annual report - alarko holding

2013ANNUAL REPORT

WE WILL ALWAYSREMEMBER YOU WITHLOVE AND RESPECT...

ALARKO HOLDİNG A.Ş.

ANNUAL REPORT 2013

April 30, 2014General Assembly Meeting

2013 Fiscal Year

Registered CapitalTL 500.000.000Issued CapitalTL 223.467.000

ALARKO HOLDİNG A.Ş. 2013 ANNUAL REPORT

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CONTENTS

Members of the Board of Directors andAuditors of Alarko Holding A.Ş.

05

06

08

10

12

14

15

18

24

30

36

42

46

Management Staff

Agenda of the Ordinary General Assembly

Contracting Group

Industry and Trade Group

Land Development Group

Message from the Chairman

General Organization

Alarko Group of Companies

Annual Report of the Board of Directors

Energy Group

Tourism Group

Seafood Products Group


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76

134

81

Consolidated Financial Statements

Conclusion

Notes to the ConsolidatedFinancial Statements

52

53

54

55

56

57

61

62

73

74

Capital and Percentage of Shareholdingsin Subsidiaries and Participations

Business Volume and Perspectives for 2014

Developments in the Last Five Years

Proposal For Profit Distribution

Independent Auditors’ Report on the Annual Report

Earnings from Subsidiaries and Equity Participations

Taxes Paid and Personnel Expenses

Additional Information Regarding Our Activities

Report on Compliance withCorporate Governance Principles

Independent Auditors’ Report

50Dr. Üzeyir Garih’s View


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MESSAGE FROM THE CHAIRMAN

Esteemed Shareholders,

The uptrend period of the economies of developing countries seems to have come to an end. This is the result of the change in short and long term capital movements observed in 2013. The increasing risks in the economies of developing countries and the improvement signs observed in the economies of developed countries and particularly in that of the USA economy reversed capital movements. We foresee this trend to continue for a few years. We have revised our strategies in accordance with this projection.

We expect some recovery in the economies of developed countries, in those of the developed countries in the Euro zone and particularly in that of the USA. In 2014, when a growth of approximately 3,5 % is expected in world economy, those who will actually benefit from this growth will be the economies of developed countries. However, the risks in the economies of developing countries will limit this recovery in the economies of developed countries. Therefore, it is evident that developed countries will organize the growth strategies of their economies taking into consideration these risks. Hence, based on this fact, it is very important for the developing countries such as ours to put in effect structural measures and not to break away from financial discipline.

As a country, in 2014 we will experience the negative effects of the economic and political uncertainty that began as of the last quarter of 2013. This uncertainty will reflect on our economy as an increase in inflation and unemployment and a drop in our growth rate. Although we expect a drop in the foreign trade and current deficit, we do not foresee a serious change in the rate of exports meeting imports.

Naturally, there is the risk of the macro-economic changes that we have mentioned above to have negative effects on our Group of Companies, too. However, our competence to foresee such changes correctly, analyze them in depth and act rapidly and flexibly thanks to the data obtained is developing and continuing. We are keeping track of the developments in our country and the countries that we have trade relations with and reviewing our strategies according to the developments.

2013 has been a rather beneficial year for our Group of Companies. We have succeeded in attaining our goals and in some sectors have even exceeded them. With your support, we will make every effort to be as successful in 2014.

With best regards to your esteemed committee.

İshak ALATONChairman of the Board of Directors


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MEMBERS OF THE BOARD OF DIRECTORS OFALARKO HOLDİNG A.Ş.

Alaton was born in İstanbul in 1927 and graduated from the French Saint Michel Lycee in 1946. He worked as welder and technical draftsman at the Motala Locomotive Factory in Sweden in the years 1951-54. Alaton returned to Turkey in 1954 and founded the company that was the kernel of the Alarko Group of Companies with Dr. Üzeyir Garih. Alaton, who is currently chairman of Alarko Holding A.Ş. and some of the companies of the group, speaks Swedish, English, French and Spanish and has been awarded with the “Swedish First Class Order of the Polar Star” and the “Medal of Commander of the Civil Merit Order of Spain”.

İshak Alaton does not have eligibility for independence as of the Capital Markets Board Communiqué Numbered II-17.1.

İzzet Garih was born in İstanbul in 1961. He graduated from the Industrial Engineering Department of the University of Michigan in Ann Arbor, USA in 1983. Garih completed his Masters Degree in Civil Engineering and Management at the same university in 1984. He worked as engineer and manager in various projects in the ALARKO Land Development and Construction Group from 1987 to 2002. Garih was Chairman of the Board of Alarko Gayrimenkul Yatırım Ortaklığı A.Ş. from 2002 to 2007. He has been serving as the Vice Chairman of the Board of Alarko Holding A.Ş. since 2004. İzzet Garih speaks English, is married and has three children.

İzzet Garih does not have eligibility for independence as of the Capital Markets Board Communiqué Numbered II-17.1.

İshak ALATON Chairman İzzet GARİH Vice Chairman of the Board

Vedat Alaton was born in 1963, in İstanbul. He graduated from the Industrial Engineering Faculty of Northeastern University, USA in 1987. Alaton worked as Project Planning Engineer, General Manager and Deputy Executive Vice President in ALAMSAŞ from 1988 to 1989 and as Field Control Engineer and Site Engineer in various projects of ALSİM Alarko between 1989-1990. He became Managing Director of Alarko Holding A.Ş. in 1995 and Vice Chairman of the Board of Alarko Holding A.Ş. in 2004. Vedat Alaton speaks English and has one son.

Vedat Aksel Alaton does not have eligibility for independence as of the Capital Markets Board Communiqué Numbered II-17.1.

Ayhan Yavrucu was born in 1948, in the Develi district of Kayseri. He graduated from the Faculty of Political Sciences of Ankara University in 1972. He started to work at the Ministry of Finance, Tax Inspectors Board as Deputy Tax Inspector the same year and worked as a Tax Inspector until 1977. Yavrucu has served in various levels in the Alarko Group of Companies where he started to work in March 1, 1977, and is currently a Board member of Alarko Holding A.Ş. and CEO of the Alarko Group of Companies. Ayhan Yavrucu is Chairman of the Board of various companies of the Group. He speaks English, is married and has two children.

Ayhan Yavrucu does not have eligibility for independence as of the Capital Markets Board Communiqué Numbered II-17.1.

Vedat Aksel ALATON Vice Chairman of the Board Ayhan YAVRUCUMember of the Board, Chief Executive Officer

Auditor Independent Auditor

Güney Bağımsız Denetim ve SMMM A.Ş.(A Member Firm of Ernst & Young Global Limited)

Güney Bağımsız Denetim ve SMMM A.Ş.(A Member Firm of Ernst & Young Global Limited)

* The terms of office of the Members of the Board of Directors is between 16.05.2013 and 16.05.2015.


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Dalia Garih was born in İstanbul in 1957. She graduated from the French Language and Literature Faculty of Nancy University, France and received English Language Advanced Certificate from Cambridge University in 1974. She worked as Assistant Chairman of the Board of the Alarko Group of Companies between 1977-1978. Dalia Garih worked as the Assistant of Dean Prof. Dr. Vedat Yerlici at Boğaziçi University Engineering Department between 1978-1979. She has been a Board member of Alarko Holding A.Ş. since 2000, and has memberships in various non-governmental organizations. She served as the İstanbul Honorary Consul of the Republic of Philippines between 2002-2005 and continues her diplomatic service as the Honorary Consul of Uruguay since 2007. Dalia Garih speaks English, French and Hebrew, and has three children.

Dalia Garih does not have eligibility for independence as of the Capital Markets Board Communiqué Numbered II-17.1.

Dalia GARİH Member of the Board Leyla ALATON Member of the Board

Hatipoğlu was born in Trabzon in 1925. After graduating from the Faculty of Economics of İstanbul University in 1946, he got his PhD degree in Economics in 1950. Hatipoğlu started his career as assistant at İstanbul Technical University, became associate professor in 1952 and professor in 1962. He conducted his postdoctoral studies at Harvard Business School in 1954-1955 and in The London School of Economics in 1963-1964. Hatipoğlu worked at İstanbul Technical University from 1949 to 1983. After leading the founding of the Management Engineering Faculty of ITU. in 1978, he served as Dean of this faculty until 1983. From 1983 to1985 he was the President of the Business Administration Faculty of Bahrain University. Hatipoğlu served as lecturer at İstanbul University Management Faculty and Management Institute and as consultant and board member in various businesses. Prof. Dr. Ahmet Zeyyat Hatipoğlu speaks English, is married and has three children.

The candidacy of Prof. Dr. Ahmet Zeyyat Hatipoğlu was accepted at the Board meeting dated 11.04.2013 of Alarko Holding A.Ş. and has eligibility for independence as of the Capital Market Board Communiqué Numbered II-17.1.

Kişmir was born in Ankara in 1964. He graduated from the Finance Management (English) Department of the Faculty of Economic and Administrative Sciences of Marmara University in 1986. In 1988 he completed his graduate studies in Modern Management at the same university and in 1996 he completed his MBA at Hartford University, Barney Management College in “International Finance and Strategic Management”. He started to work as Regional Sales Coordinator at STFA Holding in 1987. He held several managerial jobs at Mobil Oil, Garanti Bank, TEB BNP Paribas respectively. Kişmir has been working as the CEO and Board member of BNP Paribas Cardiff in Turkey since 2011. İzzet Cemal Kişmir speaks English, is married and has one child.

The candidacy of İzzet Cemal Kişmir was accepted at the Board meeting dated 11.04.2013 of Alarko Holding A.Ş. and has eligibility for independence as of the Capital Market Board Communiqué Numbered II-17.1.

Prof. Dr. Ahmet Zeyyat HATİPOĞLU Independent Member of the Board

İzzet Cemal KİŞMİR Independent Member of the Board

Leyla Alaton was born in İstanbul in 1961. She graduated from the Business Administration and Management Faculty of Fairleigh Dickinson University, New Jersey, USA. She completed her Masters Degree in Social Sciences at the University of New York. Upon returning to Turkey in 1986 she first worked as assistant to Dr. Üzeyir Garih. Later, she conducted the Publicity and Marketing of the Alkent – Etiler Uyduşehir and the Alsit Villakent projects. In 1992, she was elected “Businesswoman of the Year” by the National Productivity Center. In 1993, she was among the “Leaders of the Future” selected for the first time at the Davos World Economic Forum. In 1993, she founded her own company, Megatrend Public Relations Consultancy Company and gave consultancy to global giants such as Aérospatiale and Alcatel. Leyla Alaton is currently Board Member of Alarko Holding A.Ş. and board member of various non-governmental organizations. She has two children and speaks English and French.

Leyla Alaton does not have eligibility for independence as of the Capital Markets Board Communiqué Numbered II-17.1.

MEMBERS OF THE BOARD OF DIRECTORS OFALARKO HOLDİNG A.Ş.

Ayhan YAVRUCUMember of the Board, Chief Executive Officer


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ALARKO GROUP OF COMPANIESGENERAL ORGANIZATION

* Organizational level is limited to the “Vice President” level in this chart.

BOARD OF DIRECTORS

PRESIDENCY

SUPERVISORY BOARD

CHIEF EXECUTIVE

OFFICER

ADVISORS

MANAGINGDIRECTORS

SENIOR VICEPRESIDENT

ACCOUNTING

SENIOR VICEPRESIDENTAUDITING

SENIOR VICE PRESIDENT

FINANCIAL ANALYSIS, SYSTEM AND

PLANNING

SENIOR VICEPRESIDENTFINANCING

EXECUTIVE VICEPRESIDENT

INDUSTRY ANDTRADE


9

EXECUTIVECOMMITTEES


ENERGY


TOURISM


LANDDEVELOPMENT

DEPUTY CHIEFEXECUTIVE

OFFICERCONTRACTING

EXECUTIVE VICEPRESIDENTS

CONTRACTING


10

MANAGEMENT STAFF

CORPORATE PRESIDENT İSHAK ALATON

MANAGING DIRECTORS İZZET GARİH VEDAT AKSEL ALATON

CHIEF EXECUTIVE OFFICER AYHAN YAVRUCU DEPUTY CHIEF EXECUTIVE OFFICER M. ALPER KAPTANOĞLU CONTRACTING

SENIOR VICE PRESIDENTS MEHMET AHKEMOĞLU AUDITING

MUSTAFA FİLİZ ACCOUNTING

ÜMİT NURİ YILDIZ FINANCIAL ANALYSIS, SYSTEM & PLANNING

EXECUTIVE VICE PRESIDENTS A. ÖNDER KAZAZOĞLU ENERGY

EDİP İLKBAHAR TOURISM

H. ÖNDER ŞAHİN INDUSTRY & TRADE

HARUN H. MORENO LAND DEVELOPMENT

AYKUT BAYCAN CONTRACTING - ACCOUNTING

BEKİR BORA CONTRACTING – PROJECT FINANCE & LOCAL BUSINESS DEVELOPMENT

ONAT BİTİK CONTRACTING - CONSTRUCTION

DEPUTY SENIOR VICE PRESIDENTS NECATİ AKGÜN ACCOUNTING

ÖMER ÇELİK FINANCING

TURGUT ÇELİK INFORMATION TECHNOLOGY

DEPUTY EXECUTIVE VICE PRESIDENTS AHMET IŞIM CONTRACTING - PROPOSAL

B. BÜLENT AKKAN CONTRACTING - CONSTRUCTION

BÜLENT ÇALIŞKAN CONTRACTING – BUSINESS DEVELOPMENT – FOREIGN COUNTRIES

GÖKMEN ÜLGEN CONTRACTING - LOGISTICS

HALUK MARTAĞAN CONTRACTING – PLANNING, ANALYSIS & TECHNICAL SUPPORT

MUSTAFA V. GAFUROĞLU CONTRACTING – BUSINESS DEVELOPMENT – FOREIGN COUNTRIES

ABBAS ŞAHİN CONTRACTING – CONSTRUCTION – TALDYKOL TREATMENT PROJECT

NAİM TÜRKOĞLU CONTRACTING – CONSTRUCTION – BOZSHAKOL& AKTOGAY PROJECTS

TURAN SÜHA AÇARBİÇER CONTRACTING – CONSTRUCTION - SHETPE BEYNAU ROAD PROJECT

İSMET GENÇER INDUSTRY& TRADE

HALUK FERİZOĞLU INDUSTRY& TRADE – DEALER SALES

HIRANT KALATAŞ INDUSTRY& TRADE – MARKETING & SUPPORT

KEMAL BIÇAKÇI INDUSTRY& TRADE – AFTER MARKETS

MURAT ÇOPUR INDUSTRY& TRADE - FACTORIES

KADİR EKE LAND DEVELOPMENT – MARKETING, SALES


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PROJECT MANAGERS, GENERAL MANAGERS, ASSISTANT GENERAL MANAGERS,DEPUTY PROJECT MANAGERS

KADİR BAŞOĞUL CONTRACTING – PROJECT MANAGER - CENTER

MEHMET ULUSARAÇ CONTRACTING – PROJECT MANAGER - CENTER

RAHMİ KAHRAMAN CONTRACTING – PROJECT MANAGER - CENTER

ATİLA YILDIZ CONTRACTING – PROJECT MANAGER - AKTOGAY PROJECT

İSMAİL EROĞLU CONTRACTING – PROJECT MANAGER - TAKSİM YENİKAPI METRO PROJECT

MEHMET EKİCİ CONTRACTING – PROJECT MANAGER - ANKARA METRO PROJECT

SALİH KASABOĞLU CONTRACTING – PROJECT MANAGER - SHETPE BEYNAU ROAD PROJECT

MURAT ERİŞ CONTRACTING – DEPUTY PROJECT MANAGER - AKTOGAY PROJECT

MURAT MAZI CONTRACTING – DEPUTY PROJECT MANAGER - BOZSHAKOL PROJECT

MUSTAFA DARUĞA CONTRACTING – DEPUTY PROJECT MANAGER - SHETPE BEYNAU ROAD PROJECT

MUSTAFA GİRGİN CONTRACTING – DEPUTY PROJECT MANAGER - AKTOGAY PROJECT

ÖZAY GÜLYAR CONTRACTING – DEPUTY PROJECT MANAGER - KIEV BORYSPIL AIRPORT PROJECT

ÖZER HASAN BALSEVEN CONTRACTING – DEPUTY PROJECT MANAGER – MOROCCO HIGH-SPEED TRAIN PROJECT

EROL UÇMAZBAŞ ENERGY DISTRIBUTION- GENERAL MANAGER - MEPAŞ

MUHİTTİN MURAT ENERGY DISTRIBUTION- GENERAL MANAGER - MEDAŞ

EYÜP ERDURAN ENERGY DISTRIBUTION – DEPUTY GENERAL MANAGER - MEDAŞ – CORPORATE RELATIONS

MEHMET İNAN BAYKAN ENERGY DISTRIBUTION – DEPUTY GENERAL MANAGER - MEDAŞ – FIELD SERVICES

MEHMET ORMAN ENERGY DISTRIBUTION – DEPUTY GENERAL MANAGER - MEDAŞ - OPERATIONS

MUSTAFA BAŞER ENERGY DISTRIBUTION – DEPUTY GENERAL MANAGER - MEDAŞ -INVESTMENTS

ÖZKAN ECEVİT ENERGY DISTRIBUTION – DEPUTY GENERAL MANAGER – MEDAŞ - COMMON SERVICES

BÜLENT TOKAN ENERGY GENERATION - DEPUTY GENERAL MANAGER – FINANCING & ADMINISTRATION

ARİF NEZİH YILMAZ ENERGY GENERATION - OPERATIONS MANAGER - KIRKLARELİ POWER PLANT

ECEVİT TÜREDİ ENERGY GENERATION - OPERATIONS MANAGER - ADANA KARAKUZ HEPP

CENGİZ AKIN ENERGY GENERATION - PROJECT MANAGER - CENAL

İSMAİL H. YILDIRIM ENERGY GENERATION – HEPP OPERATIONS MANAGER

LEVENT ÖZMARAL ENERGY GENERATION – PROJECT MANAGER

MUHAMMET METLEK ENERGY GENERATION – ELECTRICAL PROJECT MANAGER

AHMET YÜKSEL VAROL LAND DEVELOPMENT – DEPUTY GENERAL MANAGER – FINANCING & ADMINISTRATION


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ALARKO GROUP OF COMPANIES


13

THECONTRACTING

GROUP

THEENERGYGROUP

THEINDUSTRY

AND TRADEGROUP

THETOURISM

GROUP

THE LANDDEVELOPMENT

GROUP

THE SEAFOODPRODUCTS

GROUP

ALSİM ALARKO SANAYİ TESİSLERİ VE TİCARET A.Ş. İSTANBUL SUBWAY (TAKSİM-YENİKAPI ELECTRO-MECHANICAL SYSTEMS CONSTRUCTION) PROJECTALSİM A.Ş.-MAKYOL A.Ş. JOINT VENTURE, ISTANBUL METRO (4.LEVENT-HİSARÜSTÜ) CONSTRUCTION OF ELECTRO-MECHANICAL WORKS AND SIGNALIZATION SYSTEMS PROJECTALARKO-CAF JOINT VENTURE – ANTALYA LIGHT RAIL TRANSPORT SYSTEMKIEV - BORYSPIL AIRPORT CONSTRUCTION PROJECTANKARA METRO ELECTRO – MECHANICAL WORKS AND SIGNALIZATION SYSTEMS CONSTRUCTION WORKSADANA KARAKUZ DAM AND HYDROELECTRIC POWER PLANT PROJECTKAZAKHSTAN BOZSHAKOL COPPER CONCENTRATE PLANT PROJECTKAZAKHSTAN TALDYKOL LAKE REHABILITATION AND WASTE WATER TREATMENT PLANT PROJECTKAZAKHSTAN AKTAU – MANASHA ROAD REHABILITATION PROJECTMOROCCO TANGIER – KENITRA HIGH SPEED TRAIN RAILROAD CONSTRUCTION PROJECT (CANCELLED)KAZAKHSTAN AKTOGAY COPPER CONCENTRATE PLANT PROJECT (CANCELLED)

ALTEK ALARKO ELEKTRİK SANTRALLARI TES. İŞL. VE TİC. A.Ş. TOHMA HYDROELECTRIC POWER PLANTKIRKLARELİ NATURAL GAS COMBINED CYCLE POWER PLANTMERAM ELEKTRİK DAĞITIM A.Ş. ALCEN ENERJİ DAĞITIM VE PERAKENDE SATIŞ HİZM.A.Ş. CENAL ELEKTRİK ÜRETİM A.Ş. MERAM ELEKTRİK ENERJİSİ TOPTAN SATIŞ A.Ş.MERAM ELEKTRİK PERAKENDE SATIŞ A.Ş. ALGİZ ENERJİ A.Ş.PANEL ENERJİ A.Ş. ALARKO ENERJİ ÜRETİM A.Ş.

ALARKO CARRIER SANAYİ VE TİCARET A.Ş. THE MAIN MANUFACTURING PLANTRADIATOR MANUFACTURING PLANTDEALER SALESSYSTEM SALESAFTER MARKETS SERVICESTOTALINE DIVISIONALARKO FENNİ MALZEME SATIŞ VE İMALAT A.Ş. ALMÜT ALARKO SINAİ GEREÇLER İMALAT VE MÜMESSİLLİK A.Ş. TÜM TESİSAT VE İNŞAAT A.Ş. ALAMSAŞ ALARKO AĞIR MAKİNA SAN. A.Ş. SARET SANAYİ TAAHHÜTLERİ VE TİC. A.Ş. ATTAŞ ALARKO TURİSTİK TESİSLER A.Ş. HILLSIDE BEACH CLUBHILLSIDE CITY CLUB - ETİLERHILLSIDE CITY CLUB - İSTİNYE HILLSIDE CITY CLUB - TRIOCINECITY - ETİLERCINECITY - TRIOCINECITY - OLIVIUMCINECITY - KİPASANDA SPA (HBC, HCC-ETİLER, HCC-İSTİNYE, HCC-TRIO)

ALARKO GAYRİMENKUL YATIRIM ORT. A.Ş. ALDEM ALARKO KONUT İNŞAAT VE TİCARET A.Ş. AL-RİVA PROJESİ ARAZİ DEĞER., KONUT İNŞ. VE TİC. A.Ş. AL-RİVA ARAZİ DEĞER., KONUT İNŞ. VE TİC. A.Ş. AL-RİVA ARAZİ DEĞER., KONUT İNŞ., TURİSTİK TES., GOLF İŞL. VE TİC. A.Ş. ALARKO DEYAAR GAYRİMENKUL GELİŞTİRME A.Ş. MOSALARKO J.V.

ALFARM ALARKO LERÖY SU ÜRÜNLERİ SAN. VE TİC. A.Ş. ATAŞEHİR : MANAGEMENT & SALES OFFICESEAFOOD PRODUCTS FACTORY : SUADİYE / İZMİTANTALYA : SALES OFFICE


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1. Opening and moment of silence.

2. Deliberations and decision on the election of the Presiding Committee.

3. Deliberations and decision to authorize the Presiding Committee to sign the minutes of the General Assembly.

4. Reading and discussion of the Annual Report of the Board of Directors, the reports of the Auditors and Independent Auditors for the term of 2013.

5. Reading, discussion and approval of the Statement of Financial Position and Statement of Comprehensive Income of 2013.

6. Deliberations and decision to acquit members of the Board of Directors on account of their activities in 2013.

7. Presenting information about donations made by the Company.

8. Deliberations and decision regarding the limits of donations to be made in 2014.

9. Presenting information on the guarantees, pledges and mortgages lodged by the company in favor of third parties.

10. Presentation of information regarding the remuneration principles for members of the Board of Directors and top executives.

11. Deliberations and resolution on presentation and approval of profit distribution policy of the company.

12. Deliberations and decision on the proposal of the Board of Directors concerning the distribution of the profits of 2013.

13. Deliberations and decision on the election of the Board of Directors and determination of the salaries and terms in office of the members.

14. Deliberations and decision on vesting the powers set out in articles 395 and 396 of the Turkish Commercial Code to the members of the Board of Directors.

15. Presenting information regarding the operations set out in articles (1. 3. 6) of the “Corporate Governance Principles” in the annex of the Capital Markets Board Communiqué Numbered II-17.1

16. Deliberations and decision on the election of auditors according to the Turkish Commercial Code.

17. Deliberations and decision concerning the signing of a contract for the auditing of the company’s accounts by an Independent Auditing Company selected by the Board of Directors in accordance with the Capital Markets Regulations and approval of the draft of the contract.

Board of Directors

AGENDA OF THE ORDINARY GENERAL ASSEMBLY


15


2013 was definitely a year that will be remembered as a year where the volatility both in politics and economy was high. It is possible to understand the reasons for this high volatility simply by looking into global capital flows. Capital flows towards developing countries reversed direction and started fleeing back towards developed countries causing deepening of problems and high depreciation of currencies of developing countries that failed to overcome their structural problems.

Undoubtedly, the outflow of capital from developing countries started gradually from May 2013. The positive signals from the US economy have a significant effect on this trend. As a result these capital outflows local currencies of developing countries began to depreciate. In parallel with these developments, there have been declines in both growth and employment rates. In line with the announcement in May about lowering the amount of assets purchased by the FED, the actual start of tapering by the end of the year caused problems to get worse and deepen. FED’s decisions began to play a paramount role in determination of the amount and direction of capital flows.

Our country has been one of the countries that most affected by these developments. The persistent continuation of the structural problems of our country such as current account deficit, foreign trade deficit, inflation and unemployment is the main reason for this. The political turmoil experienced in December and the uncertainty stemming from this turmoil led to a significant depreciation of the Turkish Lira and losses in the value of assets.

Our Group has set its target to be one of the companies least affected by these adverse conditions and competition environment. The positive effects of the implementation of the principles of corporate governance, supervision, decision making and approval processes, without compromise, in achieving the set target is indisputable. In addition to all the foregoing, the strategy implemented by our Group and practices in line with this strategy enable us to become more robust and resistant to these adverse conditions.

In 2013, Our Contracting Group strived hard to maintain the momentum it achieved in 2012 despite the considerable adverse developments. It has continued to pursue its efforts aimed entering new markets and increasing its share in the existing markets.

Our Energy Group has continued to carry out construction activities relating to both Karakuz Hydroelectric Power Plant and Karabiga Thermal Power Plant in an efficient and expeditious fashion. The Energy Group has successfully completed the preparation process for wind energy projects and designed and prepared plans to bring the projects into life. The Group proactively pursued tenders for privatization and will continue to pursue all privatization tenders in a targeted and proactive manner.

Our Industry and Trade Group has achieved significant success in making a difference with its quality in manufacturing and services and has improved both its market share and product range.

Our Tourism Group has maintained its position as a leading brand in the industry and speeded up its efforts to expand through new investments.

Our electricity distribution company has speeded up its investments in technological infrastructure to provide the highest quality services to its customers. The energy requirements of the region have been met in an efficient and expeditious manner through maintenance and repair of the distribution network and new investments.

We, as the Alarko Group of Companies, successfully completed the year 2013 which was indeed a very challenging year for the economies of developing countries. We would like to express our gratitude to our dedicated, self-sacrificing and determined employees for their diligent efforts and generous support that enables us to achieve this success and to our dear shareholders who provided us with all kinds of support.

ANNUAL REPORT OF THE BOARD OF DIRECTORS


16

ANNUAL REPORT OF THE BOARD OF DIRECTORS

Distinguished Shareholders,

We hereby present the Annual Statement of Financial Position, Statement of Comprehensive Income and other financial statements which reflect the results of our company’s activites in 2013 to your evaluation and criticisms.

1. This Annual Report covers the period between 01.01.2013 and 31.12.2013.

2. The terms in office of the members of the Board and the auditing firms for the year 2013 are given on pages 6 .The financial statements of the operational results obtained by Alarko Holding A.Ş. in 2013 were audited independently by Güney Bağımsız Denetim ve SMMM A.Ş. (A Member Firm of Ernst & Young Global Limited).

3. Our partnership’s registered capital ceiling in 2013 was TL 500.000.000.

4. Our issued capital is TL 223.467.000 - and our consolidated profit before tax in 2013 was TL 243.695.676.

5. Our Annual General Assembly held on 16.05.2013 was attended by 88 of our partners both in physical and electronical medium. Our partners with more than 10 % of our capital, owned 14,36 % of the shares İshak Alaton (Beneficial Owner), 17,68 % of the shares İzzet Garih, 15,55 % of the shares Dalia Garih. Vedat Aksel Alaton owns 17,68 %, Leyla Alaton owns 3,32 % of the share. A dividend of 85,14%, 102,40% and 207,10% over cash paid capital and of 1,88%, 2,27% and 4,59% over total equity was paid during the periods of 2010, 2011 and 2012 respectively. The proposal for the distribution of the profits for 2013 submitted by our Board of Directors to the approval of the General Assembly is on page 61 of this report. The value of our shares being traded at the Istanbul Stock Exchange at the time this report was prepared was TL 5,14.

6. The total amount of donations made by our partnership to various foundations and associations in 2013 was TL 325,00.

7. Information on the guarantees, pledges and mortgages lodged by our company in favor of third parties as of 31.12.2013 is given in footnote 20 of the financial statements.

8. The Board has convened 19 times in the year. 1 member has not attended on excuse to each of 2 meetings held during the period. Board decisions have been taken unanimously.Therefore, there is no record of dissenting votes.

9. There are no important lawsuits brought against the Company which could impinge on its financial situation or activities as of 31.12.2013.

10. There were no related party transactions or transaction of importance to be presented to the approval of the independent members of the Board in 2013.

11. Shareholders who control the management, members of the Board of Directors, top executives and their spouses and blood and in-law relatives up to and including their second kin have not executed any transaction which may lead to conflict of interest with the Company or its affiliates.Members of the Board have no transactions of their own or on behalf of others that could be within the scope of the noncompetition covenant.

12. The table on page 52 of this report includes the subsidiaries of our company with their areas of operation, their capitals and the percentage of shares owned as of 31.12.2013.


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SUBSIDIARIES OF THE ALARKO GROUP

The Alarko Group of Companies consists of numerous entities active in various sectors operating within the framework of Alarko Holding A.Ş. Although the companies of the Group are autonomous, they are managed and supervised centrally with regard to financing, financial coordination, auditing, legal affairs, management information systems, human resources, promotion, training and organization as imposed by the central coordination and control principle.

The companies of the Alarko Group operate in 6 major fields of activity listed below:

CONTRACTING GROUP

ENERGY GROUP

INDUSTRY AND TRADE GROUP

TOURISM GROUP

LAND DEVELOPMENT GROUP

SEAFOOD PRODUCTS GROUP

The activities of the different groups of our company during the term of 2013, their new projects and investments as well as their future targets are given in detail below.

CONTRACTING GROUP

Our contracting Group has determined the vision of being an international contracting company preferred by customers, employees, shareholders and the society in rebuilding the globalizing world and the mission of being a leader in constructing the new world and to satisfy our customers, shareholders and employees by both creating a unity of technology, information and human resources within a creative organization and giving environment-friendly, reliable, high quality contracting services.


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CONTRACTING GROUP

Our contracting Group has determined the vision of being an international contracting company preferred by customers, employees, shareholders and the society in rebuilding the globalizing world and the mission of being a leader in constructing the new world and to satisfy our customers, shareholders and employees by both creating a unity of technology, information and human resources within a creative organization and giving environment-friendly, reliable, high quality contracting services.

Our Contracting Group operates as a general contractor both in Turkey and abroad and carries out airport and rail system projects, largescale infrastructure works, construction of industrial plants, business centers, hotels, hospitals and other such projects on a turn key basis. The project management philosophy of the Contracting Group is based on “autonomous management and central supervision”. Each project is considered an individual profit centre and our organization and management systems

are reviewed and improved continuously to enable strategic thinking, develop effective decision making polices, reduce work completion durations, and decrease costs to the minimum while increasing quality.

The quest of our group for new markets continued in a wide geography in 2013 and in addition to the Qatar, Oman, Yemen, Morocco, Algeria, Tunisia and Libya markets, development efforts for large scale projects in Uzbekistan are ongoing. We foresee a considerable business potential in these areas in 2014.

The “Goal Based Management” principle is fundamental at the Alarko Contracting Group. In addition to goals, the general and managerial competence of all our employees is measured and evaluated continuously by a performance measurement system. Thus, each employee is ensured personal improvement in the areas of result oriented operation, effective use of resources, representation, compliance to company policies and regulations, responsibility understanding, visionary leadership, delegation and personnel training, strategic thinking, management and motivation.


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CONTRACTING GROUP

In 2013, continuous and periodical work-site supervision was maintained both with internal supervision and internationally accredited supervision companies and effectiveness of supervision was improved. Thanks to the Occupational Health and Safety Management Systems applied, there has been a serious drop in occupational accidents and the accident rate in all our organisations is now at developed countries’ standards. Moreover, application of our Environment Management Systems has enabled us to mitigate the possible environmental damage of operations to allowed levels. Our company has the ISO 9001:2000, ISO 14001, and OHSAS 18001 certifications and is maintaining its efforts to improve its management systems.

The operation areas of the Contracting Group can be summarized under the following headings:

• Refinery, Chemical and Petrochemical Plants

Refineries Petrochemical Plants Chemical Processing Plants Tank Farms

• Industrial Plants Factory Construction and Equipment Assembly Ore Processing and Dressing Plants Metallurgy and Electrometallurgy

Plants Iron and Steel Plants Cement and Lime Plants• Power Plants Hydroelectric Power Plants Thermal Power Plants Combined Cycle Power Plants Heat Recovery Systems• Pipelines Oil Pipelines Natural Gas Pipelines Water Pipelines Urban Natural Gas Distribution

Networks Compressor Stations Pump Stations• Water and Waste Water

Transportation Pipelines and Treatment Plants

Waste Water Treatment Plants Potable and Usage Water Treatment

Plants Industrial Water Treatment Plants Waste Water Sea Discharge Lines Water Supply and Irrigation Systems

• Transportation Projects Airports Railroads Underground Systems Light Rail Systems Signalization Systems Highways, Motorways Tunnels, Bridges• Housing Projects and Public Service

Buildings Satellite Towns Housing Compounds Luxury Dwellings Business Centers Commercial Centers Hospitals Hotels Military Facilities

The status of projects in progress, completed within 2013, in maintenance and operation period and undertaken recently are summarized below:

Kazakhstan Taldykol Lake Rehabilitation and Waste Water Treatment Plant 5th Phase ProjectThe construction contract of the treatment facility which is the last phase of Taldykol lake rehabilitation and Waste Water Treatment Facilities project was


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CONTRACTING GROUP

signed by the Governorship of Astana in December 2013.

The existing 136.000 m³/day capacity of the treatment facility will be increased to 254.000 m³/day capacity with the construction of this project.

The completion period of this phase is 39 months and includes sedimentation tanks, aeration tanks, gravity tanks, treatment building, aeration building, sludge dewatering and drying areas, grid filter building, raw sludge pump buildings and pump stations.

With the completion of the project, it will be possible to discharge the water trea-ted by the existing and future treatment facilities into the Esil River which runs through Astana.

Kazakhstan Aktau Manasha Road Project Approximately 100 km of the 210 km road between Şetpe-Beynau which was contracted in 4 stages by the Ministry of Transportation of Kazakhstan was completed as of the end of 2013.

2,5 million tons of rock will be crushed; 36 thousand tons of bitumen and 23 thousand m³ of cement will be used in the project planned to be completed at the end of 2014. Moreover, 1 bridge, 178 culverts and 210 km long asphalt road are being built. All works included in this project will be completed with our competent human resources and our equipment as well 45 new construction machines, 96 trucks, 1 asphalt plant with 240 t/h capacity and 1 stone crusher facility with 400 t/h capacity that was added to our equipment park.

Kazakhstan Bozshakol Copper Concentrate PlantAs of the end of 2013 a physical progress of 85% was achieved in the design and procurement of the process equipment as well as the engineering works for the construction of the whole plant and the mechanical and electrical systems of the Copper Concentrate plant with an annual capacity of 25 million tons to be built in the Pavlador area in north east of Kazakhstan. Highway, railway, basin construction, concrete-steel and prefabricated buildings, long conveyor transportation lines, pipelines of varying diameter, assembly of equipment and mechanical Installation and fully automated production control systems as well as numerous non-process buildings and facilities within the scope of the project have been undertaken by our company on a turn-key basis.

The annual average of 1.500 employees which the project employed was increased to its highest level of 2.600 employees – both Turkish and Kazak – during the last quarter of 2013. The targeted date for the mechanical completion of the plant is mid-2014.

Ankara Metro ProjectThe Project includes;• Renovation of the Electromechanical

Works on the existing Kızılay-Batıkent line,

• The Electromechanical Works of the Batıkent-OSB metro line,

• The signalization system at Kızılay-Çayyolu 2 line

• The signalization system of the Tandoğan-Keçiören line,

• The renovation or modification of the depot, workshop and control center in Macunköy according to the requirements of the system,

• Renovation of the signalization, announcement, wireless etc. systems of the existing 108 vehicles according to the new system.

• The supply, installation and commissioning of on board equipment for the signalization of 324 vehicles which will be purchased at a later date.

The final stage of completion and test runs were started by the end of 2013. Commercial passenger transporting activities will be started in two stages, the first at the end of December 2013 and the second at the beginning of 2014.


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CONTRACTING GROUP

Karakuz Dam and Hydroelectric Power Plant ProjectBy the end of 2013, a physical progress of 96 % was achieved in the Karakuz Dam and Hydroelectric Power Plant (HEPP) with a capacity of 77,4 MWm/76 MWe on the river Körkün in the Pozantı region of Adana by ALTEK ALARKO Elektrik Santralları Tesis İşletme ve Tic. A.Ş. Work done within the scope of the project aiming solely at power generation consists of: main dam structure (concrete), derivation tunnel, right and left dam roads, energy tunnel water intake building, springhead and tail-water coffer dams, energy tunnel, energy tunnel outlet building, penstock conduit, surge tank, valve chamber, power station and administrative building, construction of the road between the power plant and the energy tunnel, 154 kV switchyard and the energy transmission line.

Two specially designed state of the art TBMs (Tunnel Boring Machine) are used for the construction of the energy tunnel. The aim is to start holding water in February 2014 after the testing operations of the project are completed.

Kazakhstan Taldykol LakeRehabilitation and Waste Water Treatment Plant 3rd Phase ProjectThe contract for the Taldykol Treatment Plant 3rd phase works contracted out by the Astana Governorship was signed in March 2012. The project with a construction period of 45 months consists of the cleaning and rehabilitation of the Taldykol waste water lake of 65 million cubic meters.

Approximately 4,1 million m³ of sludge will be removed, dried, and mixed with soil of appropriate characteristics brought from the vicinity. This will be used in levelling and planting 17 million m² of land around the lake. The construction of the project continues and is planned to be completed in November 2015.

Kazakhstan Taldykol Lake Rehabilitation and Waste Water Treatment Plant 4th Phase ProjectTaldykol lake rehabilitation waste water treatment facility 4th phase project which includes the construction of the main treatment building, the diaphragm wall and other auxiliary buildings of the Taldykol lake rehabilitation waste water

treatment plant was started in 2013 and the construction activities achieved a physical progress of 44 % by the end of 2013. All the work included in the project will be completed in September 2015.

Istanbul Municipality Taksim – Yenikapı Metro Project The Taksim-Şişhane section of the Taksim-Yenikapı metro project covering the electromechanical and finishing works of this metro line has been in commercial operation since 2009. The project includes the execution of the works of the 5.200 m long double track tunnel that will work in total harmony

with the Taksim - 4th Levent metro line and the Şişhane, Unkapanı, Şehzadebaşı and Yenikapı stations. In addition to the finishing works in the stations, the project includes the execution of systems such as power supply and distribution, signalization, control and communications, scada, illumination, wireless and telephone system, tunnel and special area air conditioning, as well as the execution of such works as sanitary installation, escalators, elevators and track works. Moreover, the connection of the operating Aksaray-Airport light metro line with Yenikapı will be executed, thus completing the integration of Atatürk Airport, Esenler Bus Terminal metro and Bosphorus tube crossing. This system that will be integrated with the İDO sea bus system at Yenikapı is planned to be completed for operation at the begining of 2014.

İstanbul Municipality Levent – Hisarüstü Metro ProjectIn addition to the contract of the Levent-Hacıosman metro line constructed by

our company an approximately 4,7 km long Levent-Hisarüstü line containing 4 underground stations was added to the main contract in December 2012. The construction period for this line which was added in to the existing contract as a turnkey project that includes design, construction, procurement of materials, assembly, commissioning, test operation and a 2-year operation and maintenance supervision is planned to be 20 months.

A 75% physical progress was achieved in the project as of the end of 2013. Test runs are planned to be performed in March 2014 and to open the line for commercial operation in the second half of 2014.

Kiev Boryspil Airport ProjectOur defect liability period continued in 2013 for the “Boryspil State International Airport” which had been constructed successfully.

The project which includes passenger terminal building of 100.000 m², a parking ramp of 200.000 m², 11 passenger bridges, 1.400 m long viaduct with 40 spans, 100.000 m² of asphalt coating, a fuel line of approximately 14 km, various infrastructure works of a total of 15 km, all interior and exterior electrical and mechanical works, the procurement, assembly, testing and commissioning of all the terminal equipment including the security and baggage handling systems have been operating smoothly for 2 years.

Kazakhstan Taldykol Lake Rehabilitation and Waste Water Treatment Plant 2nd Phase ProjectThe construction, mechanical and electrical works of the 2nd phase of the Taldykol Treatment Plant with a construction period of 19,4 months awarded to our company by the Astana Governorship in November 2011 were completed at the end of 2012. The rehabilitation of the 65.000 m² aeration tanks and the ultraviolet plant, the setting up of a package lab unit, changing two compressors in the blower house building, the rehabilitation of 2 primary sludge pump houses and in-plant asphalting and landscaping work included in the scope of the project have been completed. The defects liability period ended in December 2013.

ENERGY GROUP

Our Energy Group, endeavoring to reduce our country’s foreign-dependency in the energy sector is continuing its investments and also accelerating its efforts related to new investment projects. Also our group aims to be one of the leader companies in Europe in energy distribution and retail sales.


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ENERGY GROUP

ENERGY GENERATION ACTIVITIESTurkey’s energy demand in the developing energy sector is increasing rapidly in parallel with the growing economy. Endeavoring to reduce our country’s foreign-source dependency in the energy sector, our Energy Group is continuing its investments and also accelerating its efforts related to new investment projects.

Production Activities in 2013 The hydroelectric power plant using our natural resources and established on a Build-Operate-Transfer model in Tohma, Malatya has attained a production target of 44 million kWh this year. Within the scope of its concession agreement, the Tohma Power Plant will continue its activities until the end of 2018 and will then be transferred to the State.

As the free market conditions that are being implemented in the energy sector in our country have not been fully actualized yet and approximately 70% of the energy produced is still State owned and due to a gas turbine damage at our

Kırklareli Natural Gas Combined Power Plant of an installed capacity of 164 MWe, our actual production in 2013 was 263 million kWh.

We have produced a total of 307 million kWh of electricity at these two power plants in 2013 and considering the

slow development of the free market conditions in our country, we are planning to produce a total of 450 million kWh in 2014.

Our New Power Plant ProjectsTaking into consideration the rapidly increasing energy demand, our Energy


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ENERGY GROUP

Group is continuing to evaluate new investment opportunities in the electrical energy sector.

Moreover, having adopted the principle of reducing the foreign source dependency of our country in energy our Energy Group is maintaining its efforts in producing energy from renewable sources and mainly solar and wind energy. Within this scope, we are aiming at producing energy from renewable sources on land we have bought in Konya to establish a solar energy power plant.

Karakuz Dam and Hydroelectric Power PlantWe plan to go into production at this power plant whose construction is ongoing in May 2014. This power plant produce 270 million kWh of electricity annually and will create great added value to our company with its flexible nature and intent production.

Çanakkale Karabiga Thermal Power PlantThe establishment work of the imported

coal fired electrical power plant operated by Cenal Elektrik Üretim A.Ş. – an Alarko Group and Cengiz Group partnership - with an installed capacity of 1320 MWe situated at Karabiga has started. The contract with the engineering company has been signed, a technical consultant has been found, orders have been given for the boiler, turbine and generator groups and excavation and foundation work has started at the site.

Our Karabiga plant will function as a base load power plant and the energy produced will be sold through our wholesale and retail companies’ channels. Two criteria have come to the fore at the establishment phase of this power plant. Firstly, the fact that it is an environment friendly plant and secondly, the productivity factor. The production licence for the Karabiga power plant was obtained at the end of 2012 and it is planned to go into operation in 2017.

Our Environment AwarenessEnvironmentalism will continue to be one of our characteristics that we will not give

up. In addition to the carbon releasing energy we produce, we will definitely have production plants based on renewable energy sources to minimize this effect. Today, the carbon we release for a total production of 1 MWh is 397 kg. When our Karakuz power plant and solar power plant goes into production, this will be reduced to 282 kg and 270 kg respectivly.

All precautions to reduce the effects of our production on the environment have been taken at our coal and gas fired plants and these precautions will be kept up.


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ENERGY GROUP

ENERGY DISTRIBUTION AND RETAIL SALES ACTIVITIESMeram Elektrik Dağıtım A.Ş. (MEDAŞ) taken over on 30.10.2009 after we won the tender put out by the Privatization Administration gives distribution services over an area of 76.932 km² which is equal to 10% of the total area of Turkey and includes the provinces of Konya, Karaman, Aksaray, Nevşehir, Niğde and Kırşehir.

MEDAŞ that gave electricity distribution and retail sales services separated its activities as per the abolished Electricity Market Law article 4628. With this reorganization done to open the retail electricity sales market to competition, the subscription, billing and collection activities previously done within the MEDAŞ organization were transferred to the newly established Meram Elektrik Perakende Satış A.Ş. (MEPAŞ) and activities such as breakdown-maintainance repair, investment, index reading, power switch on-cut off activities were left to MEDAŞ.

After the division was completed in March, MEDAŞ made changes in its organizational structure by creating new unit managements but did not make any changes in the structure of its operational structure. It kept its 42 independent operations in parallel with its objective of increasing productivity and efficiency by restricting the geographical responsibility area of the operations. With 32 operations that function in connection with these operations, a total of 74 operations are serving the 6 provinces, 65 counties, 331 towns, 1379 villages and 512 uplands.

Training activities were maintained in 2013 as in previous years. We are aiming to increase the knowledge and skills of

our personnel with the regular technical and personal development training provided by our company. In addition, training in occupational safety was particularly focused on to ensure that all the personnel including the expert team workers got occupational safety training before starting to work.


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ENERGY GROUP

As a result of the regular occupational safety training given, there have been no accidents involving death in 2013.

Efforts to make MEDAŞ a “technology company” that started following privatization were maintained in 2013. Projects such as the Document Management System, Customer Information System, Geographical Information Systems, Call Center, Vehicle Tracking System, SCADA, Intranet, Process Management put in use in previous years are being applied successfully. Authomatic Meter Reading System was activated in 2013 as well. Remote data collection from 15.000 meters has been accomplished as of the end of the year. Moreover, work on obtaining the coordinate information of 1,6 million meters in our area to enable regular and reliable reading is about to be completed. The coordinate information of approximately 99,5 % of these meters has been defined to the system. Our basic aim with the said projects is to be able to answer the needs and requests of the 1,65 million customers in our area rapidly, increase service quality and efficiency and make our Company one of the exemplary distribution companies in Europe.

As in previous years, maintenance work of the distribution facilities were maintained in 2013. Moreover, approximately TL 130 million was spent in 2013 for investment in technology and improvements, renewal and

capacity increase investments. Thanks to maintenance and investments to enable continuous and quality power to our customers a serious decline was experienced especially in technical losses.

Work on providing our independent customers cheaper electricity was accelerated following the seperation. Our independent customers totaling approximately 1500 as of the beginning of April exceeded 20.000 as of the end of the year. We are targeting to have an independent consumer portfolio of 1

billion kWh including our sales outside our area at the end of 2014.

In addition, temporary acceptance of the first solar energy power plant in the area of photovoltaic solar energy in Turkey, established in direct connection with the network was done by TEDAŞ. This power plant whose application was made to the EPDK (Energy Market Regulatory Authority) is located over an area of 3.500 m² in the garden of the MEDAŞ Headquarters. It is the first project under 500 kW without licence and is producing 200 kW of electricity.


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INDUSTRY AND TRADE GROUPALARKO HOLDİNG A.Ş. YÖNETİM KURULU


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In 2013, our Group whose main areas of activity are heating, ventilating, air conditioning and pumps has completed many high prestigious projects in heating, chilling, ventilating, hygenic climatization and building automation as previous years.


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Our company whose main areas of activity are heating, ventilating, air conditioning and pumps, manufactures, markets and gives after-market services for products within these areas.

Sales of air handling units and roof-top air conditioners manufactured using the technology and brand name of Carrier both in the domestic and international markets was maintained in 2013. Especially the roof-top air conditioners whose sole manufacturer in the EMEA region is Carrier have a serious growth potential.

The VAV (Variable Air Volume) fan option of the new generation roof-top air conditioning unit 48/50 UA/UH series offered to the market in 2012

will be on the market in January 2014. The project to increase the capacity of the existing apparatus conducted with the collaboration of Carrier EMEA and Alarko Carrier Engineering Department will be completed in two stages in 2014 and the new models will be offered to the market. A substantial increase is foreseen in both domestic and export sales with the introduction of two models of 135 and 155 kW in April 2014 and 170 and 200 kW models in December 2014 to the product range.

The existing 39HQ series air handling units are preferred in prestigious projects both at home and abroad. Procedures to produce air handling units for the middle segment so as to keep pace with increasing competition have been completed. Production of the middle segment 39SQ air handling units at the Alarko Carrier Gebze plant will begin as of January 2014. A more competitive version of the 39SQ series to be developed by the Alarko Carrier Engineering Department through 2014 is planned to be offered to the market at the end of 2014. Sales of air handling units aimed at the Middle East market began in 2011, continued and grew progressively due to prestigious projects obtained in this region. Training, visits and marketing activities conducted in cooperation with the Carrier offices in Qatar, Saudi Arabia, the United Arab Emirates and Kuwait will have serious positive effects on sales in future years.

Thanks to the correct price-quality matching, we were able to maintain our leadership in the market in 2013 with Carrier brand fan-coils imported from Italy and Alarko brand fan-coils imported from China. We foresee an increase in our market share by using the products with high added value in our product range containing energy efficient fans in projects and work to be conducted on stock management.

In 2013, Carrier maintained its leadership in the water-cooled chiller sector with its high efficiency equipment. A serious growth is being observed in the market especially in equipment with centrifugal compressors. In parallel with this development in the market our sales organization showed a performance beyond expectations by being proactive. The market will continue to grow in 2014 especially with Public-Private Partnership Hospital projects and our leadership in this product will be maintained.

We are continuing to develop heating equipment in accordance with feedback from final consumers and market research results. Accordingly, our new Harmony-D model conventional combi boiler will be offered to the market in 2014.

Our cooperation with Wolf in heating is continuing. In November 2013 we adopted the Wolf CGB 35/50 series to


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replace the Atag condensing combi boiler intended for the villa market. Moreover, a more ambitious position will be attained in the market with the MGK-2 condensing boiler series to be introduced to the market at the beginning of 2014 and system solutions that attain to 630 kW capacity with a single boiler, and to 2.520 kW with cascade boilers.

While cooperation with Wolf is ongoing, R&D work on Alarko condensing combi boilers and wall-hang boilers is also continuing. As a result, our standing in two different segments as a foreign and domestic brand in the developing condensing boiler market will be reinforced. Plans are being made to complete work to develop the Alarko wall-hang condensing boilers in the last quarter of 2014 and to offer the market the new condensing boiler that we have began to develop in two different base segments in cooperation with Radiant to replace the Seradens model in 2015.

Our efforts with regard to burner development to comply with the BEP (Energy Performance in Buildings) Regulations were maintained in 2013. The ALF 12DM-T single stage natural gas fueled burner with damper motor was offered to the market in July 2013. ALF 180/M type proportional modulation medium and heavy oil burners will be offered to the market in the first quarter of 2014. Moreover, gradually in 2014, all

our gas fueled modulated burners will be converted from pneumatic modulation to electronic modulation type which is easier to adjust, more modern and at the same time more economic.

Air separators and sediment collectors, accessories of large capacity condensing boilers, were procured from outside markets and offered to the market in July 2013.

We are continuing to procure and sell steel and cast iron boilers, floor type cast iron condensing boilers, boilers, radiator valves, expansion tanks, and towel radiators as supplementary apparatus for heating systems from domestic manufacturers under the Alarko brand and sales of Techem brand heat meters and heat cost allocation

equipment and giving reading service by Alarko.

The prototypes and tests of our frequency inverter circulation pumps with high energy efficiency which will be the first domestic produced pumps pursuant to the memorandum dated 23 September 2011, regarding circulation pumps published by the Ministry of Science, Industry and Technology have been completed. We are planning to go into mass production and present them to the market in the first quarter of 2014. An effective competition is being targeted in this segment. A comprehensive and detailed training program has been prepared for the Authorized Dealers and Services as well as the assembly workers and plumbers dealing with our new circulation pumps. Mini circulation


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pumps with the appropriate frequency inverters matching the memorandum for condensing boilers have been imported and offered to the market. This product range will be extended in 2014.

Within the scope of the efficiency improvement project in submersible pumps the development of our 6060 was completed and offered to the market in the fourth quarter of 2013 and the equivalent low efficiency 6055 models with cast iron and bronze fans have been taken out of our product range. Revision of our other models will continue in 2014. Our Agricultural Loan Forms which will enable us to sell our submersible pumps as agricultural equipment on long-term loans with no interest have been renewed and sales contracts were signed with Agriculture Credit Cooperatives.

An agreement has been signed with a domestic submersible pump motor manufacturing firm to enable us to offer a more competitive price to our distribution channel and production of an economic motor as an alternative to ours has begun. A competitive price has been attained with economic series motors to be used especially in conjunction with complete rustproof submersible pumps. With this product, we are targeting an increase in our submersible pump market share in 2014. Development work for our ALDF water booster with frequency inverter was started and applied on the inverter and body. Development work will continue in 2014.

Our water pressurization selection program will be revised in connection with revisions made in 2013 and new products. Moreover, just like in 2013, we will continue to display our water pressurization systems for exports at fairs abroad, either directly or indirectly in 2014.

We will continue to be the “technology leader” in the individual and light commercial air conditioning market with environment friendly, high energy efficiency and best price/quality ratio products. The energy efficiency criteria, energy rating and performance of air conditioners up to 12 kW were redefined as of 01.01.2014 in accordance with the requirements of the environment friendly designs communiqué published in the Official Gazette in July 2013 and the inverter technology that we have been using for years has become obligatory in this market. Since the products we are selling are high energy efficiency products in accordance with our policy, our strategy and sales have been positively affected by this regulation that will enable us to attain an even stronger position in the market in 2014.

As the minimum energy efficiency criteria brought by the new regulations will lead to an increase in prices, shrinkage in the number of split air conditioner sales is foreseen for 2014. However, as this shrinkage will occur in the air conditioners without inverters, we will continue to grow in the market of high energy efficiency products and products with inverters.

We have a choice of 3 different systems in the Toshiba variable refrigerant flow (VRF) systems. The Toshiba VRF systems that have the highest efficiency rates in the market in part load have been even further improved with the higher efficiency and capacity new models SHRM-I that can heat and cool at the same time offered to the market in 2013. We will continue to satisfy all the project requirements of our business partners and all technology, energy saving and initial investment cost conscious users. We maintain our technology leadership in VRF systems.

The SAP project initiated to increase efficiency by combining sales and after sales work processes under a single joint software, measure performance and eliminate activities that do not generate added value was also applied to new sections integrated to the organization. Integration with the Service Portal and ALVIMA intra-company software will be applied in 2014.

The purchasing, engineering, export, human resources, finance and all the production units at the Gebze and Dudullu plants attained the Silver Level and were certified following the ACE (Achieving Competitive Excellence) inspection conducted in November 2012. Hence, the position and quality of Alarko Carrier among all other Carrier plants has been certified with the production and related units rising from Bronze level to Silver Level, thus, opening the way for new products to be manufactured at our plants.

PRODUCTION ACTIVITIESMain Production Plant Our main Production Plant is a modern complex situated in the Gebze Organized Industrial Zone and extends over an area of 60.000 m² consisting of a closed area of 20.000 m² for production, 2.000 m² for offices, 2.000 m² for the testing and Research and Development building, and social and training facilities. Air handling units, roof-top air handling units, heating and cooling batteries in the area of central air conditioning, gas fired conventional and condensing combi boilers, light and heavy oil and gas burners in the area of heating, and submersible pumps and motors, circulation pumps, water boosters


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in the area of water pressurizing are manufactured at this plant.

The ACE (Achieving Competitive Excellence) project, which is used in all the regions of UTC to which Carrier is associated, is being implemented at our production plant. Our Testing and Research and Development Departments cooperate regularly with universities and TUBITAK (Turkish Institute for Scientific and Technical Research) to develop and improve products. Important improvements are also constantly made in our products with technology transfer from Carrier.

Radiator Production PlantOur panel radiator production plant is situated at the Istanbul Dudullu Organized Industrial Zone. The plant was modernized and its capacity was doubled by an expansion completed in 2006. The plant extending over a closed area of 12.000 m² manufactures Alarko brand radiators for the domestic market and Carrier brand as well as various OEM brand radiators for exports.

TRADE AND MARKETING ACTIVITIESOur company has an extensive and strong distribution and service network in Turkey. We have offices in İstanbul, Ankara, İzmir, Adana and Antalya. We also have 263 dealers and 243 after-sales service units over the country. Both our dealers and our service network have earned themselves a special place in the sector with their showrooms and well-trained personnel. Taking into consideration the market trends, we include imported products in addition to products manufactured at our plants

to our product range. Our company gives customer focused service, offers product variety to our dealers and complete solutions to our clients. A separate distribution channel has been created for Toshiba air conditioners and solution partnership models for VRF are continuing.

In addition to products manufactured at our own plants, our sales range includes supplementary products such as cooling groups, automatic control equipment, fan-coils, cooling towers, duct equipment, filters, cold room equipment, air conditioners for operating theaters, humidifiers, aspirators, fire dampers, garage ventilation fans, radiator valves, thermostatic valves, and heat cost allocation equipment procured by companies we cooperate with.

On the other hand, building automation systems converting complex buildings such as large business centres, hotels, hospitals into “intelligent buildings” give us a serious competitive advantage over our competitors. Operating theatre air conditioners for hospitals and special solutions for telecommunications are also within our expertise area. In addition to central system boiler and burner solutions in heating, we offer combi radiator packages in individual heating thus offering a variety of choice for every customer profile. In the area of individual air conditioners, we offer our customers high quality and technology with Toshiba and Carrier products in the inverter category whose importance in the sector is growing rapidly.

On the other hand, our Totaline spare parts markets have been offering spare parts and technical service equipment for heating, air-conditioning and pressurizing products to the whole sector since 2002. With headquarters in İstanbul, Totaline has 5 markets in İstanbul İkitelli, Ankara, İzmir and Antalya and an authorised dealer in Ankara and sales corners in İstanbul, Bursa, Antalya, Mersin and Urfa.

Moreover, service being given within the scope of the “Service Agreements” for the heating and cooling equipments and systems in large facilities is developing rapidly. A new area we are working on is energy efficiency applications. Our company is one of the first in our sector

to have obtained the authorization to supervise and give training in this area.

We are cooperating with Alarko Carrier ACademi in training in our modern training centres and through the internet. Training includes technical subjects as well as subjects related to personal development.

Alarko Carrier ACademi will continue to give training to our dealers and the engineers within our companies. The curriculum for the 1st grade in “Air Conditioning Engineering Training” has been prepared. Orientation training to new personnel is being given over the ACademi Platform in collaboration with HR.

Training of the dealers, sales points and service employees is conducted according to a curriculum entitled “Basic and Periodic Training” within a single framework under the coordination of the Training Unit. Basic Training in Cooling given to the services is partly complete and Basic Training in Heating is being prepared. Service delegation to service employees who have participated will be conducted in collaboration with the After Sales Unit with a test that will be given at the end of the Basic Training.

The Periodical Product Overview training programs of the dealers and sales points is put together with the collaboration of the Product Management and the Training Unit and includes active sales arguments. These sales arguments will be endorsed by the participant thanks to sample cases illustrating how these sales arguments are used. Training given will support dealers and sales point employees in adopting Common Sales Policies.

Video films on issues such as problem shooting and solving, parameter adjustment, starting operations, etc. to be used in the training of service employees who have not participated in the formal training or whenever deemed necessary are being prepared.

Our company has executed numerous highly prestigious projects in the areas of heating, air-conditioning, water pressurization and building automation in 2013 just as it did in previous years.


36

TOURISM GROUPALARKO HOLDİNG A.Ş. YÖNETİM KURULU


37

TOURISM GROUP

TOURISM GROUP

The Alarko Tourism Group is maintaining its efforts to develop innovative concepts to enable people to enjoy their leisure time and feel good and continuing being the precursor in its relevant area.


38

TOURISM GROUP

The “leisure” sector that can be defined as “spending leisure time in the most productive and quality manner” is growing rapidly both in the world and in Turkey. The Alarko Tourism Group, the first representative of this sector in Turkey, is maintaining its efforts to develop innovative concepts to enable people to enjoy their leisure time and feel good and continuing being the precursor in its relevant area.

The Tourism Group that includes operations such as Hillside Beach Club, Hillside City Club – Etiler, Hillside City Club -Trio and Hillside City Club – İstinye, the Cinecity Cinemas, and SANDA SPA is active with the mission of “feeling good”. Our Group that manages the brands it includes based on the “continuous guest satisfaction” approach and the understanding of the dynamics between trends, is maintaining its leader and pioneer position in its sector just as it did from the time of its establishment.

HILLSIDE BEACH CLUB - Fethiye Hillside Beach Club located at Fethiye, Kalemya Bay surrounded by pine forests and offering its guests comfort, quality, sports and entertainment has received numerous awards both at home and abroad and enjoys a privileged position in the tourism sector. Hillside Beach Club


39

TOURISM GROUP

aims and succeeds at offering its guests the holiday of their dreams with its team that has adopted the friendly, sincere and quality service approach. As a result of all these features, the Club serving as a first class Holiday Village is defined as “heaven on earth” by its guests.

Hillside Beach Club once again consolidated its rightful leader position in Turkish tourism with its high occupancy rate and service quality. The Club hosted approximately 23.000 Turkish and foreign guests in the 2013 season and is conducting its efforts to maintain its success in future years.


40

TOURISM GROUP

The percentage of guests who keep returning to Hillside Beach Club is about 58 %. This rate affirms that guests appreciate the club’s continuously updating itself and its unconditional guest satisfaction approach. The Club bases its price policy on the principle of having its guests “get their money’s worth” rather than the high demand

and once again attained exceptional occupancy rates in 2013.

HILLSIDE CITY CLUB - Etiler Emerging as the address of sports awareness Hillside City Club-Etiler has played a precursor role in making the fitness concept a large sector in Turkey with its efforts since its establishment.

With its more than 20 years of “know-how” and its “more than a sports club” motto the club has become the pioneer of the world sports trend in Turkey and a real life-center where the club feeling dominates. Aiming at enriching the social life of its members with the numerous activities organized, Hillside City Club - Etiler has created a considerably large “community” by organizing tours, cultural excursions, tournaments, and parties. The Club’s “community” and brand power has enabled it to form significant co-operations with numerous national and international companies. It has also continued to create serious synergy with a combination of brands such as Wings Cinecity Cinemas, Bej restaurant, Starbucks Coffee, D&R, SANDA SPA, Vassago lady’s hair dresser and solarium, and Nice Café. The Club that prioritises its service quality is mainly preferred by the professionals of the business world.

HILLSIDE CITY CLUB - TrioAs one of the largest facilities of its kind in Europe, Hillside City Club – Trio that


41

TOURISM GROUP

has been in operation within the Alarko Tourism Group since 2003 comes to the fore with approximately 5.500 members. The premises extending over 23.500 m2 provide serious contribution to group synergy with sports halls, indoor-outdoor swimming pools, indoor basketball, squash, racquetball and tennis courts, as well as the Wings Cinecity Cinemas with 7 cinema theaters, PIPa Restaurant, PIPa Drinks, Sosa Café, Burger House, Starbucks Coffee, Puja Café, D&R, Vassago lady’s hairdresser, Sun Vital Solarium, and SANDA SPA.

HILLSIDE CITY CLUB - İstinye Hillside City Club – İstinye opened its doors at İstinyePark mall in 2007 and is maintaining its activities with a “brand new leisure concept”. With its many well conceived areas, the facilities that went in operation after those of the Tourism Group in Etiler-Alkent and Kozyatağı-Trio is a quality entertainment center that answers the requirements of urban dwellers. Extending over a total area of 6.000 m2 in İstinyePark Shopping Center, it includes indoor and outdoor swimming pools, gym and cardio areas offering the possibility of exercising accompanied by a DJ, Express Gym, Butts&Gutts, Pilates and Group Exercise Studios, Game Corner and a basketball court. The Club also includes operations that offer not only its members but also its guests the possibility of enjoying quality leisure time.

Some of these operations include SANDA SPA, Big Plate restaurant, Trio lady’s hairdressing saloon, Şükrü Dudu barber shop, Esthetica Healthy Beauty, Esthetica solarium and Before’n After Café.

SANDA SPA At this point in its sector Sanda SPA is one of the first names that comes to mind when mentioning SPAs. The SPA first established at Hillside Beach Club-Fethiye 12 years ago pioneered the expansion of the natural SPA culture in hotels and determined the road map of the sector with its innovations. The SPA offers services in a total of 4 locations including Hillside Beach Club, Hillside City Club-Etiler, Hillside City Club-Trio and Hillside City Club-İstinye in İstanbul and more than 60 therapy choices of Far Eastern influence.

CINECITY CINEMASThe Cinecity Cinemas have made themselves a name with their innovative approach to the cinema concept in Turkey and host about 800.000 people annually with the original services they offer. Cinecity Cinemas serve in 3 cinema theaters at Hillside-Etiler, 6 at Zeytinburnu Olivium Outlet Center, 7 at Kozyatağı Hillside-Trio and 11 at Izmir Kipa Shopping Center. The Cinecity Cinemas are distinguished with their continuous innovations, the concepts they create and their boutique cinema approach and create a pleasant synergy with the famous restaurants and cafés in its operation.

The Cinecity Cinemas that aim at increasing their guest satisfaction continuously and mark unique campaigns have created a difference in the sector with their Cineclub loyalty program that attained 135.000 registered users.

HILLSIDER MAGAZINEHillsider Magazine, the Alarko Tourism Group’s publication that completed its 18th year in 2013 has a wide range of readers with its quality, sophisticated and prestigious approach. Hillsider Magazine that maintains its “exemplary” role in the world of publication with its rich content and advertisements of select national and international companies is regularly followed by a large group with high living and appreciation standards.


Our Group which creates a great difference and offers new life styles in all projects it develops has earned itself a rightful esteem with the quality of its projects with more than 50 years of experience.

Our Group designs and builts projects with full infrastructure and recreational areas and managed by modern management systems. With more than 50 years of experience and know-how, it has created a great difference and offered new life styles in all the projects it develops. Our Group that has earned itself a rightful esteem with the quality and reliability of its projects has realized numerous housing, business center, hotel and holiday village projects for the middle and high income groups. The Alkent brand has become the symbol of quality and a unique life style.

Feasibility studies were conducted for numerous areas in different parts of Istanbul in 2013. However, due to the surplus in the housing sector, we are planning to start new projects when the conjuncture is favorable. Project development work of our Group Companies’ plots extending over a large area in Riva is continuing.

ALARKO HOLDİNG A.Ş. 2013 FAALİYET RAPORU

44


ALARKO HOLDİNG A.Ş. 2013 FAALİYET RAPORU

45


ALARKO REAL ESTATE INVESTMENT COMPANY 2013 was an active year from the view point of the construction sector and an important increase was observed both in construction and occupancy permits. Sales of housing in 2013 exceeded expectations due to the adjustment made on VAT rates in the last quarter of 2012 and the favorable loan conditions. However, despite increase in sales, surplus continued and the accumulated housing stock has not been depleted yet.

Most of the Lake Mansions that constitute the most prestigious phase of the Alkent Istanbul 2000 project in Büyükçekmece have been sold. The Lake Mansions Project has become a highly prestigious residential development with its social facilities center, outstanding landscape architecture and special security due to its being located on a single lot. Efforts to sell the few remaining mansions were maintained in 2013. We are also continuing to work on a project for our estate in Maslak.

The part of our estate in the Eskice Village in Büyükçekmece where there

is no building permission because it is within the absolute preservation area was expropriated and the repay was collected in 2013.

In 2013, we have further reinforced our real estate portfolio that brings us rent income by buying the Alkent Istanbul 2000 shopping center as a block. This center consists of 10 shops with a total area of 784 m² and its principle tenant is the Macro Supermarket.

The prestigious real estate we have include in our portfolio in previous years to get high rent income are: the five star Hillside Beach Club Holiday Village located on an area of 100.037 m², a closed area of 23.922 m² and a bed capacity of 781 along the Kalemya Bay in Fethiye, the 13.794 m² factory and facilities built over an area of 13.503 m² in Eyüp, Istanbul, 39 shops in Alkent Etiler Shopping Center extending over an area of 4.233 m², the 4 storey Alarko Business Center of 1.730 m² in Karaköy, Necatibey Caddesi, the 750 m² Alarko-Dim Business Center in Tepebaşı, Istanbul consisting of 3 office floors and a 3-storey store, and the 6

storey 1.943 m² Alarko Business Center in Çankaya, Ankara.

Thanks to its resources and liquidity structure, our company has continued to get high financial income by evaluating the resources set aside for new projects in the money and capital markets in 2013.


46

SEAFOOD PRODUCTS GROUP ALARKO HOLDİNG A.Ş. YÖNETİM KURULU


47



Our Company that has made itself a reliable and reputable niche in the domestic market as a result of the succesful activities conducted towards the introduction and consumption of “Salmon”, will be making efforts to open to foreign markets firstly to the Near and Middle Eastern countries in addition to further reinforcing its existing position in the domestic market.


48


Alfarm Alarko Leröy A.Ş. processes numerous seafood and particularly salmon imported from our Norwegian partner ‘Leröy Seafood Group’ and procured from domestic markets at its modern plant in Suadiye, Izmit and offers the products to both domestic and foreing customers.

As a result of the successful activities conducted towards the introduction and consumption of ‘salmon’ since the establishment of the company in 1991,

we are enjoying the rightful pride of dominating most of the Turkish salmon market that has attained an annual volume of about 5.000 tons.

In addition to further reinforcing its existing position in the domestic market by offering consumers new products, our company that has made itself a reliable and reputable niche in the domestic market, will be making efforts to open to foreign markets and firstly to the Near and Middle East countries.

Activities in 2013 The commercial activities we have successfully conducted with national and international market chains for many years were maintained increasingly in 2013. Procurement models in accordance with changing market conditions were put in effect thus increasing customer satisfaction and operational efficiency.

We have increased our efforts regarding sales of our “Cost Controlled” products


49


whose investment was completed last year and were developed for our HORECA (Hotel - Restaurant - Catering) sales channel customers. Our ‘Sliced Smoked Salmon of Fixed Weight’ product offered to the market is particularly favored by hotel chefs.

In the first half of 2013 we have concentrated on our sales of ‘Turbot’ imported from Norway in order to reinforce our fresh fish operations that provide our company an important competitive advantage in the market. Our product was liked by our customers due to its freshness, quality and competitive price and thus our sales quantities exceeded our expectations.

Our Project based endeavors conducted in collaboration with our corporate customers continued with ‘Private Label Products’. The customer satisfaction we attained following efforts we have conducted to become their long term ‘solution partner’ is opening the gates to new customers and new markets. Our

projects are based on developing value added products that will provide our clients operational convenience and cost advantages. This year our brand and product recognition activities such as in-store tasting by which we reach the final consumer, catalogues and leaflets were carried out in collaboration with NSEC (Norwegian Seafood Export Council). In 2013, our company supported the Norwegian Seafood Products Seminar and Workshops organized by ‘Innovation

Norway’ with its expertise and know-how accumulation in this subject and made serious contribution to the development of new projects.

New Objectives and New Projects In 2014, we are aiming to increase the sales of fresh fish, which is our major competitive force in the market, by adding other fresh fish varieties to salmon, which we import in great amounts, and focus on introduction and marketing activities of these products.

We will concentrate on sale and marketing activities in the domestic markets by importing frozen seafood products produced by the Austevoll Seafood Group, to which our Norwegian partner also belongs. Our activities will focus on developing new products that we believe will meet demand on the market and the sale of new products that are already in our partner’s product portfolio.

In order to increase the number of our value added products, in 2014, we will concentrate on developing and producing ‘convenience products’, in other words, cooked or ready to cook products which make our daily lives easier and we believe will enjoy increasing demand in the market.

In addition to the fresh products we already supply to retail chains, we will concentrate on efforts regarding the production and sales of frozen and packaged products in order to increase the variety and accessibility of our retail products that will contribute seriously to our brand recognition.

ÜZEYİR GARİH

Should CompaniesDistribute Risks by Being Activein Different Sectors?

Dr. Üzeyir Garih’s View

Should companies specialize on a single subject pursuing a horizontal line of development and broadening out or should they be active in various subjects and have a free hand on more than one? Do the executives of companies that deal with more than one subject have to be experts in all these subjects? What are the advantages and disadvantages of developing horizontally and broadening out?

In this article, I will try to answer the questions above. Let’s point out the difference in make up between specialized companies and companies that are active in a number of different sectors.

Companies broaden out and develop horizontally and vertically. Companies that broaden out expand step by step in their own area. For example, a company begins with a ginnery, produces thread. Then, it may start producing textiles and this may be followed by using the textiles to manufacture ready-to-wear, and then by manufacturing materials such as wool fiber. The example I have given continuously develops itself in the textile industry. However, some companies diversify. In other words, they chose to be active in various areas.

What is the difference in the makeup of companies active in a variety of areas and those active only in a specific area? I have often been asked whether one has more of a chance to succeed than the other. I searched for the answer, talked to various academicians, read numerous books. I reached the conclusion that if a company advances in one area, in other words, if it expands horizontally, it will attain good results if it is successful in giving its employees the appropriate training. In addition to bad management, such a company can get into trouble if there is a crisis in the world or the relevant country in its area of activity.

If a company that expands vertically is managed well, it has the chance to become very strong as an expert in that area. Expertise in an area has the effect of driving the company ahead. What is risky is if there is an important crisis in that area of activity.

This means that if a company that is growing vertically is managed well, it will have the opportunity of becoming very powerful. Expertise in an area has the effect of driving the company ahead. The risk in this case is the possibility of a major crisis in the relevant area. In that case, the crisis will affect the whole company. This vertical growth model was used extensively in the world for a long time. However, the crises that the world has faced from time to time have revealed the risky aspect of this model.

Therefore, there was a quest to search for new systems and developing by going into different areas of activity started to gain popularity. The problem of companies working in different areas of activity and accommodating these different companies under one company comes on the agenda in horizontal development.

In this case, one may ask what has to be done to be successful in horizontal development.

For a company dealing with tourism on one hand and livestock, canning and textile on the other, it’s very crucial how these activites will be organized.

The most important point in achieving this type of development is for the parent company to have expertise in management rather than a particular profession. In other words, the management of an enterprise has to have the employees that make up the main core of the company disponible in that enterprise.

In doing so, pre-trained employees would be allocated in new area.

We sometimes see companies undertaking new ventures without setting up these organizations, i.e. without training teams that walk in pace with their management systems.

I have pointed out that a management team walking in pace with the management system is a must. Let me try to clarify who the ones that will make up this team are.

I am of the opinion that first of all there should be an operational general manager as well as key people such as a finance manager, a stock keeper, a personnel manager, a PR manager in companies that intend to develop horizontal. Unless these are trained in advance, the result of horizontal development will be disappointment. Work to be done with people assembled randomly will be as good as the skills of the person that heads them. I have always claimed that if you put together

five knowledgeable individuals, you do not get a knowledgeable group. What comes out is five knowledgeable individuals. The disposition of these individuals cannot be added mathematically. For example, when a man and a woman get married and have a family, that family has neither the character of the man nor of the woman. It has a different character that comprises both. The character of a company made up of five people is not the total of the characters of those five but totally different. In addition, companies also have their own schools. Companies that have a school and constitute their management core with people that are trained in this systematic and can control them have a chance to be successful in horizontal development.

One of the important advantages of horizontal development is the fact that a crisis that may come up in one area will not affect another because the company is active in a variety of areas. Naturally, if such a crisis is not observed in the other areas, there is a small chance for the company to be imperiled as a whole. In other words, if there are companies active in different areas within a holding company, in case one or a few of these are imperiled by crises, the gains of the other(s) have the chance to balance the loss. We also observe that the stocks of such holding companies do not show much fluctuation but are rather stable.

For example, in a holding company that accommodates three companies active in different areas, a strike in one of the companies will not lead to a drop in the stock prices of the holding company. This strike can be considered as an illness that nibbles away on part of the parent company but will not turn into a cancer spread over the whole group. However, a group of companies dealing only in textiles will observe a rapid drop in their stock prices if there is crisis in the textile sector.

From the view point of management I do not see much difference between a company dealing in heavy industry and one dealing in tourism. Making an analogy, we can say that the management principles of these two operations are exactly alike.

* This article was taken from the “DENEYİMLERİM 2” written by Dr. Üzeyir Garih.

In companies that tend to develop horizontally, the main thing that has to be done is to train managers

in the main area and to develop the management and go for diversification

consistent with those management systems.


52

SUBSIDIARIES AND PARTICIPATIONS

Alarko Carrier Sanayi ve Ticaret A.Ş.

Alamsaş Alarko Ağır Makina Sanayii A.Ş.

Alsim Alarko Sanayi Tesisleri ve Ticaret A.Ş.

Alarko Fenni Malzeme Satış ve İmalat A.Ş.

Attaş Alarko Turistik Tesisler A.Ş.

Alarko Gayrimenkul Yatırım Ortaklığı A.Ş.

Almüt Alarko Sınai Gereçler İmalat ve Mümessillik A.Ş.

Altek Alarko Elektrik Sant. Tes. İşl. ve Tic. A.Ş.

Alfarm Alarko Leröy Su Ürünleri San. ve Tic. A.Ş.

Aldem Alarko Konut İnşaat ve Ticaret A.Ş.

Al-Riva Projesi Arazi Değerlendirme, Konut İnşaat ve Tic. A.Ş.

Al-Riva Arazi Değerlendirme, Konut İnşaat ve Tic. A.Ş.

Al-Riva Arazi Değerlendirme, Konut İnşaat, Turistik Tesis., Golf İşl. ve Tic. A.Ş.

Yaşar Dış Ticaret A.Ş.

Arı Teknokent Proje Geliştirme Planlama A.Ş.

Mosalarko J.V.

Tüm Tesisat ve İnşaat A.Ş.

Saret Sanayi Taahhütleri ve Ticaret A.Ş.

Alarko Deyaar Gayrimenkul Geliştirme A.Ş.

Alcen Enerji Dağıtım ve Perakende Satış Hizmetleri A.Ş.

Meram Elektrik Dağıtım A.Ş.

Meram Elektrik Enerjisi Toptan Satış A.Ş.

Meram Elektrik Perakende Satış A.Ş.

COMPANIES SECTOR

AUTHORIZEDCAPITAL

(TL)

PERCENTAGE SHARE

(%)

Production of heating and cooling equipment, manufacturing, contracting, tourism

Production of machines and equipment for industrial investments

Turnkey contracting, construction and tourism

Marketing of industrial and after sales service

Touristic facility management

Real estate investment

Manufacturing of technical equipment and representation

Electric energy production

Production and marketing of seafood

Housing, construction



Housing, construction and touristic facility management

Export and import

Technologic development

Real estate project construction and use

Construction

Construction

Real estate development, construction and marketing

Build, operate or transfer energy distribution plants

Electrical energy distribution

Electrical energy sales

Electrical energy sales

10.800.000

500.000

120.072.000

230.000

6.500.000

10.650.794

250.000

66.000.000

8.355.000

50.000

6.839.064

3.308.556

10.489.765

20.000.000

6.360.500

Ruble30.000.000

141.000

75.000

22.193.713

214.560.000

496.032.905

4.050.000

13.545.520

42,03

90,42

99,87

88,68

0,46

16,41

16,80

48,41

49,94

0,13

11,55

2,49

2,16

0,0005

1,00

50,00

49,15

100,00

0,0005

0,0006

0,0000

0,1

0,0001


53

EARNINGS FROM SUBSIDIARIES ANDEQUITY PARTICIPATIONS

a) Our corporation’s shares in dividends paid out over the last three years by the companies in which it has either minority or majority shareholdings:

b) The 2012 profits of the companies within the Alarko Group from which we receive dividends, the distributable profits remaining after tax and legal reserves are set aside and the dividends distributed from the past year’s reserves are given in the table below.

Company Name 2011 2012 2013

Alarko Carrier Sanayi ve Ticaret A.Ş. 953.217 6.800.979 2.958.641

Alarko Gayrimenkul Yatırım Ortaklığı A.Ş. 217.415 507.129 378.275

Alfarm Alarko Leröy Su Ürünleri San. ve Tic. A.Ş. 696.663 1.043.746 -

Alamsaş Alarko Ağır Makina Sanayi A.Ş. 50.704 806.121 216.348

Saret Sanayi Taahhütleri ve Ticaret A.Ş. 13.476 11.219 1.083

Tüm Tesisat ve İnşaat A.Ş. - 7.802 -

Mosalarko J.V. 737.959 1.472.163 1.743.496

Alarko Deyaar Gayrimenkul Geliştirme A.Ş. - - 89

Arı Teknokent Proje Geliştirme Planlama A.Ş. 13.787 27.574 18.382

TOTAL 2.683.221 10.676.733 5.316.314

(TL)

THOUSAND (TL)

10.000

8.000

6.000

4.000

2.000

02013

EARNINGS FROM SUBSIDIARIES

Alarko Carrier Sanayi ve Ticaret A.Ş. 32.837.570 26.923.537 6.264.000 23

Alarko Gayrimenkul Yatırım Ortaklığı A.Ş. 14.271.557 14.271.557 2.304.540 16

Alamsaş Alarko Ağır Makina Sanayii A.Ş. 343.743 260.685 239.259 92

Saret Sanayi Taahhütleri ve Ticaret A.Ş. 1.353 1.083 1.083 100

ALARKO GROUP MANAGEDCOMPANIES

Profit for the period 2012

Distributable profit (A)

Distributed profit (B)

(B/A) %

(TL)

2012

6.333

10.677

5.316

2011

2.683


54

TAXES PAID AND PERSONNEL EXPENSESBUSINESS VOLUME

We present to the view of our shareholders the following table which shows the consolidated results of the last five years in figures and the volume we have reached as a result of the activities which we described in earlier section of the report.

* In the year 2013, different from the previous years, the revenues of our jointly controlled entities have not been included to this figure; the sum of these revenues is TL 2.420.684.485.

Perspectives For 2014Our company has adopted the principle of working according to a plan and it has made it a tradition to reflect this in its annual reports. Our aim is to contribute to the comparison of the results of 2013 with the volumes which we foresee for 2014 and to their evaluation.

Starting from this point, the turnovers planned for 2014 are as follows according to groups of activities:

* The year 2014 revenue targets of our jointly controlled entities have not been included to this figure; the sum of these revenue targets is TL 3.195.374.548.

2009 2010 2011 2012 2013

Contracting & Land Development 541.875 413.354 328.713 456.527 1.089.420 1.202.065

Energy 351.348 1.144.236 1.388.588 1.709.623 81.529 81.535

Industry & Trade & Sea Food 264.809 284.174 371.381 400.435 1.870 6.955

Tourism 58.267 62.028 67.273 75.495 88.410 88.411

TOTAL 1.216.299 1.903.792 2.155.955 2.642.080 1.261.229 1.378.965

Companies and Businesses According to Activities

Consolidated Results(Thousand TL)

Consolidated

* *

* *

Consolidated (Thousand TL) Total (Thousand TL)

Contracting & Land Development 1.066.716 1.075.489

Energy 164.060* 164.060*

Industry & Trade & Sea Food 1.302* 9.452*

Tourism 98.234 98.234

TOTAL 1.330.312 1.347.235

Companies and Businesses

According to Activities2014 Revenue Target

Total(Thousand TL)


55

TAXES PAID AND PERSONNEL EXPENSES

300.000

280.000

260.000

240.000

220.000

200.000

180.000

160.000

140.000

120.000

100.000

80.000

60.000

40.000

20.000

0

240.000

220.000

200.000

180.000

160.000

140.000

120.000

100.000

80.000

60.000

40.000

20.000

0

2009

TAXES PAID

(THOUSAND TL)

(THOUSAND TL)

PERSONNEL EXPENSES

92,619

157.626

196.702

183.291

293.251

2010 2011 2012 2013

157.626 157.626

2009

120.877

2010

194.661

2011

186.907

2012

167.812

2013

224.287

CONTRACTING GROUP AND

LAND DEVELOPMENT

GROUP

ENERGY GROUP

INDUSTRY AND

TRADE GROUP

TOURISM GROUP


56

ADDITIONAL INFORMATION REGARDINGOUR ACTIVITIESDEVELOPMENTS IN THE LAST FIVE YEARS

The development trend of our holding company’s balance sheet items, profits, equity participations and

dividends in the last five years are shown below.

2009 2010 2011 2012 2013

Profit / Loss before Tax (TL) 82.655.349 62.767.392 163.675.303 82.896.823 243.695.676

Equity Participation (TL) 11.776.191 6.128.751 5.437.752 5.117.996 4.176.103

Capital (TL)

• Issued

- As free shares 218.514.284 218.514.284 218.514.284 218.514.284 218.514.284

- Against cash 4.952.716 4.952.716 4.952.716 4.952.716 4.952.716

Total 223.467.000 223.467.000 223.467.000 223.467.000 223.467.000

• Registered 500.000.000 500.000.000 500.000.000 500.000.000 500.000.000

Dividends

• Net dividends

- According to paid-in capital 0,659 0,851 1,024 2,071 2,608

- According to total capitalization

(including distributed bonus shares) 0,0146 0,0188 0,0227 0,0459 0,0578

• Net dividend rates

- According to paid-in capital 65,96% 85,14% 102,40% 207,10% 260,79%

- According to total capitalisation

(including distributed bonus shares) 1,46% 1,88% 2,27% 4,59% 5,78%

*Consolidated amounts.

* * * * *

(Per share with a par value of TL 1)


57

1. Neither the Company nor any of its Board members has engaged in any act or practice which is contrary to or in violation of the provisions of the applicable legislation and no administrative and/or judicial sanction was imposed or enforced against the Company or any of its Board members.

2. No extraordinary general assembly of shareholders was held during the year.

3. No significant changes have been introduced to the legislation during the fiscal period that would have a material impact on the Company’s operations.

4. There were no events of significance that occurred during the period elapsed between the end of the fiscal year and the date of preparation of this annual report which are of a nature that would alter or affect the rights of its shareholders, creditors and other relevant persons and entities.

5. The Company has not acquired its own shares during the year.

6. The targets and goals set in previous periods have already been achieved and all resolutions passed in previous general assemblies have been complied with.

7. 2 internal audits and 2 independent audits were conducted during the fiscal year and no adverse situation was discovered or identified during these reviews. No public audit or special audit was conducted during the fiscal year.

8. 22 special event disclosures were made during the year. No additional disclosure was required.

9. The total amount of investments in 2013 amounted to TL 478.251.880.

10. Our Company has the status of a parent company within the meaning of article 195/1 of the Turkish Commercial Code. There is no legal transaction made between our Company and any of its subsidiaries or affiliates under the direction of our Company in favor of our Company or any other subsidiary or affiliate. Accordingly, in the previous business year, measures at the request of or in the interest of our Company or the affiliated companies were neither taken nor refrained from.

All business transactions and relations between our Company and its subsidiaries are at arm’s length principle and made in accordance with market conditions and applicable legislation, and accordingly there is no transaction that requires offsetting pursuant to the provisions of article 199 of the Turkish Commercial Code.

THE NATURE, SCOPE AND LIMITS OF THE POWERS OF THE MEMBERS OF THE BOARD The Chairman and Members of the Board of Directors represent the Company within the framework of and in accordance with the provisions of the relevant articles of the Turkish Commercial Code and the Company’s Articles of Association.

PECUNIARY RIGHTS GIVEN TO BOARD MEMBERS AND TOP EXECUTIVESNo pecuniary benefits such as honorariums, fees, premiums, bonuses are given to members of the Board of Directors except the independent members of the Board of Directors. The gross total of pecuniary benefits given to Independent Board members and top executives was TL 12.807.243 (Gross) in 2013. There are no allowances, travel, accommodation and representation expenses and real and financial means, insurances and any similar collaterals given to the Members of the Board of Directors.

THE PROPORTION OF SHARES OF THE PARENT COMPANY HELD BY SUBSIDIARIES SUBJECT TO CONSOLIDATIONThe nominal value of shares held by Alarko Gayrimenkul Yatırım Ortaklığı A.Ş. and Alamsaş Alarko Ağır Makina Sanayii A.Ş., both of which are subject to consolidation, in the capital stock of the Parent Company is respectively TL 608.222 and TL 179.174. The proportion of these shares in the Parent Company’s share capital is 0,35%.

AMENDMENTS TO THE ARTICLES OF ASSOCIATION DURING THE FISCAL YEAR The following resolutions were adopted with majority at the Annual General Assembly meeting that was held on May 16, 2013; - To make amendments to articles (6), (27), (28), (30), (32), (33), (34), (36), (37), (44), (48), (49), (50), (52), (53), (54), (56), (57), (58), (60), (61) and (64) of the Company’s Articles of Association and to repeal articles (31), (45), (46), (47) and (65). The new and the old versions of the said article have been announced under Investor Relations of our web-site.

ADDITIONAL INFORMATION REGARDINGOUR ACTIVITIES


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SHARE CAPITAL AND SHAREHOLDING STRUCTURE OF THE COMPANY

Shareholders

İshak Alaton (Beneficial Owner) 32.096.049,26 3.209.604.926 14,36

İzzet Garih 39.515.770,84 3.951.577.084 17,68

Vedat Aksel Alaton 39.515.770,84 3.951.577.084 17,68

Dalia Garih 34.749.897,84 3.474.989.784 15,55

Leyla Alaton 7.419.721,58 741.972.158 3,32

Alhan Holding A.Ş. 4.469.340,00 446.934.000 2,00

Destek Vakfı 1.641.741,63 164.174.163 0,74

Other (Public offering) 64.058.708,01 6.405.870.801 28,67

Total 223.467.000,00 22.346.700.000 100,00

During the fiscal year of 2013, the shareholding ratio of Dalia Garih, one of the shareholders of the Company, fell from 15,77% to 15,55%. There has been no change in the share capital of the Company during the same period.

PROFIT DISTRIBUTION POLICY The Company’s Profit Distribution Policy is designed within the framework of and in accordance with the Capital Markets Legislation, Turkish Commercial Code, Tax Legislation, and other relevant applicable legislation and the relevant article of the Company’s Articles of Association regarding profit distribution by taking into account new investments and liquidity situation of the Company. The principles of the Company’s Dividend Policy are set forth in the annexed report on compliance with corporate governance principles and also posted on the Company’s website as a means of public disclosure. The company has no shares bearing dividend concession. Profit Distribution is carried out within the statutory timescales set forth in applicable laws. If the Capital Markets Board would repeal the obligation of profit distribution for 2014 and the following years, the amount of profit available for distribution will be determined by taking into account the new investments to be undertaken and the liquidity level of the Company. The total amount of profit distributed by the Company in 2013 amounted to TL 12.067.218 (Gross). INTERNAL CONTROL AND RISK MANAGEMENT SYSTEMS IN RELATION TO THE PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS Internal control activities are in place and carried out in compliance with the internal procedures and applicable laws and in a timely fashion aimed at the effective management and prevention of risks that may be encountered both during the preparation of solo financial statements which form a basis for the consolidated financial statements and consolidation process. These activities include controls designed to identify and prevent risks and those that are performed using manual or computer assisted programs. The entire process is under the continuous supervision and control of both the management team and internal control department. In addition to the foregoing, the consolidation process and consolidated financial statements are subject to review and audit by an independent audit company.

RISK MANAGEMENT AND INTERNAL CONTROL MECHANISMThe Board of Directors has established and put in place an effective risk management and internal control mechanism. Managerial risks are periodically reviewed and assessed by the Audit Advisory and Approval Board (AAAB) and the Committee for Early Detection of Risks consisting of the members of the Board of Directors. The Committee for Early Detection has adopted a resolution aimed at the development, establishment, and implementation and updating of an effective internal control mechanism across the entire Group. In line with this resolution, the Group’s Auditing Department has been entrusted with the task of guidance and supervision of the internal control mechanism and of regular review and auditing of its effective implementation, functionality and operability. The Group’s Auditing Department conducts reviews and audits internal control mechanism at regular

Total Value of Shares Held (TL)

Number of Shares and Voting Rights

Shareholding Ratio (%)


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intervals in a periodic manner in accordance with the approved audit programs and submits its opinion and reports the findings of such audits to the top management. The Audit Comittee, after reviewing and assessing the opinion of the Group’s Auditing Department and the findings reported, submits its recommendations on the matter to the Audit Advisory and Approval Board. The Audit Advisory and Approval Board, the Committee for Early Detection of Risks and the Committee in charge of Auditing determine the measures to be taken and then give the required instructions to the company’s managers through the General Coordinator. The Committee for Early Detection of Risks consisting of 3 members has been formed to advise the Board of Directors on issues related to early detection of risks and establishment and implementation of an effective risk management system. The Committee for Early Detection of Risks held 6 meetings in 2013 and the outcomes of these meetings were reported to the Board of Directors.

FINANCIAL INDICATORS The Company’s Key Financial Indicators according to the consolidated financial statements audited by the independent auditor are as follows:

Financial Indicators 2013 2012

Current Ratio 1,50 1,94

Liquidity Ratio 1,17 1,72

Cash Ratio 0,44 0,87

Total Debt/Asset Ratio 0,50 0,36

Total Assets TL 2.620.551.467 TL 1.730.767.095

The analysis of key financial indicators for the business year of 2013 shows that the Company’s net working capital is sufficient to meet its current requirements for operating and investing activities, and the Company’s ability to pay off all of its short term liabilities through its liquid assets including cash and assets that can easily be converted to cash. The Company’s total equity is TL 1.313.867.190 and is sufficient to meet all of its financial obligations. The Company has a healthy and sound financial structure which is sufficient to continue to conduct its operations, accordingly no measure is considered necessary to be proposed or taken on the matter.

RESEARCH AND DEVELOPMENT ACTIVITIESIn the Gebze production complex of our Industry and Trade Group, ACE (Achieving Competitive Excellence) project of UTC (United Technologies Corporation), parent company of Carrier, which is launched and implemented in all regions to ensure world-class quality in Carrier’s products and processes, has been put into place. A wide range of joint studies aimed at enhancing and improving the quality of the products manufactured at our production facilities are being conducted in our R&D and Test Center in collaboration with Universities and TÜBİTAK (The Scientific and Technological Research Council of Turkey). In addition to the foregoing, continuous enhancements and improvements are made to our products and are incorporated into our processes thanks to technology transfers from Carrier. The application filed by our Industry and Trade Group for R&D Center Certificate for the purpose of taking advantage of incentives, exemptions and tax credits granted within the framework of the Law no 5746 On Supporting Research and Development Activities published in the Official Gazette dated March 12, 2008 was reviewed by the Evaluation and Supervision Committee which was established within the framework of the provisions of article 14 of the “Regulation on Implementation and Supervision of Research and Development Activities” published in the Official Gazette no 26953 of July 31, 2008 and our Industry Trade Group was awarded with a R&D Center Certificate as a result of the resolution taken at the Evaluation and Supervision Committee’s meeting of April 27, 2012.

SOCIAL AND INDUSTRIAL ACTIVITIESEMPLOYMENTA total of 6.528 people consisting of 2.003 white collar employees, mostly engineers and architects, and 4.525 technicians and workers were employed in 2013 by the Companies and Enterprises within the Alarko Holding A.Ş.In addition to the foregoing, additional employment opportunities were created for an average of 2.034 people through our subcontractors and external workshops. The severance pay obligation of Alarko Holding A.Ş. as of December 31, 2013 was TL 886.095 (excluding affiliates).


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Written job descriptions are prepared for all employees. The criteria for appraising performance and rewarding performance are determined each year and put into place after reaching an agreement with employees on the matter. Performance measurements and evaluations are conducted for all employees using the performance appraisal system, which is in place, and the outcomes of performance appraisals and reviews are taken into consideration in determining salary increases and career progression plans.

TRAININGIn 2013, a total of 96.172 man/hours of in-house training within the Group were provided to staff whereas a grand total of 178.648 man/hours training were delivered including training programs delivered by external training providers. In- house training seminars, sessions and workshops on technical, financial, administrative subjects and on computer operations, computer technology and software applications were organized within the Group to meet the training needs of employees and employees were given the opportunity to attend seminars in their fields of specialization that are delivered by well-recognized, reputable and leading training institutions.

In addition to the foregoing, on the job training programs in a wide range of business activities, including welding operations, assembly and installation and other production techniques, construction, ISO 9000 and Occupational Safety were provided to our employees and workers at our manufacturing plants and factories. Training activities for dealers and authorized maintenance and repair services of Alarko Carrier Sanayi ve Ticaret A.Ş. continued in 2013. All employees are treated equally in respect of recruitment, training and promotion and training plans and strategies are developed and implemented in order to develop and increase their knowledge, skills and experience. All employees are provided training on a regular basis each year.

EMPLOYEE –EMPLOYER RELATIONS AND RIGHTS GRANTED Considerable efforts have been put forth to strike a proper balance between employee and employer interests and rights in a realistic way and to provide solutions in order to relieve employees from economic hardships and pressures as far as practically possible within the framework of the current conditions and possibilities taking into account the economic balances of our country. The term of the collective bargaining agreement concluded between our Group companies and Turkish Metal Workers Union (Türk Metal Sendikası) and Turkish Employers’ Association of Metal Industries (Türkiye Metal Sanayicileri Sendikası, MESS) to cover the period between September 01, 2013 and August 31, 2014 signed in 30.05.2013.

ALARKO EDUCATION - CULTURE FOUNDATIONThe Alarko Education- Culture Foundation, which was established in 1986, granted scholarships for (2013-2014) education year respectively to a total of 52 students who are in their senior year of undergraduate study or in grade programs in engineering, civil engineering, economics, finance and business administration departments of various universities, to 31 high school students who study in vocational or technical high schools and to 32 successful children of our employees who are in need of financial assistance. Consequently, from the very beginning up to the present approximately a total of 2.400 students consisting 1.450 higher education students and 950 secondary education students have been awarded gratuitous scholarships by the Alarko Education-Culture Foundation.

On the other hand, the Foundation continued to sponsor various cultural and art events also in 2013. The Alarko Education- Culture Foundation has continued its close cooperation and collaboration with outstanding scientific and culture foundations.

ALARKO FUTURE’S CLUB The future of the Alarko Group of Companies will be in the hands of young generations who have completed their higher education and of those who are dynamic, hardworking, highly motivated, creative, and knowledgeable with high potential and ambition for promotion and willing to align their future with the corporate mission of the Group.

Also in 2013, Alarko Future’s Club has continued to carry out its activities aimed at professional and personal development of qualified young people, who will lead Alarko to future success, for the purpose of providing them the opportunity to better understand the importance and benefits of team spirit and cohesion and enabling them to become well trained experts or managers in future years.


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In accordance with the provisions of the Capital Markets Legislation, the Company’s Articles of Association, and other relevant applicable legislation, the remaining net profit for the period is TL 183.366.181 after deduction of non-controlling interests (formerly known as minority interests) in the amount of TL 24.545.947 and of TL 880.304 which was appropriated as first order legal reserves from the profit of TL 208.792.432 for the period as reported in the consolidated financial statements for 2013 which have been submitted for approval to the General Assembly of Shareholders.

We hereby propose the following:

• Determination of TL 15.195.756 (gross) corresponding to 8,29 % of TL 183.366.506, which is calculated by adding donations in the amount of TL 325 to the net profit for the period, as distributable profit, and paying out such distributable profit as dividend to the shareholders, in cash,

• Deduction of the required amount as withholding tax from dividend payments which are subject to withholding tax,

• Setting aside the remaining balance as extraordinary reserves,

• Start making dividend payments to the shareholders on May 30, 2014.

Board of Directors

PROPOSAL FOR PROFIT DISTRIBUTION


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REPORT ON COMPLIANCE WITHCORPORATE GOVERNANCE PRINCIPLES

1. Statement of Compliance with Corporate Governance PrinciplesEfforts have been made in fulfillment of compliance with Corporate Governance Principles published by the Capital Markets Board to the utmost extent. Our company has implemented all mandatory principles as determined by the Corporate Governance Communiqué and has complied with most of the non-mandatory Corporate Governance Principles of the same Communiqué. The principles that are exceptionally not complied with are stated under the relevant headings below, together with the reasons of non-compliance. Explanations on this issue are here below. The Corporate Governance Committee pursues its activities.

CHAPTER I - SHAREHOLDERS

2. Department in Charge of Relations with ShareholdersThe director of the Department in Charge of Relations with Shareholders is Attorney Aysel Yürür, the manager of the Department of Legal Affairs of Shareholders.

Contact information:Phone: 0212 310 33 00 - 0212 227 52 00 (Pbx)Fax: 0212 236 42 08E-mail address: [email protected]

The general assembly meeting of the Company was held, documents to be referred by shareholders at the meetings were prepared and the outcomes of the meeting were communicated with the İstanbul Stock Exchange (BİST) and the Capital Markets Board for the purpose of disclosure to public. During this period, 110 inquiries and information request from investors have been answered.

3. Exercise of Shareholders’ Right to Obtain InformationOur company exercises due care and diligence regarding the use of all shareholders’ right to obtain information. Any kind of information that would possibly affect exercising of shareholders’ rights is made available to the shareholders through the website of the Company in the “Investor Relations” section. These information and statements are regularly revised and updated.

The applications received from the shareholders requesting information are mostly related to investments, turnover, and capital increase and dividend payments of the Company. During this period, 110 inquiries were received. These questions and replies were communicated with the Board of Directors.

Company’s articles of association contain no provision regarding appointment of an independent auditor. During the fiscal year no request was made for the appointment of an independent auditor.

4. Information about General AssemblyThe Ordinary Annual General Shareholders meeting was held with a quorum of 77,46% and the participation of media members.

The shareholders are invited to the General Meeting by a notice delivered no later than 3 (three) weeks before the meeting by using the methods of public announcement as stipulated in the legislation and other communication means, including without limitation electronic mail to ensure that such invitation is available to maximum possible number of shareholders. The notice of the meeting was published on the internet page of the Public Disclosure Platform (KAP), on the web-site of the Company, as well as on the issue of the Turkish Trade Registry Gazette and one of the national newspapers.

The media members, interest owners and middle and the top management of the Company have the right to attend the General Assembly on condition complying with Internal guidelines regarding the operating principles and methods of the General Assembly holding the meeting and participation.

Before the General Assembly Meeting, the activity report, auditor’s report, financial statements, former and


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current amendments to the articles of association depending on the fact that the meeting agenda includes changes to the articles of association, meeting agenda and profit distribution proposal of the Board were made ready in the meeting building for the control/ evaluation of the shareholders. This information is available on the web-site of the Company in the “Investor Relations” section as well. Board’s proposal for the distribution of profit was announced to the public through the Public Disclosure Platform (KAP).

At the general assembly meetings, the shareholders exercise their rights to ask questions and such questions are duly handled and replied. No suggestions were presented other than by major shareholders.

The minutes of the General Shareholders’ meetings are held at the headquarters of the Company open to the shareholders for review. Furthermore, the meeting minutes and the list of attendants of the General Shareholders’ Meetings and resolutions are published via Public Disclosure Platform and also available on the Company’s web-site in the “Investor Relations” section.

During the period, total amount of contributions and donations made by the Company is TL 325 and information on the contributions and benefits to shareholder was provided through a separate item on the agenda.

5. Voting Rights and Minority RightsThe articles of association of the Company grant no privileges with respect to voting rights and do not provide any right in participating to management and cumulative voting system. The companies with cross share-holding did not vote at the general meeting.

6. Dividend RightOur company has adopted a profit distribution policy which is outlined in the annual report and the report on compliance with corporate governance principles and also made available to the public on the Company’s web-site.

Our company distributes profits in accordance with the Capital Markets Board Regulations, Turkish Commercial Code, Tax Legislation and other applicable regulations as well as considering the new investments and the liquidity situation of the Company under the relevant provision of the articles of association regarding the profit distribution. If the Capital Markets Board would repeal the obligation of profit distribution for 2014 and the following years, the amount of profit available for distribution will be determined by taking into account the new investments to be undertaken and the liquidity situation of the Company.

No preferred stock is issued or outstanding which provides a specific dividend and which takes preference over common stock. Profit Distribution is carried out within the statutory timescales set forth in applicable laws.

Our Company distributed a gross dividend of TL 12.067.218 for the year 2013.

7. Transfer of SharesThe articles of association of the Company do not contain any provisions which restrict the transfer of shares.

CHAPTER II – PUBLIC DISCLOSURE AND TRANSPARENCY

8. The Company’s Public Disclosure PolicyThe disclosure policy is publicly disclosed on the website of the Company.

General Framework of Public Disclosure Policy: The Public Disclosure Policy of the Company is developed pursuant to the Capital Markets legislation, arrangements of the İstanbul Stock Exchange (BİST), the principles set out in the Report on Compliance with Corporate Governance Principles and the ethical rules of our Company.

REPORT ON COMPLIANCE WITHCORPORATE GOVERNANCE PRINCIPLES


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The main purpose of the public disclosure policy is to submit the required information and disclosures, past performance, future expectations, strategy and vision of the company other than trade secrets, to the public, relevant competent authorities, shareholders, investors, and other beneficiaries.

Our public disclosure policy is based on candor and transparency. Our investors, shareholders and all our other stakeholders are informed equally, fairly and correctly.

Authority and Responsibility:Chief Executive Officer acting on behalf of the Board of Directors is responsible for the development, monitoring, review and improvement of the public disclosure policy of our Company. Senior Vice President of Accounting and the Shareholders Relations Department are assigned for the implementation of the policy.

Methods and Means for Public Disclosure:

For the purpose of public disclosure the following means and methods are used under the provisions of the Capital Markets Legislation, İstanbul Stock Exchange(BİST) legislation and the Turkish Commercial Code.

- Disclosure of Material Events: Disclosure of material events are prepared within the framework of Communiqué Numbered II-15.1 “Communiqué of Special Cases” of the Capital Markets Board and after being signed authorized signatories, It is disclosed to the public trough the Public Disclosure Platform (KAP). The disclosure of material events is also published In the Company’s web-site and kept for a period of five years.

- Annual Reports: Annual reports are prepared pursuant to the requirements of Capital Markets Legislation and the Corporate Governance Principles and submitted for the approval of the Board of Directors. Annual reports are published both in Turkish and English and made available for the review of investors at the headquarters of the Company and on the Company’s official web-site. Furthermore upon request, financial statements can be submitted electronically or by post who may not have access to the headquarters of the Company.

- Interviews and Press Releases: At the end of the year, following the Ordinary General Assembly meeting, a general evaluation of the previous year and expectations for the following year is disclosed to the public by a press conference. Furthermore, all press statements regarding the activities, expectations and current issues of the Group companies are released by Group Executive Vice Presidents subject to the review of the Chief Executive Officer. All other disclosures made in the form of press releases/bulletins for the purpose of disclosing information to the public are prepared and distributed by the manager of the Shareholder Relations Department of our Company in line with our public disclosure policy.

- Corporate Web Site: Company’s corporate web site at the address www.alarko.com.tr includes clear and detailed information about our Company. All information contained on our web site can be accessed through the links provided in article 9 of section II of the “Report on Compliance with Corporate Governance Principles” posted on the “Investor Relations” page of the web site.

- Disclosure of Financial Statements: The financial statements and associated explanatory footnotes are prepared in accordance with the standards set out by the Capital Markets Board and audited by an independent audit firm. Company’s financial statements and associated footnotes and the auditor’s report are submitted for the approval of the Board of Directors upon the assent of the Committee in charge of Auditing. Upon signing by the authorized signatories, the financial statements, associated footnotes, independent auditor’s report and the statement of responsibility are forwarded electronically to the Public Disclosure Platform (KAP) by the Financial Affairs Department in accordance with the CMB and BİST regulations. The financial statements and associated footnotes are also published on our corporate web-site.

- Announcements in the Trade Registry Gazette and other Newspapers: According to the Capital Markets legislation and the Turkish Commercial Code, the calls for ordinary and extraordinary general meetings, resolutions regarding profit distribution and capital increases, dividend payments, prospectus, circulars,


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notices, etc. are publicly disclosed by publishing in the Trade Registry Gazette and other newspapers.

- Informing Investors and Financial Analysts: The statements, presentations and reports made at contact, publicity or press meetings held with a specific group of investors or financial analysts are also made accessible to the public by publishing the same on the corporate web-site of the Company.

- Written and Verbal Requests: The Shareholders Relations Department is in charge of supervising all issues related to the public disclosure and replying to all inquiries made to the Company. All written and verbal inquiries received by the Company throughout the year are replied by this department and the Board of Directors is informed about such inquiries and replies given.

- News and Rumors about the Company: The news published in the press and broadcast on the internet, radio or televisions are followed by the in-house Public Relations department on a daily basis. The news about our Company are reported to the top management every morning and the contents of such news are checked.

If the company top management deems necessary to make a clarification about the news or rumors which are not subject to a material events disclosure under the Communiquè, then a material event disclosure will be published upon the approval of the Chief Executive Officer.

Identification Criteria for Persons Who Have Administrative Duty:The persons acting for and on behalf of the Company and who have the authority to take administrative decisions that could affect the business activities and the growth of the Company together with the executives who have detailed information about the foregoing including the Board members, Chief Executive Officer, Deputy Chief Executive Officer, Senior Vice Presidents, Executive Vice Presidents, Deputy Senior Vice Presidents, Deputy Executive Vice Presidents, Shareholders Legal Affairs Manager, Financial Affairs Manager, Investor Relations Department Manager, Consolidation Manager and other managers and specialists appointed for financial reporting are considered as persons having access to insider information.

On the other hand, managers and other personnel who possess only partial knowledge and information about the operations of the Company and who have limited access to holistic information about the Company are not considered as employees who have access to insider information.

Protection of Confidentiality of Insider Information:All appropriate measures are taken in accordance with the ethical rules laid down in the Philosophy of Alarko Group of Companies to protect the confidentiality of information which are not yet made public and approved by the Board of Directors and the Audit Advisory and Approval Board of the Company. According to the ethical rules that must be followed by all employees, all appropriate measures should be taken by employees to protect the confidentiality of insider information. In this context, employees of Alarko are prohibited from buying and selling securities by using the insider information to which their jobs give them access.

Compliance with rules of ethics by employees is followed-up and monitored by immediate superiors in the hierarchical structure. Employees are responsible for immediately notifying the management of any act or behavior contrary to the rules of ethics. Any contrary act or behavior noticed, notified or suspected by the Board of Auditors, the , the Chief Executive Officer or other managers are reviewed by the Board of Directors or instructed to be reviewed by the Auditing Committee to ensure compliance therewith. Appropriate disciplinary actions are imposed against employees found to violate any of these rules.

The person in charge of implementing the company’s informing policy is the Chief Executive Officer Ayhan Yavrucu.

9. Company’s Corporate Web-site and its Content:Alarko Holding A.Ş. has a corporate web site. The address of the web site is www.alarko.com.tr. All information


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that the corporate web site contains is also prepared and published in English for use of the foreign investors.

“Report on Compliance with Corporate Governance Principles” which contains a number of links for the following headings may be accessed from the “Investor Relations” link on the web site.

Information provided in Article 2.2.2, Part II of the Corporate Governance Principles, as mentioned in Article 9 of this report is accessible via the following links as well.

LIST OF LINKS:1) Statement of Compliance with Corporate Governance Principles

Part I – Shareholders2) Shareholders Relations Department 3) Exercise of Right to Information by Shareholders4) Information on General Assembly Meetings5) Voting Rights and Minority Rights6) Dividend Rights7) Transfer of Shares

Part II - Public Disclosure and Transparency8) Company’s Disclosure Policy9) Company’s Web-site and Its Content

- Trade Register information- Recent partnership and management structure- Detailed information on preference stocks- Current text of Company’s Articles of Association including date and issue number of Trade Register

Gazettes where amendments thereto are published.- Disclosure of material Events- Annual Reports- Periodical Financial Reports- Registration Statements and Public Offering Circulars- Agendas of General Assembly Meetings- Lists of Attendance and Minutes of General Assembly Meetings- Specimen Form for Voting by Proxy- Specimen Form for compulsory information prepared in collection of share certificates or proxy by way

of invitation.- Profit distribution policy - Disclosure policy - Minutes of Board Meetings where important decisions that may affect the value of Capital Market

Instruments are taken.- Frequently Asked Questions (requests for information, questions and denunciations received by the

Company and their answers)10) Annual Report

Part III – Stakeholders11) Informing Stakeholders12) Participation of stakeholders in Management13) Human Resources Policy14) Rules of Ethics and Social Accountability

Part IV - Board of Directors15) Structure and Composition of Board of Directors 16) Principles of Conduct of the Board of Directors


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17) The Number, Structure and Independence of Committees18) Risk Management and Internal Control Mechanism19) Strategic Objectives of the Company20) Financial Rights

10. Annual ReportThe Annual report contains information set out in the Corporate Governance principles.

CHAPTER III – STAKEHOLDERS

11. Informing StakeholdersStakeholders of the Company are regularly informed on matters they are involved.

Employees of the Company are kept informed by means of annual meetings held regularly and additionally, the developments within the Company are announced through in-house magazines “Bizim Dünyamız [Our World]” and “News” that are published on a semi-annual basis.

On the other hand, a comprehensive information effort is carried out through our web-site, e-bulletins and annual reports.

The stakeholders may inform the Corporate Governance Committee or the Auditing Committee through the Shareholders Relations Department of any act, conduct or transaction that is contrary to the legislation or the rules of ethics.

12. Participation of Stakeholders in ManagementNo particular model is developed regarding participation of stakeholders in the management of the Company. Rights of stakeholders are protected by virtue of applicable legislation.

13. Human Resources Policy The human resources policy developed and adopted by the Company is clearly described in “Our Policy Manual” which is published regularly on an annual basis and communicated to employees through annual meetings.

The criteria for personnel recruitment are specified in writing and strictly adhered to these criteria. Qualifications, background and personal characteristics, including but not limited to physiological, psychological and intellectual, are taken into account in the recruitment process. These qualifications and characteristics are measured, analyzed and evaluated through a written test. Following an initial interview and assessment by the human resources department the applicant is interviewed by the manager of the department where the applicant would be working, if hired. All employees are treated equally in respect of recruitment, training and promotion and training plans and strategies are developed and implemented in order to develop and increase their knowledge, skills and experience. All employees are provided training on a regular basis each year.

Written job descriptions are prepared for all employees. The criteria for appraising performance and rewarding performance are determined each year and put into place after reaching an agreement with employees on the matter. Performance measurements and evaluations are conducted for all employees using the performance appraisal system, which is in place, and the outcomes of performance appraisals and reviews are taken into consideration in determining salary increases and career progression plans.

On the other hand, a certain number of employees are awarded with a “Golden Badge” on a regular basis each year for their outstanding performance. In addition to the foregoing, winners of the “Innovation Award” competition, which is held on a regular basis each year, are awarded with a prize. This rewarding mechanism is used as a tool to increase motivation of creative employees.

The Company strives and will continue to strive to provide a safe and secure work environment for its employees and to continuously maintain and improve this environment.


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14. Rules of Ethic and Social Accountability The rules of ethic which are also set forth in the Philosophy of Alarko Group of Companies approved by the Board of Directors and Audit Advisory and Approval Board (AAAB) and adopted by all Employees and Management of Alarko Holding A.Ş. are outlined below in summary form. These rules of ethic comply with the Alarko’s policies, objectives, targets and core principles and form an integral part of these policies, objectives, targets, and core principles.

- Acting honestly in all business activities towards the Government, Clients, Shareholders, Personnel, Partners, and Sub- and By- Industries.

- Protecting the environment and maintaining the inter-company social balance in all its activities.- Orienting the customers without forcing and giving priority to their needs.- Maintaining high quality at all times, trying to supply the best at the lowest price even when the customers

are satisfied and contented with what is already given.- Achieving the profits deserved by the shareholders under the current conditions.- Give priority to teamwork as a corporation performing systematically on the basis of pre-defined

procedures, share profit, loss, success and failure.

We design, develop and formulate our policies based on this philosophy. This philosophy statement is framed and posted prominently in all premises and offices owned or occupied by the Alarko Group of Companies. Furthermore, all employees are informed about these rules through the Policy Meeting, which is held regularly on an annual basis, and Our Policy Manual which is published regularly on an annual basis. In addition to all the foregoing, both our existing and newly recruited employees are provided with detailed information about this philosophy through regular training.

This philosophy statement containing the rules of ethic is also posted both on the intercompany intranet and on the Company’s website at www.alarko.com.tr. All employees of Alarko Holding are obliged to strictly adhere to and comply with these rules. Compliance with rules of ethics by employees is followed-up and monitored by immediate superiors in the hierarchical structure. All employees of Alarko Holding are responsible for immediately notifying the management of any act or behavior contrary to the rules of ethics.

Any contrary act or behavior noticed, notified or suspected by the Board of Auditors, the Chief Executive Officer or other managers are reviewed by the Board of Directors or instructed to be reviewed by the Auditing Committee to ensure compliance therewith. Appropriate disciplinary actions are imposed against employees found to violate any of these rules.

Alarko Holding A.Ş. has always been highly sensitive and proactive towards its social responsibilities and always acts in compliance with regulations and ethical rules regarding public health and safety, and protection of consumers and environment.

Both Alarko Holding A.Ş and its affiliates, subsidiaries and other group of companies and their respective employees, expert teams and related industries have adopted and committed to implement the following rules in all of their activities and business operations for the purpose of protecting the environment and nature.

- To become thoroughly familiar with all applicable laws, regulations, policies, procedures, requirements and standards regarding the protection of the environment and to fulfill and comply with all criteria, requirements and provisions introduced by these laws, regulations, policies, procedures, requirements and standards,

- To take all measures necessary to protect pollution of air, water, soil and noise in all activities and business operations,

- To protect animal and plant life and to ensure recycling of waste,- To make cooperation with governmental organizations, institutions, public agencies, private sector

companies, and organizations and all other non-governmental organizations for the purpose of developing policies and systems aimed at protection of the environment,


69

- To continue to carry out research and development activities aimed at developing environment friendly production systems and products,

- To optimize the consumption of natural resources and energy, - To carry out continuous training activities in order to make a valuable contribution to raise awareness for

the protection of the environment and nature, to increase awareness of our employees on environmental issues, and to employ state-of-the-art technology to achieve these goals.

There is no litigation or warning filed against our Company neither in the current year nor in the past for damages on the environment.

The Alarko Education- Culture Foundation, which was established in 1986 to focus on activities in education, training and culture, has granted scholarships to a large number of students. The Foundation has, from the very beginning up to the present, granted gratuitous scholarships to approximately a total of 2.400 students consisting 1.450 higher education students and 950 high school students. 115 students were awarded scholarships for training year 2013-2014.

CHAPTER IV – BOARD OF DIRECTORS

15. The Structure and Composition of the Board of Directors

Board of Directorsİshak Alaton Chairmanİzzet Garih Vice ChairmanVedat Aksel Alaton Vice ChairmanAyhan Yavrucu Member, Chief Executive OfficerDalia Garih Member Leyla Alaton MemberProf. Dr. Ahmet Zeyyat Hatipoğlu Member (Independent) İzzet Cemal Kişmir Member (Independent)

There are two independent members in the Board of Directors. Board members are not restricted in assuming positions in other organizations or entities which are not related to the Company. Other than the Chief Executive Officer no member of the Board of Directors holds office of executive administration.

Nominating Committee has not been constituted yet and in accordance with the Corporate Governance Communiqué of the Capital Markets Board the Corporate Governance Committee undertakes the duties and activities of the Nominating Committee.

Two candidates were nominated for independent members of the Corporate Governance Committee and assessment was made as to whether or not the candidates qualify criteria for independent status and the results of the assessment was submitted for the approval of the Board of Directors with a report on 11.04.2013. Each independent board member provided a statement of independence and no situation that might compromise the independence of a board candidate has occurred as of the relevant operating period.

Curriculum vitae, terms of office and assignments outside the company of board members are presented in the previous sections of the Annual Report and also published on the corporate web-site of the Company. To avoid repetition, such information is not covered here.

16. Principles of Conduct of the Board of DirectorsThe Board of Directors is convened at least quarterly within thirty (30) days following the closure of each quarter and/or whenever the Company’s business requires. The Chairman sets the agenda of board meetings after consultation with other board members and the Chief Executive Officer and ensures that the agenda is sent to all members three (3) calendar days before the meeting. The board members will endeavor to attend all


70

scheduled board meetings and express opinions. Board members may participate in board meetings remotely using electronic means. The opinions of a member who is not present at a meeting but sent his/her opinions in writing to the Board of Directors will be presented for the consideration of other board members. Each board member has one voting right. The board member associated with a related party is not allowed to vote in the Board meeting concerning transactions with related parties. The quorum required for a board meeting is determined by the articles of association. 19 Board meetings were held in the relevant period. During the period, one board member was absent from two meeting (excused absences).

All resolutions were made unanimously and without dissent or reservation.

Board members do not reserve the right to cast weighted votes and/or powers of veto. In 2013, we had no related party transactions and any transaction that had a material effect on our business, financial position which by reason of its nature requires to be submitted for the approval of the independent board members.

17. The Number, Structure and Independence of the Committees formed by the Board of Directors New committees were formed and operating principles and procedures were designed, developed, adopted and implemented for these committees in accordance with the provisions of the Capital Markets Board’s Corporate Governance Communiqué and Turkish Commercial Code.

Accordingly; − A Corporate Governance Committee consisting of 3 members has been formed in order to introduce and

develop corporate governance practices, and Independent Board Member İzzet Cemal Kişmir was elected as the President of the committee whereas Board Members İzzet Garih and Vedat Aksel Alaton were elected as the members of the said committee. In 2013, the Corporate Governance Committee held 2 meeting, with the attendance of all committee members and submitted a report to the Board of Directors about its activities.

− A Committee for Early Detection of Risks consisting of 3 members has been formed to advise the Board of Directors on issues related to early detection of risks and to establish and to implement an effective risk management system, an Independent Board Member Prof. Dr. Ahmet Zeyyat Hatipoğlu was elected as the President of the committee whereas Board Members İzzet Garih and Vedat Aksel Alaton were elected as the members of the said committee. In 2013, the Committee for Early Detection of Risks held 6 meetings, with the attendance of all committee members and the outcomes of these meetings were reported, in writing, to the Board of Directors.

− Independent Board Member Prof. Dr. Ahmet Zeyyat Hatipoğlu was elected as the President of the Committee in Charge of Audit (Auditing Committee), which already exists and is affiliated to the Board of Directors, whereas Independent Board Member İzzet Cemal Kişmir was elected as the member of the said committee. In 2013 , the Auditing Committee held 5 meetings with the attendance of all committee members and the outcomes of these meetings were reported, in writing, to the Board of Directors.

Information on the specific duties and responsibilities of these committees, and their composition and operating procedures was publicly disclosed through the Public Disclosure Platform (KAP) and the Company’s website to inform investors.

The members of each committee consist of non-executive members of the Board.

Two independent members have been elected as member of the Board of Directors in compliance with the compositional requirements of the Board. Independent Members hold office in more than one committee due to the requirement that the Presidents of the Corporate Governance Committee and Committee for Early


71

Detection of Risks are to be elected from among independent members of the board and that all of the members of the Auditing Committee are to be elected from among independent members.

18. Risk Management and Internal Control Mechanism The Board of Directors has established and put in place an effective risk management and internal control mechanism. Managerial risks are periodically reviewed and assessed by the Audit Advisory and Approval Board (AAAB) and the Committee for Early Detection of Risks consisting of the members of the Board of Directors. The Committee for Early Detection has adopted a resolution aimed at the development, establishment, and implementation and updating of an effective internal control mechanism across the entire Group. In line with this resolution, the Group’s Auditing Department has been entrusted with the task of guidance and supervision of the internal control mechanism and of regular review and auditing of its effective implementation, functionality and operability. The Group’s Auditing Department conducts reviews and audits internal control mechanism at regular intervals in a periodic manner in accordance with the approved audit programs and submits its opinion and reports the findings of such audits to the top management.

The Committee in charge of Auditing (Auditing Committee), after reviewing and assessing the opinion of the Group’s Auditing Department and the findings reported, submits its recommendations on the matter to the Audit Advisory and Approval Board. The Audit Advisory and Approval Board, the Committee for Early Detection of Risks and the Committee in charge of Auditing determine the measures to be taken and then give the required instructions to the company’s managers through the Chief Executive Officer.

19. Strategic Goal of the Company The main vision of the Company is to become a stronger, well respected, pioneering global company that grows through the diversity it embraces and differentiation it creates.

The Company’s main mission is to carry Alarko to the future by adopting the highest universally accepted values and exceeding expectations with distinctive business models.

Startegic objectives developed by the Chief Executive Officer, evaluated by the Audit Advisory and Approval Board and submitted to the Board of Directors for approval. The realization level of the approved objectives is communicated to the Board and Audit Advisory and Approval Board and their realization level is evaluated.

20. Financial Benefits The total remuneration and other benefits of a similar nature granted to the members of the Board of Directors and senior management during 2013 amounted to TL 12.807.243 in gross terms.

Shareholders were provided with information as to the principles and rules for the determination of the remuneration payable to the Members of the Board of Directors and senior management, and information about the principles and rules for the determination of the remuneration payable to the Members of the Board of Directors and senior management was publicly disclosed through the Public Disclosure Platform (KAP) and posted on the Company’s website to inform investors. No travel expenses, accommodation allowances, entertainment allowances, other business allowances or other financial benefits, in cash or in kind, and pension schemes or other retirement plans were provided to the members of the Board of Directors.

The Company has neither given any loan nor credit to any board member or senior management nor extended any personal loan to any board member or senior management through any third party and has not provided any security or guarantee in favor of a board member or senior management, including standing as a surety or guarantor.


72

TAAHHÜT GRUBU

ALARKO HOLDİNG A.Ş.

CONSOLIDATED FINANCIAL STATEMENTSAS OF DECEMBER 31, 2013 TOGETHER WITH REPORTOF INDEPENDENT AUDITORS


73

To the Board of Directors of

Alarko Holding A.Ş.

1. As part of our independent audit, we have evaluated whether the financial information in the annual report of Alarko Holding A.Ş. prepared as of December 31, 2013 and the evaluations and disclosures of the Board of Directors are consistent with the audited financial statements for the year ended December 31, 2013.

2. The management of the Company is responsible for the preparation and fair presentation of the annual report in accordance with the Regulation on the Determination of Minimum Content of the Annual Reports.

3. Our responsibility is to express an opinion on whether the financial information provided in this annual report is consistent with the audited consolidated financial statements subject to the independent auditor’s report dated March 10, 2014.

Our evaluation has been performed in accordance with the principles and procedures put into force pursuant to the Turkish Commercial Code (“TCC”) 6102 regarding the preparation on publication of annual reports. These regulations envisage that an audit is planned and performed to obtain reasonable assurance on whether there is material misstatement regarding the consistency of the financial information provided in the annual report and the audited financial statements along with the information obtained by the auditor during the audit.

We believe that the evaluations we have performed provide a sufficient and reasonable basis for our opinion.

4. In our opinion, the financial information provided in the annual report and the evaluations of the Board of Directors are consistent with the audited consolidated financial statements of Alarko Holding A.Ş. dated December 31, 2013.

Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim ŞirketiA member firm of Ernst & Young Global Limited

Erdem Tecer, SMMMPartner

Istanbul, March 10, 2014

INDEPENDENT AUDITOR’S REPORT ON THEANNUAL REPORT OF THE BOARD OF DIRECTORS


74

Independent Auditors’ Report

To the Board of Directors and Shareholders ofAlarko Holding A.Ş.

Introduction

We have audited the accompanying consolidated financial statements of Alarko Holding A.Ş. (the Parent Company) and its subsidiaries,and jointly controlled entities which comprise the consolidated statement of financial position as at 31 December 2013, and the consolidated statement of comprehensive income, the consolidated statement of changes in equity, and the consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Alarko Gayrimenkul Yatırım Ortaklığı A.Ş., Alarko Deyaar Gayrimenkul Geliştirme A.Ş.(subsidiaries of Alarko Holding A.Ş.) and Alarko Carrier Sanayi ve Ticaret A.Ş., Alcen Enerji Dağıtım ve Perakende Satış Hizmetleri A.Ş., Meram Elektrik Dağıtım A.Ş., Meram Elektrik Enerjisi Toptan Satış A.Ş. ,Cenal Elektrik Üretim A.Ş., Meram Elektrik Perakende Satış A.Ş., Panel Enerji A.Ş. and Algiz Enerji A.Ş. ( jointly controlled entities of Alarko Holding A.Ş.) comprise 20% of the total assets in the consolidated statement of financial position as of 31 December 2013 and 49% of the total income in the consolidated statement of comprehensive income for the year then ended. The financial statements of the said subsidiary and the jointly controlled entities which comprise the statement of financial position as of 31 December 2013 and the statements of comprehensive income, changes in equity, cash flows for the year then ended were audited by another independent auditor.

Management’s Responsibility for the Financial Statements

The Company’s management is responsible for the preparation and fair presentation of these financial statements in accordance with Turkish Accounting Standards issued by the Public Oversight Accounting and Auditing Standards Authority. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Independent Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the auditing standards accepted by the Capital Markets Board. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance on whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Company management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

INDEPENDENT AUDITORS’ REPORT


75

Opinion

In our opinion, the accompanying consolidated financial statements present fairly the financial position of Alarko Holding A.Ş. and its Subsidiaries as at 31 December 2013 and their financial performance and cash flows for the year then ended in accordance with the Turkish Accounting Standards (Note 2).

Reports on independent auditor responsibilities arising from other regulatory requirements

In accordance with Article 402 of the Turkish Commercial Code Nr. 6102, the Board of Directors submitted to us the necessary explanations and provided required documents within the context of audit, additionally, no significant matter has come to our attention that causes us to believe that the Group’s bookkeeping activities for the period 1 January – 31 December 2013 is not in compliance with the code and provisions of the Company’s articles of association in relation to financial reporting.

Pursuant to Article 378 of Turkish Commercial Code Nr. 6102, Board of Directors of publicly traded companies are required to form an expert committee, and to run and to develop the necessary system for the purposes of: early identification of causes that jeopardize the existence, development and continuity of the company; applying the necessary measures and remedies in this regard; and, managing the related risks. According to subparagraph 4, Article 398 of the code, the auditor is required to prepare a separate report explaining whether the Board of Directors has established the system and authorized committee stipulated under Article 378 to identify risks that threaten or may threaten the company and to provide risk management, and, if such a system exists, the report, the principles of which shall be announced by the POA, shall describe the structure of the system and the practices of the committee. This report shall be submitted to the Board of Directors along with the auditor’s report. Our audit does not include evaluating the operational efficiency and adequacy of the operations carried out by the management of the Group in order to manage these risks. As of the balance sheet date, POA has not announced the principles of this report yet so, no separate report has been drawn up relating to it. On the other hand, the Group formed the mentioned committee on July 03, 2012 and it comprised of three members. The committee has met six times since its formation to the reporting date for the purposes of early identification of risks that jeopardize the existence of the company and its development, applying the necessary measures and remedies in this regard, and managing the risks, and has submitted the relevant reports to the Board of Directors.

Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim ŞirketiA member firm of Ernst & Young Global Limited

Erdem Tecer, SMMMPartner

March 10, 2014Istanbul, Turkey


76 ALARKO HOLDING A.Ş.CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF 31 DECEMBER 2013(CURRENCY - IN TURKISH LIRA (TL))

Current Period Audited Prior Period AuditedASSETS Notes 31 December 2013 31 December 2012 Current assets 1.280.769.183 717.078.689 Cash and cash equivalents 5 379.495.885 321.962.349Financial investments 6 206.215.245 184.223.166Trade receivables -Trade receivables from related parties 8, 31 6.267.684 24.243.405 -Trade receivables from third parties 8 323.255.722 78.183.332 Other receivables -Other receivables from related parties 9, 31 16.563.503 14.394.432 -Other receivables from third parties 9 70.205.925 12.674.293 Inventories 10 195.750.324 34.544.856Prepaid expenses 11 40.903.075 15.069.220 Current tax related assets 3.393.295 3.615.009Other current assets 21 38.718.525 28.168.627

Non-current assets 1.339.782.284 1.013.688.406 Financial investments 6 975.081 1.000.733 Trade receivables -Trade receivables from related parties - - -Trade receivables from third parties 8 20.427.591 10.583 Other receivables -Other receivables from related parties - - -Other receivables from third parties 9 14.763.060 10.325.827 Investments accounted by equity method 14 463.329.744 465.759.357 Investment properties 15 27.162.410 20.744.384 Property, plant and equipment 16 684.884.605 432.293.209 Intangible assets -Goodwill 18 12.043.473 9.292.817 -Other intangible assets 17 13.237.242 14.624.118 Prepaid expenses 11 2.094.126 15.402.690 Deferred tax asset 29 87.714.603 39.709.408 Other non-current assets 21 13.150.349 4.525.280

TOTAL ASSETS 2.620.551.467 1.730.767.095

The accompanying notes form an integral part of these consolidated financial statements.

Restated


77

Restated


Current Period Audited Prior Period AuditedLIABILITIES Notes 31 December 2013 31 December 2012 Current liabilities 853.780.533 369.841.168 Short term financial liabilities 7 62.989.555 24.044.985 Short term portion of long term financial liabilities 7 36.807.635 23.450.960 Trade payables -Trade payables to related parties 8, 31 3.774.516 59.452 -Trade payables to third parties 8 222.080.931 96.412.651Employee benefit obligations 21 4.870.525 3.485.585 Other payables -Other payables to related parties 9, 31 1.416 11.872 -Other payables to third parties 9 10.857.071 21.697.539 Deferred income 13 497.336.336 176.674.773Income tax payable 19 3.475.528 7.749.347 Provisions -Short term provisions for employee benefits - - -Other short term provisions 20 4.148.307 7.148.954 Other current liabilities 21 7.438.713 9.105.050 Non-current liabilities 452.903.744 252.691.352 Long term financial liabilities 7 165.889.945 89.821.045 Trade payables -Trade payables to related parties - - -Trade payables to third parties 8 - 636.000 Other payables -Other payables to related parties 9 66.291.962 61.291.962 -Other payables to third parties 9 26.889.713 254.039 Deferred income 13 61.291.290 50.948.944 Provisions -Long term provisions for employee benefits 20 12.183.849 10.835.615 -Other long term provisions - - Deferred tax liability 29 120.356.985 38.903.747 Equity 1.313.867.190 1.108.234.575 Equity attributable to parent 1.184.445.348 1.002.084.423

Paid-in share capital 22 223.467.000 223.467.000Cross shareholding adjustment (-) 22 (787.396) (787.396)Other comprehensive income/expense not to bereclassified to profit or loss - Revaluation and remeasurement gain / loss (32.250) 177.644Other comprehensive income/expense to be reclassifiedto profit or loss - Revaluation and reclassification gain / loss 67.321 126.174 - Foreign currency translation differences 19.029.436 8.764.296Restricted reserves allocated from profits 7.814.776 6.578.609Retained earnings 22 750.639.976 688.994.187Net income for the year 184.246.485 74.763.909Non-controlling interest 22 129.421.842 106.150.152 TOTAL LIABILITIES AND EQUITY 2.620.551.467 1.730.767.095


78

ALARKO HOLDING A.Ş.CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2013 (CURRENCY - IN TURKISH LIRA (TL))

1 January 2013 1 January 2012 Notes 31 December 2013 31 December 2012

Revenue 23 1.261.229.039 535.053.967 Cost of sales (-) 23 (1.082.722.449) (450.847.230) Gross profit 178.506.590 84.206.737 General administrative expenses (-) 24 (92.295.911) (72.023.927) Marketing, sales and distribution expenses (-) 24 (6.641.419) (5.407.250) Other income from operating activities 26 218.457.739 99.315.577 Other expenses from operating activities (-) 26 (110.326.325) (95.025.493) Operating profit / (loss) 187.700.674 11.065.644 Income from investing activities 27 3.926.044 16.059.163 Expenses from investing activities (-) 27 (385.706) (55.324) Profit from investments accounted by equity method 14 70.878.405 61.602.329 Operating profit before financial expenses 262.119.417 88.671.812 Financial income 28 - 3.221.110 Financial expenses (-) 28 (18.423.741) (8.996.099) Profit / loss from continued operations 243.695.676 82.896.823 Tax income / expense from continued operations 29 (34.903.244) (6.698.451) - Tax income / expense for the period 29 (12.466.084) (10.509.288) - Deferred tax income / expense 29 (22.437.160) 3.810.837 Net profit / loss from continued operations 208.792.432 76.198.372 Distribution of profit / loss for the period - Non-controlling interest 24.545.947 1.434.463 - Parent company shares 30 184.246.485 74.763.909 Earnings per share 0,824 0,335 Other comprehensive income / (loss) (Net of Tax) Items not to be reclassified to profit or loss in subsequent periods (209.038) 1.429.474 - Remeasurement profit / loss 157.811 - - Actuarial gain/loss arising from defined benefit plans (130.174) 1.188.963 - Share of other comprehensive income of investments accounted by equity method-actuarial gain / loss arising from defined benefit plans (325.563) 594.781 - Deferred tax income / expense of other comprehensive income not to be reclassified to profit or loss 88.888 (354.270) Items to be reclassified to profit or loss in subsequent periods 10.203.253 (6.273.702) - Changes in currency translation differences (253.945) (4.801.564) - Foreign currency change differences from investments valued by equity method 10.515.977 (1.596.818) - Revaluation and reclassification gain / loss of financial assets hold for sale (58.779) 124.680

Other comprehensive income 9.994.215 (4.844.228) Total comprehensive income 218.786.647 71.354.144 Distribution of total comprehensive income - Non-controlling interest 24.546.878 1.429.519 - Parent company shares 194.239.769 69.924.625



79ALARKO HOLDING A.Ş.CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR

ENDED 31 DECEMBER 2013 (CURRENCY - IN TURKISH LIRA (TL))

Audited Current Period Audited Prior Period Notes 31 December 2013 31 December 2012

A. Cash flows arising from principal activities 296.719.308 193.086.095 Net profit/(loss) before tax 243.695.676 82.896.823 - Adjustments related to depreciation and amortization 68.981.186 32.271.450 - Adjustments related to provisions 2.711.653 7.165.291 - Gain / loss on sale of non-current assets (3.798.055) (16.003.838) - Other adjustments related to cash flows arising from investment and financing activities (70.878.405) (61.602.329)- Exchange rate adjustments related to loans 1.491.254 (2.891.252)- Other adjustments for reconciliation of profit or loss (83.408) 318.996- Interest income / expense (3.273.390) (9.241.132)

Net working capital changes - Increase / decrease in inventories (79.117.468) (8.987.550) - Increase / decrease in trade receivables (247.466.127) (21.709.644) - Increase / decrease in other receivables related to operations (64.136.912) 49.949.396 - Increase / decrease in trade payables 128.778.056 26.428.248 - Increase / decrease in other payables related to operations 20.723.602 1.621.417 - Increase / decrease in working capital 331.683.004 102.918.281 - Cash outflow from acquisition of subsidiary, net (29.023.812) -

Cash flows from operating activities -Interest received 20.283.833 18.237.231 -Employee termination payments (1.493.593) (980.340) -Litigation payments (3.000.647) - -Tax payments (19.357.139) (7.304.953)

B. Cash flows arising from investing activities (345.815.175) (147.173.751) -Capital decrease (27.736.239) - - Cash disbursements for acquisition of other enterprises’ or funds’ shares or debt instruments (22.289.412) (2.057.055) - Proceeds from sale of property, plant and equipment and intangible assets 7.619.569 6.141.187 - Purchase of property, plant, equipment and intangible assets (312.191.361) (161.596.991) - Dividend income 15.410.259 10.339.108 - Cash outflows from other long-term asset purchases (6.627.991) -

C. Cash flows arising from financing activities 96.718.772 (2.241.902) - Proceeds from borrowings 134.443.218 16.422.384 - Repayments of borrowings (-) (7.564.327) (2.181.072) - Dividend payments (13.149.676) (7.487.115) - Interest payments (17.010.443) (8.996.099) Net gain/loss in cash and cash equivalents before currency translation differences 47.622.905 43.670.442 D. Currency translation differences effect in cash and cash equivalents 9.910.631 (2.628.733) Increase / (decrease) in cash and cash equivalents 57.533.536 41.041.709 Cash and cash equivalents at the beginning of the period 5 321.962.349 280.920.640 Cash and cash equivalents at the end of the period 5 379.495.885 321.962.349



80 ALARKO HOLDING A.Ş.CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED31 DECEMBER 2013 CURRENCY - IN TURKISH LIRA (TL)

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81ALARKO HOLDING A.Ş.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR

ENDED 31 DECEMBER 2013 (CURRENCY - IN TURKISH LIRA (TL))

1. Organization and principle activities

Alarko Holding A.Ş. (the Parent Company) was established in 1972. Its subsidiaries, affiliates, and jointly controlled entities comprise of companies which operate in various fields, namely, contracting, construction, land development, industry, trade, tourism, energy and production and trade of fishery products. In the following sections, Alarko Holding A.Ş and its subsidiaries, affiliates and jointly controlled entities whose financial statements are subject to consolidation will be referred to as “Alarko Group/the Group”.

The names, business activities, and in which country they operate, direct and indirect shareholdings of the subsidiaries, affiliates and jointly controlled entities included in the consolidation consist of the following:

Shareholding of the Group (%) Company Name Principle Activities 31 December 2013 31 December 2012

Subsidiaries (*) :

Alsim Alarko San. Tes. ve Tic. A.Ş. (Turkey) Contracting and construction 99,87 99,83 Aldem Alarko Konut İnşaat ve Tic. A.Ş. (Turkey) Residence, Construction 99,87 99,84 Attaş Alarko Turistik Tesisler A.Ş. (Turkey) Tourism Facility Management 99,88 99,84 Alarko Fenni Malzeme Satış ve İmalat A.Ş. (Turkey) Marketing of Industrial Products and After Sales Services 99,97 99,97 Almüt Alarko Sınai Gereçler Production, Marketing and Dealership İmalat ve Müm. A.Ş. (Turkey) of Technical Equipment 99,99 99,98 Alamsaş Alarko Ağır Makina Sanayi A.Ş. (Turkey) Production of Machinery & Equipment for Industrial Investments 99,99 99,98 Alarko Gayrimenkul Yatırım Ort. A.Ş. (Turkey) (**) Purchase and Sales of Real Estates and Market Tools Related to Real Estates 51,19 51,17 Alsim-Moskova Çocuk Hastanesi İnşaatı (Russia) Construction of Oncology Hospital for Children in Moscow-Russia 99,87 99,83 Alsim–TCDD (Turkey) TCDD Ankara- Eskişehir High speed Railway Project 99,87 99,83 Alsim-Rosneftegastroy JSC İş Ort. (Turkey) DSİ Melen Water Supply Project Construction 99,38 99,34 Astana Su-Taldykol Göl Arıtma Projesi (Kazakhstan) Supply of water and cleaning of lake projects 99,87 99,83 Saret Sanayi Taahhütleri ve Ticaret A.Ş. (Turkey) Construction 100,00 100,00 Alarko Enerji Üretim A.Ş. (Turkey) Power Generation 100,00 100,00 Antalya Hafif Raylı Sistem 1. Aşama Yapım İşleri (Turkey) Light Rail System Project 99,87 99,83 Garanti Koza–Alsim Ortak Girişimi (Turkey) Subway Construction Project 99,87 99,83 Streicher-Haustad & Timmerman Bakü-Tiflis- Ceyhan Crude Oil Günsayıl-Alsim A.Ş. (Turkey) Pipe Line Project 66,62 66,59 Altek Alarko Elektrik Sant. Tes. İşl. ve Tic. A.Ş. (Turkey) Production of Electrical Energy 99,94 99,91 Bozshakol Bakır Tesisi Projesi (Kazakhstan) Copper Facility Project 99,87 99,83 Fas Tanger Kenitra Hızlı Tren Projesi (Morocco) High Speed Railway Infrastructure and Art Works Project 99,87 99,83 Aktau Manasha Yol Projesi (Kazakhstan) Road Construction Project 99,87 99,83 Aktogay Bakır Konsantre Tesisi Projesi (Kazakhstan) (***) Copper Processing Plant Project 99,87 -

Alarko Deyaar Gayrimenkul Geliştirme A.Ş. (Turkey) (****) Purchase and Sales of Real Estates and Market Tools Related to Real Estates 99,87 -

(*) Included in the consolidation by full consolidation method.(**) Public company listed in the Borsa İstanbul A.Ş.(BIST)(***) Included consolidation as a subsidiary at March 31,2013.(****) As of 31 December 2013 Alarko Deyaar Gayrimenkul Geliştirme A.Ş. ‘s share of 50% is purchased from Deyaar Development PJSC and has been included in the full consolidation.


82

Shareholding of the Group (%) Company Name Principle Activities 31 December 2013 31 December 2012

Jointly Controlled Entities (*) : Alarko Carrier Sanayi ve Heating, Cooling , Air Conditioning Ticaret A.Ş. (Turkey) (**) Equipment Manufacturing 43,19 43,19 OAO Mosalarko (Russia) Russia-Real Estate Project Construction and Utilization 50,00 50,00 Obrascon Huarte Alsim SA – Alsim Alarko TCDD Ankara – Eskişehir High speed San.Tes.ve Ticaret A.Ş. (Spain) Railway Project 44,94 44,93 Alfarm Alarko Leröy Su Ürünleri Production and Marketing of San. ve Tic. A.Ş. (Turkey) Fishery products 50,00 50,00 Alarko – Makyol Adi Ortaklığı (Turkey) Subway construction project 49,94 49,92 Doğuş-Alarko-YDA İnş. Adi Ortaklığı (Ukraine) Kiev Airport construction 37,45 37,44 Alcen Enerji Dağıtım ve Establishing, transferring or operating Perakende Satış Hiz.A.Ş.(Turkey) electical power distribution facility 49,94 49,92 Meram Elektrik Dağıtım A.Ş. (Turkey) Electrical power distribution 49,94 49,92 Meram Elektrik Enerjisi Toptan Satış A.Ş. (Turkey) Electrical power sale 49,94 49,92 Cenal Elektrik Üretim A.Ş. (Turkey) Constructing and administrating Electricity power generation 49,94 49,92 Meram Elektrik Perakende Satış A.Ş.(Turkey)(***) Electrical power sale 49,94 49,92 Algiz Enerji A.Ş. (Turkey) (****) Constructing and administrating electricity power generation 49,94 -

Panel Enerji A.Ş. (Turkey) (*****) Constructing and administrating electricity power generation 49,94 -

Alarko Deyaar Gayrimenkul Geliştirme A.Ş. (Turkey) (******) Purchase and Sales of Real Estates and Market Tools Related to Real Estates - 49,92

(*) Included in the consolidation by equity method.(**) Public company listed in the Borsa Istanbul A.Ş. (BIST)(***) Registered on November 28, 2012 and included to consolidation as jointly controlled entity. On March 18, 2013 Meram Elektrik Satış A.Ş.‘s corporate name was changed to Meram Elektrik Perakende Satış A.Ş.(****) Registered on June 26, 2013 and included to consolidation as jointly controlled entity.(*****) Registered on October 28, 2013 and included to consolidation as jointly controlled entity.(******) As of 31 December 2013 Alarko Deyaar Gayrimenkul Geliştirme A.Ş. ‘s share of 50% is purchased from Deyaar Development PJSC and has been included in the full consolidation. Shareholding of the Group (%) Company Name Principle Activities 31 December 2013 31 December 2012

Affiliates ( *) : Al-Riva Projesi Arazi Değ. Konut İnş. ve Tic. A.Ş (Turkey) (**) Residence, Construction 12,13 12,13 Al-Riva Arazi Değ. Konut İnş. ve Tic. A.Ş. (Turkey) (**) Residence, Construction 2,63 2,63 Al-Riva Arazi Değ. Konut İnş., Tur. Residence, Construction Tes. Golf İşl. ve Tic. A.Ş. (Turkey) (**) and Tourism Facility Management 2,28 2,28

(*) Included in the consolidation by equity method.(**) The Parent Company has a ratio of 40% control and profit owning from affiliates


83

The address of the Parent Company’s head office is as follows:

Muallim Naci Cad. No : 69 Ortakoy / ISTANBUL

As of 31 December 2013 and 2012, the shareholding structure is as follows:

31 December 2013 31 December 2012Name Shareholding Shareholding Alaton Family 35,37% 35,37%Garih Family 33,23% 33,45%Other (*) 31,40% 31,18% 100,00% 100,00%

(*) Represents shareholdings of less than 10%.

The shares of Alarko Holding A.Ş. are traded in the Borsa Istanbul A.Ş. (BIST) since May 24, 1989, and as of 31 December 2013, 28,21% of the Company shares are offered to public.

Alarko Carrier Sanayi ve Ticaret A.Ş., a jointly controlled entity, is registered at the Capital Markets Board (CMB) and 14,77% of its shares are offered to public. The shares are traded at the BIST since January 27, 1992.

Alarko Gayrimenkul Yatırım Ortaklığı A.Ş. (subsidiary) is registered at the Capital Markets Board (CMB) and 49% of its shares are offered to public. The shares are traded at the BIST since 1996.

The average number of employees during the period with respect to categories is as follows:

31 December 2013 31 December 2012 Wage earners 2.003 1.666Salary earners 4.525 3.213Total 6.528 4.879

2. Basis of presentation financial statements

i. Basis of presentation :

The consolidated financial statements and disclosures have been prepared in accordance with Turkish Accounting Standards/Turkish Financial Reporting Standards (TAS/TFRS) promulgated by the Public Oversight Accounting and Auditing Standards Authority (POA) as set out in the communiqué numbered II-14.1 “Communiqué on the Principles of Financial Reporting In Capital Markets” (“the Communiqué”) of POA.

CMB, with its resolution dated 17 March 2005, announced that all publicly traded entities operates in Turkey was not obliged to apply inflationary accounting as from 1 January 2005. The consolidated financial statements have been prepared in accordance within this resolution.

Functional currency of all entities’ included in consolidation maintain their books of account in Turkish Lira (TL) in accordance with Turkish Commercial Code and Tax Legislation and the Uniform Chart of Accounts issued by the Ministry of Finance.

The consolidated financial statements are based on the statutory records, with adjustments and reclassifications for the purpose of fair presentation in accordance with the Turkish Accounting Standards published by the POA.

Alarko Holding and its subsidiaries and joint ventures and affiliates registered in Turkey maintain their books of account and prepare their statutory financial statements (“Statutory Financial Statements”) in accordance with the Turkish Commercial Code (“TCC”), tax legislation and the Uniform Chart of Accounts (“UCA”), issued by the Ministry of Finance. Foreign subsidiaries, joint ventures and associates maintain their books of account in accordance with the laws and regulations in force in the countries in which they are registered. These consolidated financial statements have been prepared under the historical cost conversion .

The functional currency of the Parent Company is Turkish Lira (TL) and the accompanying consolidated financial statements and related notes are presented in Turkish Lira(TL).The functional currencies of the subsidiaries and jointly controlled entities of the Parent Company located in Spain, Russia, Ukraine ,Kazakhstan and Morocco are Euro, Ruble, Hryvnia,Tenge and Dirham respectively. The items of statements of financial position are translated into TL at the foreign exchange rate at the reporting date, and income and expenses are translated at the yearly average rate. Profits or losses arising from translation are stated in the “foreign currency translation differences” in the statement of other comprehensive income.

ii. Consolidation principles:

(a) The consolidated financial statements include the accounts of the parent company, Alarko, its Subsidiaries and its Associates on the basis set out in sections (b) to (f) below. The financial statements of the companies included in the scope of consolidation have been prepared as of the date of the consolidated financial statements with adjustments and reclassifications for the purpose of fair presentation in accordance with Turkish


84

Accounting Standards published by the Public Oversight Accounting and Auditing Standards Authority of Turkey and the application of uniform accounting policies and presentation.

(b) Subsidiaries are companies over which Alarko Holding’s has the power to control the financial and operating policies for the benefit of Alarko Holding, through the power to exercise more than 50% of voting rights relating to the shares in the companies as a result of the ownership interest owned directly and indirectly by itself. Control is normally evidenced when the Company controls an investee if and only if the company has all the following; a) power over the investee b) exposure, or rights, to variable returns from its involvement with the investee and c) the ability to use its power over the investee to affect the amount of company’s returns.

The statements of financial position and statements of profit or loss and other comprehensive income of the Subsidiaries are consolidated on a line-by-line basis and the carrying value of the investment held by Alarko Holding and its Subsidiaries is eliminated against the related equity. Intercompany transactions and balances between Alarko Holding and its Subsidiaries are eliminated during the consolidation. The nominal amount of the shares held by Alarko Holding in its Subsidiaries and the associated dividends are eliminated from equity and income for the period, respectively.

Subsidiaries are consolidated from the date on which the control is transferred to the Group and are no longer consolidated from the date that the control ceases.

(c) Joint Ventures are companies in respect of which there are contractual arrangements through which an economic activity is undertaken subject to joint control by Alarko Holding and one or more other parties Alarko Holding exercises such joint control through the power to exercise the voting rights relating to shares in the companies as a result of ownership interest directly and indirectly by itself. The Group’s interest in Joint Ventures is investments accounted by equity method.

(d) Associates are accounted for using the equity method. The Group has power to participate in the financial and operating policy decisions but not control them. Unrealised gains or losses arising from transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates.

(e) Available-for-sale financial assets in which the Group have ownership interests below 20%, or over which the Group does not exercise a significant influence or which are immaterial and do not have quoted market prices in active markets and whose fair values can not be reliably measured, are carried at cost, less any accumulated impairment loss.

(f) Shares of uncontrollable companies on all balances and transactions of/with the Subsidiaries in the notes to the consolidated financial statements are presented with the total ownership interest of the Group in the non-controlling interest.

iii. Adjustments :The accompanying consolidated financial statements have been prepared in accordance with the CMB standards with the below mentioned adjustments which are not stated in the statutory records: - Provision for doubtful receivables - Inventory impairment provision - Rediscount calculation for post-dated cheques, notes receivable, customers, and suppliers - Depreciation adjustments - Retirement pay liability adjustments - Deferred tax adjustment - Valuation of financial assets quoted at the stock exchange by market value - Recognition of the contract income as income and expense by percentage of completion method - Elimination of intra-group balance and transactions as per the consolidation procedure - Provision for litigation - Expense accrual adjustment - Provision for trademark and royalty - Provision for guarantee for sales - Adjustment of income related to future months - Adjustment on invoiced but undelivered goods - Provision for unused vacation

iv. Comparative information and adjustment of prior period financial statements:Consolidated statements of financial position as of 31 December 2013 and 2012 and notes selected in relation to these consolidated statements of financial position as well as the consolidated statements of comprehensive income, changes in equity, and cash flows for the years ended have been presented comparatively.

According to the TAS 19 – Employee Benefits standards changes, from the beginning of 1 January 2013 actuarial gain/losses are recognized in equity and the application has been applied retrospectively. As of 31 December 2012 actuarial loss amounting to TL 1.434.418 has been reclassified to consolidated statement of profit or loss and other comprehensive income from “Generel administrative expenses” and “Deferred tax income/expense” accounts.


85

As of 31 December 2012 statement of financial position, actuarial gain which is presented under net profit for the period amounting to TL 177.644 which deferred tax effect is offsetted , is reclassified to other accumulated comprehensive income or expenses that are not to be classified in the profit or loss in the consolidated financial statements.

The effect of restatement of financial statements for application of IFRS 11 Joint Arrangements which is effective as of 1 January 2013 are as follows:

As of 31 December 2013 IFRS 11 Joint Arrangements which is effective as of 1 January 2013, has retrospectively applied for previous years in the consolidated financial statements and applied from 1 January 2012 and presented comperatively for one year.

Since 1 January 2013 jointly controlled entities, Alarko Carrier Sanayi ve Tic. A.Ş., OAO Mosalarko, Obrascon Huarte Alsim SA – Alsim Alarko San.Tes.ve Ticaret A.Ş., Alfarm Alarko Leröy Su Ürünleri San. ve Tic. A.Ş., Alarko Deyaar Gayrimenkul Geliştirme A.Ş., Alarko – Makyol Adi Ortaklığı, Doğuş-Alarko-YDA İnş. Adi Ortaklığı, Alcen Enerji Dağıtım ve Perakende Satış Hiz.A.Ş., Meram Elektrik Dağıtım A.Ş., Meram Elektrik Enerjisi Toptan Satış A.Ş., Cenal Elektrik Üretim A.Ş. ve Meram Elektrik Perakende Satış A.Ş., which included in the consolidation by proportionate consolidation method as of 31 December 2012 financial statements, are included in the consolidation by equity method.

The effects of the changes in standards on consolidated statement of financial position as of 31 December 2012 and on consolidated statement of profit or loss and other comprehensive income between 1 January and 31 December 2012 period are presented below.

Current assets 1.117.713.334 (400.634.645) - 717.078.689 Cash and cash equivalents 451.038.134 (129.075.785) - 321.962.349 Financial investments 184.304.632 (81.466) - 184.223.166 Trade receivables -Trade receivables from related parties 11.343.635 12.899.770 - 24.243.405 -Trade receivables from third parties 289.750.149 (211.566.817) - 78.183.332 Other receivables -Other receivables from related parties 14.394.432 - - 14.394.432 -Other receivables from third parties 21.682.972 (9.008.679) - 12.674.293 Inventories 70.608.355 (36.063.499) - 34.544.856 Prepaid expenses 25.149.582 (10.080.362) - 15.069.220 Current tax related assets 5.994.595 (2.379.586) - 3.615.009 Other current assets 42.914.160 (14.745.533) - 28.168.627 Total 1.117.180.646 (400.101.957) - 717.078.689 Non-current assets held for sale 532.688 (532.688) - - Non-current assets 1.042.247.355 (490.201.043) 461.642.094 1.013.688.406 Financial investments 1.000.733 - - 1.000.733 Trade receivables -Trade receivables from related parties - - - - -Trade receivables from third parties 106.609.477 (106.598.894) - 10.583 Other receivables -Other receivables from related parties - - - - -Other receivables from third parties 13.976.883 (3.651.056) - 10.325.827 Investments accounted by equity method 4.117.263 - 461.642.094 465.759.357 Investment property 29.090.549 (8.346.165) - 20.744.384 Property, plant and equipment 452.717.319 (20.424.110) - 432.293.209 Intangible assets -Goodwill 14.237.004 (4.944.187) - 9.292.817 -Other intangible assets 204.549.841 (189.925.723) - 14.624.118 Prepaid expenses 16.865.665 (1.462.975) - 15.402.690 Deferred tax asset 183.899.500 (144.190.092) - 39.709.408 Other non-current assets 15.183.121 (10.657.841) - 4.525.280 Total assets 2.159.960.689 (890.835.688) 461.642.094 1.730.767.095

Restated Audited

31 December 2012Consolidated by

equity method

Excluded from statement

of financial position by

equity methodAudited

31 December 2012ASSETS


86

Current liabilities 547.378.353 (177.537.185) - 369.841.168 Short term financial liabilities 24.570.343 (525.358) - 24.044.985Short term portion of long term financial liabilities 52.333.346 (28.882.386) - 23.450.960Trade payables -Trade payables to related parties 36.955 22.497 - 59.452 -Trade payables to third parties 185.577.911 (89.165.260) - 96.412.651Employee benfit obligations 13.957.908 (10.472.323) - 3.485.585Other payables -Other payables to related parties 114.249 (102.377) - 11.872 -Other payables to third parties 50.718.727 (29.021.188) - 21.697.539Deferred income 185.757.419 (9.082.646) - 176.674.773Income tax payable 9.815.670 (2.066.323) - 7.749.347Provisions -Short term provisions for employee benefits - - - - -Other short term provisions 15.184.433 (8.035.479) - 7.148.954Other current liabilities 9.311.392 (206.342) - 9.105.050

Non-current liabilities 504.347.761 (251.656.409) - 252.691.352 Long term financial liabilities 165.094.735 (75.273.690) - 89.821.045Trade payables -Trade payables to related parties - - - - -Trade payables to third parties 25.825.503 (25.189.503) - 636.000Other payables -Other payables to related parties - 61.291.962 - 61.291.962 -Other payables to third parties 48.107.678 (47.853.639) - 254.039Deferred income 51.315.574 (366.630) - 50.948.944Provisions -Long term provisions for employee benefits 17.168.187 (6.332.572) - 10.835.615 -Other long term provisions - - - -Deferred tax liability 196.836.084 (157.932.337) - 38.903.747

Equity 1.108.234.575 (461.642.094) 461.642.094 1.108.234.575

Equity attributable to parent company 1.002.084.423 (461.642.094) 461.642.094 1.002.084.423 Paid-in share capital 223.467.000 - - 223.467.000Cross shareholding adjustment (-) (787.396) - - (787.396)Other comprehensive income/expense not to be reclassified to profit or loss - Actuarial gain /loss arising from defined benefit plans 177.644 475.647 (475.647) 177.644Other comprehensive income/expense to be reclassified to profit or loss - Foreign currency translation differences 8.764.296 (9.305.967) 9.305.967 8.764.296 - Revaluation and reclassification gain / loss 126.174 - - 126.174Restricted reserves allocated from profits 6.578.609 (6.312.777) 6.312.777 6.578.609Retained earnings 688.994.187 (384.421.021) 384.421.021 688.994.187Net income for the year 74.763.909 (62.077.976) 62.077.976 74.763.909

Non-controlling interest 106.150.152 - - 106.150.152

Total liabilities 2.159.960.689 (890.835.688) 461.642.094 1.730.767.095

Restated Audited


equity method

Excluded from statement

of financial position by

equity methodAudited

31 December 2012LIABILITIES


87

Based on the decision taken on 7 June 2013 by the CMB at its meeting numbered 20/670, a new illustrative financial statement and guidance to it has been issued effective from the interim periods ended after 31 March 2013, which is applicable for the companies that are subject to Communiqué on the Principles of Financial Reporting in Capital Markets. Based on these new illustrative financial statements, a number of changes made at the Group’s consolidated financial statements.

The reclassifications that are made at the Group’s consolidated statement of financial position as at 31 December 2012 are as:

- Prepaid expenses for the following months amounting to TL 4.569.708 previously disclosed in other current assets are reclassified to prepaid expenses account,

- Current tax related assets amounting to TL 3.615.009 previously disclosed in other current assets are reclassified as a seperate account,- Prepaid expenses for the following years amounting to TL 531.473 previously disclosed in other non-current assets are reclassified to prepaid

expenses,- Advances given amounting to TL 10.499.512 previously disclosed in other current assets are reclassified to prepaid expenses,- Advances given amounting to TL 14.871.217 previously disclosed in other non-current assets are reclassified to prepaid expenses,- Short term portion of long term borrowings amounting to TL 23.450.960 previously disclosed to short-term borrowings are disclosed as a

seperate account,- Balances due from ongoing construction contracts and progress payments amounting to TL 70.582.818 previously disclosed in other current

payables are reclassified to deferred income,- Electricity energy funds amounting to TL 393.102 previously disclosed in other short term financial liabilities are reclassified to deferred income,- Taxes, duties, social security premiums and other withholdings payables amounting to TL 3.159.054 previously disclosed in other short term

payables are reclassified to employee benefit obligations,- Other payables to related parties amounting to TL 61.291.962 previously disclosed in other current liabilities are reclassified to long term other

liabilities to related parties,- Accrued personnel costs amounting to TL 324.907 previously disclosed in short term other liabilities are reclassified to employee benefit

obligations,- Accrued expensed amounting to TL 316.711 previously disclosed in short term other liabilities are reclassified to short term trade payables,- P remium provisions amounting to TL 1.624 previously disclosed in short term other liabilities are reclassified to employee benefit obligations,

Revenue 1.618.647.524 (1.083.593.557) - 535.053.967Cost ot sales (-) (1.372.085.422) 921.238.192 - (450.847.230)

Gross profit 246.562.102 (162.355.365) - 84.206.737 General administrative expenses (-) (136.392.814) 64.368.887 - (72.023.927)Marketing, sales and distribution expenses (-) (86.174.177) 80.766.927 - (5.407.250)Research and development expenses (-) (2.036.748) 2.036.748 - -Other income from operating activities 193.761.370 (94.445.793) - 99.315.577Other expenses from operating activities (-) (122.044.317) 27.018.824 - (95.025.493)

Operating profit 93.675.416 (82.609.772) - 11.065.644 Income from investing activities 16.207.075 (147.912) - 16.059.163Expenses from investing activities (-) (257.811) 202.487 - (55.324)Profit from investments accounted by equity method (210.639) - 61.812.968 61.602.329

Operating profit before financial expenses 109.414.041 (82.555.197) 61.812.968 88.671.812 Financial income 3.221.110 - - 3.221.110Financial expenses (-) (15.435.312) 6.439.213 - (8.996.099)

Profit before tax from continued operations 97.199.839 (76.115.984) 61.812.968 82.896.823 Tax expense (21.001.467) 14.303.016 - (6.698.451)-Current year tax expense (29.869.491) 19.360.203 - (10.509.288)-Deferred tax income/(expense) 8.868.024 (5.057.187) - 3.810.837

Net profit / loss from continued operations 76.198.372 (61.812.968) 61.812.968 76.198.372

Restated Audited


equity method

Excluded from statement of profit or loss

and other comprehensive

income by equity method

Audited31 December 2012


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- Allowance for cost amounting to TL 1.011.846 previously disclosed in short term other liabilities are reclassified to short term trade payables,- Advances taken amounting to TL 104.520.486 previously disclosed in short term other liabilities are reclassified to deferred income,- Income related to the future months amounting to TL 1.178.367 previously disclosed in short term other liabilities are reclassified to deferred

income,- Advances taken amounting to TL 48.997.394 previously disclosed in long term other liabilities are reclassified to deferred income,- Income related to the future years amounting to TL 18.797 previously disclosed in long term other liabilities are reclassified to deferred income,- Electricity energy funds amounting to TL 1.932.753 previously disclosed in other long term financial liabilities are reclassified to deferred

income,

The reclassifications that are made at the Group’s consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2012 are as:

- Gain on fixed asset sales amounting to TL 1.122.600 previously disclosed in other operating income are reclassified to income from investing activities,- Loss on fixed asset sales amounting to TL 55.324 previously disclosed in other operating expenses are reclassified to loss from investing activities,- Foreign exchange gains amounting to TL 61.752.480 previously disclosed in financial income are reclassified to other operating income, foreign

exchange losses amounting to TL 74.724.156 previously disclosed in financial expenses are reclassified to other operating expenses,- Dividend income amounting to TL 92.641 previously disclosed in financial income are reclassified to income from investing activities,- Gain on revaluation of securities amounting to TL 14.843.922 previosly disclosed in financial income are reclassified to income from investing activities,- Late interest income amounting to TL 1.169.032 previously disclosed in financial income are reclassified to operating income,- Rediscount interest income amounting to TL 494.539 previously disclosed in financial income are reclassified to operating income,- Interest income amounting to TL 18.237.231 and income from security sales amounting to TL 177.875 previosly disclosed in financial income are

reclassified to other operating income,- Late charge amounting to TL 217.725 previously disclosed in financial expenses are reclassified to other operating expenses,- Rediscount interest expenses amounting to TL 813.499 previously disclosed in financial expenses are reclassified to other operating expenses.

v. Changes and Errors in Accounting Policies and Accounting Estimates: The accounting policies applied by Alarko Group are consistent with those applied in the prior significant changes in accounting policies are applied

and significant errors are treated retrospectively, and the prior year financials are restated. Changes in accounting policies are applied in the period of the change if they are related to the one period only; however, if they are related to the future periods, they are applied both in the period of change and the future period, prospectively.

vi. The new standards, amendments and interpretations The accounting policies adopted in preparation of the consolidated financial statements as at 31 December 2013 are consistent with those of the

previous financial year, except for the adoption of new and amended TFRS and TFRIC interpretations effective as of 1 January 2013. The effects of these standards and interpretations on the Group’s financial position and performance have been disclosed in the related paragraphs.

The new standards, amendments and interpretations which are effective as at 1 January 2013 are as follows:

TFRS 7 Financial Instruments: Disclosures – Offsetting Financial Assets and Financial Liabilities (Amendment) The amendment requires the disclosure of the rights of the entity relating to the offsetting of the financial instruments and some information about

the related regulations (e.g., collateral agreements). New disclosures would provide users of financial statements with information that is useful in

i) evaluating the effect or potential effect of netting arrangements on an entity’s financial position andii) analyzing and comparing financial statements prepared in accordance with TFRSs and other generally accepted accounting standards.

New disclosures have to be provided for all the financial instruments in the statement of financial position that have been offset according to TAS 32. Such disclosures are applicable to financial instruments in the statement of financial position that have not been offset according to TAS 32 but are available for offsetting according to main applicable offsetting regulations or other financial instruments that are subject to a similar agreement. The amendment affects disclosures only and did not have any impact on the consolidated financial statements of the Group.

TAS 1 Presentation of Financial Statements (Amendment) – Presentation of Items of Other Comprehensive Income The amendments to TAS 1 change only the grouping of items presented in statement of profit or loss and other comprehensive income. Items

that could be reclassified (or ‘recycled’) to profit or loss at a future point in time would be presented separately from items which will never be reclassified. The amendment affects presentation only and did not have an impact on the financial position or performance of the Group.

TAS 19 Employee Benefits (Amendment) Numerous changes or clarifications are made under the amended standard. Among these numerous amendments, the most important changes

are removing the corridor mechanism, for determined benefit plans recognizing actuarial gain/(loss) under other comprehensive income and making the distinction between short-term and other long-term employee benefits based on expected timing of settlement rather than employee entitlement.

The Group recognize the actuarial gain and loss in consolidated statement of profit or loss and other comprehensive income after this amendment. The retrospective effects of the amendment to recognise actuarial gain and loss in the other comprehensive income are disclosed in Note 2.

TAS 27 Separate Financial Statements (Amendment) As a consequential amendment to TFRS 10 and TFRS 12, the POA also amended TAS 27, which is now limited to accounting for subsidiaries,

jointly controlled entities, and associates in separate financial statements. This amendment did not have an impact on the financial position or performance of the Group.

TAS 28 Investments in Associates and Joint Ventures (Amendment) As a consequential amendment to TFRS 11 and TFRS 12, the POA also amended TAS 28, which has been renamed as TAS 28 Investments in

Associates and Joint Ventures. By this change, as well as subsidiaries, joint ventures are valued by equity method. The amendments impacts on the


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financial position or performance of the Group are presented in Note 2 retrospectively.TFRS 10 Consolidated Financial Statements TFRS10, TAS 27 Consolidated and Separate Financial Statements address the accounting for consolidated financial statements. A new definition

of control is introduced, which is used to determine which entities are consolidated. This is a principle based standard and require preparers of financial statements to exercise significant judgment. The amendment did not have any impact on the financial position or performance of the Group.

TFRS 11 Joint Arrangements The standard describes the accounting for joint ventures and joint operations with joint control. Among other changes introduced, under the new

standard, proportionate consolidation is not permitted for joint ventures. The amendments impacts on the financial position or performance of the Group are presented in Note 2 retrospectively.

TFRS 12 Disclosure of Interests in Other Entities TFRS 12 requires disclosures about an entity’s interests in associates, joint ventures, subsidiaries and structured entities. The amendments impacts

on the financial position or performance of the Group are presented in Note 2 retrospectively.

TFRS 13 Fair Value Measurement The new Standard provides guidance on how to measure fair value under TFRS but does not change when an entity is required to use fair value. It is

a single source of guidance under TFRS for all fair value measurements. The new standard also brings new disclosure requirements for fair value measurements. The new disclosures are only required for periods beginning after TFRS 13 is adopted. Some of the disclosures about the financial instruments mentioned above, have to be provided in the interim condensed consolidated financial statements according to TAS 34.16 A (j).This amendment will not have an impact on the financial position or performance of the Group.

TFRIC 20 Stripping Costs in the Production Phase of a Surface Mine The Interpretation clarifies when production stripping should lead to the recognition of an asset and how that asset should be measured, both

initially and in subsequent periods. This interpretation is not applicable for the Group and did not have any impact on the financial position or performance of the Group.

Transition Guidance (Amendments to TFRS 10, TFRS 11 and TFRS 12) The amendments change the transition guidance to provide further relief from full retrospective application. The date of initial application is defined

as ‘the beginning of the annual reporting period in which TFRS 10 is applied for the first time’. The assessment of whether control exists is made at ‘the date of initial application’ rather than at the beginning of the comparative period. If the control assessment is different between TFRS 10 and TAS 27/SIC-12, retrospective adjustments should be determined. However, if the control assessment is the same, no retrospective application is required. If more than one comparative period is presented, additional relief is given to require only one period to be restated. For the same reasons TFRS 11 and TFRS 12 has also been amended to provide transition relief. The amendments impacts on the financial position or performance of the Group are presented in Note 2 retrospectively.

Improvements to TFRSs Annual Improvements to TFRSs – 2009 – 2011 cycle, which contains amendments to its standards, is effective for annual periods beginning on or

after 1 January 2013. This project did not have an impact on the financial position or performance of the Group.

TAS 1 Financial Statement Presentation: Clarifies the difference between voluntary additional comparative information and the minimum required comparative information.

TAS 16 Property, Plant and Equipment: Clarifies that major spare parts and servicing equipment that meet the definition of property, plant and equipment are not inventory

TAS 32 Financial Instruments: Presentation: Clarifies that income taxes arising from distributions to equity holders are accounted for in accordance with TAS 12 Income Taxes. The amendment

removes existing income tax requirements from TAS 32 and requires entities to apply the requirements in TAS 12 to any income tax arising from distributions to equity holders.

TAS 34 Interim Financial Reporting: Clarifies the requirements in TAS 34 relating to segment information for total assets and liabilities for each reportable segment. Total assets and

liabilities for a particular reportable segment need to be disclosed only when the amounts are regularly provided to the chief operating decision maker and there has been a material change in the total amount disclosed in the entity’s previous annual financial statements for that reportable segment.

Standards issued but not yet effective and not early adopted Standards, interpretations and amendments to existing standards that are issued but not yet effective up to the date of issuance of the consolidated

financial statements are as follows. The Group will make the necessary changes if not indicated otherwise, which will be affecting the consolidated financial statements and disclosures, after the new standards and interpretations become in effect.

TAS 32 Financial Instruments: Presentation - Offsetting Financial Assets and Financial liabilities (Amended) The amendments clarify the meaning of “currently has a legally enforceable right to set-off” and also clarify the application of the TAS 32 offsetting

criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. These amendments are to be retrospectively applied for annual periods beginning on or after 1 January 2014. The Group does not expect that these amendments will have significant impact on the financial position or performance of the Group.

TFRS 9 Financial Instruments – Classification and measurement As amended in December 2012, the new standard is effective for annual periods beginning on or after 1 January 2015. Phase 1 of this new TFRS 9

introduces new requirements for classifying and measuring financial assets and liabilities. The amendments made to TFRS 9 will mainly affect the


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classification and measurement of financial assets and measurement of fair value option (FVO) liabilities and requires that the change in fair value of a FVO financial liability attributable to credit risk is presented under other comprehensive income. Early adoption is permitted. The Group is in the process of assessing the impact of the amendment on financial position or performance of the Group.

The new standards, amendments and interpretations that are issued by the International Accounting Standards Board (IASB) but not issued by POA The following standards, interpretations and amendments to existing IFRS standards are issued by the IASB but not yet effective up to the date of

issuance of the financial statements. However, these standards, interpretations and amendments to existing IFRS standards are not yet adapted/issued to TFRS by the POA, thus they do not constitute part of TFRS. The Group will make the necessary changes to its consolidated financial statements after the new standards and interpretations are issued and become effective under TFRS.

IFRS 10 Consolidated Financial Statements (Amendment) IFRS 10 is amended to provide an exception to the consolidation requirement for entities that meet the definition of an investment entity. The

exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss in accordance with IFRS 9. The Group does not expect that this amendment will have any impact on the financial position or performance of the Group.

TFRIC Interpretation 21 Levies The interpretation clarifies that an entity recognizes a liability for a levy when the activity that triggers payment, as identified by the relevant

legislation, occurs. It also clarifies that a levy liability is accrued progressively only if the activity that triggers payment occurs over a period of time, in accordance with the relevant legislation. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability should be recognized before the specified minimum threshold is reached. The interpretation is effective for annual periods beginning on or after 1 January 2014, with early application permitted. Retrospective application of this interpretation is required. The interpretation is not applicable for the Group and the Group does not expect that this amendment will have any impact on the financial position or performance of the Group.

IAS 36 Impairment of Assets - Recoverable Amount Disclosures for Non-Financial assets (Amendment) The IASB, as a consequential amendment to IFRS 13 Fair Value Measurement, modified some of the disclosure requirements in IAS 36 Impairment

of Assets regarding measurement of the recoverable amount of impaired assets. The amendments required additional disclosures about the measurement of impaired assets (or a group of assets) with a recoverable amount based on fair value less costs of disposal. The amendments are to be applied retrospectively for annual periods beginning on or after 1 January 2014. Earlier application is permitted for periods when the entity has already applied IFRS 13. The amendment has affected to disclosure principles. The Group does not expect that this amendment will have any impact on the financial position or performance of the Group.

IAS 39 Financial Instruments: Recognition and Measurement - Novation of Derivatives and Continuation of Hedge Accounting (Amendment) In June 2013, the IASB issued amendments to IAS 39 Financial Instruments: Recognition and Measurement that provides a narrow exception to

the requirement for the discontinuation of hedge accounting in circumstances when a hedging instrument is required to be novated to a central counterparty as a result of laws or regulations. The amendments are to be applied retrospectively for annual periods beginning on or after 1 January 2014.The Group does not expect that this amendment will have any impact on the financial position or performance of the Group.

IFRS 9 Financial Instruments – Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39 -IFRS 9 (2013) In November 2013, the IASB issued a new version of IFRS 9, which includes the new hedge accounting requirements and some related amendments

to IAS 39 and IFRS 7. Entities may make an accounting policy choice to continue to apply the hedge accounting requirements of IAS 39 for all of their hedging transactions. The standard does not have a mandatory effective date, but it is available for application now; a new mandatory effective date will be set when the IASB completes the impairment phase of its project on the accounting for financial instruments. The Group is in the process of assessing the impact of the amendment on financial position or performance of the Group.

vii. Seasonality in operations In tourism sector which is one of the operating sectors of the Group, due to being affected by the seasonal factors, sales and operating profit is

higher in second and third quarters of the year comparing with the first and last quarters. Other sectors in which the Group operates does not get affected by the seasonality.

viii. Improvements to IFRSs In December 2013, the IASB issued two cycles of Annual Improvements to IFRSs – 2010–2012 Cycle and IFRSs – 2011–2013 Cycle. Other than the

amendments that only affect the standards’ Basis for Conclusions, the changes are effective as of 1 July 2014.

Annual Improvements to IFRSs – 2010–2012 Cycle

IFRS 2 Share-based Payment: Definitions relating to vesting conditions have changed and performance condition and service condition are defined in order to clarify various

issues. The amendment is effective prospectively.

IFRS 3 Business Combinations Contingent consideration in a business acquisition that is not classified as equity is subsequently measured at fair value through profit or loss

whether or not it falls within the scope of IFRS 9 Financial Instruments. The amendment is effective for business combinations prospectively.

IFRS 8 Operating Segments The changes are as follows: i) Operating segments may be combined/aggregated if they are consistent with the core principle of the standard. ii)

The reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker. The amendments are effective retrospectively.

IFRS 13 Fair Value Measurement Decision Requirements As clarified in the Basis for Conclusions, short-term receivables and payables with no stated interest rates can be held at invoice amounts when the

effect of discounting is immaterial. The amendment is effective immediately.


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IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets The amendment to IAS 16.35(a) and IAS 38.80(a) clarifies that revaluation can be performed, as follows: i) Adjust the gross carrying amount of the

asset to market value or ii) determine the market value of the carrying amount and adjust the gross carrying amount proportionately so that the carrying amount equals to the market value. The amendment is effective retrospectively.

IAS 24 Related Party Disclosures The amendment clarifies that a management entity – an entity that provides key management personnel services – is a related party subject to the

related party disclosures. The amendment is effective retrospectively.

Annual Improvements to IFRSs – 2011–2013 Cycle

IFRS 3 Business Combinations The amendment clarifies that: i) Joint arrangements are outside the scope of IFRS 3, not just joint ventures ii) The scope exception applies only to

the accounting in the financial statements of the joint arrangement itself. The amendment is effective prospectively.

IFRS 13 Fair Value Measurement The portfolio exception in IFRS 13 can be applied to the contracts within the context of IAS 39, not just financial assets and financial liabilities. The

amendment is effective prospectively.

IAS 40 Investment Property The amendment clarifies the interrelationship of IFRS 3 and IAS 40 when classifying property as investment property or owner-occupied property.

The amendment is effective prospectively. These amendments did not have an impact on the financial position or performance of the Group.

Resolutions promulgated by the Public Oversight Authority In addition to those mentioned above, the POA has promulgated the following resolutions regarding the implementation of Turkish Accounting

Standards. “The financial statement examples and user guide” became immediately effective at its date of issuance; however, the other resolutions shall become effective for the annual reporting periods beginning after 31 December 2012.

2013-1 Financial Statement Examples and User Guide The POA promulgated “financial statement examples and user guide” on May 20, 2013 in order to ensure the uniformity of financial statements and

facilitate their audit. The financial statement examples within this framework were published to serve as an example to financial statements to be prepared by companies obliged to apply Turkish Accounting Standards, excluding financial institutions established to engage in banking, insurance, private pensions or capital market. The Group has made the classification stated in Note 2.iv in order to comply with the requirements of this regulation.

2013-2 Accounting of Combinations under Common Control In accordance with the resolution it has been decided that i) combination of entities under common control should be recognized using the pooling

of interest method, ii) and thus, goodwill should not be included in the financial statements and iii) while using the pooling of interest method, the financial statements should be prepared as if the combination has taken place as of the beginning of the reporting period in which the common control occurs and should be presented comparatively from the beginning of the reporting period in which the common control occurred. This resolution did not have any impact on the consolidated financial statements of the Group.

2013-3 Accounting of Redeemed Share Certificates Clarification has been provided on the conditions and circumstances when the redeemed share certificates shall be recognized as a financial

liability or equity based financial instruments. This resolution did not have any impact on the consolidated financial statements of the Group.

2013-4 Accounting of Cross Shareholding Investments If a subsidiary of an entity holds shares of the entity then this is defined as cross shareholding investment. Accounting of this cross investment is

assessed based on the type of the investment and different recognition principles adopted accordingly. With this resolution, this topic has been assessed under three main headings below and the recognition principles for each one of them has been determined.

a. The subsidiary holding the equity based financial instruments of the parent,b. The associates or joint ventures holding the equity based financial instruments of the parentc. The parent’s equity based financial instruments are held by an entity, which is accounted as an investment within the scope of TAS 39 and TFRS 9

by the parent.

This resolution did not have any impact on the consolidated financial statements of the Group.

ix. Summary of significant accounting policies:

Financial instruments : The Group has classified its financial assets as cash and cash equivalents, financial investments held to maturity, available for sale financial assets,

financial assets held for trading and trade receivables. Classification is based on the purchase purpose of financial assets. Financial liabilities consists of loans taken from banks and trade payables. Management performs classification of financial assets on the date of purchase of the financial.


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Financial assets

Cash and cash equivalents Cash and cash equivalents include cash on hand, cash in banks, cheques received, cash in transit and marketable securities.

Cash on hand accounts consist of deposit accounts in TL and foreign currency. Turkish Lira deposit accounts are stated at booked values and foreign currency accounts are translated into Turkish Lira at the foreign currency rate issued by the Central Bank as at the reporting date.

Bank accounts consist of demand & time deposits and the related interest accruals. Turkish Lira deposit accounts are stated at booked values and foreign currency accounts are translated into Turkish Lira at the foreign currency rate issued by the Central Bank as at the reporting date.

The cheques received with maturity dates exceeding the reporting date are stated in trade receivables and are rediscounted at a rate equivalent to the interest rate of government bonds constituted in stock markets or other organized markets. Foreign currency cheques are rediscounted at Libor, Euribor, and Tibor rates.

Fair value As the foreign currency cash and cash equivalents are translated into Turkish Lira at the foreign exchange rates applicable at the reporting date, it

is assumed that the fair values of these assets approximate to their book values.

As the deposit accounts, cash, and cheques received are converted into cash in short terms, and as there is no risk of value decrease, their book values are deemed to approximate to their fair values.

Financial assets held to maturity Private sector bonds with fixed or predetermined payment conditions and fixed maturities which are meant to be held until the maturity date for

which the necessary conditions including the funding capacity are fulfilled in order to be kept until the maturity date are classified as financial assets to be held until maturity. The initial recording of the investments to be held until maturity is stated at cost. Investments to be held until maturity are stated at their values discounted by using the effective interest rate method.

Available for sale financial assets After initial recognition, investments that are classified as available for sale are measured at fair value. Gains or losses on available-for-sale

investments are recognized in equity separately until the investment is sold, collected or otherwise disposed of, or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is included in the consolidated income statement.

Trading securities Trading securities are securities, which were either acquired for generating a profit from short term fluctuations in price or similar. All trading

securities are initially recognized at their fair values at the acquisition date. After initial recognition, trading securities are re-measured at fair value. All related income and loss for fair value accounting is recognized in the consolidated income statement.

Trade receivables Trade receivables are financial assets incurred through selling goods and services directly to the customers. Notes receivable, post dated cheques,

and customers are subject to rediscount.

Fair value Discounted trade receivables for which provisions are also accrued for doubtful receivables are assumed to approximate to the fair values of these

assets.

Impairment of financial assets Financial assets or financial asset groups are assessed for indicator of impairment at each statement of financial position date. Financial assets

are impaired where there is objective evidence of impairment as a result of one or more events occurred after the initial recognition of the financial asset and that loss event has an impact on the estimated future cash flows of the financial assets that can be reliably estimated. For loans and receivables the amount of impairment is the difference between the assets’ carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The Group follows its receivables separately and general provision does not exist for these receivables.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Changes in the carrying amount of the allowance account are recognized in consolidated income statement.

Financial liabilities

Short and long term bank loans and trade payables Short and long term bank loans are stated at the value computed through addition of the principal amount and the interest expenses accrued as of the reporting date, discounted as per the effective interest method. Trade payables are financial liabilities incurred through purchasing goods and


93

services directly from the suppliers, stated at their discounted values.Fair value The fair value of the short and long term bank loans are assumed to be equivalent to the recorded values computed by adding the accrued interest

liabilities calculated over the effective interest rate end of the reporting period on the cost of the mentioned financial debts. Similarly, discounted cost values of trade payables are considered to be equivalent to their fair values.

Borrowing costs Borrowing costs are recognized as expense. Borrowing costs related to qualifying assets are included directly in the cost of the related qualifying asset.

Upon completion of the necessary operations to make the qualifying asset ready for use or sale, the capitalization of the borrowing costs are discontinued.

Inventories Inventories are stated at the lower of cost and net realizable value. The cost of inventories comprises all costs incurred in bringing the inventories

to their present location and condition. The components of the cost included in inventories are material, labor and overhead costs. The loan costs are not included in inventories. Cost is determined by using the weighted moving average cost method for the raw material, supplies, semi finished products, finished products, merchandise and other inventories.

Real estates held for trading stated within the inventories are recognized at cost adjusted as per the inflationary effects. However, the expertise value which constitutes the basis of fair value of real estates held for trading in inventories is compared with the adjusted acquisition costs, and in the case that the expertise value is lower than the adjusted value, provision is made for value decrease as per the conditions stated in the “Impairment of non- financial assets” section. Such impairment is determined and applied separately for each real estate held for trading.

Property, plant and equipment Property, plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided for property, plant and equipment on a

straight-line basis over their estimated useful lives. Land is not depreciated as it is deemed to have an indefinite useful life.

The depreciation periods for property, plant and equipment, which approximate the economic useful lives of such assets, are as follows:

Buildings 3-50 years Land improvements 4-50 years Machinery and equipment 2-40 years Motor vehicles 2-20 years Furniture and fixtures 2-25 years Other property, plant and equipment 4-20 years

Useful life and the depreciation method are constantly reviewed, and accordingly, parallels are sought between the depreciation method and the period and the useful life to be derived from the related asset.

Repairs and maintenance are charged to the income statements during the period in which they are incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset.

Machinery and equipment are capitalised and amortised when their capacity is fully available for use and their physical situations meet the determined production capacities.

Gains or losses on disposals of property, plant and equipment are determined by comparing proceeds with their restated carrying amounts and are included in the related income and expense accounts, as appropriate.

Intangible assets Intangible assets are initially recognised at acquisition cost and amortised on a straight-line basis over their estimated useful lives. Intangible

assets with indefinite useful lives are not amortised, however are tested for impairment annually. Whenever there is an indication that the intangible is impaired, the carrying amount of the intangible asset is reduced to its recoverable amount and the impairment loss is recognised as an expense.

The amortisation periods for intangible assets, which approximate the economic useful lives of such assets, are as follows:

Rights 2-27 years Leasehold improvements 2-33 years Other intangible assets 5 years

Investment properties: Investment properties are properties held to earn rentals or for capital appreciation or both, recognized at the restated acquisition cost less

accumulated depreciation and impairment losses.

Depreciation is calculated on pro rata basis as per the straight line method taking into consideration the useful lives of the investment properties. The depreciation rates determined and applied for investment properties are stated below:


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Buildings 20-50 yearsImpairment of non-financial assets The carrying amounts of assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount may not

be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognized in the consolidated statement of profit or loss and other comprehensive income. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). At each reporting date, non-financial assets are reviewed for any possible impairment.

Leases The Group as lessee

Finance leases Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the

inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against statement of profit or loss and other comprehensive income. Leased assets are depreciated over the useful life of the asset.

Motor vehicles 5 years

Operating leases Leases of assets under which substantially all the risks and rewards of ownership are effectively retained by the lessor, are classified as operating

leases. Lease payments under an operating lease are recognized as an expense on a straight-line basis over the lease term.

The Group as lessor

Operating leases Lease income from operating leases is recognized in statement of profit or loss and other comprehensive income on a straight-line basis over the

lease term. Prepaid leases are booked as deferred revenue and recognized as an income over the lease term. Initial direct costs incurred by the Group in negotiating and arranging an operating lease is added to the carrying amount of the leased asset and recognized as an expense over the lease term on the same basis as the lease income.

Effects of changes in exchange rates

Transactions and balances Transactions in foreign currencies (i.e. any currency other than the functional currency) are initially recorded at the functional currency rate ruling

at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the statement of financial position date and all differences are taken to the consolidated statement of profit or loss and other comprehensive income. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Group companies The assets and liabilities of the foreign subsidiaries are translated into TL at the rate of exchange ruling at the statement of financial position date

and their statement of profit or loss and other comprehensive income are translated at the average exchange rates for the year. The exchange differences arising on the translation are taken directly to a separate component of equity as currency translation difference.

Business combinations and goodwill A business combination is evaluated as the bringing together of separate entities or businesses into one reporting entity.

Business combinations realised before 1 January 2011 have been accounted for by using the purchase method in the scope of IFRS 3 “Business combinations” prior to the amendment. Under this method, the cost of a business combination is the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the acquirer, in exchange for control of the acquiree and in addition, any costs directly attributable to the business combination. If a business combination contract includes clauses that enable adjustments in the cost of business combination depending on events after the acquisition date; in case the adjustment is measurable and more probable than not, than cost of business combination at acquisition date is adjusted.

Any excess of the cost of acquisition over the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities is accounted for as goodwill in the consolidated financial statements.

Goodwill recognised in business combinations is tested for impairment annually (as of December 31) or more frequently if events or changes in circumstances indicate impairment, instead of amortisation. Impairment losses on goodwill are not reversed. Goodwill is allocated to cash-generating units for the purpose of impairment testing.

Any excess of the Group’s share in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of the business


95

combination is accounted for as income in the related period.Related parties Parties are considered related to the company (will be used as reporting entity in this standard) if;

(a) A person or a close member of that person’s family is related to a reporting entity if that person:

(i) has control or joint control over the reporting entity;(ii) has significant influence over the reporting entity; or(iii) is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.

(b) An entity is related to a reporting entity if any of the following conditions applies:

(i) The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party. (iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.(v) The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity.

If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity.(vi) The entity is controlled or jointly controlled by a person identified in (a).(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent

of the entity).

A related party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a price is charged.

Board Members, General Manager and Assistant General Managers are stated as executive managers by the Group.

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

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

The current income tax charge is calculated in accordance with the tax laws enacted or substantively enacted at the statement of financial position date in the countries where the subsidiaries of the Group operate.

Deferred income tax is provided in full, using the liability method, on all temporary differences arising between the tax bases of assets and liabilities and their carrying values in the consolidated financial statements.

Deferred tax liabilities are recognized for all taxable temporary differences, where deferred tax assets resulting from deductible temporary differences are recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary difference can be utilised.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities, and deferred taxes relate to the same taxable entity and the same taxation authority.

The Group recognises deferred tax asset for all deductible temporary differences arising from investments in subsidiaries and joint ventures, to the

extent that, and only to the extent that, it is probable that:

• The temporary difference will reverse in the foreseeable future; and • Taxable profit will be available against which the temporary difference can be utilised.

The Group recognises deferred tax liability for all taxable temporary differences associated with investments in subsidiaries and joint ventures except to the extent that both of the following conditions are satisfied:

• The parent is able to control the timing of the reversal of the temporary difference; and • It is probable that the temporary difference will not reverse in the foreseeable future.

Employee benefits

Defined benefit plan Under Turkish Labour Law Article 25/II, the Group is required to pay termination indemnities to each employee who completes one year of service

and whose employment is terminated upon causes that qualify the employee to receive retirement pay liability is called up for military service, leaves within one year after marriage (women only), and to those employees who retire or die. The amount payable consists of one month’s salary for each year of service. This entitlement is limited to TL 3.254,44 in respect of each year of service as of 31 December 2013 (31 December 2012 – TL 3.033,98).


96

The Group has determined the retirement pay liability stated in the accompanying financial statements as per the recognition and valuation

principles stated in TAS 19 “Employee Benefits”. As the characteristics of the retirement pay liabilities are similar to the “Post Employment Benefit Plans” stated in this standard, these liabilities are calculated and stated in the financial statements on the basis of below mentioned “Proposed Unit Loan Method” and other various assumptions.

- The dates that the employees will gain their pension rights are determined with respect to the prevailing social security laws with consideration to their past employment durations.

- In calculating the current value of future liabilities that may arise due to the retirement or contract termination of an employee, it is assumed that the current salaries and wages or, if higher than the value of the retirement pay liability upper limit determined by the Labour Law for 31 December 2013, the retirement pay liability upper limit, to remain constant for restatement purposes and this value is reduced by the actual discount rate of 10,00 % (31 December 2012- 8,50%) calculated based upon the assumption that the expected annual inflation rate will be 6,50% (31 December 2012 – 5,00%) and the expected discount rate will be 3,29% (31 December 2012 – 3,33%) which represents the proposed average interest rate per annum of the government bonds, in order to determine the current net value of the retirement pay liability at the statement of financial position date.

Defined contribution plan The Group has to compensate the Social Security Contribution of the employees. As long as this is compensated, there is no any other obligation for

the Group. Social Security Contributions are classified as personnel expenses as of the accrual date.

Revenues and expenses The accruals basis of accounting is applied for the recognition of revenues and expenses. The accrual concept requires that revenue, income and

profits should be matched with costs, expenses and losses belonging to the same period.

Interest revenue accrual is calculated over the effective interest rate. In the event that there is unpaid interest accrual before acquisition of a marketable security bearing interest, the interest collected subsequently is allocated to periods before and after acquisition, and only the part that relates to the period after acquisition is recognized as income in the financial statements.

Leasing income/expenses originating from operational leasing are recognized in the financial statements as income/expense on straight line basis throughout the leasing period.

Dividend income is recognized at the time when collection right is established.

Revenue Revenue is measured at the fair value of the consideration received or receivable.

Revenue from the sale of goods is recognized when the entity has transferred to the buyer the significant risks and rewards of ownership of the goods, when the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, when the amount of revenue can be measured reliably, when it is probable that the economic benefits associated with the transaction will flow to the entity, and when the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue is recognized only when the service cost is incurred or estimated reliably, when it is probable that the economic benefits associated with

the transaction will flow to the entity. In addition to the above stated criteria, when a service is performed with effect on more than one accounting period, and when the cost incurred or to be incurred and the rate of completion can be measured reliably, the service revenue is recognized as per the “percentage of completion method.”

Maturity difference income and expense related to forward sales and acquisitions are calculated by effective interest rate method throughout their maturities and recognized as financial income and expense on accrual basis.

The construction contracts related to the deferred construction works undertaken as a contractor are accounted by the percentage of completion method. The contract income and expenses are recognized as income and expense items if a reliable assumption can be made for the value of returns on the construction contract. The comparison of the total contract expenses incurred at the end of the related accounting period with respect to the total forecast contract costs represents the percentage of completion. This ratio is utilized in the recognition of contract income for the current period in the financial statements.

If a reliable forecast cannot be made on the outcome of the construction contracts, the total contract costs for the period of undertaking is recognized in the financial statements, whereas in regard to the construction proceeds, only the portion corresponding to the recoverable volume of the undertaken contract costs are recognized.

If the total contract costs are likely to exceed the total contract proceeds, the expected loss is recognized as expense in the financial statements.

Earnings / (loss) per share Earnings / (loss) per share is calculated by dividing the net profit or loss for the period attributable to ordinary shareholders by the weighted average


97

number of ordinary shares outstanding during the period. Companies in Turkey can increase their share capital through distributing shares (bonus shares) from retained earnings and differences arising

from inflation adjustment in changes in equity to their current shareholders on a pro rata basis. When calculating profit/(loss) per share, these bonus shares are recognized as issued shares. Therefore, the weighted average of shares used in the calculation of profit / (loss) per share is derived through retroactive application with respect to bonus shares.

Events after the reporting period The Group updates disclosures that relate to conditions that existed at the end of the reporting period to reflect any new information that is received

after the reporting period about those conditions. Non-adjusting events should be disclosed if they are of material importance.

Non-current assets held for sale The Group classifies a non-current asset as held for sale if its carrying amount will be recovered principally through a sale transaction rather than

through continuing use and does not depreciate a non-current asset while it is classified as held for sale. The Group measures assets held for sale at the lower of its carrying amount and fair value less costs to sell.

Contingent assets and liabilities Assets and liabilities that originate from past incidents and whose presence is not fully under the company management control as it can only be

confirmed through the realization of one or more indefinite incidents to take place in the future are not included in the financial statements and are considered as conditional assets and liabilities.

Provisions Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of

resources will be required to settle the obligation, and a reliable estimate of the amount can be made.

Segment reportings For the years ended 31 December 2013 and 2012, the principle activities of Alarko Group is classified in six sectors, namely, holding, tourism,

industry and merchandising, energy, contracting/land development and fishery.

Service concession arrangements TFRS Comment 12 addresses how the infrastructural investments made and services provided by the entities (operators) who have gained operating

right for a defined period of time by signing public service concession arrangements should be accounted for. TFRS Comment 12 expresses that the investments realized by operators related to projects deemed within the scope of the Comment are required to be accounted for as financial assets and/or intangible assets as per the terms of agreement and not as buildings, fixed assets or properties.

Berdan HEPP, Hasanlar HEPP, and Tohma HEPP agreements signed by the Group are deemed within the scope of TFRS Comment 12, and the Group has classified the net book values of tangible assets falling within the scope of TFRS Comment 12 under the intangible assets account.

Cash flow statement Cash flows during the period are classified and reported by operating, investing and financing activities in the cash flow statements.

Cash flows from operating activities represent the cash flows generated from the Group’s activities; such as, holding, tourism, industry and merchandising, energy, contracting / land development, and fishery products.

Cash flows related to investing activities represent the cash flows that are used in or provided from the investing activities of the Group (tangible and intangible assets and financial assets).

Cash flows arising from financing activities represent the cash proceeds from the financing activities of the Group and the repayments of these funds.

Significant accounting estimates, assumptions and decisions Preparation of consolidated financial statements requires the usage of estimations and assumptions which may affect the reported amounts of

assets and liabilities as of the statement of financial position date, disclosure of contingent assets and liabilities and reported amounts of income and expenses during the financial period. The estimations and assumptions may differ from the actual results. Estimations and assumptions are reviewed periodically, adjusted if deemed necessary and reflected to the consolidated statement of profit or loss and other comprehensive income in the period they occurred.Assumptions which might have a material effect on the amounts reflected in statement of financial position or might have a material effect in the future are summarized below.

a) Total cost and profitability of projects within the context of IAS 11 “Construction Contracts” are determined and for the projects which is expected to be completed with a loss, expense provision is recognized.

b) Group management have made significant assumptions on determining useful lives of tangible and intangible assets based on the experiences of the technical employees.

c) Debtors credibilities, historical payment performances and restructuring conditions if there is debt restructuring is considered to determine the


98

impairment of trade receivables factors.d) The possibilities of losing the case and the liabilities that will arise if the case is lost is evaluated by the Group’s legal counselor and by the

management team taking into account expert opinions. The management determines the amount of the provisions based on the best estimate to calculate the legal case provisions.

e) Discounted inventory price list is used to calculate inventory impairment. Where the sales price cannot be predicted, technical personnel’s opinion and inventory waiting time is considered. If expected net realizable value is less than cost, the Company should allocate provisions for inventory impairment.

f) Group performs impairment test for goodwill annually or if there is an indication of impairment often. Goodwill has been tested for impairment as of 31 December 2013 by comparing book value of the goodwill with recoverable amount. Recoverable amount has been determined by value in use method. Before tax free cash flows which is based on financial budgets approved by the board of directors has been used in the calculation of recoverable amount.Growth on cash flows are not expected for after the five-years period. Projected cash flow before tax has been discounted by using the ratio of 7,12 % determine the present value. Data such as growth rate of the market, gross domestic income per capita and price index has been obtained from external sources. Assumptions regarding sales prices, operating capital necessities and property, plant and equipment investments has been determined using the Group’s expectations and actual figures of prior periods.

3. Business combinations Any business combination have not been realized in period 1 January-31 December 2012 .

Business combinations in current period are as presented below:

Alsim Alarko Sanayi Tesisleri ve Ticaret A.Ş., the subsidiary of Group, has purchased Deyaar Gayrimenkul Geliştirme A.Ş.’s 50% shares from Deyaar Development PJSC at a total TL 45.153.329. The records are provisionally made due to the measurement of identifiable assets and acquired liabilities are continuing as of 31 December 2013.According to IFRS 3 “Business Combinations”, provisional accounting entry has to be adjusted in following 12 months. Following the adjustment of accounting entry, the fair values and the recorded goodwill of identifiable assets and liabilities acquired can be conceivably adjusted.

Cash and cash equivalents 16.129.516 - 16.129.516

Inventories 22.600.126 59.487.874 82.088.000

Prepaid expenses 58.464 - 58.464

Current tax related assets 1.891.779 - 1.891.779

Other current assets 187.933 - 187.933

Trade payables (10.107) - (10.107)

Employee benefit obligations (13.025) - (13.025)

Other payables (984.545) - (984.545)

Period income tax liability (2.617.236) - (2.617.236)

Deferred tax liability (27.860) (11.897.574) (11.925.434)

Fair value of net assets 37.215.045 47.590.300 84.805.345

Acquition price 45.153.329

Value of shares before acquisition as of the acquisition date 42.402.672

Less: Fair value of net assets (84.805.345)

Goodwill 2.750.656

Before the acquisition, the shares owned by the Group (49,92%) ,which was valued by equity method, was TL 36.587.854 and on the acquisition date the fair value was identified as TL 42.402.672. The revaluation surplus amounting to TL 5.814.818 is recorded in other income from operating activities.

Fair value TLFair value

adjustmentsCarrying amount


99

4. Segment reportingAlarko Groups’ sectors are classified in six sectors; holding, tourism, industry and merchandising, energy, contracting/land development, and fishery. Segment reporting is prepared based on these business sectors.

As of 31 December 2013, segment reporting is as follows (TL) :

ASSETS Current assets

Cash and cash equivalents 91.619.998 19.974.809 5.613.057 12.121.234 250.166.787 - - 379.495.885Financial assets 76.922.403 - - - 129.292.842 - - 206.215.245Trade receivables 961.426 2.325.978 4.996 27.810.741 813.692.977 - (515.272.712) 329.523.406Other receivables 16.480 675 14 55.528 101.410.800 - (14.714.069) 86.769.428Inventories 2.543 978.190 - 5.306.048 214.898.934 - (25.435.391) 195.750.324Prepaid expenses 206.485 634.749 7.659 751.710 39.302.472 - - 40.903.075Current tax related assets 217.352 42.039 8.563 33.439 3.091.902 - - 3.393.295Other current assets - 1.635.475 40.210 17.277.743 19.765.097 - - 38.718.525

Non-current assets Trade receivables - - - - 20.427.591 - - 20.427.591Other receivables 8.450 998.396 596 8.158 9.102.020 - 4.645.440 14.763.060Financial assets 570.926 - 4.050 - 426.017 - (25.912) 975.081Investments accounted by equity method 393.196.634 59.131 113.217.696 213.873.696 491.216.116 7.339.976 (755.573.505) 463.329.744Investment properties - - - - 185.747.726 - (158.585.316) 27.162.410Property, plant and equipment 1.643.295 17.608.729 2.547.662 378.775.635 266.416.370 - 17.892.914 684.884.605Intangible assets 33.527 7.533.465 - 4.725.078 368.891 - 12.619.754 25.280.715Prepaid expenses 3.939 107.807 - 2.392.075 300.807 - (710.502) 2.094.126Deferred tax asset 350.505 911.452 172.436 13.199.332 70.815.480 - 2.265.398 87.714.603Other current assets 19 - - - 13.150.330 - - 13.150.349

Total assets 565.753.982 52.810.895 121.616.939 676.330.417 2.629.593.159 7.339.976 (1.432.893.901) 2.620.551.467

LIABILITIES Current liabilities

Short term financial liabilities - - - 46.884.004 16.105.551 - - 62.989.555Short term portion of long term financial liabilities - - - 19.516.903 17.290.732 - - 36.807.635Trade payables 189.904 16.088.147 4.537 36.546.224 723.400.580 - (550.373.945) 225.855.447Employee benefit obligations 304.374 733.235 8.812 422.914 3.401.190 - - 4.870.525Other payable 73.127 44.408 16.330 707.895 10.016.727 - - 10.858.487Deferred Income - 10.560.722 - 3.751.879 483.023.735 - - 497.336.336Income tax payable 886.858 (325.058) 104.602 149.735 2.659.391 - - 3.475.528Short term provisions - - - - 4.148.307 - - 4.148.307Other current liabilities - - - 964 7.437.749 - - 7.438.713

Non-current liabilities Long term financial liabilities - - - 149.245.945 16.644.000 - - 165.889.945Other payables - - - - 93.181.675 - - 93.181.675Deferred income - 13.681 - 1.843.417 59.434.192 - - 61.291.290Long-term provisions 1.136.837 3.375.038 735.259 654.740 6.281.975 - - 12.183.849Deferred tax liability 12.627 316.727 - 18.367.934 100.593.811 - 1.065.886 120.356.985

Equity Paid-in share capital 223.467.000 5.907.067 29.253.883 78.700.780 249.742.000 - (363.603.730) 223.467.000Cross shareholding adjustment (-) - - - - - - (787.396) (787.396)Revaluation and remeasurement gain / loss (1.891) 491.487 (51.543) (526.807) 77.624 (21.120) - (32.250)Currency translation differences - - - - 19.029.436 - - 19.029.436Valuation and classification gain / loss 118.960.624 - 371.205 1.153.043 49.742.602 - (170.160.153) 67.321Restricted reserves 7.814.776 578.253 506.601 2.616.232 5.996.844 - (9.697.930) 7.814.776Retained earnings / (accumulated losses) 195.346.101 10.795.132 74.473.789 286.806.225 578.282.987 6.743.785 (401.808.043) 750.639.976Net income 17.563.645 4.232.056 16.193.464 29.488.390 183.102.051 617.311 (66.950.432) 184.246.485 Non-controlling interest - - - - - - 129.421.842 129.421.842

Total liabilities and equity 565.753.982 52.810.895 121.616.939 676.330.417 2.629.593.159 7.339.976 (1.432.893.901) 2.620.551.467

Holding Tourism

Industryand

merchandising Energy

Contracting and land

developmentFishery

products

Elimination and

classification Total

Holding Tourism

Industryand



developmentFishery

products

Elimination and



100

Revenue (Outside the Group (net) 1.773.109 88.410.290 97.065 81.528.707 1.089.419.868 - - 1.261.229.039Revenue (Within the Group) 5.000.042 - 84.918 5.810 100.274.987 - (105.365.757) -Cost of sales (Outside the Group) (-) (3.183.216) (52.991.915) (80.367) (84.291.170) (942.175.781) - - (1.082.722.449)Cost of sales (Within the Group) (-) (5.050.849) - (72.631) (380.895) (68.194.355) - 73.698.730 -

Gross profit / (loss) (1.460.914) 35.418.375 28.985 (3.137.548) 179.324.719 - (31.667.027) 178.506.590 Sellings, marketing anddistribution expenses (-) - (6.641.419) - - - - - (6.641.419)General administrative expenses (-) (2.402.547) (28.379.064) (723.150) (4.338.919) (68.728.175) - 12.275.944 (92.295.911)Other income from operating activities 20.277.319 6.498.186 2.320.487 3.346.027 180.672.083 - 5.343.637 218.457.739Other expense from operating activities (-) (685.443) (1.565.124) (658) (790.799) (105.462.071) - (1.822.230) (110.326.325)

Operating profit / (loss) 15.728.415 5.330.954 1.625.664 (4.921.239) 185.806.556 - (15.869.676) 187.700.674 Profit / Loss from Investments accounted by equity method - - 14.884.968 39.202.407 14.814.488 617.311 1.359.231 70.878.405Income from investment activites 5.320.062 46.987 13.158 5.280.955 17.190.807 - (23.925.925) 3.926.044Expenses from investment activities (-) (322.985) (10.464) - (14.923) (101.849) - 64.515 (385.706)

Operating profit /loss before financial expenses 20.725.492 5.367.477 16.523.790 39.547.200 217.710.002 617.311 (38.371.855) 262.119.417 Financial expenses (-) - (66.923) (3.424) (13.362.233) (4.991.161) - - (18.423.741)

Profit /loss from continued operations before tax 20.725.492 5.300.554 16.520.366 26.184.967 212.718.841 617.311 (38.371.855) 243.695.676

Tax income / expense for the period (3.199.083) (998.656) (321.345) (315.124) (7.631.876) - - (12.466.084)Deferred tax income / (expense) 37.236 (69.842) (5.557) 3.618.547 (21.984.914) - (4.032.630) (22.437.160)

Tax income / expense from continued operations (3.161.847) (1.068.498) (326.902) 3.303.423 (29.616.790) - (4.032.630) (34.903.244)

Net profit / loss from continued operations 17.563.645 4.232.056 16.193.464 29.488.390 183.102.051 617.311 (42.404.485) 208.792.432 Other comprehensive income not to be reclassified to profit or loss Revaluation and remeasurement gain / loss - - - - 157.811 - - 157.811Actuarial gains /lossess arising from defined benefit plans (6.475) 46.725 (10.273) (31.608) (128.543) - - (130.174)Share of other comprehensive income of investments accounted by equity method to be reclassified in profit/ loss - - (160.328) (108.978) (34.876) (21.381) - (325.563)Deferred tax expense / income 1.295 (9.454) 34.118 28.113 30.540 4.276 - 88.888 Other comprehensive income not to be reclassified to profit or loss Foreign currency translation differences - - - - (253.945) - - (253.945)Share of other comprehensive income of investments accounted by equity method to be reclassified in profit/ loss - - - - 10.515.977 - - 10.515.977Revaluation and reclassification gain / loss of financial assets hold for sale - - - - (58.779) - - (58.779)

Total comprehensive income 17.558.465 4.269.327 16.056.981 29.375.917 193.330.236 600.206 (42.404.485) 218.786.647 Distribution of profit / loss for the period Non-controlling interest - - - - - - 24.545.947 24.545.947Parent company shares 17.563.645 4.232.056 16.193.464 29.488.390 183.102.051 617.311 (66.950.432) 184.246.485 Distribution of total comprehensive income Non-controlling interest - - - - - - 24.546.878 24.546.878Parent company shares 17.558.465 4.269.327 16.056.981 29.375.917 193.330.236 600.206 (66.951.363) 194.239.769

TotalHolding Tourism

Industryand



developmentFishery

products

Elimination and

classification


101

Current assets Cash and cash equivalents 116.482.786 11.749.363 4.324.949 1.190.195 188.215.056 - - 321.962.349Financial assets 77.245.388 - - - 106.977.778 - - 184.223.166Trade receivables 578.366 2.727.320 2.099 10.599.975 219.622.736 - (131.103.759) 102.426.737Other receivables 79 675 170 61.452 31.849.406 - (4.843.057) 27.068.725Inventories 5.668 917.171 - 3.046.332 49.994.058 - (19.418.373) 34.544.856Prepaid expenses 272.962 474.382 6.743 898.349 13.416.784 - - 15.069.220Assets related to current tax 241.590 283.958 6.697 155.269 2.927.495 - - 3.615.009Other current assets - 841.007 49.770 5.594.713 21.683.137 - - 28.168.627 Non-current assets Financial investments 566.876 - - - 392.912 - 40.945 1.000.733Trade receivables - - - - 10.583 - - 10.583Other receivables 8.449 904.809 597 9.076 430.948 - 8.971.948 10.325.827Investments accounted by equity method 433.077.763 59.130 101.289.205 179.057.694 515.565.788 6.739.767 (770.029.990) 465.759.357Investment properties - - - - 72.969.300 - (52.224.916) 20.744.384Property, plant and equipment 1.708.129 17.332.072 2.750.022 258.316.917 128.609.435 - 23.576.634 432.293.209Intangible assets 65.749 8.073.832 - 5.799.240 232.740 - 9.745.374 23.916.935Prepaid expenses 5.222 183.897 - 14.909.514 304.057 - - 15.402.690Deferred tax assets 193.876 994.122 175.941 8.826.419 23.315.694 - 6.203.356 39.709.408Other non-current assets 19 - - - 4.525.261 - - 4.525.280

Total assets 630.452.922 44.541.738 108.606.193 488.465.145 1.381.043.168 6.739.767 (929.081.838) 1.730.767.095

Total

Total

ASSETS

LIABILITIES

Current liabilities Short term financial liabilities - 320.637 - 21.202.951 2.521.397 - - 24.044.985Short term portion of long term /financial liabilities - - - 5.850.274 17.600.686 - - 23.450.960Trade payables 186.364 11.985.084 5.037 27.263.757 193.622.656 - (136.590.795) 96.472.103Employee benefit obligations 201.915 718.551 4.222 263.843 2.297.054 - - 3.485.585Other payable 124.432 570.782 14.455 1.114.012 25.635.508 - (5.749.778) 21.709.411Deferred Income - 9.833.337 - 2.765.539 164.075.897 - - 176.674.773Income tax payable 1.567.704 - 43.438 - 6.138.205 - - 7.749.347Short term provisions - - - - 7.148.954 - - 7.148.954Other current liabilities - - - 89.336 9.015.714 - - 9.105.050 Non-current liabilities Long term financial liabilities - - - 56.533.045 33.288.000 - - 89.821.045Trade payables - - - - 636.000 - - 636.000Other payables - - - - 61.546.001 - - 61.546.001Deferred income - 18.797 - 1.932.752 48.997.395 - - 50.948.944Long-term provisions 969.155 2.995.678 752.783 562.909 5.555.090 - - 10.835.615Deferred tax liability 17.668 320.101 - 17.647.136 19.900.243 - 1.018.599 38.903.747 Equity Paid-in share capital 223.467.000 5.907.067 29.253.883 48.700.780 212.048.287 - (295.910.017) 223.467.000Cross shareholding adjustment (-) - - - - - - (787.396) (787.396)Defined benefit plans remeasurement gain / loss (4.887) 453.568 85.331 (415.725) 63.375 (4.018) - 177.644Valuation and classification gain / loss 188.822.199 - 526.220 2.751.553 67.446.542 - (259.420.340) 126.174Currency translation differences - - - - 8.764.296 - - 8.764.296Restricted reserves 6.578.609 578.253 485.175 2.616.232 2.643.963 - (6.323.623) 6.578.609Retained earnings (accumulated losses) 183.897.861 10.685.041 66.024.429 267.725.118 445.626.544 5.786.772 (290.751.578) 688.994.187Net income 24.624.902 154.842 11.411.220 31.861.633 46.471.361 957.013 (40.717.062) 74.763.909 Non-controlling interest - - - - - - 106.150.152 106.150.152

Total liabilities and equity 630.452.922 44.541.738 108.606.193 488.465.145 1.381.043.168 6.739.767 (929.081.838) 1.730.767.095

As of 31 December 2012, segment reporting is as follows (TL) :

Holding Tourism

Industryand



developmentFishery

products

Elimination and

classification

Holding Tourism

Industryand



developmentFishery

products

Elimination and

classification


102

Revenue (Outside the Group (net) 1.704.704 75.494.599 72.143 112.166.657 345.615.864 - - 535.053.967Revenue (Within the Group) 4.393.909 26.583 69.758 - 82.208.880 - (86.699.130) -Cost of sales (Outside the Group) (-) (3.457.478) (47.264.374) (60.377) (114.432.239) (285.632.762) - - (450.847.230)Cost of sales (Within the Group) (-) (4.437.874) (37.551) (60.921) (372.858) (52.327.604) - 57.236.808

Gross profit / (loss) (1.796.739) 28.219.257 20.603 (2.638.440) 89.864.378 - (29.462.322) 84.206.737 Selling, marketing and distribution expenses (-) - (5.407.250) - - - - - (5.407.250)General administrative expenses (-) (2.043.366) (25.562.097) (713.065) (4.165.038) (49.077.271) - 9.536.910 (72.023.927)Other income from operating activities 12.219.019 4.218.795 1.213.351 6.030.791 89.512.097 - (13.878.476) 99.315.577Other expensefrom operating activities (-) (5.654.664) (1.244.140) (219.997) (1.585.512) (86.807.387) - 486.207 (95.025.493)

Operating profit / loss 2.724.250 224.565 300.892 (2.358.199) 43.491.817 - (33.317.681) 11.065.644 Profit / Loss from Investments accounted by equity method - - 11.175.026 32.780.185 10.995.147 957.013 5.694.958 61.602.329Income from investment activites 25.520.654 124.799 9.318 88.053 5.698.723 - (15.382.384) 16.059.163Expenses from investment activities (-) - (31.800) - (57) (62.259) - 38.792 (55.324)

Operating profit /loss before financial expenses 28.244.904 317.564 11.485.236 30.509.982 60.123.428 957.013 (42.966.315) 88.671.812 Financial income - - - 3.221.110 - - - 3.221.110Financial expense (-) - (84.661) (4.764) (2.116.518) (6.790.156) - - (8.996.099)

Profit /loss from continued operations before tax 28.244.904 232.903 11.480.472 31.614.574 53.333.272 957.013 (42.966.315) 82.896.823 Tax income / expense for the period (3.663.348) - (83.057) - (6.762.883) - - (10.509.288)Deferred tax income / expense 43.346 (78.061) 13.805 247.059 (99.028) - 3.683.716 3.810.837

Tax income / expense from continued operations (3.620.002) (78.061) (69.252) 247.059 (6.861.911) - 3.683.716 (6.698.451) Net profit / loss from continued operations 24.624.902 154.842 11.411.220 31.861.633 46.471.361 957.013 (39.282.599) 76.198.372 Other comprehensive income not to be reclassified to profit or loss Actuarial gain / loss arising from defined benefit plans 27.911 777.640 21.539 110.824 251.049 - - 1.188.963Share of other comprehensive income of investments accounted by equity method not to be reclassified in profit/ loss - - 565.681 13.617 (10.820) 26.303 - 594.781Deferred tax expense / income (5.582) (155.528) (117.444) (24.888) (45.567) (5.261) - (354.270) Other comprehensive income not to be eclassified to profit or loss Foreign currency translation differences - - - - (4.801.564) - - (4.801.564)Share of other comprehensive income of investments accounted by equity method to be reclassified in profit/ loss - - - - (1.596.818) - - (1.596.818)Revaluation and reclassification gains/losses of financial assets hold for sale - - - - 124.680 - - 124.680

Total comprehensive income 24.647.231 776.954 11.880.996 31.961.186 40.392.321 978.055 (39.282.599) 71.354.144 Distribution of profit / loss for the period Non-controlling interest - - - - - - 1.434.463 1.434.463Parent company shares 24.624.902 154.842 11.411.220 31.861.633 46.471.361 957.013 (40.717.062) 74.763.909 Distribution of total comprehensive income Non-controlling interest - - - - - - 1.429.519 1.429.519Parent company shares 24.647.231 776.954 11.880.996 31.961.186 40.392.321 978.055 (40.712.118) 69.924.625

Holding Tourism

Industryand



developmentFishery

products

Elimination and



103

Distribution of depreciation and retirement pay liability expenses stated by segment in the consolidated statement of profit or loss and other compre-hensive income for the year ended 31 December 2013 is as follows (TL):

Investment properties (Note 15, 25) - - - - 209.965 - 209.965Property, plant and equipment (Note 16,25) 88.011 3.075.579 202.302 12.163.267 50.208.619 - 65.737.778Intangible assets (Note 17,25) 36.105 1.918.315 - 914.177 164.846 - 3.033.443 Current period depreciation expenses 124.116 4.993.894 202.302 13.077.444 50.583.430 - 68.981.186 Provisions for retirement pay liability no longer required (Note 20,26) (64.502) (819.370) (75.368) (80.716) (850.851) - (1.890.807)Current period retirement pay liability expense (Note 20,24,25) 168.137 1.239.640 47.572 145.459 1.375.183 - 2.975.991 Total current period retirement pay liability expense 103.635 420.270 (27.796) 64.743 524.332 - 1.160.552

Distribution of depreciation and retirement pay liability expenses stated by segment in the consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2012 is as follows (TL):

Investment properties (Note 15,25) - - - - 207.227 - 207.227Property, plant and equipment (Note 16,25) 75.258 3.030.573 204.394 12.163.153 13.488.537 - 28.961.915Intangible assets (Note 17,25) 36.548 2.026.037 - 961.302 78.422 - 3.102.309 Current period depreciation expenses 111.806 5.056.610 204.394 13.124.455 13.774.186 - 32.271.451 Provisions for retirement pay liability no longer required (Note 20,26) (120.690) (614.914) (45.676) (72.918) (723.359) - (1.577.557)Current period retirement pay liability expense (Note 20,24,25) 159.612 1.069.928 114.338 139.011 974.330 - 2.457.219 Total current period retirement pay liability expense 38.922 455.014 68.662 66.093 250.971 - 879.662

5. Cash and cash equivalentsCash and cash equivalents consist of the following (TL) :

31 December 2013 31 December 2012

Cash 164.505 99.292Banks 376.594.446 318.837.271 - TL demand deposits 219.114 1.922.265- Foreign currency demand deposits 20.274.731 52.186.266- TL time deposit 93.053.471 101.849.322- Foreign currency time deposit 262.473.279 162.502.007- Blocked time deposits 573.851 377.411

Cheques received - 16.650Other liquid assets 3.995 -Investment funds (*) 2.732.939 3.009.136

Total 379.495.885 321.962.349

As of 31 December 2013, the interest rates applied on time deposits are as follows: TL deposits 1,50 %– 11,00% (31 December 2012 - 2,25% - 8,55%); Euro deposits 1,50 % –3,50% (31 December 2012 - 1,50% - 3,50%); USD deposits 0,25% – 4,32% (31 December 2012 - 0,50% - 3,65%); Pound deposit 1,80% (31 December 2012 –).

(*) Consists of Type B liquid investment funds as of 31 December 2013 and 2012.

Holding

Holding

Tourism

Tourism

Industry andmerchandising

Industry andmerchandising

Energy

Energy

Contractingand land

development

Contractingand land

development

Fishery products

Fishery products

Total

Total


104

6. Financial assetsShort term financial assets consist of the following (TL) :


Financial assets held for trading - Investment funds (*) 77.245.388 62.401.465Financial assets held to maturity (**) - Public sector notes, promissory notes and bonds 129.292.842 106.977.780Value increase in marketable securities - 14.843.921Value decrease in marketable securities (322.985) - Total 206.215.245 184.223.166

(*) As of 31 December 2013 and 2012, financial assets held for trading consist of Type A investments funds. (**) As of 31 December 2013, the interest rate on public sector bonds and notes is 4,75%. (31 December 2012 - 0,35% - 3,00%). Long term financial assets consist of the following (TL) : 31 December 2013 31 December 2012

Participation Participation Participation Participation rate % amount % rate % amount % Subsidiaries Saret KZ (**) 100,00 7.033 100,00 7.033Tüm Tesisat ve İnşaat A.Ş.(**) 50,15 357.003 50,15 357.003Affiliates Other (*) 611.045 (*) 636.697

Total 975.081 1.000.733

(*) Less than 1%.(**) The indicated companies are not included in the consolidation as the volume of their activities is low and they do not have a significant effect

on the consolidated financial statements of the Group. Total assets of Tüm Tesisat ve İnşaat A.Ş. and Saret KZ is TL 235.665 and TL 640.034 respectively.

7. Financial liabilitiesFinancial liabilities consist of the following (TL) :

31 December 2013 31 December 2012 Short term financial liabilities 62.989.555 24.044.985Short term portion of long term financial liabilities 36.807.635 23.450.960Long term financial liabilities 165.889.945 89.821.045 Total 265.687.135 137.316.990

As of 31 December 2013 and 2012, the maturities and interest rates of short term bank loans are as follows:

31 December 2013

Original amount of Foreign Effective interest foreign exchangeMaturity rate Currency currency rate TL Amount

01.01.2014-31.12.2014 10,00%-11,60% TL 64.174.736 - 64.174.73601.01.2014-31.12.2014 3,85%-4,46% USD 16.690.463 2,1343 35.622.454 Total 99.797.190

31 December 2012

Original amount of Foreign Effective interest foreign exchangeMaturity rate Currency currency rate TL Amount

02.01.2013-21.10.2013 6,60%-10,00% TL 41.886.934 - 41.886.93401.01.2013-31.12.2013 3,85%-4,46% USD 3.146.534 1,7826 5.609.011 Total 47.495.945


105

As of 31 December 2013 and 2012, the maturities and interest rates of long term bank loans are as follows:

31 December 2013

Original amount of Effective interest foreign ExchangeMaturity rate Currency currency rate TL Amount

01.01.2015-21.10.2015 10,00% TL 16.644.000 - 16.644.00001.01.2015-30.06.2021 3,85%-4,46% ABD Doları 69.927.351 2,1343 149.245.945 Total 165.889.945 31 December 2012

Original amount of Effective interest foreign ExchangeMaturity rate Currency currency rate TL Amount

01.01.2014-11.08.2021 10,00%-11,60% TL 52.138.909 - 52.138.90901.04.2013-30.06.2021 3,85%-4,46% USD 21.138.863 1,7826 37.682.136 Total 89.821.045

As of 31 December 2013 and 2012, distribution of short and long term bank loans according to their maturities is as follows (TL):

31 December 2013 (TL) 31 December 2012 (TL) 1 Year 99.797.190 47.495.9451 – 2 Years 20.068.288 21.722.2992 – 3 Years 5.788.242 21.722.2993 – 4 Years 5.788.242 5.078.2994 Years and Longer 134.245.173 41.298.148 Total (Note 32 (ii)) 265.687.135 137.316.990

8. Trade receivables and payablesShort term trade receivables consist of the following (TL) :

31 December 2013 31 December 2012 Customers 269.254.450 50.336.504Notes receivable 742.150 48.673Rediscount on receivables (-) (98.162) (201.900) Notes receivable - (26) Maturity cheques (854) (45) Customers (97.308) (201.829)Other short term receivables 4.080.524 540.710Receivables from ongoing construction contracts (Note 12) 49.276.760 27.459.345Doubtful trade receivables 11.100.158 11.368.165Provision for doubtful trade receivables (-) (11.100.158) (11.368.165) Total 323.255.722 78.183.332 Trade receivables from related parties 6.267.684 24.243.405Doubtful trade receivables from related parties 9.003.856 9.523.403Provision for doubtful trade receivables from related parties (-) (9.003.856) (9.523.403) Total trade receivables from related parties (Note 31) 6.267.684 24.243.405 Grand total 329.523.406 102.426.737

Long term trade receivables consist of the following (TL) : 31 December 2013 31 December 2012 Customers 20.427.591 10.583 Grand total 20.427.591 10.583


106

Changes in provision for doubtful trade receivables are set out in the table below (TL) :

31 December 2013 31 December 2012 Opening balance 20.891.568 20.752.207Current year charge 56.190 288.664Collections / provisions no longer required (843.744) (149.303)

Closing balance 20.104.014 20.891.568

Short term other receivables consist of the following (TL) : 31 December 2013 31 December 2012 Suppliers 221.569.455 96.496.420Rediscount for payables (-) (124.579) (83.769)Other trade payables 636.055 - Total 222.080.931 96.412.651 Trade payables to related parties 3.774.516 59.452 Total trade payables to related parties (Note 31) 3.774.516 59.452

Grand total 225.855.447 96.472.103

Long term trade payables consist of the following (TL) :

31 December 2013 31 December 2012 Other trade payables - 636.000 - 636.000

9. Other receivables and payablesShort term other receivables consist of the following (TL) 31 December 2013 31 December 2012 Deposits and guarantees given 62.176.460 11.791.778Other miscellaneous receivables 8.023.791 882.115Due from personnel 5.674 400Other doubtful receivables 40.059 40.059Provision for other doubtful receivables (-) (Note 24) (40.059) (40.059) Total 70.205.925 12.674.293 Receivables from affiliates 16.563.503 14.394.432 Other receivables from related parties (Note 31) 16.563.503 14.394.432 Grand total 86.769.428 27.068.725 Long term other receivables consist of the following (TL) : 31 December 2013 31 December 2012 Deposits and guarantees given 4.867.780 556.979Other miscellaneous receivables 9.895.280 9.768.848 Total 14.763.060 10.325.827

Short term other payables consist of the following (TL) 31 December 2013 31 December 2012 Taxes, duties, and other withholdings payable 5.650.824 9.746.470Other miscellaneous payables 2.974.048 2.796.081Deposits and guarantees received 2.215.817 9.142.349Due to personnel 16.382 12.639

Total 10.857.071 21.697.539 Payables to jointly controlled entities - 11.872Payables to shareholders 1.416 -

Other payables to related parties (Note 31) 1.416 11.872 Grand Total 10.858.487 21.709.411


107

Long term other payables consist of the following (TL) : 31 December 2013 31 December 2012 Deposits and guarantees received 26.889.713 254.039 Total 26.889.713 254.039 Other miscellaneous payables to related parties 66.291.962 61.291.962 Other payables to related parties (Note 31) 66.291.962 61.291.962 Grand total 93.181.675 61.546.001

10. Inventories

Inventories consist of the following (TL) :

31 December 2013 31 December 2012 Raw materials and supplies 83.937.085 14.186.694Merchandise (*) 102.436.664 16.144.584Other inventories 9.381.734 4.218.737Inventory impairment provision (-) (5.159) (5.159) Total 195.750.324 34.544.856

(*) As of 31 December 2013, a portion of TL 100.720.311 out of the merchandise balance of TL 102.436.664 (31 December 2012 – TL 15.859.472) consists of real estates held for trade.

Changes in inventory impairment provision are set out in the table below (TL) :

31 December 2013 31 December 2012 Opening balance 5.159 5.159Charge for the current period - - Closing balance 5.159 5.159

As of 31 December 2013 and 2012, details of real estates held for trading consist of the following (TL) :


Real Estate Project Land Share (1 Parcel) and Project Cost Projects unsold 10.630.576 13.810.000 31.12.2013 11.537.878 - 14.195.000 31.12.2012Projects with sale contracts realized 4.730.000 4.740.000 31.12.2013 - - - Total 15.360.576 18.550.000 11.537.878 - 14.195.000 Land in Büyükçekmece Land cost (3 parcels) 3.271.735 43.753.000 31.12.2013 4.321.594 - 9.325.000 31.12.2012 Land in Orhanlı and Kocataş Land cost 82.088.000 82.088.000 27.12.2013 - - Total 100.720.311 144.391.000 15.859.472 - 23.520.000

Adjusted book value

(TL

Salesvalue(TL)

Expertisevalue(TL)

Expertisedate

Adjustedbook value

(TL)

Salesvalue(TL)

Expertisevalue(TL)

Expertisedate

Real Estate Project: The construction license of 63 villas and 1 social facility constructed on an area of 239.466 m² on section 106, parcel 18 in Büyükçekmece Eskice District included in one of the subsidiaries’ - the Alarko Gayrimenkul Yatırım Ortaklığı A.Ş.’s - investment properties portfolio is received on 21 October 2005 and the sales transactions have started. As of 31 December 2013, sales contracts are made for 51 villas.

Land in Büyükçekmece: There are 3 parcels of land with a total area of 622.651 m².

Lands in Orhanlı and Kocataş: There is a land of 103.820,54 m² located in Orhanlı Village of Tuzla District in Istanbul, and a land of 369.411 m² located in Kocataş Village of Maden District in Sarıyer.


108

11. Prepaid expensesShort term prepaid expenses are as follows (TL):

31 December 2013 31 December 2012 Advances given to suppliers 18.092.873 5.025.338Advances given to sub-contractors 13.080.465 5.474.174Prepaid expenses 9.729.737 4.569.708 Total 40.903.075 15.069.220

Long term prepaid expenses are as follows (TL):

31 December 2013 31 December 2012 Advances given to suppliers 1.714.716 14.871.217Prepaid expenses 379.410 531.473 Total 2.094.126 15.402.690

12. Balances due from ongoing construction contract and progress paymentsCosts and estimated earnings related to the ongoing construction contracts are as follows (TL) :

31 December 2013 31 December 2012 Costs related to the ongoing construction contracts 1.050.371.213 319.615.663Estimated earnings 25.016.290 67.957.931 Less: Total progress payments invoiced as of the period end (1.267.119.698) (430.693.933) Total (191.732.195) (43.120.339)

The net balance stated above is classified in the accompanying consolidated statements of financial position as follows (TL) :

31 December 2013 31 December 2012 Receivables from ongoing construction contracts (net) (Note 8) 49.276.760 27.459.345Progress payments from ongoing construction contracts (Note 13) (241.008.955) (70.579.684)

Total (191.732.195) (43.120.339)

The total amount of advance received which is disclosed in other short-term and long-term liabilities of the subsidiaries of the Group in relation to the ongoing construction contracts as of 31 December 2013 is TL 301.430.147 (31 December 2012 – TL 141.875.302).

13. Deferred income

Short term deferred income are as follows (TL):

31 December 2013 31 December 2012 Progress payments from ongoing construction contracts (Note 12) 241.008.955 70.579.684Advances received 254.648.420 104.520.486Deferred income related to following months 1.208.301 1.181.501Electricity energy funds 470.660 393.102 Total 497.336.336 176.674.773

Long term deferred income are as follows: (TL): 31 December 2013 31 December 2012 Electricity energy funds 1.843.417 1.932.753Advances received 59.434.192 48.997.394Long term deferred income 13.681 18.797 Total 61.291.290 50.948.944


109

14. Investments accounted by equity methodInvestments accounted by equity method consist of the following (TL): 31 December 2013 31 December 2012

Partnership Partnership Partnership Partnership rate % amount rate % amount Alarko Carrier Sanayi ve Ticaret A.Ş. 43,19 111.419.493 43,19 99.368.418OAO Mosalarko 50,00 6.977.436 50,00 5.746.003Obrascon Huarte Alsim SA– Alsim Alarko San.Tes.ve Tic. A.Ş. 44,94 38.778.024 44,93 31.035.183Alfarm Alarko Leröy Su Ürünleri San. ve Tic. A.Ş. 50,00 7.339.976 50,00 6.739.767Alarko Deyaar Gayrimenkul Geliştirme A.Ş. (*) 99,87 - 49,92 68.304.812Alarko – Makyol Adi Ortaklığı 49,94 73.352.702 49,92 59.443.725Doğuş-Alarko-YDA İnş. Adi Ortaklığı 37,45 11.056.083 37,44 16.577.976Alcen Enerji Dağıtım ve Perakende Satış Hiz.A.Ş. (**) 49,94 210.840.972 49,92 174.426.210Al-Riva Projesi Ar. Değ.Konut İnş. ve Tic. A.Ş. 12,13 2.566.343 12,13 3.116.375Al-Riva Arazi Değ. Konut İnş. Tur Tes.Golf İşl. ve Tic. A.Ş. 2,28 998.715 2,38 1.000.888Al-Riva Arazi Ar. Değ. Konut İnş. ve Tic. A.Ş. 2,63 - 2,63 -

Total 463.329.744 465.759.357

(*) As of 31 December 2013, the 50% share of Alarko Deyaar Gayrimenkul Geliştirme A.Ş was purchased from Deyaar Development PJSC and has been included in the consolidation.

(**) Since Alcen Enerji Dağıtım ve Perakende Satış Hiz. A.Ş., owns the 100% shares of Meram Elektrik Dağıtım A.Ş. , Meram Elektrik Perakende Satış A.Ş.. Panel Enerji A.Ş., Algiz Enerji A.Ş. and Cenal Elektrik Üretim A.Ş. and 99,60% shares of Meram Elektrik Enerjisi Toptan Satış A.Ş. These entities are included in the carried investment amount in consolidated financial statements.

Changes in investments by the equity method are as follows (TL):


Opening balance 465.759.357 419.405.036Profit/ (loss) for the period 69.519.175 55.907.385Dividends received (15.348.751) (10.246.468)Elimination of intra-group sales (2.601.941) -Other comprehensive income 10.264.937 (1.121.173)Jointly controlled entities excluded consolidation (36.638.997)(*) 1.641.077Capital decrease (27.736.239) 173.500Effect of ratio change 112.203 -

Closing balance 463.329.744 465.759.357

(*) As of 31 December 2013 50% the share of Alarko Deyaar Gayrimenkul Geliştirme A.Ş. has been purchased from Deyaar Development PJSC and is included in full consolidation.

Shares of profit/loss of investments accounted by equity method are as follows (TL):

Alarko Carrier Sanayi ve Ticaret A.Ş. 14.884.968 893.463 15.778.431 11.175.026 912.864 12.087.890OAO Mosalarko 2.040.371 - 2.040.371 1.946.523 - 1.946.523Obrascon Huarte Alsim SA – Alsim Alarko San.Tes.ve Ticaret A.Ş. (3.972) - (3.972) 7.884 - 7.884Alfarm Alarko Leröy Su Ürünleri San. ve Tic. A.Ş. 617.312 (4.662) 612.650 957.013 (3.480) 953.533Alarko Deyaar Gayrimenkul Geliştirme A.Ş. 5.730.213 12.337 5.742.550 (497.601) - (497.601)Alarko – Makyol Adi Ortaklığı 13.906.670 (190.988) 13.715.682 (2.317.049) (231.602) (2.548.651)Doğuş-Alarko-YDA İnş. Adi Ortaklığı (6.305.838) 161.034 (6.144.804) 12.280.736 4.809.187 17.089.923Alcen Enerji Dağıtım ve Perakende Satış Hiz.A.Ş. (*) 39.202.408 (11.159) 39.191.249 32.780.199 (5.996) 32.774.203Al-Riva Projesi Ar. Değ.Konut İnş. ve Tic. A.Ş. (550.784) 480.798 (69.986) (400.924) 206.280 (194.644)Al-Riva Arazi Değ. Konut İnş.Turistik Tes.Golf İşl. ve Tic. A.Ş. (2.173) 18.407 16.234 (24.422) 7.691 (16.731)Al-Riva Arazi Ar. Değ. Konut İnş. ve Tic. A.Ş. - - - - - - Total 69.519.175 1.359.230 70.878.405 55.907.385 5.694.944 61.602.329

(*) Alcen Enerji Dağıtım ve Perakende Satış Hiz. A.Ş., owns the 100 % shares of Meram Elektrik Dağıtım A.Ş. ,Meram Elektrik Perakende Satış A.Ş. Panel Enerji A.Ş., Algiz Enerji A.Ş.and Cenal Elektrik Üretim A.Ş. and the 99,60% shares of Meram Elektrik Enerjisi Toptan Satış A.Ş. These entities are included in the affiliate amount.

31 December 2013

Before elimination

31 December 2012

before eliminationElimination Elimination

31 December

2013

31 December

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31 D

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2013

31 D

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2012

Investments accounted by equity method consist of the following (TL):


111

Investments accounted by equity method consist of the following (TL): 1 January 2013 1 January 2012 31 December 2013 31 December 2012 Net profit / Net profit / Revenue loss Revenue loss Alarko Carrier Sanayi ve Ticaret A.Ş. 370.334.866 34.460.542 353.719.738 25.871.576OAO Mosalarko 8.765.164 4.080.742 7.954.812 3.893.039Obrascon Huarte Alsim SA - Alsim Alarko San.Tes.ve Tic. A.Ş. - (8.837) - 17.548Alfarm Alarko Leröy Su Ürünleri San. ve Tic. A.Ş. 49.648.750 1.234.623 45.284.014 1.914.031Alarko Deyaar Gayrimenkul Geliştirme A.Ş. - 11.479.460 - (996.854)Alarko – Makyol Adi Ortaklığı 141.173.004 27.848.285 9.456.980 (4.641.771)Doğuş-Alarko-YDA İnş. Adi Ortaklığı 40.429.705 (16.836.698) 273.737.836 32.802.862Alcen Enerji Dağıtım ve Perakende Satış Hiz.A.Ş. 1.810.332.996 78.503.306 1.590.692.635 65.668.964Al-Riva Projesi Ar. Değ.Konut İnş. ve Tic. A.Ş. - (1.376.088) - (1.002.310)Al-Riva Arazi Değ. Konut İnş.Turistik Tes.Golf İşl. ve Tic. A.Ş. - (5.432) - (61.056)Al-Riva Arazi Ar. Değ. Konut İnş. ve Tic. A.Ş. - - - - Total 2.420.684.485 139.379.903 2.280.846.015 123.466.029

15. Investment properties

31 December 2013 31 December 2012 Cost 22.287.096 22.287.096Additions 1.643.590 -Transfers 4.984.400 -Accumulated depreciation (1.752.676) (1.542.712) Total 27.162.410 20.744.384

As of 31 December 2013 and 2012, total insurance on investment properties amounts to TL 80.813.397 ve TL 65.290.332, respectively.

As of 31 December 2013, comparison between the restated cost values of investment properties and their fair values is as follows (TL):

31 December 2013 Expertise report Cost value Name of Property date Fair value (TL) net (TL) Maslak Arsası 31.12.2013 39.821.000 15.105.685Eyüp Topçular - Fabrika 31.12.2013 30.446.000 3.995.651Ankara Çankaya İş Merkezi 31.12.2013 3.206.000 1.052.913İstanbul Karaköy İş Merkezi 31.12.2013 2.600.000 381.885İstanbul Şişhane İş Merkezi 31.12.2013 2.400.000 1.024Büyükçekmece Alkent 2000 31.12.2013 5.650.000 1.640.852Antalya Arsası (*) 4.984.400 4.984.400 Total 27.162.410

(*) Antalya Arsası, is reclassified tangible fixed asset to investment property as of 31 December 2013 as of that there isn’t an appraisal report as of such date.

As of 31 December 2012, comparison between the restated cost values of investment properties and their fair values is as follows (TL):

31 December 2012 Expertise Name of Property report date Fair value (TL) Maslak Arsası 31.12.2012 35.269.000 15.105.685Eyüp Topçular - Fabrika 31.12.2012 29.138.000 4.102.439Ankara Çankaya İş Merkezi 31.12.2012 2.857.000 1.082.925İstanbul Karaköy İş Merkezi 31.12.2012 1.817.000 452.271İstanbul Şişhane İş Merkezi 31.12.2012 2.025.000 1.064 Total 20.744.384

Real estates held by Alarko Gayrimenkul Yatırım Ortaklığı A.Ş, one of the subsidiaries, were revaluated by Reel Gayrimenkul Değerleme ve Danışmanlık A.Ş. in 2013 and 2012.

Cost value net (TL)


112

16. Property, plant and equipment

Property, plant and equipment consist of the following as of 31 December 2013;

As of 31 December 2013;

Cost

Land 9.607.103 1.912.850 - (9.441.905) 2.078.048Land improvements 27.639.867 - - - 27.639.867Buildings 186.549.524 30.864.979 3.804.439 (2.786.441) 218.432.501Plant, machinery, and equipment 334.405.743 108.687.540 12.258.285 4.862.005 460.213.573Motor vehicles 35.698.720 61.929.953 901.964 (4.815.310) 93.715.327Furniture and fixtures 53.627.874 9.670.994 2.500.438 (1.917.974) 63.881.332Leasehold improvements - 1.966.156 - - 1.966.156Other tangible assets 4.381.846 445.685 875.947 (29.743) 5.673.735Construction in progress 62.412.973 131.274.937 8.732.901 (38.410.145) 164.010.666 Total 714.323.650 346.753.094 29.073.974 (52.539.513) 1.037.611.205

Accumulated depreciation Land improvements 27.304.569 13.151 - - 27.317.720Buildings 78.066.834 6.920.018 719.861 (1.124.253) 84.582.460Plant, machinery, and equipment 121.490.080 39.979.182 5.206.539 (1.185.807) 165.489.994Motor vehicles 12.930.061 14.643.095 2.011.031 (2.324.831) 27.259.356Furniture and fixtures 41.349.373 5.478.915 832.188 (1.254.980) 46.405.496Leasehold improvements - 151.470 16.808 - 168.278Other tangible assets 889.523 654.561 (12.889) (27.899) 1.503.296 Total accumulated depreciation 282.030.440 67.840.392 8.773.538 (5.917.770) 352.726.600 Property, plant, and equipment, net 684.884.605

As of 31 December 2012;

Cost

Land 9.467.552 139.551 - - 9.607.103Land improvements 27.639.867 - - - 27.639.867Buildings 170.375.277 18.261.551 (264.560) (1.822.744) 186.549.524Plant, machinery, and equipment 290.697.408 49.697.009 (1.758.693) (4.229.981) 334.405.743Motor vehicles 12.791.486 27.261.683 (1.177.490) (3.176.959) 35.698.720Furniture and fixtures 49.529.586 6.530.115 (417.330) (2.014.497) 53.627.874Other tangible assets 2.120.700 2.296.458 (35.311) - 4.381.847Construction in progress 8.554.870 55.109.794 1.084.686 (2.336.377) 62.412.973 Total 571.176.746 159.296.161 (2.568.698) (13.580.558) 714.323.651

Accumulated depreciation Land improvements 27.292.276 12.293 - - 27.304.569Buildings 74.598.804 4.317.309 (45.971) (803.308) 78.066.834Plant, machinery, and equipment 106.441.942 16.496.411 686.969 (2.135.241) 121.490.081Motor vehicles 12.152.785 4.609.556 (656.283) (3.175.996) 12.930.062Furniture and fixtures 38.999.706 3.345.942 564.005 (1.560.280) 41.349.373Other tangible assets 709.814 180.404 (695) - 889.523

Total accumulated depreciation 260.195.327 28.961.915 548.025 (7.674.825) 282.030.442 Property, plant, and equipment, net 432.293.209

Opening1 January 2013


Additions

Depreciation expense for the period

Capitalized borrowing costs

and currency translation difference

Currency translation difference

Disposals and

transfers

Disposals of purchase

and transfers

Total 31 December 2013


Opening1 January 2012 Additions

Capitalized borrowing costs

and currency translation difference

Disposals and

transfersTotal

31 December 2012


Depreciation expense for the period

Currency translation difference

Disposals of purchase

andtransfers



113

17. Intangible assets

Intangible assets consist of the following (TL) :

Cost

As of 1 January 2013 3.447.751 45.471.081 148.676 49.067.508 Additions 325.532 1.283.727 - 1.609.259Transfers - - - -Disposals (1.468) (301) - (1.769)Currency translation difference 46.531 - - 46.531 As of 31 December 2013 3.818.346 46.754.507 148.676 50.721.529

Accumulated amortization As of 1 January 2013 2.017.619 32.277.090 148.676 34.443.385 Charge for the current period 223.275 2.810.168(*) - 3.033.443Disposals - - - -Transfers (413) (301) - (714)Currency translation difference 8.173 - - 8.173 As of 31 December 2013 2.248.654 35.086.957 148.676 37.484.287 Intangible assets (net) 13.237.242

(*) As of 31 December 2013, TL 946.863 out of TL 2.810.168 in leasehold improvements is related with accounting of service concession arrangements within the frame of IFRIC 12 “Service Concession Arrangements”.

Cost

As of 1 January 2012 2.274.558 44.605.541 148.676 47.028.775 Additons 1.180.042 36.103 - 1.216.145Transfers - 1.822.212 - 1.822.212Disposals (6.606) (992.779) - (999.385)Currency translation difference (243) - - (243) As of 31 December 2012 3.447.751 45.471.077 148.676 49.067.504

Accumulated amortization As of 1 January 2012 1.801.703 29.400.994 148.676 31.351.373 Charge for the current period 223.821 2.878.488 (*) - 3.102.309Transfers - (2.389) - (2.389)Disposals (6.605) - - (6.605)Currency translation difference (1.302) - - (1.302) As of 31 December 2012 2.017.617 32.277.093 148.676 34.443.386 Intangible assets (net) 14.624.118

(*) As of 31 December 2012, TL 947.288 out of TL 2.878.488 TL in leasehold improvements is related with accounting of service concession arrangements within the frame of IFRIC 12 “Service Concession Arrangements”.

Rights

Rights

Rights

Rights

Leasehold improvements




Other intangible

assets

Other intangible

assets

Other intangible

assets

Other intangible

assets

Total

Total

Total

Total


114

18. GoodwillAs of 31 December 2013 and 2012, goodwill consists of the following (TL):

Goodwill amount, grossTransaction date 31 December 2013 31 December 2012 31 December 2013 (**) 2.750.656 -November 30, 2010 (*) 8.912.966 8.912.966June 21, 1994 161.302 161.302October 7, 1998 218.549 218.549 12.043.473 9.292.817

(*) Goodwill formed upon acquisition of 50% shares Altek Alarko Elektrik Santralları Tesis İşletme ve Tic. A.Ş. whose net assets amounted to a total fair value of TL 161.388.979 as of November 30, 2010 by Alsim Alarko Sanayi Tesisleri ve Ticaret A.Ş. for a total of TL 86.948.550. (**) Goodwill formed upon acquisition of 50% shares Alarko Deyaar Gayrimenkul Geliştirme A.Ş. whose net assets amounted to a total fair value of TL 84.805.345 as of 31 December 2013 by Alsim Alarko Sanayi Tesisleri ve Ticaret A.Ş. for a total of TL 45.153.329.

19. Current income tax liabilityCurrent income tax liability is as follows: (TL) : 31 December 2013 31 December 2012 Provision for current income tax (Note 29) 15.177.399 10.422.256Prepaid taxes and funds (11.701.871) (2.672.909) 3.475.528 7.749.347

20. Provisions, conditional assets and liabilitiesa) Short term debt provisions consist of the following (TL) :

31 December 2013 31 December 2012 Provisions for litigation 4.148.307 7.148.954 Total 4.148.307 7.148.954

Changes in provisions for litigation as of 31 December 2013 and 2012 are set out below (TL):

31 December 2013 31 December 2012 Opening balance 7.148.954 3.787.949Charge for the current period (Note 24) - 3.361.005Litigation provisions no longer required (3.000.647) - Provision for litigation expense at the end of the period 4.148.307 7.148.954

b) Long Term Debt Provisions consist of the following (TL) :

31 December 2013 31 December 2012 Unused vacation provision 1.190.691 1.057.814Provision for retirement pay liability 10.993.158 9.777.801 Total 12.183.849 10.835.615

i) Provision for retirement pay liabilityMovements of provision for retirement pay liability during the year are as follows:

31 December 2013 31 December 2012 Opening balance 9.777.801 10.084.083Interest cost 977.781 857.147Current service cost 1.600.995 1.005.874Payments during the year (1.493.593) (980.340)Actuarial difference 130.174 (1.188.963) Provision for retirement pay liability at the end of the period 10.993.158 9.777.801


115

ii) Vacation Provision

Changes in vacation provision during the year are as follows:

31 December 2013 31 December 2012 Unused allowance at beginning of the period 1.057.814 -Increase/(decrease) during the period (Note 24) 132.877 1.057.814 Provision for vacation at the end of the period 1.190.691 1.057.814

Contingent assets and liabilities are as follows (TL) :

a) Mortgage on the assets:

As of 31 December 2013, two parcels of the land in Eskice District in Büyükçekmece Village stated in the inventories and fixed asset accounts of the subsidiary Alarko Gayrimenkul Yatırım Ortaklığı A.Ş (Alarko Gayrimenkul). regarded as Greenfield site is expropriated on behalf of ISKI due to the reason that this plot of land is under unconditional preservation as per the provisions of the communiqué related to protection of land bearing tap water and drinking water resources against contamination.

As of 31 December 2013 and 2012 there is a right of easement in relation to the stores in Etiler Alkent Sitesi in Beşiktaş District dated 14 October 1987 nr. 6430 to be utilized on behalf of the real estate of the Company on section 1411, parcel 1 and against that on section 1408, parcel 1 for benefiting from the central heating; and there is a right of easement for a period of 49 years at a fee of TL 7,72 to construct 1,5 m wide channels in some parts of the heating installations. Furthermore, there is a personal right of easement for the owners of the property on section 1410 parcel 1 to benefit from the unused parking lot as stated in the project against the same parcel by voucher dated 26 February 1992 nr 784.

b) As of 31 December 2013, guarantees received for short term trade receivables amount to TL 1.174.185 (31 December 2012 – TL 3.132.686). The guarantees received other than those received for short term trade receivables amount to TL 372.493.085 (31 December 2012 – TL 268.062.240).

c) As of 31 December 2013, the overdue receivables and the related provisions stated in the Group’s accounting records amount to TL 20.144.072 (31 December 2012 – TL 20.931.626).

d) As of 31 December 2013, mortgages on assets amount to TL 2.309.343 (31 December 2012– TL 1.847.354).

e) The guarantees, sureties, and mortgages given and received by the Group as of 31 December 2013 and 2012 are set out in the table below (TL):

31 December 2013 31 December 2012 Guarantee letters given 775.212.894 738.103.000Sureties given 584.240.507 301.847.132Mortgages given 2.309.343 1.847.353Guarantee notes given 251 251 1.361.762.995 1.041.797.736 Sureties received 181.800.664 172.236.262Guarantee letters received 142.050.899 82.128.272Mortgages received 33.585.989 24.741Notes received 10.009.311 9.679.510Cheques received 271.109 279.235Other 5.949.297 6.846.906 373.667.269 271.194.926


116

31 December 2013 31 December 2012 Guarantees, sureties, mortgages given by the CompanyA. Total guarantees, sureties, mortgages given in the name of its own corporate body Foreign Currency TL Equivalent Foreign Currency TL Equivalent TL - - - - USD - - - - EURO - - - - JPY - - - - - - B. Total guarantees, sureties, mortgages givenin the name of entities included in the consolidationby full consolidation method Foreign Currency TL Equivalent Foreign Currency TL Equivalent TL 166.140.289 166.140.289 166.501.195 166.501.195 USD 260.258.778 555.470.310 135.098.237 240.826.116 EURO 9.105.942 26.739.598 25.561.352 60.112.631 JPY - - - - CHF - - - - 748.350.197 467.439.942

C. Total guarantees, sureties, mortgages given ascollateral for other third parties’ liabilities to ensurecontinuity of ordinary trade operations Foreign Currency TL Equivalent Foreign Currency TL Equivalent TL 72.872.565 72.872.565 12.872.851 12.872.851 USD 160.434.535 342.415.428 186.038.424 331.632.095 EURO 45.209.534 132.757.798 61.001.730 143.457.768 JPY 155.096.250 3.137.752 1.462.331.377 30.205.917 551.183.543 518.168.631 D. Total other guarantees, sureties, mortgages giveni. in the name of the Parent Company - - - -

ii. in the name of other group companies that are notincluded in the scope of items B and C Foreign Currency TL Equivalent Foreign Currency TL Equivalent TL 54.113 54.113 194.865 194.865 USD 17.250.000 36.816.675 18.000.000 32.086.800 EURO 8.635.609 25.358.467 10.166.049 23.907.498 62.229.255 56.189.163 iii. in the name of third parties that are not includedin the scope of item C - - - - Grand Total 1.361.762.995 1.041.797.736

As of 31 December 2013, the ratio of the other guarantees, sureties, and mortgages given by the Group to its equity is 5% (31 December 2012 – 5%).

f) On 31 December 2003, tariff adjustment invoices amounting to a total of TL 2,3 million related to 2001 and 2002 years were issued by Türkiye Elektrik Ticaret ve Taahhüt A.Ş. (TETAŞ) for Altek Alarko Elektrik Santralları Tesis İşletme ve Ticaret A.Ş. (Altek). Although the said invoices were recognized as sales deductions in 2003, Altek made an objection to the Ministry of Energy and Natural Resources and requested correction of the calculation basis of invoice totals. Upon failing to receive any response from the Ministry, Altek has filed for a case against the Ministry claiming annulment of the invoices in 2004 and the legal proceedings are ongoing as of the reporting date.

g) Altek Alarko Elektrik Santralları Tesis İşletme ve Ticaret A.Ş., a subsidiary, has filed for a number the annulment of the request for accrual and payment by Altek of additional fees on monthly system utilization, operation and transmission related to Hasanlar Hydroelectric Power Plant and for suspension of execution and the case has been finalized in favor of Altek at the 13th State Council by the decree nr. E.2007/1704 K:2009/2216. Altek has been returning the monthly Distribution Service Fee invoices back to SEDAŞ, which continue to be issued by Sakarya Elektrik Dağıtım A.Ş. (SEDAŞ) even though the court case is finalized. As of September 30, 2013, the said invoices returned by Altek without being recorded and without any provisions made amount to a total of TL 910.193 excluding VAT. The letter dated October 22, 2012 and numbered 1494 sent by TETAŞ to Altek for information on November 1, 2012, regarding Hasanlar HES Distribution Service Fee was received by Altek and SEDAŞ shall prepare invoice amounting to TL 231.316 (excluding VAT) for the period February 11, 2009 – May 17, 2011 on behalf of Altek and Altek shall invoice this amount to

(*) Represents the amounts not multiplied by the consolidation rates of the jointly controlled entities.


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TETAŞ and pay this amount which it shall collect from TETAŞ to SEDAŞ.

h) From the plants it has operated in the relevant years in accordance with the build-operate-transfer Altek Alarko Elektrik Santralları Tesis İşletme ve Ticaret A.Ş.(Altek), a subsidiary, has made a total provision of TL 10.046.245 for its receivables from TETAŞ in its records taking into account that:

- The lawsuits filed against ETKB regarding Berdan and Hasanlar Hydroelectric Plants transferred free of charge to EÜAŞ in 2011,- And Tohma Hydroelectric Plant which it still operates, regarding the revision of sale tariffs and the objections regarding the price difference

invoices and the fact that most of the lawsuits were lost by the courts of first instance and that the appeal processes have been ongoing for a long time ;

- TETAŞ has completed the offsetting started in June 2007 and started paying the receivables occurred since April 2009,- a future estimate cannot be made,

(The Supreme Court has abolished the offsetting among power plants in the lawsuit filed for the receivables regarding the BOT agreement of 3 power plants and since it has decided on separate lawsuits to be filed for each power plant, lawsuits of TL 2.344.590 for Tohma HES and TL 2.371.000 for Berdan HES were filed on September 6, 2013.)

i) In the letter sent by the Competition Authority to Alarko Carrier Sanayi ve Ticaret A.Ş., a jointly controlled entity, it is stated that a judicial inquiry is set up for the purpose of determining whether the agreements entered into between Alarko Carrier and its authorized dealers and services include competitive restrictions. As a result of the investigation made with respect to the mentioned letter, it has been communicated to Alarko Carrier on March 8, 2007 that an administrative penalty of TL 225.273 (*) corresponding to 0,1% of the net sales of 2005 year has been inflicted on Alarko Carrier. Provision has been booked for the total amount of administrative penalty in the accompanying financial statements. As of June 11, 2007 Alarko Carrier has filed for suspension of execution followed by an appeal to the State Council, however the appeal was overruled by the resolution of the State Council on December 13, 2010. Alarko Carrier has appealed to the upper court for the suspension of execution regarding the case resulted against Alarko Carrier.

j) Related to the affiliates Al-Riva Projesi Arazi Değ. Konut İnş. ve Tic. A.Ş., Al-Riva Arazi Değ. Konut İnş. ve Tic. A.Ş., Al-Riva Arazi Değ. Konut İnş. Tur.Tes.Golf İşl. ve Tic. A.Ş., in the lawsuit filed by the other shareholder of the subsidiaries for the termination of the companies, the judgment in favor of the Group was ratified by the 11th Civil Chamber of the Supreme Court after being appealed. The request of revision of decision by the claimants was rejected by the Civil Chamber 11 of the Supreme Court and the legal process resulted in favor of the Group.

k) Altek Alarko Elektrik Santrali Tesis İşletme ve Ticaret A.Ş., a subsidiary, requested an invoice receivable amounting to TL 1.086.960 which was

collected unduly due to the fact that TEİAŞ did not apply the 50% discount over the usage costs and a delay interest and a lawsuit was filed on December 7, 2012 in the file numbered 2012/680 of the Ankara 8th Commercial Court of First Instance. The lawsuit is ongoing and an additional report was submitted in the case dated December 11, 2013 but due to our objection, the trial was postponed to April 30, 2014 for the inspection of the Consultative Authority. No receivables were reflected on the consolidated financial statements as of 31 December 2013 since the receivable is not certain.

l) Deyaar Gayrimenkul Geliştirme A.Ş., a joint venture, has imposed mortgage of TL 24.718.125 (31 December 2011 - TL 24.718.125) shares of Dubai İnşaat Gayrimenkul San. ve Tic. Ltd. Şti. possessed by Deyaar PJSC and TL 8.854.714 of real estates of Dubai İnşaat (31 December 2011 - TL 8.854.714) in return for unpaid capital of Deyaar Development PJSC amounting to TL 14.189.373 (31 December 2011 - TL14.189.373). However, Deyaar Gayrimenkul Geliştirme A.Ş. filed a receivable suit against İdeal Yaşam Alanları Ltd. Şti and Dubai İnşaat Gayrimenkul San. ve Tic. A.Ş. as of September 30, 2011 amounting to TL 332.010 and as of May 25, 2012 amounting to TL 331.550 since Dubai İnşaat has not paid its unpaid capital even project sales has been realized by Dubai İnşaat. The case file was adjourned to October 2013. Legal proceedings were started by Deyaar Gayrimenkul against İdeal Yaşam Alanları Ltd. Şti. and Dubai İnşaat Gayrimenkul Sanayi ve Ticaret Ltd. Şti., by the file numbered 2012/3556E of the Istanbul 10th Directorate of Bailiff and Execution for the collection of the receivable amounting to TL 14.626.888 TL by the liquidation of the mortgage. The proceeding was suspended as a result of the objection made by the Debtors. Furthermore, an action for cancellation of the objection has been filed by Deyaar Gayrimenkul against İdeal Yaşam Alanları Ltd. Şti. and Dubai İnşaat Gayrimenkul San. ve Tic. Ltd. Şti. before Istanbul 7th Commercial Court of First Instance with case number 2012/253 on September 27, 2012 for the cancellation of the objection submitted by the defendants to the execution file of Istanbul 10th Execution office with file number 2012/3556E and such case file is still pending.,and has been waived from the case on November 27, 2013 due to the receivables was assigned and Ideal Yaşam Alanları Ltd. Şti., Dubai İnşaat reached a deal with Deyaar Development PJSC.

m) Lawsuits filed against Alcen Enerji Dağıtım ve Perakende Satış Hizmetleri A.Ş (Alcen), a joint venture of the company as of 31 December 2013 mainly consist of matters relating to claims of dismissed employees for return or compensations and lawsuits for occupational accidents and carelessness of Alcen employees. Provision amounting to TL 13.933.406 (*) has been booked for the lawsuits which are likely to result against Alcen (31 December 2012: TL 12.279.592 (*)).

n) As of 31 December 2013, an action for cancellation of the objection has been filed by the Group regarding the objection filed to the execution by the Administration for the offsetting regarding the ongoing lawsuit filed by the Group against the Antalya Metropolitan Municipality for the receivables and delay interest amounting to EUR 6.797.558. Following its overruling by the judgment numbered 2011/418 of the domestic court, this action was appealed and with the judgment of the Supreme Court numbered 2012/4417, and the judgment of the local court was reversed in favor of the Group. Subsequently, as mentioned in its Record of the Proceeding dated September 5, 2012 and its Reasoned Decision numbered 2012-762, the

(*) Represents the amounts not multiplied by the consolidation rates of the jointly controlled entities.


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domestic court accepted the case, abiding by the judgment of the Supreme Court and the amount due by the Administration to the Group became definite on September 18, 2012 by Antalya 13. Directorate of Bailiff and Execution as EUR 6.797.558 plus interest. As for the indemnification of 40% for unrightful objection to the execution proceeding, the court has decided in favor of the Group but the Defendant has appealed this decision. In accordance with the decision of the Supreme Court dated October 31, 2013, the appeal resulted in favor of the Group, with a right to amendment within 10 days. The Municipality of Antalya requested an amendment and this request also resulted in rejection in favor of the Group. The decision regarding the overruling of the request was communicated by the Group on January 22, 2014 and as of the balance sheet date no payment plan was received from the Municipality of Antalya regarding the indemnification for unrightful objection to the execution and collection of interests regarding these receivables. Since no reasonable payment plan existed regarding the collection of the aforementioned delay penalty and the indemnification, the Group has not recognized any revenue regarding the indemnification for unrightful objection to the execution and interests on the consolidated financial statements as of 31 December 2013.

Furthermore, the personal action regarding the production operations which have not yet been remunerated for is still pending. The legal expert has decided in favor of the Group in all of his reports; however, no judgment has been made yet. The legal expert has been reengaged for the precise calculation by the court during the hearing dated March 7, 2013 and for the identification of the receivable-payable relationship. Accordingly, pursuant to the 2. Supplementary Report of the Consultative Authority dated October 8, 2013, the final progress payment which may be requested by the Group was calculated and determined as EUR 10.022.493 and no revenue was recognized regarding this amount in the consolidated financial statements as of 31 December 2013.

o) The Tanger-Kenitra railway project undertaken by subsidiary Alarko Sanayi Tesisleri ve Ticaret A.Ş. in Morocco was abolished unilaterally by the employer claiming that there was a delay in the construction of the project. Alsim Alarko has filed a lawsuit over the employer attempting to liquidate the letter of guarantee and the definite letter of guarantee and by during the trial dated June 28, 2013, the court suspended the liquidation of the guarantee. The case has been transferred to Morocco Rabat Administrative Court for the review of the abolishment of the engagement. The rightfulness of the abolishment and the one responsible for the discontinuation of the engagement will be determined by the expert’s report and the case is still ongoing. In the frame of the opinion of the management of the Group and the financial advisors, the amount of the definite letter of guarantee has considered a contingent asset and no provision has been projected on the consolidated financial statements as of 31 December 2013.

p) The letter sent by Kazakhmys Projects BV to Alsim Alarko Sanayi Tesisleri ve Ticaret A.Ş. regarding the Aktogay Copper Facilities Project signed between Alsim Alarko Sanayi Tesisleri ve Ticaret A.Ş., a subsidiary and Kazakhmys Projects BV suggested the suspension and termination of the Works after discussions. Within the frame of our contractual situation, mutual talks are ongoing for the suspension of the works and for the necessary actions to be taken. As of the reporting date, no situation has yet been decided on

21. Other assets and liabilitiesOther current assets consist of the following (TL): 31 December 2013 31 December 2012 Transferred VAT 37.705.833 24.480.360Other VAT 918.789 3.587.797Other current assets 68.026 83.682Income accruals 25.877 16.788 Total 38.718.525 28.168.627 Other non-current assets consist of the following (TL) : 31 December 2013 31 December 2012 Prepaid taxes and funds 13.150.349 4.525.280 Total 13.150.349 4.525.280

Other short term liabilities consist of the following (TL) 31 December 2013 31 December 2012 Other VAT 918.789 3.677.797Provisions for other liabilities and expenses 6.519.924 5.427.253

Total 7.438.713 9.105.050


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Employee benefit obligations consist of the following (TL) :

31 December 2013 31 December 2012 Social security withholdings payable 1.183.268 1.197.865Witholding tax 3.563.049 1.961.188Other tax duties 124.208 326.532 Total 4.870.525 3.485.585

22. Equity(a) Share capital :

As of 31 December 2013 and 2012, the Parent Company’s shareholding structure is as follows (TL):

31 December 2013 31 December 2012 Name Shareholding Nominal value Shareholding Nominal value Alaton family 35,37% 79.031.542 35,37% 79.031.542Garih family 33,23% 74.265.669 33,45% 74.759.137Other (*) 33,40% 70.169.789 31,18% 69.676.321 100% 223.467.000 100% 223.467.000

(*) Represents total of shareholders who own less than 10% of share capital. The registered capital limit of the Parent Company is TL 500.000.000. As of 31 December 2013, the paid-in capital of the Parent Company is TL 223.467.000 (31 December 2012 – TL 223.467.000) consisting of 22.346.700.000 shares of 1 Kr nominal value each (31 December 2012 – 22.346.700.000 shares).

(b) Cross Shareholding Adjustment:Capital adjustment made upon participation of subsidiaries having interest in the Parent Company capital is as follows (TL) :

31 December 2013 31 December 2012 Parent Company capital 223.467.000 223.467.000Parent Company shares acquired by the Subsidiary at nominal value (-) (787.396) (787.396)

Total share capital 222.679.604 222.679.604

There are Parent Company shares acquired by Alarko Gayrimenkul Yatırım Ortaklığı A.Ş. in 2003 amounting to TL 608.222 as of 31 December 2013 and 2012 (Value adjusted to the purchasing power of the Turkish Lira at 31 December 2004 – TL 1.208.359), and there are Parent Company shares acquired by Alamsaş Alarko Ağır Makina Sanayi A.Ş. as of 31 December 2013 and 2012 amounting to a total value of TL 179.174.

(c) Restricted Reserves:As of 31 December 2013 and 2012, restricted reserves consist of legal reserves.

Legal reserves, which are divided as First Legal Reserve and Second Legal Reserve as per the Turkish Commercial Code, are appropriated as below:

a) First Legal Reserve: Appropriated out of net profit at the rate of 5% until such reserve is equal to 20% of issued and fully paid capital.b) Second Legal Reserve: Appropriated out of net profit at the rate of 10% of distributions after providing for First Legal Reserve and an amount equal to 5% of capital as dividends.

Legal reserves which do not exceed one half of share capital may only be used to absorb losses or for purposes of continuity of the business in times of business difficulties and to prevent unemployment or lessen its effects.

(d) Retained Earnings / (Accumulated Losses):Distribution of retained earnings / (accumulated losses) is as follows (TL) :

As per the Communiqué Nr. II-14.1 “Paid-in Capital and Restricted Reserves” are recognized over the totals stated in the legal books, and the differences arising upon valuations made in accordance with TAS/TFRS are associated with the retained earnings/accumulated losses. As per the same Communiqué, retained earnings / accumulated losses other than the net profit for the period, are stated in the “Retained Earnings / (Accumulated Losses)” account together with the extraordinary reserves regarded in essence as retained earnings / accumulated losses.


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31 December 2013 31 December 2012 Retained earnings / (accumulated losses) 328.702.202 312.099.183Equity restatement differences 132.502.256 132.502.256Legal reserves 24.660.141 17.595.017Extraordinary reserves 264.775.377 226.797.731 750.639.976 688.994.187

Differences in inflation adjustment in equity arising from restatement of share premium and legal and extraordinary reserves consist of the following (TL) :

31 December 2013 31 December 2012 Inflation adjustment on legal reserves 232.846 232.846Inflation adjustment on extraordinary reserves 132.269.410 132.269.410 Total 132.502.256 132.502.256

Inflation adjustment differences will be used in bonus issue and offsetting losses. Furthermore, inflation adjustment difference originating from reserves bearing no entry to disable profit distribution may be used in profit distribution.

(e) Non-controlling Interest:Non-controlling interest consists of the following (TL) :

31 December 2013 31 December 2012 Share capital 32.051.861 32.087.656Legal reserves 1.356.169 1.266.811Other comprehensive income (2.384) (4.944)Retained earnings/(accumulated losses) 71.470.249 71.366.166Profit for the period 24.545.947 1.434.463 Total 129.421.842 106.150.152

Non-controlling interestAs of 31 December 2013 TL a portion of TL 25.505.347 of non-controlling share that is related to the profit for the period amounting to TL 24.545.947 represents 48,81% rate of share of Alarko Gayrimenkul Yatırım Ortaklığı A.Ş., (a subsidiary) that the Group has not control.

The total assets, liabilities and equity of Alarko Gayrimenkul Yatırım Ortaklığı A.Ş. as of 31 December 2013 and 2012 and summary statement of profit and loss for the years ended:

31 December 2013 31 December 2012 Current assets 201.823.015 157.032.720Non-current assets 25.129.705 23.891.513

Total assets(*) 226.952.720 180.924.233 Current liabilities 1.671.142 3.119.286Non-current liabilities 532.419 1.015.125Equity 224.749.159 176.789.822

Total liabilities 226.952.720 180.924.233 31 December 2013 31 December 2012 Gross profit / loss 30.145.731 11.477.215Operating income / expenses 22.054.721 (8.562.969)

Operating income / loss(*) 52.200.452 2.914.246

(*) Investment properties of Alarko Gayrimenkul Yatırım Ortaklığı A.Ş that is accounted according to the fair value, are indicated in Group consolidated financial statements at the cost value.


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23. Sales and cost of salesSales revenues consist of the following (TL) : 31 December 2013 31 December 2012 Domestic sales 462.214.598 243.888.957Exports 787.416.644 289.290.129Other sales 16.693.874 4.014.529Sales returns (-) (244.363) (352.806)Sales discounts (-) (4.851.714) (1.786.842) Total 1.261.229.039 535.053.967

Cost of sales consists of the following (TL) :

31 December 2013 31 December 2012 Cost of trade goods sold 19.888.476 441.515.933Cost of services sold 1.062.833.973 9.331.297 Total 1.082.722.449 450.847.230

24. Research and development expenses, marketing, sales and distribution expenses, general administration expenses Research and development expenses, marketing, selling and distribution expenses and general and administrative expenses are as follows (TL) :

Marketing, sales, and distribution expenses consist of the following (TL) : 31 December 2013 31 December 2012 Outsourced benefits and services 1.840.123 1.370.804Personnel expenses (Note 25) 2.476.406 2.403.280Exhibition, advertisement, presentation expenses 1.283.340 729.430Miscellaneous expenses 1.041.550 903.736 Total 6.641.419 5.407.250 General administration expenses consist of the following (TL) : 31 December 2013 31 December 2012 Doubtful receivables expense 56.907 32.899Personnel expenses (Note 25) 60.131.184 35.644.549Outsourced benefits and services 4.502.191 3.506.634Miscellaneous expenses 17.096.011 17.935.496Depreciation and amortisation (Note 25) 3.846.920 4.769.541Provision for retirement pay liability (Note 25) 2.672.015 2.401.852Vacation Provisions (Note 20) 132.274 -Provision for litigation - 3.361.005Taxes, duties, and fees 1.653.645 1.738.843Rental expenses 1.827.021 2.194.025Communication expenses 282.309 331.120Bank expenses 95.434 107.963 Total 92.295.911 72.023.927

25. Expenses by natureDepreciation and amortisation expensed consist of the following (TL): 31 December 2013 31 December 2012 Cost expenses 65.134.266 27.501.910General administrative expenses 3.846.920 4.769.541 Total 68.981.186 32.271.451


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31 December 2013 31 December 2012 Depreciation of plant, property and equipment 65.737.778 28.961.915Amortisation of intangible assets 3.033.443 3.102.309Investment properties 209.965 207.227 Total 68.981.186 32.271.451

Employee benefits consist of the following (TL): 31 December 2013 31 December 2012 Service rendering costs 44.181.280 23.649.984General administration expenses (Note 24) 62.935.473 38.083.698Marketing, sales, and distribution expenses (Note 24) 2.476.406 2.403.280 Total 109.593.159 64.136.962 Wages and salaries 84.948.714 49.883.850Social security premiums 11.056.700 4.811.160Other personnel expenses 10.915.730 6.985.337Provision for retirement pay liability (Note 20) 2.672.015 2.456.615 Total 109.593.159 64.136.962

26. Other income/expenses from operating activitiesOther income from operating activities is as follows (TL):

31 December 2013 31 December 2012 Foreign exchange income 154.606.173 64.973.590Interest income 20.285.130 18.237.231Other income 37.385.191 7.431.201Rental income 3.965.635 4.049.189Income on returns - 2.425.207Provisions for retirement pay liability no longer required 1.890.807 1.577.556Rediscounted interest income 324.803 494.539Doubtful trade receivables provision no longer required - 127.064 Total 218.457.739 99.315.577

Other expenses from operating activities are as follows (TL):

31 December 2013 31 December 2012 Foreign exchange losses 80.459.617 74.724.157Other expenses and losses 19.557.327 10.166.450Commercial costs 4.068.406 4.669.189Contract costs related to complete projects 6.000.808 4.652.198Rediscounted interest expense 240.167 813.499 Total 110.326.325 95.025.493

27. Income / expense from investing activitiesIncome from investing activities are as follows (TL) :

31 December 2013 31 December 2012 Gain on sale of tangible fixed assets 3.860.776 1.122.601Dividend income 61.503 92.641Value increase in marketable securities - 14.843.921Gain on sale of financial tangible assets 3.765 - Total 3.926.044 16.059.163


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Expenses from investing activities are as follows (TL) :

31 December 2013 31 December 2012 Loss on sale of tangible asset 62.721 55.324Loss on sale of marketable securities 322.985 - Total 385.706 55.324

28. Financial expenses and incomeFinancial income consists of the following (TL): 31 December 2013 31 December 2012 Foreign exchange gains related to loans - 3.221.110 Total - 3.221.110

Financial expenses consist of the following (TL):

31 December 2013 31 December 2012 Foreign exchange losses related to loans 1.413.298 -Borrowing expenses 17.010.443 8.996.099 Total 18.423.741 8.996.099

29. Tax assets and liabilities a) Corporation tax;

The corporation tax rate for 2013 is 20% in Turkey (31 December 2012 – 20%). This rate is applicable to the tax base derived upon exemptions and deductions stated in the tax legislation through addition of disallowable expenses to the commercial revenues of the companies with respect to the tax legislation.

Tax income and expenses recognized in the consolidated statement of comprehensive income are summarized in the following (TL):

31 December 2013 31 December 2012 Current period Corporation Tax (Note 19) (12.466.084) (10.509.288)Deferred tax income / (expense) (Note 29(b)) (22.437.160) 3.810.837 Total tax expense (34.903.244) (6.698.451)

According to the Turkish tax legisilation in practice, 20% of defered tax is calculated over differences of revaluation of progress billing derived from extended over years constructions. The other hand, the tax rates used in calculating corporation tax and deferred tax for the jointly controlled entities are 20%, 21%(31 December 2012 - 23%), and 30% in Russia, Ukraine, and Spain, respectively, and 28% for the subsidiaries in Kazakhstan.

As of 31 December 2013 and 2012, the reconciliation between the tax expense calculated by applying the legal tax rate on the profit before tax and the total tax provision stated in the consolidated statement of comprehensive income is as follows (TL):

31 December 2013 31 December 2012 Profit before tax 243.695.676 82.896.823Equity method 70.878.405 61.602.329Profit before tax (equity excluded) 172.817.271 21.294.494Local tax rate %20 %20Tax expense calculated by using the tax rate 34.563.454 4.258.899Disallowable expenses and other additions 4.365.509 3.383.630Tax-exempt earnings and other deductions (3.457.801) (1.235.321)Effect of different tax rates (567.918) 291.243

Total tax expense 34.903.244 6.698.451


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b) Deferred Tax Assets and Liabilities;Temporary differences creating a basis for deferred tax calculations and deferred tax assets/liabilities and deferred tax income/expenses are as follows (TL):

Temporary income / (expense) differences Deferred tax assets Accumulated temporary differences / liabilities 31 December 2013 31 December 2012 31 December 2013 31 December 2012 Tax assets Deductable financial losses (*) 24.051.098 5.263.441 4.810.220 1.052.688Adjustment of construction cost within the scope of TAS 11 267.344.255 86.338.866 53.040.683 18.473.419Provision for doubtful receivables 10.051.275 10.319.508 2.010.255 2.063.902Temporary differences on inventories - 18.181.686 - 3.636.337Provision for litigation expenses 4.148.307 7.148.954 829.661 1.429.791Unused vacation provision 1.121.591 994.646 224.318 198.929Retirement pay liability 10.156.518 9.295.990 2.031.304 1.859.198Other 13.207.046 2.145.268 2.641.898 242.504 330.080.090 139.688.359 65.588.339 28.956.768

Deferred tax assets Accumulated temporary differences / liabilities 31 December 2013 31 December 2012 31 December 2013 31 December 2012

Tax liabilities Temporary differences on the inventories (35.032.879) - (7.006.576) -Adjustment of deferred construction progress payments within the scope of TAS 11 (397.229.977) (81.865.985) (79.445.995) (16.373.197)Effect of acquisition (2.247.735) (2.247.735) (449.547) (449.547)Net difference between the book values of tangible and intangible assets and their tax bases and financial assets (57.550.247) (57.106.872) (11.328.603) (11.328.363) (492.060.838) (141.220.592) (98.230.721) (28.151.107) Deferred tax liability, net (32.642.382) 805.661 Deferred tax asset on balance sheet 87.714.603 39.709.408Deferred tax liability on balance sheet (120.356.985) (38.903.747) Effect of deferred tax, net (32.642.382) 805.661

(*) Out of the total accumulated losses subject to deferred tax calculation, a portion of TL 23.242.785 pertains to energy companies and a portion of TL 808.313 pertains to contracting companies.

Deferred tax income / (expense) (TL):

31 December 2013 31 December 2012 Current period deferred tax asset / (liability) (32.642.382) 805.661Reversal of prior period deferred tax (liability) / asset (805.661) 3.084.605Effect of the companies excluded from consolidation - (380.077)Subsidiaries entry 11.925.433 -Other comprehensive income (914.550) 300.648

Deferred tax income (Note 29(a)) (22.437.160) 3.810.837


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30. Earnings/(loss) per shareEarnings/(loss) per share is calculated as follows;

31 December 2013 31 December 2012 Profit/loss for the period (TL) 184.246.485 74.763.909 Weighted average number of ordinary shares at the beginning of the period (*) 223.467.000 223.467.000 Earnings/(loss) per parent company share (TL) 0,824 0,335Earnings/(loss) per diluted shares (TL) 0,824 0,335

(*) per share of TL 1 nominal

As of 31 December 2013, the profit for the period of Alarko Group as per the accompanying financial statements is TL 184.190.188 and other sources that may be subject to profit distribution amount to a total of TL 728.848.492 (Note 22). As of 31 December 2013, the Parent Company profit for the period is TL 17.606.071 as stated in the legal books. Total of other reserves may be subject to profit distribution is TL 216.865.085.

At the ordinary general assembly meeting of Alarko Holding, dated on May 16, 2013, dividend payment per share calculated over consolidated profit of year of 2012 is TL 0,054. (31 December 2012 – TL 0,027).

31. Related party disclosuresTrade receivables from related parties consist of the following (TL) :

31 December 2013 31 December 2012 Doğuş-Alarko-YDA İnş. Adi Ortaklığı (1) 5.103.772 23.147.279Alarko-Makyol Adi Ortaklığı (1) 588.416 609.179Meram Elektrik Dağıtım A.Ş.(1) 428.541 193.287Meram Elektrik Perakende Satış A.Ş.(1) 221 -Meram Elektrik Enerjisi Toptan Satış A.Ş.(1) 700 -Wacon Hilwater-Terrasan Adi Ort. (3) - 129.989Wacon Hilwater Adi Ort. (3) 124.280 68.340Alarko Carrier San. ve Tic. A.Ş.(1) 19.284 -Alfarm Alarko Leroy Su Ürün.San.ve Tic. A.Ş. (1) 1.802 11.704Cenal Elektrik Üretim A.Ş. (1) 122 -Alarko Carrier San. ve Tic. A.Ş.(1) - 83.455Alcen Enerji Dağ.ve Perak.Sat. Hizm.A.Ş. (1) 546 172Doubtful trade receivables from related parties (*) 9.003.856 9.523.403Provision for doubtful trade receivables from related parties (-) (Note 8) (9.003.856) (9.523.403) Total (Note 8) 6.267.684 24.243.405

(*) As of 31 December 2013, the provision for doubtful trade receivables is made in relation to the receivables of TL 9.003.856 of the shareholders of “Streicher-Haustad & Timmerman Günsayıl-Alsim A.Ş.”, a company which is included in the consolidation as a subsidiary (31 December 2012 - TL 9.523.403) (1) Jointly controlled entity(2) Affiliate(3) Other ordinary partnership not included to consolidation


126

Trade payables to related parties consist of the following (TL): 31 December 2013 31 December 2012 Alarko-Makyol Adi Ortaklığı (1) 12.944 17.369Alarko Carrier San. ve Tic. A.Ş. (1) 3.556.652 29.571Meram Elektrik Enerjisi Toptan Satış A.Ş.(1) 204.920 12.512 Total (Note 8) 3.774.516 59.452

Non-trade receivables from related parties consist of the following (TL):

31 December 2013 31 December 2012 Al-Riva Projesi .Ar.Değ.Konut İnş. Tic. A.Ş. (2) 13.296.693 11.566.609Al-Riva Arazi Değer.Konut İnş.ve Tic. A.Ş. (2) 2.696.670 2.318.134Al-Riva Ar.Değ.Kon. İnş. Tur. Tes. Golf A.Ş. (2) 570.140 509.689 Total (Note 9) 16.563.503 14.394.432

Non-trade payables to related parties consist of the following (TL):

31 December 2013 31 December 2012 Doğuş Alarko YDA İnşaat Adi Ortaklığı (1) 1.416 -Dividends to shareholders - 11.872 Total (Note 9) 1.416 11.872

Non-trade payables to related parties consist of the following (TL) :

31 December 2013 31 December 2012 Alarko-Makyol Adi Ortaklığı (1) 66.291.962 61.291.962 Total (Note 9) 66.291.962 61.291.962

(1) Jointly controlled entity(2) Affiliate(3) Other ordinary partnership not included to consolidation Sales to related parties consist of the following (TL):

As of 31 December 2013 Rent Service Traded good Other Total Al-Riva Proje Ar.Değ. Konut Ins.Tic. A.Ş. (2) 515 4.029 - 721.198 308 726.050Al-Riva Arazi Değ. Konut Ins.ve Tic. A.Ş. (2) 515 889 - 225.105 - 226.509Al-Riva Ar.Değ.Kon.Inş.Tur.Tes.Golf A.Ş. (2) 515 2.818 - 27.610 - 30.943Tüm Tesisat ve İnşaat A.Ş.(4) 515 2.280 - - - 2.795Alfarm Alarko Leröy Su Ürünleri San. ve Tic. A.Ş. (1) 258 36.037 194 - 10.668 47.157Alarko Carrier San. ve Tic. A.Ş.(1) 205.981 458.674 109.283 - 143.155 917.093Alarko Deyaar Gayrimenkul Geliştirme A.Ş. (1) 258 1.745 - - - 2.003Alcen Enerji Dağıtım ve Perakende Satış Hiz. A.Ş. (1) 258 1.278 - - 3.302 4.837Meram Elektrik Dağıtım A.Ş. (1) - 1.063.032 - - 37.804 1.100.835Alarko Makyol Adi Ortaklığı (1) - 144.574 432 - 100 145.106Meram Elektrik Enerjisi Toptan Satış A.Ş. (1) 258 - - - 7.029 7.287Cenal Elektrik Üretim A.Ş. (1) 1.092 933 - - 2.610.702 2.612.727Meram Elektrik Perakende Satış A.Ş. (1) 238 - - - 1.055 1.293Doğuş-Alarko-YDA İnş. Adi Ortaklığı (1) - 154.068 377.059 174.943 - 706.070Algiz Enerji A.Ş. (1) 238 - - - 5.550 5.788 Total 210.641 1.870.357 486.968 1.148.856 2.819.673 6.536.493

Maturity difference


127

As of 31 December 2012 Rent Service Traded good Other Total Al-Riva Proje Ar.Değ. Konut Ins.Tic. A.Ş. (2) 475 6.175 - 515.700 - 522.350Al-Riva Arazi Değ. Konut Ins.ve Tic. A.Ş. (2) 475 1.089 - 82.677 - 84.241Al-Riva Ar.Değ.Kon.Inş.Tur.Tes.Golf A.Ş. (2) 475 3.457 - 19.227 - 23.159Tüm Tesisat ve İnşaat A.Ş.(4) 475 2.136 - - - 2.611Alfarm Alarko Leröy Su Ürünleri San. ve Tic. A.Ş. (1) 238 46.952 - - 7.573 54.763Alarko Carrier San. ve Tic. A.Ş.(1) 377.619 760.287 78.889 - 26.182 1.242.977Alarko Deyaar Gayrimenkul Geliştirme A.Ş. (1) 238 390 - - 3 631Alcen Enerji Dağıtım ve Perakende Satış Hiz. A.Ş. (1) 238 4.833 - - - 5.071Meram Elektrik Dağıtım A.Ş. (1) 238 809.680 - - - 809.918Alarko Makyol Adi Ortaklığı (1) 53 179.644 71 - 4.957 184.725Meram Elektrik Enerjisi Toptan Satış A.Ş. (1) 238 5.571 - - - 5.809Alhan Holding A.Ş. (5) 475 - - - - 475Cenal Elektrik Üretim A.Ş. (1) 2.742 872 - - - 3.614 Total 383.979 1.821.086 78.960 617.604 38.715 2.940.344

(1) Jointly controlled entity(2) Affiliate(3) Other ordinary partnership not included to consolidation (4) Other financial investments not included to consolidation(5) Shareholders of the Parent company

Purchases from related parties consist of the following (TL) :

As of 31 December 2013 Rent Service Traded good Other Total Alfarm Alarko Leröy Su Ürünleri San. ve Tic. A.Ş.(1) - - 4.109 - 49.967 54.076Alarko Carrier San. ve Tic. A.Ş. (1) 34.227 86.536 1.541.738 1.502 65.859 1.729.862Doğuş-Alarko –YDA İnş. Adi Ort. (1) - 29.772 144.925 - 12.087 186.784Meram Elektrik Enerjisi Toptan Satış A.Ş.(1) - 176.032 - - - 176.032Al-Riva Projesi Ar.Değ. Konut İnş. Tic. A.Ş. (2) - - - - 925 925Cenal Elektrik Üretim A.Ş. (1) - 1.333 - - - 1.333 Total 34.227 293.673 1.690.772 1.502 128.838 2.149.012

As of 31 December 2012 Rent Service Traded good Other Total Alfarm Alarko Leröy Su Ürünleri San. ve Tic. A.Ş.(1) - 33.407 3.400 - 147 36.954Alarko Carrier San. ve Tic. A.Ş. (1) 33.147 76.297 38.785 - 39.783 188.012Meram Elektrik Dağıtım A.Ş.(1) - 157 - - - 157Doğuş-Alarko –YDA İnş. Adi Ort. (1) - - 314.625 - - 314.625Alarko Makyol Adi Ortaklığı (1) - 237.247 - - - 237.247Meram Elektrik Enerjisi Toptan Satış A.Ş.(1) - 43.101 18.574 - - 61.675Al-Riva Projesi Ar.Değ. Konut İnş. Tic. A.Ş. (2) - - - - 1.755 1.755 Total 33.147 390.209 375.384 - 41.685 840.425

(1) Jointly controlled entity (2) Affiliate(3) Other shareholders of the companies included in consolidation

As of 31 December 2013, remuneration provided to top executives such as the CEO and members of the Board of Directors amount to TL 12.807.243 (31 December 2012 – TL 11.509.215). The entire amount consists of short term benefits.

As of 31 December 2013, the guarantees, mortgages, and sureties received from group companies amount to TL 181.800.673 (31 December 2012 – TL 172.236.271). As of 31 December 2013 the guarantees, mortgages, and sureties given to group companies amount to TL 1.196.801.710 (31 December 2012 – TL 651.085.355).

Maturity difference

Maturity difference

Maturity difference


128

32. Nature and extent of risk arising from financial instruments i. Credit risk

Credit risks incurred by type of financial instruments are as follows (TL) : Receivables Trade Receivables Other Receivables Bank 31 December 2013 Related party Other party Related party Other party deposits Other (*) Maximum credit risk incurred as of the reporting date (A+B+C+D+E)(**) (Note 5, 8 and 9) 6.267.684 343.683.313 16.563.503 84.968.985 376.594.446 2.736.934 - Part of the maximum risk covered by collaterals” - 137.970 - - - - A. Net book value of financial assets that are neither overdue nor impaired (Note 8, 9) 6.267.684 309.120.980 11.459.733 80.653.388 376.594.446 2.736.934 B. Book value of financial assets with conditions revised which otherwise would be considered as overdue or impaired - - - - - - C. Net book value of overdue assets that are not impaired (Note 8) - 34.562.333 5.103.770 4.315.597 - - -Portion covered by collaterals - 39.899 - - - - D. Net book value of impaired assets - - - - - - - Overdue (gross book value) - 20.104.015 - - - - - Impairment (-) (Note 8, 9) - (20.104.015) - - - - - Part of net value covered by collaterals - - - - - - - Not overdue (gross book value) - - - - - - - Impairment (-) (Note 8) - - - - - - - Part of net value covered by collaterals - - - - - -E. Derecognized elements involving credit risk (***) Credit risks incurred by type of financial instruments are as follows (TL) : Receivables Trade Receivables Other Receivables Bank 31 December 2012 Related party Other party Related party Other party deposits Other (*) Maximum credit risk incurred as of the reporting date (A+B+C+D+E)(**) (Note 5, 8 and 9) 32.154.408 78.238.023 14.394.432 23.000.120 318.837.271 3.025.786 - Part of the maximum risk covered by collaterals - 110.941 - 796.900 - - A. Net book value of financial assets that are neither overdue nor impaired (Note 8, 9) 24.243.405 47.378.662 - 23.000.120 318.837.271 3.025.786 B. Book value of financial assets with conditions revised which otherwise would be considered as overdue or impaired - - - - - -C. Net book value of overdue assets that are not impaired (Note 8) - 30.815.253 14.394.432 - - - - Portion covered by collaterals - 8.549 - - - -D. Net book value of impaired assets - - - - - - - Overdue (gross book value) - 20.891.568 - - - - - Impairment (-) (Note 8, 9) - (20.891.568) - - - -

- Part of net value covered by collaterals - - - - - -- Not overdue (gross book value) - - - - - -- Impairment (-) (Note 8) - - - - - -- Part of net value covered by collaterals - - - - - -

E. Derecognized elements involving credit risk (***) 7.911.003 44.108 - - - -

(*) Consists of the sum of , cheques received, other liquid assets, and financial assets held for trading in cash and cash equivalents.(**) In determining the amount of credit risk to be incurred, factors that increase credit reliability, i.e. the guarantees received, are not taken into consideration.(***) Indicated totals consist of the collaterals, sureties, and guarantees given for L/C agreements.


129

Distribution of net book values by maturity of the overdue assets that are not impaired is as follows (TL)

Trade receivables Other receivables31 December 2013 Related party Other party Related party Other party 1-30 days past due - 164.212 - -1-3 months past due (*) - 139.313 - -3-12 months past due (*) - 48.888 - -1-5 years past due (*) (**) - 34.209.920 5.103.770 4.315.597 More than 5 years past due - - - -Total - 34.562.333 5.103.770 4.315.597 Portion covered by collaterals - 39.899 - - Trade receivables Other receivables31 December 2012 Related party Other party Related party Other party 1-30 days past due - 373.657 - -1-3 months past due (*) - 416.902 - -3-12 months past due (*) - 56.662 - -1-5 years past due (*) (**) - 29.968.032 14.394.432 -More than 5 years past due - - - -Total - 30.815.253 14.394.432 -Portion covered by collaterals - 8.549 - -

The credit risk of Alarko Group may arise basically from its trade receivables. The Group management evaluates trade receivables taking into consideration the collaterals received, past experience, and current economic outlook; and states them as net in the statement of financial position after making provisions for doubtful receivables when deemed necessary. The Group has made provisions for doubtful receivables formed until the reporting date.

(*) Majority of receivables which are 1-3 months, 3-12 months, and 1-5 years past due arise from delayed payments of TEIAŞ to Altek Alarko Elektrik Santralleri Tesis İşletme ve Ticaret A.Ş.

(**) Other receivables are 1-5 years past due consist of trade receivables of Alsim Alarko Sanayi Tesisleri ve Ticaret A.Ş. (subsidiary) from Alriva companies. Some of the trade receivables consist of the receivables from Antalya Municipality within the scope of Antalya Light Rail Metro Project and some of the receivables from Adana Municipality within the scope of Adana Light Rail Metro Project.

ii. Liquidity riskHolding financial instruments may lead to failure of the counterparty to fulfill the terms and conditions of the agreement. The Group management takes measures to prevent such risks through limiting the average risk for the counterparty (except for the related parties) at each agreement, and receiving collaterals if necessary.

The Group creates funds through converting short term financial instruments, i.e. trade receivables, into cash. As of 31 December 2013 and 2012, the Group’s liquid assets (current assets – inventories) exceed its short term liabilities by TL 231.238.326 and TL 312.692.665 respectively.

Receivables

Receivables


130

31 December 2013

Maturities per contract Non-derivative financial liabilities Bank loans (Note 7) 265.687.135 339.560.416 23.517.051 95.436.211 176.608.559 43.998.595 -Trade payable (Note 8) 111.877.924 111.940.792 68.844.076 279.516.916 28.795.781 - (265.215.981) Other payable (Note 9) 26.929.665 26.929.657 5.330.329 29.277.663 30.935 - (7.709.270)

Expected maturities Non-derivative financial liabilities Trade payable (Note 8) 113.977.523 114.039.234 3.492.528 380.734.426 - - (270.187.720) Other payable (Note 9) 77.110.497 77.110.497 131.060 10.687.475 66.291.962 - -

31 December 2012

Maturities per contract

Non-derivative financial liabilities Bank loans (Note 7) 136.996.353 193.774.707 3.134.614 59.256.279 82.079.303 49.304.511 -Trade payable (Note 8) 28.862.954 28.921.796 49.727.183 9.359.274 637.538 11.483 (30.813.682) Other payable (Note 9) 4.042.026 4.042.026 2.548.978 1.336.067 254.039 - (97.058)

Expected maturities

Non-derivative financial liabilities Bank loans 320.637 320.637 320.637 - - - -Trade payables (Note 8) 68.245.148 68.270.076 92.239.773 36.867.651 11.895.225 3.312 (72.735.885) Other payables (Note 9) 79.213.386 79.213.386 8.588.604 70.624.782 - - -

iii. Interest riskInterest risk arises from the probability of interest rate changes to affect financial statements. The loan agreements made by the Group are denominated in USD and Euro with fixed and variable interest rates, and their average maturities vary between 1 months and 18 years. As the payments are denominated in foreign currency, it is assumed that the interest rate will not be subject to material changes during the maturity period; hence, the interest rate risk is regarded immaterial.

31 December 2013 31 December 2012 Financial Instruments with Fixed Interest Financial assets Time deposits (Note 5) 356.100.651 380.955.978 Assets of which the fair value differences are reflected to profit/loss (Note 6) 129.292.842 107.059.245 Financial liabilities (Note 7) (*) 219.805.432 180.153.685 31 December 2013 31 December 2012 Financial Instruments with Variable Interest Financial Liabilities (Note 7) (*) 45.881.703 61.844.739 Investment Funds (Note 5) 2.732.939 3.431.376

(*) Financial liabilities stated under financial instruments with fixed and variable interests consist of short and long term bank loans and lease obligations.

As of 31 December 2013, if the variable interest rates on foreign currency loans were to increase/decrease by 0,5% and those on TL loans were to increase/decrease by 1% with all other variables remaining constant, the profit/(loss) before tax would be lower/higher by TL 3.748 due to change in interest expenses (31 December 2012 – TL 4.479).

Bookvalue

Bookvalue

Bookvalue

Bookvalue

Total cash outflows per

contract(I+II+III+IV+V)







Less than 3 months

(I)

Less than 3 months

(I)

Less than 3 months

(I)

Less than 3 months

(I)

3-12 months

(II)

3-12 months

(II)

3-12 months

(II)

3-12 months

(II)

1-5years

(III)

1-5years

(III)

1-5years

(III)

1-5years

(III)

More than 5 years

(IV)

More than 5 years

(IV)

More than 5 years

(IV)

More than 5 years

(IV)

Eliminations and

adjustments(V

Eliminations and

adjustments(V

Eliminations and

adjustments(V

Eliminations and

adjustments(V


131

iv. Foreign currency riskBalances of foreign currency transactions of Alarko Group originating from operating, investing, and financing activities as of the reporting date are stated below. In relation to the foreign currency receivables and payables, the Group may be exposed to foreign currency risk in parallel with the exchange rate fluctuations. The foreign currency risk is controlled through continuous analysis and monitoring of the foreign exchange position.

As of 31 December 2013 and 2012, the currency risk analysis of Alarko Group is as follows (TL):

When USD changes by 10% against TL 1- Net Assets/ Liabilities in USD (1.858.980) 1.858.980 - -2- Hedged from USD risk (-) - - - -3- USD Net Effect (1+2) (1.858.980) 1.858.980 - -When Euro changes by 10% against TL 4- Net Assets/ Liabilities in Euro 17.420.485 (17.420.485) - -5- Hedged from Euro risk(-) - - - -6- Euro Net Effect (4+5) 17.420.485 (17.420.485) - -When JPY changes by 10% against TL 7- Net Assets/ Liabilities in JPY 5.105 (5.105) - -8- Hedged from JPY risk (-) - - - -9- JPY Net Effect (7+8) 5.105 (5.105) - -When other foreign currencies changes by 10% against TL 10- Net Assets/ Liabilities in other currencies (264.578) 264.578 - -11- Hedged from other currency risks(-) - - - -12- Net Effect of Other Currencies (10+11) (264.578) 264.578 - - Total (3+6+9+12) 15.302.032 (15.302.032)

When USD changes by 10% against TL 1- Net Assets/ Liabilities in USD 6.281.136 (6.281.136) - -2- Hedged from USD risk (-) - - - -3- USD Net Effect (1+2) 6.281.136 (6.281.136) - -When Euro changes by 10% against TL 4- Net Assets/ Liabilities in Euro 11.738.626 (11.738.626) - -5- Hedged from Euro risk(-) - - - -6- Euro Net Effect (4+5) 11.738.626 (11.738.626) - -When JPY changes by 10% against TL 7- Net Assets/ Liabilities in JPY 1.783.901 (1.783.901) - -8- Hedged from JPY risk (-) - - - -9- JPY Net Effect (7+8) 1.783.901 (1.783.901) - -When other foreign currencies changes by 10% against TL 10- Net Assets/ Liabilities in other currencies (4.875) 4.875 - -11- Hedged from other currency risks(-) - - - -12- Net Effect of Other Currencies (10+11) (4.875) 4.875 - - Total (3+6+9+12) 19.798.788 (19.798.788)

Profit / Loss

Profit / Loss

Value increasein foreign currency








Equity

Equity

Foreign currency sensitivity analysis chart31 December 2013

Foreign currency sensitivity analysis chart31 December 2012


132

As of 31 December 2013, the foreign currency assets and liabilities of the Group consist of the following (TL):

Foreign currency position table31 December 2013

TL Equivalent (Functional curreny) USD Avro GBP CAD CYN AUD

1. Trade receivables 261.501.222 95.496.241 19.643.017 92.701 - - -2a. Monetary financial assets (Incl. Cash and Banks) 272.131.527 71.999.423 40.324.656 2.461.720 - - -2b. Non-monetary financial assets 60.477.860 23.194.194 3.318.774 - - 3.510.074 -3.Other 152.348 5.261 48.057 - - - -4. Current assets (1+2+3) 594.262.957 190.695.119 63.334.504 2.554.421 - 3.510.074 -5. Trade receivables 13.214 - 4.500 - - - -6a. Monetary financial assets - - - - - - -6b. Non-monetary financial assets 4.269 2.000 - - - - -7.Other - - - - - - -8. Non-current assets (5+6+7) 17.483 2.000 4.500 - - - -9. Total assets (4+8) 594.280.440 190.697.119 63.339.004 2.554.421 - 3.510.074 -10. Trade payables 88.835.922 35.481.602 3.143.953 30.893 33.397 10.877.273 -11. Financial liabilities 36.229.243 16.974.766 - - - - -12.a Other monetary liabilities 4.213 1.974 - - - - -12.b Other non-monetary liabilities 165.298.924 76.250.294 871.078 35 - - -13. Short term liabilities (10+11+12) 290.368.302 128.708.636 4.015.031 30.928 33.397 10.877.273 -14. Trade payables - - - - - - -15. Financial liabilities 150.891.815 70.698.503 - - - - -16a. Other monetary liabilities - - - - - - -16b. Other non-monetary liabilities - - - - - - -17. Long term liabilities (14+15+16) 150.891.815 70.698.503 - - - - -18. Total liabilities (13+17) 441.260.117 199.407.139 4.015.031 30.928 33.397 10.877.273 -19. Net foreign currency asset / (liability) position (9-18) 153.020.323 (8.710.020) 59.323.973 2.523.493 (33.397) (7.367.199) -20. Monetary items net foreign currency asset / (liability) Position (1+2a+5+6a-10-11-12a-14-15-16a) 257.684.770 44.338.819 56.828.220 2.523.528 (33.397) (10.877.273) -21. Exports (*) 711.600.706 343.626.530 175.448 - - - -22. Imports (*) 425.466.270 137.785.734 45.570.958 259.208 37.267 60.861.246 708.425

(*) Average exchange rate is used and represents pre-elimination balances. As of 31 December 2012, the foreign currency assets and liabilities of the Group consist of the following (TL):

Foreign currency position table31 December 2012

TL Equivalent (Functional curreny) USD EUR JPY GBP Other 1. Trade receivables 90.476.780 36.898.398 2.905.717 863.623.565 10.210 -2a. Monetary financial assets (Incl. Cash and Banks) 293.777.536 101.906.627 47.675.631 - - -2b. Non-monetary financial assets 14.282.987 4.471.885 2.577.696 - - 4.250.0003.Other 78.153 1.021 32.460 - - -4. Current assets (1+2+3) 398.615.456 143.277.931 53.191.504 863.623.565 10.210 4.250.0005. Trade receivables 10.583 - 4.500 - - -6a. Monetary financial assets - - - - - -6b. Non-monetary financial assets 3.565 2.000 - - - -7.Other - - - - - -8. Non-current assets (5+6+7) 14.148 2.000 4.500 - - -9. Total assets (4+8) 398.629.604 143.279.931 53.196.004 863.623.565 10.210 4.250.00010. Trade payables 137.719.729 73.398.154 2.900.963 - 20.198 -11. Financial liabilities 5.609.010 3.146.533 - - - -12.a Other monetary liabilities 5.648.315 - 2.401.801 - - -12.b Other non-monetary liabilities 10.123.491 4.755.723 691.354 - 6.995 -13. Short term liabilities (10+11+12) 159.100.545 81.300.410 5.994.118 - 27.193 -14. Trade payables - - - - - -15. Financial liabilities 37.682.137 21.138.863 - - - -16a Other monetary liabilities - - - - - -16b Other non-monetary liabilities - - - - - -17. Long term liabilities (14+15+16) 37.682.137 21.138.863 - - - -18. Total liabilities (13+17) 196.782.682 102.439.273 5.994.118 - 27.193 -19. Net foreign currency asset / (liability) position (9-18+19) 201.846.922 40.840.658 47.201.886 863.623.565 (16.983) 4.250.00020. Monetary items net foreign currency asset / (liability) Position (1+2a+5+6a-10-11-12a-14-15-16a) 197.605.708 41.121.475 45.283.084 863.623.565 (9.988) -21. Exports (*) 251.528.075 134.035.444 5.548.041 - - -22. Imports (*) 154.332.334 81.088.353 12.941.484 - 11.006 -

(*) Average exchange rate is used and represents pre-elimination balances.


133

v. Capital risk management

For proper management of capital risk, the Group aims;

• To maintain continuity of operations so as to provide earnings to partners and benefits to other shareholders.• To increase profitability through determining a service pricing policy that is commensurate with the level of risks inherent in the market.

The Group determines the amount of share capital in proportion to the risk level. The equity structure of the Group is arranged in accordance with the economic outlook and the risk attributes of assets.

The Group monitors capital management by using the debt/equity ratio. This ratio is calculated by dividing the debt, net, by the total share capital. The net debt is calculated by deducting the value of cash and cash equivalents from the total debt (the sum of short and long term liabilities stated in the statement of financial position). The total share capital is the sum of all equity items stated in the statement of financial position. The Group’s general strategy has not changed with respect to last year. As of 31 December 2013 and 2012, the ratios of the total share capital to total net liabilities are as follows (TL):

31 December 2013 31 December 2012 Total debt 1.306.684.277 622.532.520 Less: cash and cash equivalents (379.495.885) (321.962.349) Net debt 927.188.392 300.570.171 Total capital 1.313.867.190 1.108.234.575 Debt / equity ratio %71 %27

33. Subsequent events

a) The retirement pay liability upper limit which was TL 3.254,44 as of 31 December 2013 has been increased to TL 3.438,22 effective from 1 January 2014.

b) As a result of the Ordinary General Assembly Meeting of Meram Perakende Satış A.Ş. Satış Hizmetleri A.Ş., a jointly controlled entity, dated March 07,2013; decision is to make tax provision amounting TL 130.738,12 and other legal obligations form the profit of 2013, TL 733.143,51 to previous years loss to be eliminated from the net profit for the period after tax, to set up first legal reserves paid in capital out of balance at a rate 5% until covering 20% of the paid in capital,to set up first legal reserves at a rate 10% of the remaining balance after the first dividend at a rate of 5% is deducted from paid-in capital, to be distributed entire balance of the profit to the sharesholders in cash, dividend distribution has been decided to start on March 10, 2014.

c) According to Ordinary General Assembly Meeting of Meram Elektrik Dağıtım A.Ş., a jointly controlled entity, dated March 07, 2013; the operating profit for the period is TL 89.521.151,00. It is decided to eliminate the profit for the period to the loss from previous year due to the loss from previous year that occured after auditting the financial statements of 31 December 2013 according to Turkish Accounting Standards and Turkish Financial Reporting Standards.

d) As a result of the Ordinary General Assembly Meeting of the Cenal Elektrik Üretim A.Ş., a jointly controlled entity, dated March 07, 2013; decision

is to make tax provision and other legal obligations from the profit TL 2.467.226,47, for the period amounting to TL 738.480,28, to be eliminated previous years loss amounting to TL 361.569,79, from net profit for the period aftter tax, to set up first legal reserves at a rate of 5% until covering 20% of the paid-in capital and to set up extraordinary reserves with the balancing amount.

e) As a result of the Ordinary General Assembly Meeting of Meram Elektrik Enerjisi Toptan Satış A.Ş., a jointly controlled entity, dated March

07,2013; decision is to make tax provision amounting TL 801.895,20 and other legal obligations form the profit of 2013,TL 2.023.174,06 to previous years loss to be eliminated from the net profit for the period after tax, to set up first legal reserves paid in capital out of balance at a rate 5% until covering 20% of the paid in capital,to set up first legal reserves at a rate 10% of the remaining balance after the first dividend at a rate of 5% is deducted from paid-in capital, to be distributed entire balance of the profit to the shareholders in cash, dividend distribution has been decided to start on March 10, 2014.

f) According to the Ordinary General Assembly Meeting of the Alcen Enerji Dağıtım ve Perakende Satış Hizmetleri A.Ş., jointly controlled entity, dated March 07,2013; not make tax provision and other legal obligations from the profit fot the period due to taxable base did not occur, to set up first legal reserves amounting to TL 2.822.988,47 at a rate of 5% until covering 20% of the paid-in capital and to set up extraordinary reserves with the balancing amount.

34. Other issues materially affecting the financial statements or requiring disclosure for a proper interpretation and understanding of the financial statements

Insurance on assets is as follows for the respective periods (TL):

31 December 2013 1.234.776.32431 December 2012 1.260.282.252


134


We prepared the Annual Report for 2013 in a detailed manner as much as possible to provide you with comprehensive and detailed information about the activities of our Group for 2013.

Our goal is to lead our Group to further levels of success with your support. In order to achieve this goal, we have prepared ourselves for 2014 by reviewing our strategies and practices. Our fundamental priority for 2014 is to drive the Group higher levels of success, performance and excellence even compared to 2013.

We wish you all a healthy and successful year.

With kind regards,

CONCLUSION


135

NOTES

TAAHHÜT GRUBUNOTES

ALARKO CENTERMuallim Naci Cad. No: 69

34347 Ortaköy, İstanbul / TURKEYPhone: (90 212) 310 33 00 - 227 52 00 Pbx

Fax: (90 212) 260 71 78 - 227 04 27web: www.alarko.com.tr

e-mail: [email protected] Registery Number: İstanbul, 118376

ANKARA OFFICESedat Simavi Sokak. No: 48

06550 Çankaya, Ankara / TURKEYPhone: (90 312) 409 52 00 Pbx

Fax: (90 312) 440 79 30

İZMİR OFFICEŞehit Fethi Bey Cad. No: 55 Kat: 13

35210 Pasaport, İzmir / TURKEYPhone: (90 232) 483 25 60 Pbx

Fax: (90 232) 441 55 13

ADANA OFFICEZiyapaşa Bulvarı Çelik Apt. No: 19/5-6

Kat: 1 01130 Adana / TURKEYPhone: (90 322) 457 62 23 Pbx

Fax: (90 322) 453 05 84

ANTALYA OFFICEMehmetcik Mah. Aspendos

Bulvarı No:79/5 07160 Antalya / TURKEYPhone: (90 242) 322 00 29 - 322 66 64 Pbx

Fax: (90 242) 322 87 66

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