB’s appeal and reverted its previous abolishmentdecision, and ratifled 1 Ith Administrative Court of Ankara’s judgrnent by the rnajority of the votes on30 May 2012 with its deeision no. E. 2010/4405; K. 2012/1352. This decision was notifled to theCompany’s lawyers on 20 July 2012.
Had the Company started to prepare its consolidated financial statements in accordance with IFRSafter 31 Deeember 2005, it would also have lo present the comparative consolidated financialstatements in accordance sih IFRS based on “IFRS 1: First-time adoption of international FinancialReporting Standards” and the previously recognized negative goodwill would be transfcrred directly 10
retained earnings on 1 January 2005 instcad of recognizing in the consolidated ineorne staternent inaccordance with “IFRS 3: Business Combinations”. Therefore. the net profit for the periods ended 30June 2016 and 30 June 2015 wilI not be affected from the above mentioned disputes.
Company’s Shareholders’ General Assernbly, whieh was held at 30 Mareh 2006. decided dividenddistdbution aecording to the consolidated financial statcrnents as of 31 December 2005, whieh wasprepared aecording to IFRS. Privatization Administration, who has a usufmct right over 1 (one) equitvshare among the Company shares it transfcned 10 Ataer Holding A.Ş., filed a lawsuit al 1 May 2006the 3th Commercial Court of Ankara against the aforernentioned General Assembly decision, andclaimed that, dividend distribution decision must be abolished and TRY 35.673 thousand allegedlyunpaid dividend must be paid to itself(E. 2006/218). The Court rejected the case on 23 October 2008;Privatization Administration appealed this rejeetion on 7 Januaıy 2009. Court of Appeals’ 1 lthChamber reversed this rejection judgment on 30 November 2010; this time the Company appealcd theChamber’s decision on 18 Febmaıy 2011. However, the Charnber rejeeted the Company’s appeal on14 July 2011. The ease file, sent back to 3th Commercial Courl of Ankara onee again. The case wasdismissed at the hearing held on 26 June 2015. The case is at the stage of appeal.
The Company, based on the above mentioned reasons. doesn’t expect for the possible effects ofchanges in the net profit for the year endcd 31 December 2005 due to the lawsuits mentioned above tohave any irnpact in the accornpanying consolidated financial statements as of 30 June 2016 and 31December 2015.
Enerjia Metal Maden Sanayi ve Ticaret A.Ş. initiated a dcbt collection proceeding that might end witha bankruptey judgmcnt against the Company based on the Expon Protocol No. 69187 of2 inIy 2009and “Additional Terms to the Erdemir-Enerjia Export Protocol No. 68197” drafled by and betweenEnerjia and the Company.
21
(Convenience ‘rransiation mm English of Condensed lnteriın Consolidaled Financial Statements (kiginaliy lssuedin Turkish — See Note 17)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2016
(Amount ara cxprcsscd in ihousands of Turkish Un (‘TRY Thousand”) unless o±envise indicated.)
NOTE 7— PROVISIONS (cont’d)
Provision for lawsuits (cont’d)
However the process stoppcd upon the Company’s objection to Enerjia’s rcqucst, and Lhat ied Encrjiato Rica lawsuit against the Company before the 7th Commercial Court of Ankara on 27 Mareh 2010claiming that the objcedon should be overruled and USD 68.312.520 should hc paid to itseif (E.20101259). The Coun dismissed the ease, in favor of the Company. on 23 June 2011. Eneriia appealedthis rcjection. 23rd Chamber of the Court of Appcals acccpted this rejection on 6 April 2012 (E.201112915, K.201212675) and after this, the case file was sent back to the 7th Commcrcial Coun ofAnkara and received case Ne number E. 2013/17. The case ilie was sent to the 4th Commercial Courtof Ankara due to the case shail seen by dciegation according to the regulatory framework regardingthe eommercial courts. The Coud has dismissed the ease at the hearing heid on 9 September 2015.The case is at the stage of appeal. No possible material cash outflow expccted according to theevaiuauons of Company management and cxpen’s reports. as ü result no provision recogniscd onfinancial statcments for related Iawsuit.
An action of dcbt was institutcd by Bor-San Isı Sislcmicri Üretim ve Pazarlama AŞ. against ourcnmpany attIm 3rd CIvıl Coun ofKdz. Ereğh on 17 April 2013 mıder ilie no 2013/253 Esas cialming for dıecompensalion of the Joss ansıng frnın the saies contraci of TRY 18 ıhousand, reserving the righıs Ibr surplus.The Company was informed from the amendment pcti6on, which was served in tim company on 1 November2013 (hat the piainlilt pleaded frorn the cotırt to raise the ciaim 10 TRY 10838 ±ousand as assessed by theexper( opinion suhmitted to dıe court. The Company contested to ilie expefl opülion and the arnendmeııt petitionwıthin dıe stauıtoryperiod. The eourthas giyen the judgmentofdismissal on Il Match 2014. ilie piainiilT, 13cr-San Isı Sistemleri Üretim ve Pazarlama A.Ş. has appealed againsi ilie judgmcnt. Upon the reversal ofjudgmeııt,the Company appealed the decısion of Supreme Court of Appeal. ilie rcjection decision of Supreıne Cotın ofAppcai has been notifled to the Company on 2% ianuary 20] 5. The case ongoing widı dıe Kdz. Ereğli CivilCoun ot’ First hıstance 3rd has dismissed at the hearing heid on 9 September 2015. The case is at dıe stage ofappeal.
Corus international Tmding Ltd. Co. (new trading title: Tata Steel international (North America) Ltd.)located at lllinois state of United States of Ameriea and the Conıpany executed a contract in 2008.The company fuiifled alI its performances arisen from this contraet in January and Febniary iıı 2009.Corus international Trnding Ltd. Co. sold to third parties the produets suppiied from our company butıhereafter alleged that they directed claim to some compensation and that thcse elaims must be coveredby Erdemir. Parties eouid not reaeh an exact agreemcnt about this matter and then Corus internationalTrading Lıd. Co iled an action for compensation nt amount of USD 4.800 tiıousand togcther withaccessory against the Company in iilinois Staıe Districı Court of USA. it is learnt through a notifledmade to the Company on 21 July 2010. ARer the subjcct casc is dismissed by the coufl fromjurisdicdon aspeci; this time a Iawsuft is re-flled by Tam SmeeI international (North America) Ltd.) inTexas State District Coun. This case is also dismisscd by (hc court fromjurisdietion aspect.
it is iearnt through a notifled made to the Company on 31 Octobcr 2012 that Corus internationalTrading Ltd. Co. (new tnding Litle: Tata Steci international (North America) Ltd.) fiied an action forcompensation at amount of TRY 8.669 thousand (USD 4.800 thousand) together with accessoryanainst the Company before Ankara l4th Commercial Court of First Instance. As a result ofadjudication ımde; the courl adjudged to dismiss the case on procedural grounds because of noncompetcnce and in send the ille to commissioned and competent Karadeniz Ereğli Commercial Courtof First Instance in Duty when the judgment becomes definite and in case of request. The ease stilicontinues on ilie no. 2013163 in Karadeniz Ereğli 2nd Civil Court of First Insiance. Dale of nexthearing of the case is 17 November 2016.
T,
(Convenience Translation into English of Condensed Interim Consolidated Financial Statemcnts Originally lssuedin Turldsh — Sec Note 17)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE SJX MONTHS PERİOD ENDED 30 JUNE 2016
(Amounts art cxpresscd in tbousands otTorkish Lira (‘TRY Thousand’] onless othmvise indicalcd,)
NOTE 7— PROVISIONS (cont’d)
Provision for Iawsuits (cont’d)
The company has been notifled about tax and Ioss of tax pcnalty amounting to TRY 8.740 thousandwithin the scope of stamp tax inspcction for the years of 2010, 2011 and 2012. The company filed acase about cancellation of related tax and loss of tax penalty notifications. No possible material cashoutflow expccted according to the evaluations of Cornpany managemenı and no provision recognisedon financial statements for related Iawsuit.
Provision for termination fec of long term contract
The Company signed flxed rate freight contract on Il August 2008 for the 2008-2022 period withthird partics considering the fact that fixcd-price overseas transpoflation of iron ore supplies withcapesize vessels shafl be more favoraNe under currcnt market conditions.
The Cornpany has evaluated the extraordinaıy decrease in freight prices resulted fronı decrease in ironore and oil prices in 2015 and started negotiations with the service provider in the last quarter of 2015regarding the termination of flxed price Iong-term freight contract, which is in force.
The parties reached an final agreement on 24 Febnıary 2016 on termination of the aforementionedagrecment with USD 75.000 thousand fec and signing of a new freight contract.
Despite the termination process of (inalizinn the protocol signed in the period alıcr the reporting dateas described above, The Company has considered the termination cost as constructive obligation sineethe Management has ınken a dccision towards termination process related to the contract as ofDecember 31, 2015 as weli as an expectanon is also formcd by the supplier regarding the teminationof aforementioned agreemcnt and cash flows can be estimated in a trustable manner as of December31, 2015 even ifthe termination proeess is concludcd with the protocol after 31 December 2015. Asaresult. the payment of TRY 21 8.070 thousand (equivalent to USD 75.000 thousand) provisionrecognised under statement of financial position was eompleted equivalenı to TRY 218.970 thousand(cquivalent 10 USD 75.000 thousand).
Provision for state right on mining activities
According to “Mining Law” numbered 3213 and regulation on “Mining Law Enforcement”publishedin the Offlcial Gazette, numbered 25716 on 3 Februaıy 2005, the Group is obliged to pay state righton mining activities based on the sales.
23
(Convcnience Translation ino English of Condensed Interlın Consolidated Financial Statements Originally Issuedin Turkish — See Note 17)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE SIX MONTHS PERİOD ENDED 30 JUNE 2016
<Amount are cxprcsscd in timosand, of Turkisi, Lira (“TRY 11,ousand9 uniess oıhcnsise indicaftd.)
NOTE 7— PROVISIONS (cont’d)Provision for land occupation
There Isa imal of 1.976.359,17 square metres of land properıy within the Erdemir faetory area of TheGroup consisting of 1,149.640,88 square metres of 6 titlc deeds bcing the propeny of the treasury and826.718,29 square melres of 1aM being within the provision and posscssion of the statc. GeneralCommunique of National Estate with the series number 336 lays down the methods and princıplcs ofdesignation, estimation and collection of Iand occupation to be undcrtaken by the administration inrespect of the land propenies within the private possession of the treasury. in aceordance with thecommunique, the land occupation is going to be designated and estimated by the relevant valucdesignation commission with the condition of not being less than 3 % of the minimum value which isthe basis for the property tax of the land property.The company filed a case in Zonguldak Tax Corn-t on the date 23 May 2012 on the grounds that it kagainst the law that the property tax value that had bccn determined by Karadeniz Ereğli Municipalityin the ycar 2009 in respect of the whole of the factory area had becn calculated over the nıarkct valuethat had becn designated for Uzunkum Street that is used only as a postal address; that it k requfrcd tounderlake a separate value dcsignation for the propcrty tax of the immovable properıies wiihin thefactoıy area: that the propeny tax should be designated over different tax values for the facton’ areasthat are located within a certain region independent fronı the streets and by-lanes of the county andthat are dilTereni in terms of their valucs. The court ruled on the date Sth June 2013 that thcre are nolegal grounds for taking the market value for Uzunkum Street as the basis for designating the taxvalue for the whole factory. As for the land occupation to be deposited, during the court case and afterin respcct of the designation of the new property tax market values and in respeet of dividing thefactory arca depending on dillerent tax zones the company had recognised TRY 122.634 Lhousandprovision (USD 42.177 thousand) as against the case for the period betwccn 1 st July 2011 and 3 IstDecember 2015 over the minimum valucs on the basis of eurrent property tax values of the relcvantda tes.The company had been served on the date 9th Mareh 2016 with the notifications for land occupationwith an amount ofTRY 93.156 thousand. in aceordance with the provisions of the llth article of theGeneral Communique of National Estate with the series number 336, under circumstances whcre noobjection had becn raised against the deposits of land occupation payment and under circumstanceswhere thcrc is an cash payrnent; there k a righi to make use of a discount to the rate of a total 35 %.As a rcsult, wiih reference to the said provisıon, the method of eash payment without raising anobjeclion had been decided upon by the administration of the conıpany and TRY 61.432 thousand(equivalent to USD 21.045 thousand) had been paid to Karadeniz Ereğli District Fiseal 0115cc. TRY61.696 üıousand (equivalent to USD 21.132 thousand) provision for Iand occupation releascd underoperating income (Note 13).in current period, amountin2 to TRY 8.464 ıhousand land occupation provision reeognised on balanccsheet, considcring property fair values presented land occupation notifications issucd Match 2016 andyearly probable incrcases.
NOTE 8— EMPLOYEE BENEFITS
The Group’s short term payables for employee benefits arc as follows:
30 June 31 December
Duc to personnelSoeial sccurity premiums payable
2016 201565.233 93.45934301 26.24!99.534 119.700
24
(Convenicnce Translation ınlo English of Condensed Interim Consolidaled Financial Sıatcments Originally lssuedin Turkish — Sec Note 17)
EREtLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE SIX MONTHS PERİOD ENDED 30 iliNE 2016
(Amounts art exprcsstd in tlıousands ol Turkisi, Lira (“TRY Thousancj”) unlcss otherwisc indicated.)
NOTE 8— EMPLOYEE BENEFITS (cont’d)
Long terrn provision of the ernployee termination benefits of the Group is as follows:
30 June 31 December2016 2015
Provisions for employee termination bcneflts 448.262 404.699
Provisions for seniority incentive premium 35.390 28.289
Provision for unpaid vacations 82.117 72.927565.769 505.915
Aceordıng 10 the articles of Turkish Labor Law in force, there is an obligation 10 pay the legalemployee termination beneflts to each ernployec whose employment contracts are ended properiyentiiling thern to receive employee termination benefits. Mso, in aceordanee with the effectivc laws ofthe Social lnsuranee Aet No: 506 No: 2422 on 6 Mareh 1981 and No: 4447 on 25 August 1999 andwiih the amended .Article 60 of the related Aet, it is obliged to pay the cmployees their legal employectermination beneflts, who are entitled to terminate.
M of3O June 2016. the amount payable consists of one month’s salaıy lirnitcd 10 a maxirnunı of TRY4092,53(3! December 2015: TRY 3.828,37). As of 1 iuly 2016, the ernployee termination bencüt hasbccn updated to a maxirnurn of TRY 4.297,21.
The crnployee terrnination benefit legally is not subject to any funding requirement.
The enıployee termination benefit has been calculated by estirnating the present value of the futureprobable obligation of the Group arising frorn the retirernent of employees. TAS 19 (“EınployeeBeneflts”) requfres actuarial valuation rnethods to be developed to estimate the Group’s obligationunder defined benefit plans. The obligation as of 30 June 2016 has been calculated by an independentaetuary. The actuarial assumptions used in the calculation of the present value of the future probableobligation are as follows:
30 lune 2016 31 Deecrnber 2015
Discount rale 9.20% 10,70%Infiafion rale 6,70% 7,75%Salaıy increase real 1.5% real 1.5%Maximurn liabiliiy increase 6,70% 7,75%
Discount rates are determined considerinu the expected duration of the retirerncnt obligations and thecurrency in which the obligations 4lI be paid. İn calculations as of 30 June 2016, a fixed discountrate is used. Long terrn infiation estinıates are made using an approach consistent with discount rateestirnates and long terrn infiation rate fixed over ycars is used.
The antieipated rate of resignation which do not result in the payment of employec beneflts is alsoeonsidered in the ealculation. The anticipated rate of resignation is assurned to be related with the pastexperienee. therefore past experiences of employees are analyzed and eonsidered in the calculation. İnthe acıuarial calculation as of 30 June 2016. the anticipated rate of rignation k considered to beinversely proportional to the past experience. The antieipated rate of resignation is between 2%-0% forthe employees with past experience between 0-15 years or over.
25
(Conveııience Translation mm English of Condensed Interim Consolidated Fiııancial Statements Originuliy lssuedin Turldsh — Sec Note 17)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE SIX MONTHS PERİOD ENDED 30 JUNE 2016
(Mnounts mc cxprcsscd in thnusands nf Turkidı Lira (“TRY Thousand’) unlcss odıenvisc indicatcd,)
NOTE 8— EMPLOYEE BENEFITS (cont’d)
Opening bahnceScrvice cosiInterest costActuarial lossİ(gain)Terminalion bencfits paidTranslation differcnccClosing balancc
The sensitivity anaiysis of thc assumptions which was used for thecmployment terminalion bencflts as of3O June 2016 as foliows:
kale
Change in crnployee bcııeflts liabılity
kale
Changc in crnployec bencflts Iiability
Opening bahnccServke costInterest costActuarial loss/(gain)Tcmıinalıon bcncfits paidTransbtion differenceClosing balance
The rnovement of the provision for unused vacation is as follows:
Opening balanceProvision for the periodVacation paid during dıe period )Provisions released (-)Translation diffcrence
Closing balance
The movement of the provision for empioyec terminanon beneflts is as follows:
1 Januaıy -
30 June 20161 January -
30 June 2015
404.699 393.47820.087 20.32320.654 14.89423.154 (226)
(20.214) (18.655)(118) 256
448.262 410.070
caiculation of provision for
Discount rate
1% hwreasc 1% decrease(40.410) 47.140
Infiation mte1% inerease 1% decrcasc
43.521 (38.080)
According 10 the cunent labor agreement, employces cornpleting their lOU. lSthyears receive seniority ineentive premium payments.
The movement of the provision for seniority incentive prcmium is as follows:
1 Jaııuaıy —
and 2Oth service
1 January -30 June 201530 June 2016
28.289 25.3891.654 2.5061.489 1.0305.487 3.299
(1.511) (1.390)(18) 66
35.390 30.900
1 Januan’ -30 June 2016
1 Januan’ -30 June 2015
72.927 68.85730.349 31.062
(2.360) (2.548)(18.652) (18.349)
(147) 816
82.117 79.838
26
(Convcnience Translation rnto English of Condensed Inıcriin Consolidated Financial SLtcmcnts Origınally lssuedili Turkish — See Note 17)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE SIX MONTHS PERİOD ENDED 30 JUNE 2016
<Amoonis ne expressed in thnusnnds ot Turkish Lın (“TRY l’hoosand”) unlcss odıcnise indicated.)
NOTE 9- COMMITMENTS AND CONTINGENCJES
The guaranices teceived by the Group are as follows:
30 June 31 December
Letten of guarantees receıved
The Collatcrals, Pledges and Mortgages (CPM) giyen by the Group are as follows:
k Tabi CPM giyen for the Cornpanys own leI enlity8. Talat CPM dven in favour of subsıdianes consohdaled on hacby-Ime basisC. Total CPM giyen in favour of other 3rd partles for ordmaıytradiııg operatıons - -
D. Other CPM ıüven - -
i. Total CPM giyen in favour of pareni entity - -
ü. Total CPM giyen in favour of other Group cornpanıes out ofthe scope of clause B and C - -
iıi. Total CPM giyen in favour of other 3rd parties out of thescope of cinuse C
As of 30 June 2016, the ratio of the othcr CPM giyen by the Group to shareholders cquity is 0% (31Decembcr 2015: 0%). Total CPM giyen in favor of subsidiaries consolidated on Iine-by-Iine basisarnounting to TRY 725.610 thousand has bcen giyen as collateral for financial liabilities expiained inNote 6.
The brcakdown of the Group’s collatcrals. plcdgcs and morigages aceording to their original currencyis as follows:
30 June 31 Deceınber2015
US DoibrsTRYEUROJapanese Yen
2016
2016 20L5
1.520.720 1.514.3831.520.720 1.514.383
30 June2016
31 December2015
108.756
616.854
105.891
787.106
725.610 892.997
429.328 514.969108.836 140.257159.841 206.28827.605 31,483
725.610 892.997
27
(Conveniencc Translation ıno English of Condensed Interim Consolidated Financial Slatements Originaliy Issued
in Turldsh — Sec Note 17)
ERECLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE SIX MONTHS PERİOD ENDED 30 JUNE 2016
(MnnunLs ara cxprcsscd in tlıousands of Turkısh Lira CTRY Thousand] unlcss od,mvisc indicatcd.)
NOTE 10- TAX ASSETS AND LİABILITIES
3OJune 31 December2015
Coıvoraıe tax pavabie:Current corporatc tax provisionPrepaid taxes and funds (-)
______________________________________
Taxation:Cunent corporate tax expenseDcferred tax (iıcorne) / cxpense
__________________________________________
Corporate tax
The cffective corporate tax rate in Turkey is 20%, 16% in Romania and 17% in Singapore as of 30June 2016 (31 December 2015: in Turkey 20%, in Romania 16%, in Singaporc 17%). The totalarnount of the corporate tax paid by the Group in 2016 15 TRY 224.760 thousand (30 June 2015: TRY222.780 thousand).
Dcfcrrcd tax
Tax rate used in the calculation of defcrrcd tax assets and liabilitics (cxcluding Iand) are 20% for thesubsidiarics in Turkey, 16% for the subsidiary in Romania and 17% for the subsidiary in Singapore (31December 2015: in Turkey 20%, in Roımnia 16%, in Singapore 17%). Defered bx related with thetcrnpomıy diiFerences arising from land parccls is calculated with the tax rate of 5% (3! Deccmber 2015:5%).
As the companics in Turkey cannot give a consolidated corporate tax deciaration, subsidiaries thathavc dcfcrred tax asscts are not ncttcd off wiih subsıdiarics that have deferred İax Iiabilıties anddiselosed separateiy.
2016
95.529 472.407(6.991) (254.638)88.538 217.769
1 Januaıy - 1 January -
30 June 2016 30 June 2015
95.529 284.36126.332 (83.729)
121.861 200.632
28
(Convenience Translation inlo English of Condensed Interim Consolidated Financial Statements Originaliy Issuedin Turldsh — Sec Nde 17)
EREĞLİ DEMiR VE ÇELiK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE SIX MONTHS PERİOD ENDED 30 JUNE 2016
(Amounts am cxpı-esscd in thousands of Turkish Lira (“TRY Thonsand”) unless oihcnvisc indicatcd,)
NOTE 10- TAX ASSETS AND LIABILITIES (cont’d)
Deferred mx assets:
Carry fonvard tax losscs
Provisions for employee beneflts
Investment incenhive
Provision for lawsuiıs
Provision for termination fee of long lenD conlract
lnvcntoriesProvision for other doubtful rcceivablcsTangible and iniangıble assetsOther
______________________________________
Dcrerred tax Iiabilities:Tangible and intangıble assets
Fair values of the dcrivative rınancial üıstrumcntsAmortized cost adjustmcnt on IoansInventoriesOther
______________________________________
The Group has defcned tax asseis resulting from carried tax Iosscs, expfrcd within one yearamounting to TRY 24.654 thousand and within thrce years amounLing 10 TRY 3.262 thousand.
The Group has unused ınvcstment incentive expenditures by 200% within the scopc of investmentincenlive certifleate dated 27.07.200) and numbered 66445. in accordancc with Article 6lstTemporan’ Income Tax Law, 19,8% income lax rate wili be applied 10 eamings Ibm investmentincentives,
in the financial statemcnts which are prepared according to the TAS, of Ereğli Demir ve ÇelikFabrikaları TAŞ. and its affluiatcs that are separate taxpayer cntities, the net deferred mx asseis andliabiliiies of the related eompanies are ciassifled scparately within the accounls of deferred tax asseisand Iiabilities of Ereğli Demir ve Çelik Fabrikaları TAŞ. and iis subsidiaries’ consolidated flnaneialstatemenıs. The temporary dıfTerences disclosed above besides the deferred tax asset and liabilities,have been prepared on the basis of the gross values and show the net deferred tax posilion.
31 Dcccmbcr2015
Deferred mx assctsDeferred tax (liabillties)
______________________________________
30 June 31 December2016 2015
27.916 2.316
113.152 101.179
9.722 10.532
19.080 42.183
- 43.614
8.816 7.491
13.921 13.479
14.248 11.227
32.674 29.857
239.529 261.878
(1.247.964) (1.250.788)
(6.033) (9.232)
(3.762) (3.472)
(2.991) (17.625)
(11.116) (5.756)
(1.271.866) (1.286.873)
(1.032.337) (1.024.995)
30 Jane2016
27.769 23.807(1.060.106) (1.048.802)
(1.032,337) (1.024.995)
29
(Convenience Translation mm English of Condensed Interim Consolidaled Financial Slatements Originally Issuedin Turkish — Sec Note 17)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTS
FOR THE SIX MONTHS PERİOD ENDED 30 JUNE 2016
(Amounts aw cxprcsscd in ılıousands of Turkkh Lira (‘TRY flousand”) unlcss othmisc indicated.)
NOTE 10— TAX ASSETS AND LİABILITIES (cont’d)
Defened tax asseUQiability) movements is as lbllows:
Opening balance
Deferred tax (cxpcnse)/income
The amount in comprehensive (expense)İincome
Translation difference
__________________________________________
Ciosing balance
____________________________________
Reconciliation of tax provision is as follows:
Profit bcforc tax
Statutoıy tax rate
Calcuhted tax e>şcnse acc. 10 eftcctive tax rate
Reconciliation betwecn the tax provision and calcuhted tax
- Non-deductible expenses- Effcct of currency translation to non twcablc asscts
- Effect of non-taxable adjustments
- Effect of the differcnt tax mtes
due to foreion subsidiarcs
Toıal tax exp, in reponed in the consolidate stat. of incorne
1 Jnnuary -
30 June 2016
1 Januaıy -
30 June 2015
(1.024.995) (626.229)
(26.332) 83.729
4.071 302
14.919 (371.676)
(1.032.337) (913.874)
1 Januaıy - 1 Januaıy -
30 June 2016 30 June 2015
621.299 999.906
20% 20%
124.260 199.981
6.757 4.025(7.342) 6.556
(1.732) 1.162
(82) (211)
121.861 200.632
30
(Convcnience Translalion inlo English of Condensed Inlerim Consolidated Financial Statements Origrnally lssuedin Turldsh — 5cc Note 17)
ERECLİ DEMiR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSFOR THE SIX MONTHS PERİOD ENDED 30 iliNE 2016
(.4,tnunts art cxprcsscd in thousands ut’Turkish Lim (‘TRY Thonsand”) unless othcnvisc indicatcd.)
NOTE 11 -EQUITY
As of3O inne 2016 and 31 Deccmbcr 2015, the capilal structure is as follows:
30 June 31 December2016 2015Sharelıoldcrs
Ataer Holding A.Ş.Quotcd in Stock Exchamze
Erdemis ovn sharcsHisiorical capital
Effcct of infiationRestated capitalTreasuıy shares
(%) (%)
49,29 1.724.982 49,29 1.724.98247.63 1.667.181 47,63 1.667.181
3,0% 107.837 3,08 107.837
100,00 3.500.000 100,00 3.500.000
156.613 156.6133.656.613 3.656.613
(116.232) (116.232)
3.540.381 3.540.361
The Company is subject to registered capilal limit. The board of directors may, al any lirne it maylhink necessary, increasc the capilal by means of ıssumg bearer shares each wiih a nominal valuc of 1Ki (one Kurus) up to the amount of the rcgislcrcd capilal, which is 7.000.000.000 in accordance withthe requirernents as set forth herein.
The issued capital of the Company consists of 350.000.000.000 lots of shares (31 December 2015:350,000.000.000 Iots). The nominal valuc of each share is 1 Kr (Turkish cent) (31 Dceember 2015: 1Ki). This capilal is split beiween A and E group sharcs. Group A shares consist of 1 share with ashare value of 1 Ki and Group E shares consist of TRY 3.499.999.999,99 shares represcnting349.999.999.999 of the issued capital.
31
(Con
veni
ence
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tion
into
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lish
ofC
onde
nsed
Inte
rim
Con
solid
ated
Fina
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lSİ
atem
ents
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gina
liy
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ı—
Sec
Not
e17
)
ER
EĞ
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MİR
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LİK
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BR
İKA
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NO
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CO
ND
EN
SE
DC
ON
SO
UD
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FIN
AN
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LS
TA
TE
ME
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SFO
RT
HE
SIX
MO
NT
HS
PE
RİO
DE
ND
ED
30JU
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(Arn
ount
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ands
orl
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ish
Lira
(“T
RY
Tho
usan
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unlc
ssod
enyi
sein
dica
ted.
)
NO
TE
12—
SA
LE
SA
ND
CO
ST
OF
SAL
ES
(con
t’d)
Sale
sR
even
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Oth
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)
Sale
sre
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Sale
sdi
scou
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(-)
___________________
__
__
__
__
___________
Cos
tof
sale
s(-
)
__
__
__
__
__
__
__
__
__
_
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sspr
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__
__
__
__
__
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__
__
__
____________
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he
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rts
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RY
3.14
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nd(3
0Ju
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TRY
25.5
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1Ja
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3O
June2
Ol6
30Ju
ne2
016
1A
pri
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Janu
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-
30Ju
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pri
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30Ju
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4.56
7.37
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341.
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3.17
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4.48
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3.16
3
32
(Con
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into
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iislı
ofC
onde
nsed
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rim
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Fim
mci
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ater
nenı
sO
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nally
lssu
edin
Tıır
kish
—Se
cN
ote
17)
ER
EĞ
Lİ
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MİR
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LİK
FA
BR
İKA
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unle
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ed.)
NO
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12—
SAL
ES
AN
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TO
FSA
LE
S(c
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The
brca
kdow
no
fco
sto
fgo
ods
sale
sfo
rth
epe
riod
s1
ian
uar
y—
30Ju
ne20
16an
d1
Janu
ary
—30
June
2015
isas
foll
ows:
1Ja
nuar
y-
30Ju
ne20
16
(2.8
96.3
24)
(630
.285
)(3
79.3
71)
(303
.826
)(1
74.5
88)
(26.
725)
(7.4
10)
(64.
611)
(16.
496)
1A
pril
-1
Janu
ary
-
30Ju
ne20
1630
June
2015
(3.4
27.9
44)
(588
.765
)
(345
.632
)
(249
.070
)
(152
.367
)
(40.
404)
(6.4
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(38.
541)
(9.7
62)
1A
pri
l
30Ju
ne20
15
(1.7
87.4
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(312
.866
)(1
80.5
90)
(137
.863
)(8
3.67
3)(2
0.03
2)(1
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(21.
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(5.3
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1.54
5(7
.342
)(2
.557
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resu
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allo
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mat
eria
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age
(1.3
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48)
Per
sonn
elco
sts
(325
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)
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s(1
84.2
22)
Dep
reci
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nan
dar
nort
izat
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expe
nses
(149
.438
)
Fac
tory
over
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s(9
0.45
4)
Oth
erco
stof
good
sso
ld(1
2.24
7)
Non
-ope
rati
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(*)
(7.4
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Frei
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cost
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deliv
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(34.
443)
Inve
ntor
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nsw
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Rev
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Y(7
.410
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has
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0Ju
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15:
TRY
(6.4
61)
thou
sand
).
(4.4
84.9
43)
(2.1
55.0
46)
(4.8
61.5
20)
33
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Con
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inT
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AT
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TH
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(Am
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NO
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13-
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PE
NS
ES
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EX
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The
brea
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pens
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toth
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natu
refo
rth
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riod
st
Janu
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—30
June
2016
and
1Ja
nuar
y—
30Ju
ne20
15is
asfo
llow
s:
Per
sonn
elex
pens
es(-)
Dep
reci
atio
nan
dar
nort
izat
ion(
-)
Serv
ice
ex
penses
(-)
__
__
__
__
__
__
__
__
__
__
__
__
__
____________
___________________
The
brea
kdow
no
fge
nera
lad
rnin
istr
ativ
eex
pens
esfo
rth
epe
riod
s1
Janu
ary
—30
iune
2016
and
1Ja
nuar
y—
30Ju
ne20
15is
asfo
llow
s:
1Ja
nuar
y-
30Ju
ne2
01
6
(81.
454)
(7.1
53)
(49.
812)
(3.7
23)
(1.8
37)
(143
.979
)
1A
pril
-
30Ju
ne20
16
(43.4
14)
(3.6
87)
(24.
544)
(1.9
03)
(567
)(7
4.11
5)
1Ja
nu
aıy
-30
June
2015
(75.
461)
(4.8
97)
(50.
409)
(3.7
08)
(2.4
29)
(136.9
04)
tA
pril
-30
Jun
e2015
(38.
314)
(2.5
63)
(26.
677)
(2.1
45)
(683
)(7
0.38
2)
1Ja
nuar
y-
1A
pril
-1
Janu
ary
-l
Apr
il-
3O
June2
Ol6
3O
Jun
e2O
I63O
June2
Ol5
3O
June2
Ol5
(37.
428)
(19.
690)
(35.
364)
(18.
725)
(10.
107)
(5.1
23)
(8.7
68)
(4.6
48)
(22.
360)
(11.
525)
(20.
338)
(9.9
03)
(69.
895)
(36.
338)
(64.
470)
(33.
276)
Per
sonn
elex
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es(-)
Dep
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dam
orti
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on(-)
Ser
vice
expe
nses
(-)T
ax,
duty
and
ehar
ges
(-)P
rovi
sion
for
doub
tful
reee
ivab
les
(-)
34
(Con
veni
cnce
Tra
nsla
tion
into
Eng
lish
ofC
onde
nsed
Inte
rim
Con
solid
ated
Finw
ıcia
lSl
atem
ents
Ori
gina
liyIs
sued
inT
urki
sh—
See
Not
e17
)
ER
EĞ
Lİ
DE
MİR
VE
ÇE
LİK
FA
BR
İKA
LA
RI
T.A
.Ş.
AN
DIT
SS
UB
SID
IAR
IES
NO
TE
ST
aT
HE
CO
ND
EN
SE
DC
ON
SO
LID
AT
ED
FIN
AN
CİA
LS
TA
TE
ME
NT
SFO
RT
HE
SIX
MO
NT
HS
PE
RIO
DE
ND
ED
30JU
NE
2016
(Aıu
ount
sar
eex
pres
sed
inılı
ousa
nds
ofT
urki
shLi
ra(‘
[RY
Tho
usan
d”)
unle
ssol
lıcn
’ise
iiidi
caie
d.)
NO
TE
13—
OP
ER
AT
ING
EX
PE
NS
ES
AN
DO
TH
ER
OP
ER
AT
ING
INC
OM
E/(
EX
PE
NS
ES
)(c
ont’
d)
The
brea
kdow
nof
othe
rop
erat
ing
inco
me
for
the
peri
ods
1Ja
nuar
y—
30Ju
ne20
16an
d1
Janu
ary
—30
June
2015
isas
foll
ows:
1Ja
nuar
y-
1A
pril
-1
Janu
ary
-1
Apr
il-
3OJu
ne2O
l63O
June2
OI6
3O
iune2
OlS
3O
iun
e2O
lS
Oth
erop
erat
ing
inco
rne
Prov
isio
nsre
leas
edfo
rla
ndoc
cupa
tion
6!.6
96(5
68)
--
Inte
rest
inco
rne
from
sale
sw
iihm
atur
ities
29.2
7614
.182
31.0
9615
.081
Dis
coun
tin
com
e4.
971
941
13.0
667.
492
Prov
isio
nsre
leas
ed8.
018
5.45
917
.970
6.32
6Se
rvic
ein
conı
e6.
384
2.58
38.
347
5.03
2M
aint
enan
cere
pair
and
rent
inco
rne
5.38
73.
328
6.52
34.
672
War
ehou
sein
com
e2.
168
1.36
81.
832
859
Inde
rnni
tyan
dpe
nalty
dete
ntio
nin
corn
e1.
101
572
799
460
Insu
ranc
ein
dem
nity
ineo
me
1.13
182
73.
595
3.52
9Ga
mon
sale
ofta
ngib
leas
sets
243
195
263
167
Gam
onsa
leof
ives
tmen
tpr
oper
ties
--
43.1
0443
.104
Oth
erin
com
ean
dga
iııs
15.4
02135.7
77
6.05
1
34.9
388.
465
135.
060
4.0
35
90.7
57
35
(Con
veni
ence
Tra
nsla
tion
into
Eng
lish
ofC
onde
nsed
Inte
rim
Con
soli
date
dFi
nanc
ial
Stat
emen
tsO
rigi
nali
yls
sued
inT
urki
sh—
Sec
Not
e17
)
ER
EĞ
Lİ
DE
MİR
VE
ÇE
LİK
FA
BR
İKA
LA
RI
T.A
.Ş.
AN
DIT
SS
UB
SID
IAR
IES
NO
TE
STO
THE
CO
ND
EN
SED
CO
NSO
LID
AT
ED
FIN
AN
CIA
LST
AT
EM
EN
TS
FOR
TH
ESI
XM
ON
TK
SPE
RİO
DE
ND
ED
30JU
NE
2016
(Arn
ounL
sar
eex
pres
sed
inIl
ınus
aııd
so
fTu
rkk
lıL
ira
(“T
RY
Tho
usan
d’)
tınle
asot
lıcn
vise
iııd
ical
ed.)
NO
TE
13-
OP
ER
AT
ING
EX
PE
NS
ES
AN
DO
TH
ER
OP
ER
AT
ING
INC
OM
E/(
EX
PE
NS
ES
)(c
ont’
d)
The
brea
kdow
nof
othe
rop
erat
ing
expe
nses
for
the
peri
ods
1Ja
nuaı
y—
30lu
ne20
16an
d1
ianu
ary
—30
June
2015
kas
foll
ows:
1ia
nuar
y-
1A
pril
-1
Jaıı
uaıy
-1
Apd
I-
30
Jun
e20
16
301u
ne20
163O
June
2Ol5
301u
ne20
15O
ther
oper
atin
gex
pens
es(-
)P
rovi
sion
expe
nses
(20.
863)
(11.
625)
(20.
148)
(9.1
42)
Dis
coun
tex
pens
es(5
.029
)(1
.487
)(1
7.85
0)(8
.462
)
Law
suit
com
pens
atio
nex
pens
es(2
.816
)(1
.310
)(1
.881
)(1
.071
)
Por
tfa
cilit
ypr
e-li
cenc
eex
pens
es(2
.566
)(1
.294
)(2
.872
)(8
06)
Don
atio
nex
pens
es(1
.579
)(5
75)
(903
)(5
75)
Ser
vice
expe
nses
(2.6
13)
(1.7
70)
(1.5
04)
(913
)
Los
son
disp
osal
of
tang
ible
asse
ts(8
20)
(236
)(3
.025
)(2
.484
)
Sto
ckex
chan
gere
gist
rati
onex
pens
es(1
.042
)(1
.042
)(9
59)
(959
)
Ren
tex
pen
ses
(683
)(3
80)
(1.0
18)
(856
)
Pen
alty
expe
nses
(477
)(2
23)
(2.3
72)
(1.3
21)
Oth
erex
pen
ses
and
loss
es(1
2.91
1)(7
.725
)(1
2.26
7)(8
.217
)(5
1.39
9)(2
7.66
7)(6
4.79
9)(3
4.80
6)
36
(Con
veni
encc
Tra
nsla
tion
into
Eng
lish
ofC
onde
nsed
Inte
rim
Con
solid
ated
Fina
ncia
lSl
atcı
nent
sO
rigi
naliy
Issu
edin
Tur
kish
—Se
cN
ote
17)
ER
EĞ
Lİ
DE
MİR
VE
ÇE
LİK
FA
BR
İKA
LA
RI
T.A
.Ş.
AN
DIT
SS
UB
SID
IAR
IES
NO
TE
ST
OT
HE
CO
ND
EN
SE
DC
ON
SO
LID
AT
ED
FIN
AN
CİA
LS
TA
TE
ME
NT
SFO
RT
HE
SIX
MO
NT
HS
PE
RIO
DE
ND
ED
30JU
NE
2016
{Arn
ount
sar
t,es
pres
sed
intlı
ousa
ııds
ofT
urki
slı
Lira
(‘1
RY
Tho
usan
d”)
unlc
ssot
herw
ise
iııdi
cate
d.)
NO
TE
14—
FIN
AN
CIA
LIN
CO
ME
/(E
XF
EN
SE
S)
The
brea
kdow
no
ffi
nanc
ial
inco
me
for
the
pcri
ods
1Ja
nuar
y—
30.lu
ne20
16an
d1
Janu
ary
—30
June
2015
isas
foll
ows:
Fin
anci
alin
com
es
Inte
rest
inco
me
onba
nkdep
osi
ts
Fore
ign
exch
ange
gai
ns
(net
)
Fore
ign
exch
ange
gam
fror
nde
ferr
edta
xba
se
The
brea
kdow
nof
lina
neia
lex
pens
efo
rth
epe
riod
s1
Janu
ary
—30
Jiin
e20
16an
d1
Janu
ary
—30
June
2015
isas
foll
ows:
Fin
anci
alex
pen
ses
(-
Inte
rest
expen
ses
onborr
ow
ings
For
eign
exch
ange
loss
(net
)
Inte
rest
cost
of
ernplo
yee
ben
efit
s
Fore
ign
exch
ang
eIo
ssfr
omd
efer
red
tax
bas
e
Fai
rval
ue
dif
fere
nee
sof
der
ivat
ive
finan
cial
inst
rurn
ents
(net
)
Otl
ıer
fınan
cial
expen
ses
1Ja
nuar
y-
1A
pril
-
3OJu
ne2O
l63
01une2
016
3OJu
ne2O
l5
1ia
nuaı
y-
1A
pril
-
30Ju
ne20
15
52.5
6727
.797
45.1
7228
.000
19.7
3!19
.731
236.
033
36.4
828.
719
(39.
725)
--
81.0
177.
803
281.
205
64.4
82
1Ja
nuaı
y-
1A
pril
-1
Januar
y-
1A
pril
-
3O
June2O
l63O
June
2Ol6
3OJt
ıne2
OI5
3OJu
ne2O
l5
(49.
428)
(22.1
33)
(67.
867)
(29.5
55)
-47.2
89
--
(22.1
43)
(11.0
86)
(15.9
24)
(8.0
09)
--
(259.6
50)
(47.6
64)
(13.2
46)
(12.5
02)
(5.2
46)
4.4
04
(412)
(21
7)
(1.1
52)
(58
7)
(85.2
29)
1.35
1(3
49.8
39)
(81.4
11)
Dur
ing
the
peri
od,
the
inte
rest
expe
nses
ofT
RY
2.80
8th
ousa
ndha
vebe
enca
pita
lize
das
pafl
ofth
eG
roup
’spr
oper
ty,
TR
Y35
3th
ousa
nd).
plan
ıan
deq
uipm
ent
(tJa
nuar
y-
30Ju
ne20
15:
37
(Convenience Translation into English of Condensed Intenm Consohdated Financial Statements (kiginally Issuedin Turldsh — Sec Note 17)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE SIX MONTHS PERİOD ENDED 30 JUNE 2016
(Amounts art exprcsscd in thousands [,rTurkish Lira (“TRY Thonsand”) unicss olhcnvise indicated.)
NOTE 15- NATURE AND LE YEL OF RISKS DERJVED FROM FINANCİALINSTRUMENTS
Additional information about financial instrumcnts
Foreign cunencv risk manaiement
The individual financial smtcments of each Group enıity are presented in the curreney of the primaryceonomic environrnent in whieh the entity operates (its functional currency). Foreign cunencyposition table represents foreign curreneies other than each entity’s functional eurrency. As of 30 June2016. the foreign enrrency position of the Group in terms of original cunency is ealculated as it asfollows:
30 itme 2016
TRY TRY EtJR() Jap. Yençroıal in (Orighıai (Oüginai (Odginal
cunoney) cuntney) cuntncv) crnTency)
1. Trndc Receivahica 224.116 41.805 56.462 -
2a. Monebıy rmwıciai asseta 124.287 101375 5.769 1.344
2h. Non- mncta,y fmanciai asseıs -
3. 0111cr 139.554 138.356 340 -
4. Curreot asseis (1+2+3) 387.957 282.636 62.571 1.334
5. Tmdc receivahles - - - -
6a. Monciaıy Ibiancial asseis - - - -
61,. Nun- ıainctaly t’mancial asscıs -
70111cr 31331 20.902 2213 109.650
8.Non.çunenlassels (54£+7) 31.331 20502 2.213 109,650
9. Total asseta (3+8) 519.28% 303.53% 63.785 110.994
la. Trade payahlcs 295,708 261511 6.196 303.252
Il. Finanebi ibhilils 257.867 113.460 33.833 1278.515
12a. Other n’neia,v fmancial liabilitics 267.387 261966 1.329 -
12h.Othcrnon-nıinctaıy l,anchi lbbilüies 82.792 81792 . -
13.Currentltallflües (10+11*12) 903.853 721.669 41.459 1.682.167
14. Tradepayables - -
15 Financül 1bbflits 329.182 - 128.5S4 609325
16a. Oilıer nurnelaly Çasancul iübdiiics ii’ 643 551643
1611. Othernon-moncıaıy fnanebl liabilüles .
17. Non.eun’enl ilabIlItles (14+15+16) 981.831 552.643 128.584 609325
18,Toial IlablIlIles (13+17) 1.885.685 1.273312 170.043 2.292.092
19. Net asseUllatillty jaislilon orog-iMlance slıeel <kri,utlwfinancial instruments (19a.19b) (312.751) (32.891) (118.543) -
lOa. Ofithalance shcct törcign cunencv dcdvaıive fmancial assets 117.547 28.533 27.779
1911. OW-haiance shcet tbrcign cııntncy dcrivativc fmancialliahihuics 530,298 61.424 136322 -
20.Net foreign currdney assei/itaWIIvjx,slüon .i8+19) (1.779.138) (1.003.665) (223.801) (2.181.098)
21. Net foreign curreney ei / IInlIiy jwaitlon ofnmnetary
iIen (1+2a+5+6a-10-1l-lla-13-15-16a) (1.454.390) (1.047.240) (107.812) (2.290.748)
22. [‘air valuc ofdcrivatic Jinancial insimn’ınis used ili rnrcigncunencyhedge 335% . 1360
23. Hcdgcd rorcion cunency asscls 530.298 61.423 146322
23. Hcdgcd romign cunency liahiiftica 117547 28.533 27.779
25.Ewrts 615.954
26. lnpofls 1316.142
38
(Convenience Translation inlo English of Condensed Interim Consolidated Financial Statements Originally lssucdin Turkish — Sec Note 17)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND İTS SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE SIX MONTHS PERİOD ENDED 30 JUNE 2016
(Amounts ara exprcssed in thnusands ofTurkislı Lira (TRY flousand”) unless o±envisc indicatad.)
NOTE 15- NATURE AND LE YEL OF RİSKS DERİVED FROM FINANCİALINSTRUMENTS (cont’d)
Additional infi>rmation about financial instrumcnts (cont’d)
Foreign cunency risk rnanagement (cont’d)
The individual financial staternents of each Group entity are presented in the currency of the primaryeconomie environmcnt in which the cntity operates (its funetional currency). M of 31 Deeember2015, the foreign currency position of the Group in terms of original cunency is calculated as it asfollows:
31 December 2015TRY TRY EURO Jap. Yen
(Tela! in (Original (Original (Onginal
curnmcy) cuuency) cuucncy) curmncy)
1. Trade Raceivables 241.540 29234 66.1% -
2a. Meneıaıy fnancial nssets 47.460 26.445 6.367 163
2k Nen- nnetaıy fmancial assets - -
3. Other 135.547 133,830 54! -
4.Current sets (1+2+3) 324.547 189.509 73.104 163
5, Trade receivahles - - - -
6a. Monetary fmancial assets - - -
6b. Nen- nx,nelaw flnaneizıl asseis - -
7. Otlter 55.422 41.916 3.227 133.765
8. Non-currentassets (5+6+7) 55.422 41.946 3227 133.765
9. Total asseis (4+8) 479.969 231.455 76331 133.92%
10. Trade payahles 321.345 281.247 7776 574.931
Il. Financial Uabiiües 333.717 194.768 34012 1.282.188
12a. Olber m,netaış fmnncial liahililies 459.280 456 (>32 752 -
l2I. Oıhcrnon-ra,neıaıv financial babiilies 211,382 211.382 . -
13. Current IlaNtliles (10+11+12) 1325.724 1.143.429 42.540 1.857.119
14. Trade payables - - - -
15. Financial bahdities 232 421 12.865 59.9% l.2tX).730
16a. Other,aı,elan’ fmancial liabililies 496,217 496.217 - -
1Gb. Other ıton-nonetaay financial hahdilies - - - -
17. Non-curreot liaNlittes (13+15+16) 728.638 509.1>82 59S96 12(10.730
18.Total liabIlitles (13+17) 2.054.362 1,652.511 102.536 3.057.839
19. Net asset/IlabIllIv phltlon otıılf-balance sbeet t,ri,ztiw
(inancInI Inslruawnts (19a-19b) (%83.204) (12224) (274.100) -
19a. oır-haınnce slıecl Ibreign cunencv derivalive fmatsuial asscls 156598 68.178 27826 —
19h. Ofltbnbı,ce sheel lbmıgn cunency dedinlive fmnncialliahilities 1.039.802 80.402 301.926
20. Net foreign currencyassetillaNlllv positton (9-18+19) (2.357.597) (1.333280) 30030S) (2S23.921)21 NeI foreign currency asset / lIaNIth’jxısIUıın of monelaryitems (1+2a4+6a-10.1 1-12a-14-15-16a) (1.553.980) (1385.350> (29.973) (3.057.686)
22. Farvaluc ofdcnvaiive Fmancml instmntnts used in foreign
currenev lıcdge 20.969 - 6599
23.Hedgedforeigncurrcncv assets 1.039 802 80.402 301.926
24. Hedged rorcıga cunvncy bnhıhııes 156 598 68.178 27.826
15. E,ons 1.183 33!
26. 1n,ops 5.316.9<Yi
39
(Convenıcnec Translation inlo English of Condensed Interim Consolidaied Financial Statcments Originaliy lssuedin Turkish — Set Note 17)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE SIX MONTHS PERİOD ENDED 30 JUNE 2016
(Amounts art cxprescd in thousands otTurkih Lira (TRY Thousand”) unless othmvisc indicaıed.)
NOTE 15- NATURE AND LEVEL OF RISKS DEVED FROM FINANCIALINSTRUMENTS (cont’d)
Additional information about financial instrumcnts (cont’d)
Foreien cunencv risk manaaement (cont’d)
The following table shows the Group’s sensitivity to a 10% (+1-) change in the TRY, USD, EUR andJapanese Yen. 10% is the scnsitivity rate used when reporting foreign curreney risk internaliy to keynıanagement personnel and reprcsents management’s assessment of the possible ehange in foreignexchange rates.
As of 30 June 2016 asset and liability balanees are translated by using the following exchange rates:TRY 2,8936 = US $ 1,TRY 3,2044 = EUR 1 and TRY 0,0281= JPY 1(31 December 2015: TRY2,9076 = US $ 1 ,TRY 3,1776 = EUR 1 and TRY 0,0224= JPY 1)
30 June 2016
_______________________ _______________________
1- TRY net asscüliabüıty2- Hedged portion from TRY risk (-)3- Egecı of capitalization (-)
_______________________ _______________________
4- TRY net effect (3+2+3)
_____________________ _____________________
5- US Dollars net assetıliabllity6- Hedged portion from US Dollars risk (-)7- Effect of capitalization (-)
_________________________ _________________________
8- US Dollars net effcct (5+6+7)
_______________________ _______________________
9- Euro net asscı’Iiability10- Hedged portion from Euro risk (-)11- EfTect of capitalization (-)
_______________________ _______________________
12- Euro net efrect (9+104-11)
_______________________ _______________________
13- Jap. Yen net asseL’liabllity14- Hedued ponion from Jap. Yen ıisk (-)15- Efl’ect of capitalization (-)
_________________________ _________________________
16- Jap. Yen net cfTect (13+14+15)
_____________________ _____________________
TOTAL (4+8+12+16)
Proflü(bss) after capitahzation on tangibleassets and before tax and non-controlling interest
Appreciation of Depreciation offoreign currency foreign currency
(97.077) 970771853 (2.853)
(94.224) 94.224
(33.729) 33.7298.902 (8.902)
(24.827) 24.827
(6.140) 6.140
(6.140) 6.140
(125.191) 125.191
in addition to the Group’s foreign curreney sensitivity to a 10% (+1-) ehange in TRY, TRY 151.764thousand of ineorne / (TRY (121.555) thousand expense) viII occur due in the (decrease) / increase indeferred tax base. (31 December 2015: TRY 155.806 thousand incorne / TRY (127.478 thousandexpense).
40
(Conveııieııce Translation into English of Condensed lntenrn Consolidated Financial Sıatcments Originally lssuedin Turkislı — Sec Note 17)
EREtLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARWS
NOTES TO THE CONDENSED CONSOLIDATED FINANCİAL STATEMENTSFOR THE SIX MONTHS PERİOD ENDED 30 iLİNE 2016
(Aınounts art cxprcsscd in ttıouands of Turkish Lım (“ThY llıousand’) unkıs otbmis indicaled.)
NOTE 15- NATURE AND LEVEL OF RISKS DERIVED FROM FINANCİALINSTRUMENTS (conl’d)
Additional information ahout financial instrumcnts (cont’d)
Foreign cunency risk management (cont’d)
3 1 December 2015
1- TRY net asset/liabihty
2- Hedged portion frorn TRY risk (-)3- ElTect of capitalization (-)4- TRY net effeet (1+2+3)
5- US Dollars net asseUliabiity6- Hedged pordon fronı US Dolkrs risk (-)7- Efrect of capitalization (-)8- US Dollars net clTccı (5+6+7)
9- Furo net asseı’liability
10- Hedaed pardon from Euro risk (-)Il- Effect of capitalization (-)12- Euro net effecı (9+10+11)
13- Jap. Yen net assetiliabilily
14- Hedged pardon froın lap. Yen risk (-)15- Effect of capitalization (-)16- Jap. Yen net effect (13+13+15)
TOTAL (4+8+12+16)
NOTE 16-SUBSEQUENT EVENTS
None.
ProfiV(loss) afler capitalization on tangibleasseis and before tax and non-conırolling interest
Appreciation of Deprcciation offoreign curreney foreign currency
(142.106) 142.106
6.818 (6.818)
( 135.288) 135.288
(8.327) 8.3278.842 (8.842)
515 (515)
(7.040) 7.040
(7.046) 7.040
(141.813) 141.813
NOTE 17 - OTRER ISSUES AFFECTING THE CONSOLIDATED FİNANCIALSTATEMENTS MATERIALLY OR THOSE REQUIRED TO BE DISCLOSED FOR ACLEAR, UNDERSTANDABLE AND INTERPRETABLE PRFSENTATION
Convenience translation to English:
As of 30 June 2016, the accounting principles descrıbed in Note 2 (defined as Turkish AccountingStandardslTurkish Finaneinl Reporting Smndards) 10 the necompanying flnancial staıernents differfrom international Financial Repoding Smndards (“IFRS”) issued by the international AccountingStandards Board with respect to the applieation of iııflatıon aecoundng, certain reclassificadons andalso for certain disclosures requirement of the PONCMB. Aecordinglv, the aecornpanying financialstatements are not intended to present the finaneial position and results of operations in accordancewith IFRS.
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