2007

ANNUAL REPORT 2007
The future
belongs to those who build it.
Contents
4
Group Profile
Tekfen Group is a long-established and reputable group of companies
comprised of 51 affiliates, each of which is leader in their respective
sectors.
6
Message From Our Founders
Turkey’s economy continued to develop in 2007 for the sixth
consecutive year, despite global economic fluctuations.
8
Message From The President
Tekfen Holding continued to grow in all its business areas in 2007 in
a sound and stable manner. In November, the Holding completed its
initial public offering, a milestone in its corporate history.
19
Contracting Group
In Engineering News-Record’s annual list of the Top 225 International
Contractors in 2006, Tekfen Construction moved up 23 places to 69th.
43
Agri-Industry Group
The Group’s 2007 revenue was TRY775 million, making it Tekfen
Holding’s second major area of business after contracting.
61
Real Estate Development Group
With the goal of increasing and developing its range of services, Tekfen
Real Estate Development Group entered a partnership with Och-Ziff (OZ),
one of the USA’s leading asset management companies in October 2007.
69
Other Activities
After Tekfenbank and Eurobank EFG established a partnership in early
2007, the resulting enterprise gained momentum over the year. In 2007,
Tekfen Insurance exceeded its performance goals. Its net premium
production increased by 37% and its commission revenues by 45%.
77
Social Responsibility
Tekfen believes that supporting social development and progress is the
responsibility of all individuals and institutions.
83
Corporate Governance
• The Board • Corporate Governance Principles Compliance Report • Dividend Distribution Policy
105
Auditors’ Report
> Tekfen Group
Tekfen Group is a long-established and reputable group of companies comprised
of 51 affiliates, each of which is a leader in their respective sectors. Established in
1956 as a small engineering consultancy company, Tekfen is today an international
group of companies operating in contracting, agri-industry, real estate development
and banking.
Tekfen Contracting Group is the oldest Tekfen Group company.
Today, as a core business with an active portfolio of around
$2 billion and excellent references, Tekfen Contracting Group
Agri-Industry
32.3%
is not only one of the most prominent contracting groups in
Turkey but also a significant player in an expansive region
Contracting
42.4%
encompassing the Middle East, the Caspian basin, North
Other
18.9%
Africa and Eastern Europe. The leading international
contracting trade journal Engineering News-Record, in its
annual ranking “Top 225 International Contractors” placed
Real Estate
6.4%
Tekfen Construction 69th. Specialized in oil and gas industry,
Breakdown of Total Assets, 2007
highway, pipeline, tank farm, and sea port construction,
Tekfen Contracting Group undertakes all three legs of the
EPC (Engineering-Procurement-Construction) tripod,
delivering turn-key projects.
Tekfen Group is active in the agriculture sector under the
Agri-Industry
40.9%
“Toros” brand name. Having entered the sector with chemical
fertilizer production in 1981, Tekfen Agri-Industry Group today
also encompasses seedling production, grain trading, bag
Contracting
54.3%
production, terminal operations, and industrial free zone
management. Now a leader in its sector in terms of its business
Other
2.3%
Real Estate
2.5%
Breakdown of Revenues, 2007
volume, market share, scope of operations, and product
portfolio, Tekfen Agri-Industry Group is Tekfen’s second
largest business unit after contracting.
Tekfenbank was established as an investment bank in 1989.
Having not only weathered all the national economic and
financial crises in the intervening years, but also gained in
strength, Tekfenbank has earned widespread respect and
trust as a conservatively managed bank with a balanced
financial structure.
4
In 2007, Tekfenbank entered a partnership with Eurobank
Tekfen Holding melds its constituent
EFG, one of Greece’s leading financial institutions, and
companies together by enabling synergy
established itself firmly in the Turkish market under a new
between their strategic goals and generating
name, Eurobank Tekfen. Already a leader in Turkey’s corporate
new strategies in line with the changing
banking sector, the bank aims to reposition itself as a leading
competitive environment and economic
player in Turkey’s retail banking market by expanding its
conditions. In 2007, shares of Tekfen Holding
branch network.
were offered to the public and the company
continues its sustainable growth on strong
Tekfen Real Estate Development Group is the youngest
foundations.
member of Tekfen Group. It was established in 2000 with the
goal of providing unique and distinctive projects to clients in
Tekfen Holding supports its business
the real estate sector, which is among the most rapidly
achievements with social responsibility
developing business sectors in Turkey. Having achieved many
projects and with a corporate outlook that
notable successes in the sector since its founding, Tekfen Real
maintains institutionalization as a
Estate Development Group took a major step towards further
prerequisite for growth. Tekfen Holding will
growth by signing a partnership contract with Och-Ziff, one
retain its pioneering role in Turkey.
of the USA’s leading asset management companies, in 2007.
> Consolidated Financial Summary
2007
(TRY’000)
2006
2,420,785
3,052,229*
1,203,681
2,418,711
Share Capital
296,775
104,000
Retained Earnings
182,295
221,043
1,895,332
1,725,779
Profit From Discontinued Operations
154,889
12,406
Net Income
279,257
80,975
Total Assets*
Total Liabilities
Total Revenue
(*) Since the majority shares in Tekfenbank were sold in 2007, Tekfenbank is not included in the 2007 balance sheet.
Values which were expressed TRY can be converted by the official exchange rate of the Central Bank of the Republic of Turkey as of December
31, 2007 (1.3003 TRY = 1 USD). This conversion is not a part of the audited financial statements.
5
> A Message From Our Founders
Turkey’s economy continued to develop in 2007 for the sixth consecutive year,
despite global economic fluctuations. The picture of political stability presented by
the results of the July 22nd general election supports this steady economic trend.
The Turkish lira strengthened in 2007 and this created an attractive environment
for foreign capital investors who have been closely following the Turkish market
and the new opportunities it offers.
> FROM LEFT TO RIGHT
Necati Akça¤l›lar - Feyyaz Berker - A. Nihat Gökyi¤it
6
The economic stability of recent years and the resulting macroeconomic gains have made the
Turkish economy resilient to external influences. While some economic vulnerabilities remain, the
Turkish economy in general is able to stand on its own feet. This situation has encouraged domestic
and foreign investors to make new investments and, as a result, a huge amount of foreign capital
entered the Turkish economy in 2007.
Other than transient fluctuations caused by volatility in foreign markets, domestic capital markets
maintained a high level of confidence throughout the year. As a measure of this, various Istanbul
Stock Exchange indexes reached record levels many times during the year.
This positive environment played an important role in the success of Tekfen Holding’s public
offering process. The great interest in Tekfen’s shares justified the company’s preparatory efforts
and Tekfen’s management model, which takes a long-term perspective and seeks planned, disciplined
growth. Domestic and foreign investors displayed their trust in Tekfen’s name through generating
excess demand for the shares.
The most important factor inducing this confidence is Tekfen’s business philosophy, which
emphasizes realism and due diligence in all things. Tekfen has supported this approach with a
focused, disciplined and sustainable growth policy and with serious steps towards institutionalization
and has directed its efforts towards bigger goals.
Tekfen Holding is well aware of the responsibilities its public offering entails. In addition to its
responsibilities to increase business volume, create more employment, provide better opportunities
for its employees, and increase added value and return on investment, Tekfen will set an example
in Turkey concerning the process of institutionalization. Tekfen believes that a bright future is
guaranteed not only by individual achievement but also by corporate structures with strong
foundations.
Tekfen’s most important goal is to create a unique synthesis by integrating its values with an
institutionalized corporate structure. Reaching this goal is only possible when every member of
the Tekfen family believes in this goal and acts in accordance with it.
We wish success to all Tekfen employees in the new era that has commenced with the public
offering. We are grateful to all our employees for their above average performance and their
future endeavors to enable Tekfen to reach its new goals.
Necati Akça¤l›lar
Feyyaz Berker
A. Nihat Gökyi¤it
7
> Message From The President
Of Tekfen Holding
Tekfen Holding continued to grow in all its business areas in 2007 in a sound
and stable manner. In November, the Holding completed its initial public
offering, a milestone in its corporate history.
2007 was a successful year for Tekfen. The Group’s revenue increased by 10% to reach
TRY1,895 million. Profitability followed a similar trend in 2007. Earnings before interest,
tax, depreciation and amortization remained stable at TRY197 million while earnings
before tax jumped by 66% to TRY150 million and net income from continuing activities
increased by 81% to TRY124 million. When the income gained from the sale of the majority
shares in Tekfenbank is added, Tekfen Group’s net income amounted to TRY279 million
for 2007.
The growth seen in revenues and profitability were also reflected in the Group’s assets.
Excluding the assets of Tekfenbank, the majority shares of which were sold in 2007,
total assets of Tekfen Group increased by 25% from TRY1,933 million at the end of 2006
to TRY2,421 million at the end of 2007. Moreover, the increased market value of the
Group’s real estate holdings was not included in the calculation of total assets for 2007.
These positive developments demonstrate that the Holding continued to build on its
strong foundation to prosper, reinforcing its reputation both in Turkey and abroad due
to its focused and consistent growth strategies. The fact that this growth trend continued
in 2007, despite fluctuations in global markets
and unfavorable economic conditions, makes
Tekfen’s performance even more significant.
The world economy failed to reach its projected
growth level in 2007 and anxiety in international
financial markets inspired by the U.S. mortgagecrisis adversely affected the world economy
throughout the year. The liquidity crisis that
emerged in developed countries, particularly the
United States, due to mortgage foreclosures
caused the dollar to lose value. This created
anxiety in international markets that in turn caused
sudden fluctuations in Turkey from time to time.
Although the global state of affairs was
8
unfavorable in 2007, the Turkish economy grew for the sixth consecutive year. According
to the new national income series based on 1998 fixed prices, GDP increased by 4.5%
in 2007. The fact that the year closed with a positive growth rate signifies the stability
of the economy. However, the decrease in the growth rate is noteworthy, as is the fact
that inflation exceeded its targeted level to reach 8.4%.
Turkey’s 2007 foreign trade volume reached a record level of $277 billion, with exports
and imports significantly higher. The fact that the foreign trade volume, which was
around $70 billion only 10 years ago, has reached these levels indicates just how fast
the Turkish economy has integrated with the rest of the world. However, the growth
in the foreign trade deficit is alarming. The current account deficit, which increased
parallel to the foreign trade deficit, was financed by the more than $50 billion in capital
that entered Turkish economy in 2007, as foreign direct investment, in particular,
increased.
> Growth of the Contracting Group continues
Global oil prices continued to increase throughout the year, resulting in a rapid increase
in industrial and infrastructure investments in oil producing countries, which in turn
created more business opportunities for international contracting companies. This
situation created significant potential for Tekfen Contracting Group, which has gained
a strong reputation from the projects it has completed in the world’s most important
oil production zones.
The Middle East occupied an important
place in Tekfen Contracting Group’s
activities in 2007 and Tekfen monitors
developments in the region closely.
Saudi Arabia allocates more resources
for oil sector investments than any
other country and, in this regard, it has
provided many opportunities for
Tekfen. The activities of the
Contracting Group in Qatar - one of
the most important natural gas
producers in the world - continue and
expand daily. The contract to construct
a $600 million highway in this country
was one of Tekfen’s most significant
achievements in 2007.
9
Another promising development of 2007 is the “The Great Man Made River” project in
Libya -a milestone project that extracts water from aquifers deep under the desert to
use for agricultural irrigation and public consumption. A Tekfen-led Turkish consortium
was awarded a portion of this project, the value of which is the highest of any contract
ever awarded to Turkish contractors in Libya.
Tekfen Contracting Group’s backlog value was $2 billion in 2007 - a record for the
company. Parallel to this growth in business volume, the Group re-organized its regional
management structure in 2007 in the Caspian, Middle East and North Africa regions.
Progress continued on Caspian Region projects during the year. However, the partnership
dispute between the consortium led by Agip and Kazmunaigas, the Kazakhstan state oil
and natural gas company, adversely affected the Kashagan Field Development Project.
On the other hand, the record high of 23 million accident free operation hours at the
Kashagan site is a source of pride for Tekfen, as are all achievements in the area of safety.
In spite of all these positive developments, Tekfen Contracting Group’s profitability was
unsatisfactory. A major cause for this was the rapid oil-price induced proliferation of
projects in foreign markets, which caused material, equipment and qualified labor costs
to inflate and project timings to slide.
These cost increases primarily affected projects that had been taken on before 2005 and
completed or neared completion in 2007. This unexpected and uncontrolled cost increase
impacted profitability, especially in the first quarter of the year. As the year progressed,
the Group won tenders with more advantageous terms, resulting in better financial
performance in the last quarter of 2007.
Another important aspect that should be emphasized is the depreciation of the U.S. dollar
in 2007 against the Turkish Lira. Since a significant portion of income is in U.S. dollars,
this had an adverse effect on the Contracting Group’s revenues. Thus, Tekfen Contracting
Group revenues declined in Turkish Lira even as they increased in U.S. dollars.
Accordingly, with the 4% decrease in revenues to TRY 1,029 million, Tekfen Contracting
Group’s earnings before interest, tax, depreciation and amortization declined by 43% to
TRY74 million.
2007 was a transition year; the momentum achieved during the last quarter of 2007
is expected to continue and increase in 2008, resulting in significantly better financials
for 2008.
10
> Agri-Industry Group increases market share
Fertilizers are an important input for the global agriculture sector. Although the demand
for fertilizers increased rapidly in 2007, insufficient supply caused a bottleneck in fertilizer
and fertilizer raw material procurement. In addition to that, hikes in transportation costs
and prices of fertilizer raw materials caused by higher oil price, led to dramatic increases
in fertilizer prices.
Agriculture’s share of the Turkish economy continued to decrease in 2007. Climate
change and drought induced by global warming contributed to the downsizing of the
agricultural section. Supplies of certain product groups failed to meet demand, which led
Turkish agriculture to incur a foreign trade deficit in 2007. For example, cereal production
decreased by 15% compared with the previous year. All these developments caused
fertilizer consumption in Turkey to decrease by 4% in 2007.
In the face of all these drawbacks, Tekfen Agri-Industry Group maintained its market
leadership and even significantly increased its fertilizer sales, market share and profitability.
In 2007, the Group managed to increase its domestic sales of chemical fertilizers by 15%,
causing its market share to increase 5% to reach 31%. The major factor behind this
success was the Group’s ability to supply fertilizers to customers in a timely manner
thanks to its effective international relations and strong logistics infrastructure, which
enabled flawless and timely fertilizer and fertilizer raw material distribution. The company
has similar advantages in the water-soluble fertilizer segment, in which Toros Tar›m
increased its revenues by 23% while strengthening its leadership position of this segment.
Profit margins increased in 2007 thanks to a higher market share and a widening margin
between fertilizer prices and fertilizer raw material costs. As a result, revenues of the
11
Agri-Industry Group in 2007 rose by 30% to TRY775 million while earnings before interest,
tax, depreciation and amortization rose by 59% to TRY110 million. The Group expects to
increase its profit margin from 14.5% to 16.5% in 2008.
The Group displayed significant progress in its non-fertilizer fields of operation - seed
production, tissue culture, seedling production and cereal trade - in 2007. This situation
demonstrates the advantages of correct investment strategies and the adoption of a
long-term perspective in the face of the difficulties in agriculture sector.
Similarly, developments in Toros Tar›m’s terminal business prove that Tekfen Holding’s
decision to invest in ports as part of its long-term investment strategy was correct. Toros
Tar›m’s terminal at Ceyhan, which became one of the most important trade centers in
the East Mediterranean after the BTC pipeline came on stream, has an important place
in the region, due to its load handling and storage capacity. With the region’s re-definition
as the “Ceyhan Energy Industry Region”, the business potential of Toros Ceyhan Terminal
and Toros Adana Yumurtal›k Free Zone is set to increase dramatically.
> Focusing on the real estate sector
The real-estate sector, a rising star of the Turkish economy in recent years, has an
important place in the future vision of our Holding. Real-estate development operations,
previously the preserve of the
Contracting Group, were gathered
under a separate business group
that is represented at the vice
president level. This change
reflects the new vision of the
Holding.
A further step taken to
strengthening Tekfen Holding’s
position in the real estate sector
is the partnership it has entered
into with Och-Ziff (OZ), one of the
USA’s leading asset management
companies. Under this agreement,
real estate development activities
are conducted by the newly found
company Tekfen-OZ Real Estate
Development Co., Inc.
12
> From Tekfenbank
to Eurobank Tekfen
After the economic crisis of 2001,
Turkey gained a strengthened
economic structure that encouraged
growth. This produced particularly
good results in financial markets and
started a period of sustained growth.
The total assets of the banking
sector in 2007 increased by 16%
compared with the previous year to
reach TRY561.9 billion. In addition
to improvements in the economy,
the Turkish banking sector’s bright
prospects attracted foreign
investors. As a result, many foreign
banks have entered the Turkish
market and invigorated it.
Tekfenbank was established in 1989 and it operated as an investment bank for many
years. After the acquisition of Bank Ekspres, Tekfenbank started commercial banking
activities. Its partnership with EFG Eurobank, which started in 2007, is an outgrowth of
these developments.
EFG Eurobank, a major Greek bank with a significant market share due to its recent
investments in Eastern Europe and elsewhere, established a strategic partnership with
Tekfenbank in order to enter the Turkish banking sector. For Tekfenbank, the partnership
is a way for it to strengthen its position in the Turkish market and thus increase its
effectiveness.
Tekfen Holding’s banking activities passed an important milestone when EFG Eurobank
and Tekfenbank joined forces in 2007 and the new entity started operations as Eurobank
Tekfen. The partnership has been supportive and constructive and, with the financial
power and experience of both parties, Eurobank Tekfen will add a new dimension to the
Turkish banking sector. Eurobank Tekfen will expand its range of services by adding retail
banking to its present corporate banking activities. With an expanded branch network,
Eurobank Tekfen will become an influential player in the Turkish market.
13
> A New era starts with a public offering
Tekfen Holding shares were first offered to the public on November 23rd 2007, an event
marked by our striking the Exchange Bell to open the Istanbul Stock Exchange Session.
The interest that domestic and foreign investors showed in Tekfen shares during the
initial public offering and upon listing on the exchange confirmed our expectations.
The Tekfen Holding public offering process is the culmination of a long preparation period.
Starting in 2000, the shares of Tekfen affiliates were rearranged and gathered under
the roof of the Holding, non-profitable affiliates were either sold or transferred, and the
Holding’s efficiency was increased. All affiliates were gathered under a management
concept focused on a growth strategy and systematic work was undertaken to achieve
a greater degree of institutionalization. These are the major factors that ensured a
successful public offering. The philosophy “do what you know, and do it in the best way”
is a cornerstone of Tekfen’s culture. The focus this brings increased the company’s
revenue and profitability and greatly strengthened the Holding prior to the public offering.
This period, the product of hard and patient work, passed its first examination during the
initial public offering held November 14th-16th, 2007, when total demand exceeded supply
by nine times. This once again proved the value of the Tekfen brand and its association
with trustworthiness and stability. Tekfen Holding’s shares were listed on the stock
exchange from November 23rd, 2007. The Holding’s share price increased dramatically
from the first day, pushed up by strong demand from domestic and foreign equity investors
despite fluctuations in international markets. This is not only Tekfen’s but also Turkey’s
14
success. Tekfen Holding offered 34.5% of its shares to the public and the opening market
value of Tekfen Holding was TRY1.69 billion. By the end of 2007, Tekfen Holding’s market
value had increased by 13% to TRY1.91 billion.
The public offering created additional funds, particularly for investment in the petroleum
industry, port management activities, and the agri-industry and real estate development
sectors. The public offering is also important in that it supports Tekfen’s institutionalization
efforts.
This process has fortified Tekfen Holding and accelerated its institutionalization process.
The establishment of internal audit, investor relations, and corporate governance
departments within the Holding’s Vice-Presidency for Corporate Affairs, is an important
step towards further institutionalization. Additionally, appointment of independent board
members and the abolition of privileged shares through changes made to Articles of
Association will carry Tekfen Holding forwards in terms of institutionalization.
We are grateful to our colleagues, business partners and customers, as well as to our
investors and our founding partners, all of whom have supported us with endless confidence
during the process of making Tekfen Holding one of the leading, pioneering corporations
in our country in every respect.
Erhan Öner
President
15
> Our Vision
“To be one of the leading forces of Turkey’s growth in our
areas of operations: Contracting, Agri-Industry, Real-Estate
Development and Finance.”
> Our Mission
“While keeping faith with our traditional values, we aim to focus
on our areas of operations, deliver the highest quality products
and services, become leader of our segments, and at the same
time, generate value for all of our stakeholders, namely, our
customers, suppliers, employees, shareholders and the society.”
16
> FROM LEFT TO RIGHT
Dr. Ahmet ‹pekçi
Dr. Osman Reha Yolalan
Erhan Öner
Mehmet Erktin
Ümit Özdemir
Esin Mete
Vice President / Investment & Service Companies Group
Vice President / Corporate Affairs
President & CEO
Vice President / Real Estate Development Group
Vice President / Contracting Group
Vice President / Agri-Industry Group
17
Tekfen Construction and Installation Co., Inc.
Contracting Group
Tekfen Engineering Co., Inc.
Tekfen Manufacturing Co., Inc.
Hallesche Mitteldeutsche Bau - A.G. (HMB)
Azfen J.V.
Geotek J.V.
Cenub Tikinti Servis ASC
GATE Co., Inc.
Agri-Industry Group
Real Estate Development Group
Other Activities
Social Responsibility
Corporate Governance
Auditors’ Report
> Profile
Tekfen Contracting Group is one of the largest and most important contracting
groups in Turkey. Its main area of specialization is construction projects in the
oil and natural gas sector. Founded in 1956 as an engineering and consultancy
firm, Tekfen Contracting Group has made great progress since that date. The
Group expanded its range of activities first in Turkey and, after 1978, abroad.
Today, with over 13,000 employees,
tank farms, pipelines, oil refineries, pumping stations,
construction projects underway on three
power plants, industrial facilities, as well as highways,
continents, and backed by impressive
subways, bridges and tunnels, telecommunication systems,
references, Tekfen Contracting Group has
and large sports complexes.
turned into an international brand in its sector.
The total value of the projects completed by Tekfen
With revenue of TRY1.029 billion, Tekfen
Contracting Group abroad currently exceeds $3 billion.
Contracting Group is a successful affiliate
About 95% of the Group’s present projects are in Bulgaria,
of Tekfen Holding.
Azerbaijan, Kazakhstan, Kuwait, Qatar, Saudi Arabia, Oman,
Libya, and Morocco. The Group’s across the board emphasis
A prominent feature of Tekfen Contracting
on occupational health, safety and environmental (HSE)
Group is its capability to provide its
policies has turned it into a successful representative of
customers with a wide range of services
the sector. During the last five years, Tekfen Contracting
that encompass every branch of EPC
Group has broken records for working hours without a
(Engineering-Procurement-Construction)
lost time incident (LTI) in Azerbaijan, Kazakhstan and
for even the most complex projects. The
Ceyhan (near Adana, Turkey), and it is a preferred and
profound experience of the Group qualifies
reliable business partner for leading international
it to undertake projects in the areas of on-
companies, even for the most technically challenging
and offshore terminals, offshore platforms,
projects.
PCWU Topside Operational
CTS completed the 13,500-tonne PCWU Topside, now towed
and in place in the Caspian Sea.
20
SAMIR Refinery
Mohammedia, Morocco
21
> Overview of 2007
> Worldwide:
The world economy faced unexpected
economy - with China and India at the forefront - continued
problems in 2007 and failed to display the
to play a locomotive role in 2007.
anticipated growth. The main developments
in the year were the liquidity crises sparked
The construction sector again played the leading role in
by mortgage foreclosures, the constraints
global economic growth. Although housing starts decreased
in the loan markets, instability in global
by 50% in the USA due to the sub-prime lending crises,
financial markets caused by the decline of
globally the sector continued its rapid growth trend fuelled
the dollar, and the anxiety that all these
by high oil prices.
developments caused in the global economy.
These developments, plus the widespread
Today, the global construction sector contributes an
sentiment that the good times that started
estimated 8% to the world’s GNP and its annual production
in 2003 were over brought the global growth
value is put at more than $3.5 trillion. Classified under
rate down from 6.2% in 2006 to an estimated
industrial production, the construction sector’s share in
5.2% in 2007. Contrary to the danger of
total industrial employment is estimated at about 30%. The
recession in the US and Western European
sector’s 5% annual growth trend is expected to continue
economies, the rising stars of the global
over the next ten years.
> Turkey:
The economic growth of the previous six
resistant housing projects ensured the construction sector’s
years continued in 2007, with the Turkish
continued to growth in 2007, despite some transient
lira maintaining its strong position against
fluctuations.
other currencies - demonstrating that the
Turkish economy has gained a level of
However, major infrastructure projects led by the public
stability in recent years. The locomotives of
sector were deferred to 2008 and beyond. Infrastructure,
the economy remained the construction and
energy, and transportation projects that are in train are
industrial sectors. The rapid population
expected to dominate the local sector, bringing important
increase and the need for earthquake-
opportunities for construction and contracting companies.
Ras Laffan-Mesaieed Ethane Pipeline, Qatar
Ceyhan Sends Steel to the World
Ceyhan Steel Structure Manufacturing Plant served the SAMIR
Refinery in Morocco, Rabigh Refinery in Saudi Arabia, Sangachal
Onshore Terminal in Azerbaijan, Bursa’s Light Rail Bridge,
‹sdemir Iron and Steel Factory Power Plant boiler building in
‹skenderun, Maritza Power Plant turbine building in Bulgaria,
and other projects in 2007.
22
Crude Oil Export
Terminal Expansion
Project
Ahmadi, Kuwait
23
> Our activities in 2007
> Tekfen Construction:
Overall, Tekfen Construction performed well in 2007, with a project backlog
exceeding $2 billion and new records for no lost time incidents (LTIs). In
Engineering News-Record’s annual list of the Top 225 International Contractors
in 2006, Tekfen Construction moved up 23 places to 69th. This is an important
indicator of the company’s growth trend and its place in the world.
The main reason for Tekfen Construction’s
to public investments in highways, water distribution
high revenue and backlog increase in 2007
systems, etc. With oil price increases, many deferred
is increased investment in construction
projects were resuscitated in 2007. This situation provided
projects in oil-producing countries. Average
Tekfen Construction, which has outstanding experience
oil prices rose to about $70/bl. in 2007 and
in almost all areas of the oil and natural gas sector, with
this created additional resources for
significant opportunities and allowed the company to
infrastructure investments in oil producing
increase its business volume.
countries. These investments included
industrial facilities - pipelines, refineries,
However, increased costs brought some drawbacks. The
and oil and natural gas facilities - in addition
higher level of demand for construction projects fueled
Another Safety Record!
Tekfen Construction, which since its establishment has completed more than 300 projects, added
to its health and safety record by reaching 23 million man-hours of Day Away From Work Case
(DAFWC) on the Kashagan site in Kazakhstan on December 17th, 2007. In 2006, Tekfen Construction
reached 10 million man-hours of DAFWC on the BTC Pipeline Project’s Ceyhan terminal and 28
million man-hours of DAFWC on the Sangachal terminal. In the same year, Tekfen Construction
received the Safety Award from the International Pipeline and Offshore Contractors Association.
As part of its Health, Safety and Environmental (HSE) policies, the company places great emphasis
on occupational safety and minimizing environmental risks on its operations. As a reflection of its
sensitivity to this issue, Tekfen Construction supports its HSE efforts with its Total Quality Management
System, which integrates the OHSAS 18001:1999 Occupational Safety and Health, ISO 9001:2000
Quality Management, and ISO 14001:2004 Environment management systems. Training programs
throughout the company encourage personnel to act in line with this system and ensures the
system’s application through the active involvement of all personnel. The fact that Tekfen Contracting
Group devoted 480,000 hours of its 47.4 million operational working hours to training in 2007 is
an indicator of the importance that the company places on the issue.
Also in 2007, the Group added two new publications to its series of manuals on occupational safety
- the “Safe Lifting” and “Safe Rigging” manuals. Both were distributed to personnel at company
sites in 2007. Preparations for a training book on argon welding are underway.
Tekfen’s Distinctive Safety Record
Tekfen’s strict adherence to health, safety, and environmental
protection standards are literally a matter of record and a key
factor in gaining major national and international contracts.
24
Gaziantep-Birecik Motorway
Turkey
25
labor, material, and equipment cost inflation
Road Project, signed in 2007, and the Ma’aden Phosphoric
and put an additional cost burden on some
Acid Plant and Khurais Oil Field Development projects in
continuing projects. As a result, these projects
Saudi Arabia made significant contributions to Tekfen’s
yielded lower profits than expected.
order book in 2007. The share of international operations
Nevertheless, the new business opportunities
in Tekfen Contracting Group’s revenues in 2007 increased
created in 2007 outweighed these drawbacks.
to reach 95%. The Group’s projects in 2007 were
Tekfen Construction’s international
concentrated in the Caspian, Middle East, and Northern
reputation, its emphasis on occupational
Africa regions. Ongoing projects took place in Bulgaria,
health and safety, and its high level of
Turkey, Azerbaijan, Kazakhstan, Kuwait, Qatar, Saudi
expertise and experience, helped the company
Arabia, Oman, Libya, and Morocco.
to win business. Qatar’s 94km-long North
Caspian Region
Tekfen Construction has been active in Azerbaijan for a long time and, due to
the opportunities the country provides, it is one of the two major markets in the
Caspian region.
In 2007, Tekfen Construction continued its
Sivas. Azfen is going to undertake the renovation of a
operations at the Sangachal Terminal and
river crossing in Azerbaijan.
completed Phase III of the ACG (AzeriChiraq-Gunashli) project. The second
Kazakhstan, Tekfen Construction’s second major location
offshore platform manufactured at its CTS
in the Caspian region, retains its good potential despite
steel manufacturing facility was completed
increases in labor and material costs in recent years.
and towed to the gas field in September.
Tekfen’s facilities in Kazakhstan create important
advantages for Tekfen regarding impending projects. The
Tekfen Construction had previously
Group’s most significant achievement in Kazakhstan was
completed the terminals at both ends of the
its new record of 23 million man-hours without lost time
Baku-Tbilisi-Ceyhan (BTC) crude oil pipeline,
on the Kashagan Main Works project, which is still under
so it was natural that British Petroleum
construction. The project, started in 2005 and scheduled
should engage the company in 2007 to
for completion in mid-2009, will process crude oil from
increase the capacity of the pipeline by a
the Kashagan fields. Valued at $400 million, the project
projected 20%. The first phase of the project
provides employment for about 3,000 people. To achieve
involves laying the foundation of Drag
23 million man-hours of DAFWC (Day Away From Work
Reducing Agent storage and injection units
Case) on such a complex project demonstrates that
at the BTC pipeline’s Turkish pumping
Tekfen’s previous safety achievements are sustainable.
stations at Posof, Erzurum, Erzincan, and
Bulgaria’s Energy Boost
Tekfen’s detailed engineering, procurement, and construction
work on the Maritza East-1 Thermal Power Plant continued
seamlessly in 2007. The plant will make a significant contribution
to Bulgaria’s energy needs.
26
North Road
Qatar
27
Middle East
Tekfen Construction’s primary objective in the Middle East is to secure new
business in countries that are investing in infrastructure parallel to increased
oil revenues.
Tekfen’s experience and prestige in the
2006 as part of the Saudi Arabian Petrorabigh Refinery
region puts it in demand. The total value
Development Project, continued successfully in 2007.
of the projects that Tekfen Construction
carried out in Saudi Arabia, Kuwait, Qatar,
Qatar, with its rich natural resources, is the second most
and Oman in 2007 was $1.697 billion.
important country in the region in terms of business
opportunities. Qatar possesses 9.2% of the world’s proven
Of all Middle Eastern countries, Saudi Arabia
natural gas reserves and it provides great construction
dedicates the highest proportion of its
business opportunities through its investment in industrial
budget to infrastructure investments. At
production and real estate projects in the capital, Doha,
the beginning of 2007, Tekfen Construction
which is a candidate for the 2016 Olympic Games. These
won the contract for the Mechanical Erection
business opportunities present Tekfen Construction with
for Water Injection System of the Khurais
the opportunity to increase its business in Qatar.
Oil Field Development Project, valued at
about $150 million. The main contractor for
Recent and on-going projects in Qatar include construction
this project is Snamprogetti, Italy and the
of the 137km Ras Laffan-Mesaieed Ethane Pipeline, which
client is Saudi Aramco. The project,
Tekfen started in 2005 and completed in 2007. The value
comprised mainly of prefabricated pipe
of the oil pipeline project between Umm Bab and Mesaieed,
production and assembly, pipe racks, fire
scheduled for completion in May 2009, reached $57.5
water systems, turbine flare assembly, and
million after the scope of the project was widened. In 2007,
the construction of gas fuel systems, is
Tekfen Construction and Qatar’s national road construction
scheduled for completion at the end of 2008.
company, Ashghal, signed a $598 million contract for
construction of the 94km North Road. With construction
Another important project for Tekfen
lasting 30 months, the dual 4-lane highway, complete with
Construction in Saudi Arabia is the
30 bridges and junctions, will connect the north coast,
construction of a phosphoric acid plant,
where the majority of Qatar’s industrial complexes are,
tendered by the state company, Ma’aden.
to Doha.
Undertaken in cooperation with Litwin,
France, Tekfen Construction’s portion of
Tekfen Contracting Group’s projects in other countries
the complete construction of the facility is
continued seamlessly in 2007. Storage tanks started in
$189.8 million.
Kuwait in 2005 were ready to store oil in 2007 and will
start operating by the beginning of 2008. The work on a
Despite labor shortages, the Utilities and
234km natural gas and oil pipeline in Oman continued
Offsites Umbrella (UOU) and Utilities and
throughout 2007. The project was scheduled for completion
Offsites Package 1 (UO1) projects, which
by mid-2008 but, due to a delay in procuring the pipes,
were awarded to Tekfen Construction in
the project will run into 2009.
All Tanked Up
Tekfen completed eight crude oil tanks, each with a capacity
of 618,000 barrels, in the Ahmadi region of Kuwait.
28
Rabigh Refinery
Saudi Arabia
29
Maritza East-1
Thermal Power Plant Construction
Bulgaria
30
32
Better Organization to Meet the Challenges of Globalization
Tekfen Construction has steadily increased its business volume in recent years and become
progressively more active in various regions. This has created the need to adopt new human
resources and management strategies. The biggest obstacle to increasing business volume is
providing an adequate supply of qualified labor and managers with the necessary skills to undertake
projects abroad. The placing of projects under regional management units led by vice-presidents
allowed the company to move towards a more decentralized management organization in 2005.
By mid-2007, Tekfen Construction was operating simultaneously in 10 countries with a total
backlog value of over $2 billion. This volume of business created the need to revise and improve
the existing management model. In this regard, Saudi Arabia, with its enormous business potential,
was turned into a separate management center, raising the number of regional level management
units from three to four (Northern Africa, Caspian Region, Middle East, and Saudi Arabia). In
addition, successful mid-level managers were promoted up one level and the managerial network
was expanded. The goal of these changes is to overcome managerial bottlenecks and to enable
Tekfen Construction to manage multiple projects simultaneously.
The Oracle E-management System project - which the company started in 2005 to reinforce
internal control mechanisms, facilitate regular reporting, and raise managers’ decision-making
authority - was made more active in 2007. New modules were implemented and existing ones
were distributed more widely. The project’s goal is to put business processes on a platform of
integrated corporate applications. Today, around 20 projects and administrative locations, 6,800
pieces of machinery and equipment, 24,000 items of material, 5,000 suppliers and customers,
and 15,000 employees are managed and monitored using the Oracle E-management System. With
its current scope, the project is an example of global-scale corporate practice.
Eastern Europe
The construction of Bulgaria’s Maritza East-1 Thermal
procurement, and construction of the
Power Plant (ME1), which Tekfen Construction started in
project, and it is scheduled for completion
May 2006, continued flawlessly in 2007. The project
in mid-2009.
includes the engineering, materials and equipment
World’s Greatest Man-made Waterway
Ice Age aquifers in the Sahara were discovered during oil
prospecting in 1953. Tekfen is constructing a 383km water
pipeline to carry this life-giving resource, originating from
2km-deep aquifers, to Libya’s coastal region. Each giant
pipeline section is four and a half meters in diameter and
weighs 80 tonnes.
33
TUNISIA
Mediterranean Sea
MOROCCO
ALGERIA
North Africa
LIBYA
EGYPT
North Africa, where many large-scale infrastructure projects are underway,
offers significant business potential for Tekfen Construction as a new market.
The Great Man Made River project’s Al Kufra-
The Morocco Highway project, contracted in 2004, was
Tazerbo section, valued at $500 million and
completed in 2007. However, the unexpected increase
which is contracted to Tekfen, is one of the
in material prices resulting from bottlenecks in the global
highest value contracts Libya has ever
contracting sector caused the company to incur a loss
awarded to a Turkish company. The project’s
on this project. Upgrading work at Morocco’s SAMIR
goal is to extract water from Ice Age aquifers
Refinery, built by Tekfen, continued without problems in
under the Sahara and transport it to cities
2007. The $640 million SAMIR Refinery Project was
on the Mediterranean coast. Tekfen joined
contracted to Tekfen and Snamprogetti in 2005, and a
the project in 2006 and commenced
significant portion of the project is scheduled for
operations in 2007. The section awarded to
completion by the end of 2008.
the Tekfen-TML joint venture is a 380km line
planned for completion by the end of 2011.
Turkey
The number of new infrastructure investments in Turkey decreased in 2007,
limiting Tekfen Construction almost entirely to previously contracted and
continuing projects.
The first of these projects is the Black Sea
The city of Bursa’s BursaRay light railway system,
Coastal Highway’s Perflembe-Bolaman
contracted to Tekfen and Siemens partnership, was
section, which was completed in 2007.
completed successfully in 2007.
Contracted to the Nurol-Tekfen partnership,
the Perflembe-Bolaman section of the
Revenue from Tekfen Construction’s projects in Turkey
project shortens the previous 42km road
in 2007 was around 5% of the company’s total business
section by 15km and decreases travel time
volume. In parallel with its strategic plan, Tekfen
by one third. The project included the
Construction expects an increase in its domestic business
construction of five tunnels and many
volume with the anticipated acceleration in local
viaducts.
infrastructure investments. In addition to big transportation
build-operate-transfer projects that are on the
Construction of the Gaziantep-Birecik and
government’s agenda in 2008, Tekfen Construction expects
Adana-Pozant› connections of the Tarsus-
to strengthen its position in Turkey by increasing its share
Adana-Gaziantep (TAG) highway continued
in energy and refinery projects.
throughout 2007.
Black Sea Coastal Highway Open
After completing the TAG Motorway, Turkey’s greatest highway
project, Tekfen tackled the toughest part of the Black Sea
Coastal Highway scheme, the section between Perflembe and
Bolaman, by constructing several tunnels and viaducts.
34
Great Man Made River
Al Kufra-Tazerbo
Water Supply Project,
Libya
35
Bursaray
Light Rail System
Bursa, Turkey
36
> Tekfen Engineering:
Tekfen Engineering was established in 1984 to gather under one roof Tekfen
Contracting Group’s experience and expertise in consultancy and project
management services. As a result of the projects it has undertaken abroad,
the company has gained significant experience and a reputation in Turkey for
competency. The SAMIR Refinery project in Morocco and tank farm and terminal
project in Kuwait are important references for Tekfen’s engineering work.
Additionally, the detailed engineering for steel fabrications
stations, 44,918m of dual line tunnels,
at the Rabigh Refinery in Saudi Arabia was completed
2,762m of switch line, 1,679m of splitting
successfully in 2007. Meanwhile, engineering work on the
work with supporting walls, 3,466m of
Maritza East-1 Thermal Power Plant in Bulgaria is nearing
viaducts, and 1,694m of level crossings.
completion. Tekfen Engineering has also undertaken the
engineering work on the Great Man Made River project in
During 2007, Bursa’s light railway system,
Libya.
BursaRay, and viaducts on the AdanaPozant› road project were completed.
On behalf of the Istanbul transport authority (IETT), Tekfen
Preparations for the bridged-junction project
Engineering undertakes project and construction
to connect Adana via the TAG Motorway
supervision of an ongoing $855 million, 22km metro line
and the tender for the Bosporus Highway
project. The tunneling on the project uses pre-pressurized
Tunnel were started.
drilling machinery for the first time in Turkey and 40% of
the project was complete at the end of 2007.
Tekfen Engineering has been working
intensively to strengthen its staff in process
Projects of a 31km Yenikap›-Bak›rköy section of a 51km,
automation-related projects for terminals,
$2.2 billion metro line in Istanbul have been completed
refineries, and fertilizer plants, as well as
and submitted to the Metropolitan Municipality of Istanbul.
developing its competency in procurement
Remaining projects are underway comprising of 45
engineering.
Engineering for Success
With more than 200 engineers on its staff, Tekfen Engineering
is Turkey’s largest engineering company. It makes Tekfen
Construction’s turnkey contracting possible.
37
> Fabrication Plants:
Tekfen Manufacturing
Tekfen Manufacturing was established in the early 1970s to respond to Tekfen’s
increasing steel production and fabrication needs. At its factory in Derince,
the company provides engineering, production and fabrication services for
oil, petrochemical, chemical and fertilizer, natural gas, steel-iron, power plant,
and other industrial facilities.
In 2007, Tekfen Manufacturing produced
were received for installation in 2008. Six 3m diameter
many pressurized vessels, heat exchangers,
and 47m long autoclaves for Nuh Yap› and four oxygen
and spherical tanks to meet demand from
tanks for Kardemir are slated for delivery at the beginning
both domestic and foreign companies and
of 2008.
it made important business connections for
2008. Among the completed projects are
Among the work completed and exported in 2007 are
reactor and energy work undertaken for the
pressurized vessels for Kazakhstan, Russia and Saudi
Tüprafl Refinery, and pressurized vessels
Arabia, and a spherical tank for Senegal. Tekfen
and heat exchangers for ‹zmit and K›r›kkale
Manufacturing received new orders from abroad for 2008.
refineries. Two
5,000m3
propane spheres
were produced and installed for the Aygaz
The company will build an additional 2,700m2 indoor
Yar›mca facility while orders for two propane
production hall at its Derince factory in 2008 to increase
spheres for the Dörtyol facility and one LPG
production capacity to meet the higher business volume
sphere for the Akpetgaz Samsun facility
and demand for heavy equipment.
Tekfen Ceyhan Steel Structure Manufacturing Plant
The Ceyhan Steel Structure Manufacturing Plant was established to support
the steel construction needs of Tekfen Construction’s projects in the Middle
East, North Africa, and the Caspian Region. The Ceyhan Plant has an annual
capacity of 25,000 tons and it is equipped with the latest technology. The
workshop manufactured 17,500 tons of structural steel in 2007.
Projects that the Ceyhan Steel Structure
training, and technical activities of construction sites and,
Manufacturing Plant completed in 2007
in 2007, it added a new line of service to its portfolio by
include fabrication for the SAMIR Refinery
manufacturing steel for the Khurais project in Saudi Arabia.
in Morocco and Rabigh Refinery in Saudi
Arabia, the Sangachal Terminal in
The Welding School was expanded in 2007, continuous
Azerbaijan, a light railway bridge in Bursa,
training sessions were started, and 250 internationally
and a boiler building for the ‹skenderun-
certified welders were sent to sites. The school also
‹sdemir Steel-Iron Facility power plant. The
conducts examinations for trained master welders.
Ceyhan Plant also supported the planning,
Ceyhan Steel Trains Welders for Turkey
Ceyhan Steel Structure Manufacturing Plant’s welding school
meets an important portion of Turkey’s need for welders. The
school opens the door to skilled employment for hundreds of
welders each year, with the best ones joining the company.
38
Tekfen Bay›l Steel Construction Manufacturing Plant, Baku-Azerbaijan
Cenub Tikinti Servis (CTS) facility produces steel fittings and fabrications for
Tekfen’s projects in the Caspian region. CTS operates to international standards.
It has two production units and expertise in oil and other marine platforms.
The company’s deep-water pier is suitable for large
Water Utilities (PCWU) Topside project in
platforms and tankers and it allows all kinds of production
March 2005 and completed it on September
and maintenance work.
19th, 2007, allowing the platform to be towed
to its location. CTS fully utilized its annual
The most important project CTS completed during the
capacity of 7,000 tons of steel and 2,000
year, was the Sangachal Produced Water Loading /
tons of pipe production to complete this
Unloading Terminal. This project is significant because it
project.
demonstrates that CTS can produce to British Petroleum’s
quality standards and it will enable CTS to become a BP-
The Fabrication of Offshore Jackets project,
approved facility.
which started after the completion of the
PCWU project and is contracted to Azfen, is
Amec-Tekfen-Azfen started the Process Compression and
scheduled for completion by the end of 2008.
Steel for Welding, Welding for Steel
Ceyhan Steel Structure Manufacturing Plant utilized 17,500
tonnes of its 25,000 tonnes capacity in 2007.
39
Black Sea Coastal Highway
Perflembe-Bolaman Section, Turkey
40
STRATEGIC DIRECTION
Tekfen Contracting Group consistently works on the following issues in line with
the goals of its Strategic Plan:
Existing and new projects will be undertaken within the framework of the adopted
business principles and occupational health, safety and environment (HSE)
policies. Maximizing work quality and maintaining accident-free operations in
line with occupational safety standards are the main priorities.
The company will continue to focus on projects that emphasize the EPC
(Engineering-Procurement-Construction) concept and it will continue to improve
its competency in this area.
The emphasis will be on increasing business volume in countries where operations
continue. The goal is to secure new projects that at least maintain the current
level of revenue generated from projects in these countries. In addition, the
goal is to increase backlog to $2.5 billion in the short- and mid-run and to $2.5
billion-$3 billion in the long run.
Activities geared towards increasing efficiency and profitability will continue.
All requirements to preserve Tekfen’s strong and prestigious brand image in
existing markets will be met.
Quality Known Worldwide
With over $3 billion in projects completed abroad, 95% of
Tekfen Contracting Group’s projects in progress today are
outside Turkey. The company is most active in Bulgaria,
Azerbaijan, Kazakhstan, Kuwait, Qatar, Saudi Arabia, Oman,
Libya, and Morocco.
41
Contracting Group
Toros Agricultural Industry & Trade Co., Inc.
Agri-Industry Group
Toros Terminal & Maritime Co., Inc.
Toros Real Estate Investment Co., Inc.
Toros Energy Electricity Production Autoproducer Group Co., Inc.
TAYSEB - Toros Adana Yumurtal›k Free Trade
Zone Founder and Operating Co., Inc.
Toros Ship Agency Services Co., Inc.
Hishtil - Toros Seedling Industry and Trade Co., Inc.
TAGAfi - Türk - Arap Gübre A.fi.
MESBAfi - Mersin Free Trade Zone Operating Co., Inc.
ASBAfi - Antalya Free Trade Zone Operating Co., Inc.
Real Estate Development Group
Other Activities
Social Responsibility
Corporate Governance
Auditors’ Report
> Profile:
Tekfen Agri-Industry Group is Turkey’s market leader in business volume,
market share, variety of business operations and product range. The Group
made its first agri-industry investment in 1981 with a fertilizer plant in Ceyhan.
Since then, it has added many other business areas to its operations by
combining and diversifying all its activities in this sector under the Toros brand.
The Group’s 2007 revenue was TRY775
Tekfen Agri-Industry Group pays great attention to
million, making it Tekfen Holding’s second
maintaining good relations with the agriculture sector and
major area of business after contracting.
putting its relations with its customers on a solid base in
the long term. From its first day, the Group has worked
The Agri-Industry Group’s operations fall
systematically to improve yield and quality in agricultural
into two categories. The first is operations
production.
directly related to agriculture, including
fertilizers, seeds, seedlings, grain trade, and
The Group provides free services to its customers such as
seed and seedling production using tissue
soil analyses, consultancy and training programs for fertilizer
culture technology. The second category
usage. In 2007, the Group began offering seminars to
encompasses support operations for the
increase farmers’ and dealers’ awareness of the effects of
first group’s activities. These include bag
global warming on agriculture. The Group organized a series
production, marine terminal operations,
of these seminars in Thrace, and the Aegean, Central
shipping agency, and tugboat and pilotage
Anatolian and Mediterranean regions, where prolonged
services, free trade zone management,
drought is common. This service demonstrates Tekfen Agri-
energy production, management of highway
Industry Group’s sensitivity to global warming and underlines
facilities, and fuel stations.
its commitment to Turkey’s agricultural development.
Powerful Support for Farmers
More than just a supplier, Toros stands by farmers, helping
them to improve their yields and prepare for the future through
its research, production, and sales, and its free soil analyses
and training events.
44
Toros Terminal Pier
Samsun, Turkey
45
Toros Tar›m’s Social Responsibility Projects
Toros Tar›m has supported Turkish farmers since its establishment. In 2007, the company continued
social responsibility projects in many areas, mainly through providing training seminars. In addition
to providing soil analyses and training in fertilization practices, Toros Tar›m started a seminar series
“Relations between Temperature, Drought and Fertilizer Usage” in the fall. The goal of these seminars
was to increase farmers’ awareness of climate changes resulting from global warming and to minimize
losses caused by drought. These seminars will continue in 2008, particularly in regions prone to
drought.
Toros Tar›m opened a multi-purpose educational center at its Samsun facility. Toros Tar›m Samsun
Educational Center was established to support voluntary educational activities. For its first project,
run in cooperation with the Community Volunteers Foundation (Toplum Gönüllüleri Vakf›, TOG), the
Center prepared high school students from Tekkeköy District of Samsun Province for their university
entrance examinations. The tutors were TOG members from the student body of Ondokuz May›s
University in Samsun.
Educational Aid for Children
Toros Tar›m sponsors social responsibility projects like Education
Parks, where 250 primary school students got their hands on
computers and explored the internet, and developed their
theatrical, musical, and painting talents.
46
Toros Tar›m’s Mersin Plant
Mersin, Turkey
47
> Overview of 2007
> Worldwide:
The International Monetary Fund expects the global economy’s 2007 growth
to have been 4.9%. The main driving force of global growth was the emerging
Asian economies of countries such as China, India and Indonesia.
The increase in oil prices, which started in
consumption patterns from grain-based to meat-based
2006 continued in 2007, when prices
nutrition, increasing the demand for animal feed grain.
reached $100 a barrel. Along with increased
Meanwhile, increased biofuel production has further raised
global trade, higher oil prices pushed up
demand for some key crops. However, while grain consumption
freight costs. Supply-demand projections
rates have increased worldwide, production has fallen by
indicate that oil prices will continue at high
about 1% due to regional droughts. The result is that world
levels in 2008 ($80 a barrel and above).
grain stocks have declined to a 30-year record low.
These circumstances have driven energy
importing countries to expedite investment
In a contrary development, many farmers allocated a higher
in alternative energy sources and production
acreage to corn at the expense of wheat and soybeans,
- such as wind, solar and biofuel - so as to
expecting an increased demand for biofuel production
reduce upward pressure on oil prices, lessen
would push corn prices up. However, the resulting higher
national dependence on oil, and ensure
production limited corn price increases to only 25% while
energy security.
wheat prices doubled because of the lower acreage
allocated, high demand and low stock levels.
These developments, especially those
concerning biofuels, have affected the
These developments and the restricted amount of new
agricultural sector and, consequently, the
arable land means that it is essential to increase yields per
fertilizer sector. As the provider of one of
unit of arable land and this means using more fertilizers.
the agricultural sector’s main inputs, the
However, supply has fallen short of the increased demand
fertilizer sector has witnessed sharp
for fertilizers and this has pushed up raw material costs
increases in demand, costs and pricing.
and limited their availability.
The demand for grain is increasing under
According to the International Fertilizer Industry Association
two main influences. The increase in per
(IFA), 2007 fertilizer consumption is expected to have
capita revenue, especially in the South Asian
increased by 4.1%. Within this figure, potash was in greatest
developing countries, is changing food
demand, followed by phosphorus and nitrogen.
Global Fertilizer Demand Soars
The scarcity of arable lands to feed a burgeoning population
pushed fertilizer demand to new heights.
48
Toros Tar›m’s Ceyhan Plant, Ceyhan, Turkey
> Turkey:
The Turkish economy performed favorably in 2007, growing for the 6th
consecutive year. The official economic growth rate for 2007 is expected to
be about 4%, driven by construction, the financial sector, and industry. It is
expected that the agriculture sector shrank in the year due to lower yields. In
2007, agricultural imports increased significantly and, statistical data indicates,
the sector moved into a trade deficit.
The 2007 inflation rate was above the projected level of 4%, reaching 5.9% on the Producer Price
Index and 8.4% on the Consumer Price Index.
The major factor that affected the agriculture sector in
market due to high world grain prices and
2007 was changes in climatic conditions caused by global
freight costs. The development of the flour,
warming. Drought and the resulting irrigation problems
starch and animal feed industries accelerated
caused grain production to decrease by 15.5% to 29 million
and the demand for food increased in 2007.
tons compared with the previous year. According to national
data from the Turkish Institute of Statistics, total wheat
The decline in agricultural production
production decreased 13.9% to 17.2 million tons, barley
induced farmers’ crop prices to increase in
production decreased 23.5% to 7.3 million tons, corn
2007, but this rise was still below that of
production decreased 7.2% to 3.5 million tons, and cotton
fertilizers. This caused fertilizer consumption
production decreased 10.8% to 2.2 million tons.
to decrease, adversely affecting the
agricultural sector. Overall fertilizer
This situation makes Turkey dependent on imports,
consumption decreased by 4.1%, falling to
particularly for grains and animal feed raw materials. As
5.1 million tons in 2007, though with regional
in many other importing countries, price speculation has
variations. DAP (di-ammonium phosphate),
been prevented by decreasing customs tariffs to very low
the most expensive fertilizer, was the most
levels or eliminating them right after the harvest. However,
strongly affected, suffering a 33% decrease.
prices far exceeded anticipated levels in the domestic
Genuine Seeds Guarantee Results
Quality seeds increase yields and economic returns.
49
> Our activities in 2007
> Fertilizer:
Toros Tar›m, Turkey’s largest fertilizer manufacturer, has the capacity to
produce 38% of Turkey’s total output of chemical fertilizers.
It produced 1,300,000 tons in 2007, with its
domestic sales and market share in the face of a shrinking
three facilities of Ceyhan, Mersin, and
fertilizer market is noteworthy. Toros Tar›m owes this
Samsun producing 493,000 tons, 556,000
success to its timely procurement of fertilizers and their
tons, and 251,000 tons, respectively. This is
raw materials. The ability to procure readily derives from
an 11% increase on the previous year and
its corporate structure and international reputation. The
equals 42% of Turkey’s total fertilizer
confidence it has won in international markets and the
production in 2007. The company imported
sound relations it enjoys with its suppliers underpins the
fertilizers to cover shortages in the local
company’s achievement during the past year.
market, as it had done in previous years. To
economize on inland transportation and to
A loyal and extensive dealer network with the ability to
achieve better distribution, Tekirda¤,
maximize its potential differentiates Toros Tar›m from its
Izmir/Alia¤a, and Antalya ports were used
competitors. In 2007, the number of dealers increased by
for fertilizer imports and bagging and
5% to reach 804. More than one third of the dealers have
distribution operations. To prevent
been with Toros Tar›m for more than a decade,
forwarding bottlenecks in the high season,
demonstrating the stability of the network and the
additional warehouses were rented for
company’s sales strength.
building inventories in the off-season.
> Specialty Fertilizers:
Toros Tar›m’s 2007 sales amounted to
Specialty fertilizers are fully water soluble and are applied
1,596,000 tons. Of this, 92% was sold to
via drip irrigation. Sales of this product group had been
domestic dealers and 7% directly, mainly to
rising in recent years but in 2007 it experienced an
local cooperatives through winning
unanticipated decrease in demand. Widespread summer
competitive tenders. The remainder, 1%, was
drought caused a decrease in open field vegetable
exported. Although consumption in the
production and this in turn stymied growth in the specialty
domestic market decreased by 4.1% in
fertilizer market. A second-half increase in international
general, Toros Tar›m increased its domestic
fertilizer prices also had a negative impact on domestic
sales by 15% compared with 2006, thereby
consumption levels.
boosting its market share from 26% to 31%,
according to the Ministry of Agriculture.
Despite these issues, Toros Tar›m’s specialty fertilizer sales
Growth in 2007 was mainly fueled by a
increased by 25% compared with the previous year to
growth in sales of compound and AN
reach 25,770 tons. The main reason behind this success
(ammonium nitrate) fertilizers. Compound
was the supply of fertilizers prior to price escalations and
fertilizer sales increased by 26% while AN
negotiations with suppliers to procure and build inventory
fertilizer sales increased 23%.
at reduced prices. Toros Tar›m has adopted a sales and
marketing policy that effectively taps this price potential,
The company’s success in increasing
Toros Tar›m and Global Warming
Toros Tar›m’s sensitivity to global warming goes right to the
heart of the company. Its gas turbine generators in Mersin and
Ceyhan are perfect examples of its energy-saving and lowemission practices.
50
enabling the company to strengthen its position in this
Cotton
Toros Tar›m produces a specialty
fertilizer for cotton farmers.
51
shrinking market segment. The highest
own production and from imports.
growth rate was achieved in phosphatebased fertilizers, sales of which increased
Alongside the development of high yield and disease-
by 66% in the year.
resistant vegetable seeds at its trial stations in Antalya
and Bursa, Toros Tar›m undertakes R&D on seed varieties
In 2007, the company continued to add new
at its dedicated research station in Antalya/Çand›r. The
products to its portfolio of specialty
station focuses on developing and breeding local hybrid
fertilizers to meet changing customer
vegetable varieties and it undertakes adaptation and
demands. The introduction of low biuret urea
registration trials of foreign seed varieties.
fertilizer to its range of products is expected
to improve yield and quality in citrus
Toros Tar›m undertakes such activities in cooperation with
production.
Zeraim-Gedera. The following projects were conducted in
2007:
Seeds:
The use of high quality seeds in combination
• Trials made under various farming conditions in different
with other favorable production conditions,
regions have brought a new dimension and contributed to
increases yields and has direct beneficial
the R&D work on tomato, pepper and cucumber varieties
effects on the value of the final product.
at the seed research station in Antalya/Çand›r.
High quality seeds produced using breeding
and biotechnological methods have become
• A project was started in 2006 to determine and develop
an indispensable aspect of sustainable
new segment varieties suitable for various planting seasons
development in every corner of the world.
and geographical regions. This project was expanded in
The use of high quality seeds, coupled with
2007 with the addition of four new programs.
appropriate cultivation techniques and
favorable environmental conditions, is crucial
• In 2007, registration procedures for 11 new varieties of
for agricultural development and for the
tomato, melon, cucumber, cabbage, okra, bean, parsley
optimal utilization of arable land.
and red pepper were completed and conditions were fulfilled
to allow these varieties to meet the legal provisions for
Toros Tar›m believes that one of the major
commercial use.
ways to increase yields is to use high quality
seeds and over the years the company has
• Our 2007 sales increased from 39,318 to 55,929 kilos
expended great efforts to provide Turkish
(an increase of 42%) for varieties sold in kilos, and
farmers with high quality genuine seeds.
decreased from 183.7 million units to 176.7 million units (a
decrease of 4%) for varieties sold in units. The reason for
Vegetable Seeds:
the decrease was a shift in the tomato sowing season
In addition to fertilizers, Toros Tar›m
caused by climate change in 2007; our seed varieties did
provides standard and hybrid varieties of
not adapt well to this change.
vegetable seeds to Turkish farmers from its
Tomato Varieties Proliferate
Toros Tar›m’s Bursa and Antalya R&D stations develop and
adapt new varieties with high market value, high resistance,
and high productivity.
52
Field Crop Seeds:
The company continued to produce wheat seeds via
parent lines of additional varieties of wheat
contracted farming in 2007. Cooperation between Toros
seeds for production purposes.
Tar›m and the Ministry of Agriculture’s Çukurova and
Anadolu Agricultural Research Institutes resulted in 5,237
In 2007, the company continued the sale
tons of wheat seed production and 5,172 tons of sales.
and distribution of the NK ATRIA corn seed
During the year, in cooperation with Turkey’s largest seed
variety in Turkey, in cooperation with
producer, the Agricultural Production Department (Tar›m
Syngenta. Corn seed sales increased by 29%
‹flletmeleri Genel Müdürlü¤ü, T‹GEM), the company procured
compared with 2006 and 6,450 bags (each
bag=15 kg) were sold.
Contract Production Supports Farmers
Toros supports farmers through a contract production method
producing wheat seeds.
53
> Tissue Culture:
Plant disease and pests are widespread in
Antalya, Hishtil-Toros Seedlings is set to become one of
Turkey, causing significant losses in yields
the major grafted seedling producers in the world.
and revenue. The crop most severely
affected by these losses is the potato. Toros
Hishtil-Toros Seedlings is also a pioneer in its sector because
Tar›m understands that precautions need
it utilizes the latest technology and, in 2007, the company
to be taken and it has initiated production
launched its single-use RS type production viols. The
of disease-resistant potato seeds at its
advantage of RS viols, which are an improved version of
Agripark laboratories in Adana. Three years
the traditional viols, is that they facilitate the adaptation
of tissue culture production has now enabled
of seedling roots to the soil and they also provide protection
Toros Tar›m to supply producers with
against diseases. Their introduction to the Turkish market
certified potato seeds.
is an innovation. Hishtil-Toros Seedlings’ revenue increased
by 17% in 2007 and, with a strengthened financial structure
Potato seed production increased by 27%
and increased capitalization, the company has increased
in 2007 and 1.44 million potato mini-tubers
its investments and started to build a greenhouse on
were produced. Also, as a result of our
60,000 m2 of neighboring land it purchased during the
cooperation with the Australian-based
year. After this investment is completed, Hishtil-Toros
company Technico, imported potato mini-
Seedlings will have a higher market share and be a stronger
tubers are grown to potato seeds through
competitor ready to meet the ever increasing demand for
contracted farming in various districts of
quality seedlings.
Konya and Kayseri provinces after we
received field and product certifications from
> Grain and Animal Feed Raw Materials:
the Ministry of Agriculture. The total
From 2005, Toros Tar›m started to focus on the trade of
production was 6,713 tons and 2,691 tons of
domestically produced grain products and successfully
seeds were sold. Also, in 2007, 495,000
continued this activity in 2007. Toros Tar›m has two storage
fruit saplings were produced using tissue
facilities for this trade - one in Adana Agripark and the other
culture and sold to growers directly.
in Izmir/Torbal›, each with 20,000 tons capacity. Toros
Tar›m also utilized the Turkish Grain Board (Toprak Mahsulleri
> Seedling Production:
Ofisi)-operated warehouses in Thrace as well as the
Hishtil-Toros Seedlings made a strong entry
warehouses of its dealers in Central Anatolia.
in 2007 by upgrading its production facilities
and increasing its grafted seedling
During the 2007 harvest, 50,800 tons of products were
production capacity. The company increased
purchased (15,908 tons of wheat, 32,392 tons of corn, and
its production by 62% in the year. The
2,500 tons of barley) and 16,647 tons of wheat, 51,489 tons
demand for grafted seedlings for melon and
of corn, and 2,500 tons of barley (including 14,863 tons of
tomato varieties in Turkey has increased
wheat and 27,881 tons of corn carried over from 2006)
50-fold in the previous five years, and it now
were sold. As a result, 70,636 tons of grain and animal feed
exceeds 50 million seedlings per year. With
raw material were sold. 14,054 tons of wheat and 8,319 tons
its high level of production in its nursery in
of corn purchased in 2007 were carried over to 2008.
Certified Potatoes
Three years of research and tissue culture development at
Toros Tar›m’s Agripark Laboratory has produced certifiable
potato seeds.
54
Hishtil-Toros Nursery
Antalya, Turkey
55
> Marine Terminal Operations:
Port Activities in Turkey
With maritime transportation accounting for
increased in recent years. These developments have led
the greatest portion of ever increasing world
to capacity increases and new investments in the region.
trade, rapid port sector development is
essential. Many ports of the world,
With its high handling and storage capacity, Toros Ceyhan
particularly those in the Far East and Asia,
Terminal is the most modern multipurpose deep-water port
are increasing in importance. The majority
in the Eastern Mediterranean. In 2007, Toros Tar›m’s port
of existing ports continue to increase their
services, other than those for its own cargoes, included
capacity with investments in new piers and
2,543,701 tons of coal, 445,667 tons of oil and oil products,
docks to meet growing demand and to serve
178,803 tons of metal ore, 397,674 tons of cereals and
larger vessels. Meanwhile, newly constructed
grains, and 120,648 tons of other products. The total amount
ports take future projections into account.
handled for third parties in 2007 was 3,686,493 tons.
Mergers and acquisitions among ports around
the world continued to increase in 2007.
Among the Iskenderun Gulf ports handling dry bulk cargo,
Toros Terminal, with its 19% market share, ranked second,
This international dynamism has direct
according to the Iskenderun Chamber of Commerce. With
consequences on our ports. Turkish ports
the goals of increasing Ceyhan Terminal’s handling
have strategic importance for Eastern
capabilities and making it the region’s largest port, two
Mediterranean and Black Sea routes and
new cranes were ordered in 2007 to increase the dry bulk
they are located on the junction of east-west
cargo handling capacity.
and north-south international transportation
corridors. In this regard, Turkey’s ports
Toros Samsun Terminal, which started operations in the
represent an attractive business opportunity
second half of 2006, continued to grow owing to increased
for international investors. Efforts to
quantities of coal handled. Thanks to ample open storage
privatize the Turkish State Railways (TCDD)
areas, several new coal firms have been allocated storage
ports continued in 2007 with the
spaces, resulting in total coal handling of 571,761 tons.
privatization of Izmir and Derince (near
Samsun Terminal also handled 28,662 tons of liquid
Istanbul) ports. This has significantly
products in 2007. In all, 600,423 tons of cargo was handled
increased the economic value of the port
and stored for third parties.
sector in Turkey.
In addition to these activities, Ceyhan and Samsun Terminals
Toros Terminal Operations
have prepared “Rapid Intervention for Sea Pollution by Oil
Cargo handled at the Eastern Mediterranean
and Other Hazardous Materials” plans in line with the
region ports increased significantly in 2007,
Maritime Affairs Under-secretariat regulations and they
mainly due to the dynamism of the iron and
have also trained personnel and procured equipment to
steel industry in the region. Interest from
meet those plans’ requirements. Work on renewing
international transportation and oil trade
authorization documents under the Under-secretariat’s
companies located in the regions’ ports like
“Regulation on the Management of Coastal Facilities” has
Malta, Piraeus, Larnica, and Gibraltar, has
started.
Giant Silos Serve the Grain Trade
Another successful year for Toros’s grain trading, which it
started in the domestic market from 2005.
56
Toros Terminal Pier
Ceyhan, Turkey
57
> Free Trade Zone Management:
Toros Adana Yumurtal›k Free Trade Zone
In 2007, two chemical and construction material companies
(TAYSEB) provides investors with an
completed their investments and started operations. An
infrastructure that facilitates trade and
attractive center for large shipyard and iron-steel
transit operations and meets the
investments, TAYSEB has welcomed two companies, one
requirements of light and heavy industries
producing cold drawn steel products and the other
intending to operate in this zone. The
constructing a shipyard, and these have began developing
potential of the region has been increasing
their sites. Two other companies that had previously
daily since the Baku-Tbilisi-Ceyhan oil pipeline
received licenses, one for a shipyard and the other for
became operational and the construction of
textiles and chemicals, have failed to invest and had their
new refineries on nearby land became
licenses cancelled.
imminent with its designation as the Energy
> Plastic Bag Production:
Specialization and Industry Zone.
The Adana plastic bag production factory produces
TAYSEB’s business volume in 2007
polypropylene and polyethylene bags for Toros Tar›m’s
increased by 108% on 2006 and the leased
chemical fertilizers. It produced 31.6 million bags, thereby
open area reached 231,305m2. In addition
surpassing its target of 30 million bags. 240,000 plastic
of
bags were procured from third parties in 2007 for Toros
storage space have been leased as closed
Tar›m. Furthermore, 412.5 million meters of polypropylene
areas.
tape was produced for third parties.
to that,
280m2
of office and
4,660m2
Toros Adana Yumurtal›k Free Trade Zone (TAYSEB), Ceyhan, Turkey
Toros Terminal’s Ample Storage Capacity
Toros Ceyhan Terminal is the Eastern Mediterranean’s most
modern multi-purpose deep-water port, and it offers copious
operation and storage capacity.
58
> Fuel:
Toros Tar›m’s fuel oil activities are handled through its
production and 38.4 million kWh from the
dealerships with BP for fuel oil and with Mobil for motor oil.
national grid.
In 2007, a total of 11.3 million liters of fuel was sold via Toros
Tar›m’s gas stations and 593,000 liters of gas oil and 7,900
tons of fuel oil were supplied to Toros Tar›m’s facilities.
> Tugboat, Pilotage and Shipping
Agency Services:
In addition to Toros Tar›m’s own vessels,
While BP’s sales in our region increased 6% in the year,
Toros Ship Agency Co., Inc. began shipping
this figure was 8% for Toros Tar›m’s gas stations. In the
agency services to coal-carriers in Samsun
wholesale category, Toros Tar›m was awarded for being
Terminal in 2007. Tugboat and pilotage
among the top 15 dealers.
services were expanded in the year to include
Akpet facilities, which are within our pilotage
> Energy:
sector in Iskenderun Bay.
Toros Energy produces electricity at its Ceyhan and Mersin
co-generation units for the Agri-Industry Group. In 2007,
Over the year, we provided shipping agency
Toros Energy chose not to operate its gas turbine generators
services to 149 vessels in Ceyhan, 86 vessels
because of a massive increase in naphtha prices and only
in Samsun, and 14 vessels in Mersin. We also
used its steam-turbine electrical power plant in Mersin. In
provided tugboat and pilotage services to
2007, Toros Energy provided its shareholders with 71.3
581 vessels in Ceyhan and 753 vessels in
million kWh, of which 32.9 million kWh was from its own
Samsun.
STRATEGIC DIRECTION
Tekfen Agri-Industry Group’s aim is to grow in all areas of the agriculture sector.
The Group continues to invest to strengthen its leadership of the fertilizer market
and expand its terminal operations in line with regional developments. Tekfen
Agri-Industry Group will continue to lead and support the development of the
Turkish agriculture sector with long-term planning based on a modern, innovative,
results-oriented approach.
Toros Tar›m Meets its Responsibilities
As a leading player in the agriculture sector, Toros Tar›m sets
an example by its commitment to Turkish agriculture.
59
Contracting Group
Agri-Industry Group
Tekfen Real Estate Development
Investment and Trade Co., Inc.
Real Estate Development Group
Tekfen Tourism & Facility
Management Co., Inc.
Tekfen-OZ Real Estate Development Co., Inc.
Other Activities
Social Responsibility
Corporate Governance
Auditors’ Report
> Profile
Tekfen Real Estate Development Group was established in 2000 with the goal
of utilizing opportunities in the real estate sector - a rising business realm to meet the demand for high quality construction. The Group became a legal
entity in 2006 and, with Tekfen’s profound design and construction experience,
it soon established itself as a leader in its segment.
Real estate development, which was identified
feasibility studies, conceptual design, design development,
as one of the core activities of Tekfen Holding
project management, and facility management.
during the restructuring process in 2000, are
undertaken with a wide range of services
With the goal of increasing and developing its range of
under the heading of Tekfen Real Estate
services, Tekfen Real Estate Development Group entered a
Development Group. These services include
partnership with Och-Ziff (OZ), one of the USA’s leading
market research, technical and economic
asset management companies in October 2007.
> Overview of 2007
After the Turkish economy showed strong improvements in 2004, the realestate sector started to show signs of growth. During the last three years, the
sector has gained significant dynamism thanks to new housing projects and
increasing demand.
With economic stability, interest rates fell,
affects of fluctuations in international markets, mortgage
credit maturity periods lengthened, and this,
interest rates did not display the expected decrease. All
in turn, widened the market for housing loans.
these developments inhibited the anticipated increase in
The amount the banks loaned for housing
demand after the elections.
increased 500 fold between 2001 and 2007
to reach TRY224 billion by mid-2007. The
Despite all these drawbacks, the Turkish real estate sector
abundance of housing loans caused an
continued to grow in 2007. Real estate loans continued
increase in demand for housing, which in
their growth trend more or less and the amount of real
turn increased real-estate prices.
estate loans increased by 39% compared with the previous
year. Turkey still has an insufficient level of housing and
Increasing prices and saturation of demand,
the rapid population increase and demand for housing
plus election-induced recession caused a
projects with high earthquake resistance are the main
general slowdown in the construction sector
factors buoying the dynamism of the construction sector.
in 2007, with middle class housing projects
As of 2007 third quarter, the Turkish construction sector
especially affected. Throughout the year,
had grown 11.5%.
price decreases of up to 15% were observed
for collective housing projects and, with the
Akmerkez: a Prestigious Brand
Opened in 1993, 100% occupancy and numerous international
awards attest to Akmerkez shopping centre’s unqualified
success. It sets the standard for such centers around the
country. Tekfen holds a 10.79% share in Akmerkez.
62
The market for the luxury housing, shopping mall and office
Tekfen Tower
A modern business centre
in the heart of Istanbul.
63
building segments were strong in 2007. Since
in Istanbul and the number of vacant offices decreased.
mid-2004, foreign investors have been
According to a report by Colliers International, the total
making long-term investments in the Turkish
area of all Class A office buildings in Istanbul reached 1.84
real-estate sector and their involvement
million m2 in 2007. Due to a lack of supply in this category,
increased in 2007. During the second half of
the rents of Class B and Class C office buildings also
2007, 49 new shopping malls were opened
increased. If economic growth is maintained, an additional
in Turkey. The total value of shopping mall
150,000-200,000m2 of office space is expected to enter
investments are estimated at $10 billion and,
the market in the next two years.
in the next five years, this amount is expected
to increase to $22 billion while the foreign
According to the PriceWaterhouseCoopers and Urban Land
investors’ share of the new shopping mall
Institute report “Emerging Trends in Real Estate Europe
projects is expected to reach 50%.
2007”, Istanbul is one of the brightest cities in Europe for
real-estate profitability. Of 27 cities surveyed, Istanbul is
On the other hand, the interest of foreign
rated third for office purchasing offers, first for industrial
investors in office building investments is
real-estate purchasing offers, and second for commercial
confined to Istanbul. After the supply of office
real-estate offers. This situation explains why foreign
projects decreased during 2007, office rents,
investors, who were previously only interested in shopping
particularly in the popular business hubs on
mall investments, are now interested in mortgage funds,
the European side, increased tremendously
residential projects and logistic real-estate.
Tekfen Services
Tekfen Tourism and Facility Management Co. Inc. was established in 2003 to bring added value to
Tekfen Real Estate Development Group’s projects.
The company operates under the Tekfen Services brand and undertakes the management of realestate projects like Tekfen Tower and Taksim Residences. The revenues of S Café in Istanbul’s
Akmerkez shopping mall has increased steadily under the management of Tekfen Services.
Additionally, Tekfen Services manages the conference center at Tekfen Tower and the Energym
Fitness Centers located at Tekfen Tower and Taksim Residences. Tekfen Services will also manage
the boutique hotel and restaurant that will be opened as part of the “Yal›kavak Tekfen Evleri” project.
Ka¤›thane’s Changing Face
Architect Emre Arolat is designing the office buildings for this
innovative urban development project.
64
Boutique Hotel
Yal›kavak, Bodrum
65
> Our activities in 2007
As a result of a decision made in 2007, Tekfen Real Estate Development
Group entered into partnership with a leading international asset management
company Och-Ziff (OZ) and they formed a company entitled Tekfen-OZ Real
Estate Development Co. Inc. The group will continue its real-estate investments
via this new company.
The construction of “Yal›kavak Tekfen Evleri”,
located on a 27,500m2 area purchased on August 22nd,
one of the continuing projects, progressed
2007 and it will preserve the existing natural textures and
flawlessly in 2007. The project is located on
tangerine garden. The architectural project will be selected
60,000m2 area on the hills of Gökçebel bay
by competition, and construction and marketing will
in Yal›kavak. The investment decision for this
commence in the first half of 2008.
project was made in the last quarter of 2006
and construction started in January 2007.
Preparations for the “Ka¤›thane Project” in Istanbul are
Marketing activities for 86 units started in
underway. The project, an urban regeneration project, will
April and by the end of 2007, 75 of these
utilize a former industrial zone by turning it into an office
units were sold. The project also includes a
complex with a design that suits the surrounding
40-bed boutique hotel that is planned for
architecture. Zoning plans for the project were approved
completion by July 2008. The hotel has a
by the municipality in 2007. The project was designed by
typical Aegean style and unique decoration.
architect Emre Arolat as an “office park” and has a total
It offers a gourmet restaurant, health center,
usage area of 30,000m2.
indoor and outdoor bars, swimming pool and
the sea. It will provide an exclusive atmosphere
The “Bomonti Project” in Istanbul is in the preparation
for its guests.
phase. This project includes residential buildings, conference
halls and “street shopping” applications. The preparations
The Group’s Gümüfllük project is currently
are planned for completion in the first half of 2008.
in preparation. This is a boutique project
The Turkish Green Building Council
Tekfen Real Estate Development Group became one of the founding members of the Turkish Green
Building Council in 2007. Through its membership, the Group aims to adopt an environmentalist
approach to underpin its unique activities and to set the Group a pioneering role for its emphasis on
environment-friendly approaches in the real-estate sector. The goals of the Council are to encourage
projects that emphasize insulation and energy efficiency in the construction sector as well as to
encourage the use of construction materials that do not pose a danger to human health. In these
days when our ecosystem is under enormous threat, the benefits brought about by more efficient
and less environmentally harmful construction materials is particularly important.
Bodrum’s Hidden Paradise: Gümüfllük Project
Tekfen Real Estate Development Group’s second Bodrum project
creates a paradise inside tangerine groves for those yearning
for authentic Bodrum living.
66
Och-Ziff Capital Management Group
Och-Ziff Capital Management Group, which is an international corporate assets management company,
was established by Daniel Och in 1994. The Group, which operates in public and private markets,
manages a portfolio valued at $34 billion. More than 325 investment experts and analysts work at
Och-Ziff’s offices in New York, London, Hong Kong, Tokyo, Bangalore and Beijing.
STRATEGIC DIRECTION
In line with its business model adopted in previous years, Tekfen Real Estate
Development Group’s goal is to continue its pioneering role in its sector and to
gain repute for projects that carry brand value. Tekfen Real Estate Development
Group blends its quality and brand concepts in projects of high added-value and
it aims to expand its target market and its project portfolio through the same
approach.
Tekfen Real Estate Development Group’s goal is to expand its residential and
commercial real-estate projects beyond Istanbul, to other large cities of Turkey.
Urban regeneration projects are part of a strategy of offering high quality
exclusive projects to high-income groups. They are an important opportunity
for Tekfen Real Estate Development Group. This approach will be a determining
factor when the Group makes decisions on its areas of investment.
The Group will use its current resources to develop office projects primarily in
districts such as Ka¤›thane that are outside the current business hubs of Istanbul
and that provide ease of commuting. The project designs will be practical and
set an example with their unique operation.
Ka¤›thane Project
A run-down industrial area starts its transformation into a
modern business district with distinctive office designs.
67
Contracting Group
Agri-Industry Group
Real Estate Development Group
Eurobank Tekfen Co., Inc.
Other Activities
EFG Leasing Co., Inc.
EFG ‹stanbul Securities Co., Inc.
Tekfen Industry and Trade Co., Inc.
Papfen Joint Stock Company (Uzbekistan)
Tekfen Insurance Brokerage Services Co., Inc.
Antalya Studios Co., Inc.
Akmerkez Real Estate Investment Co., Inc.
Tekfen Culture and Arts Production and
Publishing Industrial and Trade Co., Inc.
Social Responsibility
Corporate Governance
Auditors’ Report
> Eurobank Tekfen
> Profile:
After Tekfenbank and Eurobank EFG established a partnership in early 2007,
the resulting enterprise gained momentum over the year and started its
operations under its new name, Eurobank Tekfen, at the beginning of 2008.
As a bank that offers a wide range of financial
services and product solutions, the Eurobank
Tekfen brand is associated with ethical
values, integrity and trustworthiness.
Eurobank Tekfen has a very respectable standing in national
and international markets, and it bases all its corporate
operations on the principles of prioritizing client satisfaction
and providing services at international standards.
The main goal of Eurobank Tekfen is to meet
the needs of its corporate, commercial and
small businesses clients with traditional and
innovative financial solutions via the most
appropriate distribution channels. Eurobank
Tekfen offers services in the areas of project
finance, foreign trade finance, corporate and
consumer credits, credit cards, deposits, and
treasury and capital market products.
Eurobank Tekfen’s competitive advantage springs from its
ability to maintain superb relations between its clients and
its specialists through providing innovative, high quality
and effective solutions. Eurobank Tekfen’s goal is to use
its competitive power to strengthen its position in the
Turkish banking sector to become a leading player and the
bank of preference.
> An overview of 2007:
Developments in the financial markets under
the macroeconomic policies of 2006-2007
have brought the world economy to a new
conjuncture. Mortgage loan foreclosures and
the conversion of some credit risks into losses
have turned previously emphasized risk factors
into reality. The mortgage crisis has pushed
the global economy into recession and this is
expected to hold sway over 2008. The growth
rate of the world economy, which is expected
to be announced at 5.2% for 2007, is projected
to decrease to 4.8% in 2008.
The main influence on the Turkish economy
in 2007 was the general elections held in the
Eurobank Tekfen: Young but Experienced
Tekfenbank was renamed Eurobank Tekfen in early 2008 to
reflect the new partnership between Tekfen and Eurobank EFG,
and the marriage of local experience with international knowhow.
70
third quarter of the year. GDP increased 3.8% in the first
nine months of the year. Taking the Turkish financial sector
as a whole, the growth trend continues. The ratio of the
banking sector’s assets to GDP was 85% and the cumulative
assets of the sector rose 16% on the previous year to
TRY581 billion while the credit volume reached TRY286
billion and its share of the balance sheet increased to 49%.
The deposits to credits conversion rate was 79.7%.
The total deposit volume was 61.9% of total liabilities and
reached TRY357 billion in December 2007. In the same
period, the Capital Adequacy Ratio was 18.9% and net profit
was TRY15 billion. Average Return on Equity was 19.6%
while the Average Return on Assets was 2.6%.
Eurobank Tekfen
A new look.
71
> Our operations in 2007:
The agreement between Tekfen Group and EFG Eurobank Ergasias S.A.
(Eurobank EFG), signed May 8th, 2006, to increase cooperation in Turkey’s
financial services sector, was concluded in 2007.
The legal process started with Banking
Regulation & Supervision Agency (BDDK)
approval on February 23rd, 2007 and it was
finalized at an extraordinary general
assembly held on March 16th, 2007 and with
Tekfen Holding’s transfer of 70% of
Tekfenbank’s shares to Eurobank EFG. As
the last step in this process, the name of the
bank was changed to Eurobank Tekfen on
January 14th, 2008.
Eurobank EFG is one of Greece’s leading
financial institutions in consumer and
corporate banking, mutual fund management,
investment banking, equity brokerage, and
life insurance. Eurobank EFG, with total assets
over EUR68.4 billion, is the second largest
bank in Greece and the second largest
company on the Athens Stock Exchange.
With over 22,000 employees, and 1,500
branches and alternative distribution
channels, the bank offers services at an
international level. The bank grew rapidly
between 2000 and 2006 by focusing on
Eastern Europe and the Mediterranean
regions. With subsidiaries in Poland, Romania,
Ukraine, Serbia, Bulgaria and Turkey,
Eurobank EFG offers financial services in a
market of 200 million people.
That Eurobank EFG chose Tekfenbank as its
strategic partner in Turkey demonstrates
Eurobank EFG’s confidence in the former
Tekfenbank as a select member of the
Turkish economy. Behind this investment decision there is
a strong expectation that the Turkish banking sector will
develop rapidly and in line with the increasing financial
needs of corporations and individuals. This partnership,
which unites Eurobank EFG’s financial power and its
experience in contemporary banking practices with
Tekfenbank’s unique values and market knowledge, will
turn Eurobank Tekfen into a stronger player able to utilize
its opportunities to the full. The financial and organizational
commitment of both partners provides the driving force
behind the mid- and long-term growth plan of Eurobank
Tekfen.
Eurobank Tekfen continued its growth in line with its
strategic goals in 2007. The balance sheet of the bank grew
by 147% and its total assets reached TRY2,749 million at
the close of 2007. While the number of clients holding
deposits in Eurobank Tekfen has been steadily increasing,
the increase in the amount deposited was 51% in 2007 and
the deposits totaled TRY1,152 million at the end of the year,
an amount that funds 42% of the balance sheet.
Including the six new branches opened in 2007, Eurobank
Tekfen serves its clients from 37 branches in 18 cities. This
geographical distribution gave the bank access to 64% of
Turkey’s GNP in 2007. The bank’s total cash placements
increased by 53% in 2007 to reach TRY882 million. The
credit portfolio was diversified in client and sector terms
and it maintained this structure in 2007.
Eurobank Tekfen has a strong financial structure and it
meets all national and international accounting and
presentation regulations and standards. The bank’s capital
adequacy ratio was 21.8% at the end of 2007.
EFG Leasing
EFG Leasing, an affiliate of Eurobank Tekfen, offers high quality financial leasing services with high
added value thanks to the synergy created by the headquarters and the branch network. In 2007,
EFG Leasing increased its active clients to 376 and its agreement portfolio to $37.8 million. The
company improved its relations with its creditors in 2007 and this allows it to offer the best terms
to its clients.
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EFG Istanbul Securities
EFG Istanbul Securities A.fi., formerly known as HC Istanbul, was established in 2001 as a boutique
brokerage house to provide equity trading and corporate financial services. In April 2005, the company
was wholly acquired by Eurobank EFG Group, which is one of the leading financial institutions in Greece.
The same group purchased 70% of Tekfenbank’s shares in March 2007. As part of Eurobank EFG’s
strategy to gather its operations in Turkey under one roof, all EFG Istanbul’s shares were transferred
to Tekfenbank in October 2007.
EFG Istanbul Securities’ mission is to become the leading investment bank of Turkey. The company
provides capital market, corporate finance, and public offering services, and innovative financial products.
EFG Istanbul Securities has taken an active role in various company mergers and acquisitions, strategic
sales and partnerships, privatizations, and public offerings, and it has represented reputable international
and local clients successfully in such projects.
At the close of 2007, EFG Istanbul Securities’ assets totaled TRY67 billion and its market share had
reached 24%.
STRATEGIC DIRECTION
Eurobank Tekfen, with the mission to offer international quality financial services, will
continue to be a solution partner for its corporate and individual clients.
Eurobank Tekfen sees the accelerating growth of the corporate banking sector as an
opportunity so it will offer innovative products and services to small, mid-sized, and
large companies.
Retail banking operations will be steadily increased by expanding the service network.
Emerging banking service areas, such as asset management and capital markets
transactions, will be entered and the bank’s activities in the capital markets will be
strengthened via EFG Istanbul Securities.
Additional financial services will be offered to existing clients in other countries of the
region and the share per client will be increased.
Quick Change Artist
A new name and a new corporate image to reflect the benefits
and opportunities of a new partnership. Renamed in 2008,
Eurobank’s corporate identity was quickly applied to all branches
and bank materials following the completion of preparations
in 2007.
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> Tekfen Industry
Tekfen Industry and Trade Co. Inc. operates in two main sectors - lighting and
chemical products.
Tekfen Industry reinforced its already strong
players in the LED segment of the Turkish market.
position in the light bulb sector in 2007. Tekfen
Industry’s wide product range includes its
Tekfen Industry continues to market its Fentox brand
own brand of incandescent light bulbs
household insecticide with a product line that includes Fentox
outsourced from China, Wiselite branded
Stop, Super Fentox, Water-based New Fentox, Fentox Likit
energy-saving light bulbs, and advanced
and Fentox Mat. Match production continued through contract
technology products such as LED, metal halide,
manufacturing in India.
sodium vapor, and mercury vapor lamps. Due
to increasing global demand for LED lamps,
Despite significant price decreases in the products Tekfen
the company increased its investments in this
Industry produced and traded, the company performed above
area in 2007. With these investments, Tekfen
its budget and strategic targets and completed 2007 with
Industry’s goal is to become one of the leading
a net profit.
> Papfen
Papfen, a Turkish-Uzbek partnership in which Tekfen holds an 85% stake,
has produced thread in Uzbekistan since 1997.
With modern facilities, ISO 9001 Quality
Papfen’s annual production capacity is around 4,000 tons.
Management System certification, and a
The company operated at full capacity in 2007 and reached
commitment to high quality, Papfen is among
its tonnage and revenue targets. Exports to Turkey, Russia,
Uzbekistan’s leading industrial companies.
Belarus and other countries accounted for 86% of the
Papfen celebrated its 10th anniversary in
thread produced in 2007, while the remaining 14% was sold
2007.
on the domestic market. Sales revenue totaled $9 million.
Happy Birthday Papfen!
A model for industrial facilities in Uzbekistan, Papfen celebrated
its 10th anniversary in 2007. A Turkish-Uzbek joint venture with
Tekfen Holding an 85% share, Papfen has modern production
facilities, ISO 9001 Quality Management System certification,
and high quality products.
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> Tekfen Insurance
Tekfen Insurance acts as agent for 18 insurance and retirement companies
and, with a high level of premium production, it provides services in all
branches of the insurance industry.
In 2007, Tekfen Insurance exceeded its performance goals.
agreement between Tekfen Insurance and
Its net premium production increased by 37% and its
HSBC. Under this agreement, all procedures
commission revenues by 45%.
concerning liability and traffic insurance
policies - such as proposals, sales,
As a distribution channel, Tekfen Insurance uses secondary
terminations, additional period follow ups,
agencies that provide their customers with a wide product
improved sales reports, and correspondence
range offering high levels of coverage at affordable
- will be handled via the online insurance
premiums. In 2007, the net premium production of the 14
platform Tekfen Insurance has developed.
secondary agencies, including Eurobank Tekfen, increased
The new system, which is an important step
by 18% on the previous year while commission revenues
for Tekfen Insurance with regard to online
increased by 20%.
insurance solutions, is scheduled to become
functional in 2008.
Tekfen Insurance uses an online insurance platform that
enables its secondary agencies to provide insurance services
Bank branches that provide insurance
to its customers 7/24. With the help of this platform, policy
services can easily adopt the solutions
proposals and sales procedures can be handled easily online.
Tekfen Insurance has developed and work
In 2007, Tekfen Insurance extended its online insurance
is continuing on improving operations in this
platform to include HDI Sigorta A.fi.’s car liability insurance
area.
and traffic insurance products, and Ergo ‹sviçre Sigorta
A.fi.’s liability insurance products. In 2007, the company
In line with agreements signed in 2007 with
also completed preparations for the DASK (mandatory
Garanti Bankas›, Akbank, Türkiye ‹fl Bankas›,
earthquake) insurance software and the e-learning system
HSBC Bank, Finansbank, Fortisbank, and
that will provide online training for secondary agencies.
Yap› Kredi, Tekfen Insurance started the
virtual POS application. The company has
Another important development in 2007 was the signing
obtained a certificate of competency from
of a preliminary protocol of a prospective secondary agency
the Turkish Standards Institute.
> Antalya Studios
Antalya Studios provides domestic and foreign movie producers with advanced technology and infrastructure
in a venue of 186,000 m2. In line with Tekfen Holding’s decision to concentrate on its core business areas,
the Holding has decided to sell or lease Antalya Studios to foreign investors and negotiations continue
on this issue.
Papermoon: A classic Italian restaurant.
Papermoon caused a stir from its opening in 1996. A fixture in
Istanbul’s high-end restaurant segment, the Tekfen Holding
affiliate has steadily increased its turnover and garnered several
international awards for its menu, service, and management.
Papermoon opened its Ankara branch in 2006.
75
Contracting Group
Agri-Industry Group
Real Estate Development Group
Other Activities
Tekfen Foundation for Education, Health,
Culture, Arts and Protection of Natural Habitat
Social Responsibility
Corporate Governance
Auditors’ Report
> Social responsibility
From its founding, Tekfen has been committed to the business principles of
due diligence in all its operations and strict adherence to ethical rules. The
company believes that supporting social, cultural and environmental activities
are a natural requirement of its corporate identity. All Tekfen Holding affiliates
see the concepts of “usefulness”, “harmony” and “protection” as prerequisites
of their operations.
Tekfen believes that supporting social
projects for these purposes over many years. All Tekfen
development and progress is the responsibility
employees, from the most senior to the most junior levels,
of all individuals and institutions and the
embrace these activities, which go hand in hand with the
company has been actively involved in major
company’s emphasis on people and the environment.
> Tekfen Foundation:
The Tekfen Foundation for Education, Health, Culture, Art and Protection of
Natural Habitat, was established on April 12th, 1999 to support social and
cultural activities. In 2004, the Council of Ministers granted the Tekfen
Foundation the status of an “institution working for the public welfare”. Every
year, the Foundation awards scholarships to 180 successful high school,
university and graduate students. Since its establishment, the Foundation has
provided financial support to more than 1,000 students.
The Tekfen Foundation supports various NGOs, including: the Istanbul Foundation for Culture and Arts;
the Turkish Foundation for Combating Soil Erosion, for Reforestation and the Protection of Natural Habitats
(TEMA); and the Family Health and Planning Foundation (TAP). In 2007, the Tekfen Foundation directly
supported the nationwide awareness campaign organized for TEMA’s 15th anniversary.
In 2007, the Tekfen Foundation:
• Supported the “Culture Center Project” by donating computers for a school internet room. The project
was initiated by primary school teachers near Diyarbak›r, in southeastern Turkey.
• Donated money to the Haber Turk TV campaign for the families of Turkish Armed Forces veterans and
fallen soldiers.
• Gave financial support to the Foundation of Disabled’ People’s “Social Activities for the Disabled 2007”
project to facilitate the integration of disabled citizens into society and to encourage equal opportunities.
Tekfen Scholarships for Successful Students
The Tekfen Foundation awards scholarships to young intelligent
minds. 2007 saw a record number of 11 thousand applications,
all of which were assessed via the internet.
78
Tekfen Philharmonic Orchestra
The orchestra performed in Hagia Irene
within the scope of the 35th International
Istanbul Music Festival.
79
> The Sound of Three Seas:
One of Tekfen’s most important contributions
The Tekfen Philharmonic started its 15 th anniversary
to culture is the Tekfen Philharmonic
celebrations with a concert tour of Gaziantep, Adana and
Orchestra. The ensemble dates back to 1992
Mersin. The tour continued with “A Starry Night in
when it was established with Tekfen’s support
Cappadocia” concert co-organized by the local governments
as the “Black Sea Chamber Orchestra” to
of Nevflehir, Avanos, and Ürgüp at Cappadocia’s Zelve Open
enhance cultural exchange between the
Air Museum. The tour ended in October 2007 with concerts
member states of the Black Sea Economic
on both sides of Istanbul and in Ankara, with solo
Cooperation organization. The orchestra
performances by the famous Israeli cellist Amit Peled, the
originally brought together 17 musicians from
youngest professor of cello in the USA.
11 countries but soon the name was changed
as participation was widened to countries
The Tekfen Philharmonic performed a concert entitled
from the Caspian and Eastern Mediterranean
“From Russia with Love” on June 28th, 2007 as part of the
regions. The Tekfen Philharmonic Orchestra
35th International Istanbul Music Festival, sponsored by
has given numerous concerts all over the
Tekfen Holding, as it is every year.
world and it continues its mission as a peace
ambassador carrying the flag of 23 states.
The Orchestra gave the opening concert at the World
The Orchestra’s repertoire includes pieces
Chambers Federation’s biennial event, the Fifth World
played on traditional instruments of its
Chambers Congress, which was hosted by the Union of
participant nationalities, thereby underlining
Chambers of Commerce, Industry and Commodity
the Orchestra’s unique richness of musical
Exchanges of Turkey (TOBB) on July 4th, 2007.
sources and its multicultural composition.
> Tekfen Holding:
Tekfen Holding continued its support of the Istanbul Foundation for Culture and Arts in 2007 and the
company was among the sponsors of the 10th International Istanbul Biennial, held September 8th-November
4th, 2007. Tekfen Holding sponsored the sixth meeting of Forum Istanbul, which brought leading international
and domestic politicians and scientists together with business and cultural leaders, May 10th-11th, 2007.
The Forum Istanbul Platform focused attention on developing a road map for Turkey in the light of global
changes under the title “Establishing tomorrow - Goal is 2023”. It was organized under three headings:
“Turkey’s Development Strategy in the Light of Developments in the World”, “The Status of Energy in the
World and Turkey” and “New Regional Power Balance and Turkey: Policy Choices”.
> Tekfen Real Estate Development Group:
Tekfen Real Estate Development Group is among the founding members of the Turkish Green Building
Council, which was established in 2007 with the goal of promoting widespread usage of energy saving
technology and environmentally friendly construction materials. The Chairman of the Council is Ali Nihat
Gökyi¤it, one of Tekfen’s founders.
Tekfen Welcomes
World Green Buildings Council
The World Green Buildings Council’s opened its Turkish branch
September 26th, 2007, with Tekfen’s full support. The WGBC
also has members in Australia, Brazil, Canada, India, Japan,
Taiwan, Spain, Mexico and the UAE, as well as the USA.
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From Book to Documentary - the Flowers of Anatolia
The book “Flowers of Anatolia” is the result of 20 years of dedicated hard work by photographer
Fatih Orbay. It was published in 2007 with support from the Tekfen Foundation. The book has
generated great interest from a large audience and the media. It contains 306 pictures selected
from 15,000 photographs taken at remote locations all over Turkey.
Shooting has now started on a documentary, “Unique Flowers of Turkey”, which is the second step
of the project following the book’s publication. Also prepared by Fatih Orbay, the documentary will
present various flowers of Anatolia in their natural habitats in a series of six 26-minute episodes.
The series will be in wide screen format and the production team will use high-resolution cameras
to capture the natural colors of the flowers. The project also involves two DVD movies, one of 45
minutes and the other 15 minutes, that will summarize the series. The shootings are expected to
continue until 2009.
The documentary will be an important step in promoting and preserving the natural bounty and
beauty of Turkey.
Cello Virtuoso and the Sound of Three Seas
Amit Peled, the young Israeli cello virtuoso, performed with
the Tekfen Philharmonic Orchestra on its October Tour.
81
Contracting Group
Agri-Industry Group
Real Estate Development Group
Other Activities
Social Responsibility
The Board
Corporate Governance
Corporate Governance Principles
Compliance Report
Dividend Distribution Policy
Auditors’ Report
> Members of the Board
President and Managing Director
Ali Nihat GÖKY‹⁄‹T
Deputy Chairman and Managing Director
Cansevil AKÇA⁄LILAR Deputy Chairman and Managing Director
Feyyaz BERKER
Board Member
Dr. Ayfle Leyla AKÇA⁄LILAR
Board Member
Meltem BERKER
Board Member
Murat G‹G‹N
Independent Board Member
fiefika PEK‹N
Independent Board Member
Dr. Rüfldü SARAÇO⁄LU
Independent Board Member
Hasan Seymur SUBAfiI
84
> Corporate Governance
Principles Compliance Report
Tekfen Holding, which has a distinguished 51-year history and a strong corporate foundation,
has embraced the Capital Markets Board (CMB) of Turkey’s Principles of Corporate Governance.
Within the framework of its management philosophy - which is based on the principles of equality,
transparency, accountability, and responsibility - the Holding, through embracing the Principles
of Corporate Governance, aims to maximize its value by protecting the interests of all its
shareholders and stakeholders.
March 20, 2008
1. Corporate Governance Principles Compliance
Tekfen Holding understands that good corporate governance brings great benefits to the Company. An
important indicator of the emphasis the Company places on Corporate Governance Principles is establishment
of an Investor Relations and Corporate Governance Department at the end of 2007, as outlined in the
following sections. The Holding has also established a Corporate Governance Committee to evaluate its
performance against the Principles and to ensure the highest level of compliance.
The number of board members was increased from six to nine and the three new members are independent
in the sense that they have no other Tekfen Holding affiliations whatsoever.
Prior to the Holding’s public offering, its Articles of Association were amended to remove privileged shares
and to grant equal voting rights to each of the Company’s shares on the principle of one share-one vote
principal.
The Company is fully compliant with the CMB’s Corporate Governance Principles with the following
exceptions:
• Since the minority shareholders who hold a 5% share in the Company, in accordance with the Turkish Law of
Commerce and the Capital Markets Law, hold the right to demand for a special auditor to be arranged, there is
no provision in the Company’s articles of association for the appointment of a special auditor.
• The Articles of Association contain no provision for the representation of minority shares in management or the
utilization of the method of cumulative voting.
• No structure has been established to involve stakeholders in the Board of Directors.
• There is no representative appointed to manage relations with the Company employees. The Company’s relations
with its employees are actively managed through the human resources and personnel departments of the Holding’s
companies.
• To allow board members to take positions in other Group companies, it was decided at the ordinary Annual General
Meeting that its members would not be subject to the prohibitions and limitations outlined in articles 334 and 335
of the Turkish Law of Commerce. In this regard, board members are in no way restricted from taking positions
outside of the Company for the period covered by the General Meeting decision.
• A performance-based award system has not been adopted for the determination of remuneration of board members.
However, according to the Company’s Articles of Association, with regard to the amounts and provisions set by
the Board, dividends which may not exceed 2% of the profit after deduction of legal reserves and distributed
profits can be distributed to the board members.
All work necessary for full compliance with the CMB’s Principles of Corporate Governance is currently
underway. The Tekfen Board of Directors believes that the present level of non-compliance does
not constitute a basis for significant conflicts of interest.
85
> Section I
Shareholders
2. Investor Relations Department
In the Company, the practice of shareholder rights complies with all relevant legislation, as well as the
Articles of Association and other internal regulations, and every measure is taken to ensure these rights.
An Investor Relations and Corporate Governance Department was formed prior to the Company’s initial
public offering. This department is charged with managing the Company’s shareholder relations and
undertaking all the necessary arrangements to conform to the CMB’s Corporate Governance Principles.
This department is led by the Corporate Governance Committee and Osman Reha Yolalan, Tekfen Holding’s
VP for Corporate Affairs. Departmental tasks are undertaken by Ça¤lar Gülveren, who has all the relevant
certifications from the CMB.
The Investor Relations and Corporate Governance Department can be contacted as follows:
Tel
: +90 (212) 359 34 20
Fax
: +90 (212) 257 00 81
Email : [email protected] or [email protected]
This department can also be reached via the contact form on the Company’s official website: www.tekfen.com.tr.
The basic responsibilities of the Investor Relations Department are as follows:
a) To keep shareholder records in a sound, current, and secure manner
b) To respond to written shareholder requests to the fullest extent possible while not divulging confidential
or trade information that should not be disclosed to the public
c) To ensure that the General Assembly is held in accordance with the current legislation, the Articles
of Association, and other internal Company regulations
d) To prepare, in cooperation with other Company departments, the General Assembly documents for
shareholders
e) To keep records of voting and to send the relevant reports to any shareholders who may request
them
f) To undertake all tasks related to informing the public, including issues such as legislation and the
disclosure policy of the Company.
The Investor Relations Department prepares the financial and operational data which analysts need to
prepare their research reports and it makes every effort to ensure that research reports reflect the complete,
correct, and current state of the Company. The department also responds in a timely manner and in accord
with the legal requirements to telephone and email requests and inquiries from domestic and international
investors.
A large percentage of the publicly traded portion (34.5%) of the Company’s capital is owned by foreign
institutional investors. Many existing and prospective foreign institutional investors and brokerage companies’
analysts that render services to such investors request visits to the Company. The department strives to
meet these requests by facilitating the active participation of the Company’s senior management.
In 2007 following the Company’s IPO, about 15 inquiries from investors and analysts reached the Investor
Relations Department via telephone or email and these were answered.
86
3. Shareholders’ Right to Obtain Information
Following the Company’s share listing on the Istanbul Stock Exchange (ISE) in 2007, about ten inquiries
concerning financial performance were received from foreign institutional investors and these were answered.
In the same period, two conference calls were organized to answer investors’ and analysts’ questions about
the Company’s performance up to the third quarter of 2007. A presentation of the Company’s 9-month
operational results was also shared with investors via the internet.
The Investor Relations page on the Company’s official website, www.tekfen.com.tr, provides a wide range
of current, complete, and correct information for investors.
Since the minority shareholders who hold a 5% share in the Company, in accordance with the Turkish Law
of Commerce and the Capital Markets Law, have the right to request the appointment of a special auditor,
there is no provision in the Company’s Articles of Association for the appointment of a special auditor. No
request to make such an appointment was received during this reporting period.
4. Information about the General Assembly
The Company went public in November 2007. No ordinary or extraordinary general assembly was held after
that date, so the Company will have its first General Assembly as a public company in 2008. Announcements,
and procedures related to the General Assembly will be made in line with the provisions of the relevant
legislation.
In Article Three, entitled Purpose and Subject, of the Company’s Articles of Association, the business and
operations that may be undertaken are outlined. In accordance with this article, the Company can enter
other necessary business areas only with the General Assembly’s approval on the proposal of the Board
of Directors. While fulfilling the provisions of Article 3, the Company will also fulfill the public disclosure
requirements of the Capital Markets Law and other relevant legislation.
The latest version of the Articles of Association is posted on the Company’s official website: www.tekfen.com.tr.
5. Voting Rights and Minority Rights
For compliance with the CMB’s Corporate Governance Principles, privileged rights were removed by an
amendment of the Articles of Association. Currently there are no privileged rights. As a result, every share
carries a single vote.
In line with the CMB’s regulations, shareholders may use their voting rights directly or via a duly authorized
proxy.
The Company’s capital contains no cross ownership.
The Company’s Articles of Association contain no provision for the representation of minority shareholders
in the management of the Company or about utilization of the method of cumulative voting.
6. Dividend Policy and Deadline for Dividend Distribution
Company dividend policy is determined according to the Turkish Law of Commerce, the CMB’s legislation
and its regulations and decisions, the tax laws, other relevant legislation, and the Company’s articles of
association.
1- Article 28 of the Company’s Articles of Association reads as follows:
Profit will be distributed as outlined below from the net profit stated in the Company’s balance sheet and
reached after deducting the general expenditure of the Company, various amortization costs, and mandatory
taxes. The relevant provisions of the Capital Markets Law and notifications of the Capital Markets Board
will be followed during the process of profit distribution.
First level legal reserves:
a) Legal reserves at a rate of 5% will be allocated.
87
First Dividend:
b) To the remaining amount, grants delivered during the year, if any, are added, from this total at least 30%
first dividends are allocated provided the rate or the amount is not below those set by the Capital Markets
Law.
c) A maximum of 3% of the remaining amount will be allocated to the Tekfen Foundation for Education,
Health, Culture, Art and Protection of Natural Habitat.
d) After the above mentioned deductions, the General Assembly has the right to decide on an allocation
of dividends that does not exceed 2% of the remaining profit to members of the Board (in line with the
limits and principles set by the Board).
Second Dividend:
e) The General Assembly is entitled to distribute the amount remaining (after the deduction of the items
outlined in a, b, c, and d, above) from the net profit as second dividends or allocate it as extraordinary
legal reserves.
Second level legal reserves:
f) Subject 3 of paragraph 2 of Article 466 of the Turkish Law of Commerce and the provisions of the
paragraph of the same article do not apply to the Holding.
g) No decision may be made to set aside profits for other reserves to transfer profits to the following year,
or to distribute dividends to the founders or dividend right certificate holders, board members or Company
officials, workers or foundations or other similar real/legal entities established for specific purposes,
unless the first dividend is paid as provided and unless the reserves required to be set aside as required
by law have been so set aside.
h) Dividends shall be distributed to all the existing shares as the end of the accounting period without taking
into account the date of issue or acquisition of such shares.
The decision as to how and when the annual profit will be distributed to the shareholders will be decided
by the General Assembly upon the recommendation of the Board and in accordance with the provisions of
the Turkish Law of Commerce and the Capital Markets Law. Profit distributed according to the provisions
of the Articles of Association cannot be recovered.
2- The calculation of the first dividend, which is at the rate of 30%, is based on the financial tables required
by the Capital Markets Legislation and in accordance with International Financial Reporting Standards
(IFRS).
3- When a decision is made not to distribute profits or to make only a partial profit distribution during the
general assemblies of the affiliates and partnerships included in the consolidated financial tables, the
undistributed amount is not taken into account during the distribution of the net profit of the period indicated
in the consolidated tables.
4- After the general meetings of the Company’s affiliates and partnerships, the proposal for profit distribution
will be disclosed to the public in accordance with public disclosure legislation and following the relevant
decision of the Board of Directors.
5- If a net distributable profit is not created as indicated in the financial statements prepared in line with
Turkish Law of Commerce and the Tax Laws, no profit is distributed, even if a net distributable profit is
created in the financial statements prepared in line with IFRS to meet Capital Markets Law requirements.
6- Regulations of the Capital Markets Law will be taken as reference with regard to the timing and location
of dividend payments.
7- Within the framework of Article 29 of the Company’s Articles of Association, if the Company General
Assembly so authorizes the Board, interim dividend payments may be made (for that specific year only).
88
The Capital Markets Law is taken into account during this process.
The basic principles of profit distribution are announced to investors on the Company’s official website:
www.tekfen.com.tr.
In this regard, the distribution of profit of the 2007 accounting period will be made within the terms set
by the Capital Markets Law and in accordance with the Company’s articles of association.
7. Transfer of Shares
The Company’s Articles of Association place no limitations on the transfer of shares (cf. Article 6) within
the limits set by the Capital Markets Law.
89
> Section II
Public Disclosure And Transparency
8. Company Information Disclosure Policy
The Company’s Board of Directors developed its disclosure policy in accordance with the CMB’s Corporate
Governance Principles and this policy was first publicly announced in the Company’s IPO prospectus. The
disclosure policy holds a permanent place on the Company’s official website.
According to the Company’s disclosure policy:
• In accordance with the CMB’s Corporate Governance Principles, the Holding has adopted the concepts
of transparency, equity, integrity, objectivity, consistency, comprehensibility, and punctuality with regard
to disclosing financial and non-financial information about the Holding (excluding commercial secrets
and confidential information) to its shareholders and other stakeholders. All announcements and
explanations made under the jurisdiction of this policy will be timely, complete, accurate, comprehensible,
and analyzable, and should be made at minimum cost.
• In following an active and transparent disclosure policy, the Holding acts in accordance with Capital
Markets legislation and ISE regulations and implements an effective communications policy within the
framework of the CMB’s Corporate Governance Principles.
• For this purpose, the Holding’s Investor Relations and Corporate Governance Department responds in
writing to all shareholder, stakeholder, financial analysts’, and media inquiries and requests for information
and printed material.
Meetings presenting the Company’s annual and semi annual operational results with the participation of
senior managers are planned. After the disclosure of the annual and semi annual financial statements, four
conference calls involving senior managers will be organized for investors and the analysts.
Ça¤lar Gülveren, head of the Company’s Investor Relations and Corporate Governance Department, is
responsible for supervising and applying the disclosure policy.
9. Disclosures of Special Circumstances
During 2007, as required by CMB regulations, two disclosure statements were made and one item of
correspondence sent in reply to an inquiry from the ISE. These were disclosed to investors via the ISE’s
Stock Market Bulletin. Neither the CMB nor the ISE made additional inquiries with regard to the disclosure
of material events.
The Company is not listed on foreign stock exchanges.
10. Official Company Website and Its Content
The official website of the Company is www.tekfen.com.tr.
The website includes all the information outlined in Article 1.11.5 of Section II of the CMB’s Corporate
Governance Principles, other than Board meeting minutes that might affect the value of investment
instruments.
Minutes of Board decisions that might affect the values of investment instruments are not presented via
the website in the format of a separate report, as they are disclosed via disclosure of material events.
90
11. Disclosure of Ultimate Controlling Shareholder(s)
The ownership structure of the Company (which is announced to the public via the website) is as follows:
SHAREHOLDER’S NAME
NUMBER OF SHARES
SHARE RATIO (%)
Feyyaz Berker
50.066.663
16,87
Alev Berker
7.223.744
2,43
Berker Family - Total
57.290.407
19,30
Necati Akça¤l›lar
50.066.663
16,87
Cansevil Akça¤l›lar
7.223.744
2,43
Akça¤l›lar Family - Total
57.290.407
19,30
Ali Nihat Gökyi¤it
25.883.731
8,72
A. Nihat Gökyi¤it Yat›r›m Holding
25.758.370
8,68
A. N. Gökyi¤it E¤. Sa¤l. Kült. San.
5.648.306
1,90
Gökyi¤it Family - Total
57.290.407
19,30
Günay Ünlüsoy
3.848.867
1,30
Necdet Bozdo¤an
3.315.207
1,12
Naim Özkazanç
3.379.427
1,14
Elçin Erktin
846.866
0,29
Mehmet Erktin
1.234.173
0,42
Emine Erktin
1.234.173
0,42
Erktin Family - Total
3.315.212
1,13
Erhan Öner
6.424.347
2,16
Öner Yat›r›m ‹ç ve D›fl Tic. A. fi.
2.233.919
0,75
Öner - Total
8.658.266
2,91
Open to Public
102.386.800
34,50
GRAND TOTAL
296.775.000
100,00
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12. Disclosure of Individuals Who Have Access to Insider Information
Because the Company went public during the last quarter of 2007, the list of individuals who have access
to insider information was not previously made public. The list in this report is, therefore, its first public
presentation.
There are numerous undisclosed transactions and events which have potential to affect the Company
share price. Thus, many Tekfen employees and managers who participate in the decision taking and
reporting processes and as well as the personnel of companies providing services to the Holding have
access to inside information. In this regard, the Company management takes all precautions to prevent
misuse of such information.
The list of senior managers and other employees who, as a result of their positions, have the ability to
access to the inside information that might affect the share price of the Company is given below:
92
Name Surname
Position
Ali Nihat Gökyi¤it
Chairman of the Board
Cansevil Akça¤l›lar
Deputy Chairman of the Board
Feyyaz Berker
Deputy Chairman of the Board
Dr. Ayfle Leyla Akça¤l›lar
Board Member
Meltem Berker
Board Member
Murat Gigin
Board Member
fiefika Pekin
Independent Board Member
Dr. Rüfldü Saraço¤lu
Independent Board Member
Hasan Seymur Subafl›
Independent Board Member
Cengiz Yaman
Auditor
Erhan Öner
Group Companies President
Dr. Ahmet ‹pekçi
Vice-president-Investment & Service Companies Group
Ümit Özdemir
Vice-president-Contracting Group
Esin Mete
Vice-president-Agri-Industry Group
Mehmet Erktin
Vice-president-Real Estate Development Group
Dr. Osman Reha Yolalan
Vice-president-Corporate Affairs
Ali fievket Tursan
Director of Finance & Administrative Affairs
Burçin Kuzgun
Finance Coordinator
Toca Tonya
Finance Manager
Arzu Dodurga
Chief Accountant
Dr. Ahmet Burak Emel
Strategic Planning and Reporting Coordinator
Dorottya Maria Kiss Kalafat
Corporate Communications Coordinator
Ça¤lar Gülveren
Investor Relations & Corporate Governance
Mustafa Özçilingir
Information Systems Coordinator
Hakan Dündar
Audit Manager
Ramazan ‹brahim Eker
Consultant
Atila Purut
Chief Legal Consultant / Attorney
fiule Özkaner
Legal Consultant / Attorney
> Section III
Stakeholders
13. Informing Stakeholders
The Holding informs stakeholders of important Company developments via internal correspondence,
meetings, the intranet and internet, press meetings, briefings, and other written and visual media.
Stakeholders, investors, and analysts can access financial reports, annual reports and other presentations
and information regarding the Holding via the official Company website.
Because the Company is a holding company, it is not directly involved in commercial activities. However,
depending on the business area of the Holding’s companies, stakeholders (such as customers who have
affiliation with the Company, franchisees, and suppliers) are informed about issues of interest to them,
via franchise meetings or training sessions.
Employees are informed via various events, periodical meetings with managers, and the intranet. Some
important announcements and messages are communicated to all employees via email. Tekfen Holding
places great emphasis on dialogue between the employees and managers and facilitates such an information
flow.
14. Participation of Shareholders in the Management
No structure for the involvement of stakeholders in the Company’s management has been established.
However, managers evaluate requests and recommendations emanating from meetings held with the
employees and other stakeholders and thus, relevant policies and applications are developed.
15. Human Resources Policy
After Tekfen Holding’s IPO, a Human Resources Directorate was formed within the Holding to develop a
human resources system with the capability to provide continuous quality improvement in line with
Company’s goals and to put this system into practice within the Holding’s companies.
In this regard, the basics of the human resources policy are as follows:
• Continuous customer and employee satisfaction is a guarantee of the present and future success of a
company
• To minimize any possibility of damage to employees, third parties, property, or the environment, Tekfen
Holding arranges all its operations according to the following work principles, presented in order:
- All managers and employees are responsible for health, safety, the environment, and quality.
- Keep strict adherence to standards and customers’ specifications so as to eliminate or minimize
customer complaints, and repeat and maintenance charges.
- Increase the effectiveness of management systems and continuously monitor and improve
applications.
The Human Resources policy is not only concerned with managing the Company’s human resources policy
effectively, but it is also concerned with investing in Turkey’s future. In this regard, social, cultural, and
environmental protection activities, as well as the Company’s scholarship program for successful students
(which we have undertaken since the Company’s foundation) are among the tasks that are covered by the
policy and that carry Turkey to a brighter future.
93
This management concept is based on a belief in a person’s unlimited potential and an understanding that
a brighter future can only be attained through technology and science. Therefore, investing in human
intelligence and skills is essential.
The fact that no complaint of discrimination came from the employees in 2007 indicates the objective
attitude of Tekfen Group towards its employees.
Its employees are the Company’s most valuable assets and their quality is the most important guarantee
of service and product quality. The Company shows the same diligence for employee development programs
as it does for employee selection.
Employee development programs develop the employees’ ability to act in a coordinated fashion, to develop
recommendations, and to make rational decisions. The Human Resources and Personnel Units take active
roles in managing relations with employees.
16. Information on Relations with the Clients and Suppliers
Because the Company is a holding company, it is not directly involved in commercial activities. However,
the Holding places great emphasis on relations with and the satisfaction of stakeholders, such as its clients,
franchisees, and suppliers.
The Agri-Industry Group takes great care to reply to all emails regardless of whether or not they come
from its customers. All complaints, recommendations, or technical inquiries from customers via email or
telephone are replied to as soon as possible and relevant solutions are provided. Periodical dealers’ meetings
involving senior level managers are organized to provide information to dealers and to manage dealers’
relations in the best possible way. There is a mutual sharing of information during these meetings. Solutions
are created for the problems of dealers. Questions that go unanswered at these meetings are evaluated
later and information is provided to the dealers concerned. In addition to these meetings, senior level
managers and the sales teams from regional offices visit dealers throughout the year to nurture warm
relations. On average 30 training sessions a year are organized to increase the awareness level and
knowledge of the end users. During these meetings, Company training consultants with academic backgrounds
provide information on various agricultural practices. In addition to these meetings and training sessions,
the official website includes a comprehensive section on recommendations about fertilization practices
for the farmers. The Agri-Industry Group has many years of reliable relations with foreign suppliers. There
is a continuous information flow with suppliers with regard to current and future market conditions and
expectations.
To maximize customer satisfaction, the Agri-Industry Group places great emphasis on product, human,
and environmental health. Product quality is guaranteed by the ISO 9001 Quality Management System, the
safety of the employees, property, and third parties is guaranteed by OHSAS 18001 Occupational Health
and Safety Management System, and environmental protection is guaranteed and continuously improved
by the ISO 14001 Environment Management System. Suppliers are also asked to operate in accordance
with these management systems and to improve themselves on a continuous basis.
94
17. Social Responsibility
As a responsible member of society, the social, cultural, and environmental activities of Tekfen are an
integral part of the Holding’s corporate culture.
In 1999, Tekfen established the Tekfen Foundation for Education, Health, Culture, Art, and Protection of
Natural Habitat, which is known as the Tekfen Foundation, with the aim of increasing Tekfen’s contribution
to social and cultural activities and to establish a better future in harmony with the natural environment.
Tekfen Foundation
The foundation:
• Provides scholarships every year to 180 successful high school, undergraduate, and graduate school
students in need of financial support. To date, these scholarships have helped more than 1000 students
to graduate.
• Supports various NGOs, including TEMA Foundation (The Turkish Foundation for Combating Soil
Erosion, for Reforestation and the Protection of Natural Habitats), the Family Planning Foundation
of Turkey, the Istanbul Foundation for Culture and the Arts, and it also supports the Tekfen Philharmonic
Orchestra, which was established in 1992.
• Published the books Growing without Aging by Tekfen Holding and Flowers of Anatolia by Fatih Orbay,
with the aim of preserving Turkey’s natural, historical, and cultural heritage for future generations.
• Provides social support for various needs.
Tekfen’s contribution to society is not limited to the activities of the Foundation. Tekfen Group Companies
continue to work in collaboration with local authorities and the public with regard to issues arising in those
regions and sectors where the companies operate.
Tekfen Contracting Group
Tekfen Construction is a reliable partner for international contracting companies, with the emphasis it
places on occupational health and safety and the environment, its know-how, experience, project delivery
punctuality, business ethics, and EU-compatible standards.
Tekfen Construction’s business concept has been established and developed over many years in accordance
with the following principles:
• To act with the goal of benefiting society and the environment during all its operations, and to set
high standards with regard to environmental awareness
• To strive to avoid breaches of environmental rules that might endanger the health and rights of clients
or inhabitants of the areas where the Company operates
• To act in a way that minimizes the environmental impact of its operations and to take precautions
to eliminate environmental pollution
• To respect the traditions and cultures of the countries it operates in and to avoid practices that might
adversely affect the social environment
• To take all precautions necessary to preserve archeological, historical, and cultural artifacts, as well
as the natural environment
• To minimize the consumption of natural resources
• To determine all environmental issues and their effects, as well as risk levels with regard to all business
practices and projects, and to minimize the determined risk levels with corrective and preventive
action
• Within the framework of its social responsibility obligations, to support education, activities that
increase environmental and social awareness, as well as cultural and social responsibility activities.
95
The core of Tekfen Contracting’s quality concept is the HSE (Health, Security and Environment) system.
With this system, Tekfen undertakes not to harm people, to protect the environment, to use natural
resources efficiently, and to develop and maintain the HSE system. With HSE, Tekfen’s goal is to win the
trust of its clients, shareholders, and the general public and to contribute to sustainable development.
To ensure all its employees adopt and apply the relevant principles, Tekfen organizes training programs
for its employees. These training events emphasize eight golden rules under the following titles: vacation
leave, energy insulation, excavation works, entrance to indoor facilities, working at height, load lifting tasks,
vehicle safety, and change management (For example, 160,000 thousand hours of training was given to
employees on the BTC Pipeline Ceyhan Marine and Land Terminal.)
Tekfen continues to break records for accident-free operations. The Contracting Group broke records for
accident-free operation one after the other on projects in Azerbaijan, Kazakhstan and Ceyhan/Adana. A
total of 31 million working hours of free of accident-related lost time incidents was achieved during the
challenging projects under the BTC Crude Oil Pipeline System and this set an impressive record for the
construction sector. Employees on the Kashagan Main Works Project in Kazakhstan reached 23 million
working hours of such accident-free operation as of January 2008.
With its trained technical and administrative personnel, Tekfen Contracting Group reinforces its reputation
in the national and international contracting sector. The Group has ISO 9001:2000 Quality Management,
OHSAS 18001 Occupational Safety and Health, and ISO 14001 Environment Management System Certificates.
Group employees and the management systems are audited under these certifications by independent
organizations on a continuous basis and improvement programs are implemented.
Toros Tar›m
In addition to its main business activity, Toros Tar›m aims to improve the income and the living standards
of farmers and agricultural sector employees and to contribute to the development of the Turkish agricultural
sector.
To help solve farmers’ problems, Toros Tar›m has over several years organized Field Day activities and
regular training seminars for farmers focused on improving agricultural techniques, increasing yields, and
ensuring correct fertilization.
Toros Tar›m also provides farmers with free soil analysis. With the help of this service, farmers can
understand the nature of their soils’ and ascertain fertilizers they need to maximize yields and crop health.
Toros Tar›m also works on educational projects for the children of the people living in the environs of
Ceyhan and Samsun, where production facilities of Toros are located. Toros Tar›m contributed to the
establishment of the Toros Primary School and Toros High School, near the Ceyhan production facility,
and it continues to meet all the needs of these schools. Free university preparation courses are also
provided to high school students in the region through a cooperation agreement with NGOs and TOG (the
Foundation for Community Volunteers). In cooperation with TEGV (the Foundation for Educational Volunteers
of Turkey), Toros Tar›m aided primary school children’s awareness of dental health through the Dental
Friend project and the Education Parks project provided children with social activities that supported their
personal development. Toros Tar›m contributes to the development of science through sponsorship of
scientific congresses at universities.
96
Toros Tar›m has two Toros Houses, one in Antalya Kumluca and the other in Mersin Erdemli, where
producers are provided with technical know-how and support as well as practical information about
monitoring seed performance. Agricultural engineers attached to the Toros Houses deal with farmers’
problems and provide solutions.
Toros Tar›m has developed its quality, environmental, and occupational safety performance in line with
international standards and obtained ISO 9001, ISO 14001 and OHSAS 18001 certification, demonstrating
the company’s adherence to occupational safety, environmental, and quality standards in all its operations.
Finally, Toros Tar›m was a supporter of the International Mersin Music Festival.
Tekfen Real Estate Development Group
Tekfen Real Estate Development is a founding member of the Turkish Green Building Council, which was
established to construct energy-efficient buildings and inform the sector about the need for energy
conservation to combat global warming.
97
> Section IV
Board Of Directors
18. Structure of the Board and its Independent Members
The Company’s administration is undertaken by a Board of Directors of nine members chosen by the
General Assembly. The current board members and their positions in the Company are as follows:
NAME SURNAME
POSITION
Ali Nihat Gökyi¤it
President and Managing Director
Cansevil Akça¤l›lar
Deputy Chairman and Managing Director
Feyyaz Berker
Deputy Chairman and Managing Director
Dr. Ayfle Leyla Akça¤l›lar
Member
Meltem Berker
Member
Murat Gigin
Member
fiefika Pekin
Independent Member
Dr. Rüfldü Saraço¤lu
Independent Member
Hasan Seymur Subafl›
Independent Member
In 2007, three members had executive roles in the Company as managing directors and the remaining
members had non-executive roles.
Among the board members, Dr. Rüfldü Saraco¤lu, Hasan Seymur Subafl› and fiefika Pekin are independent
members in line with the CMB’s Corporate Governance Principles and each has made a written statement
about his or her independence.
Up to the end of the period covered by this report, no situation arose that undermined the independent
status of these members.
To allow board members take positions in other Group companies, it was decided in the ordinary Annual
General Meeting that the board members would not be subject to the prohibitions and limitations outlined
in articles 334 and 335 of the Turkish Law of Commerce. In this regard, board members are not limited in
any way from taking positions outside the Company for the period covered by the General Assembly’s decision.
19. Qualifications of Board Members
As a matter of principle, all board members, independent or otherwise, are chosen from among candidates
who have relevant expertise and experience, and a high level of skill and knowledge in their respective
areas. In this regard, the qualifications required of board members match those outlined in Articles 3.1.1,
3.1.2, and 3.1.5 of Section IV of the CMB’s Corporate Governance Principles. However, the Company’s articles
of association contain no provision about the minimum qualifications for board members.
There has been no need up to now to organize a training and orientation program for board members.
However, if the need should arise, a training and orientation program for the new board members will be
organized in accordance with the principles set out by the Company’s Corporate Governance Committee.
98
20. The Vision, Mission, and Strategic Goals of the Company
The Company’s vision and mission statement are published on the official website.
Tekfen Group’s vision is
To be one of the leading forces of Turkey’s growth in our areas of operation: Contracting, Agri-Industry,
Real-Estate Development and Finance.
Tekfen Group’s mission is
While keeping our faith to our traditional values, we aim to focus on our areas of operations, deliver the
highest quality products and services, become leader of our segments, and at the same time, generate
value for all of our stakeholders, namely, our customers, suppliers, employees, shareholders and the society.
Tekfen Holding operates in accordance with the corporate values it has developed over its 51 years and
which have been fully adopted by its employees. These corporate values, which are also stated on the
Company’s official website, are as follows:
• To do what you know best in the best possible way
• To benefit the country
• To stand by the employees
• To talk less and to do more
• To act ethically and fulfill commitments regardless of the circumstances
• To be in harmony with others and not to disillusion anyone to attain your goals
• To prevent greed overtaking wisdom
• To believe in the power of technology and science (as is reflected in the Company’s name)
• To conserve nature and protect the Company’s employees.
The Board of Directors holds quarterly evaluation meetings with senior representatives of each business
group where the Board monitors the financial and operational performance of the Group companies against
their budgetary and other objectives. The meetings also develop recommendations with regard to the
Company’s core business areas and strategy.
21. Risk Management and Internal Control Mechanism
The Board of Directors is responsible for minimizing imminent and potential risks by establishing risk
management and internal control mechanisms.
As a holding company, the Company’s financial statements are consolidated and the financial results and
performance of all the Holding’s companies are controlled and followed up at the holding level, as the
relevant legislation requires. In line with the provision of the Capital Markets Law and other relevant
legislation, internal auditing is the responsibility of the Audit Committee and is undertaken by the Financial
and Administrative Tasks Directorate of the Holding, Audit Department and Finance Directorate. Risk
management and reporting tasks related to the Holding’s companies are followed up at the vice-presidential
level.
The financial results required for public disclosure are presented to the Board after they have gained the
approval of the Audit Committee.
Reports of the companies’ operational results, the degree to which they have attained their goals, and the
risks encountered, are assessed at the periodical Board meetings with the participation of the relevant
group vice-presidents.
99
22. Authority and Responsibilities of the Members of the Board and Executives
According to the Company’s Articles of Association, the Board of Directors executes the tasks given to it
as a result of the Turkish Law of Commerce, the Articles of Association, and the decisions of the Company’s
General Assembly. In line with Article 319 of the Turkish Law of Commerce, the Board can delegate some
or all of its authority and responsibilities, including its authority to represent the Company, to a committee
made up of its own members or to managing director(s) or manager(s).
During the first Board meeting held after the ordinary Annual General Meeting, the authority and
responsibilities of the board members were determined and announced and a circular documenting the
authority and responsibilities of the board members was prepared.
In this regard, the board members Ali Nihat Gökyi¤it, Feyyaz Berker, and Cansevil Akça¤l›lar were appointed
as managing directors at the 2007 Board meeting.
The Board determines and announces the basic management principles of the Company every year.
23. Principles of Activity of the Board of Directors
Issues related to the Board’s meeting frequency and quorum are defined in the Company’s Articles of
Association. The Board of Directors meets at least once a month or when the need arises. In 2007, Board
of Directors met 17 times.
The quorum required for a Board meeting to commence is half the membership plus one and all decisions
require a majority. Board decisions may also be made by obtaining the written decision of each member
provided that none of the members demands a discussion of the subject in hand.
The secretariat of the Board of Directors determines the agendas by taking the proposals of the President
of Tekfen Group Companies and approval of the Chairman of the Board. Supporting documents are prepared
by the secretariat of the Board of Directors and submitted in a single dossier to the members at least ten
days before the meeting date.
All Board decisions in 2007 were passed unanimously, so no dissenting view is recorded in the Resolution
Book. Should it arise, all details of dissenting views would be recorded in the Resolution Book.
In 2007, during the period after the public offering, a meeting was held to discuss the issues outlined in
Article 2.17.4 of the CMB’s Corporate Governance Principles and all board members actively participated
in that meeting.
In cases where the Capital Markets legislation so requires, important Board decisions are publicly announced
with a disclosure of material events.
The board members do not have privileges such as controlling a vote or a negative right of veto.
24. Prohibition of Engaging in Transactions and Competing with the Company
To allow board members take positions in other Group companies, it was decided in the ordinary Annual
General Meeting that the board members would not be subject to the prohibitions and limitations outlined
in articles 334 and 335 of the Turkish Law of Commerce.
Currently, none of the board members is engaged in any activity that would cause a conflict of interest
or would be deemed as competing in the same business area.
100
25. Ethical Rules
Tekfen Holding places great emphasis on ethical rules and commercial conventions and on ensuring that
all employees follow these rules in their relations with stakeholders. These rules, which are incumbent on
all Company employees, were printed and presented as part of the requirements of the CMB’s Corporate
Governance Principles and they were publicly announced in the Company prospectus prepared for the
initial public offering, after the approval of the Annual General Meeting.
Tekfen Holding A.fi.’s ethical rules are published on the Company’s official website, www.tekfen.com.tr.
26. The Number, Structure and Autonomy of Committees Formed by the
Board of Directors
During the initial public offering, two committees, namely the Audit Committee and the Corporate Governance
Committee, were formed upon Board decisions dated November 22nd, 2007.
The president of the Audit Committee is an independent board member, Mr. Rüfldü Saraço¤lu, and Ms.
Meltem Berker, a non-executive board member, is a member of this committee. In line with Capital Markets
Legislation, the Audit Committee is responsible for supporting the Board of Directors by overseeing the
Company’s accounting system, the public disclosure of financial information, the independent auditing,
and by monitoring the effectiveness and performance of the internal audit mechanism, and for reporting
on its evaluations to the Board of Directors.
The president of the Corporate Governance Committee is an independent board member, Mr. Hasan Seymur
Subafl›, and Mr. Murat Gigin, a non-executive board member, is a member of this committee. In line with
Capital Markets Legislation, the Corporate Governance Committee is responsible for monitoring the
Company’s compliance with the CMB’s Corporate Governance Principles, proposing improvements in
compliance, and making recommendations on compliance issues to the Board of Directors.
At present, no board member may be a member of more than one committee at a time.
The Tasks and Operational Principles that outline the general procedures related to the tasks of the
Corporate Governance Committee and the Audit Committee are in effect following the Board of Directors’
approval. The Tasks and Operational Principles of these committees are published on the Company’s official
website, www.tekfen.com.tr.
These committees will meet at least on a quarterly basis.
27. Remuneration of the Members of the Board of Directors
In line with the Company’s Articles of Association, board members receive an annual or monthly stipend
or a certain fee per meeting, as determined by the General Meeting.
Dividends shall be distributed to board members according to the amounts and provisions set by the Board.
However, they may not exceed 2% of the profit after deduction of legal reserves and the amounts to be
distributed under the Company’s articles of association.
Financial benefits are not determined and granted in line with a performance-based system but paying
dividends out of profits can be accepted as a performance based awarding system.
No board member or manager may obtain loans or guarantees, such as letters of guarantee, from the
Company.
101
> Tekfen Holding Dividend Distribution
Policy
Company dividend policy is determined according to the Turkish Law of Commerce, the CMB’s legislation
and its regulations and decisions, the tax laws, other relevant legislation, and the Company’s articles of
association.
1- Article 28 of the Holding’s Articles of Association reads as follows:
Profit will be distributed as outlined below from the net profit stated in the Holding’s balance sheet and
reached after deducting the general expenditure of the Company, various amortization costs, and mandatory
taxes. The relevant provisions of the Capital Markets Law and notifications of the Capital Markets Board
will be followed during the process of profit distribution.
First level legal reserves:
a) Legal reserves at a rate of 5% will be allocated.
First Dividend:
b) To the remaining amount, grants delivered during the year, if any, are added, from this total at least
30% first dividends are allocated provided the rate or the amount is not below those set by the Capital
Markets Law.
c) A maximum of 3% of the remaining amount will be allocated to the Tekfen Foundation for Education,
Health, Culture, Art and Protection of Natural Habitat.
d) After the above mentioned deductions, the General Assembly has the right to decide on an allocation
of dividends that does not exceed 2% of the remaining profit to members of the Board (in line with the
limits and principles set by the Board).
Second Dividend:
e) The General Assembly is entitled to distribute the amount remaining (after the deduction of the items
outlined in a, b, c, and d, above) from the net profit as second dividends or allocate it as extraordinary
legal reserves.
Second level legal reserves:
f) Subject 3 of paragraph 2 of Article 466 of the Turkish Law of Commerce and the provisions of the
paragraph of the same article do not apply to the Holding.
g) No decision may be made to set aside profits for other reserves to transfer profits to the following
year, or to distribute dividends to the founders or dividend right certificate holders, board members
or Company officials, workers or foundations or other similar real/legal entities established for specific
purposes, unless the first dividend is paid as provided and unless the reserves required to be set aside
as required by law have been so set aside.
102
h) Dividends shall be distributed to all the existing shares as the end of the accounting period without
taking into account the date of issue or acquisition of such shares.
The decision as to how and when the annual profit will be distributed to the shareholders will be decided
by the General Assembly upon the recommendation of the Board and in accordance with the provisions
of the Turkish Tax Laws and the Capital Markets Law. Profit distributed according to the provisions of the
Articles of Association cannot be recovered.
2- The place and date of dividend payments are set in accordance with Capital Market Board Regulations.
3- Within the framework of Article 29 of the Company’s Articles of Association, if the Company General
Assembly so authorizes the Board, interim dividend payments may be made (for that specific year only).
The Capital Markets Law is taken into account during this process.
103
TEKFEN HOLDİNG A.Ş.
AND ITS SUBSIDIARIES
CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2007
106
107
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
Notes
31 December
2007
31 December
2006
1,443,211
2,180,805
521,653
325,539
862
16,744
55,433
249,398
254,824
8,990
9,768
209,484
306,831
190
15,687
67,967
236,099
205,903
10,800
1,127,844
977,574
871,424
12,789
10,772
62,859
143,720
115,963
586,459
4,293
39,385
1,334
5,344
11,333
61,734
60,607
119,866
548,393
4,203
58,042
1,902
2,420,785
3,052,229
ASSETS
Current Assets
Cash and Cash Equivalents
Marketable Securities (net)
Trade Receivables (net)
Financial Lease Receivables (net)
Due From Related Parties (net)
Other Receivables (net)
Biological Assets
Inventories (net)
Receivables From Ongoing Construction Contracts (net)
Deferred Tax Assets
Other Current Assets
Assets Classified As Held For Sale
4
5
7
8
9
10
11
12
13
14
15
35
Non Current Assets
Trade Receivables (net)
Financial Lease Receivables (net)
Due From Related Parties (net)
Other Receivables (net)
Financial Receivables (net)
Positive/Negative Goodwill (net)
Investment Property (net)
Property, Plant and Equipment (net)
Intangible Assets (net)
Deferred Tax Assets
Other Non Current Assets
TOTAL ASSETS
7
8
9
10
16
17
18
19
20
14
15
The accompanying notes form an integral part of these financial statements.
108
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
LIABILITIES
Current Liabilities
Bank Loans (net)
Short Term Portion Of The Long Term Loans (net)
Obligations Under Finance Leases (net)
Other Financial Liabilities (net)
Trade Payables (net)
Due To Related Parties (net)
Advances Received
Ongoing Construction Progress Payments (net)
Provisions
Deferred Tax Liabilities
Other Liabilities
Other Payables
Liabilities For The Assets Classified As Held For Sale
Non Current Liabilities
Bank Loans (net)
Obligations Under Finance Leases (net)
Other Financial Liabilities (net)
Trade Payables (net)
Due To Related Parties (net)
Advances Received
Provisions
Other Liabilities
Deferred Tax Liabilities
Other Payables
MINORITY INTEREST
EQUITY
Share Capital
Adjustment To Share Capital
Capital Reserves
Premium In Access Of Par
Gain On Cancellation Of Equity Shares
Revaluation Fund
Fair Value Reserve Of Financial Assets
Inflation Adjustment On Equity
Profit Reserves
Legal Reserves
Statutory Reserves
Extraordinary Reserves
Special Reserves
Gain On Sale Of Investment And Property To Be Added
To Share Capital
Currency Translation Reserve
Net Profit For The Year
Retained Earnings
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
Notes
6
6
8
10
7
9
21
13
23
14
15
10
35
6
8
10
7
9
21
23
15
14
10
24
25
26
27
28
31 December
2007
31 December
2006
1,020,350)
309,143)
8,504)
30,203)
-)
339,125)
1,707)
196,566)
36,262)
45,870)
-)
17,176)
35,794)
-)
183,331)
7,055)
68,084)
-)
1,805)
-)
38,349)
27,748)
-)
30,939)
9,351)
2,220,106)
462,515)
81,943)
14,049)
-)
395,240)
11,645)
112,245)
61,955)
14,229)
-)
25,405)
37,550)
1,003,330)
198,605)
47,278)
16,814)
-)
18,824)
-)
21,629)
24,669)
-)
46,942)
22,449)
15,764)
1,201,340)
296,775)
-)
407,259)
301,839)
-)
585)
41,975)
62,860)
79,164)
3,560)
-)
75,604)
-)
19,227)
614,291)
104,000)
-)
136,901)
-)
-)
3,128)
39,500)
94,273)
78,541)
10,615)
-)
67,926)
-)
-)
(43,410)
279,257)
182,295)
-)
(7,169)
80,975)
221,043)
2,420,785)
3,052,229)
The accompanying notes form an integral part of these financial statements.
109
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
1 January 2007 31 December 2007
1 January 2006 31 December 2006
36
36
36
36
1,895,332)
(1,625,938)
-)
12,650)
282,044)
1,725,779)
(1,454,879)
-)
16,715)
287,615)
- Operating Expenses (-)
OPERATING PROFIT
37
(151,949)
130,095)
(142,533)
145,082)
- Other Income and Profits
- Other Expenses and Losses (-)
- Finance Income / (Expense) (net) (-)
PROFIT BEFORE MONETARY GAIN / (LOSS) AND TAX
38
38
39
26,357)
(15,009)
9,451)
150,894)
21,424)
(15,589)
(60,688)
90,229)
- Net Monetary Gain / (Loss)
- Share Of Minority On Profit For The Year (-)
PROFIT BEFORE TAXATION
40
24
-)
(633)
150,261)
-)
513)
90,742)
- Taxation
NET PROFIT FOR THE YEAR FROM CONTINUED OPERATIONS
41
(25,893)
124,368)
(22,173)
68,569)
- Profit For the Year From Discontinued Operations
35
154,889)
12,406)
279,257)
80,975)
Notes
OPERATING INCOME
- Revenue (net)
- Cost of Revenue (-)
- Service Revenue (net)
- Income from Other Operations (net)
GROSS PROFIT
NET PROFIT FOR THE YEAR
FROM CONTINUING AND DISCONTINUED OPERATIONS:
Earnings per Preferred Share
42
-)
0.350)
Earnings per Common Share
42
1.158)
0.355)
Earnings per Preferred Share
42
-)
0.297)
Earnings per Common Share
42
0.516)
0.301)
FROM CONTINUING OPERATIONS:
The accompanying notes form an integral part of these financial statements.
110
111
Balances as at 1 January 2006
Foreign currency translation reserve
Revaluation Fund
Fair value reserve of financial assets
Net income / (expense) recognized
directly in equity
Hedging reserves
Net profit for the year
Total income and expense for the period
Capital increase
Payment of dividends
Transfers to retained earnings
Transfers to reserves
Balance as at 31 December 2006
Balance as at 1 January 2007
Foreign currency translation reserve
Group’s share on net assets of investments in
associates accounted by equity pickup method
Increase in premium in access of par
Public offering expenses
Fair value reserve of financial assets
Net income / (expense) recognized
directly in equity
Effect of sale of subsidiaries
Net profit for the year
Total income and expense for the period
Capital increase from premium in access of par
Transfers to retained earnings
Effect of sale of subsidiaries
Capital increase from inflation adjustment
on equity and retained earnings
Transfers to reserves from retained earnings
Payment of dividends
Balance as at 31 December 2007
-)
-)
-)
-)
94,273)
-)
-)
94,273)
-)
-)
-)
(31,413)
-)
-)
62,860)
104,000
104,000
66,775
126,000
296,775
-)
-)
-)
301,839)
368,614)
-)
-)
368,614)
(66,775)
-)
-)
855)
380,618)
(12,859)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
(812)
812)
-)
-)
-)
-)
-)
-)
-)
-)
-)
Hedging
Reserves
(812)
-)
-)
-)
-)
-)
-)
585)
2,829)
(2,244)
-)
585)
-)
-)
-)
(299)
-)
-)
-)
3,128)
-)
-)
3,128)
-)
-)
-)
-)
3,128)
3,128)
-)
-)
-)
-)
41,975)
42,155)
(180)
-)
41,975)
-)
-)
-)
543)
-)
-)
2,112)
39,500)
-)
-)
39,500)
-)
-)
-)
-)
39,500)
39,500)
-)
-)
-)
-)
(43,410)
(43,410)
-)
-)
(43,410)
-)
-)
-)
-)
-)
-)
-)
(7,169)
-)
-)
(7,169)
-)
-)
-)
-)
(7,169)
(7,169)
(36,241)
-)
275)
-)
3,560)
10,615)
-)
-)
10,615)
-)
-)
(7,330)
-)
-)
-)
-)
10,254)
-)
-)
10,254)
-)
-)
-)
361)
10,615)
10,615)
-)
Fair Value
Foreign
Reserve of Currency
Revaluation Financial Translation
Legal
Fund
Assets
Reserve Reserves
-)
53,883)
(7,832)
10,254)
-)
-)
663)
-)
3,128)
-)
-)
-)
-)
(14,383)
-)
-)
The accompanying notes form an integral part of these financial statements.
157,773)
-)
-)
157,773)
(63,500)
-)
-)
-)
94,273)
94,273)
-)
40,500
40,500
63,500
104,000
104,000
-
Inflation
Premium
Share Adjustment in access
Capital on Equity
of par
40,500
157,773)
-)
-)
-)
-)
-)
-)
-)
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
-)
7,678)
-)
75,604)
67,926)
-)
-)
67,926)
-)
-)
-)
-)
-)
-)
-)
63,227)
-)
-)
63,227)
-)
-)
-)
4,699)
67,926)
67,926)
-)
-)
-)
-)
279,257)
80,975)
-)
279,257)
360,232)
-)
(80,975)
-)
-)
-)
-)
-)
121,353)
-)
80,975)
202,328)
-)
-)
(121,353)
-)
80,975)
80,975)
-)
Net
Profit
Extraordinary For the
Reserves
Year
63,227)
121,353)
-)
-)
-)
-)
-)
-)
1,099)
380,618)
(12,859)
2,112)
532,541)
812)
80,975)
614,328)
-)
(37)
-)
-)
614,291)
614,291)
(36,241)
Total
543,133)
663)
3,128)
(14,383)
(94,587)
-)
(7,953)
-)
(24,513)
(24,513)
182,295) 1,201,340)
221,043)
949,020)
-)
(2,424)
-)
279,257)
221,043) 1,225,853)
-)
-)
80,975)
-)
7,330)
-)
-)
-)
-)
-)
104,787)
-)
-)
104,787)
-)
(37)
121,353)
(5,060)
221,043)
221,043)
-)
Retained
Earnings
104,787)
-)
-)
-)
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
Notes
CASH FLOW FROM OPERATING ACTIVITIES
Profit for the year
Adjustments to reconcile net income to net cash
provided by operating activities:
Share of minority in profit / (loss)
Gain on sale of a subsidiary
Depreciation of tangible assets
Amortization of intangible assets
Depreciation of investment property
Effect of liquidation on tangible assets
Miscellanous provisions
Reversal of unnecessary provision
Provisions for litigation
Discount on notes receivables
Discount of notes payables and trade payables
Provision for retirement pay provision
Provision for bonuses
Group’s share on net assets of investments
in associates accounted by equity pickup method
Gain on sale of tangible assets
Allowances for doubtful receivables
Allowances for diminution in value of available for sale
investment
Interest income
Interest expense
Tax effect of discontinued operations
Effect of discontinued operations on minority interest
Dividend income
Reversal of unnecessary tax provisions
Adjustments recognised in current year
in relation to the corporate tax of prior years
Allowance for taxation
Cash flow from operating activities
Movements in working capital
Net cash generated by operating activities
Interest received
Interest paid
Tax paid
Penalty of litigation paid
Bonuses paid
Retirement pay provision paid
Cash flows from operating activities
24
35
19
20
18
19
23
7, 23
23
7
7
23
23
38
38
7
16
39
39
14, 35
24
36
41
41
43
41
23
23
23
1 January 31 December 2007
1 January 31 December 2006
279,257)
80,975)
633)
(154,889)
62,473)
1,607)
3,052)
-)
66)
(3,245)
4,866)
(418)
(1,257)
9,706)
8,179)
(513)
-)
46,702)
2,934)
3,852)
(2,371)
98)
(205)
3,056)
1,473)
1,859)
10,808)
1,831)
(8,463)
(2,321)
1,571)
-)
(7,188)
3,903)
3,005)
(25,942)
48,625)
14,217)
-)
(7,326)
-)
(82)
(10,047)
59,928)
5,107)
226)
(9,270)
6,131)
(1,380)
25,893)
257,909)
(103,326)
154,583)
20,103)
(42,613)
(12,181)
(703)
(1,801)
(4,756)
112,632)
476)
22,173)
221,856)
(71,131)
150,725)
9,177)
(56,117)
(10,581)
(231)
-)
(9,531)
83,442)
The accompanying notes form an integral part of these financial statements.
112
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
1 January 31 December 2007
1 January 31 December 2006
255,192)
(43,349)
-)
(865)
(71,851)
(2,083)
18,969
(165)
-)
7,326)
(20,043)
143,131)
-)
13,091)
(35,580)
194)
(93,168)
(4,128)
13,111)
11,483)
(22,138)
9,270)
10,655)
(97,210)
66,775)
300,984)
520,593)
(701,554)
(16,079)
(9,329)
(24,513)
-)
136,877)
-)
-)
527,929)
(471,021)
67,731)
(7,919)
(37)
(215)
116,468)
NET CHANGES IN CASH AND CASH EQUIVALENTS
392,640)
102,700)
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF THE YEAR
Translation reserve (net)
Accrued interest on cash and cash equivalents
Cash and cash equivalents of discontinued operations
209,484)
(86,310)
5,839)
-)
351,951)
15,288)
870)
(261,325)
521,653)
209,484)
Notes
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of a subsidiary
Changes in available for sale investments
Changes in marketable securities
Changes in assets classified as held for sale
Acquisition of tangible assets
Acquisition of intangible assets
Proceeds from sale of tangible assets
Changes in investment property
Changes in mandatory reserve in Central Bank
Dividend income from subsidiaries
Changes in other investing activities
Net cash (used in)/generated by investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Capital increase due to public offering
Changes in premium in access of par
Proceeds from borrowings
Repayments of borrowings
Effect of discontinued operations on borrowings
Finance lease paid
Dividends paid
Dividends paid to minority shares
Net cash generated by financing activities
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
35
16, 35
35
19
20
19
18
35
36
43
24
4
35
The accompanying notes form an integral part of these financial statements.
113
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
1.
ORGANIZATION AND OPERATIONS OF THE GROUP
Majority shares of Tekfen Holding A.Ş. (“the Group”) are controlled by: Necati Akçağlılar, Feyyaz Berker, and Ali Nihat Gökyiğit.
The Company and its subsidiaries are referred to as the “Group” in the accompanying consolidated financial statements.
As of 31 December 2007, the Group has 15,738 employees (31 December 2006: 11,791) including the personnel of
subcontractors. Registered address of the Company is Kültür Mahallesi, Aydınlık Sokak, Tekfen Sitesi A Blok No: 7 Beşiktaş,
İstanbul/Türkiye.
As of 31 December 2007 registered names of the subsidiaries, joint ventures and branches, nature of their business, countries
of their origin and the business segments they belong to are listed below.
Registered Name of Subsidiaries
Eurobank Tekfen A.Ş. (formerly Tekfenbank A.Ş.)
“Tekfenbank” (1)
EFG Finansal Kiralama A.Ş. “Tekfen Leasing” (1)
(formerly Tekfen Finansal Kiralama A.Ş.)
Tekfen Sigorta Aracılık Hizmetleri A.Ş. “Tekfen Sigorta”
Tekfen Dış Ticaret A.Ş. “Tekfen Dış Ticaret”
Belediye Tüketim Malları İthalat İhracat Ticaret ve
Pazarlama A.Ş. “Belpa”
Tekfen Kültür Sanat Ürünleri Yapım ve Yayın San. Tic. A.Ş.
“Tekfen Kültür”
Tekfen Turizm İşletmecilik A.Ş. “Tekfen Turizm”
TST Investment Holding S.A. “TST Holding”
TST International Finance S.A. “TST Finance”
TST International Trading Limited “TST Trading”
TST International Limited “TST Ltd.”
Petrofertil Shipping S.A. “Petrofertil Shipping”
Petrofertil Trading Limited “Petrofertil Trading”
Industrial Supply and Trading Company Limited
“Industrial Supply”
Toros Gayrimenkul Yatırım A.Ş. “Toros Gayrimenkul”
(formerly Toros Uluslararası Nakliyat ve Denizcilik A.Ş.)
Toros Tarım Sanayi ve Ticaret A.Ş. “Toros Tarım”
Toros Adana Yumurtalık Serbest Bölgesi Kurucu ve
İşleticisi A.Ş. “Tayseb”
Toros Terminal Servisleri A.Ş. “Toros Terminal”
Toros Enerji Elektrik Üretimi Otoprodüktör Grubu A.Ş.
“Toros Enerji”
Hishtil-Toros Fidecilik Sanayi ve Ticaret A.Ş. “H-T Fidecilik”
Türk Arap Gübre A.Ş. “Türk Arap Gübre”
HMB Hallesche Mitteldeutsche Bau-Aktiengesellschaft,
Halle “HMB”
Tekfen Endüstri ve Ticaret A.Ş. “Tekfen Endüstri”
Toros Gemi Acenteliği ve Ticaret A.Ş. “Toros Gemi”
Karaca Giyim Sanayi ve Ticaret A.Ş. “Karaca Giyim”
114
Nature of
business
Country
of Origin
Business
Segment
Banking
Turkey
Finance Leasing
Turkey
Insurance Service
Discontinued
Operation
Trade
Turkey
Turkey
Discontinued
Operation
Discontinued
Operation
Other
Other
Turkey
Real Estate
Cultural Activities
Turkey
Other
Service
Investment
Investment
Trading
Trading
Service
Turkey
Luxembourg
Luxembourg
Ireland
United Kingdom
Panama
Trading
Trading
United Kingdom
United Kingdom
Real Estate
Other
Other
Agriculture
Agriculture
Agriculture/
Contracting/
Other
Agriculture
Agriculture
Real Estate
Turkey
Agriculture
ManufacturingAgriculture-Seedling
Service
Turkey
Agriculture
Turkey
Agriculture
Service
EnergyManufacturing
Seedling-Agriculture
ManufacturingAgriculture
Trading
Turkey
Turkey
Agriculture
Agriculture
Turkey
Turkey
Agriculture
Agriculture
Germany
Contracting
Turkey
Turkey
Turkey
Other
Agriculture
Other
Trading
Shipping Agent
Discontinued
Operation
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
1.
ORGANIZATION AND OPERATIONS OF THE GROUP (cont’d)
Registered Name of Subsidiaries
Karaca Pazarlama A.Ş. “Karaca Pazarlama” (5)
Papfen Joint Stock Company “Papfen”
Tekfen International Finance and Investments S.A.
“Tekfen Finance”
Tekfen Participations S.A. “Tekfen Participations”
Tekfen International Limited “Tekfen International Ltd.”
Tekfen Construction and Installation Company Limited
“Tekfen Construction”
Antalya Stüdyoları A.Ş. “Antalya Stüdyoları”
Kablotek Kablo Şebekeleri Tesis İşletme Mühendislik İnş.
Tic. San. A.Ş. “Kablotek”
Tekfen Emlak Geliştirme Yatırım ve Ticaret A.Ş. “Tekfen
Emlak” (old name Tekfen Doğalgaz Dağıtım A.Ş.) (2)
Tekfen-Oz Gayrimenkul Geliştirme A.Ş. “Tekfen Oz” (4)
Tekfen İnşaat ve Tesisat A.Ş. “Tekfen İnşaat”
Tekfen Mühendislik A.Ş. “Temaş”
Tekfen İmalat ve Mühendislik A.Ş. “Timaş”
Cenub Tikinti Servis ASC. “Cenub Tikinti”
Nature of
business
Country
of Origin
Business
Segment
“Discontinued
Operation”
Textile
Investment
Turkey
Other
Uzbekistan
Luxembourg
Other
Other
Investment
Investment
Construction
Luxembourg
United Kingdom
Ireland
Other
Contracting
Contracting
“Studio
Administration”
Cable TV Network
Operator
Real Estate
Turkey
Other
Turkey
Other
Turkey
Real Estate
Real Estate
Construction
Engineering
Manufacturing
Construction
Turkey
Turkey
Turkey
Turkey
Azerbaijan
Real Estate
Contracting
Contracting
Contracting
Contracting
As of 31 December 2007 joint ventures included in the Group’s consolidation are as follow:
Registered Name of the Joint Venture
Nature of
business
Country
of Origin
Business
Segment
Gate İnşaat Taahhüt Sanayi ve Ticaret A.Ş. “Gate J.V.” (3)
Azfen Birge Müessesesi “Azfen J.V.” (3)
Tekfen Impresit J.V. “Impresit”
Tekfen-Tubin-Özdemir J.V. “TÖT J.V.”
Tubin-Tekfen-Özdemir J.V. “TTÖ J.V.”
Overseas International Constructors GmbH “OIC J.V.” (3)
North Caspian Constructors B.V. “NCC J.V.” (3)
CP Contracting and Trading FZE “CP J.V.” (3)
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Contracting
Contracting
Contracting
Contracting
Contracting
Contracting
Contracting
Contracting
Nurol-Tekfen-Yüksel J.V. “NTY J.V.”
Tekfen TML J.V. “Tekfen TML J.V.”
Gama-Tekfen-Tokar J.V. “GTT J.V.”
TGO İnşaat Taahhüt Nakliyat Ticaret San. Ltd. Şti.
“TGO J.V.” (3)
Construction
Construction
Construction
Construction
Turkey
Azerbaijan
Turkey
Turkey
Turkey
Switzerland
Netherland
United Arab
Emirates
Turkey
Libya
Turkey
Turkey
Contracting
Contracting
Contracting
Contracting
(1) In 2006, the Group has classified its assets of these subsidiaries as “Assets Classified As Held for Sale”; their liabilities
as “Liabilities Classified As Held for Sale” and profit from these operations as “Profit from Discontinued Operations”.
(2) Registered name of Tekfen Doğalgaz was changed as “Tekfen Emlak Geliştirme Yatırım ve Ticaret A.Ş.” as of 18 September
2006 and nature of business changed to real estate.
(3) Companies are joint ventures in terms of their operations; however, they are established as equity companies in terms
at their legal structure.
(4) The Group has established a company named “Tekfen Oz Gayrimenkul Emlak Geliştirme A.Ş.” on 9 October 2007 and
registered the firm by 17 October 2007 dated, 6917 numbered Trade Registry Gazette.
(5) Karaca Pazarlama and Karaca Giyim merged under Karaca Giyim on 19 November 2007.
115
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
1.
ORGANIZATION AND OPERATIONS OF THE GROUP (cont’d)
As of 31 December 2007, branches included in the Group’s consolidation are as follow:
Branch Name
Nature
of Business
Place of Operation
and Country of Origin
Tekfen İnşaat - Baku Office
Tekfen İnşaat - Saudi Arabia Office
Tekfen İnşaat - Morocco Office
Tekfen İnşaat - Kuwait Office
Tekfen İnşaat - Qatar Office
Tekfen İnşaat - Dubai Office
Tekfen İnşaat - Muscat Office
Tekfen Dış Ticaret - Europe Free Zone (1)
Tekfen Dış Ticaret - Mersin Free Zone (1)
Tekfen Endüstri - Mersin Free Zone
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Trading
Trading
Trading
Azerbaijan
Saudi Arabia
Morocco
Kuwait
Qatar
United Arab Emirates
Oman
Turkey
Turkey
Turkey
(1) Tekfen Dış Ticaret was merged with Mersin Free Zone and Europe Free Zone as of 24 March 2006 and 29 March 2006
by closing the branches, respectively.
(2) Tekfen Endüstri, Mersin Free Zone was closed at 26 December 2007.
The Group’s management manages its operations by four main business lines; contracting, agriculture, real estate and
other operations. The Group discontinued its banking operations by selling the majority portion of its shares in subsidiary.
Therefore, the Group’s banking sector operations in 2006 are stated as discontinued operations in the accompanying
financial statements (Note: 35). Nature of business of Group companies can be summarized as follows:
Contracting Group
The Group’s contracting segment undertakes infrastructure and industrial construction projects in Saudi Arabia, Azerbaijan,
Kuwait, Kazakhstan, and Morocco. Contracting group especially specializes on construction of petroleum and gas facilities.
In recent years, the Group’s contracting business line expands its operations by starting construction projects in Libya,
Qatar, Bulgaria, and Oman. Terminals, offshore platforms, tank farms, pipe lines, petroleum refineries, pumping stations,
generating station, highway and metro project, electricity and telecommunication systems, residential and trading centers,
stadium and sport complex are included in contracting group’s scope of activity.
Agricultural Group
Agricultural group has operations in chemical fertilizer, ground and vegetable grain, seedling, energy production and sapling
production distribution and trade since 1981. In 2005 Samsun Gübre, Tekfen Sanayi Yatırımları and Toros Gübre merged
under Toros Tarım Sanayi and Ticaret. In addition to these operations, harbour and free zone operations are included in
the operations of agricultural industry group.
Real Estate Group
Real Estate segment has been founded in 2000 and operates in designing, constructing, renting, and sale of real estates such
as residents, offices, shopping centers, and hotels. The Group has established a company named “Tekfen Oz Emlak Geliştirme
A.Ş.” in 9 October 2007 and registered to Trade Registry Gazette numbered 6917 at 17 October 2007.
Other Operations
Operations of other segment comprise of light-pulp trading, cotton yarn trading, insurance services and holding services.
Holding operations executed by Tekfen Holding A.Ş. and covers Group’s financial needs. Moreover, dividend income and
rent income provided constitute Holding’s revenue from operations.
116
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
2.
BASIS OF PRESENTATION OF FINANCIAL STATEMENTS
Applied Accounting Standards
The Group companies registered in Turkey maintain their books of account and prepare their statutory financial statements
in accordance with accounting principles in the Turkish Commercial Code and Tax Legislation. Books of account of
subsidiaries and joint ventures established in abroad are prepared in accordance with legislation requirements of their
country of origin.
The Capital Market Board (“CMB”) published a set of comprehensive accounting policies in the Communiqué Series XI,
No: 25, “The Capital Markets Accounting Standards”. In accordance with the Communiqué on “Amendments upon the
Capital Markets Accounting Standards” (Serial: XI, No: 27) issued on 23 December 2004 and the additional Article 1 to
the Communiqué on the “Capital Markets Accounting Standards” Serial: XI, No: 25, it is declared that, without revealing
the declarations made by the CMB upon Accounting Standards including financial reporting and footnote disclosures,
application of International Financial Reporting Standards (IFRS) should be subject to the preparation and presentation
requirements of financial statements set out in the Communiqué Serial: XI, No: 25. Thus, as an alternative, accounting
standards issued by the International Accounting Standards Board (IASB) and International Accounting Standards
Committee (IASC) shall be counted as compliant with the CMB’s Accounting Standards.
Accordingly, the Group prepares its financial statements in accordance with the alternative application permitted by the
CMB, mentioned above. Presentation of financial statements and the content of footnote disclosures are in compliance
with the compulsory format announced on 20 December 2004 by the CMB.
Functional and Reporting Currency
Functional and reporting currency of the Group’s contracting segment is US dollars and its reporting currency of the Group
is TRY. In accordance with IAS 21 (“The Effects of Changes in Foreign Exchange Rates”), balance sheet items are translated
into TRY with the US dollar rates prevailing at the balance sheet date and revenue, expenses and cash flows are translated
with the exchange rates at the transaction date (historical rates) or yearly average rate. Gain/loss arising from the
translation is recognized in the foreign currency translation reserve under equity.
The individual financial statements of branches operating in contracting segment are presented in the currency of the
primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated
financial statements of contracting segment, balance sheet items are translated into US dollar with the US dollar rates
prevailing at the balance sheet date and revenue, expenses and cash flows are translated with the exchange rates at the
transaction date (historical rates). Such translation differences are recognized in profit or loss in the period in which the
foreign operation is disposed of.
The exchange rate announced by the Turkish Central Bank as of 31 December 2007 is; 1 USD Dollar = 1.1647 TRY,
1EUR = 1.7102 TRY, 1 MAD = 0.152 TRY, 1 OMR = 3.036 TRY, 1 KWD = 4.029 TRY, 1 SR = 0.311, 1 QR = 0.312 TRY (On
31 December 2006; 1 USD Dollar = 1.4056 TRY, 1 EUR = 1.8515 TRY, 1 MAD = 0.167 TRY, 1 OMR = 3.650 TRY, 1 KWD =
4.821 TRY, 1 SR = 0.375 TRY, 1 QR = 0.385 TRY).
117
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
2.
BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)
Consolidation Principles
Consolidated financial statements comprise the accounts of Tekfen Holding’s subsidiaries, branches and joint ventures.
Entities in which the Group, directly or indirectly, has above 50% shareholding or interest of voting rights or otherwise has
power to exercise control over operations, have been fully consolidated. The Group has obtained shares from the operations
of the equity subsidiaries since it has power to govern the financial and operational policies of the Group. All significant
transactions and balances between the Group and its consolidated subsidiaries are eliminated on the consolidation.
Shares pertaining to third parties in the shareholders’ equity and net profit / (loss) of the consolidated subsidiaries, which
are not fully (100%) owned, are separately accounted for as minority interests in the consolidated financial statements.
A joint venture is a contractual arrangement whereby one or more parties of Tekfen Holding A.Ş. as audit subsidiaries
undertake an economic activity that is subject to joint control. Balance sheet and statements of income shares related to
the Group’s joint ventures in domestic and overseas construction projects are reflected to the consolidated financial
statements proportional to the share percentage in these joint ventures.
A subsidiary is an entity, including an unincorporated entity such as a partnership that is controlled by another entity (known
as the parent). For subsidiaries of which the Group holds 20% or 50% of sharing or the voting power, however, it has no
significant control on their operations are recognized based on the equity method. Under the equity method, subsidiary
is carried at net asset amount in the consolidated balance sheet and the Group’s share arising from the results of the
operations is included in the consolidated statements of income. Unless the decrease in the subsidiaries’ net asset value
is temporary, its value is carried at the reduced value in the consolidated financial statements.
118
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
2.
BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)
Consolidation Principles (cont’d)
As of 31 December 2007 and 2006, effective and direct rate of the Group’s ownership in the related subsidiaries and joint
ventures are as follows.
Direct ownership %
Effective ownership %
Registered Name of the Subsidiary
2007
2006
2007
2006
Tekfenbank (1)
29,13
198
29,13
198
Tekfen Sigorta
100,131
100
100,131
100
Tekfen Dış Ticaret
100,131
100
100,131
100
Belpa
95,13
195
95,13
195
Tekfen Kültür
100,131
100
100,131
100
Tekfen Turizm
100,131
100
100,131
100
Tekfen Emlak
100,131
100
100,131
100
Tekfen Oz (2)
16,40
1116,40
11TST Holding
100,131
100
100,131
100
TST Finance
100,131
100
100,131
100
TST Trading
100,131
100
100,131
100
TST Ltd.
100,131
100
100,131
100
Petrofertil Shipping
100,131
100
100,131
100
Petrofertil Trading
100,131
100
100,131
100
Industrial Supply
100,131
100
100,131
100
Toros Gayrimenkul
100,131
100
100,131
100
Toros Tarım
100,131
100
100,131
100
Tayseb
100,131
100
100,131
100
100
Toros Terminal
100,131
100
100,131
Toros Enerji
100,131
100
100,131
100
H-T Fidecilik
50,13
150
50,13
150
Türk Arap Gübre
80,13
180
80,13
180
Tekfen Endüstri
99,13
199
99,13
199
Toros Gemi
100,131
100
100,131
100
Karaca Giyim
100,131
100
100,131
100
Karaca Pazarlama
-,1
100
-,1
100
Tekfen İnşaat
100,131
100
100,131
100
Temaş
100,131
100
100,131
100
Timaş
100,131
100
100,131
100
HMB
100,131
100
100,131
100
Papfen
85,13
185
85,13
185
Cenub Tikinti
65,13
165
65,13
165
Tekfen Finance
100,131
100
100,131
100
Tekfen Participations
100,131
100
100,131
100
Tekfen International Ltd.
100,131
100
100,131
100
Tekfen Construction
100,131
100
100,131
100
Antalya Stüdyoları
100,131
100
100,131
100
Kablotek
100,131
100
100,131
100
(1) The Group has sold 70% shares of Tekfenbank and Tekfen Finansal Kiralama on 16 March 2007. Subsequent to the
sale, the Group started to account its investments in Tekfenbank by equity method of accounts.
(2) The company has established at 2007.
119
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
2.
BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)
Consolidation Principles (cont’d)
Registered Name of the Joint Venture
Gate J.V.
Azfen J.V.
TÖT J.V
TTÖ J.V.
OIC J.V.
NCC J.V.
Impresit
CP J.V. (*)
NTY J.V.
GTT J.V.
Tekfen TML J.V.
TGO J.V.
Rate % (*)
2007
2006
150
140
171
125
150
150
100
150
133
135
167
150
150
140
171
125
125
125
100
150
133
135
167
150
(*) Because of an agreement, made by CP J.V. Group’s subsidiary Tekfen Finance has 50% voting power in the management
of CP J.V. and owns 50% of CP J.V.’s assets and liabilities.
On acquisition of a subsidiary by the Group, the assets and liabilities of the relevant subsidiary are measured at their fair
values at the date of acquisition. Minority interests are calculated by applying the minority ownership rate on the fair
value of the net assets. Operational results of the subsidiaries acquired or disposed of during the year are included in the
consolidated statements of income effective from the date of acquisition or up to the actual date of disposal, as appropriate.
If the consolidated subsidiaries’ total equity is loss (negative), unless there is a strict commitment that such losses will be
recovered by the minority, then such losses are not recognized as receivables from minority interest. Minority interest is
not calculated until subsequent profits attributable to these subsidiaries are offset against the accumulated losses of these
minority shares. Minority interest is not calculated until subsequent profits attributable to these subsidiaries are offset
against the accumulated losses of these minority shares.
Where necessary, adjustments are made to the financial statements of subsidiaries to be in compliant with the accounting
policies used by other members of the Group.
Comparative information and reclassifications to the prior period financial statements
Consolidated financial statements are prepared comparative to the prior period. If the presentation or classification of the
financial statements is changed, in order to confront current year presentation, financial statements of the prior periods
are also reclassified in line with the related changes.
Offsetting
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable
right to set off the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the
liability simultaneously.
120
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
2.
BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)
Adoption of new and revised international Financial Reporting Standards
In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the International
Accounting Standards Board (“the IASB”) and the International Financial Reporting Interpretations Committee (“IFRIC”)
of the IASB that are relevant to its operations and effective for accounting periods beginning on 1 January 2007. At the date
of authorization of these financial statements, the following Standards and Interpretations were in issue but not yet effective.
• IFRS 7, “Financial instruments: Disclosures”
• IAS 1, “Presentation of financial statements”
IFRS 7, “Financial instruments: Disclosures”
This standard requires disclosures that enable users of the financial statements to evaluate the significance of the Group’s
financial instruments and the nature and extent of risks arising from those financial instruments. The new disclosures are
included throughout the financial statements. While there has been no effect on the financial position or results, comparative
information has been revised where needed.
IAS 1, “Presentation of financial statements”
This amendment requires the Group to make new disclosures to enable users of the financial statements to evaluate the
Group’s objectives, policies and processes for managing capital.
Standards, amendments and interpretations effective as of 31 December 2007 but not relevant to Group’s operations
The following standards, amendments and interpretations to published standards are mandatory for accounting periods
beginning on or after 1 January 2007 but they are not relevant to the Company’s operations:
•
•
•
•
•
IFRS 4, “Insurance contracts”,
IFRIC 7, “Applying the restatement approach under IAS 29, Financial reporting in hyperinflationary economies”,
IFRIC 8, “Scope of IFRS 2”,
IFRIC 9, “Reassessment of embedded derivatives”,
IFRIC 10, “Interim financial reporting and impairment”.
121
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
2.
BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)
Adoption of new and revised international Financial Reporting Standards (cont’d)
Standards, amendments and interpretations to existing standards that are not yet effective and have not been early
adopted by the Company
At the date of authorization of these financial statements, the following Standards and Interpretations were in issue but not
yet effective:
122
• IFRIC 11, “IFRS 2 - Group and treasury share
transactions”
Effective for annual periods beginning on or
after 1 March 2007
• IAS 23, “(Amendment) Borrowing costs”
Effective for annual periods beginning on or
after 1 January 2009
• IFRS 8, “Operating segments”
Effective for annual periods beginning on or
after 1 January 2009
• IFRIC 12, “Service concession arrangements”
Effective for annual periods beginning on or
after 1 January 2008
• IFRIC 13, “Customer loyalty programmes”
Effective for annual periods beginning on or
after 1 July 2008
• IFRIC 14, “IAS 19 - The limit on a defined benefit
asset, minimum funding requirements and their
interaction”
Effective for annual periods beginning on or
after 1 January 2008
• IFRS 2, “Share-based Payment” Amendment relating
to vesting conditions and cancellations
Effective for annual periods beginning on or
after 1 January 2009
• IFRS 3, “Business Combinations”
• IAS 27, “Consolidated and Separate Financial
Statements”
• IAS 28, “Investments in Associates”
• IAS 31 “Interests in Joint Ventures” Comprehensive
revision on applying the acquisition method
Effective for annual periods beginning on or
after 1 July 2009
• IAS 32, “Financial Instruments: Presentation”
Amendments relating to disclosure of puttable
instruments and obligations arising on liquidation
Effective for annual periods beginning on or
after 1 January 2009
• IAS 1, “Presentation of Financial Statements”
Effective for annual periods beginning on or
after 1 January 2009
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
3.
SIGNIFICANT ACCOUNTING POLICIES
3.1 Statement of Compliance
In the framework that the alternative application permitted by the CMB, the financial statements included presentation of
financial statements and the content of footnote disclosures have been prepared in accordance with International Financial
Reporting Standards (“IFRS”) save for accounting standards explanations (Note 2) published by the association.
3.2 Basis of Preparation
The financial statements have been prepared on the historical cost basis except for some of the tangible assets and financial
instruments revaluation.
3.3 Basis of Presentation of Consolidated Financial Statements
The Company and its Turkish subsidiaries maintain their books of account and prepare their statutory financial statements
in accordance with accounting principles in the Turkish Commercial Code and tax legislation. Subsidiaries that are registered
in foreign countries maintain their books of account and prepare their statutory statements in accordance with the prevailing
accounting principles in their registered countries.
3.4 Inflation Accounting
As per the CMB’s resolution No: 11/367 on March 17, 2005, it is declared that companies operating in Turkey and preparing
their financial statements in accordance with the CMB’s (included those IFRS applications adopted) Accounting standards
effective as of 1 January 2005, shall not be subject to the application of inflation accounting. Consequently, IAS 29 “Financial
Reporting in Hyperinflationary Economies” is not applied in the accompanying financial statements.
3.5 Business Combinations
The acquisition of subsidiaries and businesses are accounted for using the purchase method. The cost of the acquisition
is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed,
and equity instruments issued by the Group in exchange for control of the acquire, plus any costs directly attributable to
the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions
for recognition under IFRS 3, “Business Combinations” are recognized at their fair values at the acquisition date, except for
non-current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5, “Non-Current Assets
Held for Sale and Discontinued Operations”, which are recognized and measured at fair value less costs to sell.
Goodwill arising on acquisition is recognized as an asset and initially measured at cost, being the excess of the cost of
the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent
liabilities recognized. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets,
liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognized immediately in
profit or loss.
The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value
of the assets, liabilities and contingent liabilities recognized.
123
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
3.
SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3.6 Investments in Associates
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a
joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee
but is not control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these financial statements using the equity method
of accounting, except when the investment is classified as held for sale, in which case it is accounted for under IFRS 5.
Under the equity method, investments in associates are carried in the consolidated balance sheet at cost as adjusted for
post-acquisition changes in the Group’s share of the net assets of the associate, less any impairment in the value of individual
investments. Losses of an associate in excess of the Group’s interest in that associate (which includes any long-term interests
that, in substance, form part of the Group’s net investment in the associate) are not recognized.
Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and
contingent liabilities of the associate recognized at the date of acquisition is recognized as goodwill. The goodwill is included
within the carrying amount of the investment and is assessed for impairment as part of the investment. Any excess of the
Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition,
after reassessment, is recognized immediately in profit or loss.
Where a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s
interest in the relevant associate.
3.7 Interests in Joint Ventures
A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is
subject to joint control that is when the strategic financial and operating policy decisions relating to the activities require
the unanimous consent of the parties sharing control.
Where a group entity undertakes its activities under joint venture arrangements directly, the Group’s share of jointly
controlled assets and any liabilities incurred jointly with other ventures are recognized in the financial statements of the
relevant entity and classified according to their nature. Liabilities and expenses incurred directly in respect of interests
in jointly controlled assets are accounted for on an accrual basis. Income from the sale or use of the Group’s share of the
output of jointly controlled assets, and its share of joint venture expenses, are recognized when it is probable that the
economic benefits associated with the transactions will flow to/from the Group and their amount can be measured reliably.
Joint venture arrangements that involve the establishment of a separate entity in which each venturer has an interest
are referred to as jointly controlled entities. The Group reports its interests in jointly controlled entities using proportionate
consolidation, except when the investment is classified as held for sale, in which case it is accounted for under IFRS 5. The
Group’s share of the assets, liabilities, income and expenses of jointly controlled entities are combined with the equivalent
items in the consolidated financial statements on a line-by-line basis.
Where the Group transacts with its jointly controlled entities, unrealized profits and losses are eliminated to the extent of
the Group’s interest in the joint venture.
124
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
3.
SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3.8 Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer
returns, rebates, and other similar allowances.
Sale of Goods
Revenue from sale of goods is recognised when all the following conditions are satisfied:
• The Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
• The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective
control over the goods sold;
• The amount of revenue can measure reliably;
• It is probable that the economic benefits associated with the transaction will flow to the entity; and
• The costs incurred or to be incurred in respect of the transaction can be measured reliably.
Construction Contracts
In contracts where third parties undertake the management, control and coordination of the construction activities are
referred to as service contracts and they are only recognized as revenues when they are presented to third parties.
When the outcome of a construction contract can be estimated reliably, contract revenue associated with the construction
contract shall be recognised by reference to the stage of completion of the contract activity at the balance sheet date.
Stage of completion is measured by the proportion of the contract costs incurred for work performed to date divided by
the estimated total contract costs. This calculation does not apply if the stage of completion cannot be measured reliably.
Changes in construction contract, additional receivable claims and incentive payments are included in the project revenue
in accordance with the consent of the employer.
Construction contract costs consist of indirect costs such as; all raw materials and direct labour expenses, indirect labour
costs related with contract performance, equipment, maintenance, and depreciation expenses. General administration
expenses are expanded when they occur. Provision for cost of estimated loss of incomplete contracts is provided for
immediately in the year, which such loss is forecasted. Business efficiency, business conditions, provisions for contract
penalties and changes in estimated profitability arising from final contract arrangements because a revision in costs incurred
and revenues obtained at the end of the project. Impact of these revisions is accounted for in the year, which such revision
is made.
Unbilled work indicates the revenue recognized on construction contracts in excess of billings, and progress billings indicate
the billings in excess of the revenue recognized on construction contracts.
Construction group management does not recognize the additional receivables under compensation outside the scope of
the contract that may be subject to litigation as income, unless negotiations have reached to an advanced stage such that
it is probable that the customer will accept the claim and the amount that is probable will be accepted by the customer
can be measured reliably.
Retention receivables from contractors
The Group’s interim progress billings from its clients are subject to retention deductions, which vary, based on the individual
agreements. These balances are collected from the clients upon successful completion of the contract at the end of the
warranty period. Retention receivables are measured at initial recognition at fair value, and are subsequently measured
at amortized cost using the effective interest rate method.
125
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
3.
SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3.8 Revenue Recognition (cont’d)
Retention payables to subcontractors
The Group’s interim progress billings to its sub-contractors are subject to retention deductions, which vary, based on the
individual agreements. These payables are paid to subcontractors after they successfully complete the guarantee periods.
Retention payables are measured at initial recognition at fair value, and are subsequently measured at amortized cost
using the effective interest rate method.
Dividend and interest revenue
Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial
asset to that asset’s net carrying amount.
Dividend revenue from investments is recognized when the shareholders’ rights to receive payment have been established.
Rental income
Rental income from investment properties is recognized on a straight-line basis over the term of the relevant lease.
3.9 Non-Current Assets Classified as Held for Sale
Non-current assets (or disposal groups) are classified as assets held for sale and stated at the lower of carrying amount
and fair value less costs to sell if their carrying amount is to be recovered principally through a sale transaction rather than
through continuing use. These assets may be a component of an entity, a disposal group or an individual non-current asset.
A discontinued operation is a component of an entity that either has been disposed of, or that is classified as held for sale,
and: (a) represents a separate major line of business or geographical area of operations; (b) is part of a single coordinated
plan to dispose of a separate major line of business or geographical area of operations; or (c) is a subsidiary acquired
exclusively with a view to resale.
3.10 Inventories
Inventories are stated at the lower of cost and net realizable value. Costs, including an appropriate portion of fixed and
variable overhead expenses, are assigned to inventories held by the method most appropriate to the particular class of
inventory, with the majority being valued on a weighted average basis. Net realizable value represents the estimated selling
price less all estimated costs of completion and costs necessary to make a sale.
Cost of materials that have been delivered to contract site or set aside for use in a contract but not yet installed are included
in the cost of project if the materials have been made specially for the contract. In the current year, cost of materials that
have been delivered to contract site or set aside for use in a contract but not yet installed are included in the inventory instead
of cost of sales if the materials have not been made specially for the contract. The effect of related accounting policy change
to the current year is 2,769.
3.11 Property, Plant and Equipment
Property plant&equipment are carried at cost less accumulated depreciation and any accumulated impairment losses.
Properties in the course of construction for production, rental or administrative purposes, or for purposes not yet determined,
are carried at cost, less any recognized impairment loss. Cost includes professional fees and, for qualifying assets, borrowing
costs capitalized in accordance with the Group’s accounting policy. Depreciation of these assets, on the same basis as other
property assets, commences when the assets are ready for their intended use.
126
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3.11 Property, Plant and Equipment (cont’d)
Depreciation is charged so as to write off the cost or valuation of assets, other than land and properties under construction,
over their estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation
method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or,
where shorter, the term of the relevant lease.
The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the
difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.
Property, plant and equipment deemed to have indefinite lives, except land, are depreciated over the following useful lives:
Land improvements
Buildings
Machinery and equipments
Vehicles
Furniture and fixtures
Leasehold improvements
Other tangible assets
Useful Life
2-10 Years
10-50 Years
4-25 Years
5 Years
3-15 Years
5 Years
5 Years
3.12 Intangible Assets
Intangible assets acquired separately
Intangible assets acquired separately are reported at cost less accumulated amortization and accumulated impairment
losses. Amortization is charged on a straight-line basis over their estimated useful lives. The estimated useful life and
amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate
being accounted for on a prospective basis.
Computer software
Acquired computer software licences are capitalized on the basis of the costs incurred to acquire and bring to use the specific
software. These costs are amortized over their estimated useful lives (three to ten years).
Costs associated with developing or maintaining computer software programmes are recognized as an expense as incurred.
Costs that are directly associated with the development of identifiable and unique software products controlled by the
group, and that will probably generate economic benefits exceeding costs beyond one year, are recognized as intangible
assets. Costs include the software development employee costs and an appropriate portion of relevant overheads. Computer
software development costs recognized as assets are amortized over their estimated useful lives (not exceeding three
years).
Intangible assets are depreciated over the following useful lives:
Rights
Other intangible assets
Useful Life
3-10 Years
3-10 Years
127
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3.13 Investment Property
Investment property, which is property, held to earn rentals and/or for capital appreciation is carried at cost less accumulated
depreciation and any accumulated impairment losses. The carrying amount includes the cost of replacing part of an existing
investment property at the time that cost is incurred if the recognition criteria are met; and excludes the costs of day to day
servicing of an investment property. Depreciation is provided on investment property on a straight line basis.
Investment properties are derecognised when either they have been disposed of or when the investment property is
permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the
retirement or disposal of an investment property are recognised in profit or loss in the year of retirement or disposal.
Transfers are made to or from investment property only when there is a change in use. For a transfer from investment
property to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change
in use. If owner occupied property becomes an investment property, the Group accounts for such property in accordance
with the policy stated under property, plant and equipment up to the date of change in use.
3.14 Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction, or production of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those
assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the
temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing
costs eligible for capitalization.
All other borrowing costs are recognized in profit or loss in the period in which they are incurred.
3.15 Taxation and Deferred Income Taxes
Turkish tax legislation does not permit a parent company and its subsidiary to file a consolidated tax return. Therefore,
provisions for taxes, as reflected in the accompanying consolidated financial statements, have been calculated on a
separate-entity basis.
The corporate earnings of the real persons and corporations that are resident, acquired from their affiliates at abroad that
are controlled by them separately or jointly and directly or indirectly, by virtue of having at least 50% of the shares, profit
shares or the voting rights, shall be subject to corporate tax in Turkey, distributed or not distributed when all the conditions,
that are explained in Turkish Corporate Tax Law article 7, are met.
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income
statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes
items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date.
128
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3.15 Taxation and Deferred Income Taxes (cont’d)
Deferred tax
Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the financial statements
and the corresponding tax bases which is used in the computation of taxable profit, and is accounted for using the balance
sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred
tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profits will
be available against which those deductible temporary differences can be utilized. Such assets and liabilities are not
recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting
profit.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and
associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference
and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from
deductible temporary differences associated with such investments and interests are only recognised to the extent that
it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences
and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability
is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the
balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow
from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets
and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends
to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited
or debited directly to equity, in which case the tax is also recognised directly in equity, or where they arise from the initial
accounting for a business combination. In the case of a business combination, the tax effect is taken into account in calculating
goodwill or determining the excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities
and contingent liabilities over cost.
129
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3.16 Retirement Pay Provision
Under Turkish law and union agreements, lump sum payments are made to employees retiring or involuntarily leaving the
Group. Such payments are considered as being part of defined retirement benefit plan as per International Accounting
Standard No. 19 (revised) “Employee Benefits”.
3.17 Foreign Currency Transactions
The individual financial statements of each Group entity are presented in the currency of the primary economic environment
in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results
and financial position of each entity are expressed in TRY, which is the functional currency of the Company, and the
presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual entities, transactions in currencies other than TRY (foreign currencies)
are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary
items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Nonmonetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing
on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a
foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the period in which they arise except for:
• Exchange differences which relate to assets under construction for future productive use, which are included in the cost
of those assets where they are regarded as an adjustment to interest costs on foreign currency borrowings;
• Exchange differences on transactions entered into in order to hedge certain foreign currency risks (see below for hedging
accounting policies); and
• Exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither
planned nor likely to occur, which form part of the net investment in a foreign operation, and which are recognised in
the foreign currency translation reserve and recognised in profit or loss on disposal of the net investment.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations
are expressed in TRY using exchange rates prevailing on the balance sheet date. Income and expense items are translated
at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which
case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are classified as
equity and transferred to the Group’s translation reserve. Such exchange differences are recognized in profit or loss in the
period in which the foreign operation is disposed of.
130
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3.18 Leasing - The Group as Lessor
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as operating leases.
Amounts due from lessees under finance leases are recorded as receivables at the amount of the Group’s net investment in
the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on
the Group’s net investment outstanding in respect of the leases.
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct
costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and
recognised on a straight-line basis over the lease term.
3.19 Leasing – The Group as Lessee
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are recognized as assets of the Group at their fair value at the inception of the lease or,
if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the
balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of
the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges
are charged to profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalized
in accordance with the Group’s general policy on borrowing costs.
Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant
lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line
basis over the lease term.
3.20 Financial Assets
Financial investments are recognised and derecognized on trade date where the purchase of sales of an investment is under
a contract whose terms require delivery of the investment within the timeframe established by the market concerned,
and are initially measured at fair value, net of transaction costs except for those financial assets classified as fair value
through profit or loss which are initially measured at fair value.
Financial assets are classified into the following specified categories: financial assets as ‘at fair value through profit or
loss’ (FVTPL), ‘available-for-sale’ (AFS) financial assets and ‘loans and receivables’.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest
income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset, or, where appropriate, a shorter period.
131
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3.20 Financial Assets (cont’d)
Financial assets at FVTPL
Income is recognised on an effective interest basis for debt instruments other than those financial assets designated as at
FVTPL.
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this
category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorised as held for
trading unless they are designated as hedges. Assets in this category are classified as current assets.
Available for sale financial assets
Investments (a) other than held-to-maturity debt securities and (b) held for trading securities are classified as availablefor-sale, and are measured at subsequent reporting dates at fair value except available-for-sale investments that do not
have quoted prices in active markets and whose fair values cannot be reliably measured are stated at cost and restated
to the equivalent purchasing power. Gains and losses arising from changes in fair value are recognized directly in equity,
until the security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously
recognized in equity is included in the profit or loss for the period. Impairment losses recognized in profit or loss for equity
investments classified as available-for-sale are not subsequently reversed through profit or loss. Impairment losses
recognized in profit or loss for debt instruments classified as available-for-sale are subsequently reversed if an increase
in the fair value of the instrument can be objectively related to an event occurring after the recognition of the impairment
loss.
Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active
market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective
interest method less any impairment.
Impairment of financial assets
Financial assets, other than those at fair value through profit or loss are assessed for indicators of impairment at each
balance sheet date. Financial assets are impaired where there is objective evidence that because of one or more events
that occurred after the initial recognition of the financial asset the estimated future cash flows of the investment have
been impacted. For loans and receivables the amount of the impairment is the difference between the asset’s carrying
amount and the present value of estimated future cash flows, discounted at the original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception
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 recognised in profit or loss.
132
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3.20 Financial assets (cont’d)
Impairment of financial assets (cont’d)
With the exception of available for sale equity instruments, if, in a subsequent period the amount of the impairment loss
decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the
previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the investment
at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment
not been recognised.
In respect of AFS equity securities, any increase in fair value subsequent to an impairment loss is recognised directly in
equity.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments
which their maturities are three months or less from date of acquisition and that are readily convertible to a known amount
of cash and are subject to an insignificant risk of changes in value.
3.21 Financial Liabilities
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual
arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is
any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting
policies adopted for specific financial liabilities and equity instruments are set out below.
Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss are initially measured at fair value subsequently stated at fair value
and subsequently stated at the fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss
recognised in profit or loss incorporates any interest paid on the financial liability. The net gain or loss recognised in profit
or loss compass the interest paid for financial liability.
Other financial liabilities
Other financial liabilities are initially measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest
expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash
payments through the expected life of the financial liability, or, where appropriate, a shorter period.
133
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3.22 Provisions
Provisions are recognized when the Group has a present obligation as a result of a past event, and it is probable that the
Group will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation
at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation.
Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the
present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party,
the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the
receivable can be measured reliably.
Onerous contracts
Present obligations arising under onerous contracts are recognised and measured as a provision.
An onerous contract is considered to exist where the Group has a contract under which the unavoidable costs of meeting
the obligations under the contract exceed the economic benefits expected to be received under it.
4.
CASH AND CASH EQUIVALENTS
Cash on hand
Demand deposits
Time deposits
Other liquid assets
134
31 December
2007
1,203
50,511
466,503
3,436
521,653
31 December
2006
1,799
105,738
97,042
4,905
209,484
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
4.
CASH AND CASH EQUIVALENTS (cont’d)
Time Deposits
Currency
Type
Interest Rate
(%)
Maturity
Date
Currency
Amount (000)
31 December
2007
4.00-5.80
1.50-4.35
9.00-18.50
Jan-June 2008
Jan-June 2008
Jan-February 2008
58,646
6,281
-
68,305
10,742
381,617
5,839
466,503
Currency
Type
Interest Rate
(%)
Maturity
Date
Currency
Amount (000)
31 December
2006
USD
EUR
TRY
Interest accrual
3.4-6.00
1.75-4.76
10.00-19.00
June 2007
January 2007
February 2007
43,172
13,978
-
USD
EUR
TRY
Interest accrual
5.
60,682
25,880
9,610
870
97,042
MARKETABLE SECURITIES (NET)
None.
6.
BANK LOANS
Short term loans
Short term portion of long term loans
Total short term bank loans
Long term loans
Total long term loans
Total bank loans
31 December
2007
31 December
2006
309,143
8,504
317,647
462,515
81,943
544,458
7,055
7,055
47,278
47,278
324,702
591,736
31 December
2007
31 December
2006
317,647
6,060
766
105
124
324,702
544,458
31,528
14,683
1,067
591,736
Repayment schedule of bank loans is as follows:
Within 1 year
Within 1-2 year
Within 2-3 year
Within 3-4 year
Over 5 years
135
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
6.
BANK LOANS (cont’d)
Short term bank loans are as follows:
Original
currency
USD
EUR
MAD
QAR
TRY
Interest accrual
Original
currency
USD
EUR
MAD
QAR
TRY
Interest accrual
Weighted average
interest rate
(%)
Currency
amount
31 December
2007
225,399
7,677
110,148
26,142
-
262,523
13,130
16,683
8,341
2,599
5,867
309,143
Weighted average
interest rate
(%)
Currency
amount
31 December
2006
6.49
5.66
5.75
7.05
22.00
265,772
19,278
148,834
38,600
-
373,569
35,693
24,813
14,865
871
12,704
462,515
Currency
amount
31 December
2007
6.24
5.96
5.50
7.05
-
Current portions of long term borrowings are as follows:
Original
currency
USD
EUR
Interest accrual
Original
currency
USD
EUR
Interest accrual
136
Weighted average
interest rate
(%)
5.84
5.93
Weighted average
interest rate
(%)
6.11
5.74
6,958
6,149
Currency
amount
55,788
55,783
8,104
255
145
8,504
31 December
2006
78,416
153
3,374
81,943
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
6.
BANK LOANS (cont’d)
Long term portion of long term bank loans consists of the following:
Original
currency
Weighted average
interest rate
(%)
USD
EUR
Original
currency
Currency
amount
5.85
5.61
31 December
2007
2,252
2,591
2,623
4,432
7,055
Weighted average
interest rate
(%)
Currency
amount
31 December
2006
6.79
5.53
30,176
2,399
42,837
4,441
47,278
USD
EUR
As of 31 December 2007, the Group has given USD 24,191 thousand of letters of guarantee (TRY 28,175 thousand), EUR
3,011 thousand and 3,205 mortgage (31 December 2006: USD 40,503 thousand of letters of guarantee (TRY 52,840
thousand); EUR 3,011 thousand (TRY 5,575 thousand), 3,205 mortgage).
The Group has bank loans amounting to USD 2,699 thousand (TRY 3,109 thousand), EUR 10,418 thousand (TRY 17,816
thousand) and MAD 110,418 thousand (TRY 16,687 thousand) with fixed interest rates and expose the Group to fair value
interest rate risk. Other borrowings are arranged at floating rates, thus exposing the Group to cash flow interest rate risk.
7.
TRADE RECEIVABLES AND PAYABLES
Short and long term trade receivables:
Short term trade receivables (net)
Contract receivables
Agriculture segment receivables
Trade receivables
Provision for doubtful receivables
Notes receivables
Discount on notes receivables
Retention receivables (Note: 13)
Deposits and guarantees given
Other
31 December
2007
31 December
2006
234,150)
23,029)
23,554)
(12,928)
48,397)
(1,973)
7,993)
3,229)
88)
325,539)
218,154)
6,575)
37,155)
(16,434)
35,370)
(2,391)
17,477)
10,852)
73)
306,831)
137
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
7.
TRADE RECEIVABLES AND PAYABLES (cont’d)
31 December
2007
Long term trade receivables (net)
Legally approved claims
Retention receivables (Note: 13)
Deposits and guarantees given
767)
8,392)
3,630)
12,789)
31 December
2006
-)
3,985)
1,359)
5,344)
Average maturity date vary between the segments. Average maturities for contract, agriculture and other segments are
approximately 165, 50 and 55 days, respectively.
Collaterals received in relation to trade receivables that are neither past due nor impaired is as follows:
Guarantee letters
Pledges
31 December
2007
31 December
2006
99,690)
973)
100,663)
43,475)
757)
44,232)
The Group estimates its provision for doubtful receivables based on past experience. All provided doubtful receivable
provisions are general provisions. Reserve is made for uncollateralized bad debts. The movement of reserve for doubtful
receivables for the years 2007 and 2006 are as follows:
Opening
Charge for the period
Collected
Write off of bad debts
Currency translation effect
Closing balance
138
1 January 31 December
2007
1 January 31 December
2006
(16,434)
(1,571)
2,610)
1,528)
939)
(12,928)
(12,046)
(3,903)
205)
-)
(690)
(16,434)
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
7.
TRADE RECEIVABLES AND PAYABLES (cont’d)
In determining the recoverability of trade receivable, the Group considers any change in the credit quality of the trade
receivable from the date credit was initially granted up to the reporting date. Accordingly, the Group management believes
that there is no further credit provision required in excess of the allowance for doubtful debts.
Short term trade payables (net)
Contract payables (*)
Trade payables related to agricultural operations
Other trade payables
Notes payables
Discount of notes payables and trade payables
Deposits and guarantees received
Retention payables
Other payables
Long term trade payables (net)
Trade payables
Contract payables
Retention payables
Notes payables
Discount of notes payables
Deposits and guarantees received
31 December
2007
31 December
2006
127,479)
130,890)
49,870)
22,783)
(1,453)
1,318)
6,963)
1,275)
339,125)
195,455)
160,509)
14,190)
17,114)
(1,354)
2,054)
7,272)
-)
395,240)
31 December
2007
31 December
2006
40)
748)
797)
-)
(83)
303)
1,805)
51)
-)
1,917)
17,710)
(1,439)
585)
18,824)
(*) As of 31 December 2006, letter of credit, amounting to 21,890, with the maturity date of 2 January 2007 is issued for
purchasing construction materials.
The average payable period for Group’s trade payables changes according to the segments. For agriculture segment
average payable period of purchases from foreign suppliers are 85 days and 16 days for local suppliers. The average payable
period for contract and other segment are 83 days and 59 days respectively. The Group has financial risk management
policies in place to ensure that all payables are paid within the credit timeframe.
8.
FINANCE LEASE RECEIVABLES AND OBLIGATIONS UNDER FINANCE LEASES
Finance lease receivables of the Group consists of a long-term rent agreement related with an hospital building, that’s
ownership passed to the Group in return of a doubtful receivable. Details of finance lease receivable are as follows:
Short term finance lease receivables
Long term finance lease receivables
31 December
2007
862)
10,772)
11,634)
31 December
2006
190)
11,333)
11,523)
139
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
8.
FINANCE LEASE RECEIVABLES AND OBLIGATIONS UNDER FINANCE LEASES (cont’d)
Details of obligations under finance lease are as follow:
Minimum Lease Payments
31 December
31 December
2007
2006
Payments amounts for obligations
under finance leases:
Within one year
Within 1-5 year
Present Value of
Minimum Lease Payments
31 December
31 December
2007
2006
37,778)
76,272)
114,050)
16,962)
18,489)
35,451)
30,203
68,084
98,287
14,049
16,814
30,863
Less: finance expenses related to following
years
(15,763)
(4,588)
-
-
Present value of obligations finance leases:
98,287)
30,863)
98,287
30,863
Less: Payments within 12 months
(in short term payables)
30,203
14,049
Due beyond 12 months
68,084
16,814
It is the Group’s policy to lease some of its furniture, fixtures, and equipment under finance leases. The average lease term
is 4 years (2006: 4 years). For the year end 31 December 2007, the effective average borrowing rate was 3.27% (31
December 2006: 3.27%). Finance lease obligations currency type distribution was shown at Note: 29. The fair value of
the Group’s lease obligations approximates their carrying amount. There are guarantees of Tekfen Holding on all the fixed
assets acquired by these finance leases.
140
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
9.
RELATED PARTY TRANSACTIONS
The Group has various transactions with related parties during the course of its operations. Transactions between the
Company and its subsidiaries, which are related parties of the Company, have been eliminated in consolidation and are
not disclosed in this note.
As for the periods ended 31 December 2007 and 2006, details of its significant transactions with related parties are as
follow:
a) Due from/to related parties
Short Term
Related parties
Tekzen Paz. İth. İhr. İnş. Mlz. Yat. A.Ş.
Papfen Mersin Serbest Bölgesi
Tekfenbank
Tekfen Oz
Other
Participants in Joint Ventures
TÖT J.V.
Azfen J.V.
OIC J.V
NCC J.V.
NTY J.V.
Gate J.V.
Tekfen TML J.V.
Other
Related parties (*)
Key management personnel
Total
31 December 2007
Amounts
Amounts
owed by
owed to
31 December 2006
Amounts
Amounts
owed by
owed to
289
136
480
7,551
2,426
10,882
498
498
255
327
462
1,044
9
601
610
634
932
51
265
2,555
556
157
5,150
84
293
8
385
158
516
1,323
71
12,137
259
179
14,643
201
9,695
314
825
11,035
712
824
-
-
16,744
1,707
15,687
11,645
(*) Advances received by Tekfen Emlak for Bodrum Yalıkavak Residents Project. The project is planned to be completed by
July 2008.
Owed by and owed to balances are unsecured and will be settled in cash. No bad debt provision is made for balances owed
by related parties in the current year.
141
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
9.
RELATED PARTY TRANSACTIONS
b) Transactions within the year
1 January - 31 December 2007
Sales
Purchases
Participants in joint ventures
Gate J.V.
OIC J.V.
NCC J.V.
Tekfen TML J.V.
Other
3,772
5,109
30,771
2,347
815
42,814
12121212131
131
1 January - 31 December 2007
Sales
Purchases
Sales to Shareholders (*)
Key management personnel
5,680
-
1 January - 31 December 2006
Sales
Purchases
6,558
4,821
6,546
392
18,317
555554
54
1 January - 31 December 2006
Sales
Purchases
-
-
(*) Comprise of sales related to Bodrum Yalıkavak Residents.
Services Rendered
Related parties
Tekzen Paz. İth. İhr. İnş. Mlz. Yat. A.Ş.
Other
Participants in joint ventures
Azfen J.V.
Tekfen TML J.V.
NTY J.V.
Other
Financing Transactions
Participants in joint ventures
NTY J.V.
Gate J.V.
Other transactions
Tekfen Oz
142
1 January - 31 December 2007
Rent Income
Rent Expense
1 January - 31 December 2006
Rent Income
Rent Expense
360
44
404
-
203
16
219
-
1,069
599
33
577
2,278
-
825
180
52
1,057
-
1 January - 31 December 2007
Finance
Finance
Income
Expense
1,571,573
1,573
-
1 January - 31 December 2007
Other Income
Other Expense
429
-
1 January - 31 December 2006
Finance
Finance
Income
Expense
81
881
138
36138
1 January - 31 December 2006
Other Income
Other Expense
-
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
10. OTHER RECEIVABLES / PAYABLES
Other short term receivables (net)
Witholding tax of ongoing construction contracts
Business advances given
VAT receivables
Other receivables
Blocked deposits
Provision for blocked deposits (*) (Note: 35)
Prepaid taxes and funds
Advances given to personnel
VAT receivable arising from export sales
Other long term receivables (net)
VAT carried forward
Witholding tax of ongoing construction contracts
Other receivables
31 December
2007
31 December
2006
12,984)
8,769)
18,583)
4,768)
6,146)
(6,146)
9,185)
838)
306)
55,433)
23,396
12,640
17,322
8,145
3,694
300
2,470
67,967
31 December
2007
31 December
2006
57,236)
5,623)
-)
62,859)
56,393
5,207
134
61,734
(*) At the time of sale of its subsidiary Tekfenbank, the Group has invested 6,146 blocked deposit to Tekfenbank in return
of liabilities of Tekfenbank’s long term security Tümteks Tekstil Sanayi ve Ticaret A.Ş. (“Tümteks”) to Tekfenbank. According
to “Cash Commitment Agreement” between Tekfenbank and the Company, dated 30 May 2007, it is agreed that in case
of Tümteks’s bankruptcy, it’s exclusion from İstanbul Stock Exchange’s quotation, cancellation of Tümteks’s stock operations
on İstanbul Stock Exchange for an indefinite period or any loss of Tekfenbank regarding Tümteks stocks provided that the
loss does not exceed 6,146, the total amount of incurred loss will be collected by Tekfenbank A.Ş. from blocked deposit
account. As of the report date Tümteks has been transferred to trusteeand has (43,361) loss of net assets. Consequently,
provision is reserved for the blocked deposit stated above in the accompanying financial statements.
143
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
10. OTHER RECEIVABLES / PAYABLES (cont’d)
Other short term payables (net)
Due to Privatization Office (*)
Taxes and funds payable
Due to personnel
Social security witholdings
Dividend payable
Other payables
Social benefit payables to employees
Other long term payables (net)
Due to Privatization Office(*)
31 December
2007
31 December
2006
10,183
5,687
9,399
2,426
5,534
890
1,675
35,794
13,019
7,774
9,811
3,216
3,338
392
37,550
31 December
2007
31 December
2006
9,351
22,449
(*) Payable to Privatization Office is associated with the acquisition of Samsun Gübre Sanayi A.Ş. Samsun Gübre Sanayi A.Ş.
merged with Toros Gübre in 2005.
11. BIOLOGICAL ASSETS
None.
12. INVENTORIES (NET)
Raw materials
Work in process
Finished goods
Contract work in process (**)
Trade goods
Goods in transit and order advances given
Other inventories
31 December
2007
41,551
25,422
24,212
7,055
52,573
77,671
20,914
249,398
31 December
2006
26,745
29,529
27,027
16,159
64,120
54,119
18,400
236,099
(**) Inventories associated with the unsold houses consist of cost of land used for the construction and other costs related
with Tekfen Emlak Project are shown as inventory.
Cost of materials that have been delivered to contract site or set aside for use in a contract but not yet installed are included
in the inventory instead of cost of sales if the materials have not been manufactured specially for the contract (Note: 3.10).
144
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
13. CONSTRUCTION CONTRACTS
Construction contracts are presented in the accompanying consolidated balance sheets as follows:
Consruction cost incurred plus
Recognised profit less recognised losses to date
Less: progress billing
31 December
2007
1,856,187)
172,359)
2,028,546)
31 December
2006
1,935,957)
281,071)
2,217,028)
(1,809,984)
(2,073,080)
218,562)
143,948)
Costs and billings incurred on uncompleted contracts are as follows:
From customers under construction contracts
To customers under construction contract
31 December
2007
254,824)
(36,262)
218,562)
31 December
2006
205,903)
(61,955)
143,948)
As of 31 December 2007, total retention receivables amount to 16,385 (31 December 2006: 21,462).
Unbilled costs related to ongoing contracts are as follows:
Receivables from uncompleted contracts
Contracts undersigned abroad
Contracts undersigned in Turkey
Payables from uncompleted contracts
Contracts undersigned abroad
Contracts undersigned in Turkey
31 December
2007
31 December
2006
239,439)
15,385)
254,824)
144,314)
61,589)
205,903)
(36,262)
-)
(36,262)
(60,535)
(1,420)
(61,955)
218,562)
143,948)
The Group has 210,747 of advances received for contract projects (31 December 2006: 125,825) (Note: 21)
In the audit report dated 3 September 2007, regarding the Group’s consolidated financial statements as at 30 June 2007
it was indicated that there were news bulletins claiming that operations of the main employer of the Group’s joint ventures
in Kazakhstan namely Agip Kazakhstan North Caspian Operating Company N.V. (“Agip Kco”) were ceased for three months
due to legal disputes with Kazakhstan government regarding the Agip Kco’s violation of the environmental regulations
and damage given to environment, however these news bulletins were not confirmed by Agip Kco. In the subsequent period
there has been news in the press indicating that Agip Kco. And Kazakh government came to a resolution amount these
matters.
145
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
14. DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax
The Group recognizes deferred tax assets and liabilities based upon temporary differences arising between its financial
statements as reported for IFRS purposes and its statutory tax financial statements. These differences usually result in
the recognition of revenue and expenses in different reporting periods for IFRS and tax purposes.
31 December
2007
Components of deferred tax (assets) / liabilities:
Restatement and depreciation / amortization
differences of tangible and intangible assets
Provision for employment termination benefits
and vacation liability
Investment incentive
Contract costs and progress billings (net)
Obligations under finance leases
Provision for doubtful receivables
Effect of valuation
Effect of income accruals
Tax losses carried forward
Provision for tax losses carried forward
Available for sale investments
Provision for premium payments
Other
Deferred tax asset
Provision for deferred tax assets
Deferred tax asset
Deferred tax liability
Deferred tax asset movement
Opening balance
Effect of discontinued operations
Deferred tax expense (Note: 41)
Tax effect of available for sale investments
Currency translation effect
Closing balance
146
31 December
2006
2,722)
5,305)
(5,177)
(1,577)
39,041)
(3,583)
(5)
1,340)
900)
(45,141)
196)
2,165)
(291)
(5,700)
(15,110)
(4,262)
(892)
20,843)
(648)
(642)
(1,243)
3,006)
(46,094)
-)
2,074)
(359)
(638)
(23,550)
6,664)
(8,446)
12,450)
(11,100)
(39,385)
30,939)
(8,446)
(58,042)
46,942)
(11,100)
1 January 31 December
2007
1 January 31 December
2006
(11,100)
-)
2,598)
111)
(55)
(8,446)
(44,496)
5,107)
25,195)
2,066)
1,028)
(11,100)
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
15. OTHER CURRENT/NON-CURRENT ASSETS AND LIABILITIES
Other current assets
Prepaid expenses
Income accruals
Other non-current assets
Prepaid expenses
Other short-term liabilities
Expense accruals (*)
Deferred revenues
31 December
2007
31 December
2006
8,850
8,140
8,990
37,880
32,920
10,800
31 December
2007
31 December
2006
1,334
1,902
31 December
2007
31 December
2006
13,781
3,395
17,176
23,353
2,052
25,405
(*) In the current period, due to a delay in one of the construction contract the Group reserved for these delay penalties
amounting to 2,713 (2,329,589 USD) in the accompanying consolidated financial statements. (31 December 2006: 3,099
(2,201,493 USD).
16. FINANCIAL ASSETS (NET)
Available for sale investments
Group’s share on net assets of investments
in associates consolidated by equity method
31 December
2007
59,438
31 December
2006
60,607
84,282
143,720
60,607
147
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
16. FINANCIAL ASSETS (NET) (cont’d)
Details of available for sale financial assets are as follow:
Companies
Akmerkez Gayrimenkul Yatırım Ortaklığı A.Ş. (*)
Sinai ve Mali Yatırımlar Holding A.Ş.
Mersin Serbest Bölge İşleticisi A.Ş.
Hazera Toros Tohumculuk A.Ş. (**)
Other
Share
%
31 December
2007
Share
%
10.79
00.02
09.56
50.00
57,268)
2,861)
898)
1,597)
2,020)
64,644)
10.79
00.02
09.56
50.00
Less: Allowance for dimunition in value (-)
Hazera Toros Tohumculuk A.Ş.
Sinai ve Mali Yatırımlar Holding A.Ş.
Other
31 December
2006
55,051)
2,861)
898)
1,597)
2,401)
62,808)
(1,597)
(2,861)
(748)
(5,206)
(1,597)
-)
(604)
(2,201)
59,438)
60,607)
(*) Financial assets are carried at fair value; other financial assets are carried at cost less any impairment loss in the
accompanying financial statements.
(**) Hazera Toros is not included in the consolidation since the assets and liabilities of this company are deemed immaterial
taken the financial statements as a whole.
Listed available for sale investments are carried at quoted market prices. The difference of 41,975 (31 December 2006:
39,500) in the fair value of the listed available for sale investments traded in active markets is recognised directly in equity.
7,376 (31 December 2006: 7,757) of the above unlisted available for sale equity investments that do not have a quoted
market value and their fair values cannot be reliably measured as the range of reasonable fair value estimates is significant
and the probabilities of the various estimates can not be reasonably assessed.
Subsidiaries that are accounted with equity method and their summary financial information are as follows:
Tekfenbank
Tekfen Oz
31 December
2007
82,361
81,921
84,282
31 December
2006
-
31 December 2007
Tekfenbank
Tekfen Oz
Financial Position
Total assets
Total liabilities
Net assets
148
2,793,836
2,517,206
276,630
19,279
7,569
11,710
Share of the Group to Tekfenbank
29.13%
16.40%
Group’s share in assets
Effect of purchased Tekfenbank shares in 2007
Total
80,582
1,779
82,361
1,921
1,921
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
16. FINANCIAL ASSETS (NET) (cont’d)
Tekfenbank (*)
Tekfen Oz
1 January - 31 December 2007
Net profit / (loss) realized
Group’s share in net
for the period 2007
profit / (loss) (Note: 38)
29,616)
8,628)
(1,005)
(165)
8,463)
(*) Sale of 70% share of Tekfenbank has occurred on 16 March 2007. After this date, the Group consolidated Tekfenbank
based on the net profit for the period between 16 March 2007 and 31 December 2007 with equity method in the
accompanying financial statements.
17. POSITIVE/NEGATIVE GOODWILL (NET)
None.
18. INVESTMENT PROPERTY (NET)
As of 31 December 2007 and 31 December 2006, details of investment properties are as follows:
Land and Land
Improvements
Building
Total
Cost
Opening balance as of 1 January 2007
Currency transaction difference
Transfers
Closing balance
2,583
165
2,748
133,553)
-)
(1,016)
132,537)
136,136)
165)
(1,016)
135,285)
Accumulated Depreciation
Opening balance as of 1 January 2007
Charge for the year
Closing balance
-
(16,270)
(3,052)
(19,322)
(16,270)
(3,052)
(19,322)
2,748
113,215)
115,963)
Carrying value as of 31 December 2007
149
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
18. INVESTMENT PROPERTY (NET) (cont’d)
Land and Land
Improvements
Building
Total
Cost
Opening balance as of 1 January 2006
Currency transaction difference
Reclassification to discontinued operations
Disposals
Transfers
Closing balance
2,339
244
2,583
144,884)
-)
(12,346)
(470)
1,485)
133,553)
147,223)
244)
(12,346)
(470)
1,485)
136,136)
Accumulated Depreciation
Opening balance as of 1 January 2006
Reclassification to discontinued operations
Depreciation charge for the year
Closing balance
-
(13,507)
1,089)
(3,852)
(16,270)
(13,507)
1,089)
(3,852)
(16,270)
2,583
117,283)
119,866)
Carrying value as of 31 December 2006
Investment property includes buildings over rental income earned and lands that are hold for the investment purposes.
Useful life of investment property is 50 years.
For the year ended 31 December 2007 total rental income earned from investment properties is 7,170 (31 December
2006: 9,225) and depreciation charge calculated for the year end 31 December 2007 is 3,052 (31 December 2006: 3,852).
Direct operating expenses arising on the investment properties in the period amounted to 2,835.
The fair value of the Group’s investment property at 31 December 2007 has been arrived based on a valuation carried out
at that date by TSKB Gayrimenkul Degerleme A.Ş. (“TSKB Gayrimenkul”) independent expertise not connected with the
Group. The valuation was arrived at by reference to market evidence of transaction prices for similar properties. The fair
market value of the investment properties is 262,937 according to the valuation carried out by TSKB Gayrimenkul.
150
151
237,200)
(19,418)
16,310)
5,395)
(8,906)
-)
(1,327)
229,254)
(33,435)
2,423)
(8,850)
581)
(39,281)
189,973)
203,765)
Accumulated Depreciation
Opening balance as of 1 January 2007
Currency transaction effect
Charge for the year
Disposals
Closing balance as of 31 December 2007
Carrying value as of 31 December 2007
Carrying value as of 31 December 2006
126,012)
184,120)
(850,749)
73,386)
(33,309)
5,316)
(805,356)
976,761)
(80,724)
24,764)
71,358)
(5,795)
-)
3,112)
989,476)
Machinery &
equipment
12,234)
6,468)
(28,255)
4,067)
(4,603)
5,361)
(23,430)
40,489)
(5,685)
2,858)
-)
(7,764)
-)
-)
29,898)
Vehicles
The amount of mortgage on buildings is 8,354.
Property, plant and equipment include fixed assets with carrying value of 104,025 purchased through financial lease.
104,913)
90,489)
(123,514)
5,269)
(7,119)
3,133)
(122,231)
228,427)
(9,946)
1,258)
-)
(8,059)
1,016)
24)
212,720)
Land & land
improvements
Buildings
19. PROPERTY, PLANT AND EQUIPMENT (NET)
Cost Value
Opening balance as of 1 January 2007
Currency transaction effect
Additions
Tangible assets acquired through finance leases
Disposals
Transfers from investment property
Transfers
Closing balance as of 31 December 2007
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
12,770)
11,606)
(66,495)
10,467)
(5,314)
1,657)
(59,685)
79,265)
(12,017)
6,000)
-)
(2,157)
-)
200)
71,291)
Furniture
& fixtures
21,645)
39,995)
(1,498)
-)
(60)
8)
(1,550)
23,143)
(205)
20,628)
-)
(12)
-)
(2,009)
41,545)
Construction
in progress &
other tangible
assets
67,054)
63,808)
(48,001)
628)
(3,218)
306)
(50,285)
115,055)
(678)
33)
-)
(317)
-)
-)
114,093)
Leasehold
improvements
548,393)
586,459)
(1,151,947)
96,240)
(62,473)
16,362)
(1,101,818)
1,700,340)
(128,673)
71,851)
76,753)
(33,010)
1,016)
-)
1,688,277)
Total
152
203,765)
159,443)
Carrying value as of 31 December 2006
Carrying value as of 31 December 2005
119,150)
104,913)
(114,801)
(6,669)
1,214)
(104)
(5,514)
2,360)
(123,514)
76,864)
126,012)
(824,512)
(20,345)
-)
(18)
(23,482)
17,608)
(850,749)
26,039)
976,761)
901,376)
24,839)
-)
370)
13,890)
29,321)
(19,074)
-)
Machinery &
equipment
13,198)
12,234)
(26,368)
(913)
2,327)
-)
(4,572)
1,271)
(28,255)
141)
40,489)
39,566)
1,480)
(2,890)
-)
3,548)
-)
(1,356)
-)
Vehicles
The amount of mortgage on buildings is 8,779.
Property, plant and equipment include fixed assets with carrying value of 38,316 purchased through financial lease.
(26,589)
(349)
-)
-)
(6,667)
170)
(33,435)
Accumulated Depreciation
Opening balance as of 1 January 2006
Currency transaction effect
Reclassification to assets held for sale
Effect of liqudation
Charge for the year
Disposals
Closing balance as of 31 December 2006
557)
228,427)
186,032)
7,409)
-)
-)
46,620)
-)
(2,861)
-)
-)
237,200)
233,951)
10,961)
(20,380)
2,113)
5,501)
-)
(2,791)
(1,485)
Land & land
improvements
Buildings
Transfers
Closing balance as of 31 December 2006
19. PROPERTY, PLANT AND EQUIPMENT (NET) (cont’d)
Cost Value
Opening balance as of 1 January 2006
Currency transaction effect
Reclassification to assets held for sale
Effect of liqudation
Additions
Tangible assets acquired through finance leases
Disposals
Transfers from investment property
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
8,795)
12,770)
(73,062)
(2,909)
9,450)
(1)
(3,548)
3,575)
(66,495)
149)
79,265)
81,857)
3,306)
(11,449)
11)
9,357)
-)
(3,966)
-)
Furniture
& fixtures
35,939)
21,645)
(8,536)
-)
7,184)
-)
(146)
-)
(1,498)
(26,886)
23,143)
44,475)
24)
(7,735)
-)
14,124)
-)
(859)
-)
Construction
in progress &
other tangible
assets
71,297)
67,054)
(60,322)
(157)
15,243)
-)
(2,773)
8)
(48,001)
-)
115,055)
131,619)
176)
(16,860)
-)
128)
-)
(8)
-)
Leasehold
improvements
484,686)
548,393)
(1,134,190)
(31,342)
35,418)
(123)
(46,702)
24,992)
(1,151,947)
(1,485)
-)
1,700,340)
1,618,876)
48,195)
(59,314)
2,494)
93,168)
29,321)
(30,915)
Total
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
20. INTANGIBLE ASSETS (NET)
Cost Value
Opening balance as of 1 January 2006
Reclassification to assets held for sale
Currency translation effect
Additions
Disposals
Closing balance as of 31 December 2006
Rights
Other
intangible
assets
Total
15,188)
(11,77 1)
66)
4,115)
(117)
7,481)
2,416)
-)
124)
13)
-)
2,553)
17,604)
(11,771)
190)
4,128)
(117)
10,034)
Currency translation effect
Additions
Disposals
Closing balance as of 31 December 2007
(650)
2,070)
-)
8,901)
(75)
13)
(665)
1,826)
(725)
2,083)
(665)
10,727)
Accumulated Amortization
Opening balance as of 1 January 2006
Reclassification to assets held for sale
Currency translation effect
Charge for the year
Disposals
Closing balance as of 31 December 2006
(11,810)
10,281)
(13)
(2,202)
117)
(3,627)
(1,363)
-)
(109)
(732)
-)
(2,204)
(13,173)
10,281)
(122)
(2,934)
117)
(5,831)
Currency translation effect
Charge for the year
Disposals
Closing balance as of 31 December 2007
280)
(1,415)
-)
(4,762)
59)
(192)
665)
(1,672)
339)
(1,607)
665)
(6,434)
Carrying value at 31 December 2007
4,139)
154)
4,293)
Carrying value at 31 December 2006
3,854)
349)
4,203)
Carrying Values
21. ADVANCES RECEIVED
The Group’s advances received amounts comprise of advances received related to contracts undertaken in Turkey and
abroad.
Short term advances received
Advances received from construction contracts
Other advances received
Long term advances received
Advances received from construction contracts
31 December
2007
31 December
2006
172,398
24,168
196,566
104,196
8,049
112,245
38,349
38,349
21,629
21,629
153
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
22. PENSION PLANS
The Group has no liabilities regarding pension plans.
23. PROVISIONS
a) Short term provision:
31 December
2007
Provision for litigation (Note: 31)
Corporate tax payable (Note: 41)
Retirement pay provision
Premium provision
Other provisions
14,358)
22,782)
1,054)
7,610)
66)
45,870)
31 December
2006
11,172)
290)
868)
1,801)
98)
14,229)
Movement of provision for litigation is as follows:
1 January 31 December
2007
Balance at the beginning of the year
Provision paid (-)
Charge for the year
Provision released
Currency translation effect
Balance at the end of the year
11,172)
(703)
4,866)
(635)
(342)
14,358)
1 January 31 December
2006
8,001)
(231)
3,056)
-)
346)
11,172)
Movement of premium provision is as follow:
1 January 31 December
2007
Opening balance
Provisions paid
Charge for the period
Currency translation effect
Closing balance
1,801)
(1,801)
8,179)
(569)
7,610)
1 January 31 December
2006
-)
-)
1,831)
(30)
1,801)
b) Details of long term provision are as follow:
31 December
2007
Provision for retirement payment
154
27,748)
31 December
2006
24,669)
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
23. PROVISIONS (cont’d)
Retirement Pay Provision
Under the Turkish Labour Law, the Group is required to pay employment termination benefits to each employee who has
qualified for such benefits. In addition, employees are required to receive their retirement pay provisions that are entitled
to receive retirement pay provisions in accordance with Law numbered 2422, dated 6 March 1981, numbered 4447,
including the amended Article 60 of the related Law.
The amount payable to the employee consists of one month worth salary limited to a maximum of 2,087.92 (31 December
2006: 1,960.69) for each period of service at 31 December 2007.
The liability is not funded, as there is no funding requirement.
The provision is calculated by estimating the present value of the future probable obligation of the Group arising from the
retirement of the employees (not applicable for employees who are working in construction projects). IAS 19 (“Employee
Benefits”) requires actuarial valuation methods to be developed to estimate the Group’s obligation under defined benefit
plans. Accordingly, the following actuarial assumptions are used in the calculation of the total liability.
The principal assumption is that maximum liability for each year of service will increase in line with inflation. Thus, the
discount rate applied represents the expected real rate after adjusting for the anticipated effects of future inflation.
Consequently, in the accompanying consolidated financial statements as of 31 December 2007, provision is calculated
by estimating the present value of the future probable obligation of the Group arising from the retirement of the employees.
Provisions at the respective balance sheet were calculated assuming an annual inflation rate of 5% and a discount rate of
11%, the real discount rate is approximately 5.71% (31 December 2006: real discount rate of 5.71%). The anticipated
rate of forfeitures is also considered.
Movement of retirement pay provision is as follows:
Opening balance
Reclassification to liabilities classified as held for sale
Currency translation effect
Service expense
Interest expense
Termination benefits paid (-)
Closing balance
Short-term retirement pay provision
Long-term retirement pay provision
1 January 31 December
2007
1 January 31 December
2006
25,537)
-)
(1,685)
8,530)
1,176)
(4,756)
28,802)
25,944)
(2,162)
478)
9,499)
1,309)
(9,531)
25,537)
31 December
2007
31 December
2006
1,054)
27,748)
28,802)
868)
24,669)
25,537)
155
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
24. MINORITY INTEREST
As of 31 December 2007 and 2006, the movement of minority interest is as follows:
Opening balance
Currency translation effect
Minority shares of the discontinued operations
Effect of sale of a subsidiary (Note: 35)
Payment of dividend (-)
Minority share on operating results of the year
Closing balance
1 January 31 December
2007
1 January 31 December
2006
19,227)
(2,129)
-)
(1,967)
-)
633)
15,764)
18,412)
1,317)
226)
-)
(215)
(513)
19,227)
25. SHARE CAPITAL
The structure of the share capital as of 31 December 2007 and 2006 is as follows:
(%)
Shareholders
Necati Akçağlılar
Feyyaz Berker
Ali Nihat Gökyiğit
Ali Nihat Gökyiğit Yat. Hold. A.Ş
Cansevil Akçağlılar
Alev Berker
Erhan Öner
Ali Nihat Gökyiğit Eğitim Sağlık Kültür
Sanat ve Doğal Varlıkları Koruma Vakfı
Abdurrahman Günay Ünlüsoy
Naim Özkazanç
Mehmet Necdet Bozdoğan
Öner Yatırım İç ve Dış Tic. A.Ş.
Erktin family
Publicly traded
31 December
2007
(%)
31 December
2006
16.88
16.88
8.73
8.67
2.43
2.43
2.17
50,066
50,066
25,883
25,758
7,223
7,223
6,424
25.76
25.76
15.82
11.20
3.72
3.71
3.48
26,786
26,786
16,450
11,647
3,865
3,865
3,622
1.90
1.30
1.13
1.11
0.76
1.11
34.50
100.00
5,649
3,849
3,380
3,316
2,234
3,317
102,387
296,775
2.45
1.98
1.74
1.71
0.97
1.70
0.00
100.00
2,554
2,059
1,808
1,774
1,010
1,774
104,000
In accordance with the Board of Director’s, decision No: 454 dated on 29 May 2007, the Company has increased its capital
by 126,000 from 104,000 to 230,000. The portion amounting to 31,413 of the increase was made through transfer from
inflation adjustment funds, the portion amounting to 2,576 of the increase was transferred from other funds and the
portion amount as 92,011 was from the profits of property and subsidiary sales.
The Company restricted existing shareholders rights to buy new shares and made a capital increase by 66,775, this
increased capital is offered to public. The Companies legal capital was announced at 219 numbered Trade Registry
Gazette in 26 November 2007.
Registered and issued capital comprises 296,775,000 shares at 1 TRY par value. All these shares consist of bearer
common shares.
156
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
25. SHARE CAPITAL (cont’d)
Group, reserves 5% of the historical statutory profit as first legal reserve, until the total reserve reaches 20% of the
historical paid in share capital. From the remaining statutory profit, 30% of the paid capital is distributed as first dividend
to the holders on the condition that rates and amounts are not less then rates and amounts applied by CMB. Also at least
3% of remaining profit is distributed to Tekfen Eğitim Sağlık Kültür Sanat ve Doğal Varlıkları Koruma Vakfı which has
redeemed share.
26. CAPITAL RESERVES
31 December
2007
Premium in excess of par
Fair value reserve of financial assets (*)
Revalution fund (**)
Inflation adjustment on equity
- Inflation adjustment on share capital
- Inflation adjustment on reserves
31 December
2006
301,839
41,975
585
39,500
3,128
3,475
59,385
407,259
3,475
90,798
136,901
(*) Fair value reserve of financial assets consists of changes in fair value of securities held for sale.
(**) Revaluation fund comprise revaluation of fixed assets funds of Tekfenbank.
27. PROFIT RESERVES
31 December
2007
Legal reserves
Extraordinary reserves
3,560
75,604
79,164
31 December
2006
10,615
67,926
78,541
According to the Turkish Commercial Code, legal reserves consist of first and second legal reserves. The first legal reserves,
appropriated out of historical statutory profit at the rate of 5% per annum, until the total reserve reaches 20% of the
historical paid in share capital. The second legal reserve is appropriated after the first legal reserves and dividends, at the
rate of 10% per annum of all cash dividend distributions. Legal reserves can be offset against retained earnings, however;
they can not be subject to profit distribution.
28. RETAINED EARNINGS/(ACCUMULATED LOSSES)
As of 31 December 2007, retained earnings of the Group amount to 182,295 (As of 31 December 2006: 221,043).
157
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
29. FOREIGN CURRENCY POSITION
As of 31 December 2007 and 2006, foreign currency position posisiton of the Group stated in TRY is as follows:
Cash and cash equivalents
Trade receivables
Due from related parties
Receivables from ongoing construction assets
Sub-total
USD
108,623)
103,879)
12,268)
135,444)
360,214)
31 December 2007
EUR
Other
15,592
4,297
24,726
133,724
153
1,392
8,595
110,785
49,066
250,198
Total
128,512)
262,329)
13,813)
254,824)
659,478)
Bank loans
Finance lease payables
Trade payables
Due to related parties
Sub-total
278,404)
74,757)
191,220)
1,322)
545,703)
18,151
4,317
13,220
35,688
25,499
12,303
94,637
92
132,531
322,054)
91,377)
299,077)
1,414)
713,922)
(185,489)
13,378
117,667
(54,444)
31 December 2006
EUR
Other
44,716
39,356
22,412
94,156
201
6,247
59,113
175,522
1,509
248,897
194,335
Total
193,345)
264,650)
15,029)
173,417)
404,416)
1,050,857)
508,580)
25,947)
206,625)
10,184)
276,069)
1,027,405)
41,443
32,629
174,268
248,340
40,456
4,533
113,694
690
1,563
160,936
590,479)
30,480)
352,948)
10,874)
451,900)
1,436,681)
(419,780)
557
33,399
(385,824)
Cash and cash equivalents
Marketable securities (net)
Turkish Central Bank account
Loans and loaned securities
Finance lease receivables (net)
Assets classified as held for sale
USD
74,307)
11,096)
-)
138,380)
3,602)
227,385)
31 December 2006
EUR
Other
69,460
1,329
28,368
72,133
180
5,561
175,522
1,509
Total
145,096)
11,096)
28,368)
210,693)
9,163)
404,416)
Bank loans (net)
Deposits
Liabilities classified as held for sale
55,917)
220,152)
276,069)
51,293
122,975
174,268
107,243)
344,657)
451,900)
Net foreign currency position
Cash and cash equivalents
Trade receivables
Due from related parties
Receivables from ongoing construction assets
Assets classified as held for sale
Sub-total
Bank loans
Finance lease payables
Trade payables
Due to related parties
Liabilities classified as discontinued operations
Sub-total
Net foreign currency position
USD
109,273)
148,082)
14,828)
108,057)
227,385)
607,625)
Details of foreign currency position from discontinued operations are as follow:
158
33
1,530
1,563
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
30. GOVERNMENT GRANTS AND INCENTIVES
Tekfen Construction hasa tax incentive on the Baku Tbilisi Ceyhan project in accordance with the 9th article of the appendix
2 “Hosting Country Agreement between the Turkish Government and MEP participants” which is an integral part of the
“Agreement between Turkish Government, Azerbaijan Government and Georgia Government regarding the
transportation of petroleum over Azerbaijan, Georgia and Turkey with Baku Tbilisi Ceyhan main export pipeline”
(Agreement between the governments) which took effect with the council of ministers numbered 2000/1127 and
approved with the law 4585 and announced in the official gazette dated 10 September 2000 numbered 24166.
The contracting segment has a tax incentive on project of NTY, the joint venture of Tekfen İnşaat and Yüksel İnşaat A.Ş.,
“Karadeniz Perşembe Bolaman shore highway” in accordance with the “Creation of Employment and Incentives for
Investments in the State of Emergency And Priority Areas For Development” dated 21 January 1998 and numbered 4325
and “Law about the Change in The Income Tax Law” numbered 193.
The contracting segment has a tax incentive regarding the section 2 article 2.9 (Taxes And Contract Registration Section)
caption 3 of the agreement between Titaş and Tekfen TML J.V. for the construction of Kufra- Tazerbo water channel project
in Libya dated 6 June 2006.
The contracting segment has a tax incentive on Sangachal ACG Terminal and PCWU Topside platform construction in
Azerbaijan in accordance with the agreement, which was promulgated as a law on 18 December 1998 between Titaş and
Azerbaijan Rebuplic Petroleum Company and signed on 20 July 1998.
Tanger-Lechbaa highway carried by Tekfen Construction Morocco Branch has 50% tax incentive in accordance with the
Morocco investment incentive law. Furthermore, the Tekfen Inşaat Morocco branch has a VAT incentive due to the same
law.
The Undersecretaries of Treasury and Foreign Trade of Turkey has given taxes and dues incentive for the contracts
undertaken by Tekfen Construction and its joint ventures. These contracts are as follows:
•
•
•
•
•
Morocco- Tanger - Lechbaa Highway Contract - extended till September 2008.
Ankara - Pozantı Highway (Çiftehan - Pozantı Section) Project - extended till August 2008.
Perşembe - Bolaman Highway contract - Extended till December 2008.
Afşin - Elbistan Thermal Power Plant Contract - Extended till June 2008.
Azerbaijan Shah Deniz Gas Export Contract On shore works, pipeline and tank construction contract - extended till
October 2008.
• Azerbaijan PCWU Platform construction - Extended till March 2010.
• Bursa Light Rail System - Extended till June 2008.
Tekfen Emlak has taken a tourism investment certificate on 28 June 2007 from ministry of culture and tourism and applied
to Republic of Turkey Prime Ministry Undersecretaries of Treasury in order to benefit from the law numbered 2634 about
“incentive for tourism investments” article 16 (The companies that take tourism incentive certificate pay the company’s
electricity, gas and water fees in the lowest fees of the region.) for the construction of a Boutique hotel within Tekfen
Yalıkavak Tekfen Evleri contract at 21 August 2007. At 29 August 2007 this application is approved.
Toros Tarım and Toros Enerji within Toros Group have an investment incentive certificate. Toros Tarım has taken two
investment incentive certificates for the extension of the steel grain elevators in Adana-Seyhan and İzmir-Torbalı. The
investment incentive certificate dated 23 June 2005 covers the investment amounting to 1,390 to be financed by the
entities internal sources for the extension from 50,000 ton/year to 70,000 ton/year of the grain elevator in İzmirTorbalı. The investment incentive certificate dated 9 June 2005 covers the investment amounting to 1,526 to be financed
by the entities internal sources for the extension from 20,000 ton/year to 40,000 ton/year of the grain elevator in
Adana Seyhan. The group has 100% custom tax and VAT incentive for both of these investments. Toros Group has 2,134
unutilized investment incentives, which expires in 2008.
159
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
30. GOVERNMENT GRANTS AND INCENTIVES (cont’d)
Toros Enerji has taken investment incentive certificates for its electricity and steam production investments in AdanaCeyhan. Investment incentive certificate dated 22 September 1997 covers the investment for the electricity and steam
production with capacities 36,700 mwh/year and 82,000 ton/ year respectively.
Investments in Mersin amount to 796, which will be financed by internal sources amounting to 239 and 557 from external
borrowings. The other investment incentive certificate covers the investment for the electricity and steam production with
capacities 36,200 mwh/year and 82,000 ton/year respectively.
Investments in Ceyhan amount to 680, which will be financed by capital amounting to 204 and the remainder from external
borrowings. The investment incentives of Toros Enerji comprise 100% customs, 100% taxable investment incentive
deduction, and 100% VAT deduction. The company has tax deductible investment incentives amounting to 11,753 out of
which 2,642 were used.
31. COMMITMENTS AND CONTINGENCIES
31 December
2007
Letters of guarantee given
Letters of credit
Mortgages
Provisions, contingent assets and
liabilities from discontinued operations
31 December
2006
665,625
128,067
8,354
548,142
203,337
8,779
802,046
539,871
1,300,129
Contractual Obligations
Defects Liability
Based on the agreements signed with customers, the Group ensures to maintain its contract operations until the end of
guarantee period and undertake the construction, maintenance, and general maintenance of related assets for two years.
In case the customer determines any defects subsequent to the provisional acceptance of the contract, the Group is obliged
to remedy the defect.
Penalty of Default
Based on the agreements signed with the customers, if the Group fails to complete in full or partially its contract operations
within the determined period, it shall pay penalty amount for such defaults to its customers.
Tax inspections
In the Saudi Arabia Branch, the Department of Zakat and Income Tax (“DZIT”) has issued its final tax assessment for the
years 2003, 2004, and 2005. Based on this assessment, there is an additional tax liability from the Saudi Arabia Branch
amounting to 5,324 thousand USD (Saudi Arabia Riyal 19,963,924). Saudi Branch has submitted an objection on this
assessment with the Appeal Committee. Management believes that the DZIT’s claim is without merit and the Appeal
Committee decision will ultimately be to their favour. As the claim revenue has not been yet collected by the branch,
consolidated financial statements of the Group did not include this claim and accordingly, no provision for tax charge was
provided in the accompanying financial statements.
160
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
31. COMMITMENTS AND CONTINGENCIES (cont’d)
Litigations
Based on the decision taken by the Board of Competition of Republic of Turkey, a case was filed against Toros Gübre on 4
June 2000. This court case was finalized on 13 February 2002 and a penalty was charged amounting to approximately
2,563 against the company. The penalty is denominated in Turkish Lira and does not bear any interests. Toros Gübre
objected to the decision of the Board of Competition and has filed a case for the suspension of execution on 27 April
2004 in 10th department of the Council of State. The council decided to reconsider this application, legal situation, and
disagreement under the legal framework after receiving the defendant Board’s response to the allegation including the
related information and documents attached therein as of 2 June 2004. The defendant’s (Board of Competition) response
to the allegation was submitted and the judicial document was sent to the Council of State prosecutor for the suspension
of execution. Toros Gübre is still applying for an appeal against the Board of Competition. Based on the examination
performed collected and accrued penalties have been withdrew. Although the refundment process has started, tax
administration will make the refund after the act of refundment received. Since the case has not arrived to final decision,
2,451 provisions are provided in the accompanying consolidated financial statements.
Republic of Turkey Prime Ministry Undersecretaries of Treasury filed a lawsuit against Toros Tarım for violation of coastline.
The related case which was subject to violation was related to the Group’s land plot no: 3713 in Tekkeköy, Samsun and
the reason for legal grounds of this case was based on the violation of 75,000 square meters of coastline by the Group’s
land having a total of 452,814 square meters. Court granted an injunction in order to prevent sale of the land and final
decision of administrative court has not arrived. The occasion is taken into consideration in the calculation of goodwill
during the recognition of Samsun Gübre acquisition and no provision booked.
Moreover, Botaş A.Ş. file a claim to Toros Tarım related with the expropriation of the lands which are located in Mersin.
However, the Group management does not consider any risk for this and other claims therefore, no provision has been
recorded for the related legal claims as 31 December 2007 in accompanying consolidated financial statements.
On 21 July 2006, Samsun Municipality (the “Municipality”) sent a notice to the Company stating that the Facility’s business
has to be halted since necessary operating licenses had not been acquired as of that date. The Company has objected to
this declaration promptly stating the reasons. Upon these objections, the Municipality sent a notice on September 12,
2006 to the Company, noting that the Company shall have a six-month period to complete the license procedures and
act towards averting environmental pollution in the meantime. Close to the due date, the Company has requested another
six-month extension to resolve this issue. In this request, the Company also noted that since the facility is located on a
land that is considered (2)(b) land (i.e., land subject the article to (2)(b) of the Forestry Law), it has no authorization for
improving or developing the Facility area. The Company’s request for the second six-month extension had been accepted
on 20 March 2007 by the Municipality.
However, during the inspection of the Ministry of Interior on Samsun Municipality on 23 October 2007, the Ministry of
Interior Inspectors had noted that the delaying procedure of the closing down decision was not within the authority of
the Municipality. Therefore, the Municipality has decided to close down the operations and sent a notice to the Company
for this effect on 6 November 2007. The Company filed a claim against the Municipality’s decision of closing down on 27
November 2007. The Samsun 2nd Administrative Court has declared a stay of execution of the Municipal Decision on 6
December 2007 stating that decision of closing down had been temporarily delayed until the Municipality files its response.
However, at 12 March 2008 the Court has refused the demand for stay of execution of the Group. The Company Management
considers the closing down decision of Samsun Facilities is highly remote. Therefore, the indistinctness of the judicial process
is still existing as of date of report. Therefore the Group has not reserved for the aforementioned cases in the accompanied
financial statements.
161
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
31. COMMITMENTS AND CONTINGENCIES (cont’d)
Litigations (cont’d)
As of balance sheet date a lawsuit adducing that Toros Terminal has mixed its petroleum with fuel oil was opened against
Toros Terminal. The case amounts USD 1,728,636 as of balance sheet date, and because The Company Management
considers the case is highly remote therefore accompanying consolidated financial statements do not include any provision
related to this issue.
2,592 of provision amount was set for the restitution of employment case filed by former employees of Samsun Gübre
before its privatization against the Toros Group and 1,521 of provision was made for the case filed against Toros Enerji in
accordance with amended Article 4 (c) of the Turkey Radio and Television Corporation Revenues Law No: 4397 on 6 July
1999.
Other than those significant lawsuits mentioned above, 7,794 of provision have been made for other legal cases.
Information gathered from the Group lawyers related to the amounts and current proceedings of cases above have been
examined, and provisions 14,358 (2006: 11,172) have been recorded as of the balance sheet date (Not: 23). These
provisions are the most likely outcome and calculated by using the probability ratio on the potential outflow amount of
resources. No provision is provided for remaining 22,183 (31 December 2006: 9,051) by management as it is not likely
to require an outflow of resources from The Group after providing provision for the high probable cases according to
judgements of the lawyers.
Mortgages
In addition, as of 31 December 2007, the Group has USD 24,191 thousand (28,175 TRY thousand) letters of guarantee
and EUR 3,011 thousand USD 3,205 thousand mortgage in consideration of its bank loans (31 December 2006: USD
40,503 thousand (52,840 TRY thousand) of letters of guarantee; EUR 3,011 thousand, (5,575 TRY thousand) and 8,779
mortgage).
Commitments based on buyback agreement
The Bank shall undertake to transfer, at the option of Holding, the property subject to a lease agreement dated 22
December 2003 between the Bank (as Lessee) and BNP-Ak-Dresdner Finansal Kiralama A.Ş. (as Lessor) (the “Lease
Agreement”) for the Tekfen Tower floor number: Tower 21 Independent Part: 28, Tower 22 Independent Part: 29, Tower
23 Independent Part: 30 and Tower 24 Independent Part: 31. According to this agreement, 21, 22., 23. and 24. Floors
in the Tekfen Tower, which are owned by the Lessor, are leased to the Bank for a period of four years to be renewed with
the written approval of the Lessee and with the option to purchase at the end of the lease period by paying USD 1000 to
buy estates. In addition, they make purchase agreement about immovable property for the benefit of company at 16 March
2007. Upon the agreement, Tekfenbank can use purchase right in earliest in one month and in latest on 31 July 2010
following the date of purchase of the Tekfen Tower Estate. The Company shall undertake, upon the request of the Bank,
to execute a lease agreement with the Bank regarding the Tekfen Tower Estate to be effective immediately upon its
transfer to the Company. Purchase value is USD 11.9 million and will be paid in cash or in full to the bank account of
Eurobank EFG Holding (Luxembourg) S.A. (“EFG Eurobank”) or other bank account that declared before at the latest date
of purchase right that used. After Purchase right is used in proper conditions, purchase value is paid, Tekfenbank transfer
the title deed of property to the company, and the company will take over. When Tekfenbank did not want to conclude the
rent contracts, after ownership of property are transferred to Holding, the bank will implement process for discharging the
property and placed property in twelve months following transfer of the property.
162
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
31. COMMITMENTS AND CONTINGENCIES (cont’d)
Rights and Commitments Based on Share Purchase Agreement
Call option to EFG Eurobank; put option to Tekfen Holding and TST Finance given pursuant to share purchase agreement,
which was signed in 16 March 2007 between the Company, TST Finance (both of the companies are “Tekfen Shareholders)
and EFG Eurobank.
At any time between the seventh (7th) anniversary and the tenth (10th) anniversary of the signing of this Agreement,
EFG Shareholders will have the right to exercise, by delivery of a written notice (“Call Notice”), a call option to purchase
at the Exercise Price, in one transaction, all of the shares then by all Tekfen Shareholders (“Call Shares”). The Exercise
Price applicable to the sale of Call Shares shall be paid in USD and will be higher of the followings:
1. USD 72,5 million plus positive or negative difference of net asset value multiply 28.2% plus 5% yearly accepted pay
back amount for the period between such value’s closing and option’s using date,
2. Lower of the followings:
(a) Expenses occurred during additional Bank Shares purchases by Tekfen Shareholders from third parties or;
(b) Cost per share plus positive or negative difference of net asset value for all types of corporate transactions per share
(stock splits, reverse stock splits, capital increase etc.), plus 5% accepted pay back amount for the period between
such amount’s purchase date and option’s using date.
At any time between the fifth anniversary and the tenth anniversary of the signing of this Agreement, Tekfen Shareholders
shall be entitled to sell at the Exercise Price, in one transaction, all of the Shares then held by all Tekfen Shareholders (“the
Put Shares”), to the EFG Shareholders, by delivery of a written notice stating their intent to exercise such entitlement (a
“Put Option”), such sale to be in accordance with this Section. The exercise Price applicable to the sale of the Put Shares
shall be determined pursuant to the awards above and shall be paid in cash in USD.
Furthermore, based on Share Purchase Agreement in Share Transfer Article it is stated that the shareholders shall not
sell their shares to third parties by way of public offering or special purpose sale for the five years from the agreement date
however, it is excluded that one of the shareholder or both can sell or transfer whole amount or a portion of their shares
to a subsidiary of the Group.
Others
The financial, economic, and social policies of the different countries in which the Group has operations may affect the
Groups operations in these countries. As of 31 December 2007 and 31 December 2006, management of the Group
believes that there are no significant financial or political matters that will affect the accompanying consolidated financial
statements.
32. BUSINESS COMBINATIONS
None.
163
164
22,464)
2,974)
19,490)
90,730)
(20,641)
111,371)
(67)
4,985)
(4,154)
15,510)
111,438)
(81,768)
95,097)
(598,189)
175)
176,865)
Agriculture
774,879)
136,663)
2,371)
913,913)
15,735)
(4,029)
19,764)
5)
345)
-)
5,699)
19,759)
(818)
13,715)
(32,473)
-)
14,533)
(4,561)
(4,197)
(364)
(31)
10,290)
(952)
(734)
(333)
(25,164)
(8,937)
(40,257)
12,475)
16,227)
1 January - 31 December 2007
Real
Estate
Other
47,006)
44,009)
9)
7,574)
2,337)
5,951)
49,352)
57,534)
The Group has 38,510 of revenue and 13,387 of operating income from terminal operations classified as agricultural operation in 2007.
Net Profit / (Loss) for the Period from Continuing Operations
Taxation
Profit / (Loss) Before Taxation
(540)
10,737)
(9,903)
(11,024)
20,030)
Other income/profit
Other expenses/losses
Finance income/(expense) (net)
Operating Profit / (Loss)
Minority Interest
(44,199)
30,220)
(955,019)
-)
74,419)
Contracting
1,029,438)
119,080)
744)
1,149,262)
Operating expenses
Operating Profit / (Loss)
Cost of Sales
Income from other operations
Gross Profit
Revenue
Intra-segment sales
Inter-segment sales
Revenue
a) Segmental results
33. SEGMENTAL REPORTING
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
-)
Eliminations
-)
(263,326)
(11,403)
(274,729)
124,368)
(25,893)
150,261)
(633)
26,357)
(15,009)
9,451)
150,894)
(151,949)
130,095)
(1,625,938)
12,650)
282,044)
Total
1,895,332)
-)
-)
1,895,332)
165
6,716)
(3,766)
Other income/profit
Other expenses/losses
(19,940)
65,949)
Taxation
Net Profit / (Loss) for the Period from Continuing Operations
14,877)
(971)
15,848)
(38)
(30,670)
15,886)
4,572)
(7,843)
(65,159)
49,827)
(482,304)
107)
114,986)
Agriculture
597,183)
309,166)
2,054)
908,403)
(11,105)
(199)
(10,906)
(1)
1,239)
(10,905)
10)
-)
(824)
(12,154)
(18,626)
-)
(11,330)
(1,152)
(1,063)
(89)
-)
-)
-)
-)
-)
-)
-)
(3)
-)
(3,980)
(8,366)
(86)
-)
-)
-)
-)
-)
Eliminations
-)
(608,178)
(11,037)
(619,215)
10,126)
(20,883)
2,134)
(42,314)
16,608)
23,017)
1 January - 31 December 2006
Real
Estate
Other
7,296)
48,723)
-)
20,083)
216)
7,112)
7,512)
75,918)
The Group has 38,632 of revenue and 17,307 of operating income from terminal operations classified as agricultural operation in 2006.
85,889)
555)
Profit / (Loss) Before Taxation
Minority Interest
(22,891)
85,334)
(55,667)
105,275)
Operating expenses
Operating Profit / (Loss)
Finance income/(expense) (net)
Operating Profit / (Loss)
(911,635)
-)
160,942)
Contracting
1,072,577)
278,929)
1,655)
1,353,161)
Cost of Sales
Income from other operations
Gross Profit / (Loss)
Revenue
Intra-segment sales
Inter-segment sales
Revenue
a) Segmental results (cont’d)
33. SEGMENTAL REPORTING (cont’d)
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
68,569)
(22,173)
90,742)
513)
(15,589)
(60,688)
90,229
21,424)
(142,533)
145,082)
(1,454,879)
16,715)
287,615)
Total
1,725,779)
-)
-)
1,725,779)
166
1,112,840
1.608,874
1.503,966
1.223,251
Agriculture
Contracting
1,553,779
1,311,369
1.242,411
1.311.36-
970,637
333,574
637,063
333,261
Agriculture
1,733,735
1,423,818
1.309,550
11.12,195
Contracting
182,443
130,976
146,414
113,989
627,134
224,663
507,525
507.52-
Other
31 December 2006
Real
Estate
Discontinued
Operations (*)
1,118,942
1,003,330
1.115,611
1.551,987
991,996
120,483
975,503
975.227
Other
154,450
128,076
122,380
154.281
31 December 2007
Real
Estate
-
Discontinued
Operations (*)
(*) The Group discontinued its “Banking” operations by selling its subsidiary, Tekfenbank in 2007.
Balance Sheet
Assets
Liabilities
Equity
Minority interest
Balance Sheet
Assets
Liabilities
Equity
Minority interest
b) As of 31 December 2007 and 2006 segmental assets and liabilities are as follow:
33. SEGMENTAL REPORTING (cont’d)
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
(1,542,909)
(760,501)
(801,636)
-)
Eliminations
(1,430,033)
(702,270)
(743,156)
-)
Eliminations
3,052,229
2,418,711
2.614,291
2.319,227
Total
2,420,785
1,203,681
1,201,340
1.215,764
Total
167
Agriculture
44,893
14,906
Agriculture
12,430
19,375
Contracting
138,215
343,381
Contracting
110,342
323,377
Capital additions
Depreciation and amortisation charge
Capital additions
Depreciation and amortisation charge
Other
7.477
7,240
Other
22,104
10,293
1 January - 31 December 2007
Real Estate
7,102
1,605
1 January - 31 December 2006
Real Estate
1,741
1.443
c) Segmental information related to tangible and intangible assets for the years ended 31 December 2007 and 2006 are as follows:
33. SEGMENTAL REPORTING (cont’d)
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
Total
126,617
553,488
Total
150,687
567,132
168
CIS
300,387
464,620
4,752
CIS
409,113
471,923
61,008
Turkey
1,066,573
2,457,688
82,841
Turkey
1,067,595
3,147,820
44,404
(*) Fixed asset purchase through financial lease are also included.
Revenue (1 January - 31 December 2006)
Total Assets (31 December 2006)
Capital additions to tangible and intangible
assets (1 January - 31 December 2006) (*)
Revenue (1 January - 31 December 2007)
Total Assets (31 December 2007)
Capital additions to tangible and intangible
assets (1 January - 31 December 2007) (*)
d) Geographical segmental information is as follows:
33. SEGMENTAL REPORTING (cont’d)
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
11,805
1,022
Other
362,468
647,453
Middle
Eastern
Countries
418,310
195,220
North
Africa
106,196
132,723
8,378
947
Other
199,981
448,698
49,027
Middle
Eastern
Countries
404,038
297,789
13,120
North
Africa
225,303
181,651
-)
Eliminations
(637,903)
(1,542,910)
-)
Eliminations
(300,950)
(1,429,661)
126,617
Total
1,725,779
3,052,229
150,687
Total
1,895,332
2,420,785
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
34. SUBSEQUENT EVENTS
a) In accordance with the resolution of Board of Directors’, dated on 20 February 2008 numbered 171, it is decided to call
general assembly to a meeting for liquidation of Karaca Giyim at 27 March 2008.
b) In accordance with the resolution of Board of Directors’, dated on 4 February 2008 numbered 36/a, it is decided to
increase in capital of Antalya Stüdyoları by 610 to 5,250.
35. ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE
Assets classified as held for sale consists of the Groups buildings, land and Tekfenbank’s assets which are held with the aim
of selling.
Assets classified as held for sale are as follow:
Assets classified as held for sale
Assets of discontinued operations
Liabilities related to assets classified as asset
held for sale
31 December
2007
31 December
2006
9,768
9,768
8,902
1,118,942
1,127,844
-
1,003,330
Liabilities classified as held for sale are the liabilities of Tekfenbank which classified as discontinued operations. Group
sold the 70% of its banking subsidiary Tekfenbank as of 16 March 2007 based on the decision made on 8 May 2006 and
reclassified the banking operations as “discontinued operations”. All the assets and liabilities of the discontinued operations
are presented as a single line items as “Assets Classified as Discontinued Operations” and “Liabilities Classified as
Discontinued Operations” in the consolidated balance sheet as of 31 December 2006.
31 December
2006
Cash and Cash equivalents
Marketable securities (net)
Turkish Central Bank Account
Loans and Loaned securities
Finance lease receivables (net)
Other Receivables (net)
Financial assets (net)
Tangible assets (net)
Intangible assets (net)
Deferred tax assets
Current assets of discontinued operations
261,325
45,935
48,035
640,696
12,332
5,500
78,388
23,896
1,490
1,345
1,118,942
Financial liabilities (net)
Deposit
Other liabilities and payables
Current liabilites from discontinued operations
152,422
823,456
27,452
1,003,330
169
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
35. ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE (cont’d)
Results of period until the date of Tekfenbank’s sale, 16 March 2007 and gain on sale of Tekfenbank are presented as “Net
Profit for the Period from Discontinued Operations” in statement of income.
Details of discontinued operations operating income are as follow:
1 January 16 March
2007
1 January 31 December
2006
OPERATING INCOME
- Revenue (net)
- Cost of revenue (-)
GROSS PROFIT / LOSS
37,610)
(23,902)
13,708)
138,937)
(75,890)
63,047)
- Operating expenses (-)
NET OPERATING PROFIT / LOSS
(12,919)
789)
(42,332)
20,715)
- Other income and profits
- Other expense and losses
OPERATING PROFIT / LOSS
(890)
(6,499)
(6,600)
2,921)
(7,370)
16,266)
- Taxation
NET PROFIT / LOSS
2,011)
(4,589)
(3,505)
12,761)
-)
(355)
(4,589)
12,406)
Profit from sale of subsidiary
159,478)
-)
Net Profit from Discontinued Operations
154,889)
12,406)
Consolidation eliminations
NET PROFIT AFTER CONSOLIDATION ELIMINATIONS
170
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
35. ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE (cont’d)
Details of profit from the sale of subsidiary are as follow.
Name of Subsidiary: Tekfenbank / Tekfenbank Finansal Kiralama
Percentage of shares sold: 70%
Net assets of disposed subsidiary Tekfenbank are as follows:
16 March 2007
Tekfenbank
ASSETS
Cash and Cash Equivalents
Marketable Securities (net)
Turkish Central Bank Account
Loans and Loaned Securities
Financial Lease Receivables (net)
Other Assets
Financial Assets (net)
Tangible Assets (net)
Intangible Assets (net)
Deferred Tax Assets
Total Assets
393,404)
4,081)
44,000)
426,781)
9,435)
3,466)
57,082)
17,592)
630)
2,315)
958,786)
LIABILITIES
Financial Liabilities (net)
Deposit
Other Liabilities and Payables
Total Liabilities
106,163)
755,166)
19,648)
880,977)
Net Asset Sold
77,809)
Tax charge undertaken due to the sale (Note: 41)
14,217)
Other commitments undertaken due to the sale (Note: 10)
6,146)
Expenses undertaken due to the sale
6,645)
Revaluation fund realized in profit / loss accounts
(2,458)
Total Cost
102,359)
Proceeds to Group from the sale
261,837)
Gain on sale (net)
159,478)
Minority interest share before the sale
1.77%)
Effect of sale of subsidiary on minority interest (Note: 24)
1,967)
171
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
35. ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE (cont’d)
Cash flow table of discontinued operations as of the nine month interim period ended on 31 December 2007 is as follow:
16 March 31 December
2007
Changes in cash and cash equivalents
Changes in marketable securities
Change in reserves in Turkish Central Bank
Changes in loans and marketable securities associated with repo transactions
Changes in financial lease receivables
Changes in other current assets
Changes in available for sale assets
Effect of discontinued operations in tangible and intangible assets
Tax provision net of monetary gain/(loss)
Changes in loans
Changes in deposits
Changes in other short term liabilities
300,682)
(79,613)
14,823)
(31,009)
1,147)
431)
42,666)
(333)
1,963)
760)
(255,352)
(617)
36. OPERATING INCOME
Revenue
Domestic goods and merchandise sales
Export goods and merchandise sales
Contract revenue - domestic
Contract revenue - abroad
Contract revenue from joint ventures - domestic
Contract revenue from joint ventures - abroad
Textile products revenue
Other
Sales returns (-)
Sales discount (-)
Other sales discount (-)
172
1 January 31 December
2007
1 January 31 December
2006
853,517)
8,841)
69,187)
662,286)
32,976)
264,989)
11,315)
660)
(2,532)
(2,731)
(3,176)
1,895,332)
616,831)
23,750)
93,563)
685,136)
87,048)
206,830)
16,892)
4,711)
(3,512)
(2,847)
(2,623)
1,725,779)
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
36. OPERATING INCOME (cont’d)
Cost of revenue
Cost of goods sold
Cost of merchandises sold
Contract cost - domestic
Contract cost - abroad
Contract cost from joint ventures - domestic
Contract cost from joint ventures - abroad
Cost of textile products
Other
1 January 31 December
2007
1 January 31 December
2006
(406,802)
(249,551)
(53,880)
(636,572)
(25,162)
(239,405)
(13,314)
(1,252)
(1,625,938)
(316,934)
(193,485)
(78,778)
(587,896)
(73,623)
(171,338)
(16,365)
(16,460)
(1,454,879)
The Group has 60,404 depreciation and amortization expenses and 133,951 personnel expenses in cost of revenue for the
year ended 31 December 2007. (For the year ended 31 December 2006, 44,991 depreciation and amortization expense;
109,483 personnel expense).
Income from other operations
Rent income
Dividend income
1 January 31 December
2007
1 January 31 December
2006
25,324
27,326
12,650
27,445
29,270
16,715
1 January 31 December
2007
1 January 31 December
2006
37. OPERATING EXPENSES
Transportation expenses
Payroll expenses and fringe benefits
Office administration expenses
Consultancy expenses
Amortisation expenses
Premium expense
Other expenses
Rent expenses
Receivables written-off
Traveling expenses
Bank and notary expenses
Provision for doubtful receivables
Provision for vacation pay
Reserve for diminution in value of subsidiaries
Reversal of unnecessary provision
(57,117)
(45,386)
(12,964)
(9,302)
(6,728)
(5,410)
(4,541)
(3,055)
(2,558)
(2,058)
(1,626)
(1,571)
(1,475)
(768)
2,610)
(151,949)
(42,756)
(45,660)
(8,897)
(12,278)
(8,497)
(1,831)
(5,123)
(1,692)
(4,396)
(2,232)
(2,440)
(3,903)
(1,560)
(1,473)
205)
(142,533)
173
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
38. OTHER INCOME/EXPENSES AND PROFIT/LOSSES
Other Operating Income and Profit
Group’s share on net profit of investment
accounting by equity method (Note: 16)
Rent income
Scrap sale income
Gain on sale of fixed assets
Reversal of other unnecessary provision
Previous periods income
Effect of liquidation
Damage and indemnity income
Other income
Other Operating Expense and Losses
Other expenses and losses
Litigation provision
Previous year’s losses and expenses
Damages subjest to litigation
Commission expense
Penalty and damages paid
Write off VAT receivable
1 January 31 December
2007
1 January 31 December
2006
8,463)
6,258)
1,778)
2,321)
1,079)
555)
492)
420)
4,991)
26,357)
-)
3,866)
-)
7,188)
1,137)
975)
3,283)
1,157)
3,818)
21,424)
1 January 31 December
2007
1 January 31 December
2006
(6,868)
(4,231)
(1,632)
(1,339)
(601)
(338)
-)
(15,009)
(4,849)
(3,056)
(456)
(2,095)
(2,415)
(460)
(2,258)
(15,589)
1 January 31 December
2007
1 January 31 December
2006
(48,625)
32,162)
(109)
81)
25,942)
9,451)
(59,928)
(11,649)
700)
142)
10,047)
(60,688)
39. FINANCE EXPENSES (NET)
Interest expenses
Foreign exchange gains / losses (net)
Rediscount income / (expense) (net)
Securities sale profit/loss
Interest income
40. NET MONETARY GAIN/LOSS
Net monetary gain/loss is not calculated since the inflation accounting has been ceased as of 1 January 2005.
174
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
41. TAXATION
31 December
2007
Tax payable:
Current tax provision
Prepaid tax and funds
34,673)
(11,891)
22,782)
1 January 31 December
2007
Tax provision:
Current tax provision
Effect of sale of a subsidiary on
discontinued operations (Note: 35)
Deferred tax expense (Note: 14)
Adjustments recognised in current year
in relation to the current tax of prior years
Reversal of unnecessary tax provisions (*)
Transaction difference
31 December
2006
3,563)
(3,273)
290)
1 January 31 December
2006
34,673)
3,563)
(14,217)
2,598)
-)
25,195)
1,380)
-)
1,459)
25,893)
(476)
(6,131)
22)
22,173)
(*) Revenue associated with construction projects attributable to some of the Group’s Branches in foreign countries is
measured based on the stage of completion and tax is levied in accordance with the tax base calculated from this
measurement. In some of the branches, some of the tax provisions made in the prior period are released due to project
end estimation changes, and accordingly, those amounts are recognized as tax income in the statements of income.
175
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
41. TAXATION (cont’d)
Reconciliation of taxation:
Profit / (Loss) before tax
Profit from discontinued operations
Loss before tax after monetary gain
Expected taxation (*)
Reconciliation of expected tax to actual tax:
- Undeductable expenses
- Dividend and other non-taxable income
- Carry forward tax losses deducted in current year
- Provision for unrealizable tax losses (**)
- Investment incentive
- Effect of discountinued operations
- Tax effect of sale of subsidiary
- Tax commitments fall out as a result of the sale
- Effect of tax rate change and
consolidation adjustments
- Other
Taxation
1 January 31 December
2007
1 January 31 December
2006
150,261)
154,889)
305,150)
90,742)
12,406)
103,148)
50,012)
13,916)
11,694)
(760)
(3,804)
3,045)
(75)
(14,217)
(22,569)
1,229)
7,948)
(760)
(8,286)
4,705)
2,022)
(2,552)
-)
-)
1,819)
(481)
25,893)
5,180)
-)
22,173)
(*) Different rates are applied for different countries where the foreign companies and joint ventures are located.
(**) As of 31 December 2007 and 31 December 2006, total tax effect amount of one of Group’s joint ventures calculated
based on the loss for the current year less the Group’s share amounting to 3,045 (31 December 2006: 4,705).
Tax legislation in Turkey
Corporate Tax
The Group is subject to Turkish corporate taxes. Provision is made in the accompanying financial statements for the
estimated charge based on the Group’s results for the year.
Corporate tax is applied on taxable corporate income, which is calculated from the statutory accounting profit by adding
back non-deductible expenses, and by deducting dividends received from resident companies, other exempt income and
investment incentives utilized.
The effective rate of tax in 2007 is 20% (2006: 20%)
In Turkey, advance tax returns are filed on a quarterly basis. The advance corporate income tax rate in 2007 is 20% (2006:
20%). The excess temporary tax paid of corporate income that was calculated at the rate of 30% during the taxation of
the corporate income in temporary taxation periods after 1 January 2006 over 20% will be deducted from future temporary
tax returns.
Losses can be carried forward for offset against future taxable income for up to 5 years. Losses cannot be carried back
for offset against profits from previous periods.
176
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
41. TAXATION (cont’d)
Tax legislation in Turkey (cont’d)
Corporate Tax (cont’d)
In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Companies file their tax returns
between 1-25 April following the close of the accounting year to which they relate (Companies with special accounting
periods file their tax returns between 1-25 of the fourth month subsequent to the fiscal year end). Tax authorities may,
however, examine such returns and the underlying accounting records and may revise assessments within five years.
Income Withholding Tax
Since 75% of sale proceeds from subsidiary and fixed asset acquisitions, to the extent that they are at hand less than two
years, are included in capital in for five years, they are exempt from tax.
In addition to corporate taxes, companies should also calculate income withholding taxes and funds surcharge on any
dividends distributed, except for companies receiving dividends who are resident companies in Turkey and Turkish branches
of foreign companies. Undistributed dividends incorporated in share capital are not subject to income withholding tax.
Income withholding tax calculated in 2002 and prior years over specific income that are exempt from withholding tax,
irrespective of any distribution, are superseded in general. However, 19,8% withholding tax is still applied to investment
allowances relating to investment incentive certificates obtained prior to 24 April 2003. Such allowances may be used to
the extent that the Group companies’ profits are subject to exemption. If companies fail to make profit or incur losses,
any allowance outstanding may be carried forward to 2008 year end, to be deducted from the taxable income for future
profitable years.
Taxation of Foreign Subsidiaries and Operations
Subsidiaries and operations included in consolidation in the accompanying financial statements are subject to corporate
tax and withholding tax effective in the relevant country. Effective tax rates in those countries in which the Group operates
are summarized below:
Countries
Azerbaijan
Bulgaria
Kazakhstan
Uzbekistan
Germany
Saudi Arabia
Luxembourg
Ireland
England
Morocco
Kuwait
Libya
Oman
United Arab Emirates
Qatar
Corporate Tax
Rate
22%
10%
30%
18%
38%-40%
20%
29.63%
12.5%
30%
35%
55%
0%
0%-30%
0%
0%-35%
Withholding Tax
Rate
10%
0%-10%
15%-20%
10%-20%
0%-20%
5%-20%
0%-15%
20%
30%
10%
0%
5%-10%
10%
0%
0%
Withholding tax rates in Kazakhstan, Germany, and Saudi Arabia vary according to the nature of the business. Since the
Group, operations in Luxembourg are only related to the investments to subsidiaries and providing loans to these
investments, these activities are not subject to corporate tax. The Group’s construction project in Libya is not subject to
corporate tax.
177
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
42. EARNING PER SHARE
Calculation of earning per share for the current period is made in accordance with IAS 33 considering the effects of shares
and bonus shares issued.
As of 31 December 2007 and 2006, the Group’s weighted average number of shares and computation of earnings per
share (which corresponds to per share amounting to TRY 1) set out here are as follows:
178
Number of outstanding shares at the starting of the period
1 January 31 December
2007
104,000
1 January 31 December
2006
40,500
Number of issued shares:
- Transfer from inflation adjustment on equity
- Other funds
- Transfer from gain on sale of subsidiary and fixed assets
- Capital increase paid in cash
Number of outstanding shares as the end of period
31,413
2,576
92,011
66,775
296,775
63,500
104,000
Weighted average number of outstanding shares (*)
241,129
230,000
Number of preferred share
Number of common share
241,129
116,961
113,039
Profit/loss for preferred shareholders
Profit/loss for common shareholders
Profit/loss from continued operations
124,368
124,368
34,653
33,916
68,569
Profit/loss from discontinued operations
Net profit for the period
154,889
279,257
12,406
80,975
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
42. EARNING PER SHARE (cont’d)
Profit from continued and discontinued operations:
- profit/loss for preferred shareholders
- profit/loss for common shareholders
1 January 31 December
2007
1 January 31 December
2006
279,257
279,257
40,922
40,053
80,975
-
0.297
0.053
0.350
0.516
0.642
1.158
0.301
0.054
0.355
Net profit/loss per preferred share (**):
Calculated from continued operations:
Calculated from discontinued operations:
Net profit/loss per common share:
Calculated from continued operations:
Calculated from discontinued operations:
(*) The company transferred 31,413 from inflation correction adjustment and 94,587 from accumulated gain/ (loss)to
capital at 2007 In accordance with paragraphs 21 and 22 of IFRS 33 “Earnings per Share”, the number of ordinary shares
outstanding are adjusted for the bonus share issued as if the increase had occurred at the beginning of the increase period
presented.
(**) Preferred shareholders valid at 2006 receive additional dividends calculated as 5% of paid in capital more compared
to common shareholders.
The Company decided to change original contract in 8 November 2007 and removed the clause related with paying dividends
amounted as 5% of paid capital to the owners of A Series preferred share. Therefore during the calculations of gains per
share as of 31 December 2007, preferred shares are excluded.
179
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
43. CASH FLOW STATEMENTS
Changes in working capital
Note
Changes in loans and loaned securities
Changes in trade receivables
Changes in inventories
Changes in trade payables
Change in other payables
Changes in other receivables
Changes in unbilled contract revenues
Change in provision
Changes in due to related parties
Changes in other current assets
Changes in due from related parties
Changes in finance lease receivables
Changes in other short-term liabilities
Changes in advances received
Changes in billings in excess of contract revenue
Changes in deposits
35
7
12
7
10
10
13
23
9
15
9
8
15
21
13
35
1 January 31 December
2007
1 January 31 December
2006
-)
(16,312)
(13,299)
(56,214)
(1,756)
6,388)
(48,921)
(14,315)
(9,938)
1,810)
(1,057)
(111)
(8,229)
84,321
(25,693)
-)
(103,326)
(328,329)
(58,273)
(37,417)
158,256)
(4,787)
(25,603)
(142,645)
(9,612)
9,348)
(11,129)
(10,230)
(16,477)
42,540)
47,643)
3,877)
311,707)
(71,131)
1 January 31 December
2007
1 January 31 December
2006
Changes in other investing activities
Note
Changes in financial assets held to maturity date
Changes in long term advanced received
Changes in long term receivables
Changes in long term trade payables
Changes in other long term receivables
Changes in other long term assets
Changes in other long term liabilities
Changes in long term loans and loaned securities
180
21
7
7
10
15
10
-)
16,720)
(7,445)
(15,663)
(1,125)
568)
(13,098)
-)
(20,043)
3,498)
2,134)
325)
11,952)
(7,388)
998)
(10,512)
9,648)
10,655)
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
44. OTHER ISSUES TO BE EXPLAINED AS A MANDATORY MATTER TO RENDER THE FINANCIAL STATEMENTS CLEAR,
INTERPRETABLE AND COMPREHENSIBLE OR AFFECTING THE FINANCIAL STATEMENTS SIGNIFICANTLY
None.
45. ADDITIONAL INFORMATION ABOUT FINANCIAL INSTRUMENTS
(a) Capital Risk Management
The Group manages its capital to ensure that the Group will be able to continue as a going concern while maximizing the
return to stakeholders through the optimization of the debt and the equity balance.
The capital structure of the Group consists of debt which includes the borrowings disclosed in Note: 6 cash and cash
equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained
earnings as disclosed in Note: 25, 26, 27 and 28.
The Group’s strategy is same as 2006.
(b) Significant accounting policies
The Group’s accounting policies about financial instruments are disclosed in Note: 3 “Summary of Significant Accounting
Policies” to the financial statements.
181
182
Financial liabilities
Bank loans
Trade payables (trade payables to related parties included)
Long term trade payables
31 December 2007
Financial assets
Cash and cash equivalents
Trade receivables (trade receivables from related parties included)
Long term trade receivables
Receivables from ongoing construction contracts
Financial assets classified as held for sale
-
342,283
12,789
254,824
-
521,653
-
-
Loans and
receivables
Financial
assets at
amortized
cost
45. ADDITIONAL INFORMATION ABOUT FINANCIAL INSTRUMENTS (cont’d)
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
-
59,438
Available
for sale
324,702
340,832
1,805
-
Financial
liabilities at
amortized
cost
324,702
340,832
1,805
521,653
342,283
12,789
254,824
59,438
Carrying
value
324,702
340,832
1,805
521,653
342,283
12,789
254,824
59,438
Fair value
6
7, 9
7
4
7, 9
7
13
16
Note
183
Financial liabilities
Bank loans
Trade payables (trade payables to related parties included)
Long term trade payables
31 December 2006
Financial assets
Cash and cash equivalents
Trade receivables (trade receivables from related parties included)
Long term trade receivables
Receivables from ongoing construction contracts
Financial assets classified as held for sale
-
322,518
5,344
205,903
-
209,484
-
-
Loans and
receivables
Financial
assets at
amortized
cost
45. ADDITIONAL INFORMATION ABOUT FINANCIAL INSTRUMENTS (cont’d)
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
-
60,607
Available
for sale
591,736
406,885
18,824
-
Financial
liabilities at
amortized
cost
591,736
406,885
18,824
209,484
322,518
5,344
205,903
60,607
Carrying
value
591,736
406,885
18,824
209,484
322,518
5,344
205,903
60,607
Fair value
6
7, 9
7
4
7, 9
7
13
16
Note
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
45. ADDITIONAL INFORMATION ABOUT FINANCIAL INSTRUMENTS (cont’d)
(d) Financial risk management objectives
The Group’s corporate treasury function provides services to the business, coordinates access to domestic and international
markets, monitors, and manages the financial risks relating to the operations of the Group through internal risk reports,
which analyses exposures by degree and magnitude of risk. These risks include market risk (including currency risk, fair
value interest rate risk and price risk) credit risk, liquidity risk and cash flow interest rate risk.
The Group does not enter in to or trade financial instruments, including derivative financial instruments for speculative
purposes.
(e) Market Risk
The Group’s activities expose it primarily to the financial risks of changes in foreign exchange rates (refer to section f) and
interest rates (refer to section g).
At a Group level market risk exposures are measured by sensitivity analysis.
There has been no change to the Group’s exposure to market risks or the manner which it manages and measures the risk.
(f) Foreign Currency Risk Management
The Group’s assets and liabilities denominated in foreign currencies are disclosed in Note: 29.
Foreign currency sensitivity
The Group undertakes certain transactions denominated in USD and EUR hence exposures to certain exchange rate
fluctuations arise.
The table in the below analyzed the 10% increase or decrease interest rate sensitivity of the Group in USD and EUR. Negative
amounts shows the decrease, positive amount shows the increase in the net profit.
Profit/Loss
Effect of USD (i)
1 January 1 January 31 December
31 December
2007
2006
(14,839)
(33,582)
Effect of EUR (ii)
1 January 1 January 31 December
31 December
2007
2006
1,070
45
(i) iThis is mainly attributable to the exposure to outstanding trade receivables and payables denominated in USD.
(ii) This is mainly attributable to the exposure to outstanding trade receivables and payables denominated in EUR.
The change in the profit or loss due to a 10% change in the USD and EUR would impact the profit and loss statement as above.
(g) Interest rate risk management
The Group is exposed to interest rate risk as the Group borrows funds at both fixed and floating interest rates.
The Group exposures to the interest rates on financial liabilities are detailed in Note: 6.
Interest rate sensitivity
The Group’s USD denominated financial borrowings have variable interest rates indexed to Libor accordingly the Group is
exposed to interest rate risk due to the fluctuations in Libor rates. At the reporting date if the Libor rate had been 0.5%
higher/lower and all other variables were held constant the Group’s net profit would increase/ decrease 23 (1 January31 December 2006: 89).
184
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
45. ADDITIONAL INFORMATION ABOUT FINANCIAL INSTRUMENTS (cont’d)
(h) Other price risks
The Group does not hold equity investments as of the reporting date there the Group is not exposed to other currency
risks.
(i) Credit risk management
Credit risks refer to the risk that counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral
where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group’s exposure and credit
ratings of its counterparties are continuously monitored and the aggregate value of the transactions concluded is spread
amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved
by the risk management committee.
Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing
credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee
insurance cover is purchased.
The financial assets carrying value after deduction of necessary impairment reserves, presented in the accompanying
financial statements indicates the Group’s maximum credit risk.
(j) Liquidity risk management
The Group management has built an appropriate liquidity risk management framework for the management of the
Group’s short, medium and long term funding and liquidity management requirements. The Group manages liquidity risk
by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast
and actual cash flows and matching the maturity profile of financial assets and liabilities.
Liquidity and interest rate risk tables
The following table details the Group’s expected maturity for its non-derivative financial assets. The tables below have been
drawn up based on the undiscounted contractual maturities of the financial assets.
Less than
one month
1-3 month
3 month1 year
1-5 year
After
5 year
Adjustment
Amount of
balance sheet
31 December 2007
Bank loans
Financial lease payables
Trade payables
Due to related parties
62,345
2,648
36,150
5
63,532
2,277
231,860
187
200,068
25,307
72,287
1,515
7,692
68,090
1,911
-
31
333-
(8,966)
(35)
(1,278)
-)
324,702
98,287
340,930
1,707
31 December 2006
Bank loans
Financial lease payables
Trade payables
Due to related parties
48,596
3,068
117,817
692
105,363
1,316
224,569
702
401,321
9,677
53,068
10,251
52,289
16,818
18,787
-
3333-
(15,833)
(16)
(177)
-)
591,736
30,863
414,064
11,645
185
TEKFEN HOLDİNG A.Ş. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
(Amounts are expressed in thousands of New Turkish Lira (“TRY”) unless otherwise stated.)
46. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The Group Management has considered the following critical accounting decisions and estimations that have significant
impact on financial statements, in application of accounting policies:
Forward looking financial statements
Due to the nature of the construction business and the method of accounting (percentage of completion) as well as intensive
usage of the management estimates, the financial statements itself are subject to a number of risks and uncertainties
and actual results and events could differ materially from those currently being anticipated as reflected in such forward
looking statements. Factors which may cause future outcomes to differ from those foreseen in forward looking statements
include, but are not limited to: exchange rate fluctuations and factors affecting contracting clients’ final acceptance of
construction projects.
Change in contract fee
Changes in contract fees are recognized in the financial statements to the extent that those changes are likely to be
approved by the customers, based on the percentage of completion method of the construction projects’ estimates on the
collection of those changes are made based on the Group management’s past experiences, the related contract terms and
the related legislation.
Percentage of completion
The Group uses the percentage of completion method in accounting for its construction contracts. Use of the percentage
of completion method requires the Group to estimate the proportion of work performed to date as a proportion of the total
work to be performed and its management’s judgment that the use of costs to date in proportion to total estimated costs
provided the most appropriate measure of percentage of completion.
Guarantee Provision of warranty liabilities
Management grants guarantee period for commitments of constructional segment up to 2 year. Management estimates
warranty provision amount related to potential damages in the future based on the experiences of the management. Current
developments and activities in recent periods are taken in to account for developing forecasts and estimations.
Key sources of estimation uncertainty
Departures from the estimation related to the completion costs of construction projects or estimated profit for the projectend may change the carrying amount of the assets and liabilities.
The Group uses construction experts and project directors during the estimation of future costs attributable to construction
contracts. Potential escalations of unit prices and quantity are considered in the estimations related to raw material,
labour and other costs.
Retention guarantees in construction contracts
At each year-end, retentions related to construction contracts deducted from progress payments by customers and
deductions made from sub-contractors by the Group are carried at their fair value less discounting the Group’s effective
deposit and borrowing rates of which the management considers to be the best discount rates for those assets and
liabilities.
186
187
> Directory
www.tekfen.com.tr
• Tekfen Holding Co., Inc.
Kültür Mahallesi, Tekfen Sitesi
Ayd›nl›k Sokak, A Blok, No: 7
34340 Ulus-Befliktafl / ‹stanbul, Turkey
Phone : (90.212) 359 33 00
Fax
: (90.212) 359 33 05
E-mail : [email protected]
Website: www.tekfen.com.tr
• Tekfen Foundation for Education, Health,
Culture, Art & Protection of Natural Habitat
Kültür Mahallesi, Tekfen Sitesi
Ayd›nl›k Sokak, A Blok, No: 7
34340 Ulus-Befliktafl / ‹stanbul, Turkey
Phone : (90.212) 359 33 49
Fax
: (90.212) 359 33 50
E-mail : [email protected]
CONTRACTING GROUP
• Tekfen Construction & Installation Co., Inc.
Kültür Mahallesi, Tekfen Sitesi
Ayd›nl›k Sokak, B Blok, No: 3
34340 Ulus-Befliktafl / ‹stanbul, Turkey
Phone : (90.212) 359 35 00
Fax
: (90.212) 359 35 08
E-mail : [email protected]
Website: www.tekfeninsaat.com
• Hallesche Mitteldeutsche Bau - A.G. (HMB)
Magdeburger Strasse 27 06112
Halle / Saale, Germany
Phone : (49.345) 511 62 39
Fax
: (49.345) 511 68 13
E-mail : [email protected]
Website: www.hmb-ag.de
• Azfen J.V.
Istiglalijat Street 31,
Baku, Azerbaijan
Phone : (99.412) 492 58 35 - 57 25
Fax
: (99.412) 492 57 27
E-mail : [email protected]
Website: www.azfen.com
• Geotek J.V.
4. Sanapiro Street 380026
Tbilisi, Georgia
Phone : (995.32) 92 10 24
Fax
: (995.32) 92 10 29
• Tekfen Manufacturing & Engineering Co., Inc.
Tekfen Tower, Büyükdere Caddesi, No: 209
34394 4.Levent ‹stanbul, Turkey
Phone : (90.212) 357 00 60
Fax
: (90.212) 357 00 61
E-mail : [email protected]
Website: www.tekfenim.com
• Tekfen Engineering Co., Inc.
Tekfen Tower, Büyükdere Caddesi, No: 209
34394 4.Levent ‹stanbul, Turkey
Phone : (90.212) 357 03 03
Fax
: (90.212) 357 03 09
E-mail : [email protected]
Website: www.tekfenmuhendislik.com
• Cenub Tikinti Servis ASC
Sabail Rayonu, Cenub Köprüsü AZ1003
Bakû, Azerbaycan
Phone : (99.412) 491 18 82
Fax
: (99.412) 447 41 28
188
• GATE Construction & Trade Co., Inc.
Kültür Mahallesi, Tekfen Sitesi
Ayd›nl›k Sokak, No: 4
34340 Ulus-Befliktafl ‹stanbul, Turkey
Phone : (90.212) 359 37 50
Fax
: (90.212) 359 37 52
AGRI-INDUSTRY GROUP
• EFG Leasing Co., Inc.
Tekfen Tower, Eski Büyükdere Caddesi, No: 209
34330 4.Levent / ‹stanbul , Turkey
Phone : (90.212) 357 07 07
Fax
: (90.212) 357 08 25
E-mail : [email protected]
Website : www.tekfenbank.com
• Toros Agricultural Production & Marketing Co., Inc.
Tekfen Tower, Eski Büyükdere Caddesi, No: 209
34394 4.Levent / ‹stanbul
Phone : (90.212) 357 02 02
Fax
: (90.212) 357 02 31
E-mail : [email protected]
Website : www.toros.com.tr
• EFG Istanbul Securities Co., Inc.
Büyükdere Caddesi, No: 195 Kat:7
34394 Levent / ‹stanbul , Turkey
Phone : (90.212) 317 27 27
Fax
: (90.212) 317 27 26
Website : www.efgistanbulsec.com
• Toros Terminal & Maritime Services Co., Inc.
Tekfen Tower, Eski Büyükdere Caddesi, No: 209
34394 4.Levent / ‹stanbul, Turkey
Phone : (90.212) 357 02 02
Fax
: (90.212) 357 02 31
E-mail : [email protected]
Website : www.toros.com.tr
• Tekfen Real Estate Development Investment
and Trade Co. Inc.
Tekfen Tower, Eski Büyükdere Caddesi, No: 209
34394 4.Levent / ‹stanbul, Turkey
Phone : (90.212) 357 10 10
Fax
: (90.212) 357 10 15
E-mail : [email protected]
• Toros Energy Electricity Production &
Autoproducer Group Co., Inc.
• Tekfen-OZ Real Estate Development Co., Inc.
Kementafl Caddesi, No:81 Kat:4
34420 4 Karakoy-Beoglu / Istanbul, Turkey
Phone : (90.212) 243 72 80
Fax
: (90.212) 243 72 85
E-mail : [email protected]
Tekfen Tower, Eski Büyükdere Caddesi, No: 209
34394 4.Levent / ‹stanbul, Turkey
Phone : (90.212) 357 02 02
Fax
: (90.212) 357 02 31
E-mail : [email protected]
Website : www.toros.com.tr
• TAYSEB - Toros-Adana-Yumurtal›k Free
Trade Zone Founder and Operating Co., Inc.
P.K.10, 01920 Ceyhan-Adana, Turkey
Phone : (90.322) 634 20 80
Fax
: (90.322) 634 20 90
E-mail : [email protected]
Website: www.tayseb.com
• Toros Real Estate Investment Co., Inc.
Tekfen Tower, Eski Büyükdere Caddesi, No: 209
34394 4.Levent / ‹stanbul, Turkey
Phone : (90.212) 357 02 02
Fax
: (90.212) 357 02 31
E-mail : [email protected]
Website : www.toros.com.tr
• Toros Terminal & Maritime Services Co., Inc.
Tekfen Tower, Eski Büyükdere Caddesi, No: 209
34394 4.Levent / ‹stanbul, Turkey
Phone : (90.212) 357 02 02
Fax
: (90.212) 357 02 31
E-mail : [email protected]
Website : www.toros.com.tr
• H-T Seedling Industry & Trade Co., Inc.
Tekke Köyü, Pürenli Mevkii, 10.km.
Serik / Antalya, Turkey
Phone : (90.242) 717 40 45
Fax
: (90.242) 717 41 99
Website : www.toros.com.tr
BANKING GROUP
• Eurobank Tekfen Co., Inc.
(Headquarters)
Tekfen Tower, Eski Büyükdere Caddesi, No: 209
34330 4.Levent / ‹stanbul, Turkey
Phone : (90.212) 357 07 07
Fax
: (90.212) 357 08 08
E-mail : [email protected]
Website : www.tekfenbank.com
REAL ESTATE DEVELOPMENT GROUP
• Tekfen Tourism & Facility Management Co., Inc.
Tekfen Tower, Eski Büyükdere Caddesi, No: 209
34394 4.Levent / ‹stanbul, Turkey
Phone : (90.212) 357 00 00 (10 lines)
Fax
: (90.212) 357 00 12
E-mail : [email protected]
Website : www.tekfentower.com
INVESTMENT & SERVICES COMPANIES GROUP
• Tekfen Industry & Trade Co., Inc.
Kültür Mahallesi, Tekfen Sitesi
Ayd›nl›k Sokak, D Blok, No: 2
34340 Ulus-Befliktafl / ‹stanbul, Turkey
Phone : (90.212) 359 37 80
Fax
: (90.212) 359 37 90
E-mail : [email protected]
Website : www.tekfenendustri.com.tr
• Papfen Joint Stock Company
Yakkasarayskiy Rayon
Ul: Vasit Vahidov, No: 41
Tashkent, Uzbekistan
Phone : (99.871) 120 40 82
Fax
: (99.871) 120 40 81
E-mail : [email protected]
• Tekfen Insurance Brokerage Services Co., Inc.
Kültür Mahallesi, Ayd›nl›k Sokak, No: 6
34340 Ulus-Befliktafl / ‹stanbul, Turkey
Phone : (90.212) 359 38 80 (PBX)
Fax
: (90.212) 359 38 81
E-mail : [email protected]
Website : www.tekfensigorta.com.tr
• Antalya Studios Co., Inc.
Kültür Mahallesi, Tekfen Sitesi
Ayd›nl›k Sokak, A Blok, No: 7
34340 Ulus-Befliktafl / ‹stanbul, Turkey
Phone : (90.212) 359 33 00
Fax
: (90.212) 359 33 05
E-mail : [email protected]
Website : www.antalyastudios.com