(CONVENIENCE TRANSLATJON OFCONSOLİDATED FINANCİAL STATEMENTSORİGİNALLY (SSUED İN TURKISH- SEE NOTE 34)
EREĞLİ DEMİR VE ÇELİKFABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
CONSOLIDATED FINANCİAL STATEM ENİSFOR THE PERİOD 1 JANUARY-31 DECEMBER 2014 ANDJNDEPENDENT AUDITOR’S REPORT
-1
Ey Guney Bağımsız Denetim ve Tel ÷90 212 315 3000SMMMAŞ Fax 90 212230 8291Mastak Mahallesi Eski Büyükdere ey.com
Building a better Caddesi No 27 Daire 54-57-59 Ticaret Sicil Na 479920working wortd Kat 2-3-4 Sarıyer Istanbul, Turkey Mersis No 0-4350-3032-6000017
(Convenience translation of a report and consolidated financial statements originally issuad in Turkish)
INDEPENDENT AUDITORS’ REPORTON THE CONSOLIDATED FINANCİAL STATEMENTS
To the Board of Directors of Ereğli Demir ve Çelik Fabrikaları TAŞ.;
lntroduction
We have audited the accompanying consolidated statement of financial position of Ereğli Demir veÇelik Fabrikaları TAŞ. (the Company) and its subsidiaries (together wiil be referred to as “the Group”)as st 31 December 2014 and the related consolidated statement of profit er oss. consolidatedstatement of other comprehensive income, consolidated statement of changes in equity andconsolidated statement of cash flows for the year then ended and a summary of significant accountingpolicies and explanatory notes.
Managements responsibility for the financial statements
The Group management is responsible for the preparation and fair presentation of these consolidatedfinancial statements in accordance with the Turkish Accounting Standards published by the PublicOversight Accounting and Auditing Standards Authority ÇPOA”) of Turkey and for such internalcontrols as management determines is necessary to enable the preparation and fair presentation ofconsolidated finanojal statements that are free from material misstatement, whether due to errorand/or fraud.
lndependent auditors’ responsibility
Our responsibility is to express an opinion on these consodated financial statemenis based on ouraudit. Our audit was conducted in accordance with standards on auditing issued by the CapitalMarkets Board of Turkey and standards on auditing issued by POA. Those standards require thatethical requirements are compJied with and that the independent audit is planned and performed toobtahı reasonable assurance whether the financial statements are free from material misstatement.
lndependent audit involves performing independent audit procedures to obtain independent auditevidence about the amounts and disclosures in the financial statements. The independent auditprocedures selected depend on our professional judgment, including the assessment of the risks ofmaterjal misstatement of the financial statements, whether dua to error and/or fraud. in making thoserisk assessments, the entity’s internal control system is taken into consideration. Our purpose,however, is not to express an opinion on the effectiveness of internal control system, butto designindependent audit procedures that are appropriate for the circumstances in order to identify therelation between the financial statements prepared by the Group and its internal control system. aLırindependent audit includes also evaluating the appropriateness of accounting policies used and thereasonableness of a000unting estimates made by the Company’s management, as weB as evaluatingthe overail presentation of the financia statements.
We beljeve that the audit evidence we have obtained during our independent audit is sufficient andappropriate to provide a basis for our audit opinion.
j1
EYBuilding a betterworkinq world
(Convenience translatian of a report and consolidated financial statements originally issued in Turkish)
Opinion
in our opinion, the accompanying consolidated financial statements present fairly, in ali materialrespects, the financial position of Ereğli Demir ve Çelik Fabrikaları TAŞ. and its subsidiaries as al 31December 2014 and their financial performance and cash flows for the yaar then ended in accordancewith the Turkish Accounting Standards.
Other Matters
Without quaiifying our opinion; we draw attention ta the matter in note 16 ta the acoompanyingconsolidated financial statements: The court cases related to CMS’s claim that the Company hadprepared its December 31, 2005 financial statements in accordance with International FinancialReporting Standards instead of the Communiqu Serial Xl, No:25 on “Accounting Standards in CapitalMarkets” without the permission of the CMB in prior years were concluded against the Company alCouncil of State and such conciusions declared to the Company via notifications received in Juiy2012. On August 1 2012, the Company has applied to Administrative Court to remove the conflictingdecisions of these court; Administrative Court has decided to reject the application by the notificationmade on February 17, 2014. However Lawsuit filed by Privatization Administration (PA) of The TurkishRepublic, is stili pending as the reporting date.
Reports on Other Responsibilitles Arising From Regulatory Requirements
1) Auditors’ report on Risk Management System and Committee in accordance with subparagraph4, Articie 378 of Turkish Commerciai Code no. 6102 (“TCC”) is prepared to be submitted to theBoard of Directors of the Company on February 10, 2015.
2) In accordance with subparagraph 4, Article 402 of the TCC, no significant matter has come taour attention that causes us to believe that the Company’s bookkeeping activities for the period1 January —31 December 2014 and financial statements are not in comphance with the codeand provisions of the Company’s articles of association in relation to flnancial reporting.
3) In accordance with subparagraph 4, Article 402 of the TCC, the Board of Directors submitted tous the necessary explanations and provided required documents within the context of audit.
Güney.Bağım.şız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim ŞirketiArn6hıbw’flçni%fErnst 8 Young Global Limited
t>sMMM (10 February 2015Istanbul, Türkiye
(2)
TABLE OF CONTENTS Page
CONSOLIDATED STATEMENT OF FİNANCIAL POSITION 1-2
CONSOLİDATED STATEMENT OF INCOME 3
CONSOLIDATEDSTATEMENTOFCOMPREİIENSİVE INCOME 4
CONSOLIDATED STATEMENT OF CIIANGES İN EQUİTV 5
CONSOLİDATED STATEMENT OF CASIİ FLOW 6
NOTES TO THE CONSOLIDATED FINANCİAL STATEMENTS 7-81
NOFE 1 GROUİ’S ORGANIZATİON AND NAFURI: OF OPER1VIİONS 7-8NOlE 2 flASIS OF lRESENTMION OF 111V CONSOVIDAlED FINANCIM. S[MEMENIS 8-29NOlE 3 SEGMENIAL REPORİİNG 29NOlE 4 CASII AND CASU EÇUIVALENIS 30NOlE 5 FINANCIAL DERIVAFIVE INSIRUMENIS 31-33NOI13 6 FINANCİAI. EIADILIIIES 34-35NOlE 7 iRADE RECEIVAI3LES AND PAVAIILES 36-37NOlE 8 Oli lER RECEİVADLES AND PAYABLES 37NOlE 9 INVENIORIES 38NUFL 10 PRLI’AID LxPLNSI:SNOl E Il INvEsıMENr PROPERTİES 39NOTE 12 PROPERIY, PLANF AND EQUIPMEN 40—42NOlE 13 INFANGIBLE ASSEİS 32-43NOlE 14 GOVERNMEKIGRANIS AND INCENiIVES 43NOlE 15 FMI’LOYEE IIENEFI VS 44-36NOFE 16 PROVISIONS 16-49NUIE 17 COMMI IMENIS AND CONiINGENCIES 50NOlE 18 Oli lER ASSEFS AND LIADII.lIIES 51NOlE 19 DEFERRED REVENU 5 1NOTE 20 EQUIlY 52-55NOFE 21 SALES AND COST OF SALES 55-56NOFE 22 RESEARCII AND DEVELOPMENT EXPENSES. MARKElING. SALES AND DISTR1BUTİON
EXPINSI:S GENERAL ADMINISIRNFIVE EXPENSES 56NIY 23 OI>ERNJİNG EXI’EN SES ACCORDING [(31 IIEİR NA[UR 57NOTE 24 Oli lER OPERAİING INC0MEıEXPEN5ES 5%NOlE 25 l’INANCIAL INCOME 59NOlE 26 FINANCİAL EXI’ENS 59NOTE 27 TAX ASSEİS AND LIABILIiIES 59-64NOFE 28 EARNINGS PEk 51 lAR 64NOTE 29 RELATED PARİV TRANSAC liONS 65-66NO lE 30 NATURE AND [EVE!. OF RISKS DERIVED l’kOM FINANCIAI. INSFRUMENFS 67-77NOlE 3! FINANCIAL INSVRUMENls ([AİR VALUE AND FINANCİAL RİSK
MANAGEMENI DISCLOSURES) 78-80NOFE 32 SUBSEÇUENI EVENIS %0NOEL 33 AbD] 1 İONAL INFORMAT]ON FOR CASIİ FLOW 5 VAiEMENİS %1NOTE 34 011 lER ISSUES AFFECFING ThE CONSOLIDATED FINANCIALSTMEMENFS
MAİERIALLY Ok TIIOSE REQUIRED TÜ BE DISCLOSED FOR A CLEARUNDERSlANDABLE AND INİERPREFABLE PRESENTATION %1
(Convenience Translation into English ofconsolidated Financial Slatcnwnts Originaliy Issucd ili TurIish — See Note 31)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF 31 DECEMBER 2014
tAmouni sır’ pressL’d in ‘[ur 1. sir ini (‘‘‘1’ k V Timi sand’ >111] icss ii ıiıcrwise indi cal d
NoW
Currrnl I’rrind
31 Dcccnıl,rr
21)13
ISIYOOt)
(Audi(ed)
Currrııt Ve d on
31 Decenıber2013
‘IR’000
1’ re’ ii> üs I>rri od
3! I)ecrmlıer
2013
8 ‘SIYOOI(
(udi (e il)
Pres i oııs Veri od
31 i)eccn,lier
2(113
.t’Rvoon
The demils of US Dollar amounts e\plained in Note 2.1.
(‘urreol issc(s 3.178.814 7.371.353 2.815.209 6.1108.498
Cash and Casiı Equivalcnls 4 943 038 2,186.810 356 609 761 1 IlFinancial Deriaıic inısiriinirenls 5 1 5.795 36.628 3 455 7.374Trade kecciuhIcs 7 757.626 1.756.86<) %00.515 1 708 538Via’ F)’oı,i Riy/aIL’d Pariles 29 /5. 701 36 109 17.193 36 691Oıher Yün/e Receire,hks 7 741 925 1.720.45/ 783.322 1 671.614
Oder Receivahles 8 1 639 3.80)) 1,959 4.181inven)orics 9 1.41)5.144 3.258.389 1.585.104 3.383,087Prepaid Expenses 0 16.094 37.320 8 488 8 1)5O)hcr Curren) Msc)s 18 39.478 91.546 59A)79 126.1)92
Non Corrcnl Mscis 3.692.406 8.562.321 3.761)478 8.025.986
Oiher Receivahles 8 0 237 23 738 10 64! 22.7))[‘mancini Invesımen:s 27 63 . —
i:inancı.ii Deriullive insirumenls 5 24.1)13 55.684 34.043 72.657Inves)meni Properıies Il 24.879 57,691 24,199 51.647Properıy. Plan) and Equıprneni 12 3.535.882 8 99.357 3 595 35)) 7 673 556In)anuıhk Assc)s 3 72 689 1 68.559 74.568 159 150Prcpaıd Fpenses 10 10.931 25.318 13 320 28 329fleferrcdTaMse)s 27 3.748 31.881 8357 17836
‘!‘Ol’.IL tSSE’IS 6.871.221) 15.933.674 6.575.687 14,034,484
The accornpanying news forrn an irnegral pan of these consolidated f5nancial statements.
(Convenience Translation into English orconsolidated Finanehil Stateıııents Originaliy lssued in Turkish Sec Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.£Ş. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITİON AS OF 31 DECEMBER 2014
(Anıounts tie cx pressed in TorL ish Lira (11< Y T haLl salı d’) alı less allı erw ise i adı cal ed.
(Miili ted) (Mıdi ini)Cıırrenl I’eri ad (‘urrenl l’cri ad I>rcvi nus I’eri od Prrvi ous (‘eri ad
31 l)ccenılıer 31 Dccvnıhcr 31 I)ecrinlwr 31 Hrrrnilıer21)13 21)14 2013 2013
IJUIILI’flES Nolr USD001) iRY’OOl) 181)001> TRV’OOO
Curreıı( liahilities 1.339.179 3.105.322 1.159.8211 2.475.406Fiıuncial Liabilities 6 273 938 637 577 93055 198 608li<ırt ‘Jean Portioııofl.ongTcrrn Fiıı Liah 6 615 9(8 1 428 252 600 285 I 281188Einatıcıal Deriuıtıw lrbtrulnelııs 5 2 62’) 6096 6 832 l3 582itiJe l’avables 7 179 936 417255 236 230 504 1851)ue tv Re/utecl Purnes 29 7.903 18329 6.767 13.443Oıher 7)ade Patvhkç 7 172.032 393 926 22(L463 389.713
Oıkr I>avah!es 8 3.186 7389 2931 6.256DL’ferred Revnoe (9 32 972 76.35% 33568 92988Cunenl Tax Liahılılıes 27 55935 29.70% 21.080 44990Short ‘lürnı Prnvisions 15 101.138 234 52% 96 062 21)5.026Payahles IhrEmpioyec Benelits 15 53,354 123.722 50.973 10% 794Other Current Liahilıttes 18 19 (63 44437 8803 18788NoııCtırrciıt lJ:ıhililies 1.085.836 2.5(7.945 1,336389 2,852.258Ftıunctat Liahilittes 6 561 269 1 347 905 936.579 2021)283Fiıuncıal Deri’aIp’v lıbrunıdnls 5 10.2811 23 839 5 75% 12290I’ro’ısions for Eınplo>ee Benefl:s 15 21<) 326 187 724 83.775 392 232I)efrredTaI.iahıltties 27 283 803 658 IlO 2(1(1113 427 (02Otltr Non Currenı Lia,ıIıties 1 15% 367 164 351EQL in 4.346.205 111.3111.31)7 4.1>79,478 8.71)6.821)Eı1nityAıırihıııahlr ii> Equity iloldrr.½ ofthe (‘arenl 4.313.813 10.1)1)3.303 3.967.1)15 6.466.7911Shre Copital 20 1 818.371 3.500000 1.81% 371 3 500 000lnflation Mjuslmenl ta Capilal 20 81.366 1566(3 81.366 156.613‘lreasury Shares (-1 20 (60 367) (Il (ı 232) (60 387) (116.232)Share Issuc Prenııum 20 553(13 (06 447 55303 106 447010cr Cornprehcnsit’ lnzt,lue/EnsL’ N0L la kRelassıfıed to I’roOt’ (Lnss) (44 682> (101563) (20 407) (33 554)
Retvzıotğon Reserve af lko,g,hle ılsseıs 10 405 23.151 10 896 23.255.‘tcitmnal (L.oss) Gcıorfiı,ıJs (55.037) (/25.713) G1.303) (66.809;
Otlıcr Ccımprehensi w lncoıne/Lı,ensc it, beReelasıfıed ta Proht/ tl.oss) (41)1)7) 1 623 62 (5697) 835 320Cosh E/atı’ Ikdgmg Reserres 3.088 7 160 (1 378) (9.334)F»eig;ı Cnrrencı’ Trwıs/ağkn, Reserve ,v (7.095) 1.616.002 (1.319) 314.664Restricted Reservs Assorled from I>raflt 20 313.3(17 6(7 355 260 261 500.949Retained Eamings 20 1.422232 2.616 106 1 354 568 26(17273Net I’ro ‘ü for the I’erıad 732 31(1 1.6<11 415 483 637 919 974Nnn—ControI)in lıiirrh 132392 3(17.003 112.463 240,030iOT:U. I.IAHILIi’IES .NI) EQIl’fl
The demiN ofL’S Dolkw amounts explaincd in Note 2.1.
6.871.221) 15.933.674 6.575.687 14.1>34.484
The aceompanying notes form an integral pafl of (hese consolidated financial stalemenıs..3
(Con
veni
ence
Tra
nsla
tion
into
Eng
lish
ofC
onso
lida
tcd
Fin
anci
alS
tate
rnen
tsO
rigi
nali
vls
sued
inT
urki
sh—
See
Not
e34
)
ER
EĞ
Lİ
DE
MİR
VE
ÇE
LİK
FA
BR
İKA
LA
RI
T.A
.Ş.
AN
DIT
SS
UB
SID
IAR
IES
CO
NS
OL
IDA
TE
DS
TA
TE
ME
NT
OF
INC
OM
EF
OR
TH
EY
EA
RE
ND
ED
31D
EC
EM
BE
R20
14
(Ano
unis
are
cxpr
essc
din
Tur
kısh
Lir
a<“
TR
YIh
ouand)
untc
ssoth
erw
scın
ükal
ed
(Audit
ed)
(Audit
ed)
Cıı
rren
tP
crio
dC
urr
cn
tP
eüod
Pre
vio
us
Per
iod
Pre
vio
us
Per
iod
1Ja
nıı
aıy
-1
Jan
uaıy
-1
Januaıy
-1
Jan
un
ıy-
31D
ecem
ber
2014
31D
ccem
ber
20
14
31D
ecem
ber
2013
31D
ecem
ber
2013
No
teU
SD’O
OO
TR
Vi0
00
USD
’OO
OT
RY
’00
0O
PE
RA
TIN
GIN
CO
ME
Rev
enue
215.2
51.5
72
11
.48
4.1
37
5.1
41.8
10
9.7
80
.75
1C
ost
ofS
ale
s(-
)21
(4.1
36
.47
9)
(9.0
45.6
52)
(4.1
64.5
74)
(7.9
21.8
52)
GR
OS
SP
RO
FIT
1.1
15
.09
32.4
38
.48
59
77
.23
61
.85
8.8
99
Mar
ket
ing,
Sal
esan
dD
istr
ibıı
tio
nE
xpen
ses
(-)
22(5
4.7
77)
(119.7
86)
(56.7
75)
(107.9
97)
Gen
eral
Ad
min
istr
ativ
eE
xpen
ses
(-)
22(1
02
.20
8)
(223
.509)
(106.1
63)
(201.9
44)
Res
earc
han
dD
evel
op
men
tE
xpen
ses
(-)
22
(3.2
01)
(6.9
99
)(2
.030)
(3.8
62)
Oth
erO
per
atin
gln
com
e24
67.9
36
148.
563
85
.62
916
2.88
3O
der
Oper
atin
gE
xpen
ses
(-)
24(6
5.0
91)
(142
.342)
(89.4
63)
(170.1
77)
OP
ER
AT
ING
PR
OF
IT9
57
.75
22.0
94.4
12
80
8.4
34
1.5
37
.80
2F
inan
ceIn
com
e25
40.6
48
88.8
88
55.3
73
105.3
30
Fin
ance
Expen
se(-
)26
(10
6.4
96
)(2
17
.729)
(218.8
44)
(394.9
70)
PR
OF
ITB
EF
OR
ET
AX
891.9
04
1.9
65
.571
64
4.9
63
1.2
48
.16
2T
axE
xpen
se27
(13
2.4
42
)(3
04.7
80)
(140.0
70)
(287.7
54)
-C
ure
nt
Corp
ora
teT
axE
xpen
se(1
14.7
29)
(266
.045)
(91.8
24)
(195.9
80)
-D
efer
red
Tax
Expen
se(1
7.7
13)
(38.7
35
)(4
8.2
46)
(91.7
74)
NE
TP
RO
FIT
FO
RT
HE
PE
RIO
D759.4
62
1.6
60
.79
15
04
.89
39
60
.40
8-
No
n-C
on
tro
llin
gln
tere
sts
27.
152
59.3
7621
.256
40.4
34-
Equ
ity
Hold
ers
oft
he
Par
ent
732.
310
1.60
1.41
548
3.63
791
9.97
4
EA
RN
ING
SP
ER
SH
AR
E28
0.45
750.
2628
(TR
Y1
No
min
alval
ue
per
shar
e)
The
acco
mpa
nyin
gno
tes
form
anin
tegr
alpa
rto
fthe
seco
nsol
idat
edfi
nanc
iaL
stal
enıe
nts.
3
(Con
veni
ence
Tra
nsla
tion
into
Eng
lish
ofC
onso
lida
ted
Fin
anci
alS
tate
men
tsO
rigi
nall
yIs
sued
inT
urki
sh—
See
Note
34
)
ER
EĞ
Li
DE
MİR
VE
ÇE
LİK
FA
BR
İKA
LA
RI
T.A
.Ş.
AN
DIT
SS
UB
SID
IAR
IES
CO
NS
OL
IDA
TE
DS
TA
TE
ME
NT
OF
CO
MP
RE
HE
NS
IVE
INC
OM
EF
OR
TH
EY
EA
RE
ND
ED
31D
EC
EM
BE
R20
14
(Am
ount
sar
eex
pres
sed
inT
urkı
slı
Lira
(1RY
Tlıo
usan
d”)
uole
ssot
herw
isc
ındi
cate
d.)
(Aud
itcd
)(A
udit
ed)
Cur
ren!
Per
iod
Cur
rent
Per
iod
Pış
viou
sP
erio
dP
rn’i
ous
Per
iod
1Ja
nunry
-1
Janunry
-1
Janunıy
-1
Jnnuaı
y-
31D
ecem
ber2
fll4
31D
ecem
ber2
Ol4
31D
ecem
ber
20l3
31D
ecem
ber
20l3
Not
eU
SD
000
TRY
’OO
OU
SD’O
OO
TR
Y00
0
PR
OF
ITF
OR
TH
EP
ER
IOD
759.
362
1.66
0.79
150
3.89
396
0.30
8O
ther
Com
preh
ensi
veIn
corn
eİ(E
xpen
sc):
Not
tobe
reci
assi
fled
subs
equc
ntlv
topr
ofit
orIo
ssC
hang
ein
Rev
alua
tion
Res
ene
ofT
angi
bkA
sset
s(4
91)
896
(1.8
71)
(3.5
59)
Cha
nge
inA
cına
rial
(Los
s)/
Gaü
(30.
372)
(75.
386)
(7.5
08)
(14.
282)
Tax
ElTe
eıof
Cha
nges
inA
ctua
rial
(Lcs
s)/
Gam
6.09
415
.077
1.50
!2.
856
To
bere
cias
sifl
edsu
bseq
uent
lyto
pıf
itor
Ioss
Cha
nge
inC
ash
FIow
Iled
giııg
Res
enes
9.44
520
.842
4.62
827
.826
Tax
Etk
elof
Cha
n2e
inC
ash
Flow
IIed
oüg
Res
enes
1.88
9)(4
.168
)(2
.926
)(5
.565
)C
hang
ein
For
eien
Cun
encv
Tra
nsla
tion
Res
erve
s(7
.038
)79
2.01
044
6.58
384
9.19
0
OT
IIE
RC
ON
IP.
INC
ON
IF?
EX
PE
NS
EF
OR
TH
EP
ER
İOD
(AF
FE
RT
AX
)27
(24.
35!)
749.
271
450.
407
856.
766
TO
TA
LC
OM
PR
EH
EN
SW
EIN
CO
ME
FO
RT
HE
PE
RIO
D73
5.11
12.
410.
062
955.
300
1.81
7.17
3D
istı
lbut
ion
ofT
otal
Com
preh
ensi
veIn
com
e-
Non
-con
tmll
ing
Inıc
resı
s25
.259
78.8
1424
.378
46.3
72-
Equ
ity(I
olde
rsof
the
Parc
ııt70
9.85
22.
331.
218
930.
922
l.770
.802
The
acco
rnpa
nyin
gno
tes
form
anin
tegr
alpa
rtoft
hes
eco
nsol
idat
edfi
nanc
ial
s!at
emen
ts.
4
(Conv
en
ien
ce
Tra
nsl
ati
on
into
Engii
slı
of
Conso
lidate
dF
inan
cia
lS
tate
menıs
Ori
gin
ali
yls
sned
inT
ıirk
ish
—S
ee
Note
34)
ER
EĞ
Lİ
DE
MİR
VE
ÇE
LİK
FA
BR
İKA
LA
RI
T.A
.Ş.
AN
DIT
SS
UN
SID
İAR
IES
CO
NS
OL
İDA
TE
DS
TA
TE
ME
NT
OF
CH
AN
GE
SİN
EQ
UIT
YF
OR
TH
EY
EA
RE
ND
ED
31D
EC
EM
BE
R20
14
(Am
ou
nis
are
expr
esse
das
Tur
kısh
Lir
a(T
RY
1hoo
sand
’)un
less
olh
enuse
rndi
calc
d
Ohe
rco
rnpr
ehen
sıve
016c
rco
mpr
chcn
sivc
ınco
me’
expe
osc
nal
10(‘e
nron
iecx
pcns
e10
beR
viaı
ned
Eam
ın,e
iecl
ass<
13ri
s«beq
ıttı
lvıu
rc(a
ssOn
sııb
ç,1e
n:1’
inpr
eflİ
of(0
80pr
ef(I
of(D
OS
Rev
aloa
iıen
F’zc
ırn
Rcs
:nci
d(!
ıfl3l
loı
Shaı
eR
escn
-ne
Cai
hfl
ooC
uac
raR
esen
es£q
uih
Nı-
Tot
alA
d,us
lmcn
iT
reas
uq(s
atın
Tan
gıbl
eA
clua
nal
leso
sII
cdeı
naT
nnsl
aiıo
nA
ssen
edR
rıa,
ncd
Neı
resn
ıFo
rA
IIr(
bula
blc
lece
nıro
lling
Slı
areh
oldr
n’1A
udııc
d(N
scSh
arc
Cap
ı(aI
laC
apıia
lSl
ıare
s-)
Psc
ınıu
mM
eriç
gam
)fe
n),
Res
enes
Res
enes
kem
Icef
liE
anun
gsDe
ePe
riod
hcPa
renl
Inle
resl
sEq
ui(9
1.I
anua
n211
133.
500.
000
156.
613
(116
.232
)10
6.33
723
.255
(66.
109)
(9.3
44)
834.
664
500.
949
2.60
1.27
391
9.97
38.
366.
790
240.
630
8.70
6.82
0N
etpr
ofil
Ot
hcpe
rıns
i-
--
-.
.-
--
-16
0141
51.
601.
415
5937
61.
660.
791
016c
rrn
pın
1ıc
ısu
teın
emec
llo
so)
--
——
896
(589
05<
650
477
)33
8-
-—
729.
833
9.43
874
9.27
1T
ela!
corn
prcl
ıcns
ıve
mce
mc1
loss
)-
--
-89
6(5
890
5116
504
771
338
--
160
14(
513
31.2
1878
8(4
1110
.062
Oı’
ıdcn
dsp
sıd
r(-
--
--
<794
735)
-(7
91.7
35)
1184
0<(8
06.5
75)
Tra
nsfn
rs20
--
--
.-
--
1(63
0680
3568
(9(9
974)
--
-il
Dec
cmbr
r2ol
420
3.50
0.01
)15
6.61
3(1
16.2
32)
106.
447
24.1
51((
25.7
(4)
7.16
01.
616<
892
6(7.
355
2.61
6.10
61.
601.
415
10.0
(6.3
0330
7181
310
.3(0
.307
4 Aııd
ııd
1
1Ja
nuar
v2
ol3
(pon
ions
ivrr
porı
cd)
3.09
0±88
)34
2.19
5(1
03.6
410
(06.
437
26.1
13-
(29.
878)
(315
)33
2.87
62.
888.
254
452.
Or
7.26
4.81
221
1.10
0t4
15.9
12Ef
teci
ofch
w,g
esin
arco
urni
ııepo
licy
-.
..
.<5
5.68
3).
..
5563
3.
—-
1Ja
nu
an20
(3It
es(a
lrd
3.09
0.0<
1)34
2.19
5(1
03.6
00)
1416
.147
16.5
14<5
5.68
3)<1
9.87
83<3
15>
132.
876
2.94
3.93
735
2.01
77.
264.
8(2
2(8
.309
7.41
5.91
2N
e’pı
ofi)f
(hc
perı
ni.
--
.-
.-
..
9(9
974
919.
974
40.4
3496
0.30
8O
ilıe
reo
mp
relı
eno
ıwm
roın
e3lo
ss)
-.
--
(355
9)(1
)12
6<20
534
844.
979
--
850.
828
593
885
6.76
6T
ela)
com
prc
hen
sıve
ıııc
om
(Io
ssi
..
——
(355
9<(I
l12
6120
534
843.
97’1
..
919
974
.770
.802
4637
21.
817.
174
Dıv
ıden
dspaid
o’)
.-
..
..
--
-<5
0382
4)-
(503
.824
)(7
432<
(526
.266
)C
upıl
alı
nacasr
204
)00
00
<(8
5582
3((
2.6
32
)-
-.
.-
-(2
1178
6).
--
Tra
nsf
er,
20-
.-
--
-.
-68
071
3830
4644
520(
7<-
31D
errm
l,er2
013
203.
51)1
1000
156.
613
116.
232)
106.
447
23.2
55(6
6.80
9)93
33)
843.
663
509.
949
260’
.273
919.
973
8.46
6.79
024
0(11
08.
706.
820
(1in
an
nu
al
Genera
lA
ssem
bly
date
d31
Marc
h20
14,
div
idend
dis
trib
uti
on
(gro
ssd
ivid
en
dper
share
:T
RY
0,23
43(2
013:
TR
Y0,
0342
9))
am
ou
nti
ng
toT
RY
820.
000
tho
usa
nd
(29
Mar
eh20
13:
TR
Y12
0.00
0th
ousa
nd)
fro
m20
13n
et
pro
fit
was
ap
pro
ved
.A
sth
eC
om
pany
hold
s3,
08%
of
its
share
sw
ith
anom
inal
valu
eo
fTR
Y1
asof]!
Marc
h20
14,
div
iden
ds
for
Irea
sLır
ysh
are
sare
nett
ed
og
un
der
div
idends
paid
.T
hed
ivid
en
dp
ay
rnen
tw
as
com
ple
ted
at26
May
2014
.
The
acco
mpa
nyin
gn
ote
sfo
rman
inte
gra
lp
ort
of
ıhese
co
nso
lid
ate
dfi
nan
cia
lst
ate
rnents
.)
The acoompanyıng notes form an integral pafl of these consolidated flnancial statements.
(Convetüence TransIaton into English ofConsolidaıed Financial Stateınents Originaliy lsstıed in Tıırkish - See Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CAS[1 FLOWS FOR THE YEAR ENDED 3] DECEMBER 2014
A moums re ex pressed as Turk i alı Lira (FR V Thou ne] unal cas ol Iaerwi ac idi caled
(Aıidiled) (>8ııdilcnl)Cunent I’erio d Curreal ledod (‘jeriii t,, Verin d Cun’cnt Veli,, d
1 1 isnuan 1 .Ianuarr 1 Januan31 Dceeml,rr 2014 31 Ioerrmlıer 21)14 31 I)cee,nlwr 21)13 31 flrcrnılier 20(3
15(8)0 11<VlllXI IS(H8) İRVIMHI
%91 904
199 65315(27
4 632(402:(%873811<)6831O 4853 %839011
698
22233(79
84265
(24 545)(27 145)<11501<
:558%)
1.175.954l°5 77227750(3147)
<402)<%2 919)11% 19))>
1381)2969)
1 965 571
436 62254947
1013<1
1 054)4(27844:
(493%
(8555%191
:1 082517
486)6951
04 271(53 675)59 360)27 374)
<12 22:’>
2.5ü.732453 97560603<7537)
<08<])
18) 327)>39 777)
(30)9)6374)
(>44 963
208 43225 356
(1821Mc)
1 0528 0860381
(07621 44»
477W
5701389
1 756114.791
(36 670)<2(309)(5959)
<18 693j
9)4278<265 1(6)
15336(3897<
(791)%5 708)
(1167%)(1916,(1757>
21<23
(5
217>89
Il
16101:1
262524
252),
33
16(62715
(5
15
(313.74
1248(62
306 18))48272
346)((228)
2 002153815943
201720 345
99847
1 055
33412<8 35669 754)
(40 534)11336)
>35 557)
1.912.633504 437)
29 1727112)
(1>163 1%’)):22 211)
13 <.15)
(3 32)
FASİt FLOWS flU)%l 0I’IJLVIING ,%rIiVIOLSVrofll before ini and n:i:ı.conlrotiog nl(ere1ts%,Iju.,trneıı(s İn reconeile net pnfl( Iiefnrn an to
ict ca.sIi pnıviiled liy 0000ıline neliritles:
Dr reçiaik,a and aıuoflization espe:1se1(‘ii:’ i,n:iı fen eirtf 6.> re 1 crmr.:;: brneC:s‘rov:sıon for senelirey nı cemive pre:n]ıeıi
(Ona ton nakc.f pn:rcrl) .Lt: nal clı:6rrnı£l
Loto on wriie off of pi openy pSid and eqtı]p:nenllııcrcnse in provinio:i for dmebifiıl rceeivablcnDemenin üı hc alk,wnı:ce far invcntorimnInercease ii hc )rnpnirnıent of tangdle anna>1 rercaac> (decreasel in pmn 1)1m for ı:nça.d vaçatilıns1 nercaw h pro; is)oa for çLı:drg mL,z:,s and bn> su(slacrense en pcnalty prov for oh]ieaaaıı eanpl t stıoıaagm of disalaled pmopleIr.ceeaw in pravakan Or seato ri>1:: na ,n:nne ada:Inereane t, prewisnn f],r miii) dcfLn sa Oh nI1 :i)crcst capeıincs(amran: ıacon:e froın inek dcp<isitsIntercal incoiee irna: ovcrdi:a salont:erca(ijcd tiirelo, csrrcaey bm af Unancul Iiahiliaics[ ass)gea) on [ne, icb e ehanges of deraa:jve öe:n::ı as:rtmecsNet easl, linıvided (ir lJıaLTatiıiz ncİıli(ıcn Iieflirr elun5es ii,s,eır6inn capilal(hangen in iiorlemo capilalInteras: inmorne (corn on erihic sales col)meıcd1 aresn<is paidI’cnahv nal for ilie e,::p loymeni shooare of disahlcd peopicCorpi’rılc san paadEmpIoo re cami anInı i:enai:o pan)Sta:e ngl:tn pad for min:an antil eki:rijçecatia pn:d
Seneoraiy inceative prcıniı:::i paidNet enist, pnirided ii> apen,ling acliritie,(Asil FLO%S (‘RUM INVLSFING ACI1l’ITIESCIaanges in (mancini aavcs(mcntn1> nyir.er.:s for ieveo:,n:ni faofcnrCash ismi in ıle pa:ieia.:n e of oranbc asscia(ani: end ni ‘hc fOciI3SC of inlacd(,k asinın
(anI pre> ele! h süs ofaaadbL,wss
Net vadi ensed in inrrnling inci rum,(Asil F1.OWS (‘00M FINANONG AflIVITIESNew t.orritnvrn)ŞRepaymen( of horronvinnsIiar,:ni pail1 n:4rcsı ,me:vd on 1 aek deposu;Din ilcadı pn:dOan alnınIn paid nal nasn-cnsaimolisg onc, cnn
Nel can), ıi.seil in by fln:mcing aetii i(iesNEF(IIANGES İN (ASIl AND(ASIi EQI’IAl.KN1S(ASIl ANİ) (ASIl EQIIVAIL:NıS ATİİIE IIEGINNİM; OFTIİF (‘(:0100Ciirmcncy tr000lanon dellereame nci(%511 ANi) (ASİl EOlI’ALLNTS .%TfllE LNI) OFfllE P114100Acen:cd arnerest ıncorne(A6İl .%Nİ) (kSIt EQIIV.%tLVfl %THIE ENİ) OFTIIE I’EHIOİ)IN(I.l>l)İNG AC(Rİ’EI) INFI:RENT INCOME
Il 017) 2224) 454) (%64)1.289.161% 2.86)1152 638.14(1 1.235.188
<29) 63) 45 856(4) 1 38%) -
]151 012i (33329%] 160 011ı (305807)16 7831 (14 034, (606(1 >11 533<
95/] 1 215 %77 0,5/8157.965) (345.438) 165.951) (315.673)
964 75< 2 237 160 2 724 643 5 %2 $16(1 115 51.4) <2 610071) (3 65% 27) <695% %12)
7067), (172(37) i109641i 200 560)22 030 40 545 37 044 70 465
352<43) 794 735) 267 492< 51% %24)5735)> 1)04])) <>5)5/)> ((7442)
(61)2. 1)15) (1.3111.57%) (1.282.1)12) 2.441)357)529.1%)) 1.213.136 (81)1.723) (1.52)1.842)355 .997 759.804 (3)25.299 .627.698
55 689 208 %33 131 321 452 ‘<48
9411.866 2.181.773 355997 759.8)4
2 171 5037 612 1.317
913.108 2.186.6111 356.6)19 761.111
6
(Convenience Translatioıı into Englisb ofconsolidated Financial Statenıents Originaliy lssued in Turkislı Sea Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUHSIDİARIES
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED3I DECEMBER 2014
(Aınounıs ‘re expressed as iurLisb Lira (1 RY ‘1 hoLısaııd) unless otherwise indicated
NOTE 1 - GROUP’S ORGANIZATİON AND NATURE OF OPERATİONS
Erdemir Grubu (“Group”). is composed of Ereğli Demir ve Çelik Fabrikaları T.A.Ş. (“Erdenıi or “theCompanyfl. and its subsidiaries which it owns the majority of ıheir shares or has a significant influence ontheir ınanagement structure.
The immediate parent and Lıltimate controlling pariy of the Group are Ataer 1 holding A.Ş. and OrduYardımlaşma Kurumu, respectively.
Armed Forces members. provides various services and beneflts within İlie framework of social secıırityconcept anticipated by Turkish Constitution. OYAK has nearly sixty direct and indirecı subsidiaries inindustry, fiııance and service sectors. The detailed information about OYAK can be found oıı its oficialwebsite (www.ovak.conı.tr).
The Company was incorporated in Turkey as a joint slock company in 1960. The principal activities of theCompany ara production of iron and stad rolled products, alloyed and non-alloyed iron, steel and pig ironcastings, cast and pressed products, coke and their by-products.
The Conıpany’s shares hava baca traded in Istanbul Stock Exchange since the es(ablishment of the IstanbulStock Exchange (year 1986).
The maiıı operations of the conıpaııies included in the coıısolidatioıı and the slıare percentage of the Groupfor these companics ara as follows:
Nam e ot t hc Corn p0vIskenderun Demir ve Çelik A.Ş.frdenıir Madencilik San. ve hc. A.Ş.Erdemir Çelik Servis Maketi San. ve Tie. A.Ş.Erenco Erdenıir Miih. Yün. ‘e Dan. lliz...\.Ş.Erdemir Romania S.R.L.
rdeıni r As ia I’aci Fe I’ri vatc Li ini ted
Country ofOperalion Operation‘lurkey Inlegrated Sıeel ProductionTurkev Iron Ore and Pellellurkev Stect Service Centerlurke> Xlanagemcnı and Consuhanevkonıanıa Si licon Stecl I’roducı onSingapore Trading
İn order to carry om business activities in Far East, the Group has established “Erdemir Asia Pacific PrivateLimited (EAPPLf’ with a share capital of USD 250.000 in Singapore in 4 July 2014, which is a 100%subsidiary of Erdemir.
The registered address of the Company 15 Merdivenköy Yolu Cad. No: 2, 34750 Küçükbakkalköy/ISTANBUL.
Ordu Yardımlaşma Kurumu (OYAK/Armed Forces Pension Fund)the Act No. 205 as a private entity under its own law subject toautonomous in flnancial and adrninistrative matters. OYAK. being
was incorporated on 1 March 1961 underTurkislı civil and commercial codes andan “aid and relirement fıınd” For Turkish
2014S hare %
95.0790.00
lüt)100100‘nt)
2013Sharc %
95.0790.00
10610<)1(M)
7
(Convenience Translation into English of Consolidated Financial Statements Originaliy lssued in l’urkish 5cc Note 34)
EREĞLİ DEMİR VE ÇELiK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFORTIIEYEAR ENDED3I DECEMBER2OI4
(A rnouIıs are c pressed as Türki su 1. in (T k YI’ Iıotısand ) unl ess ti herwi se 1 idi cai cd
NOTE t —CROUP’S ORGANIZATION AND NATURE OF OPERATİONS (cont’d)
The number of the personnel empioyed by ilie Groııp as nt 31 December 2014 and 31 December 2013 areas follows:
Ereğli Demir ve Çelik Fab.T.A.Ş.Iskenderun Demir ve Çelik A.Ş.Erdemir Madencilik San. ve Tic. A.Ş.Erdemir Çelik Servis Merkezi San, ve Tie. A.Ş.Erenco Erdemir MIHı. Yön, ve Dan. 1Hz. A.Ş.Erdemir Romania S.R.L.Erdemir Asia Pacil5c 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.Erenco Erdemir MIHı. Yön, ve Dan. Hiz. A.Ş.Erdemir Romania S.R.L.
_______________ _______________ _____________________
NOTE 2- BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCİAL STATEMENTS
2.1 Basis of Presentation
The Companv and alt its subsidiaries in Turkey maintain ıheir legal books of account and prepare Iheirstatutory tinancial staternenis (“Statutory Financial Sıatements”) ili accordance witlı accoıınting principlesissued by the Turkish Commercial Code (“TCC”) and tax legislalioıı.
The Group’s consolidated tinancial stalements and disclosures have been prepared in accordance with thecommuniqııö numbered 11—14,1 “CornmuniquĞ on the Principles of Financial Reporting 111 Capital Markets”(“the Communiqu”) annoıınced by the Capilal Markets Board (“CMB”) (lıereinafter wili be referred to as“the CMB Accounting Standards”) on 13 June 2013 wlıich k pııblished on Offlcial Gazette numbered 28676.
The flııancial staternents are prepared on cost basis. except the derivative tinancial instruments and tangibleasseis used for silicon steel and iron ore carried on fair value.
ln accordance with article 5111 of ilie CMB Reportiııg Siandards, companies shouhd apphy Tıırkish AccountingStandardslTurkish Financial Reporting Siandards and iis interpretations issıled by dıe Public OversightAccounting and Auditing Standards Authority of Turkey (“P0K’).
Paid Hourly Paid Montly 31 December 2014Personnel Personnel Personnet
4.593 1.861 6.4543.795 1.81$ 5.613
137 139 27661 73 134
- 114 114227 51 278
- 3 38.813 4.059 12.872
Paid 1 Iourly Paid Monthy 31 December 2013Personnel Personnel Personnel
4.612 1.824 6,4364.271 1 .255 5.526
123 148 27143 95 13$
- 160 160218 52 270
9.267 3.534 12.801
8
(Convenience Translation into English ofconsolidated Fiııancial Stateıucnts Originally Issued in Turkislı Sec Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCİAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2014
<Anıçıuııts are cxprcsscd as iıırkish lira (1 RY” Thouand) unlcss otlıcrvısc ndicaicd
NOTE 2 - BASIS OF PRESENTATİON OF THE CONSOLIDATED FINANCİAL STATEMENTS(cont’d)
2.1 Basis of Presentation (cont’d)
Functional and Reportintt Cıırrency
TRY is accepted as the functional currency of the Company’s subsidiaries operaing in Turkey andpresenlalion currency of the consolidated linancial stalemenis until 30 June 2013, Due 10 changes in sale andcollection policies of Company and its subsidiaries’ Iskenderun Demir ve Çelik A.Ş. “İsdernir’ and ErdemirÇelik Servis Merkezi San. ve Tic. A.Ş “Ersem”. the functional curreney of İlie Company and its sııbsidiariesİsdemir and Ersem changed frorn TRY to US Dollars in accordance with TAS 21 (“The ElTecıs of ForeignExchange Rales”) starting ftom the beginning of third quarler, which is 1 iuly 2013. Therefore TheCompany’s fıınctional currency 15 US Dollars as of 31 December 2014 and 31 December 2013. TheIünctional currency of the Company’s subsidiaries, Erdemir Madencilik San. Ve Tie. A.Ş. “Ermaden” andErdemir Mühendislik Yönetim ve Danışmanlık Il izmetleri A.Ş “Erenco”, operating in Tılrkey Jiave beenaccepted in TRY, Erdemir Asla Pacific Private Limited ili USD and Erdemir Roınania S.R.L in Euro.
Presentation currency translalion
Presentation currency of the consolidated financial statemenis is TRY. Accordingto IAS 21 (“The Effects ofClıanges in Foreign Exchange Rates”) flnancial slalements, that are prepared in USD Dollars for isdemirErsem and EAPPL. in Eııro for Erdemir Romania, have beeıı translated in TRY as the following method:
a) For the purpose of presenting consohidated financial statements, the assets and Iiabilities aretranslated from USD Dollars iııto TRY using the Central Bank of Turkey’s exclıange rale whiclı isTRY 2.31 89=US 5 1 and TRY 2.8207=EUR 1 on the balance sheet dale (31 December 2013: TRY2.1343= US $ 1. TRY 2.9365=EUR 1).
b) For the year ended 31 December 2014, income stateınents are traııslated from the average TRY2,1868=US $ 1 and TRY 2,9059=EUR 1 rales of 2014 January-December period.
c) Exchangc differences are shown in other comprehensive income as of foreign currency translationreserve.
d) The differences between presentation ofstatutory and Iıistorical figures are recognised as translationdifferences under equity. .4!! caphal. capilal measures and other measures are represneled with theirstatutory figures in the accompanying financial statements.
USD amounts presented in the financial statemenis
The figures in USD amounts presented in the accornpanying consolidated financial statements comprisingthe statements of önancial position as of 31 December 2014 and 31 December 2013, consolidated statementof iııcome and other comprehensive income, and consolidated statement of cash flows for the year ended 31Deceıııber 2014 represent the consolidated financiah statements within the frame of functional curreııcychange ıhat the Companv has nıade. wlıich is effeclive as of July 1, 2013. prepared in accordance wilh theTAS 21- Effects of Changes in Foreign Exchange Rales.
Goin concern
The Group prepared its consolidated financial slatements in accordance with the going concernassumption.
9
(Convenience Translation into English ofconsolidated Financial Statements Originaliy lssued in Turkish — Sec Note 34)
EREĞLi DENÜR VE ÇELİK FABRiKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2014
(A inii Lıllis are ex pressed as Tu rk islı Lira (1 RY ‘T hou sa nd) ini ess oilwrwı se ii dı cated )
NOTE 2 - BASIS OF PRESENTATİON OF THE CONSOLIDATED FINANCİAL STATEMENTS(cont’d)
2.1 Basis of Presentation (cont’d)
Approval oftlıe consolidated financial statements
The consolidated flnancial statements have been approved and atıthorized to be published on 10 February2015 by the Board of Directors. The General Assembiy has the autlıority to revise the financial statemenis.
2.2 Comparative Information and Restatemcnt of Consolidated Financial Statements with PriorPeriods
The Croups consolidated flnancial sta(ements are presented in comparison with the previous period in orderto ahlow for ilie determination of the önancial position and performance trends. The coınparalive informationis reclassifled when necessary in order to be aligned wiih the current period consolidated financialstateiıients.
2.3 Consolidation Principlcs
The consolidated financial statemenis include the accoums of the parent compain. Ereğli Demir ve ÇelikFabrikaları TAŞ.. and its Subsidiaries on the basis set oııt in sections behow. The financial statements of thecornpanies included in the consolidatioıı lıave been prepared as of the date of the coıısolidated financialstatemenıs and are based on dıe statutory records with adjustments and reclassiflcations for the purpose ofpresentation in conformity TAS/TERS promulgated by the POA as set out in the cornmuniqu numbered Il-14.1, and Groııp accounting and disclosure pohicies.
Subsidiaries are the Companies controlled by Erdemir when it k exposed. or has rights, to variable returnsfrom its involvement with the iııvestee and has the abi 1 ity to affect those returııs lhrough its power over dıeinvestee.
Subsidiaries are consohidated from the date on wlıichı the control is traıısferred to the Group and are no longerconsolidated from the date that the control ceases.
The statement of financial position and statements profit or loss of the Subsidiaries are coıısolidated on ahine-by-hine basis and the carrying value of the investment held by Erdemir and its Sııbsidiaries is ehiminatedagainst the related shareholders’ eqııity. lntercompany transactions and balances between Erdemir and itsSubsidiaries are eliminated on consolidation. The cost of, and the dividends arising from, shares hıehd byErdenıir in its Subsidiaries are eliminated fvom shareholders’ equitv and income for the vear. respectivelv.
The ıable below sets out alI Stıbsidiaries inclııded in the scope of consolidation and discloses their direct andindirect ownershıip. which are identical to tlıeir economic interests. as of 31 December 2014 and 31 December2013 (%) and their functional currencies:
31 December 2014 31 December 2013
Functional Ownership Effective Functional Ownerslıip ElTectiveCurrency Interest Sisareholding Curreney Interest Slıarehold ing
İsdemir US Dolhrs 95.07 95.07 L’S Dolbrs 95,07 95,07Ersem US Dollars 100.00 100.00 US Dollars 100,00 100,00Ermaden Turkisb Lira 90,00 90,00 Turkish Lira 90.00 90,00Erenco Turkish Lira 100,00 100.00 Turkish Lira 100,00 100.00Erdemir Romania S.R.L. Euro 100,00 100,00 Euro 100.00 100,00Erdemir Mia Pasiflc US Dollars 100,00 100,00 - - -
10
(Convenience Translation into English ofConsolidated Financial Statements Originally lssued in Turkish Sec Note 31)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUHSIDIARIES
NOTES TO THE CONSOLIDATED FINANCİAL STATEMENTSFOR THE YEAR ENDED3I DECEMBER 2014
(Am ü mas ‘re ex presscd as Yu ıki sh Lira (‘İR Y ‘T ii utısa ud 1 unl ess ol henvi se indi cated
NOTE 2 - BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCİAL STATEMENTS(cont’d)
2.4 Comparative Informalion and Restatement of Consolidated Financial Staternents with PriorPeriods
The Group’s consolidaled financial sialemenıs are presented in accordance with the communiquĞ numbered11—14,1 “ComnıııniquĞ on the Principles of Financial Reporting lıı Capital Markets” (“ilie Communiqu”)announced by the Capital Markets Board (“CMB”). The Group’s consolidated linancial statements areprepared in comparison witlı the previous period in order to allow fbr the determination of the financialposition and performance rends in accordance with a new illustrative flnancial statements and guidance thathas been eflctive from the interim periods ended aRa 30 September 2013.
Reciassifications of income statenıent ne as follows:
(Previously Reported) (Restated) (Difference)1 ianuary - 1 ianuary - 1 Ianuary -
Account 31 December 2013 31 December 2013 31 Dcccmher 2013
Other Operating Incorne 160.927 162.883 1.956
Other Operating Expenses (-) (146.818) (170.177) (23.359)
Financial Expense (-) (416,373) (394.970) 21.403
(t) 0m of (net) TRY 21.403 thousand discoıınt expense that vas reported under “Financial Expenses (-‘. isreciassifled under ‘Financial Incorne” TRY 1.956 (hoıısand as discount income aııd under “FinancialExpenses (-)“ TRY (23.359) thousand as discount expenses in consohidated inconıc statemeni as of 31December 2013.
2.5 Signiflcant Judgments and Estimates of the Group on Application ofAccounting Policics
The Groııp makes estimates and assurnptions prospectivehy wlıile preparing its consolidated financialstaternents. These accoıınting eslirnates are rareiy identical to the actual resıılts. The estiluates and assumptionsıhat may cause signiflcant adjııstments to the carrying values of asseis and Iiabilities in the following reportingperiods are listed below:
2.5.1 Useful lives ofproper(, plant and equipment and intangible assets
The Group calculates depreciation for the fixed assets by taking into account ilıeir production arnounts anduseful lives that are stated in Note 2.8.3 and 2.8.4 (Note 12, Note 13).
2.5.2 Deferred tax
The Groııp recognizes deferred tax on the ternporary timing differences between the carrying arnounts ofassets and liabihities in the ünancial staiernents prepared in accordance with TFRS and statutory financialstaternents which is used in the computation of taxable profit. The related differences are generally due to thetiming difference of the tax base of sorne income and expense items between statutory and TFRS financialstaternents. The Group has deferred tax assets resulting frorn tax loss carrv-forwards and deductibleternporary differences. which could reduce taxable incorne in the future periods. Ali or partial aınounts of therealizable deferred tax assets are estirnated in curreni circurnstances. The main factors which are consideredinclude future earniııgs potential; curnulative losses in recent years; Iıistory of Ioss carry-forwards and othertax assets expiring, the carry-forward period associated with ilie deferred tax assets, future reversais ofexisting taxable ternporary differences that would, if necessary, be irnplernented. and the nature of theincome tlıaı can be used to reahize the deferred tax asset (Note 27).
(Convenience Translation into English ofconsolidated Financial Statements Originaliy Issued in Turkish See Note 34)
EREĞLİ DEMiR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTSFORTIIEYEAR ENDED3I DECEMBER 2014
(AmounLs ar cxprcsscd as link ish t nı (TRY Thoıısınd) iınkss otlıcrwisc ındicaicd
NOTE 2 - BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS(cont’d)
2.5 Significant Judgmcnts and Estimates of (hc Croup on Application of Accounting Pohiçles (cont’d)
2.5.3 Fair values of derivative financial instrnmcnts
The Croup valııes its derivative flnaııciai iııstrurnents by ıısing the foreign exclıaııge and interest rateestimations and based on the valuation estimates of the market vaiues as of the balance sheet dale (Note 5).
2.5.4 Provision for doubtfui rcccivablcs
A hiowance for doubt lui receivables rehlect the future ioss ıhat the Groııp anticipates to incur from the tradereceivables as of the balance siıeet date whiclı is sııbject to coilection risk considering the current economicconditions. Dııring the impairnıent test for the receivables, the debtors are assessed with their prior yearperformances, their credit risk in the cuırrent market, their performance after the balance shıeet dale tıp to theissuiııg dale of the linancial statements; and ahso the renegotiation conditions with these debtors mc considered.The provision for doubtfui receivabies 15 presented iıı Note 7 and Note 8.
2.5.5 Provision for invcntorics
During the assessment of the provision for inventory the foliowing are considered; analyzing the inventoriesphysicaliy and historicallv. considering the enıphoyment and usefuhness of the inventories respeciing to thetechnicah personneh view. Sales prices listed. average discouııt rates giyen for sale and expected cost incurredto seli are ıısed to determine the net reahizable valuıe of the inventories. As a result of mis, the provision forinventories with the net reahizable vahues behow the cosis and the show moving inventories are presented inNote 9.
2.5.6 Provisions for crnphoyce bencfits
Actuariah Assumptions about discount rates. intlation rates. future salary iııcreases and eıııployee turnoverrates are made to calculate Group’s provision for employee beneflts. The detaiis rehated with the deflnedbenchit plans are stated in Note 15.
2.5.7 Provision for lawsuits
Provision for lawsuils is evalılated bv the Group Management based on opinions of Group Legal Counsehand legal consultants. The Group Management deternıines the amount of provisions based on hest estimates.As of bahance slıeet date. provision for lawsııits is stated in Note 16.
2.5.8 Impairmcnts on Asscts
The Group, performs impairment tests for asseis that are subject to depreciation and amortization in case ofbeing not possibhe to prevent recovery of dıe assets at each reporting period. Assets are grouped al the iowestIevels which thıcre are separateiy identiliahle cash flows for evaluation of impairment (cash generatingunits). Asa resuht of the impairment works performs by the Group managemcnt. as of the reporting date anyiınpairment except calctıhated provision on non-flnanciah assets has not been estirnated.
2.6 Offsetting
Financial assets and Iiabilities are offsel and the net amounts are reporled with their net values in thıe bahancesheet where either there is a legaliy enforceable right to offset 11w recognized amounts or there is an intentionto senle on a net basis, or realize the asset and setthe the Iiabihity sirnııltaneoushy.
12
(Convenience Translatioıı into English ofConsolidated Finaııcial Statements Originaliy lssued in Turkish See Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO Tl lE CONSOLIDATED FINANCIAL STATEMENTSFOR TIIE YEAR ENDED 31 DECEMBER 2014
(Aıuounts are exprcsscd as TurL ish lira 1 RY’ ‘flıousand) unlcss otlıcrwise indicaled
NOTE 2 - BASIS OF PRESENTATİON OF THE CONSOLIDATED FINANCİAL STATEMENTS(cont’d)
2.7 Adoption of New and Revised Financial Rcporting Standards
The accounling policies adopted in preparation of the consolidated financial statemeııts as nt 31 Decenıber2014 are consistcnt with those of ilie previoııs linancial year, excepl for the adoption of new and arnendedTFRS and TERIC interpreiations effective as of 1 ianuary 2014. The effecls of Ihese standards andinterpreıations on the Group’s flnancial position and performance have been disclosed in 11w relaledparagraphs.
The new standards. amendmenls and interpretations which are effective as al I Jaııuary 2014 are as follows:
• TAS 32 Financial Instrtımenls; Presentalion — Ofketting Financial Assels and Financial Iiabililies(Amended)
The aniendrnents clarify the meaning of turrenily has a leaally enforceable right 10 set-oli” andalso clarify the application of the TAS 32 offselting criteria to settlement systems (suchı as centralclearing honse svsteıns) whichı apply gross seitlemem nıechanisms that are not sirnııltaneous. Theseamendments did not Iıave an impaci on the consolidated financial statemenls of the the Group.
• TERS Inlerpretalion 21 Levies
The iıılerpretalion clari(ies Ihat an entity recognizes a Iiability for ü levy when the activily Ihatlriggers pa’ment. as identifled by the relevanl legislation. occurs. it also clarifles Ihat a levy liabilityis accrtıed progressivciy only if the activily thal triggers payment occurs over a period of time, inaccordance with the relevaat legislation. For a levy thal 15 triggered ııpon reaching a nıinimu nılhreshold. the inıerpretation clarifles Ihat no liability should be recognized before the specifledmini munı threslıold is reaclıed. The interpretation is not applicable for ilie Group and did not haveany impact on the financiah posilion or performance of the Group.
• TAS 36 Impairment of Assels (Amended) - Recoverable Amount Disclosures for Non-Financialasseis
As a consequential ameııdment lo TFRS 13 Fair Value Measurement. some of the disclosurerequirements in TAS 36 Impairment of Assets regarding measurernent of the recoverable amount ofimpaired assets has been ınodifled. The amendments required additional dischosures about theıneasurement of impaired assets (or a group ofassels) with a recoverable amount based on fair valueless cosis of disposal. These amendments did not have an impaci on the consolidated financialstaıemerns of the Group.
• TAS 39 Financial Instruments: Recognition and Measuremenl (Amended) - Novation of Derivativesand Continuation of 1 Iedge Accounting
Amendments provides ü narrow exception lo the requirement for the discontinuation of hedgeaccounting in circumstances whıen a hedging instrumenl is required to be notated to a centralcoıınterparly as a result of laws or reguhatioııs. These amendrnenls did not have an iınpacl on theconsolidaled financial stalernents of the Group.
• TERS 10 Consohidated Financial Slatements (Amendment)
TERS 10 is amended to provide an exception to the consolidalion requirement for entities thıat ıneetthe definition of an iııvestınent enlity. The exception lo consolidation reqııires investrnent eııtilies toaccount for sııbsidiaries at fair valııe thırough profit or loss in accordance wilh TFRS. Thisamendment does not have any impact on the flnancial position or performance of the the Groııp.
‘3
(Convenience Translation into English ofConsolidated Financial Statenients Origiııaliy lssued in Turkish — Sec Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCİAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2014
tArnounts are expresscd as Turkish Lira tl RY 1 hoLısand) unless othcrwisc iııdicatcd
NOTE 2 - BASIS OF PRESENTATİON OF THE CONSOLIDATED FINANCIAL STATEMENTS(cont’d)
2.7 Adoption of New and Revised Financial Reporting Standards (cont’d)
Standards issued but not yet effective and not cariy adopted
Srnndards, interpretations and amendrnenrs to existing standards (fiat are issued bul not yet efFctive tıp to thedale of issuance of the consolidated finaııcial staternents are as follows. The Group wilI make the necessarychanges if not indicated otherwise. which wilI be affeciing the consolidoted linancial staternents anddisclosures. when ilie new standards and interpretalioııs become effective.
TERS 9 Financial Instrurnents — Classiflcation and rneasurement
As arnended in December 2012, the new standard is effective for annual periods beginning on oratier 1 Januan 2015. Phase 1 of Iliis new TERS introduces ıiew requirements for classifying andmeasuring finaıicial inslrurnents. The arnendrnenls made to TERS 9 will mainly affect theclassiflcation and measıırement of flnancial assets and measuremeıit of fair value option (FVO)Iiabilities and requires Ihat the change in fair valııe of a FVO Enancial hiability attribtıtable to creditrisk is presented ıınder other comprehensive income. The Cornpany / the Group will qtıantifv ilieeffect in conjunction wilh the other phases. when the imal standard including ali phases is adoptedby POA.
TAS 19 Defined Beneflt Hans: Ernployee Contributions (Arneııdnien()
TAS 19 requires an entity to consider contributions froın ernployees or hurd parties when accountingfor delined beneflt plans. The amendrnents clari fy dut. i f the amount of the contributions isindependent of the number of years of service. an entity is permitted 10 recognize such contributionsasa reduction in dıe service cost in the period in wliiclı the service is rendered. instead of allocatingthe contributions 10 the periods of service. These aıııendınents are (o be retrospectively applied forannual periods beginning on or after 1 July 2014. The amendments wilI not have an impact on theflııancial position or performance of the Group.
• TERS Il Acquisition of an Interest in a Joint Operation (Arnendrnent)
TERS il is anıended to provide guidance on the accounting for acquisitions of interess in jointoperations in which ilie activily constitutes a business. This arnendrnent requires the acquirer of aninterest in a joint operalion in which the activity constitutes a bıısiness. as deflned in TERS 3Business Combinations, to apply ali of the principles on business combinations accounting in TERS3 and other TFRSs except for those principles tlıat conflict wilh the guidance in Iliis TFRS. lnaddition, the acquirer shall disclose the information required by TFRS 3 and other TFRSs forbusiness combinations. These amendrnents are to be applied prospectively for annual periodsbeginning on or afler 1 ianııary 2016. Earlier applicalion is perniitted. The arnendrnents will nothave an irnpact on ilie financial position or performance of the Group.
14
(Convenience Translalion into English ofConsolidated Financial Slatements Originaliy Issued in Turkish — 5cc Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO ThE CONSOLIDATED FINANCİAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2014
tA ınoLj ni t re es pressed as 1’ ti rk sit 1 ila (‘T k Y ‘T isotisa tl >11111 C55 Ol her ise indi cal L’d
NOTE 2 - BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCİAL STATEMENTS(eont’d)
2.7 Adoption of New and Revised Financial Reporting Stsındards (cont’d)
Standards issued but not yet cffectivc and not cariy adopted (cont’d)
• TAS 16 and TAS 38 - Clariflcation of Acceplable Methods of Depreciation and Amortization(Arnendrnents 10 TAS 16 and TAS 38)
The amendmenıs to TAS 16 aııd TAS 38. have prohibited the tıse of revenue-based depreciation forproperty. plant and equipment and signiflcantlv limiting the use of revenuc-based amortization foriniangible assets. The anıendments are effective prospectiveby for annual periods beginning on orafler 1 ianııarv 2016. Earlier apphication is permitted. The amendrnenls viI 1 not have an impact onthe linancial pos ition or performance of the Groııp.
• TAS 16 Property, Plant and Equipment and TAS 41 Agriculture (Amendment) — Bearer Planis
TAS 16 is amended to provide guidance tlıat bearer phants, such as grape vines, rubber trees and oHpalrns shıould be accounted for iıı the same vay as property, pinot and equipment in TAS 16. Once abearer planı k mature. apart from bearing produce. its biological transformation is no longersigniflcant in generating future economic beneflls. The only signiflcant future economic beneflts itgenerates come from the agricultural produce lui it creates. Because iheir operation is similar to thatof manufacturing. either the cost model or revalııation model should be applied. The prodııcegrowing on bearer planis wilI remain witlıin the scope of TAS 41. measured at fair value less coststo seli. Entities are required to appty the ametıdments for annual periods beginning on or afer tianuary 2016. Earhier apphication is permitted. The amendmeni is not apphicable for the Group andwiil not have an impact on the financial position or performance of the Group.
Annual Improvcmcnts to TAS/TFRSs
In Seplember 2014, Public Oversight Authority (POA) has issued the below amendments to the standards inrelation ta “Annual lrnproveınents - 2010—2012 Cycle” and “Annuah improveııents - 2011—2013 Cyche. Thechanges are effective for annual reportiııg periods beginning on or aRer 1 July 2011.
Ayınıjul Improreıııeıus — 2010—2012 C;ck
• TFRS 2 Share-based Payment:
Definitions relating to vesting conditions have changed and performance condition and servicecondition are defined in order to clarify various issues. The amendment k eftecılve prospeetively,
• TERS 3 Business Combinations
Contingent consideration in a btısiness acquisition that is not classifled as equity is subsequentlymeasured at fair value through prolit or Ioss whether or not it falis within the scope of TFRS 9Financial lnstruments. The amendnıent is effective for business combinations prospectively.
• TERS 8 Operating Segments
The changes are as foliows: i) Operating segments may be combined/agregaied if ihey areconsistent with the core principle of the standard. ii) The reconcihiation of segment assets to totalassets is oniy required to be disclosed if the reconciliation is reported to the chiefoperating decisionmaker. The amendments are effective retrospectively.
15
(Conveniencc Translation ato English ofconsolidatcd Financial Statements Originaliy lssued in Turkish Sec Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO Tl lE CONSOLIDATED EINANCIAL STATEMENTSFOR Tl lE YEAR ENDED 31 DECEMBER 2014
tA “lou ıı s am cx prussud as T ur ki su L i ü (ER T mri sami) jnlcss ol hcrwi su n d cald
NOTE 2 - BASIS OF PRESENTATİON OF THE CONSOLIDATED FINANCİAL STATEMENTS(cont’d)
2.7 Adoption of New and Revised Financial Reporting Standards (cont’d)
Standards issued but not yet effectivc and not carly adopled (cont’d)
Annual Improvcments to TASrFFRSs (cont’d)
• TAS 16 Property. Plant and Equipment and TAS 38 lnlaııgible Assets
The amendmern to TAS 16.35(a) and TAS 38.806) ciarifles that revaluation can be performed. asfollows: 1) Adjust the gross carrying amount of the asset 10 market va)ue or ii) determine the marketvalue of the carrying amoıınt and adjust the gross carrying arnount proporlionateiv so thal theresiulting carrying arnount equals the market valtic. The amendrnent is effective reirospeciiveiy.
• TAS 24 Related Party Disclosures
The amendment ciarifles Ihat a management entity — an entity (hat provides key managementpersonııel services — is a related party snbject to the related party disclosures. The amendmcnt 15effective retrospectively.
Aıınual Improı’emeııts — 2011—2013 (‘pek’
• TERS 3 Business Combinations
The amendrnent clarifles thal: 1) Joint arrangements are outside ilie scope of TERS 3, not just jointventures ii) The scope exception applies oııly to the accounting in the önancial staremenis of thejoint arrangement itself The amendment is effective prospectively.
• Amendment to the Basis for Conclusions on TERS 13 Fair Value Measurernent
The porlfohio exception in TERS 13 caıı be applied to financial assets. flnancial hiabilities and othercontracts. The amendment k effective prospectively.
• TAS 10 lnvestment Propertv
The amendrnent ciarifles the interrelationship of TFRS 3 and TAS 10 when classifying propertv asinvestment property or owner-occupied property. The amendment 15 effective prospeciivcly.
The Group do not expect that these arnendments wihI have signiflcarn impact on the flnancial position orperformance of the the Group.
The new standards. amendrnents and interpretations that are issııed bv the international AccounılngStaııdards Board (IASB) but not issııed bv Public Oversicht Aııthoritv (P04):
The fohlowing standards. interpretations and amendments to existing IFRS standards are issued by the IASBbut not yet effeetive up to the date of issuance of the financial statements. 1 lowever. these srandards.interpretations and amendments to exisling IFRS standards are not yet adapted/issued by the POA. thtıs theydo not constitute part of TFRS. The Group wili make the necessary changes to lis consolidated financialstatements after the new standards and interpretations are issued and become effective under TERS.
16
(Convenience Transation into English of Consolidated Financial Statemenıs Originaliy lssued in Turkish —5cc Note 31)
EREĞLİ DEMiR VE ÇELİK FABRiKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE C0NSOLIDATED FINANCİAL STATEMENTSFORTIİEYEAR ENDED3I DECEMBER2OI4
(AımıLın[s are cxprcsscd as TıırisIı 1 ini housand) uııless oiIıcr’ ıs indıcalcd
NOTE 2 - BASIS OF PRESENTATİON OF THE CONSOLIDATED FINANCİAL STATEMENTS(cont’d)
2.7 Adoption of New and Rcvised Financial Reporting Standards (cont’d)
The new standards. amendments and interpretaflons that are issııed by the international AccountingStandards Board (lASB but not issued by Pııblic Oversiht Authority (P0M (cont’d):
An,ıua! Jmproı’enwııts — 2010—2012 Çıck’
• IFRS 13 Fair Value Measurement
As ciarifled in the l3asis for Conclusions short—term receivables and payables with no stated interestrates can be heid at invoice amounts when the effect of discoıınting k imıııateriah The arnendınent keffective iıııınediatelv.
Aıınnol lınprovements — 2011—2013 Çı’cle
• IFRS 15 Revenne from Contracts with Customers
in May 2014, the IASB issued IFRS 15 Revenue from Contracts with Custorners. The new flve-stepmodel in the standard provides ilie recognition and measuremeni requirernents of revenue. Thestandard applies to revenue from contracts with cııstomers and provides a model for the sale ofsomenon—ünancial assets that are not an output of the entitys ordinary activities (e.g., the sale ofproperty. planı and equipmeııt or intangibles). IFRS 15 is effecıive for reporting pcriods beginningon or after t ianuary 2017. wiih early adoption permiited. Eniities wiil Iransilion tü the new standardfollowing either a fuli retrospeclive approach or a modifled retrospective approach. The modifledretrospeciive approach would allow the standard to be applied beginning wiih the current period,witlı no restatement of the comparative periods, but additional disclosures are required. The Group isin the process of assessing the impact of the standard on financial position or performance of theGroup.
• IFRS 9 Financial lnstruments - Final standard (2014)
in Jııly 2014 the IASB publislıed the flnal version of IFRS 9 Financial lnstrııments. The final versionof IFRS 9 brings together dıe classiflcation and measurement, irnpairment and hedge accountingplıases of the IASB’s project 10 replace IAS 39 Financial lnstruments: Recognition andMeasuremeni, IFRS 9 is built on a logical, single classiflcaiion and ıneasurernent approach forfinancial assets that reflects the bıısiness model in whiclı they are managed and their cash flowcharacterisıics. Built upon this is ü forward-looking expected credit Ioss model that wili result inmore timely recognition of ban losses and is a siııgle nıodel that is applicable to alI financialinstruments subject to impairmeni accounting. İn addition. tERS 9 addresses the so-called owncredit’ issue. whereby hanks and others book gains through proflt or loss as a result of the vaine oftheir own debt falling due to a decrease in credit worthiness when they have elected to measure ihatdebt at fair vaitte. The Standard also includes an irnproved hedge accounting model to better link theeconomics of risk managernent with its accounting treatınent. IFRS 9 is effeetive for annual periodsbeginning on or afıer 1 ianuary 2018. However. the Standard is available for eariy application. Inaddition. the own credit clıanges can be early applied in isolation wiıhout orherwise changing theaccoıınling for financial instrurnents. The Group is in the process of assessing the impact of thestandard on financial position or performanee of the Group.
17
(Coııvenience Translation into English ofConsolidated Financial Statements Originaliy Issued in Turkish Sec Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2014
tA moLınts ‘re ex pressed as Turk si, Lira (T RY’ T hoıısa ııd) [1111 C5S otlıerwise in dicaled
NOTE 2 - BASIS OF PRESENTATİON OF THE CONSOLIDATED FINANCIAL STATEMENTS(cont’d)
2.7 Adoption of New and Revised Financial Reporting Standards (cont’d)
A ımııal Iıııproı’cıııeııts ta JFRSs — 2012—2014 Çı’c!e
Iıı September 2014, IASB issued their annual cycle of improvements to IFRSs, Annııal lrnprovements toIFRSs 2012-2014 Cycle. The docııınent seis oW five amendrnents to four standards, excludiııg (hosestandards that are consequentially arnended. and the related Basis for Conclusions. The standards affectedand the subjects of the arnendments are:
• IFRS 5 Non-cıırrent Assets iield for Sale and Discontinııed Operations — changes ili rnethods ofdisposal
• IFRS 7 Financial Instrurnents: Disclosııres — servicing contrac(s; applicability of the arnendments toIFRS 7 to condensed interim flnancial staternents
• IAS 19 Ernployee Beııeflts — regioııal niarket issue regarding discoıınt rate• IAS 34 Interiın Financial Reporting — disclosııre of information ‘elsewhere ili the interim financial
report’
The arnendrnents are effective for annual periods beginning on or after 1 Janııary 2016, with earlierapplication permitted. The Group k in the process of assessing the impact of the arnendments on financialposition or performance of the Group.
• IFRS 10 and hAS 28: Sale or Contrjbution of Assets between an Investor and its Associate or JointVenture (Arnendnıents)
in September 2014, IASB issued arnendrnents to IFRS 10 and IAS 28, to address the acknowledgedinconsistency between the requirernents in IFRS 10 and IAS 28 in deahing with the Ioss of control ofa subsidiary that is contribııted to an associate or a joint venture, to clarify that an investorrecognizes a fulI gam or loss on the sale or contribution of assets (hat constitute a business, asdefined in IFRS 3, between an investor and its associate or joint venture. The gam or Ioss resultingfrorn the re-rneasurernent nt fair valııe of an investrnent retained in a former subsidiary should berecognized only to the extent of unrelated investors’ interests in that former subsidiary. An entityshahl apply those arnendrnents prospectively to transactions occıırring in annual periods beginning onor after 1 Ianııary 2016. Earlier apphication is permitted. The Group is in the process ofassessing theimpact of the standard on financial position or performance of the Group. or The arnendment is notapplicable for the Group and wiil not have an irnpact on the financial position or performance of theGroup.
• IFRS 10. IFRS 12 and IAS 28: Investrnent Entities: Applying the Consolidation Exception(Amendments to IFRS 10 and IAS 28)
in December 2014, IASB issued arnendrnents to IFRS 10, IFRS 12 and hAS 28, to address the issııesthat have arisen in applying the investrnent entities exception under IFRS 10 Consolidated FinancialStaternents. The amendrnents are applicable for annual periods beginning on or after 1 ianuary 2016.Earlier application is permitted. The arnendrnent is not applicable for the Group and wili not have anirnpact on the financial position or performance of the Group.
18
(Convenience Translation into Engiish ofConsolidated Finaııcial Statemenıs Originally Issued in Turkish — 5cc Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR Tl lE YEAR ENDED3I DECEMBER 2014
M IISOLLIİI 5 flrc QX pressed as Turk sis t. ra (TR YI houss mi) uııless atlı erwi su n d i cat eti 1
NOTE 2 - BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCİAL STATEMENTS
(cont’d)
2.7 Adoption of New and Revised Financial Reporting Standards (cont’d)
IAS 1: Disc]osure Initiative (Arnendmenls 10 IAS 1)
in Decenıber 2014, IASB issued aınendments to IAS 1. Those arnendments inclııde narrow-focus
improvements in the following five areas: Materiality, Disaggregation and subtotals, Notes structure,
Disclosure of accounting policies, Presentation of items of other comprehensive income (OCI) arising from
equity accounted investments. The amendments are applicable for annual periods beginning on or after
1 Janııary 2016. Earlier application is permitıed. Tlıese amendments are not expected hava signiflcant impact
on the notes to the consol idated ima nelal statemeııts of the Group.
2.8 Valuation Principles Appiied / Signiflcant Accounting Polieies
ValLiation principles and accounting policies used in the preparation of dıe consolidated financial statements
are as follows:
2.8.1 Revenuc recognition
Revenue is measured at the fair valııe of the received or receivable amount. The estimated customer returııs,
rebates. and other similar allowances are deducted from this amount.
Sale of ıoods
Revenue from the sale of goods is recounized when alI the foiiowing conditions are satisiled:
• The Group transfers the signiflcant risks and beneflis of the ownership of the goods to Ihe buver;
• The Group retains ııeither a continuing managerial invoivement usualiv associated with ownership
nor effective control over the goods soW;• The amount of revenııe is measured reliably;
• it is probable that the economic beneflıs associated with the transactioıı wili flow to the Group; and
• The costs incıırred or to be incurred due tü the transaction are ıneasured reliabiy.
Dividend and interest revenue
Interest revenue is accrued on ü time basis. by reference ta the principal outstanding and at the effective
interest rate applicable. which is the rate that exactly discounts the estirnated future cash receipts through the
expected life of the financial asset to that asset’s net carrying arnount. Grotıps interest incorne from sales
with maturities is recognized in other operating inconıe.
Dividend revenue frorn investmen!s k recogaized uhen the shareholders rights tü receive payment havabeeıı established.
Rental income
Rental income from invesıment properties 5 recognized ona straight-Iine bask over the term of the relevant
lease.
19
(Convcnience Translation into English ofconsolidated Financial Sıatenıerns Originally Issued in Turkish See Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR Tl lE YEAR ENDED 31 DECEMBER 2011
tA m,,ıJ nt ü re cx pressed üs T ortasI, 1_ ra (t RY’T Iıoııs;ı nd) sınl ess otIıer ise in d ıcaled
NOTE 2- BASIS OF PRESENTATİON OF THE CONSOLIDATED FINANCIAL STATEMENTS(cont’d)
2.8 Valuation Principles Applied / Signifieant Accounting Policies (cont’d)
2.8.2 Inventories
lnventories are valued al the Iower of cost or net realizable value. The costs. including an appropriate poflionof flxed and variable overhead expenses. are assigned to inventories heid by the method most appropriate tothe particular class of invemorv. with the majoritv valııed by using the monthly weighted ıııoving averagemetlıod. Net realizable value is the estirnated selling price in the ordinary course of business. less estirnatedcosis of completion and the estimated costs necessary to make the sale.
2.8.3 Property, plant and equipment
Property, plant and equiprnent pıırchased before 30 June 2013 are disclosed in the Rnancial statements attheir indexed historical cost for infiation effects as al 30 June 2013, on ilie other hand the purchases made in30 June 2013 and in Inter periods are presented at their historical cost, less depreciation and impairment Ioss.Except for Iand and construction in progress. other tangible assets are depreciated according to straight-Iinebasis or tıniis of production method basis using the expected useful lives and production amounls of theassets.
The Groııp’s tangible flxed assets operating in the production of iron ore and high silicon fiat steel are statedin the balance sheet nt their fair value anıoums nt the date of acqııisition. Any increase arising from therevaluation of the existing assets is recorded under the revalııation reserve. in the sharelıolders’ equity. Adecrease in carrying amount arising on the revaluation of assets is charged to the consohidated incomestaiement to the extent thal it exceeds the balance in the revaluation reserve that is related to the previoıısreval uat on.
The carrying values of property, plant and equiprnent are reviewed for iınpairrnent when events or changesin circumstances indicate the carrying valııe may not be recoverable. If any sııch indication cxists and wherethe carrying valııes exceed the estimated recoverable anıount, the assets or cash-generating uııits are writtendown to their recoverable anıounts. The recoverable amount of property. plant and equipmeııt 5 the greaterof ııel sel ling price and valtıe in use.
ln assessing the value in Lise, the estimated future cash Rows are discounted 10 tlıeir present vahııes using apre-tax discount rate ıhat refiects current market assessments of the time value of money and the risksspeciflc to the asset. For an asset timi does not generate Iargely independent cash inflows, the recoverableamount is determined for the cash—generating unu lo which the assel belongs. Impairnment losses arerecognized in the consolidated income statement.
The rates that are used to depreciate the Hxed assets are as fohlows:
RatesBuiidings 2-16%Land irnprovernents 2-33% and units of production levelMachinery and equipment 3-50% and units of production levelVehicles 5-25% and units of production levelFurımiture and flxtııres 5-33%Othmer tangible flxed assets 5-25%
20
(Convenience Translation irna English of Consolidaled Financial Staternenıs Originaliy issued in Turkish — 5cc Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO Tl lE CONSOLIDATED FINANCIAL STATEMENTSFOR TElE YEAR ENDED 31 DECEMBER 2014
(Am nunts are exprcsscd as Tu iLi su ra t TRY Ttuius;ı id ) ii Icss ol lıcrui s indi cal cd
NOTE 2 - BASIS OF PRESENTATİON OF THE CONSOLIDATED FINANCİAL STATEMENTS(cont’d)
2.8 Valuation Principles Applicd / Significant Accounting Policies (cont’d)
2.8.4 Intangible asscts
Intangible assets purchased before 30 iııne 2013 are recognized al their acquisition cos indexed for inflatioııeffecls as al 30 June 2013, on the oher hand the pıırchases made in and after 30 June 2013 are recognized atacqlıishion cost Iess any amortization and iınpairrnern loss. Intangible assets are amortized principally on asıraight-Iine basis over their estimated useful lives and production amourns. The esuiınated useful life andaınonization method are reviewed at the end of each annual reporting period. and any clıanges in theestimate are accounted for ona prospective basis.
The arnortization rates of the intangible assets are stated below:
RatesRights 2-33%
5-10% and ıınits ofExploration costs and other intangible flxed assets with special ııseful lives productionOther intangible flxed assets 20-33%
2.8.5 Invcstmcnt properties
Investrnent properties. which are held to carıı rental income and/or for capital appreciation are measuredinitialiv nt cost any accurnulaled irnpairment losses.
Investment propertics are derecognized when either they havc been disposed of or when the investmenlproperty is permaııently withdrawn from use and no future economic benefit is expccted from its disposal.Any gains or losses on the retirernent or disposal of an investment property are recognized in theconsolidated statement of income in the year of retirement or disposal.
2.8.6 Impairmeat ofasse(s
Assets sııbject to depreciation and amortization are tested for impairment when evenıs or changes incircurnstances indicate the carrying valııe may not be recoverable. An iınpairrnent Ioss is recognized for theamount by which the asset’s carrying amount exceeds its recoverable arnount. The recoverable amount is thegreater of net selling price and value in ııse. Recoverable arnounts are estimated for individuah assets (for thecash-generating unit). Non-önancial assets (hat are impaired are evaluated for reversal of inıpairment amountal each reporting date.
2.8.7 Borrowing cosis
Borrowing costs Hint are directlv attrihulable to the acquisition. construction or producuion of qualifyingassets. one that takes a substantial period of time to get ready for use or sale. are capitahized as part of thecost of that asset in the period in vhich the asset is prepared for its intended use or sahe. Investmem revenuesarising from the temporarv utilization of the unused portion of facility Ioans are netted off from the costseligible for capitalization.
Ali other borrowing cosis are recognized directly in the consolidated incorne staternent of the period inwhich they are incurred.
21
(Convenience Translalion into English ofconsolidated Financial Sıatements Originaliy lssued in Turkish — Sec Note 34)
EREĞLİ DEMiR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARİES
NOTES TO THE CONSOLIDATED FINANCİAL STATEMENTSFORTHEYEAR ENDEDJI DECEMBER2OI4
(Apııoıınls ıw prcssud as lurkıstı 1 ım (JRY’ Ihuıısand) ımless ııtlıcrwisc indıcaled )
NOTE 2 - BASIS OF PRESENTATİON OF THE CONSOLIDATED FINANCİAL STATEMENTS(cont’d)
2.8 Valuation Principles Applicd / Significant Accouuting Polieies (cont’d)
2.8.8 Financial instrurncnts
Financial assets and financial liabilities are recognized iıı the Group’s consolidated balance sheet when theGroup becornes a legal party for the contractual provisions of the financiah instrumem.
Fiııancial assets
Finaııcial assets, are mil ially measured al Ihir value, less transaction cosls except for those financiah assetsclassifled as al fair value through profit or Ioss, which are initially measured at fair valııe. AlI financial assetsare recognized and derecognized on a trade dale where İlie purclıase or sale of a financial asset is ıınder acontract whose terms require delivery of the financial asset within the timefranıe established by the market.
Financial assets are classified into the FoHowing specifled categories: Rnaııcial assets as at fair valuethrough profit or )oss. ‘held—to-maturitv inveslments’. ‘available—for-sa]e financial assets and ioans andreceivables’. The ciassification depends on the natLıre and purpose of the financial assets and is determinedal the time of initial recogniıion.
E/kcıh’e ii;!erest incihad
The effective interest rate method is ü melhod of calculating the arnorlized cosl of a financial asset and ofallocating the interest income over the relevant period. The effective interesı rate is the ratio exactlydiscounts the estimated future cash receipls through the expected Il fe of the linancial asset to the net presenivahııe of the financial asset or in a shorter period wlıere appropriate.
Incornes related to the debt instruments thıat are held to maturity and arc available for sale. and financialassets that are classifled as Ioans and receivables are calculated according to the effective interest rateınethod.
Aıv//ah/c/ör sa/e fhıcuıeial asseis
Sonıe of the shares and long terrn marketable securities hıehd by the Group are ciassifled as available for saleand recognized at their fair values.
The flnancial assets. which are not priced in an active market and the fair value cannot be recognizedaccuralely, are recognized at cost hess accumulated impairments.
Gains and losses arising from changes in fair value are recognized directly in the investments revaluationreserve with the exception of impairınent losses, interest calcıılated using the effective interest method andforeign exchange gaiııs and losses on monetary assets whıichı are recognized directly in the consolidatediııcome statement. Where the investrnent is disposed of or is determined to be impaired, the cumulative gamor loss previoush’ recogaized in the investments revaluation reserve is included in the consohidaled incomestaternent for the period.
Dividends associated with the available For sale eqııity instrııments are recognized in consohidated incomestateınent uhen the Group has the right to receive the related pavments.
(Convenience Translation into [ngiish ofconsoiidaıed Financial Staternents Originaliy lssued in Turkish - Sec Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCİAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2014
(A mou nts are cx pressud as Utırk 1 su i. i ra (1 k YI iıousa nd ) tini uss othcrwi su in dicated
NOTE 2 - BASIS OF PRESENTATİON OF THE CONSOLIDATED FINANCIAL STATEMENTS(cont’d)
2.8 Valuation Principles Applied / Signiticant Accounting Policies (cont’d)
2.8.8 Finııncial instruments (cont’d)
Receivahles
Trade receivables and other receivables are initialiy recognized at their fair valııe. Sııbsequently. receivablesare measured al amortized cost using the effective interest method.
Inıjudruzcız! offhıaııcial asseis
Financial assets. other tlıan those at fair value through profit or Ioss. are assessed For indicators ofirnpairment at each reporting period. Financial assets are impaired wlıere there is objective evidence that. asa result of oiw er more events that occurred after the initial recognition of the financial asset. the estirnatedfuture cash llows of the invcstnıenl have been irnpacled.
For receivables, the amount of the irnpairment is the di fference between the asset’s carrying amount and thepresent value ofestirnated future cash flows, discounted at the original effective interest rate.
The carrying ainount of the flnancial asset is reduced by the impairmeni loss directiy for ali financial assetswith the exception of trade teceivables where the carrviııg amount k reduced through the use of anallowance account. When ü trade receivable is uncollectible. it is writren off against the ailowance account.Subsequent recoveries of arnoııms previously written off are credited against the allowance account.Changes in the carrying anıouııt of the aliowance account are recognized in the consolidated incornestatement.
With the exceplion of available for sale equity instruments, if, in a subsequent period, the arnount of theirnpairrnent Ioss decreases and the decrease can be related objectiveiy to an event occurring after theirnpairinent was recognized, the previonsly recognized impairrnent Ioss is reversed throııgh profit or Ioss tothe extent that ilie carrying anıount of the investment al the date the iınpairment k reversed does not exceedwhat the aınortized cost would iıave been had the irnpairrnent not been recognized.
in respect of available for saie equity securities. anv increase in fair valLie subsequenl 10 an irnpairment Iossk recognized directly in the consolidated staternent ofcornprehensive incorne.
(‘<ıslı mıci ccvIı eguivak’ııts
Cash and cash equivaients cornprise cash on hand and dernand deposits and other short—terrn highly liqııidinvestrnents which their rnaturities are three-rnonths or less frorn dale of acquisition and that are readiiyconvertible to a known amount of cash and are subject le an insigniflcant risk of changes in value. Thecarrying arnount ofthese assets approxirnates tlıeir fair vaiııe.
23
(Convenience Translation into English ofConsotidaıed Financial Statcments Originaliy lssued in Turkish Sec Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND JTS SUBSIDIARIES
NOTES TO Tl lE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2014
(AınoLın:s ‘re exprasscd as lurk su Lira (TRYT I;uusand) uıılcss oıhcr”ıse indıcaıcd
NOTE 2 - BASIS OF PRESENTATİON OF THE CONSOLIDATED FINANCİAL STATEMENTS(cont’d)
2.8 Valuation Principles Applicd / Significıınt Accounting Polieics (cont’d)
2.8.8 Financial instrurncnts (cont’d)
Financial liabilities
Financial liabililies and equitv instrurnents issued by the Group are elassifled according tü the subslance ofthe contractual arrangemcms entered irno and the deflnitions ofa financial Iiability and an eqtıitv instrument.An eqııity instrument k any contract ihat evidences a residual interest in the assets of the Group afterdeducting alI of its liabilities. The accoıınting policies adopted for specilic financial liabilities and equityiııstruınents are set 0111 below.
Financial Iiabilities are ciassifled as eitlıer flnancial Iiabilities ‘at fair value through proflt or Ioss’ or otherflnancial Iiabilities.
Oılwrfinaıwial liabihıles
Other flnancial liabi 1 ities are initial Iy accounted at fair value, net of transaction costs.
Sııbsequently other financial Iiabilities are accounted at arnortized cost using the effective interest method,wiih interest expeııse ıecognized on an effective interest rate basis.
The effective interest method is a method of calculating the arnortized cost of a financial liabiliiv and ofallocating the interest expense to ilie relevanı period. The effective interest rate 15 the rate tlıat exactlydiscoums the estimated future cash pavmcnts through the expected 1 ife of the flnanc iah liabil it’. or. whereappropriate. a shorter period 10 ilie net carrving arnoıınt.
Derivative financial instruments and hedıze accoııntin2
Derivatives are initialiy recognized al cost ofacquisition and are subsequently accounted to their fair value atthe end of each reporting period. The method of recognizing the result of gam or Joss is dependent on thenature of the item being hedged.
On the dale a derivative contract 15 entered into, the Group designates certain derivatives as either a hedge ofthe fair value of a recognized asset or liability (fair valııe hedge) or a hedge frorn changes that coııld affectthe statemenı ofincorne dııe to a specific risk in cash llow ofa forecasted transaction (caslı Ilow hedge). Fairvalııe of the Group’s interest swap contracts k determined by valuation methods depending on analyzablemarket data.
Changes in the fair value of the derivatives that are designated and qualifled as cash flow hedges and that arehighhy effective. are recognized in equity as hedging reserve. Where the forecasted transaction or fIrıncommitrnent resıılts in the recognition of an asset or a hiability. the gains and losses previously booked underequity are transferred from equity and iııcluded in the initial nıeasureınent of the cost of acquisition of theasset or Iiability. Otherwise. amounts booked ıınder equity are transferred to the consolidated statement ofincome and classifled as revenııe or expense in the period in which the hedged 11cm affects the stateınent ofincome.
24
(Convenience Translation into English oFConsolidatcd Financial Statements Originaliy Issued in Turkish — See Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED3I DECEMBER 2014
(AmoLınts am cxprcsscd as lurkistı Lira (TRY IIıousand) unicıs ottıcrwısL iııdicaıcd
NOTE 2 - BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCİAL STATEMENTS
(cont’d)
2.8 Valuation Principles Applied / Significant Accounting Policies (cont’d)
2.8.8 Fintıncial instruments (cont’d)
Derivative financial instruments and hedee accountinp (cont’d)
When the lıedging instrurnent expires, is sold, or when a hedge no longer rneets the criteria for hedge than
hedge accounting is terminated. Any curnıılative gam or Ioss exisling in equity at hint time rernains ili equity
and is recognized when the committed or forecasted transaction ııltiınately is recognized in the statemeııt of
income. However, IF the hedged Iraıısaction is not realized, the cıırnulative gala or Ioss that was reported inequity is irnrnediately transferred lo the profli or Ioss of the current period.
The Gronp evaluales the derivative flııanciai instrurnents held for fair value hedge purpose with iheir fair
values and associates thern with profit or loss.
2.8.9 The effects of foreign cxclıangc nde changes
Foreign currency transactions are recorded al the rates of exchange prevailing on the dates of thetransactions. Assets and liabilities denorninated in foreign cıırrencies are converted at the exchange rates
prevailing on the halance slıeet date.
The Group records Foreign currency (currencies other than the funetional currency of the related company)
transactions ıısiııg exchange rates of the date the transaction is cornpleted. Foreign currency monetary iterns
are evaluated with exchange rates as of reporting date and arising foreign exclıaııge incorneİexpeııses are
recorded in consolidated staternent of incorne. Ali nıonetary assets and Iiabilihies are evaluated withexchange rates of the reporting date and related foreign currency transiation differences are transferred to
consohidated staternent of incorne. Non-rnonetary foreign cıırrency iterns that are recognized at cost are
evaluated with historic exchange rates. Non-rnonetary Foreign currency iterns that are recognized al fair
vaine are evaluaıed witlı exchange rates of the dates Iheir Fair vaiues are deterrnined.
2.8.7<) Earnings pershare
Earnings per slıare. disciosed in the consolidated incorne staternent. are deterrniııed by dividing the net
income atiributable to eqııity hoiders of the parent by the weighted average number of shares outstaııding
during the period concerned.
in Turkey. cornpanies can increase iheir share capilal by distributing “bonus shares” to shareholders frorn
retained earnings. in computing earnings per share, such “bonus share” disıributions are assessed as issued
shares. Accordingly. the weighted-average nıırnber of shares are computed by taking into consideration of
the retrospective effects of the share distribııtions.
2.8.11 Subsequcnt evcnts
Subseqııent events mnclude ali events that lake place between the balance sheet dale and the date of
aııthorization for the release of the balance sheet. aithough the events occurred after the annoııncernents
rehated to the net profitİioss or even after the pubhic disclosure of other seiective flnanciai information.
in the case that events occur requiring an adjustrnent. the Group adjıısts the arnounts recognized in its
consolidated flııancial staterneııts to reflect the adjustments after the balance sheet dale.
25
(Convenience Translation into EnIish ofConsolidated Finaııcial Staternents Originaliy lssued in Turkish - Sec Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO Tl lE CONSOLIDATED FINANCIAL STATEMENTSFOR Tl lE YEAR ENDED 31 DECEMBER 2014
tA mounıs arc Qxprcssd as Turk sh in tFRYT hoıs:inj) unIQss i>liicr ısc ındiLakd
NOTE 2 - BASIS OF PRESENTATİON OF THE CONSOLIDATED FINANCİAL STATEMENTS(cont’d)
2.8 Valuation Prineiples Applied / Significaııt Accounling Policies (cont’d)
2.8.12 Provisions, contingent liabilities and contingent asseis
Provisions are recognized when ilie Group has a present obligation as ü resuli of a past event. where it isprobable that the Groııp wiil be required to selde (hat obligation and when a reliable estirnate can be made ofthe amount of ilie obligation. Contingent liabilities are assessed continuously to deterınine the probability ofoııtflow of the economicaliv beneflcial assets. For comingeııt liabilities. when an outflow of resourcesenıbodying econornic beneflts are probable, provision is recogııized for ihis contiııgent liability iıı the periodwhen the probabilitv has changed, except for the cases where ü reliable eslimale cannot be ınade.
When Ihe Groups contingent liabiliiies’ availability k possible but ilie amouni of resources containing theeconornic beneflis cannot be measured reliabiy. Ihen the Group discloses this faci in ilie notes.
2.8.13 Related parties
A related party is a person or entity ihat is related to reporting entity, the entiiy thai is preparing its Rnancialst a t e in e ii ts.
(a) A person or a close ıneınber of ihat persons faınily is related to a reporiing entiiy ifthai person:
(i) has control or joint conirol over the reportiııg entity;(ii) has signi flcant influence over the reporting entity; or(ili) is a nıember of the key ınanageınent personnel of ilie reporting eniity or ofa pareni of ilie repordng
entity.(b) An entiiy is related to a reporting eniity ifaııy of the following coııdiiions applies:
(1) The entiv and dıe reporting entitv are rneıubers of the same group (wlıicht means tha( each pareni,subsidiary and fellow subsidiary is related to the others).
(ii) One entity k an associate or joint venture of the other entity (or an associate or joint veııture of ü
nıernber of a group of which the other entity is a member).(ili) Roth entities are joint ventures of the same third party.(iv) One ernity is ajoint venture ofa ihird entity and the other entity is an associate of the third entity.(v) The entity is a post-enıployrnent benefit plan for the beneflt of employees of eitlıer the reporting
entiiy or an entity related io the reporiing entiiy. If the reporting entiiy is itseif such a plan. thesponsoring eınployers are also related to the reporting entity.
(vi) Tim entity is controlled orjointly controlled by a person identifled in (ü).
(vii) A person identifled in (a)(i) has signiflcaııt inflııence over the entitv or is ü member of the keymanagement personnel of the entity (or ofa parent of ilie emitv).
A related parıy transaction k ü transfer of resources. services or obhigations between a reporting entity and arelaled party. regardless of whether a price is charged.
26
(Conveniencc Transla(ion into Fnglisla ofconsolidated Financial Statements Originally Issued in Turkish — Sec Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCİAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2014
(Amounts are cxpresscd as Turkislı Lira (1 ItY 1 Imıısaııd) ıınluss otIscrvısc ıısdiraıcd
NOTE 2- BASIS OF PRESENTATİON OF THE CONSOLIDATED FINANCİAL STATEMENTS(cont’d)
2.8 Vaiuation Principles Appiied / Significant Accounting Policies (cont’d)
2.8.14 Taxation and deferred income taxcs
Turkish ta> legislation does not permit a parem company and its subsidiary to file a consoiidated tax return.
Therefore. provisions for taxes. as refleced in the consolidated flnancial staternents. have bcen calculated ona separate-entity basis.
Incorne tax expense represenıs the sum of the current tax and deferred tax.
Current tax
The tax currently payable is based on taxabie profit for the year. Taxabie profit differs from profit as
reported in the consolidated incorne statement because it excludes items of incorne or expense ıhat are
laxabie or deductible in future and it furtlıer excitıdes items timi are never taxable or deductible. The Group’sIiabiiity for ctırrent tax is calculated usiııg tax rates that have been enacted or stıbstantiveiv enacted 1w Uıe
balance sheet date.
Defrred tax
Deferred tax is determined bv caiculating the temporarv differences between the carrving arnounts of
assets/Iiabilities in the financial staternens and the corresponding tax bases, used in the cornpııtation of the
taxabie profit, usiııg currentiy enacted tax rates. Deferred tax liabilities are geııerally recognized for ali
taxabie temporary differences where deferred tax assets resulling frorn deductible temporary differences are
recognized tü the extent that it is probable tlıat future taxabie profit wiihi be availabie against wiıiclı the
deductibie temporary difference can be ııtiiized. Such assets and iiabihities are not recognized if the
temporary difference arises frorn goodwill or frorn the initial recognition (other than in a business
combination) of other assets and iiabilities in a transaction that affects neither the taxable profli nor the
accounting profli.
Deferred tax Iiabilities are recognized for (axable ternporary differences associated with investrnents in
subsidiaries and associates. and interests in joint ventures. except wlıere the Group is able to control the
reversai of the ternporarv difference and it is probable (hat the ternporarv differeııce wiil not reverse in ilieforeseeable future. Deferred tax assets arising from dedııctible temporary differences associated with suchinvestrnents and interests are onk’ recognized if it is probable that there wili be suflicient taxable proflts
against which to utilize the beneflts of the ternporary differences and they are expected to reverse in the
foreseeabie future.
The carrying amount of deferred tax assets is reviewed at each baiance slıeet date and redtıced tü the extent
that it is no longer probable that sufhicient taxable profits wili be availabie to allow ali or part of the asset tü
be recovered.
Deferred tax assets and liabilities are measured at the tax rates ihat are expected to appiy in the period in
whiclı the iiabihty is settled or the asset reaiized, based on tax rates (and tax iaws) thal have been enacted or
substantively enacted by the balance sheet date. The rneastırernent of deferred tax habiiities and assets
reflects the Iax conseqııences that wotıld foliow frorn Ihe manner in which the Group expects, at the
reporting date. tü recover or senle the carring arnount of its assets and Iiabihities.
27
(Convenience Translation into Eııglislı afConsolidated Financial Statemenis Originally Issued in Turkish See Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO TIIE CONSOLIDATED FINANCİAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2014
(A moLmts 1w cxprcsscd as Türki sis 1. nı (T K Y “T ismi sa ısd ) uni css ol ii crwi 5C indi caled
NOTE 2- BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCİAL STATEMENTS(cont’d)
2.8 Valuation Principles Applied / Significan( Aecounting Polieies (cont’d)
2.8.14 Taxation and deferred income taxcs (cont’d)
Deferred tax (coni’d)
Deferred iax assets and liabilities are offset when tlıere is ü legally enforceable right ta set off current taxassets against current iax Iiabilities and when they relate to income taxes Ievied by the same taxationauthority and the Group intends ta selde its current tax assets and liabi 1 ities on a net bask.
Current and deferred tax for the period
Current and deferred iax are recognized as an expense or incorne in the consolidated incorne staternent,except when they relate ta the iterns credited or debited directly to the equity (in tlıis case the deferred taxrelated to these tenis is also recagnized directly in the eqııity), or where they arise frorn the initialaccoııııting ara business combination. in the case of a bıısiness combination, ilie tax effect 15 taken ulaaccoıınt in caicıılating goodwill or determining the excess af the acquirer’s interest in the net fair value of theacquiree’s identiflable assets, liabilities and contingent Iiabilities over cost.
2.8.15 Employcc bcncfits
According ta the Turkish and Romanian iaw and union agreernents, ernpioyee termination payınents aremade ta ernployees in the case of retiring or involııntarily leaving. Such payrnents are considered asa part ofdefined retirernent benefit plan in accardance with IAS 19 (revised) “Employee Beneflts” (“IAS 19”).
The termination indemnities accaunted in the balance sheet and seniarity incentive prerniurn in accardancewith the ıınian agreernents in farce represent the present vahııe of the residual obligatian. Actuarial gains andlasses, an the ather hand, are recagnized in the staternent af ather carnprehensive incarne.
The Graup makes certain assurnptians abant discaunt rates, infiatian rates, future salary increases andernplayee turnaver rates in caiculatian af pravisians far emplayee beneflts. The present valııe af ernployeebeneflts is calculated by an independent actuary and same changes are dane in accaunting assurnptians usedin caiculations. The irnpact af the changes in assurnptions 15 recagnized in the staternent af incame. Thedetails related with the defined beneflt plans are stated in Nate 15.
Liabilities due ta unused vacatians ciassifled as pravisions duıe ta ernplayee beneflts are accrued anddiscounted if the discaunt effect is ınaterial.
The Graup carnpanies aperating in Turkey are required ta pay social insurance prerniuırns ta the SocialSecurity Agency. As hang as it pays these insurance premiııms, the Group does nat liave any furtherabligatian. These prerniurns are reflected in the payrail expenses incurred in the periad.
28
(Convenience Translation into English of Consolidated Financial Statenıents Originaliy lssued in Turkislı See Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TC THE CONSOLIDATED FINANCİAL STATEMENTSFCR THE YEAR ENDED 31 DECEMBER 2014
(Amou nts are cx pres sed as Turk su Lira (T RY Tlimısa nd) mil css otlıcrwi se in dicaled
NOTE 2- BASIS OF PRESENTATİON OF THE CONSOLIDATED FINANCİAL STATEMENTS(cont’d)
2.8 Valuation Principles Applicd / Signiflcant Accounting Policies (cont’d)
2.8.16 Govcrnment granis and incentives
Goverıırnent grants and incentives are recognized at fair value when there is assurance tlıat these grants andincentives wilI be received and the Group has met alI conditions reqııired. Government grants and incentivesrelated to costs are recognized as revenue duriııg the periods (hey are rnatched with the cosis tlıey wiil cover.
2.8.17 Statcmcnt of cash flows
Cash flows during ilie period are ciassifled and reported as operating. investing and ünancing activiiies inthe consolidated siaternent of cash flows.
Cash flows arising froın operating activities represent the cash flows (hat are ıısed in or provided by theGroup’s steel products and metal sales activities.
Cash Rows arising from investrnent activities represent the cashı flows tha( are used in or provided by theinvesting activities (direct investments and financiah investments) of the Group.
Cash flows arising frorn financing aciivities represent the cash proceeds frorn the flnancing activities of theGroıup and the repayrnents of these funds.
Cash and cash equivalents cornprises offle cash on hand, the demand deposits and higlıly liquid other shortterm investments whiclı their maturities are three months or Iess froııı the date of acqu isition, are readihyconvertible to cash and are not subject to a signiflcant risk of changes in value.
The translation di fference (hat occurs dııe to translation frorn functionah cıırrency to presentation currency isshown as translation difference on cash flow statemcnt.
2.8.18 Slıarc capital and dividends
Common shares are classifled as equity. Dividends on common shares are recognized in eqııity in the periodwhich (hey are approved and dechared.
2.8.19 Trcasury sharcs
Wlıen share capitah recognized as eqııity 15 repurchased, the amount of the consideration paid which includesdirectly attribııtable costs, is net of any tax effects, and is recognized as a dedııction from equity.
Repurchased slıares are ciassifled as treasury shares and are presented as a deduction frorn total eqııhy.When reasııry shares are sold or reissııed subsequently, the arnount received is recognized as an increase ineqııity. and (hc resulting surplııs or defidil on the transaction is transferred to/from retained earnings.
NOTE 3- SEGMENTAL REPORTING
The operatlons of the Group in Iskenderun and Ereğhi have been defined as geographical segments.However, the segments with similar economic characteristics have been combined into a singhe operatingsegrnent considering the nature of the prodııcts and the production processes. methods to allocate theproducts and the type of customers or to provide services.
29
(Conveniencc Translation into English ofConsolidated Financial Statements Originaliy Issued in Turkish Sec Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO Tl lE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2014
(Aınou nts are ex pressed as T [ırk sh 1,1m (‘T RY ‘T Iıoıısa ııd) LınlesS ol herwi se n d icaı d
NOTE 4- CASH AND CASH EQUIVALENTS
The detail ofcaslı and cash equivaleııts as oF31 December 2014 and 31 December 2013 is as follows:
Caslı
Banks — dcmand deposits
Banks — tiıııe deposits
US Dollars
T RY
EU RORoman an Lel
GB Potınd
Japanese Yen
The breakdown of time deposits is presented below:
US DollarsT RY
EU RORomanian Lel
Croııp’s bank deposits consist ofdeposits with maturity from 1 day to 3 montlıs depeııding oıı immediate
cash needs. Interest is received based on current short-term rates on the market.
31 December 31 Decenıber2014 2013
Time deposit interest accruals (—)Cash and caslı equivalents exclLıding interest accruals
The breakdown oFdemand deposits is presented below:
27 25
52.083 53.594
2.134.700 707.492
2.186.810 761.111
(5.037) (1.307)
2.181.773 759.804
31 December 31 December2014 2013
19.530 15.437
15.511 30.599
10.146 6.571
6.746 978
13 8
13752.083 53.594
31 December 31 December
2014 2013
1.768.703 679.583
357.129 17.734
8.745 10.052
123 1232.134.700 707.492
30
(Con
veni
ence
Tra
nsla
tion
into
Eng
lish
ofC
onso
lidat
edFi
nanc
ial
Stat
emen
tsO
dgin
allv
lssu
edin
Tur
kisl
ı—
See
Not
e34
)
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
l-lE
CO
NS
OL
1DA
TE
DF
INA
NC
İAL
ST
AT
EM
EN
TS
FO
RT
HE
YE
AR
EN
DE
D3
ID
EC
EM
BE
R2O
I4
<A
mou
nıs
arc
cxpr
cssc
das
Tur
kısh
Lir
a(T
R’ı
Tli
ousa
nd)
unlc
sscı
llicr
wis
eın
dıca
ted
NO
TE
5-
FIN
AN
CIA
LD
ER
IVA
TİV
EİN
ST
RU
ME
NT
S
The
dera
ilof
fina
ncia
lde
riva
tive
inst
rum
ents
asof
3!D
ecem
ber
2014
and
31D
ecem
ber
2013
kas
fo!I
ows:
Fair
vah
tehed
gin
gderi
vati
vefi
nancia
lass
eis
Forw
ard
co
ntr
acts
Opti
on
contr
acts
Cro
sscunency
swap
contr
acts
Cas
hflo
ıı’
hed
gin
gder
ival
ive
finan
cial
asse
!s
Fo
rwar
dcon
tracts
for
cash
ilow
hed
ges
of
cuıT
encv
risk
of
sale
s
Cro
sscu
rren
cy
swap
con
trac
tsfo
rca
shfl
ow
hed
ges
of
cuıe
ncy
risk
of
bo
rro
win
gs
Inte
rest
rate
swap
contr
acts
for
cash
flow
hed
ges
of
inte
rest
rate
risk
of
bo
rro
win
gs
Com
rnodit
ysw
apco
ntr
acts
for
casl
ıfl
ow
hed
ges
of
pri
ce
flıı
ctı
ıati
ons
of
raw
mate
rial
purc
hase
s
31D
ecem
ber2
ol4
Ass
etL
iabil
ity
18.7
76
3.95
72.
353
659
49.4
43
12
.37
9
70
.57
21
6.9
95
17.0
28
-
-9
.30
4
4.5
13
2.36
9
199
1.2
67
21.7
40
12
.94
0
92.3
12
29
.93
5
31D
ecem
ber
20
13
Ass
etL
iabil
ity
7.3
88
14
.54
8
21212
7.4
09
14
.76
0
72
.62
2-
-1
2.1
12
72
.62
21
2.1
12
80.0
31
26
.87
2
31
(Convenience Translation into Engiislı ofConsolidatcd Financial Statements Originaliy lssued in Turkish — Sec
Note 31)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SURSIDİARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
(A ıuoLınts are epresscd as Turk 1 su [nı (‘‘İR YI housand) ani ess ııtherwi 5 in dicaıed
NOTE 5— FINANCİAL DERİ VATIVE INSTRUMENTS (cont’d)
Derivative iııstrııments for fair valLıe hedae
As of 31 December 2014 and 31 December 2013, the detalis of forward, oplion and cross cıırrency
swap transactions for fair valııe hedge are as follows:
Assets LiabilitiesNominal Fair Valuc Nominal Fair Valuc
31 December 2014
Valuc
_____________
Valuc
___________
Fonvard contractsBu’ USD/Scll TRY Less ün 3 months 441.870 18.776 - -
Buy TRY/Scll USD Less Ihan 3 months - - 77.876 3.957441,870 18.776 77.876 3.957
Options contractsBuy TRY/SeIl USD Less ün 3 months 11.598 1.108 23.196 214Buy USD/Scll EUR Betwccn 6-12 monihs 11.843 696 23.686 348Buy USD/Sell EUR More Ihan 12 monihs 8.935 549 17.871 97
32.376 2.353 64.753 659
Cross currency suap contractsBuy LSD.’SeII TRY More than 12 rnomhs 50.066 18.630 50.066 9.126
Buy ELR’SeII TRY More Ihan 12 months 117.734 30.813 117.731 3.253167.800 49.413 167.800 12,379
642.046 70.572 310.429 6,995
Assets Liabilities
Nominal Fair Valuc Nominal Fair Valuc3! December 2013
Valuc
______________
Vgluıe
____________
Fonvard contractsBuy ‘I’RY/Sell USD Less than 3 months -
- 4,186 95Buy USD/SeII EUR Less than 3 months -
- 161.768 5.025Buy JPY/SeIl USD Less ilhan 3 months -
- 45.519 4.838Buy USD/SeIt EUR Between 3-6 months 5.884 5 110,564 1.735Buv JPY/SeIl USD Between 3-6 months -
- 14.510 592Bu’ USÜ/SelI EUR flctwcen 6-12 months -
- 162.856 1.914Buy iPY/SeII USD Belween 6-12 months -
- 6.613 171Buy USD!SeII EUR More than 12 months 16.393 35 36.812 178Buy ECRISeII USD Less than 3 months 13.329 237 - -
Buy USD/Sell JPY Less than 3 montlis 52.290 6.516 - -
Buy USD/SelI JPY Betwecn 6-12 months 37 S95 - -
96.413 7.388 42 828 14 S48
Options contractsBuv ‘I’RY/SeII USD Less Ihan 3 monıhs 423fl 21 8.161 212
1.230 21 8.461 212
100.663 7.409 551.289 14.760
32
(Convenience Translation into English ofConsotidated Financial Statements Originaliy lssued in Turkislı Sec
Note 34)
EREĞLi DEMiR VE ÇELİI( FABRİKALARI T.A.Ş. AND ITS SUBSİDIARIES
NOTES TO THE CONSOLIDATED FINANCİAL STATEMENTS
FOR THE YEAR ENDED3I DECEMBER 2014
(Aınouıits are cxpresscd as rıırkislı Lira (“IRY”Ttıousaııdj unlcss oıhcrwisc ındıcaıcd
NOTE 5- HNANCIAL DERİ VATIVE INSTRUMENTS (cout’d)
Derivative instruments for cash Ilow hedtw
Fonıard coıııracts for eashfloı hedges o/czoreıın’ risk of sa/es:
Buy USD — Seli EUR forward contracts measured at fair valuc tiırough oüıer comprehensive income
are designated as lıedging instruments in cash flow hedges of forecast sales in EUR. Tlıese forecast
transactions are Iıighly probable and their maturities vary between ianuary 2014 and April 2016.
The terms and conditions of the forward contracts match the terms and conditions of the expected
highly probable forecast sales in EUR. As a result, no hedge ineffectiveness arises requiring
recogaition through prolit or öss.
in respect of these contracts vIıich has a nominal value of TRY 390.056 thousand For the purpose of
hedging cash flow risk. with related deferred tax effect TRY 17.028 thousand vas inc]uded in other
comprelıensive income (31 December 2013: None).
As of 31 December 2014, there isn’t any realised rechassiflcation to sales from other conıprehensive
income during the year.
(‘ross cıurency and interesl role swap conlnıcis fiw ençi, floaı’ heciges of inlerest role and cioreney
risk ot hono 1 ings.
Group has flxing contracts for future interest and principle payments of floaring interest rate
borrowin£ıs. The fair values of these contracts match the floating rate borrowings and was included in
other comprehensive income, The mawrities of these transactions wili be completed in itıne 2017.
The terms and conditions of tiıose contracts match the terms and conditions of the floating rate
borrowings. As ü resnit. no hedge ineffectiveııess arises requiring recognition tlroııgh profit or loss.
in respect of Ihese contracts which has a nominal valııe of TRY 634.729 thousand, for the purpose of
hedging cash flow risk. wiih related deferred tax effect TRY (7.160) thousand was included in othercomprehensive income (31 December 2013: TRY 60.510 thousand).
(oın,nodiıv suap eo,ılraels for hedges of prke risk ofron’ >naleria/purchases:
The Group pıırchases iron ore oıı an ongoing basis as its operating activities. The increased volatility
in iron ore price over the past 12 months, the Group enter into iron ore forward contract.
Group’s iron ore forward contracts ıneasured at fair vaiue through other comprehensive income matchiron ore price risk associated with future long term sales contracts. These sales are higlıly probableand Ierms and conditions of iron ore forward contracts match sales terms. As a result. no hedgeineffectiveness arises requiring recognition thırough profit or Ioss.
The maturitles of these 60 thousands tons of iron ore contracts which has a nominal value of TRY10.892 thousand. are vary between Ianuary 2015 and ianuary 2016 and fair value with relateddetirred tax effect. TRY (1.068) thousand was included in otlıer comprehensive incoıne.
As of 31 December 2014, there is no recycled portion of hedge reserve to cost of goods sales dııringthe year.
33
(Convcnicnce Translation into Englisls ofconsolidated Financial Sıawmcnts Originally Issued in Turkish — 5ccNote 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
(AnıoLınts are cxpresscd as ‘Iurk isis Lira (‘1 RY “‘1 housand) unless uilıcrwisc indicaıcd
NOTE 6— FINANCIAL LİABILITIES
Breakdown offlııancial liabilities is as follows:
Short term flnancial liabilities
Currenl portion of long ternı financial liabilitles
Corporate bonds issued
(*)
____________________ ____________________
Total short terrn linancial Iiabilities
________________________ ________________________
Long term flnaııcial Iiabilities
Corporate bonds issued
(*)
______________________ ______________________
Total long terrn financial liabilities
______________________ ______________________
(*) As of 13 March 2013. completed sales of the Group is İlie total nominal value of TRY 200.000
thousand fionting rate bond issue witlı 6—moıflhıs coupon paymenıs. principal pavnıent al the
maturity date of 11 March 2015 and 150 bask points added lo the benchmark interesi pavnıents that
is determined nt coupon payrnent dates.
As of 31 December 2014, the brcakdown of the Groııp’s loans wiih their origiııal currency and their
weiglıted average interest rates k presented as follows:
31 Deceıııbcr 31 Decenıber
2014 2013
637.577 198.608
1.222.019 1.275.113
206.233 6.075
2.065.829 1.479.796
1.347.905 1.820.381
- 199.902
1.347.905 2.020.283
3.413.734 3.500.079
WeiLJiled
Tpe of Average Rate of Short Tcrm Long Temı
Interesjvpç Ctrrencv Portion Ponion 31 December 2014
No interest TRY - 24.300 - 24,300
Fixed TRY 9,10 196.110 166.462 362.572
Fixed US Dollars 1,68 396.802 58.794 455.596
Fid EURO 5,50 955 2.971 3.926
Floating TRY Trlibor4 1.5 206.233 - 206.233
Floating US Hars Libor—2.18 1.113.305 889.051 2.002.356
Floating EURO Etınr+O.32 103.141 185.311 288.452
Flwıing Japanese Yen JPY U,or4ü22 24.983 45.316 70.2992.065.829 1.347.905 3.413,734
31
(Coovenlence Translation into English ofconsolidated Financial Statenıenls Originally lssued in l’urkish Sec
NoLe 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDJARIES
NOTES TÜ THE CONSOLIDATED FINANCİAL STATEMENTS
FOR THE YEAR ENDED3I DECEMBER 2014
Tthc breakdown of the ban rcpayıııcnts with respcct to their rnaturilies as follows:
Vt’ithin 1 year
Between 1-2 years
Between 2-3 years
Between 3-4 years
Beiween 4-5 years
Five ycars or more
31 December 31 December
tA rn[’unt ure ex pr essed as T [Irk slı Lira (‘1 it YI lınusa nd) ııııl es s ol hcrvisc in diem ed
NOTE 6— FINANCIAL LIABILITIES (cont’d)
As of 3! December 2013, the breakdown of the Group’s Joans with Iheir original currency and their
weigbted average interest rates k presented as follows:
Weighted
Typc of Average kale of Short Terrn Leng Tcrrn
Irnerest Tvpe Currency Irnerest (%) Ponion Ponion 31 December 2013
No interest TRY - 61.187 - 61.487
Fixcd TRY 8,57 231.995 290.925 522.920
Fixed US Doblars 1,96 62.618 41.281 103.899
Fixed EURO 5.50 628 3.859 4.487
Fbeating TRY Trlibor+I.50 6.075 199.902 205.977
Finating US Doblars Libor+2.52 974.459 1.118.262 2.092,721
Floaling EURO Euribor+0.33 114.956 295.301 110.257
Fboating Japanese Yen JPY Liborrü.22 27.578 70.753 98.331
1.479.796 2.020.283 3.500.079
2014 2013
2.065.829 1.479.796
588.577 869.087
522.255 577.900
137.072 347.915
16.680 154.698
83.321 70.683
3.413.734 3.500.079
35
(Conveniencc Translation inw English of Consolidated Financtal Stawments Originally lssucd in Turkish Sec
Note 34)
EREĞLİ DEMiR VE ÇELİK FABRiKALARI T.A.Ş. AND ITS SURSIDİARIES
NOTES TO THE CONSOLIDATED FINANCİAL STATEMENTS
FOR THE YEAR ENDED3I DECEMBER 2014
(Anı oLıni ure e xpressed as Turk i sh 1. nı (T R YI lınnsand) ıınl cıs nLIı crwise i mi i caLcU
NOTE 7-TRADE RECEİVABLES AND PAYABLES
As of the balance slıeet dam. ilie details of Ihe Group’s trade receivables are as follows:
Shen ıerrn irade receivahles
Tmde recck’ables
Dııe koni related panties (Nole 29)
Notes receivables
Discouııt on receivabies (—)Provision for doubtful irade receivables (-)
The nıovemem of he provision for short terrn doubiful trade receivables are as follows:
3 1 December 20 14 3 1 December 20 1 3
61.380 41.271
1.804 13.692
(62) (432)
(1.015) 6.849
62.107 61.380
According to the niarket conditions and product types, ü certain interest charge is appiied for deferred
irade receivables and overdue interesi is applied for overdue irade receivables.
As the Groııp provides services and prodııcts to ü Iarge number of cııslorners. collcction risk is wideiv
disiributed amongst ihese cuslorners and Ihere k no signiflcant credit risk expostıre. Therefore. the
Group does not provide for any fıırther provision beyond the doubtful receivables provisions tlıat the
Groııp has already provided for in the consolidated financial staternenis.
As of ilie balance sheet dale. ihere is no signiflcani arnount of overdtıe receivables within the irade
receivables.
Other expIanator noles related to the credit risk of the Groııp are disclosed in Note 30.
The Group provides provision according to the balances of ali ıınsecured receivables under legal
follow tıp.
31 December 31 December
2014 2013
1.784.623 1.740.796
36.409 36.694
42 834
(2. 107) (8.406)
(62.107) (61.380)
1.756.860 1.708.538
Opening balance
Provision for the peniod
Provision released (—)Translation loss/(gain)
Ciosing balance
1 Jantıazy - 1 Januaıy -
36
(Convenicııcc Translation inW Enzlish oFconsolidated Financial Smtcments Originaliy Issucd in Turkish — Sec
Note 31)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCİAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
(Arnounts ıre xprcsscd as TurLislı Lira (T RY’ Tlıuıısand) unlcss oıhcrwisc indicaıcd
NOTE 7— TRADE RECEİVADLES AND PAYABLES (cont’d)
As of ilie balance slıeei dale. the deıails of ilie Group’s irade payables are as foIIos:
31 Deceinber 31 December
2013Slıort terrn trade payables
Trade payables
Due to related partles (Note 29)
Discounl on irade payables (—)
2014
NOTE 8- OTHER RECEIVABLES AND PAYABLES
As of the balance sheet dale, the detalls of the Croup’s other receivables and payables are as follows:
Other curreni receivables
Receivables from water systern consiruction
Deposits and guarantees giyen
Other non current receivables
Receivables floıii Privatization Aııthority
Receivables frorn water system constructioıi
Deposits and goarantees giyen
Provision For otlier doubtful receivables (—)
31 Deceinber 31 Deceniber
20132014
The ınovcıneni of the provision for other doubtful receivables are as follows:
Opening balance
Provision for the period
Translation difference
Closing balance
Taxes payable
Deposits aııd guarantees received
Dividend payables to shareholders (fl
(iDividend payable represents the uncollected balances by shareholders related to the prior years.
400.717 491.705
18.329
(1.791)
4 17.255
14.443
(1 .962)
504.186
3.527 3.890
273 291
3.800 4.181
31 December 31 Decenıber
2014 2013
62.403 55.958
22.836 21.958
902 753
(62.403) (55.958)
23.738 22.71 1
1 ianuary —
31 December 2014
1 ianuary —
31 Decernber2ol3
55.958 54.061
6.699 2.121
(254) (224)
62.403 55.958
31 December 31 Deceinber
2014 2013
951 1.617
5.248
190
7.389
3.249
1.190
6.256
37
(Convenience Translation into English ofConsolidated Financial Stnlements Originaliy lssued in Turkish — See
Note 31)
EREĞLİ DEMİR VE ÇELİK FABRiKALARI T.A.Ş. AND ITS SURSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
lA motifi s am e pres ted as 1 tj rk i sis 1 ini (‘1 RY ‘‘T mu sa nd) mil css otlıer ise 1 ndicaı eti
NOTE 9- INVENTORJES
As of the balance slıeet dale, the details of the Croııp’s inventories are as follows;
31 December 31 December
Raw rnaıerials
Work in progrcss
Finished goods
Spare parts
Goods in transit
Other inventories
A Ilowance for impairnıent oıı invenlories (—)
2014 2013
773.832 770.493
648.460 586.384
877.211 907.440
480.502 447.941
361.212 553.101
228.924 206.467
<111.752) (88.739)
3.258.389 3.383.087
The ınovenıent of the allowance for impairment on iıwentorics:
Opening balance
Provision for the period (Note 21)
Provision released (-) (Note 21)
Transialion difference
Closing balance
_____________________
The Group has provided an allowance for the impairnıenl on the inventories of finished goods. work
in progress and raw materials in the cases vhen their net realizable values are lower than their costs.
The provision released has been recognized under cosi of sales (Note 21).
NOTE 10- PREPAID EXPENSES
As of the balance sheel dale, the delalls of the Group’s shorl term prepaid expenses are as follows;
Instırance expenses
Order advances giyen
Prepaid utility allowance to enıplovees
Other prepaid expenses
1 January -3! Decernber2ol4
1 ianuarv -31 December 2013
88.739 60.395
29.951 32.607
(15.013) (16.664)
8.075 12.401
111.752 88.739
31 December
2014
3 1 December
2013
20.250 4.776
4.200 3.133
6.622 6.775
6.248 3.431
37.320 18.115
38
(Convenience Translation into English of Consolidated Financial Statements Originaliy lssued in Turkish — Sec
Nole 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCİAL STATEMENTS
FORTIİEYEAR ENDED3I DECEMBER2OI4
(Anıounis air cxpresscd as Turk sh 1. nı (“1kV ihousand) unlcss ı,ıIıcrviw ndicaıcd
NOTE 10— PREPAID EXPENSES (cont’d)
As of the balance sheet date. the details of the Group’s long term prepaid expenses are as follows:
Order advances giyen
Insurance expenses
Other prepaid expenses
Book value
According 10 the recent valuation reporis, the fair value of the Groups investrnent properties is TRY
216.760 thousand (3! December 2013: TRY 214.315 tlıousand). The fair values of the investmeııt
properties have been determined in reference lo the valuations of indepeııdent valuation flrms
aııthorized by the CMB of Turkey. The valııations are undertaken predorninantiy by using the
precedent values of sirnilar properties as references under market approach.
The Group’s alI investment properties consist of bad parceis.
For the year ended 3! December 2014, the Group generated rent income amounting to TRY 256
thousand (31 December 2013: TRY 101 thoıısand) recognized under other operating incorne.
31 Deceinber 31 December
NOTE Il - INVFSTMENT PROPERTIES
CostAs of 1 ianııary
Additions
Translation difference
As of3I December
2014 2013
18.949 25.800
3.787 -
2.612 2.629
25.348 28.429
1 January — 1 Januan’ —
31 December 2014 31 December 2013
51.647 46.577
1.488 -
4.556 5.070
57.691 51.647
57.691 51.647
39
(Con
veni
ence
Tra
nsla
tion
into
Eng
lish
ofC
onso
lida
ted
Fin
anci
alS
tate
men
tsO
rigi
nall
yls
sued
inT
urki
sh—
See
Not
e34
)
ER
EĞ
Lİ
DE
MİR
VE
ÇE
LİK
FA
BR
iKA
LA
RI
T.A
.Ş.
AN
DIT
SS
UB
SID
IAR
IES
NO
TE
ST
OT
HE
CO
NS
OL
IDA
TE
DF
INA
NC
İAL
ST
AT
EM
EN
TS
FO
RT
HE
YE
AR
EN
DE
D31
DE
CE
MB
ER
2014
(Am
ount
sar
expr
essc
das
TL
ırkı
slıU
n(1
kV
Thn
usan
d)un
less
otlı
erw
ısc
ındı
cale
d
NO
TE
12—
PR
OP
ER
TY
,P
LA
NT
AN
DE
QU
IPM
EN
T
Acc
umıı
iaıe
dD
epre
ciat
ion
Oth
erPr
opem
,C
onst
ruct
ion
Cos
t
Ope
ning
bala
nce
asof
1Ja
nuar
v
Tran
slal
ion
diff
eren
ce
Add
ition
s(f
lT
rans
fers
from
CIP
(**)
Dis
posa
is
Cio
sing
bala
nce
asof
31D
ecem
ber
20)4
Land
Mac
hine
nFu
milu
rean
dPl
anı
and
inP
roes
s
Land
Impr
ovem
ents
Build
invs
and
equi
pmen
(V
ehic
les
Fbıu
res
Equi
pmen
t(C
IP)
Ope
ning
bala
nce
asof
1Ja
nuan
Tran
slat
ion
difte
renc
e
Cha
rge
for
the
perh
d
Impa
irmen
i(t**)
Dis
posa
is
Clo
sing
bala
nce
asof
3lD
ecem
ber
2011
Tota
l
122.
007
1.72
4.93
92.
721.
371
11.3
79.3
6673
1.53
635
4.80
523
.577
429.
980
17.4
87.6
81
8.66
914
8.38
823
5.35
399
0267
50.0
4722
.931
1.63
533
.161
1.49
0.45
1
400
38!
560
59.1
573.
810
12.6
824.
425
248.
883
330.
298
4.98
543
.843
47.9
5220
8.18
61.
770
7.03
978
(317
.580
)(3
.727
)
--
-(1
4.19
3)(1
.137
)(1
2.86
9)(6
53)
-(2
8.85
2)
136.
061
1.91
7.55
13.
005.
236
12.6
22.8
8378
6.02
638
1.58
829
.062
394.
444
19.2
75.8
51
-(1
.187
.900
)(1
.828
.208
)(6
.178
.014
)(4
14.7
62)
(186
.916
)(1
8.29
5)-
(9.8
14.1
25)
-(1
03.4
88)
(160
.523
)(5
43.1
62)
(23.
834)
(8.3
73)
(1.3
19)
(1.1
21)
(841
.820
)
-(.1
0.08
3)(6
3.67
7)28
5.19
7)(2
2.12
1)13
.885
)(1
.565
)-
(426
.528
)
--
--
--
-(1
8.55
5)<1
8.55
5)
--
-11
.403
1.04
111
.437
653
-24
.534
-(1
.331
.471
)(2
.052
.408
)(6
.995
.000
)(4
59.6
76)
(197
.737
)(2
0.52
6)(1
9.67
6)(1
1.07
6.49
4)
Net
book
valtı
eas
oF3I
Dec
embe
r20
1312
2.00
753
7.03
989
3.16
35.
201.
422
316.
774
Net
bk
vaI
ue
asoD
ID
ecem
her2
oll
136.
061
586.
080
952.
828
5.62
7.88
332
6.35
0
(*)
ilie
amoL
ınt
ofca
pita
lize
dbo
rrow
inQ
cost
15T
RY
3.93
6th
ousa
ndfo
rth
ecu
rren
tpe
riod
(31
Dec
embe
r20
13:
TR
Y2.
008
thou
sand
).
(“)T
RY
3.72
7Ih
ousa
ndis
tran
sfen
edto
inta
ngib
leas
sets
(Not
e13
).
167.
889
5.28
242
9.98
07.
673.
556
186.
851
8.53
637
4.76
88.
199.
357
(‘“)
The
Gro
upre
view
the
anıo
ıınt
of
disc
ared
fixe
das
set
whi
chk
not
able
toge
nera
teca
shR
ows
inde
pend
enli
y.A
ccor
diıı
gly,
the
revi
ewle
dto
the
reco
gnit
ion
ofan
impa
imıe
ntlo
sso
f
TR
Y(1
8.55
5)th
ousa
nd(h
alha
sbe
enre
cogn
ized
inpr
ofit
orIo
ssun
der
othe
rop
erat
ing
expe
nses
(Not
e24
).(3
1D
ecem
ber
2013
:T
RY
(20.
472)
thou
sand
).
As
of3
lD
ecem
ber
20
14
,th
eG
rou
pha
sno
coll
ater
als
orple
dges
upon
its
tangib
leas
sets
.(3
1D
ecem
ber
2013
:N
one)
.
40
(Conven
ience
Tra
nsl
atio
nin
toE
ng
lish
ofC
onso
lid
ated
Fin
anci
alS
tatc
men
tsO
rigin
aliy
Issu
edin
TurL
ish
—S
eeN
ote
34
)
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
NS
OL
IDA
TE
DF
INA
NC
İAL
ST
AT
EM
EN
TS
FO
RT
HE
YE
AR
EN
DE
D3
ID
EC
EM
BE
R2O
I4
<Am
utın
tsar
eex
pres
sed
asT
urkı
slı
Lira
(“T
RY
”T
hous
and)
ıınlc
ssot
her’
sis
eın
dica
ted
NO
TE
12-
PR
OP
ER
TY
,P
LA
NT
AN
DE
QU
IPM
EN
T(c
ont’
d)
Cos
t
Ope
ning
hala
nce
aso
f1
Janu
arv
‘[ra
nsla
tion
diff
crcn
ce
Add
iıion
sl’
rans
fers
froı
nC
Il’(9
Dis
posa
ls
Clo
sing
bala
nce
asof
31D
ecem
her
2013
Acc
umıı
late
dD
eprc
cial
inn
Ope
nıng
hala
nce
asoF
1ia
nıar
y
Tra
ıısla
tion
difk
rcnc
c
Cha
rgc
for
lise
peri
od
Inıp
airn
eot
Dis
posa
ts
Clo
sing
bala
ııcc
asof
3!D
eccm
hcr
2013
Net
hook
valu
cas
of31
Dec
emls
er20
12
Net
hook
vain
eas
of3
ID
ecem
her
2013
Lan
dM
achn
en’
Lan
dIn
ıpro
vem
enıs
Bııı
ldüı
gsan
deg
ııipr
ncnt
99.6
7615
26.9
$1
2.40
1.82
510
.124
.707
11.0
8116
5.55
526
8.09
91.
121.
728
11.2
51)
16.3
7$21
32.4
74
-16
.395
51.1
2616
7.11
8
-(1
70)
-(6
6.59
1)
122.
007
1.72
1.93
92.
721.
371
11.3
79.4
66
(flT
RY
1.72
3th
ousa
ndis
tran
sfer
red
toin
tang
ible
asse
rs(N
ote
t]).
Oth
er
Pro
pcrt
y.
Fur
nilu
rean
dPl
anı
and
Vch
icle
sF
i\lu
res
Egı
ıipm
ent
675.
208
326.
951
17.7
37
57.7
5225
.932
3.70
8
1.37
24.
281
2.08
2
1.18
%1.
608
188
(4.0
84)
(3.9
67)
(138
)
731.
536
354.
805
23.5
77
(370
.660
)(1
69.1
64)
(14.
233)
(26.
824)
(9.4
92)
(2.6
53)
(20.
029)
(12.
041)
(1.2
09)
(1.2
28)
-(3
57)
3.97
93.
781
13%
(314
.762
)(1
86.9
16)
(18.
295)
304.
54%
157.
787
3.50
3
316.
774
167.
889
5.28
2
-(1
.040
.695
)(1
.593
363)
(5.3
81.2
46)
—(1
15.5
11)
(180
.266
)(6
11.9
19)
-(3
1,51
%)
(50.
942)
(233
.764
)
-(3
78)
(2.6
37)
(15,
872)
-20
2-
64,7
57
-(1
.87
.90
0)
(1.8
18.2
08)
(6.1
78.0
44)
99.6
7648
6.28
6%
07.4
624.
743.
461
122.
007
537.
039
893.
163
5.20
1.42
2
Con
slru
ctio
n
Il1>
rogr
ess
(CIP
)T
olal
395.
174
15.5
68.2
59
36.6
431.
690.
49%
237.
839
305.
897
(239
.676
)(1
.723
)
-(7
5.25
0)
429.
980
17.4
87.6
81
-(8
.570
.361
)
-(9
46.6
16)
-(3
49.5
03)
-(2
0.47
2)
-72
.857
-(9
,814
.125
)
395.
174
6.99
7.89
8
429.
980
7,67
3.55
6
41
(Convenience Translation inlo Enlish ofConsolidated Financial Siaıcrnents Oılginally Jssued in Turkish —Sec
Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO Tl lE CONSOLIDATED FINANCİAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2014
(A not’ nıs a re s pressed as T ak, tl, 1 ir,, (1’ (YI’ mu saııd) ii ni ess otiıerwi se iııdıcaıed )
NOTE 12- PROPERTY, PLANT AND EQUIPMENT (eont’d)
The breakdown of depreciation expenses related lo property. planı and equipment is as follows:
Associated with cost of production
Geııeral administrative expenses
Marketing. sales and distribution expenses
Research and development expenses
____________________ ____________________
(98.121) (56.144)(8.227) (88)
(13.32%) (6.37!)(119.676) (62.603)
122.210 35.737
132.838 33.216
Odıcr Inlangıhle
Asseis
(5.902) (160.167)
(1.10%) (9423)(202) (19.901
(7.212) (189.491)
1.203 159.150
2.505 168.559
As of 31 December 2014. the Group has no collaterals or pledges upoıı iıs intangible asseis (3!December 2013: None).
31 December 31 Decemher
2014 2013
402.224 333.003
10.507 6.046
13.653 10.454
144 -
426.528 349.503
l:Nplor;ılıon Costsand Ollıer Asseis
willi S pecifleRiulıls Useliıl Lili
NOTE 13— INTANGIBLE ASSETS
Cosi
Openıng halance as ol 1 jaIıuıarv
raı,slat io n dil eren re
Ad d lions
i’ransfers lionı CIPClosumg halance as of 31 Decenmher 2014
Aecnn,nlaled aıııorlvalion
Opeııiııg halarıce as of 1 Janoary
T raıısla tio ii di ‘ferejıce
Clıarge fr Ihe periodClosing halance as of 3! Deeeınher 21)14
Net lıonk vahıc as of 31 Decemher 2013
Nel hook vaiııe as of 3! Deceınher 2014
220.33!
18.771
91.881290
10.747 3.648
2.665 -
252.514 95.819
7.105 319.3171.111 20.172
439 14.831
1.062 3.7279.717 358,050
42
(Convenience Translalion imha English of Consolidated Financial Siatements OriinaI1y lssued in Turkish Sec
NoLe 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDİARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2014
(Am nonıs ‘re cxprcssed t i,ırk sit I. re, RY’’ T lıntıset ııd) LUi 1 css otlierwı sc in d ,caıcd
NOTE 13— INTANCIBLE ASSETS (cont’d)
Cost
Opening halance as of 1 ianuary[raııslation diflerence
Addilians]ransfers from CIPDisposaisCiosing halance as of 31 December 2013
Mc tı in ii lale d et m n rt izeit on
Opening halance as of 1 iannary
Translahion dıflerenceCharge ör the periodDisposaisCiosing halance as of 3!
Net book ya lue as of 31
Nel hook value as of 31
The breakdown of amorlization expenses
Assocbled with cosi of productioıı
General administrative expenses
Marketing, sales and distributioıı CXCflSC5
related to inlangible asseis is as follows:
31 December
2014
loUl
31 Deceıııbcr
2013
NOT 13- GOVERNMENT GRANTS AND INCENTIVES
The governmenl grants and iııcentives ıısed in the current period are as follows:
1 January —
31 December 2014 31
These grants and incentives can be used by alI companies. which meet the related legislative
reqııirernents and those grants have no secioral differences.
Explorai ion Costsand Other Assets
‘itlı Specilicllsetül Life
Other lntanwhleAssetsRights
190.819 88.394 5.386 284.599
20,599 329 1.659 22.587
8.312 3.158 60 11.530
1.723 - - 1.723
(1.122) - - (1.122)
220.331 91.881 7.105 319.317
(77.87!) (19.64%) (1.169) 131.68%)
(6.678) (62) (1.617> (11)357)
(12.611) (6.434) (116) (19.194)
1.072 - - .072
Decemher2ol3 (98.121) (56.144) (5.902) (160.167)
Deeernher2ül2 112.918 38.746 1.217 152.911
December 2013 122.2 10 35.737 1.203 159.150
17.374 17.800
2.013 1.100
514 294
19.901 19.194
Research and development grants
Social secıırity granis
Tax grants
1 January —
December 2013
364 130
1.895 1.348
167 -
2.426 1.478
43
(Convenience Translation into Enelislı ofConsolidated Financial Staternents Originally lssued in Turkish Sec
Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCİAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
(A rnounts are cxprcs sad aS 1 ii rk i su i. ra (E k Y’’i ImLısa nd) uni css ntlıcrwi sa i ndkatcd
NOTE 15— EMPLOYEE BENEFITS
The Group’s short terrn payables for ernplovee beneüts are as follows:
3 1 Deceinber
2014
31 December
2013
66.87174.611
24.909 22.676
24202 19.247
123722 108.794
Long terrn provision of the ernployee terınination bcneflts ofthe Group is as follows:
31 December 3 1 December
2014 2013
393.478 307.528
25.389 17.667
68.857 67.037487.724 392.232
According tü the articles of Turkish Labor Law in force. there 15 an obligation tü pay the legal
empioyec termination beneflıs to each ernployee whose cınploynıent contracts are ended properly
entitling thern to receive ernployee terrninaıion beneflis. Also. iıı accordance with the effective laws of
the Social Insurance Act No: 506 No: 2422 on 6 March 1981 and No: 4447 on 25 August 1999 and
with the arnended Articlc 60 of the related Act, it is obliged to pay dıe ernployees their legal ernployee
termination beneflts, who are entitled to terrninate.
As of 31 December 2014, the arnount payable consists of one rnonth’s salary lirnited ton rnaxirnurn of
TRY 3.438,22 (31 December 2013: TRY 3.254.44). As of 1 ianııary 2015. the ernployee termination
beneflt has been updated tü a rnaxiınunı of TRY 3.541.37.
The ernployee termination bendfit legaliy is not subject tü any fundiııg requirerneııt.
The ernplovee termination benefit has been calculated by estirnating the present valtıe of the future
probable obligatioıı of tlıe Groııp arising froııı the retirerneııt of eınployees. TAS 19 (“Ernployee
Beııelits”) reqııires actuarial valuation rnethods tü be developed tü estirnate the Oroııp’s obligation
under defiııed benelit plans. The obligation as of 31 December 2014 has been calculated by au
independent actııary. The actuarial assurnptions used in the calcıılation of the present value of the
future probable obligation are as follows:
31 December 2014 31 Decenıber 2013
8,00% 9,40%
6,50% 6.30%
real 1.5% real 1.5%
6,50% 6,30%
Discount ratelnflation rate
Salary increase
Maxirnurn Iiability inerease
Due tü persoıınel
Social secıırity premiıınıs payable
Enıployees incorne tax payables
Provisions for ernployee termiııation benefits
Provisions for seniority incentive preuniunı
Provision for unpaid vacations
44
(Convenience Translation into English ofConsolidated Financial Staternents Originaliy Issued in Turkisb SecNote 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO Tl 113 CONSOLIDATED FINANCİAL STATEMENTSFOR THE YEAR ENDED3I DECEMBER 2014
M nıounts am e>pmssed as T LI rk ah Lira (T it YI musa nd ) uni css oh erss ise i ımdiçaled
NOTE 15— EMPLOYEE BENEFITS (cont’d)
Discount rates are determined considering the expected duration of the retiremeni obligations and the
curreııcy in which the obligations wiil be paid. in calculations as of 3! December 2014, a Iixeddiscoıınt role is used. Long term infiation estimates are made using an approach consistent \\ilh
discounl role eslirnates and long ierm infiation role flxed over years is used.
The anticipated rate of resignation whiclı do not result in the paymeni of employee beneflis is alsoconsidered in the calculation. The aıflicipated rate of resignatioıı is assurned to be related with the pastexperience, thıerefore past experiences of ernployees are analyzed and considered in the calculation. bi
the actuarial calculatioıı as of 31 December 2014, the anticipated role of resignatioıı is considered to be
inversely propornonal to the past experience. The anticipated role of resignation is between 2%-0% for
the ernployees witlı past experience between 0-15 years or over.
The moverneni of ilie provision for ernployee termination beneflis is as folhows:
Opening balanceSen’ice cosiInteresi costActuarial lossTermination benefits paidTranslation diikrence
Ciosing balance
Sensitivitv level
RoleChage in eıııployee beneflts liability
RateChage in ernployee beneflts hiabihity
1 ianuary —
31 Decernber20l4
1 ianuarv -
31 December 2013
307.528 265.08326.379 27.308
28.568 20.924
75.386 14.282
(39.777) (22.214)
(4.606) 2.145393.478 307.528
The sensitiviiy anaiysis of the assumptioııs which was used for the calcıılalion ofeınployment termination beneflts as of 31 December 2014 as follows:
provision for
DiscoLınt role
1% increase 1% decrease
(38.033) 41.717
Inflation rate
1% increase 1% decrease
44.941 (38.862)
45
(Convenience Translation into Engiislı ofconsolidated Financial Smwrnents Origiııally lssued in Turkislı 8ccNote 34)
EREĞLİ DEMiR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
(Am [sunts aw e pres sed as T rk islı 1. ira (‘1 RY ‘‘1 ıoıısa nd) tıni ess ısı hcrwi se indi rai ed
NOTE 15— EMPLOYEE BENEFITS (cont’d)
According 10 the curreıfl labor agrccnıent. eınployees cornpleting their IOth. l5th and 2Oth service
years receive senioriiy incentive premlum payments.
The moveınent oftlıc provision for seııiority iııcentive prerniurn is as follows:
Opening balanceService cost
1 nteresi cost
Actuarial loss’(ain)
Terrnination beneflıs paid
Translation difference
____________________________________________
Ciosing balance
The movement of ilie provision for unused vacat on is as follows:
Opening balanceProvision tbr the period
Vacation paid during the period (-)Provisioııs released (-)Translation difference
Ciosine balance
67.037 62.270
48.475 53.765
(6.474) (3.342)
(39.983) (45.320)
(198) (336)68.857 67.037
NOTE 16- PROVISIONS
The Group’s slıorı terrn provisions are as follows:
31 Decenıber 31 December
2013
194.475
2014
214.722
5.223 4.568
4.484 2.642
10.099 3.341
234.528 205.026
(*)According to “Mining Law” ntıınbered 3213 and regulation
published in the OfflciaI Gazette. nunıbered 25716 on 3 February
state right on mining activities based on the sales profit.
(**)According to law number 5217. il is a provision of the enterprises that were subjecıed to “Natural
Disaster Fund” ile “Civil Defense Fund’. it 15 cakulated ıhrouglı 2004 revenue of the cornpany.
1 ianuary -31 Deceıııber 2014
1 January -31 December 2013
17.667 18.896
2.312 1.642
1.870 1.313
5.948 (3.301)
(2.224) (864)
(184) (19)25.389 17.667
1 Januan -
31 December 20141 January —
3 1 December 20 13
Provisioıı For Iawsuits
Penalıy prov. for ernployrnent shortage of disabled pers.
Provision for state right on rnining activilies (*)
Provision for civil defense fund (**)
on ‘Mining Law Enforcerneni”2005. the Group is obliged to pay
46
(Con
veni
ence
Tra
nsla
tion
into
Eng
lish
of
Con
solid
ated
Fina
ncia
lSt
aıem
ents
Ori
gina
liyls
sued
inT
urki
sh—
See
Not
e34
)
ER
EĞ
Li
DE
MİR
VE
ÇE
LİK
FA
BR
iKA
LA
RI
T.A
.Ş.
AN
DIT
SS
UB
SID
IAR
IES
NO
TE
ST
ÜT
HE
CÜ
NS
OL
IDA
TE
DF
INA
NC
İAL
ST
AT
EM
EN
TS
FO
RT
HE
YE
AR
EN
DE
D31
DE
CE
MB
ER
2014
Am
t>un
Isar
eex
prc
ssed
asT
urkı
slı
Lir
a(T
RY
Tho
usın
d)un
less
othc
rwıs
eın
dıca
tcd
)
____________
-__________
_____________
___
__
__
__
NO
TE
16—
PR
OV
ISIO
NS
(con
t’d)
The
rnov
emen
tof
the
shor
tte
rmpr
ovis
ions
isas
foll
ows:
Pro
vis
ion
for
Iaw
suits
Pen
alty
prov
.fo
rem
pio
ym
eni
sho
rtag
eo
fdi
sabl
edpe
rs.
Pro
vis
ion
for
stat
eri
giit
onm
inin
gac
tivi
ties
Pro
visi
onfo
rci
vil
defe
nse
fund
Pro
visi
onfo
rIa
wsu
its
Pen
alty
prov
.fo
rem
plo
ym
ent
shodag
eof
disa
bled
pers
.
Pro
vis
ion
for
stat
eri
ubt
onm
inin
gac
tivi
ties
Pro
vis
ion
for
civi
lde
fens
efu
nd
1Ja
nunı
yPr
ovis
ion
Prov
isio
nT
rans
latio
n31
Dee
ernb
er
2014
for
the
peri
odP
avrn
ents
rele
ased
difT
eren
ce20
14
194.
475
43.9
19(7
.537
)(2
2.83
7)6.
702
214.
722
4.56
82.
546
(880
)(1
.019
)8
5.22
3
2.64
24.
861
(3.0
19)
--
4.48
4
3.34
16.
95!
--
(193
)10
.099
205.
026
58.2
77(1
1.43
6)(2
3.85
6)6.
517
234.
528
1Ja
nuaı
wPr
ovis
ion
Prov
isio
nT
rans
latio
n31
Dec
embe
r
2013
for
the
peri
odP
ayrn
ents
rele
ased
diff
eren
ce20
13
104.
472
101.
753
(7.4
12)
(10.
906)
6.56
819
4.47
5
4.94
52.
634
(!.5
04)
(1.5
49)
424.
568
3.64
42.
642
(3.6
44)
--
2.64
2
-3.
341
--
-3.
341
113.
061
110.
370
(12.
560)
(12.
455)
6.61
020
5.02
6
47
(Convenience Transladon into English ofConsolidated Financial Statenıcnts Oriuinally lssued in Turkish — See
NoLe 34)
EREĞLİ DEMİR ‘E ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO Tl lE CONSOLIDATED FINANCIAL STATEMENTS
FOR TIIEYEAR ENDED3I DECEMBER 2014
tA moLı nis ıre ex pressed ıs Itırk i su 1 ra (1 RY 1 housa mi) uni ess ol llerwise indi cı
NOTE 16— PROVISIONS (cont’d)
As of3I Decernber2ol4and 31 Decenıber 2013. Iawsuils filed bvand againsl ıheGroup are as follows:
31 December 31 December
2014 2013
Lawsuils filed by the Group 300.304 311.275
Provision for Iawsuits flled by the Groop 5.872 4.183
The provisions For the Iawsuits filed by the Groııp represents the doııbtful trade receivables.
3 1 December 31 December
2014 2013
Lawstuits filed against the Group 242.347 225.543
Provision for Iawsuits filed against the Groııp 214.722 191.475
Compaııy’s Sharelıolders’ Geuıeral Assembly, which was heid at 30 March 2006, decided dividend
distribution according to the consolidated (inancInI staternents as of 31 December 2005, which was
prepared according lo IFRS. Privatizatioıı Adrninistrauion, who has a usufruct right over 1 (one) equity
slıare anıoııg the Company shares it traıısferred to Ataer 1 Ioldiuıg A.Ş.. üled a lawsuit before the 3tlı
Commercial Court of Ankara against the aforernentioned General Assembiy decision, and claimed
thaı. divjdend distribution decision most be abolished and TRY 35673 thousnnd ailegedly tınpaid
dividend most be paid to itseif (E. 2006/218). The Court rejected the case on 23 Ociober 2008;
Privatization Administration appeaied this rejection on 7 Janııary 2009. Court of Appeals’ Il Ih
Charnber reversed this rejection judgment on 30 November 2010; this time the Company appealed the
Charnber’s decision on 18 Febrııary 2011. llowever, the Chamber rejected the Company’s appeal on
14 huly 2011. The case (ile, sent back lo 3th Commercial Court of Ankara once again. Therefore the
case is stili pending (E. 2011/551). The next hearing day is 17 April 2015.
1-had the Companv started to prepare its consolidaled önancial stalements in accordance with IFRS
afler 31 December 2005, it wonid also have to present the comparative consolidated önancial
statements in accordance with IFRS based on “IFRS 1: First-time adoption of international Financial
Reporting Standards” and the previousiy recognized negative goodwill wouid be transferred directiy to
retained earnings on 1 ianuary 2005 instead of recognizing iıı the consolidated income stalement in
accordance with “IFRS 3: Bıısiness Combinations”. Therefore. the net profit for the periods ended 31
December 2014 and 31 December 2013 wili not be affected from the above mentioned disputes.
The Coıııpany. based on the above mentioned reasons, did not unake any adjustments in the
accompanying consolidated financial staternents for the possible effects ofchanges in the net profit for
the year ended 31 December 2005 due to the Iawsuits mentioned above and waits for the resolution of
the pending Iawsuit opened by Privatization Administration.
48
(Convenience Translation tito Engiislı of Consolidated Financial Statements Originaliy issucd in Turkish Sec
Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSİDIARIES
NOTES TO ThE CONSOLIDATED FINANCİAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMSER 2014
A rnou nis are prcsscd as Tıı rL ı sh L in (“T k Y’’ Tim Lısand) uni ess nı Iıcrwi se indi caıcd
NOTE 16— PROVISIONS (cont’d)
Enerjia Metal Maden Sanayi ve Ticaret A.Ş. initiated a debi collection proceeding that might end vith
a bankrupıcy judgment against the Company based on the Export Protocol No. 69187 of 2 iııly 2009
and Additioıial Terms to ilie Erdemir-Enerjia Export Protocol No. 68197” drafied by and beiween
Enerjia and the Compaııy. 1 lowever ilie process stopped ııpon the Company’s objectioıı to Enerjia’s
request, aııd that led Enerjia to İlle a iawsuit against the Company before the 7th Comınercial Coıırt of
Ankara on 27 March 2010 claiming that the objection should be overrııled and USD 68.312.520
shouid be paid to itself(E. 20 10/259). The Court dismissed the case, in favor of the Company, on 23
iune 2011. Enerjia appealed (his rejection. 23rd Chamber of the Court of Appeals accepied Ihis
rejection on 6 Aprih 2012 (E. 2011/2915) and after Iliis. the case İlle “as sent back to the 7th
Coınmercial Court of Ankara. Therefore the case is stili pending (E. 2014/734) and the next court
hearing is on 1 April 2015.
An action of debt was instittıted by Messrs. Sor-San Isı Sistemleri Üretim ve Pazarlama A.Ş. against
otır company at the 3rd CIvIl Court of Kdz. Ereğh on 17 Aprii 2013 ıınder ilie ılo 2013/253 Esas
claiming for the compensation of the loss arising from the sales contract of TRY 18 thousand,—,
reserving the rights for surplus. The Coıııpany was informed froni the amendment petition, which wasserved lo the conipany on 1 November 2013 timi the piaintiffpleaded from ilie cotırt to raise the claim
to TRY 10.838 thousand as assessed by the expcrt opinion submitted to the court. The Compaııy
contested ta the experı opinion and the amendmeııt pet ition within ilie siatııtory period. The court has
giyen the judgment of dismissal on Il March 2014. The plaintiiT. Hor—San Isı Sistemleri Üretim ve
Pazarlama A.Ş. has appealed agaiııst the jııdgınent. Upon the reversal of judgment, the Company
appealed the decision of Supreme Court of Appeai. The rejection decision of Supreme Court of
Appeai has been notifled to the Company on 28 Jaııuary 2015. No hearing date has been notifed to the
Company yet.
Corus lnterna6onal Trading Ltd. Co. (new trading hile: Tata Sieel international (North Arnerica) Lid.)
located al lhIinois state of United States of America and the Company execııted a contract in 2008. The
companv fulfllied alI its performaııces arisen from this contract in January and Februarv in 2009.
Corus International Trading Ltd. Co. sold to ıhird parties the producis supplied from otır company but
thereafter alheged that they directed ciaim 10 sorne compensatioıı and that these ciaims must be covered
by Erdemir. Parties could not reach an exact agreement about (his matter and then Corııs international
Trading Ltd. Co flied an action for compensation al arnount of USD 4.800 thousand together with
accessory against the Company in Illinois State District Court of USA. It is iearnt through a notifled
made ta the Companv on 21 Juiy 2010.
After the subject case is dismissed by the coıırt from jurisdiction aspect; this time a iawsuit is re-Ried
by Tata Steei international (North America) Ltd.) in Texas State Disırict Court. This case is aiso
dismissed by the coort from jurisdiction aspect.
it is Iearııt through a notifled ınade lo the Company on 31 October 2012 that Corııs international Trading
Lid. Co. (new trading (ilie: Tata Steei international (North America) Ltd.) filed an action for
compensation al amount of TRY 8.669 thousand (USD 4.800 thoıısand) together with accessory against
ille Company before Ankara I4th Commercial Court of First hnstance. As a result of adjudication made;
the coort adjudged to disrniss the case on procedurah grounds because of non-coınpeence and to send the
İlie to comınissioned and competent Karadeniz Ereğli Comınercial Court of First lnstance in Duıy when
the judgment becomes deflnite and in case of request. The case stili continues on İlie no. 2013/63 in
Karadeniz Ereğhi 2nd Civil Court of First Instance. The court İlie has been entrusted to ilie expert. Dale of
next hearing of the case is 2 April 2015.
49
(Convenience Translation into English of Consolidated Financial Statements Originally lssued ili Turkish SeeNote 34)
EREĞLİ DEMİR VE ÇELİK FABRiKALARI T.A.Ş. AND ITS SUBSİDIARIES
NOTES TO THE CONSOLIDATED FINANCİAL STATEMENTSFORTHEYEAR ENDED3I DECEMBER 2014
Amounts are cxprcsscd as Turk sh Lira ii tV 1 mu sa mi) ırni css ot ıcrwi se ii dicated.
NOTE 17- COMMITMENTS AND CONTINGENCIES
The guarantees received by ilie Group are as follows:
Letters ofguarantees received
31 December 3 1 December
The Collaierals, Pledges and Morigages (CPM) giyen by the Group are as follows:
A. Total CPM giyen for İlie Cornpany’s own legal entiiy
13. Total CPM giyen in favour of subsidiaries consolidated
on line-by-line basisC. Total CPM giyen in favour ofother3rd parties for ordinaryirading operations -
D. Other CPM giyen -
i. Total CPM giyen in favoLir of pareni eniity -
ii. Total CPM giyen in favour of other Grotıp cornpaniesoııi of the scope of clause 13 and C -
iii. Tolal CPM giyen in favour of other 3rd parties out ofthe scope of clause C
____________________ ____________________
As of 31 December 2014, the ratio of the other CPM giyen by the Groııp to shareholders eqııity iso%(31 Deeernber 2013: 0%). Total CPM giyen in favor of subsidiaries consolidated on Iine-by-Iine baskarnotınting lo TRY 1.155.440 thousand has been giyen as collateral for finanelal liabilities explainedin Note 6.
US Dollars
T RYEUROJapanese YenRornanian Lei
31 December
2013
2014 2013
1.538.130 1.469.2091.538.130 1.469.209
31 December 31 December2014 2013
73.574 69.757
1.155.440 1.577.126
1.229.014 1.646.883
The breakdown of the Group’s eollaterals, pledges and rnortgages according to iheir original eıırrencyis as follows:
31 December
2014
771.816 973.629
144.474 236.352274.778 381.965
37.946 52.906
- 2.0311.229.014 1.646.883
50
(Convenience TransIaton into English ofConsolidated Financial Statenıents Originaliy lssued n Turkish SeeNote 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TÜ TIIE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2014
(Amcıunts au cxprcsscd as Turkish lira (‘lRY’’ Tlıousand) unlcss otlıcrwisc ııdicatcd
NOTE 18- OTHER ASSETS AND LİABILITIES
As of the balance sheet dale, the details of the Group’s other assets and Iiabilities are as follows:
Other current asseis
Other \‘AT receivable
Deferred VAT
Prepaid taxes and funds
Olber current assets
Other current liabi 1 iries
VAT payable
Expense accrualsOther cıırrent liabilities
Other ııon—current liabi 1 ities
Olber non—curreat Iiabilities
NOTE 19- DEFERRED REVENUE
31 Deceluber 31 December
As of the balance sheet dale, the details of the Group’s short terrn deferred revenuc are as lhllows:
Advances received
Deferred incorne
2014 2013
44.134 91.14737.035 31.908
8.555 1.2401.822 1.797
91.546 126.092
31 December 31 December2014 2013
40.524 14.294324 1.046
3.589 3.44844.437 1 8.788
31 Deceıııber 31 December2014 2013
367 351367 351
31 December 31 December
2014 201373.839 92.8822.619 106
76.458 92.988
51
(Convenience Translation into English ofCoıısolidated Financial Statements Originaliy Issued in Turkislı - SecNote 34)
EREĞLİ DEMiR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR Tl lE YEAR ENDED 31 DECEMRER 2014
(A rnounts ıre cx pressed as iıırk sis Lira (T it YI housa nd) tıni cas ol Iıcrwi se indi cated
NOTE 20- EQUITY
As of 31 December 2014 and 31 December 2013, the capital slructure is as follows:
31 December 3! December
Shareholders (%) 2014 (%) 2013
Ataer 1 lolding A.Ş. 49,29 1.724.982 49,29 1.724.982
Quoıed in Stock Exchange 47,63 1.667.181 47,63 1.667.181
Erdemirs own shares 3,08 107.837 3,08 107.837
Ilistorical caphal 100,00 3.500.000 100.00 3.500.000
Effect ofinfiation 156.613 156.613
Reslated capital 3.656.613 3.656.613
Treasııry slıares (116.232) (116.232)
3.540.381 3.540.381
The Coınpany 15 subject tü registered capital limit. The board ofdirectors mav. at anv time it maythink necessary, increase the capital by means of issuing bearer shares each with a nominal valııe of 1Kr (one Kurus) up to the aınount of the registered capital. which is TRY 7.000.000.000 in accordancewith the reqııirements as set fortlı herei ii.
The issııed capital of the Compaıw in 2014 consists of 350.000.000.000 Iots of shares (2013:350.000.000.000 lots). The nomiııal value of each share is 1 Kr (Turkish cent) (2013: 1 Kr). Thiscapital is sphit between A and 3 group shares. Group A shares consist of 1 share with a share value of
1 Kr and Group 8 shares consist of 3.499.999.999.99 shares representing TRY 349.999.999.999 ofthe issued capital.
The Board of Directors consists of 9 members. 3 of which are independent. The number andqualiflcations of independent members are ascerlained in compliance with the CMB’s Comrnuniqtıenumbered 11-17.1 on Corporate Governance Principles.
The General Assembiv has to clıoose one member to the Board of Directors from the nominees of thePrivatization Administration as the beneflciarv owner representing A Group shares. In case, the Roardmember represeniing the A Group shares leaves the board within the chosen period. a new boardmember is obliged tü be chosen from the ııominees of the Privatization Adrninistration as thebeneflciary owner. For decisions to be taken about the rights assigned tü A Group shares. the boardmember representing A Group shares is also obliged to use an afflrmative vote. The decisions tü
clıange the Articles of Association of the Company tlıat wilh have an effect on the board of directors’meetiııg and decision quorum. righıts assigııed tü A Group shares, righıts assigned to A Groııp shares inrelation tü investments and ernployment decisions and any other changes in the Articles ofAssociation of the Company which wihl directly or indirectly affect the rights of A Group shares, haveto receive an afflrmative vote of the beneflciary owner representing the A Group shares. Otherwise.the decisions are accepted as invalid.
52
(Convenience Translation into English of Consolidated Financial Statements Originally lssued in Turkislı SeeNote 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUHSIDİARIES
NOTES TO Tl lE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED3I DECEMBER 2014
(Am nunts are expresscd as Turk su 1. ira (İR YE Iumsa ad) unless atlı ençi se in d taktI
NOTE 20— EQUITY (coııt’d)
Article IV-K of Articies of Association “According to Turkish Commercial Code Article 329,transactions of an entity’s own shares” al Iows Erdemir to purchase, lıoid, seli or transfer its ownshares, without voting riglıts. As of 31 December 2014, İlie Company hoids its own shares with anominal value of TRY 107.837 thousand (31 December 2013: TRY 107.837 tlıousand). TheCompany’s own shares liave been reciassifled willı its inflation adjusted value in the consolidatedbalance sheet asa deduction under eqııity.
31 December 3! DecenıberOtlıer equity tenis 2014 2013
Share prernium 106.447 106.447Revaluation reserves 24.151 23.255—Revahtaf lou resen’es ofpıvpeıIı’, planı d eqııipmenı 24. 15? 23.255
Cash flow hedging reserves 7.160 (9.344)Foreign currency translation reserves 1.616.002 844.664Actuarial (ioss)/ gam fund (125.714) (66.809)
Restricled reserves assorted from proflt 617.355 500.949-Legal ıesen’es 617.355 500.949
Retained earnings 2.616.106 2.607.273-Evhaordh;an’ ş,jçpç 781.169 780.894—Aceunıulaıedprofiı 1.076.610 846.367-Sıaıuıort’reserves 758.027 980.012
4.861.507 4.006.435
tlowever, in accordance with the comrnııniqu numbered 11—14,1 “Comrnuniqud on the Principies ofFinancial Reporting in Capital Markets” (“the Comrnuniqıı”) on 13 June 2013 which is published onOfflcial Gazette numbered 28676. “Paid-in capital’, “Restricted prolit reserves” and “Share premium”should be presented by ıısing their registered amounts in the statutory records. The restaternentdifferences (e.g. inflation restatement differences) arising from the application of this Cornmuniqudshould be associated with the:
- ‘Capital restaternent differences” account. foliowing the “paid—in cnpital” line item in theflnancial statements, ifthe differences are caused by “paid-in capital” and have not been added tocapital yet;
— “Retained earııiııgs”, if the differences are arising from “restricted profit reserves” and “sharepremiurn” and have not been associated witlı eitlıer profit distribution or capital increase yet.
Other equity items are carried at the amoıınts that are valued based on the CMB’s Financial ReportingStaııdards.
Capital restatement differences may only be considered as part of the paid-up capital.
Listed companies distribute dividend in accordance with the Communiqu No. 11-19.1 issııed by theCMB which is effective from Eebruary 1,2014.
53
(Convenience Translation into English ofConsolidated Financial Statemcnts Originaliy Issucd in Turkish — SecNote 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCİAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2014
tAmounts arc cxprcsscd as Turk islı lira (“1RY’ Tlınusand) unlcss ollıcrwisc ındicated
NOTE 20— EQUITY (cont’d)
Cornpanies distribute dividends in accordance with their dividend payment policies settled and divideııdpayınent decision taken in general assembiy and also in conforrnity with relevant legislations. Thecornımıniqıı does not constitute ü rniniıııum dividend rate for the publiciy—heid subsidiaries. Companiesdistribute dividend in accordance with the method deflned in their dividend policy or afliclcs ofincorporation. in addition, dividend can be distributed by fixed or variable installrnents and advancedividend can be paid in accordance with profit on interim financial statements of ilie Company.
in accordance witlı the Turkish Commercial Code (TCC), unless ilie required reserves and the dividendfor shareholders as determined iıı the article of association or in the dividend distribution policy of thecornpany are set aside, no decision may be made to set aside other reserves, to transfer proflts to thesııbsequent year or to distribute dividends to the holders of usufruct right certificates, to the members ofthe board of directors or to the employees; and no dividend can be distributed to these persons unless thedetermined dividend for siıareholders is paid in cash.
Infiation adjustments to issued capital and historical amount of extraordinary reserves can be used asan internal soıırce of capital increase, dividend distribution in caslı or the net off from prior periodlosses. in case of usage of infiation adjustment to issued capital in dividend distribution in cash, it issubject to corporation fax.
Other sources which rnight be used in dividend distribution, except the profit for the period. instatutory books of the Company are equal to TRY 960.741 thoıısand as of 3! December 2014 (31December 20 13: TRY 1 .024.546 thoıısand).
The legal reserves and the share premium, which is regarded as legal reserve in accordance with TCCArticle 466, are presented using their amounts in statutory records. in this context, the difference ofinfiation restaternents in accordance with IFRS frarnework, that are not subject to profit distribLıtion orcapital increase as of the date of financial statements, is associated with the retained earnings.
According to the first paragraph of Article 519 numbered 6102 of the Turkish Commercial Code(“TCC”), 5% of the profit shall be allocated as the first legal reserves, up to 20% of the paid! isstledcapital. First dividend is appropriated for shareholders afler deducting from the profit. Following thededuction of the arnounts from the “profit”. General Assembly of Shareholders is authorized to decidewhıether shall be the rernaining balance shail be fully or totally placed in extraordinary legal reservesor whether it is distribııted, also taking into consideration the Cornpany’s profit distribution policy.According to the sııb-clause 3 of the clause 2 of Article 519 of the Turkish Commercial Code, aflerdeducting dividends arnounting to 5% of the paid/issued capital frorn the part decided to be allocated;ten percent of the rernaining balance shalh be appropriated to second legal reserves. If it is decided todistribute the profit as bonus share, through the method of adding the profit to the capital, second legalreserves k not appropriated.
According to the CMB Comrnııniqıı, untih the cornpany’s Article of Association was revised on 31March 2008, an arnount eqııal to the first dividend distribııted to shareholders is allocated as statusreserves in order to be ıısed in the plant expansion. Also according to the 1 3th Article of Associationbefore the revision on 31 March 2008, 5% of the net profit for the period after taxation is estirnated tobe ahlocated as legal reserves up until reaching 50% of the paid/issued capital. The reserve arnountthat exceeds the 20% of the legal reserves, defined by the Article 519 of TCC. is recorded as statusreserve. Cornpany’s Shareholders’ General Assembly, which was held at 30 March 2012, decidedstatus reserves can be used as an internal source of capital increase and profit sharing.
54
(Coııvenience Translation into English of Consolidated Fiııaııcial Statemeııts Originaliy Issued in Turkish — SecNote 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO Tl lE CONSOLIDATED FINANCİAL STATEMENTSFOR ThE YEAR ENDED3I DECEMBER 2014
(Anı au nts are cx pressed as Türki su Lira (TRYTlıntısa nd) ii ıl ess ol lıcrwi s ad caled
NOTE 20— EQU ITV (cont’d)
Cash flow Iıedging reserve arises from the recogni(ion of (Ile clıanges in the fair value of derivativeönancial instruments that are designated aııd effective as hedges of future cash flows directly inequity. The arnounls deferred in equity ure recognized in the consolidated staternent of income 111 thesarne period. iftlıc hedged item affects prolit or Ioss.
Revalııation reserve of property, plant and equipment arises from the revaluation of Iand andbuildings. lui the case of a sale or retirement of the revalued property, the related revalııation surphusremaining in the properties revalııation reserve is transferred directly to the retained earnings.
The arnendrnent in IAS—I 9 “Employee Benehits” does not permit the actııarial gam /Ioss considered inthe calculation of provision for employee terıııination beneflts to be accounted for under the statemeııtof income. The gains and losses arising from the changes in the actuarial assumption liave beenaccounted for by “Actuarial (Loss)/Gain Euııds” under the equity, The funds for actuarial gaiııs/(losses) in the cmployee termination beneflıs is not in a position lo be reciassifled under profit andIoss.
As it stated in Note 2.1, foreign currency translation reserve arises froıii expressing the assets andliabilities of the Group’s foreign operations in reporting currency TRY by using exchange ratesprevailing oıı the balance sheet date. Exclrnnge differences arising. if am. are recognized undertranslation reserve in equity.
NOTE 21 -SALES AND COST OF SALES
Sales Revenue
Dornestic sales
Export sales
Other revenues (*)
Sales retıırns (—)Sales discouıı(s (—)
_______________________ _______________________
(*) The total anıoıınt of by prodııct exports in other revenııes is TRY 139.685 thousand (31 December2013: TRY 130.926 thousand).
1 January — 1 ianııary —
Cost ofoods sold (-)
Gross profit
31 December 2014 31 December 2013
9.962.783 8.576.056
1 .230.427 972.019308.022 253.410
(11.158) (10.155)
(5.937) (10.579)
1 1.484.137 9.780.751
(9.045.652) (7.921.852)
2.438.485 1.858.899
55
(Convenience Translation into English ofconsolidated Financial Sıatenıenıs Originaliy Issued in Turkish SeeNoLe 34)
EREĞLİ DEMiR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR Tl lE YEAR ENDED 31 DECEMBER 2014
(Amoıınts ac cxprcsscd as Ttjrk,sh Linı ([RY Ilınıpsandi ıınless oıhcrwisc ıı,dıcalcd
NOTE 21 — SALES AND COST OF SALES (cont’d)
The breakdown of cost of goods sales for the periods I3! December 2013 k as follows:
January —3! December 2014 and 1 .Ianııary —
Raw material usage
Personnel costs
Eııer’ costs
Depreciation and aınortizatioıı expensesFactory overheads
Other cost of goods sold
Non—operating costs (t)
Ereighil cosis for salles delivered ta cuslomerslnventory write—downs witi in the period (Note 9)
Reversal of invento write-downs (Nole 9)
Otlıer
1 Januaıy —31 December 2014
(6.376.176)
(1.085.243)
(616.695)(409.791)
(214.760)
(142.572)
(67.390)
(62.594)
(29.951)
15.013
(55.493)
(9.045.652)
1 ianuaıy —3 1 December 2013
(5.748.149)
(855.242)
(553.916)
(376.586)
(144.079)
(92.630)
(52.696)
(34.050)
(32.607)
16.664
(46.561)
(7.921.852)
(*) Duc to the planned! Lınplanned hah prodııction of planı of the Group’s, operations vere suspendedtemporariiy in the current period. As ü resuht of this, unallocated overheads. TRY (67.390) thousand.has been accounted directly under cost ofgoods said (3! December 2013: TRY 52.696 thousaııd).
NOTE 22 - RESEARCH AND DEVELOPMENT EXPENSES, MARKETING, SALES ANDDISTRIBUTİON EXPENSES. GENERAL ADMINISTRATWE EXPENSES
The breakdown of operalional expenses according to their nature for the periods 1 January — 31December 2014 and 1 Januarv —31 December 2013 k as follows:
Marketing. sales and distribution expenses (-)General administrative expenses (-)Research and development expenses (-)
___________________ ___________________
1 January — 1 ianuary -31 December 2014 31 December 2013
(1 19.786) (107.997)(223.509) (201.944)
(6.999) (3.862)
(350.294) (3 3.803)
56
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO Tl lE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED3I DECEMBER 2014
M mou na are expressed as 1 urk ish 1. ira (1 RY ‘1 lıou sand) uni ess ot Iıcrwi se indi ıcd
NOTE 23- OPERATING EXPENSES ACCORDING TO THEIR NATURE
The breakdown of operational cxpenses according to tlıeir nature for the periods 1 ianuary — 3!Deceınber 2014 and 1 ianııary —31 December 2013 is as follows:
I .Ianuary -31 December 2014
(135.299)
(12.520)
(15.245)
(3.934)
(56.511)
(223.509)
December 2014 and
t Inntıary —31 December2ol3
(I27.755)
(7.146)
(18.962)
(4.765)
(43.316)
(201.944)
The hreakdown of research and development expenses for the periods 1 ianuaryand 1 ianuarv —31 December 2013 is as follows:
— 3 1 December 201 4
1 January -3! December 2013
(1.975)
(Convenience Translation into English of Consolidated Finaııcial Staternents Originaliy Issued in Turkish SecNote 34)
Personnel expense (-)Depreciation and amortization(-)
Service expenses (-)Other (—)
t Jan uaıy —3 1 Decenıber 20 14
(65.053)
(11.167)
(15.066)
(25.500)
(119.786)
1 ianııaty -31 December2ol3
(59.668)
(10.748)
(19.896)
(17.685)
(107.997)
The breakdown of general administraıive expenses for the periods 1 ianuary —311 January —31 December 2013 is as follows:
Personnel cxpenses (—)Depreciation and arnortization (-)Service expenses (-)Tax. duty aııd charges (-)Other (—)
Personnel expeııses (-)Depreciation and arnortization (-)Oıher (—)
1 January —31 December 2014
(4.364)
(144)(2.491) (1.887)
(6.999) (3.862)
57
(Conveıılence Translation iıırn Enalislı ofConsofldaed Fiııancial Statcments Originaliy lssued ili Turkish SecNote 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARJES
NOTES TC Tl lE CONSOLIDATED FINANCIAL STATEMENTSFOR ThE YEAR ENDED 31 DECEMBER 2014
(Ammıııts are cxpressed as itırLıslı 1m (TR\ Iuıusaııd) uıılcss oıherısc indıcattü
NOTE 24- OTHER OPERATING JNCOME/(EXPENSES)
Other operating incomeForeign exclıangc gam froın tradereceivables and payables <net)Inıcrest incorne from on credit salesDiscoıınt incorneProvisions ıeleasedService incorneMaintenance repair and rent incomeWarehonse inconıclndemnity and penalty detention incomeInsurance indernııiıy incoıneRoyalty incomeGam on sale of tangible assetsOther incorne and gains
The breakdown of other operating cxpcııses For the periodsJanuarv —31 Deceinber 2013 k as follows:
Otlıer operatine expcnses (-P rovisions expensesDonation expenscs
Discourn expenses
Port facility pre-licence expensesLawsuit compensation expensesPenalty expenses
Service expenses
Rent expenses
Capital Markets Board registration expenses
Stock exchange registration expensesLoss on dkposal of tangible assetsImpairmem of propeny, plant and eqııiprnent (Note 12)Other expenses and losses
- 57.90159.360 40.53415.479 1.956
12.0508.5126.9343.6922.367
738 8.732606 7.122
1.054 1.22714.634 1 1.856
148.563 162.883
(69.643)
(8.529)
(23.359)
(8.603)
(3.994)
(3.471)
(4.465)
(598)
(859)
(1.262)
(2,002)
(20.472)
(22.920)(170.177)
The breakdown of other operating income for the periods 1 ianuary —31 December 2014 and 1ianııary —31 December 2013 k as follows:
1 January -
31 Dccernber2ol41 January -
31 Dcceınber2ol3
23.89618.3897.2433.0854.079
1 ianuary — 3! December 2014 and 1
1 January -
31 December 2014
1 Januan -
31 Deccrnber2OI3
(49.560)
(10.213)
(9.155)
(4.906)
(3.765)
(3.485)
(2.638)
(6 1 8)
(5.588)
(910)
(4.127)
(18.555)
(28.822)(142.312)
58
(Convenience Translation into English ofConsolidated Financial Statements Originaliy Issued iıı Turkish SecNote 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTSFOR Tl lE YEAR ENDED3I DECEMBER 2014
(Ainotinis ıre exprcssed as lurkisis lira (“TRY Tlıousaııd) uııless oılıerwise iııdıcaıed
Financial incoınes
Interest incorne on bank depositsForeign exchange gains (net)
Fair vahıe differences of derivative önancialin st nı in enis (net)Other flnancial income
NOT 26- FINANCE EXPENSES
The breakdown of finance expenses for the pcriods 1 January —31 Deceınbcr 20December 2013 is as follows:
Financial expenses (—)
Interest expenses on financial liabilitiesForeign exchaııge loss (net)Interest cosi ofempioyec benefitsOther linancial expenses
(184.271)
Corporate tax payable:Current corporate tax provisionPrepaid taxes and fuııds (-)
Taxation:Current corporate tax expenseDeferred tax expense
NOTE 25- FINANCE INCOME
The breakdown of finance incoıne for the periods 1 iaııuary —3 Deceınber 2011 and 1 ianuary — 31December 2013 is as follows:
1 iaııuaiy -
31 December 2014
53.675
1 Jan uary —
31 Decenıber 2013
69.75422.993 -
12.220 35.557- 19
88.888 105.330
1 January -
3 1 Deceıuber 2014
14 and 1 Jantiary — 3 1
1 January —
31 December 2013
(218.356)(152.207)
(22.237)
(2.170)<394.970)
(30.438)
(3.020)
(217.729)
During the period. the interest expenses of TRY 3.936 tlıousand Iıave been capitalized as pan of theGroup’s property. plant and equipment (1 Januarv - 3! December 2013; TRY 2.008 thousand).
NOTE 27 -TAX ASSETS AND LIABILITIES
31 Deceınber 31 December
2014 2013
266.045 195.980(136.337) (150.990)
129.708 44.990
1 January - 1 Jantıary -31 Decernber 2014 31 December 2013
266.045 195.98038.735 91.774
304.780 287.754
59
(Convenience Translation into English ofCoıısolidated Financial Staternents Origiııally lssued in Turkislı — SeeNote 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO Tl lE CONSOLIDATED FINANCIAL STATEMENTSFORTHEYEAR ENDED3I DECEMBER 2014
tA rnnunls are cxprcssed as Turk i sh 1 nı tl RY ‘1 hoLısa nd) uni css otlıcrwı sc indi cated
NOTE 27 —TAX ASSETS AND LİABILITIES (coııt’d)
Corporate fax
The Group, except its subsidiary ili Romania and Singapore, is subject to Turkish corporate taxes inforce. The necessary provisions are allocated iıı the consolidated önancial statemenis for the estimatedIiabilities based on the Groııp’s results for ilie year. Tıırkish fax legislation does not pernıit a pareııtcornpany and its sııbsidiary to ille a consolidated tax return. Therefore, provisions for taxes, asreflected in ilie consolidated Jinaııcial staternents, have been calculated on a separate-entity bask.
Corporate tax is applied on taxable corporate income, which is calcıılated frorn the statutoryaccounting profit by adding ııon-dedLıctible expenses, and by deducting dividends received frornresident companies, other exempt incorne and investment incentives ulu ized.
The effective corporate tax rate in Turkey is 20%, 16% in Romania and 17% iıı Singapore as of3lDecember 2014 (31 December 2013: in Tıırkey 20%, in Romaııia 16%). The total arnount of iliecorporate fax paid by the Group in 2014 is TRY 181.327 thousand (31 December 2013: TRY 163.199thoıısand).
in Tıırkey, advance tax returns are iled on a quarterly basis. The ternporary fax of 2014 has beencalculated over the corporate earnings ıısing the rate 20%, during the temporary iaxation period.(2013: 20%).
Losses can be carried forward to offset the future taxable incorne For up to maximıım 5 years(Romania: 7 years). [Iowever, losses cannot be carried back to offsei the proilts of the previousperiods, retrospectively.
in Turkey, a definite and distinct reconciliation procedure for tax assessment does not exist.Cornpanies ille their fax retıırns between 1 April - 25 April following the closing period of the relatedyear’s accounts. Tax returns and related accounting records may be examined and revised within fiveyears.
Incorne withholding tax
in addition to corporate taxes, cornpanies should also calculate incorne withholding taxes ondividends distributed, except for the dividends distribııted to fuliy fledged taxpayer cornpaniesreceiving and declaring these dividends and to Turkish branches of foreign cornpanies. The rate ofincorne withholding tax applied to ali cornpanies in the period of 24 April 2003-22 JuIy 2006 is 10%.This rate was changed to 15% as of 22 July 2006 by the decision of the Council of Ministers,numbered 2006/10731. Undistributed dividends incorporated in share capital are not subject to theincorne withholding taxes.
19,8% withholding tax must be apphied to the investrnent allowances relating to investrnent incentivecertiilcates obtained prior to 24 April 2003. Investment disbursernents without any investrnentincentive certificate after this date which are directly related to production facilities of the cornpanycan be deducted by 40% frorn the taxable incorne. The investments without investrnent incentivecertiilcates do not qııalify for tax allowance.
60
(Convenience Translation into English ofConsolidated Finaııcial Staternents Originaliy Issued in Turkish SecNote 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR Tl lE YEAR ENDED 31 DECEMBER 2014
(A rnou nts are exprssed as t ü ıL su 1 ‘nı (FR Y T hmısa mi) ıınless ol Iıerwi SC in d icated
NOTE 27 —TAX ASSETS AND LİABILITIES (eont’d)
lnvestment allowance application
With the decision numbered 2006/95, which was taken during the meeting of the Constitutional Courton 15 October 2009, the phrase “onlv related to the years 2006, 2007 and 2008 which was a partof the Temporary Article 69 of the lncoune Tax Law was cancelled and the cancellation becameeffective from the dale the decision has been published in the Oföcial Gazette on 8 ianııary 2010.Accord ing to the decision. ilie iuıvest meuıt incentive amoıınt outstanding that cannot be dedLlcted frorn2008 laxable income previotısiy. wili be deducted frorn taxable income of the sııbsequent profliableyears.
Regarding the cancellation decision taken by the Constilutional Court, atı arnendnıeııt was made iıı the69’ article in Incorne Tax Regulation using the regtulation nıınıbered 6009 aııd dated 23 iuIy 2010.Consequentlv. in cornpl iaııce with the cancellation decis on of the Constitutional Court. the vearIiınitation has been abolislıed and investrnent allowaııce has been limited to 25% of the profit. AsIiınitation of investment allowance to 25% of the proflt by regulation numbered 6009 is found to becontrarv to law bv the Constitutional Court, the Constitutional Court cancel led the regulation aııdstayed an eecutioıı. Corporate tax ratio of 30% ii the previoııs regulation for the ones who benefitfroun investmeııt allowance has been decreased to the effective corporate tax with the arnendınentınade (2013: 20%).
Deferred tax
The Groııp recognizes deferred tax assets auıd Iiabilities based ııpon the teıııporary differences arisingbetweeıı its taxable statutory hiuıancial staterneııts and its ünancial statenıeııts prepared in accordancewitlı the CM B’s Comnıun iqu on Accoıınting Standards. Tlıese di ITerences ıısuahly result in therecognition of revenue and expenses in differeııt reporting periods for the CMB regulations and taxpurposes and are explained below.
Tax rate used in the calculatiouı of deferred tax assets and hiabihities (excluding Iand) are 20% for thesubsidiaries in Turkey. 17% for the subsidian’ in Singapore and 16% for the subsidiary in Romania (31December 2013: in Turkev 20%, in Rornanla 16%). Deferred tax related with the teuııporao’ differencesarising frorn Iand parcels k calculated with the tax rate of 5% (December 2013: 5%).
As the cornpanies ili Turkev cannot give a consohidated corporate tax deciaration. subsidiaries thathave deferred tax assets are not netted off with subsidiaries that have deferred tax Iiabilities anddiselosed separateiy.
61
(Convenience Translation oto English ofconsolidated Financial Statemeııts Originally Issued in Turkish SecNote 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2014
M mouııts are es pressed as in, k su i ra (‘İR Y ‘T bu asa nd) ii ni ess <flbcrwi se nd i cated
NOTE 27 —TAX ASSETS AND LİABILITIES (cont’d)
31 December 31 December2014 2013
Deferred tax asseis:Carry forward tax losses 2.056 20.625
Provisions for employee beneflls 97.545 78.445
Investınent ıncentıve — 44.253
Provision for Iavsuits 37.598 38.895
Inventories 15.601 6.519
Provision for other doubtful receivables 12.481 11.192
Tangible and intangible flxed assets 9.901 10.455
Fair values of the derivative flnancial instrurnents 923 2.952
Other
Presentation of deferred tax assets/(Iiabilities):
Deferred tax assetsDeferred tax (Iiabilities)
(788.481) (593.509)(13.399) (13.327)(6.199) (8.870)
(10.828) (20.399)(4.110) (4.251)
(823.017) (640.356)
(626.229) (409.266)
2014 2013
31.881 17.836(658.110) (427.102)(626.229) (409.266)
20.683
196.788
Deferred tax Iiabilities:Tangible and intangible flxed assetsFair valııes of the derivative flııancial ınstrurneats
Arnortized cost adjustment on Ioans1 nventories0111cr
17.754
231.090
in the flnancial siatemenis which are prepared according lo ilie TAS, of Ereğli Demir ve ÇelikFabrikaları T.A.Ş. and ils afilhiales (hal are separaie 1axpaer entilies. (Ile net deferred Iax assets andliabilines of the relaled companies are classifled separateiv within the accounts of deferred ıax asselsand liabilities of Ereğli Demir ve Çelik Fabrikalari T.A.Ş. and its subsidiaries’ consolidated flnancialsiaiemerns. The temporary differences diselosed above besides the deferred tax assel and liabililies,lıave been prepared on the basis of the gross valucs and show the net deferred tax posilion.
31 Decem her 31 December
62
(Convenience Translation into English ofConsolidated Financial Statements Originaliy Issued in Turkish — See
Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCİAL STATEMENTS
FORTHEYEAR ENDED3I DECEMBER 2014
(Amounts are expressed as Turkish Lira (“TRY” [housand) unless otherwise indicaıcdj
NOTE 27 —TAX ASSETS AND LİABILITIES (cont’d)
Maturities of carry forward tax losses are as follows:
Carry forward tax losses
31 December 2014 31 Decenıber2olj
1 year - 511.825
2 year
3 year
4 year
5 year
Deferred İax asset/(liabilitv) movements:
Opening balance
Deferred tax expense
The amount in comprehensive income/(expense)
Translation ditTerence
Ciosing balance
Reconciliation of ıax provision:
Profit before tax
Statutory tax rate
Calculated tax acc. to effective tax rate
Reconciliation between the tax provision and calculated tax:
- Non-deductible expenses
- Effect of tax losses unrecotrnised
deferred tax assets in prior years
- Effect ofcurrency translation to non taxable assets
- Investınent incentives
- Effect of non-taxable adjustments
- Effect of the different tax rates
due to foreign subsidiaries
- Other
Tax expense in reported in the consolidate
statement of income
1.965.571
(92.022)
(4.219)
1.246.162
1.849
(480) (157)
Defened tax assets (*)
3 1 December 2014 3 1 December 2013
51.716
- 51.411 - 51.411
J9.100 - 1.629 -
8.651 - 8.651 -
27.751 563.236 10.280 103.127
() The Company had written offTRY 92.022 thousand of deferred ax assets in 31ihat recoverability of tax losses amounting to TRY 460.109 thousand is remote.
1 .January -
31 December20l4
December 2012 assuming
1 Januarv -
31 December 2013
(409.266) (135.970)
(38.735) (91.774)
10.909 (2.709)
(189.137) (178.813)
(626.229) (409.266)
1 ianuaıy - 1 Januaıy -
3! December 2014 31 December 2013
20% 20%
393.114 249.632
4.668 5.656
28.629
(3.276)
3.644 5.421
75
304.780 287.754
63
(Convenience Translation into English ofConsolidated Financial Statements Originally lssued in Turkish — SeeNole 34)
EREĞLİ DEMiR VE ÇELiK FADRiKALARI T.A.Ş. AND ITS SUBSIDİARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFORTHEYEAR ENDED3I DECEMBER 2014
(AmoLınis am cxpresscd as TurLislı Lira (‘‘rRY’ Thousand) unless oıhcrvisc indicated
NOTE 27 —TAX ASSETS AND LİABILITIES (cont’d)
As of 1 January — 31 December 2014 and 2013,comprehensive income/(expense) are as follows:
Oıher comprehensive incomei(Iossin the current period
_____________________________________________________________
Change in revaluation reserves of ixed assetsChange in actuarial (loss)/gainChange in cash flow hedging reservesChange in foreign currency translation reserves
_____________________________________________________________
Other comprehensive incomei(Ioss)in the current period
_____________________________________________________________
Change in revaluation reserves of fLxed assetsChange in actuarial (loss)/uainChange in cash Ilow hedgin2 reservesChange in foreign currency translation reserves
_____________________________________________________________
1 January -
31 December2ül4
1 Januaıy
31 December 2013
Number of shares outstandin
Net profit attributable to equity holders
thousand
- TRY
Profit per share with 1 TRY nominal value TRY 34
350.000.000.000
1.601.415
0.1575 /45,75%
350.000.000.000
919.974
0.2628 / 26.28%
the detalls of the tax gains/(Iosses) of the other
1 Januaıy —31 December 2014Amount Tax income/ Amount
before tax (expense) after tax
896 - 896
(75.386) 15.077 (60.309)
20.842 (4.168) 16.674
792.010 - 792.010,738.362 10.909 749.271
1 Jaııuan’ —31 December 2013Amount Tax income! Amount
before tax (expense after tax
(3.559) - (3.559)
(14.282) 2.856 (11.426)
27.826 (5.565) 22.261849.490 - 849,490
859,475 (2.709) 856.766
NOTE 28- EARNINGS PER SHARE
64
(Convenience Translation into English ofConsolidated Financial Staements Originally lssued in Turkish — 5cc
Note 34)
EREĞLi DEMİR VE ÇELİK FABRiKALARI T.A.Ş. AND ITS SUBSIDİARIES
NOTES TÜ THE CONSOLIDATED FINANCİAL STATEMENTS
FOR THE YEAR ENDED3I DECEMBER 2014
tAmounts are eprcssed as Turkislı Lira <TRY Tlıousand) unlcss othcrwise indicaled.)
NOTE 29 -RELATED PARTY DISCLOSURES
The immediate parent and ultimate controlling parent of the Group are Ataer Holding A.Ş. and Ordu
Yardımlaşma Kurumu respectively (Note 1).
The transactions between the Group and its subsidiaries, which are related parties of the Group, have
been eliminated in the consolidation and therefore are not diselosed in this note.
The details oftransactions between the Group and other related parties are disclosed below:
3 1 December 3 1 December
2014 2013
Due from related partles (short term)
Oyak Renault Otomobil Fab. A.Ş.<2> 27.886 27.443
Bolu Çimento Sanayi AŞ.t1 3.887 4.263
Adana Çimento Sanayi T.A.Ş. <‘> 4.071 4.689
Other 565 299
36.409 36.694
The irade receivables from related parlies mainly arise from sales of iron. steel and by-products.
3 1 December 31 December
2014 2013
Due to relaıed parties (shon term)
Omsan Lojistik A.Ş.”> 3.306 2.531
Omsan Denizcilik A.Ş.”’ 4.982 2.469
Oyak Pazarlama Hizmet ve Turizm A.Ş.t> 5.361 2.894
Oyak Savunma ve GUvenlik Sistemleri A.Ş.’’’ 2.876 2.263
Omsan Logistica SRL<’’ - 479
OYAK Yatırım Menkul Değerler A.Ş. <‘- 2.141
Other 1.804 1.666
18.329 14.443
Trade payables to related parties mainly arise from purchased service transactions.
Subsidiaries of the parent company(2> ioirn venture
65
(Convenience Translation into English ofConsolidaed Financial Statements Originally (ssued in Turkish — 8ccNote 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SURSIDİARIES
NOTES TO THE CONSOLIDATED FINANCİAL STATEMENTSFOR THE YEAR ENDED3I DECEMBER 2014
(Am[rnnls are cprcsscd as Turkish Lira (TRY” Thousand) un!css otlıcrwise indicaıcd
NOTE 29 -RELATED PARTY DISCLOSURES (cont’d)
Major sales to related parties
Oyak Renault Otomobil Fab.
Adana Çimento Sanayi T.A.Ş.”
Bolu Çimento Sanayi A.Ş.<’1
Aslan Çimento A.Ş.<’>
Mardin Çimento Sanayi ve Ticaret A.Ş.11
Other
_____________________ _____________________
The major sales to related parties are generaliyproducts.
Major purchases from related arties
Omsan Denizcilik A.Ş.<’>
Oyak Pazarlama Hizmet ve Turizm
Omsan Lojistik A.Ş.
Oyak Savunma ve Güvenlik Sistemleri A.Ş.11>
Omsan Logistica SRL’’>
Oyak Teknoloji Bilişim ve Kart Hizmetleri A.Ş.111
Other
The major purchases from related parties are generaliy due tü the purchased service transactions.
tl) Subsidiaries of the parent company(2) Joint venture
The terms and policies applied to the transactions with related parties:
The period end balances are un-secured, interest free and their collections wilI be done in cash. As of
3) December 20)4. the Group provides no provision for the receivobles from related parties (31December 2013: None).
Salaries. bonuses and otlıer beneflts of the key managemeni:
For the year ended 31 December 2014. the total compensation consisting of short term beneflts such
as salaries. bonuses and other beneflts of the key management of the Group k TRY 18.448 thousand
(31 December 2013: TRY 14.574 thoıısand).
1 January -
31 December20l4
1 January
31 December 2013
128.005 97.797
19.262 15.465
16.929 13.010
2.652 1.757
1.098 450
2.564 892
170.510 129.371
due to the sales transactions of iron. steel and by
1 ianuaıy - 1 January -
31 December 2014 31 December 2013
110.485 68.151
42.422 26.841
32.243 26.603
30.539 23.481
7.758 7.02)
- 5.384
7.018 6.712
230.465 164.193
66
(Convenience Translation into English ofConsolidated Financial Sıatements Originaliy Issued in Turkish — See
Note 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDİARIES
NOTES TO THE CONSOLİDATED FINANCIAL STATEMENTS
FORTHEYEAR ENDED3I DECEMBER2OI4
(Amounts am expresscd as Turkish Lira (‘TRY’ lhousand) unlcss othcrwisc indicajed.)
NOTE 30 - NATURE AND LEVEL OF RISKS DERIVED FROM F(NANCIAL
INSTRUM ENTS
Additional information about financial instruments
(a) Capital risk management
The Group manages its capital through the optimization of the debt and the equity balance that
minimizes the financial risk.
Through the forecasts regularly prepared by the Group, the future capital amount. debt to equity ratio
and similar ratios are forecasted and required precautions are taken to strengthen the capital.
The capital structure of the Group consists of debt which includes the financial fiabilitles disclosed in
Note 6, cash and cash equivalents and equity attributable to equity holders of the parent company,
comprising issued capital, reserves and retained earnings as disclosed in Note 20.
The Group’s Board of Directors analyze the capital structure in regular meetings. During these
analyses. the Board of Directors also evaluates the risks associated with each class of capital togeUıer
with the cost of capital. The Group. by considering the decisions of the Board of Directors, aims to
balance its overali capital structure through dıe payment of dividends. new share issues and share buy
backs as vell as the issue of new debt or the redemption of exisıing debt.
As of 31 December 2014 and 31 December 2013 the net debt/equity ratio is as follows:
3 1 December 3 1 December
Note 2014 2013
Total financial Iiabiliıies 6 3.413.734 3.500.079
4Less: Cash and cash equivalents
Net debt
Tom! adjusted equity (9Total resources
Net debtlTotal adjusted equity ratio
Distribution of net debt/ total adjusted equity
2.186.810 761.111
1.226.924 2.738.968
10.428.861 8.782.973
11.655.785 11.521.941
12% 31%
1 !ı89 24/76
(*) Totai adjusted equity is calcu!ated by subracting cash llow hedging reserves and actuarial (IossYgain fiind and
adding non-contro!!ing interests.
67
(Convenience Translation tmo English ofConsolidated Financial Statements Originally lssued in Turkish —SeeNote 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUHSIDİARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2014
(Amnunts am cxprcssed as Turkish Lira t”TRY’ Tlıousand) unlcss otlıcrwise ındicaıcd
NOTE 30 - NATURE AND LEVEL OF RISKS DERIVED FROM FfNANCIAL
İNSTRUMENTS (cont’d)
Additional information about financial instruments (cont’d)
(b) Signiflcant nccounting policies
The Croup’s accounting policies related to the financial instruments are disclosed in Noe 2“Summary of Signiflcant Accounting Policies, 2.8.8 Financial Instruments”.
(c) Financial risk management objectives
The Group manages its financial instruments through a separate treasury function which wasestablished for ıhat purpose. The developments are foİlowed on a real time basis. The Croup’scorporate treasury function manages the financial instruments through daily regular meetings byevaluating the domestic and international ınarkets and by considering the daily cash inflows andouıflows in accordance wiih the policies and regulations issued by the Group Risk Management Unit.At the end of each day, each Group company prepares a “daily cash report” and Group RiskManagement Unit calculates daily Value at Risk (VaR) for cash and cash equivalents. Theinformation included therein is consolidated by the treasury function and used to determine the cashmanagement strategies. Additionally, the Group’s annual payment schedules are followed through theweekly reports and annual cash management is followed by the monthly reports.
The Group utilizes derivative financial instruments as required and within the terms and conditionsdetermined by the Group Risk Management Unit. Instruments that are highly Iiquid and securing ahigh-level yield are preferred when determining the financial instruments. in that respect. the Grouphas a right to claim the accrued interest on time deposits when withdraw before the predeterminedmaturity.
(d) Market risk
The Croup is exposed primariiy 10 the financial risks of changes in foreign exclıange rates and interestrates. The Group utilizes the fohlowing financial instruments ta manage the risks associated with theforeign exchange rates and interest rates. Alsa, the Group follows price changes and marketconditions regularly and takes action in pricing instantaneously.
The Group prefers floating interest rates for long term borrowings. To hedge against the interest riskthe Group uses interest swap contracts for some of its borrowings.
In the current period, there is no signiflcant change in the Croup’s exposure ta the market risks or themanner wlıich it manages and measures risk when compared ta the previous year.
68
Max
imum
cred
itri
skex
posu
reas
ofba
lanc
esh
eet
date
(9(A
+B
±C
+D
tE)
-S
ecur
edpa
rtof
the
rnas
imum
cred
itri
skex
posu
revi
aco
llat
eral
etc.
AN
etbo
okvu
lue
ofth
efi
nanc
ial
asse
tsth
atai
tne
ithe
rov
erdu
efo
rim
pair
ed
E.C
arry
ing
amou
nt
offl
nanc
ial
asse
tsth
atar
ere
nego
tiat
ed,
othe
rwis
eci
assi
fled
as
over
due
orim
pair
ed
üN
etL,
ook
ulu
eo
ffi
nanc
ial
asse
tsth
atar
eow
rdue
but
not
impa
ired
-se
cure
dpa
rtvi
aco
llat
eral
dLc.
D-N
etbo
okva
lue
of
iınp
aire
dfl
naiıc
ial
asse
ts-
Ove
rdue
(gro
ssca
rryi
ngam
otm
t)-
hnpa
irm
ent
(-)
-S
ecur
edpa
flvi
aco
llat
eral
e(c.
-N
otov
erdu
e(g
ross
carr
ying
arno
unt)
-lr
npai
rmen
t(-
)-
Sec
ured
part
via
coll
ater
alet
c.E.
Off
-bal
ance
shee
tfl
nanc
ial
asse
tsex
pose
d10
cred
itri
sk
Tra
de
rece
ivab
les
timi
are
over
duc
but
not
impa
ired
arno
unhi
nglo
TR
Y8.
040
ihou
sand
.ar
epa
stdu
eup
to1-
30da
ysan
dse
cure
dw
ith
guar
ante
es.
(Con
veni
ence
Tra
nsla
tion
irna
Eng
iislı
ofC
onso
lidat
edFi
nanc
ial
Sta
tenı
ents
Ori
gina
llyLs
sued
inT
urki
sh—
Sec
Not
e31
)
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
NS
OL
IDA
TE
DF
INA
NC
İAL
ST
AT
EM
EN
TS
FO
RT
HE
YE
AR
EN
DE
D3,
DE
CE
MR
ER
2014
(Arn
ount
sar
ecx
pres
sed
astu
rkıs
lıLi
ra<
IRY
”T
lıous
andl
unlc
ssoı
lıerw
isc
ındi
cale
d
31
Dec
enıb
er20
14
NO
TE
30-N
AT
UR
EA
ND
LE
VE
LO
FR
ISK
SD
ER
WE
DF
RO
MF
INA
NC
İAL
INS
TR
UM
EN
TS
(con
t’d)
Add
itio
nsd
info
rmat
ion
about
finan
cial
inst
rurn
ents
(con
t’d)
(e)
Cre
dii
risk
man
agem
ent
Tra
dere
ceiv
able
sin
clud
ea
larg
enu
ınbe
rof
cust
orne
rssc
atte
red
inva
riou
sse
ctor
san
dre
gion
s.T
here
isno
risk
conc
entr
atio
non
iisp
ecif
iccu
stom
eror
agr
oup
of
eust
orne
rs.
The
ınaj
oriı
ytr
ade
rece
ivab
les
are
assu
red
byba
nkIe
tters
ofgu
aran
tee
and/
orcr
edit
Iim
its.
The
cred
itre
view
sar
epe
rfor
med
cont
inuo
usly
over
the
acco
unts
rece
ivab
leba
lanc
eof
the
cust
omer
s.T
heG
roup
does
not
have
asi
gnif
lcan
tcr
edit
risk
aris
ing
from
any
cust
omer
.
Cre
dit
risk
of
fina
ncia
lin
sıru
men
tsR
ecei
Mıb
les
Der
ivuti
e
Ban
kfi
nanc
ial
Dep
osit
siı
ıstr
unıe
ııts
27.5
382.
186.
783
Tra
deR
ecei
vabl
esO
tlıer
Rec
eiva
bles
Rel
ated
pari
ylh
ird
part
yR
elat
edpa
rty
Thi
rdpa
rty
36.4
091.
720.
451
-
-1.
659.
676
--
36.4
091.
7124
11-
8.04
0-
-8.
040
--
62.1
07-
6240
3(6
2.1
07
)-
(62.
403)
27.5
382.
!86
.783
92.3
12
92.3
12
69
(Con
veni
ence
Tra
nsla
tion
into
Eng
lish
ofC
onso
lida
ted
Fina
ncia
lSt
aıer
nent
sO
rigi
naliy
Issu
edin
Tur
kish
—Se
eN
ote
34)
ER
EĞ
Li
DE
MİR
VE
ÇE
LiK
FA
BR
İKA
LA
RI
T.A
.Ş.
AN
DIT
SS
UB
SID
IAR
IES
NO
TE
ST
üT
HE
CO
NS
OL
IDA
TE
DF
INA
NC
İAL
ST
AT
EM
EN
TS
FO
RT
HE
YE
AR
EN
DE
D31
DE
CE
MB
ER
2014
IAın
ounl
sar
eex
prcs
sed
asT
urkı
shLi
ra(T
R\”
rhou
sand
)un
less
oIhe
rvıs
cnd
pcaı
edj
NO
TE
30—
NA
TU
RE
AN
DL
EV
EL
OF
RIS
KS
DE
RIV
ED
FR
OM
FIN
AN
CİA
LIN
ST
RU
ME
NT
S(c
ont’
d)
Ad
dit
ion
alin
form
atio
nab
out
finan
cial
inst
rum
ents
(co
nt’
d)
(e)
Cre
dit
risk
man
ager
nent
(con
t’d)
31D
ecem
ber
2013
Max
imur
ner
edit
risk
expo
sure
asof
bala
nce
shee
tda
te(‘
)(A
±B
+C
+D
±E
)
-S
ecur
edpa
flo
fth
em
axir
nunı
cred
itri
skex
posu
revi
aco
llat
eral
etc.
A.
Net
book
valu
eof
the
fina
ncia
las
sets
that
are
neit
her
ow
rdu
eno
rim
pair
ed
B.
Car
ryin
gam
ount
of
tina
sıci
alas
sets
that
are
rene
goti
ated
,ot
hcrw
ise
clas
sifi
edas
over
due
orim
pair
ed-
C.
Net
book
şnlu
eof
flna
ııcia
las
sets
that
are
owrd
uebu
tno
tim
pair
ed-
-se
cure
dpa
rtvi
aco
llat
eral
etc.
-D
.N
etbo
okva
lue
of
impa
ired
fina
ncia
las
sets
--
Ove
rdue
(gro
ssca
nyin
gar
noun
t)-
-hn
pair
rnen
t(-)
--
Sec
ured
part
via
coll
ater
alet
c.-
--
Not
over
due
(gro
ssca
nyin
gar
noun
l)-
--
lrnp
airm
ent
1-)
--
-S
ecur
edpa
rtvi
aco
llat
eral
etc.
--
E.O
ff-b
alaj
ıce
shee
tfi
nmıc
ial
assc
tsex
pose
dto
cred
itri
sk-
-
()T
hefa
ctor
sth
atiı
ıcre
ase
cred
ibilı
ıysu
chas
guar
anıc
esre
ceiv
edar
eno
ttak
eniıı
loac
coun
tin
dete
rmin
a6on
ofam
ount
.
Tra
dere
ceiv
able
sth
atar
eov
erdu
ebu
tno
tim
pair
edar
noun
ling
toT
RY
2.58
7th
ousa
nd,
are
past
duc
upto
1-30
days
and
secu
red
wit
hgu
aran
tees
.
Cre
dit
risk
of
fina
ncia
lin
stru
rnen
tsR
eee
ivab
ies
Bas
ıkD
epos
its
Der
ivat
ive
fina
ncia
lin
stru
rnen
tsT
rade
Rec
eivu
bles
Rel
ated
part
ylN
rdpar
ty
36.6
941.
671.
844
-1.
650.
165
36.6
941.
669.
257
2.58
72.
587
61.3
80(6
1.38
0)
761.
086
761.
086
üıh
erR
ecei
vubl
es
Rel
ated
pafi
yll
ürd
part
y
26.8
92
26.8
92
55.9
58(5
5.95
8)
80.0
31
80.0
31
70
(Convenience Transiafion tnw English of Consolidated Financial Statements Originaliy Issued in Turkish — SeeNote 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
(Amoonıs am çxpresscd as TurLish Lira (TRY” Timosand) unless otherwıse ındicaLed
NOTE 30 - NATURE AND LEVEL OF RISKS DERIVED FROM FINANCİAL
INSTRUMENTS (cont’d)
Additional information about financial instruments (cont’d)
(t) Foreign currency risk management
As of 31 December 2014, stated in Note 28.9 the foreign curreney position of the Group in terms of
original currency is calculated as it as follows:
31 Deccmber2ol4TRY TRY US llaıs EURO Jap Yen
(imal in Otiginal (Orıgin (Otiginal (Ofiginal
reponing CLUTCSC) çunncv( ur500ç’v( emrenev o.OrenLW)
1. TrIe Rec:iables 05 778 19224 204 30458 ‘433
2a. Monely flıundal asocIs 3815(6 37(18V 565 3608 6603
Il,. »ın- noıctwy finarelal asnels . . - -
3 OıI,er 105.294 105.193 . 36
3, Currenl s,scl, (1+2+3) $93588 495.293 769 34.103 14,1(36
5 irade rttcivahles . . -
6a. Mcsne(ary rııanci al assels — —
66, Non. ınonelmy financial asneis - - -
7, Oder 36867 31.34% - 1.956 -
8. Nnn-currcnt ossels (5+6+7) 36.867 31.33% . 1.956 -
9. IsInI asırIs (4+8) 630.455 526.642 769 36.059 3,036
(0. Trade sayab(es 254 101 230.220 494 4.047 533 504
Il, Financial Iiahiliıies 555.509 426 430 . 36904 1.203.596
12ı üIıc ırtıeıary Onrciai liabilides 633 %60 632 979 . 2(6
12b O(hLT non-nnıeıary %nxıcial liahilitiis 127 (20 127.120 - . -
(3. Currenl liahilitic, ( l(»II+12) (.570.599 1.416.7531 494 31.267 1.737.1(X)
l4.Tmdepaab(es -
(5. rnandal (iabiIiİi 399.791 166.194 . 66750 2183 (87
16a. ha nıeaıy Ofl1Li2l ILabIhDel 4(3 582 483 582 - -
16b. Oiher Iıon.ıııonelaıy llnaacial l(ahilınes - . -
17. Nıın-currenl Ilabilitic, (14+15+16) 883.373 639.776 . 66.150 2.183.187
18. To(nI linliililles (13+17) 2.353.972 2,066.525 494 1118.017 3.920.287
19. Net nsscUlinbilily posillon of off-Inlnnce sheet derivative nonnelal
Inslrumenis (l9a.l9h) (578.039) (335(154) - (86.147)
19a OIfl,alasees(ee( roreign CuflenL’y derivalive tinancialasseis 326 61% 208.885 . 41.739
106 OIf-haııcc shal fcwgn CUfllL dtıialne finandal Oahilitıes 11(4 667 543 959 . (27 886
20. tl forcion currencv asscWiahilits pOSiIiOfl (918+19) (2.401.566) ((.873.938) 275 (158.11W) (3.9()6.25l)
21. Sel forei0n curreney assel t liabilliy posilion of monetan ile’ms
(fr2at5+6..l0-I l.12a.13-l5-16a) (1.838.55%) (1.549.305) 275 (73.950) (3.1)1)6.251)
22 bir alııe ofdtıı’tlı’e Iinxıeial ınsınanenıs sısed in flırdgn currenQ
66(6% 87V - 15801
25 I(edged (breigıı cartL,ıey asseSs 904.667 543.939 . (27.886
24. Iledged tbrdgn eııneııcy Iiabılılıes 326 618 208.885 . 31.739
25 Epons 1.370.112 . 517158 82086
26. Iınpoııs 5,301.714 . 2320.516 2.935
71
(Convenience Transla6on loto English ofconsolldated Financial Statements Originaliy lssued in Turkisb — SeeNote 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCİAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2014
(Amounts am epressed as Turkish Lira (“FRY Tlıousand) unless otherwise indıcated.)
NOTE 30 - NATURE AND LEVEL OF RISKS DERIVED FROM FINANCIAL
INSTRUMENTS (cont’d)
Additional information about financial instruments (cont’d)
(fl Foreign currency risk management (conf d)
31 Decemkr 2013T RY TRY L’S Dollars EURO Jap Yen
(Total in (Original (Onigmal (Odginal (Odginal
currency) cunency) cugency cunency) cuneney)
1. Tnde Receivables 91.603 24.567 45 22.656 19.623
2a. Monetaiy llnancial assets 59423 48.20 298 3.630 14
2b. Non- monetaıy financial assets . - — - —
3. Other 144.125 142.694 - 487
3. Currenl asseis (1+2+3> 295.152 215.382 343 26,773 19638
5 Tradereceıvahles - - - -
6a. Monetaıv financbl assets 47920 - . 16119
65. Non- nıonctat’ Ihiancial assets . - . -
7 015cr 41.811 26495 - 3883 44924
8. Nnn-currcnt assrls (5—6—7) 89.732 26.495 - 21.201 44.924
9. Tabi assets (4—8) 3841383 241.877 343 37.975 63.562
I0.Tndepayabks 220202 177.812 365 8671 717337
Il. Financiat fiabılııics 442092 298 928 . 39361 1)6320%
12a. Other ranclary Iinancwl Iiabililies 28(18(12 175,200 - . 276.885
125. Othernon-oneta Onancial Iiabilities 50 800 50.800 - . -
13. Current IlaNllties (10+11+12) 993,816 802.730 365 38.032 2.357.529
4. Trade payahles - -
15. Financial Iiabilities 860.740 490.827 . 101,876 3.497 293
16a. 015cr nıjnelary financial Iiahilities 38663 382,890 . 1,271
165, 015cr non-ınonelaiy tinancial habiliıies
17. Nan-currenl IiaNIiIies (13+15+16) 1.237.363 873.716 . 103.137 3,497.293
18, Tabii liaNlilles (13+17) 2.231.259 1.676.457 465 151.18(1 5.854.822
19. Net asset/IlaNIity Insition afaff-Mance slwetckrhnüw
finantial inslrumen (19a-19b) 2(7142 53.9(8 . Ç5653
19a. 0lf-halance shcct foreign cuntncy deıivalive linancial assets 333 237 169813 . 55653
11* Ollhabncc shccl foreign currcncy denvaııvc flnancıalIıahilfties 115895 115895
20. Net flwcign currencyasscUllaNhly msition (9-18+19) (I.6i9,03i) (1.380.661) (121) (47,553) (5.790.260)
21. Nel foreign currcncy asset? IlaNIlIy msilion ııfmuıwlary
11am (I+2a+5+6.ilI-I I-12n-14-I5-16a) (1.991.512) (1.552.969) (121) (108.575) (5.835.184)
22. Fair value ofde6vative tinancial instmmcnts used in foreigncuntncy hedge 65.197 65(97 -
23. Fledgcd Ihreign cucncy assels 115 895 115.895
24. lledgcd Ibmign currcncy iahilities 333.237 (69 813 - 55653
25. Ewons 1.102 945 - 518695 46(8)3
26. Impons 4891486 - 2 566 578 3.695
72
(Convenience Translation into English ofConsolidated Financial Statements Originaliy Issued in Turkish — SeeNote 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCİAL STATEMENTSFOR THE YEAR ENDED3I DECEMBER 2014
(Amounts are cxpresscd as Turkish Lira (‘TRY Thousand) unless othcrwise ındicatL’dj
NOTE 30 - NATURE AND LEVEL. OF RISKS DERWED FROM FINANCİAL
INSTRUMENTS (cont’d)
Additional information about financial instruments (cont’d)
(t) Foreign currency risk management (cont’d)
The following taNe shows the Group’s sensitivity to a 10% (+1-> change in the TRY. FURO and
Japanese Yen. 10% is the sensitivity rate used when reporting foreign currency risk internally to key
rnanagement personnel and represents management’s assessment of the possible change in foreign
exchange rates.
As of 31 December 2014 asset and Iiability balances are translated by using the following exchange
rates: TRY 2,3 189 = US $ l,TRY 2,8207 = EUR 1 and TRY 0,0193= JPY 1(31 December 2013:
TRY 2,1343 = US $ I,TRY 2,9365 = EUR 1 and TRY 0,0202= JPY 1)
31 December2ol4
1- TRY net asset/Iiability
2- Hedged ponion from TRY risk (-)3- Effect of capitalization (-)4- TRY net effect (1+2+3)
5- US Dollars net asset/Iiability
6- Hedged ponion from US Dollars risk (-)7- Effect of capitalization (-)8- US Dollars net effect (5+6+7)
9- Euro net asset/Iiability
10- Hedged portion from Euro risk (-)Il- Effect of capitalization (-)12- Euro net effect (9+10+11)
13- Jap. Yen net asseUliability
14- Hedged polion from Jap. Yen risk (-)15- Effect of capitalization (-)16- Jap. Yen net effect (13+14+15)
TOTAL (4+8+12+16)
ProfitI(Ioss) after capitalization on tangible
assets and before tax and non-controlling interest
Appreciation of Depreciation of
foreign cunency foreign currency
(153.988) 153.988
20.889 (20.889)
(133.099) 133.099
64 (64)
64 (64)
(20.297) 20.297
11.773 (11.773)
(8.524) 8.524
(8.108) 8.108
(8.108) 8.108
(149.667) 149.667
in addition to the Group’s foreign currency sensitivity to a 10% (+1-) change in TRY, TRY 166.866
thousand of income / (TRY (56.859) thousand expense) wili occur due to the decrease/ (increase) in
deferred tax base.
73
(Convenience Translation into English ofConsolidaed Financial Statemenıs Originaliy lssued in Turkish — SeeNote 34)
EREĞLİ DEMİR YE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUBSIDİARIES
NOTES TO THE CONSOLIDATED FINANCİAL STATEMENTS
FOR THE YEAR ENDED3I DECEMBER 2014
(Amnunts are cxpressıd as Turkish Lira (TRY” Tlıousand) unless otlıerwisc indicated,)
NOTE 30 - NATURE AND LEVEL OF RISKS DERIVED FROM FINANCİAL
INSTRUMENTS (cont’d)
Additional information about financial instruments (cont’d)
(fl Foreign curreney risk managemenı (cont’d)
31 December20l3
1- TRY net asset/Iiabiliw
2- Hedged portion from TRY risk (-)3- Effect of capitalization (-)4- TRY net effect (1+2+3)
5- US Dollars net asset/Iiability
6- Hedged portion from US Dollars risk (-)7- Effect of capitalization (-)8- US Dolbrs net effect (5+6—7)
9- Euro net asseuliabilitv
10- Hedged ponion from Euro risk (-)Il- EWect ofcapitalization (-)12- Euro net effect (9+10+11)
13- Jap. Yen net assetlliability
14- Hedged portion from Jap. Yen risk (-)15- EfTect ofcapitalization (-)16- Jap. Yen net eftect (13—14—15)
17- Other currencies net asset/Iiabilities
18- Hedged portion from other currency risk (-)19- Effect of capitalization (-)20- Other curriencies net effect (17+18+19)
TOTAL (4+8+12+16+20)
ProliV(loss) after capitalization on tangible
assets and before tax and non-controlling interest
Appreciation of Deprecbıion of
foreign currency foreign currency
(143.458) 143.158
16.981 (16.981)
(126.477) 126.477
(26) 26
(26) 26
(30.306) 30.306
16.342 (16.342)
(13.964) 13.964
(11.714) 11.714
(11.714) 11.714
(133) 133
(133) 133
(152.314) I52.314
74
(Convenience Translation nto English ofConsolidated Financial Statements Originaliy Issued in Turkish — SeeNote 34)
EREĞLİ DEMİR VE ÇELİK FABRiKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCİAL STATEMENTSFOR THE YEAR ENDED3I DECEMBER 2014
(Amounts are cxprcsscd as Turkish Lira (1kV’ Thousand) unless o(hcrwıst indıcaıcd.)
NOTE 30 - NATURE AND LEVEL OF RISKS DERIVED FROM FINANCİAL
INSTRUMENTS (eont’d)
Additional information about financial instruments (cont’d)
(g) Liquidity risk management
Ultirnate responsibility for liquidity risk management rests with the Board of Directors, which has
built an appropriate Iiquidity risk management framework for the rnanagement of the Group’s short.medium and Iong-İerm funding and Iiquidity management requirements. The Group manages liquidityrisk by continuously monitoring forecasted and actual cash flows and matching the maturity profilesof financial assets and liabilitles and maintaining adequate funds and reserves.
Lipuidiıv risk tabies
Conservative Iiquidity risk management includes maintaining sufficient cash, availability of sufflcientamount of borrowings and funds and ability to settle market positions.
The Groııp manages its funding of actual and forecasted financial obligations by maintaining theavailability of sufflcient number of high quality ban providers.
The following table details the Group’s expected maturity for its derivative and non derivativefinancial Iiabibities. Interests which wili be paid on borrowings in the future are included in therelevant columns in the folbowing table.
75
(Con
veni
ence
Tra
nsla
tion
into
Eng
lish
ofC
onso
lida
ted
Fina
ncia
lSt
atei
ıwnt
sO
rigi
naliy
Jssu
edin
Tur
kish
—Se
eN
ote
34)
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
NS
OL
IDA
TE
DF
INA
NC
İAL
ST
AT
EM
EN
TS
FO
RT
HE
YE
AR
EN
DE
D31
DE
CE
MB
ER
2014
(Am
ooni
sar
ecx
pres
sed
asT
urkı
slı
Lir
arT
RV
Thn
usan
d)un
leas
oıhe
rvıs
eın
dıca
ted
NO
TE
30—
NA
TU
RE
AN
DL
EV
EL
OF
RIS
KS
DE
RW
ED
FR
OM
FIN
AN
CİA
LIN
ST
RU
ME
NT
S(c
on(’
d)
Addit
ional
info
rmal
ion
about
finan
cial
insl
runıe
nts
(con
t’d)
(g)
Liq
uidi
tyri
skm
anag
emem
(contd
)
31D
ecem
her
2014
Contr
actn
alm
aturi
tyan
aiy
sis
Non
ded
vat
ive
fln
ancj
alll
abil
itie
s
Bor
row
ings
froı
nha
nks
Tra
de
paya
bles
Oth
erfi
nanc
ial
liab
illt
ies
(*)
To
tal
liab
ilit
ies
Der
iva6
ve
fin
anci
alia
biI
itie
s
Der
ivat
ive
casl
ıüı
flow
s
Der
ivat
ive
cash
outf
low
s
(*)
Oni
yth
efi
nanc
ial
Iiab
ilitie
sun
der
othe
rpa
yabl
esan
dIi
abili
ties
are
incl
uded
.
To
tal
eash
outf
low
per
are
en
ıen
t<1
+11+
111
+1V
i
Les
sth
an3
rno
nth
s
m
3-12
mo
nth
s
ün
1-5
yea
rs
mü
Mor
eth
an
5vea
ıs
Bo
ok
val
ue
-
3.41
3.73
43.
578.
406
L.1
94.8
0487
8.60
71.
402.
728
102.
267
417.
255
419.
046
419.
046
--
-
154.
888
154.
888
154.
888
--
-
3.98
5.87
74.
152.
340
1.76
8.73
887
8.60
71.
302.
728
102.
267
92.3
1283
8.12
055
0.12
823
8.58
049
.412
-
(29.
935)
(826.9
31)
<66
7.49
0)(7
3.8
4!)
(85.
600)
-
62.3
77
11.1
89(1
17.3
62)
164.
739
(36.
188)
-
76
(Con
veni
ence
Tra
rısl
atio
nin
toE
ngii
shof
Con
soli
date
dF
inan
cial
Sta
icın
enis
Ori
gina
liy
lssu
edin
Tur
kish
See
Not
e34
)
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
NS
OL
IDA
TE
DF
INA
NC
IAL
ST
AT
EM
EN
TS
FO
RT
HE
YE
AR
EN
DE
D31
DE
CE
MB
ER
2014
(Arn
ount
sar
eex
pres
sed
asT
urkı
slı
Lira
(TR
Y”
Ti,o
usan
d)un
lcss
oıh
erw
isın
dica
ted.
)
NO
TE
30-N
AT
UR
EA
ND
LE
VE
LO
FR
ISK
SD
ER
IVE
DF
RO
MF
INA
NC
IAL
INS
TR
UM
EN
TS
(con
t’d)
Addit
ional
info
rmal
ion
about
Jina
ncia
lin
siru
men
is(c
ont’
d)
(g)
Liq
uidi
tyri
skrn
anag
erne
nt(c
ont’
d)
31D
ccem
ber
2013
Contr
actu
alnıa
turi
t’an
alysi
s
Non
der
ivat
ive
linan
cial
Iiab
llit
ies
Bor
row
ings
fror
nba
nks
Tra
depa
yabl
es
Oth
erli
nanc
ial
Iiabi
litie
s(*
)
To
lal
liab
ilit
les
Der
ivat
ive
fin
anci
alIi
abil
itie
s
Der
ivat
ive
cash
infl
ows
Der
ivat
ive
cash
outf
low
s
(*)
Oni
yth
efi
nanc
ial
liabi
litie
sun
der
othe
rpa
yabl
esan
dIi
abili
ties
are
incl
uded
.
To
tal
casl
ıoutf
low
per
at!r
eem
ent
fl±
II+
III+
IV
Les
s(h
an3
mo
nlh
s
3-12
month
s
<in
1-5
vear
s(i
li)
Mor
eth
an
5<
ün
Book
valu
c
-
3.50
0.07
93.
773.
302
345.
897
1.20
4.52
12.
132.
117
90.7
67
504.
186
506.
148
506.
148
--
-
208.
568
208.
568
208.
568
--
-
4.21
2.83
34.
488.
018
1.06
0.61
31.
204.
521
2.13
2.11
790
.767
80.0
3191
1.73
227
8.03
639
0.28
!24
3.41
5-
(26.
872)
(890
.273
)(2
81.1
11)
(391
.630
)(2
17.5
32)
-
53.1
5921
.459
<3.0
75)
(1.3
49)
25.8
83-
77
(Con
veni
ence
Tra
nsla
tion
inlo
Eng
lish
ofC
onso
lida
ted
Fina
ncia
lSt
ater
nent
sO
rigi
nally
lssu
edin
Tur
kish
—Se
eN
ote
34)
ER
EĞ
Li
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
NS
OL
IDA
TE
DF
INA
NC
İAL
ST
AT
EM
EN
TS
FO
RT
HE
YE
AR
EN
DE
D31
DE
CE
MB
ER
2014
(Arn
nunt
sar
eex
pres
sed
asT
urkı
slı
Lir
a(T
RY
”T
hous
and)
unle
ssot
iıcrw
ısc
ındı
cale
d.)
NO
TE
31
-F
INA
NC
IAL
INS
TR
UM
EN
TS
(FA
İRV
AL
UE
AN
DF
INA
NC
İAL
RİS
KM
AN
AG
EM
EN
TD
ISC
LO
SU
RE
S)
Ad
dit
ion
alin
form
atio
nab
ou
tfi
nan
cial
inst
rum
cnts
Cat
egori
esof
the
fina
ncia
lin
stru
rnen
tsan
dth
eir
fair
valu
es
Ded
vati
vefi
nanc
ial
insl
mnıe
nls
Llı
mug
ho
ther
Der
ivat
ive
fına
ncia
l
Cas
lıan
dca
sh1.
oans
and
Ava
ilab
lefo
rsal
eF
inan
cial
Iiab
illt
ies
com
prnh
cnsi
vein
sLm
ntnL
sth
mL
ıgh
31D
eeeı
ııb
er21
)14
egu
ival
ent
rncc
ivab
lcs
fına
ncia
las
seis
aLam
oıti
zed
cost
inco
ınc/
loss
pmfi
L/I
oss
Can
yin
gva
luc
Not
e
fln
,ın
ciıı
lA
ssei
s
Cas
han
dca
shcq
uiv
alen
ts2.
186.
810
--
-—
—2.
186.
8l0
4
Tra
dere
ceiv
able
s-
1.75
6.86
0-
--
1.75
6.86
07
Fin
anci
alin
ves
tıw
nts
-63
--
-63
Oth
erfi
nanc
ial
asse
Ls
-27
.538
—-
--
27.5
388
Deü
vat
ive
fına
ncia
lin
stn
ırn
ents
--
--
2L.7
4070
.572
92.3
125
Fiı
ısıı
ıria
lli
abil
itic
s
Fiı
aıci
aIIi
abil
itic
s-
--
3.41
3.73
4-
-3.
413.
734
6
Tm
dcpav
abks
--
-41
7.25
5-
-41
7.25
57
Oth
erIi
ahil
ilie
s—
--
154.
888
154.
888
8/15
/18
Der
ivat
ive
fina
ncia
lin
stm
men
ts-
--
-12
.940
16.9
9529
.935
5
31D
cccn
ıbcr
20l3
Fii
ıaiı
ci,ı
IA
ssei
sC
aslı
aııd
cash
cqu
ivak
nts
761.
111
--
--
—76
1.11
14
irade
rece
ivab
les
—1.
708.
538
--
—-
1.70
8.53
87
Fin
anci
alin
ves
tnrn
ts—
——
——
——
016cr
fman
ciul
assc
ts—
26.8
92-
-26
.892
8
Dcd
vat
ivc
fına
ncia
lin
stm
nrn
ls-
--
-72
.611
7.40
980
.03!
5
fln:ı
nci
alIj
ahil
ilie
sF
iııa
ncia
lIi
abil
itic
s-
—-
3.50
0.07
9—
—3.
500.
079
0
irade
pav
able
s-
--
504.
186
--
504.
186
7
OL
Iıcr
Iiab
ihui
cs—
—-
208.
568
208.
568
8115
118
ljcd
vat
ivc
fına
ncia
lin
stm
mcn
ts-
-—
-12
.112
14.7
6026
.872
5
78
(Convenience Translation into Enıdish ofConsolidated Financial Statements Originally İssued in Turkish — See NoLe 34)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SURSIDİARIES
NOTES tO THE CONSOLIDATED FINANCİAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
(Amouncs are cxpresscd as Turkish Lira (TRY” Thousand) unless otherwısc indicated.)
NOTE 31 - FİNANCİAL INSTRUMENTS (FAİR VALUE AND FİNANCİAL RİSK MANAGENIENT
DISCLOSURES) (cont’d)
Adcljtional information about financinl instruments
Categories of the financial instruments and their fair values (cont’d)
Fair value is the price that would be received to seli an asset or paid to transfer a liability in an orderiy
transaction between market participants at the measurement date.
Estimated fair vaiues of flnanciai instruments have been delermined by the Group by using available market
information and appropriate valuation methodologies. However, judgement is necessariiy required to
interpret market data. Accordingly. estimates presented herein are not necessariiy indicative of the amounls
the Croup could realise in a current market exchange.
The foilowing methods and assumptions are used to estimate the fair vaiues of financial instruments:
Fina,wiul assetsFinancial assets that are carried at cost value including cash and cash equivalents are assumed to reflect their
fair vaiues due to their short term nature.
The carrying value of receivables, with related impairments are assumed to reflect their fair vaiues.
Finwwğal liabilitiesFair vaiues of short term borrowings and Lrade payables are assumed to approximate their carning values
due to their short rerm nature.
Fair values of long term financial liabilities are assumed to approximate their carrying values due to mostiy
they have floating inlerest rates and repricing al shon term.
Hnancial asset and Iiabiİities nt fairvaluc Fair value level as ofreporting date
3 İ December 2014 Level İ Level 2 Level 3
[mancini asseis and İiabilities al fairvaluc thmugh prufiHoss
Dedvative financialassets 70.572 - 70.572
Derivatjve financinİ lbbiikies (16.995) - (16.995)
Financinİ asseis and Iiabilities nt hürvalue thmugh othercompruhensive
inconw/expense
Derivative fmanciaİassets 21.740 - 21.740
Dedvative financbi iiabilluies (İ 2.940) - (12.940)
Tolaİ 62,377 62.377
79
(Convenience Translation into English ofConsolidated Financial Statements Originally İssued in Turkish - See Note 34)
EREĞLİ DEMiR VE ÇELİK FABRiKALARI T.A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
(Amounts are cxprcsscd as Turkish Lira (TRY” Tlıousand) unlcss othcrwisc indicatcdj
NOTE 31 - FİNANCİAL INSTRUMENTS (FAİR VALUE AND FINANCİAL RİSK MANAGEMENT
DISCLOSURES) (cont’d)
Additional information about financial instruments
Categories of the financial instruments and their fair values (cont’d)
Financial asset and Iiabilitics at fairvaluc Fafr valuc veİ as ofrepofting date
3! December2ol3 Leveil Level2 Level3
Financial assets and habilities at fair
valuc thmugh pmfitAoss
Derivative finap±lasses 7.409 - 7.409 -
Derivative finarıcial lbbiities (14.760) - (14.760) -
Financial assets and Iiabilities nt fair
valuc thmugh othercompıthensive
incomeİezpense
Derivaüve finartial assets 72.622 - 72.622 -
Dedvativefinartiallbbilities (12.112) - (l2.t12) -
Total 53,159 53.l59 -
First Level: Quoted (non adjusted) prices in active markets for identical assets or liabilities.
Second Level: Other valuation techniques for which alI inputs which have a signiflcant effect on the
recorded fair value are observable, either directly or indirectly.
Third Level: Valuation techniques which use inputs which have a signiflcant effect on the recorded fairvalue that are not based on observable market data.
NOTE 32- SUBSEQUENT EVENTS
Accordingto the decision of iskenderun Demir ve Çelik A.Ş. Board of Directors, dated İ2 ianuary 2015 and
numbered 333;
Witlıin the frame of Turkish Commercial Codes provisions related “becoming a shareholder”, according to
the decision of The Board of Directors of our subsidiary Iskenderun Demir ve Çelik A.Ş. (İsdemir), dated 24
March 2014 and numbered 314. it is decided to record the 7.120 people to lsdemir’s shareholders’ stock
register. By reason of the fact that number of the shareholders becomes more than 500 as of register date24.03.2014, the Company applied to the Capital Markets Board (CMB) for approval of becoming a public
company. The approval of the Capital Markets Board was announced to the public on the Board’s Bıılletin
dated 27.06.2014 by CMB. İn accordance with the 2. paragraph of article 16 of Capital Markets Law and
CMB’s “11-161 Commtıniqu on Principles Pertaining to Removal ofCorporations From The Seope of Law
and Obligation of Trading of Shares on Exchange”; General Management is authorized for applying to Borsa
istanbul A.ş. and CMB and fulfllling the requirements to make its own shares tradable on Borsa İstanbul
A.ş. Free Trade Platform in a certain period of time.
80
(Convenience Translation into English ofConsolidated Financial Statements Originaliy Issued in Turkish — See Note 31)
EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş. AND ITS SUHSIDİARİES
NOTES TO THE CONSOLIDATED FINANCJAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2014
(Amounts are exprcsscd as TurLish Lira (‘TRY” Thousand) unlcss otherwise indicaled.)
NOTE 33- ADDITIONAL INFORMATİON FOR CASH FLOW STATEMENTS
Detalis of changes in working capital for the periods between 1 January —3) December 20)4 and 1 January
—31 December 2013 are as follows:
31 December 2014 31 December 2013
102.712 (466.576)
412.375 (20.648)
(58) (1.198)
28.329 (24.673)
(130.540) (8.324)
30.885 22.291
10.472 (5.309)
453.975 (504.437)
NOTE 34 - OTHER ISSUES AFFECTING THE CONSOLWATED FINANCİAL STATEM£NTS
MATERIALLY OR THOSE REQUIRED TO BE DISCLOSED FOR A CLEAR,
UNDERSTANDABLE AND INTERPRETABLE PRESENTATİON
Convcnience translation to English:
As at December 31. 2014, the accounting principles described in Note 2 (delined as Turkish Accounting
Standardsfrurkish Financial Reporting Standards) to the accompanying financial statements differ from
international Financial Reporting Standards (“IFRS”) issued by the international Accounting Standards
Board with respect to the applicaıion of infiation accounting. cenain reclassiflcations and also for certain
disclosures requirement of the POA/CMB. Accordingly, the accompanying financial statements are not
intended to present the financial position and resuits of operations in accordance with IFRS.
l January- 3 January
Current İrade receivables
Inventories
Other short term receivables / cunent assets
Other long term receivables / non current assets
Current trade payables
Other short term payables / Iiabllities
Other long ternı payables / Iiabilities
8)