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2014
The Creation of Success
Gap Güneydoğu Tekstil
2014 Annual Report
Head Office
Keresteciler Sitesi, Fatih Cad. Ladin Sok. No: 17
34169 Merter, Istanbul
T: +90 (212) 459 26 26 pbx
F: +90 (212) 677 41 17
www.calikdenim.com/tr
Factory
Gap Güneydoğu Tekstil San. ve Tic. A.Ş.
1. Organize Sanayi Bölgesi 2. Cadde No: 6
44900 Yeşilyurt, Malatya
T: +90 (422) 237 54 18
F: +90 (422) 237 54 17
Contents
Gap Güneydoğu Tekstil at a Glance
02
06
08
12
16
Gap Güneydoğu Tekstil in Brief
Key Financial and Operational Indicators
Milestones
Our Mission, Vision and Values
Certifications
Management
18
22
24
28
Message from the Chairman
Board of Directors
Message from the General Manager
Senior Management
Operations
32
38
42
48
Production
Sales & Marketing
Investments
Research & Development and Product Development
Sustainability
52
54
56
58
Human Resources
Occupational Health & Safety
The Environment
Corporate Social Responsibility & Society
Financial Tables
61
Independent Audit Report, Financial Tables and Footnotes
Founded with the aim of introducing a new
approach to the textile sector, Tekstil Gap
Güneydoğu Tekstil is today proud to be one of the
manufacturers that shapes world fashion through
its brand Çalık Denim...
Setting ever more ambitious performance targets
thanks to its rich product range and innovative
operations, Gap Güneydoğu Tekstil adds a chic and
comfortable touch to the lives of millions as a supplier
to the world’s biggest fashion brands.
2
At a Glance
Management
Operations
Sustainability
Financial Tables
in Brief
Manufacturing a wide array
of products in a 150,000 m2
facility and boasting an annual
production capacity of 40
million meters, Gap Güneydoğu
Tekstil is a robust, dynamic and
reliable supplier and solutions
partner for leading global
brands.
A Çalık Holding enterprise,
40 Million Meters
Manufacturing a wide array of products in a 150,000 m 2 facility
with an annual production capacity of 40 million meters, Gap
Güneydoğu Tekstil employs 1,414 personnel at its Malatya
location and 67 staff at the Istanbul headquarters.
Annual Production Capacity
Gap Güneydoğu Tekstil was established in Malatya as an
integrated yarn and weaving factory in 1987. Founded with an
investment of USD 111 million, Gap Güneydoğu Tekstil is also
the first Çalık Holding manufacturing related investment.
Gap Güneydoğu Tekstil completed building out its infrastructure
in 1996 and started production of denim fabric, commissioning
its ring spinning plant in 1997. In 2003, the Company added
gabardine and velvet to its production portfolio and became
a fully integrated manufacturing facility. Since that time, it
has steadily expanded its customer portfolio with new export
countries and brands.
After receiving R&D Center certification in 2011, Gap
Güneydoğu Tekstil demonstrated that it does not simply
manufacture products and fulfill customer orders; instead, the
Company carries out R&D operations as a recognized scientific
research center that capitalizes on its corporate know-how. Gap
Güneydoğu Tekstil has set up the seventh largest R&D center in
the Turkish textile industry.
For more information www.calikdenim.com
With an integrated factory in Malatya and Sales & Marketing
Center in Istanbul, Gap Güneydoğu Tekstil is widely known
as a leading global textile company. It is a robust, dynamic
and reliable supplier of many global brands, including Diesel,
Topshop, Benetton, Ann Taylor, G Star, Salsa, Next, Jack Jones,
H&M, VF, Inditex, Ahlers, Mavi, Replay, Scotch & Soda, Calvin
Klein, River Island, Hugo Boss, Gerry Weber and Zerres.
Gap Güneydoğu Tekstil markets its products to Italy, Germany,
the USA, Netherlands, France, Scandinavia, Portugal, Tunisia,
Morocco, Colombia, Canada as well as the Far East. Some 50% of
the Company’s fabric sales revenue originates from exports. The
Company plans to increase the number of its export markets in
coming years with production capacity increases.
Gap Güneydoğu Tekstil leads the sector with unrivaled
collections that include commercial as well as innovative,
cutting-edge fabrics. Under the brand Çalık Denim, the
Company offers a vast range of denim and gabardine fabric,
including sustainable and organic denim. As such, the Company
not only adds value to the domestic economy but also protects
the environment. The Company holds the GOTS, GRS,
OE100 and OE Blended certifications, all of which attest to its
environmentally minded approach.
3
4
506
TL million
Net Sales
From left to right: Serhan Meriçöz, Semra Ebret, Mehmet Akif Olgun, İsmail Meşe.
5
achieved a capacity
increase of 45% in yarn
and 15% in weaving in
2014; it also doubled its
coating capacity with a
new capital investment in
dye finishing. As a result,
the Company consistently
continues its growth drive
and remains one of the
world’s top ten denim
manufacturers.
6
At a Glance
Management
Operations
Sustainability
Financial Tables
Key Financial and
Operational Indicators
Gap Güneydoğu Tekstil closed the year with a strong
performance despite fluctuations in the economic environment.
(TL thousand)
2014
2013
506,284
383,649
Gross Profit
99,472
74,160
Operating Profit
54,769
11,803
1,240
(17,793)
13,009
1,185
Net Sales
Profit Before Taxes
Net Profit
Net Sales (TL thousand)
506,284
2014
383,649
2013
Exports (TL thousand)
176,440
2014
157,973
2013
Net Profit (TL thousand)
13,009
2014
1,185
2013
7
Export Markets (Gross)
Consolidated
TL Sales
%
337,174,000
65.65
Italy
44,298,841
8.62
Tunisia
34,523,037
6.72
Portugal
22,229,794
4.33
Bangladesh
16,536,354
3.22
Germany
12,467,613
2.43
Morocco
7,414,492
1.44
Hong Kong
5,271,223
1.03
China
4,889,901
0.95
Indonesia
4,856,422
0.95
Poland
2,516,293
0.49
France
2,460,680
0.48
South Korea
2,376,840
0.46
UAE
1,893,631
0.37
Colombia
1,886,293
0.37
USA
1,825,915
0.36
Philippines
1,741,424
0.34
Finland
1,304,259
0.25
Netherlands
1,288,791
0.25
Turkey
Egypt
1,270,611
0.25
India
1,162,413
0.23
814,364
0.16
Taiwan
Spain
589,078
0.11
Austria
524,285
0.10
Singapore
493,807
0.10
Serbia
484,683
0.09
UK
325,639
0.06
Belgium
308,990
0.06
Romania
226,442
0.04
Pakistan
152,882
0.03
Mexico
137,144
0.03
Israel
55,012
0.01
Australia
47,826
0.01
Vietnam
22,505
0.00
Estonia
16,958
0.00
Thailand
13,065
0.00
Sweden
11,136
0.00
1,025
0.00
330
0.00
513,614,000
100.00%
Hungary
Japan
Total Sales
8
At a Glance
Management
Operations
Sustainability
Financial Tables
Milestones
closely monitors technological
advances and continues
its production drive by
undertaking new capital
investments.
1930 - Malatya
1987 - Malatya
1995 - Malatya
> Family company
established.
> Gap Güneydoğu
Tekstil founded.
> Denim production
started up.
1981 - Malatya
1993 - Turkmenistan
1998 - Turkmenistan
> Ortadoğu Tekstil
established.
> Gap Türkmen
founded.
> Serdar Yarn Factory
commissioned.
9
2001 - Turkmenistan
2005 - Turkmenistan
2011 - Malatya
> Ashgabat Textile
Factory commissioned.
> Balkan Weaving and Yarn
Factory commissioned.
> Gap Güneydoğu Tekstil
R&D Center opened.
> Çalık Pamuk founded.
2004 - Malatya
2007 - Egypt
> Production of gabardine
fabric initiated.
> Çalık Alexandria
became operational.
10
Innovation
From left to right: Ahmet Serhat Karaduman, Fatih Doğan, Hamit Yenici, Aysun Şengür Salmanlı.
11
In line with its strategy of
product diversification,
has made significant
headway towards
becoming a highly
commended and wellknown world-class
manufacturer. The
Company continues
to reach its targets by
focusing on innovation.
12
Our Mission
We are a reliable, world-class
solutions partner that weaves
exceptional denims.
Our Vision
Becoming a denim
solutions partner
that immediately
comes to mind with its
customer focus and
innovative force, and
sells its products to the
strategic customers it
targets.
13
Our Values
•
•
•
•
•
•
•
•
•
•
Passion for denim
Openness to innovation
Customer focus
Belief in strong and open communications
Adding value to employees and customers
High awareness of quality
Integrity and consistency
Teamwork culture
Respect for employee and customer rights
Socially responsible and respectful to the
environment
14
100%
Qu
ality
From left to right: Ahmet Serhat Karaduman, İbrahim Ethem Büyükpepe, Hamit Yenici, Mehmet Faruk Avcı.
15
Making a difference in the
sector with its quality-focused
operations and investments,
further demonstrates its worldclass approach thanks to the
international certifications it
holds.
16
At a Glance
Management
Operations
Certifications
Gap Güneydoğu Tekstil takes into account the environmental
footprint of its manufacturing and sales operations and pays
maximum attention to human health in general and employee
health in particular. The many certifications held by the
Company demonstrate this approach.
Gap Güneydoğu Tekstil has obtained the following certifications:
•GOTS
•OCS
• OEKO-TEX STANDARD 100
•GRS
• ISO 9001
• ISO 14001
• BCI (Better Cotton Initiative)
• OHSAS 18001 Occupational Health and Safety
Sustainability
Financial Tables
17
18
At a Glance
Management
Operations
Message from the
Chairman
The Group’s textile subsidiary
Gap Güneydoğu Tekstil bolsters
its market position among
global textile giants thanks to
an ever-rising business volume
and production capacity.
Gap Güneydoğu Tekstil ranks
among the top ten companies
worldwide that manufacture
high quality denim. The
Company exports its products
to some 38 countries.
Sustainability
Financial Tables
19
20
At a Glance
Management
Operations
Sustainability
Financial Tables
Message from the
Chairman
Esteemed business partners and
distinguished associates,
In 2014, the global economy demonstrated lower-than-expected
growth while economic expansion in emerging markets also
dramatically slowed. Sluggish growth and deflation in the Euro
zone, the general deterioration of global financial conditions and
geopolitical risks associated with conflicts in Syria and RussiaUkraine created a challenging environment for the Turkish
economy. Despite the loss of momentum in the world economy,
Turkey achieved its macroeconomic targets and indicators to a
large extent and preserved its economic stability.
Çalık Holding employs about
27 thousand personnel across
three continents with its highly
successful business models. The
Holding continues to help move
the Turkish economy forward
with its operations in a diverse
range of sectors, including
energy, mining, construction,
finance, textiles and telecoms.
Çalık Holding employs about 27 thousand personnel across
three continents with its highly successful business models. The
Holding continues to help move the Turkish economy forward
with its operations in a diverse range of sectors, including energy,
mining, construction, finance, textiles and telecoms.
The Group’s textile subsidiary Gap Güneydoğu Tekstil bolsters
its market position among global textile giants thanks to an
ever-rising rising business volume and production capacity.
Gap Güneydoğu Tekstil ranks among the top ten companies
worldwide that manufacture high quality denim. The Company
exports its products to some 38 countries. Gap Güneydoğu
Tekstil continues to develop and implement projects that add
significant value to the Turkish economy, with innovative
products geared towards future generations and business models
that boost productivity, all under the brand Çalık Denim. In
2014, Gap Güneydoğu Tekstil was honored with the Export Stars
Platinum Award granted by the Istanbul Textile and Apparel
Exporters Associations (İTKİB) and the Export Achievement
Bronze Award from the Uludağ Textile Exporters Association
(UTİB).
Despite the slowdown in the global economy, Gap Güneydoğu
Tekstil closed 2014 with solid success, bringing its turnover up
to USD 130 million. Between 2012 and 2014, the Company made
capital investments amounting to about USD 60 million, and
it plans to invest a further USD 50 million by year-end 2017, to
increase and upgrade its production capacity. Exporting 60% of
its production to Italy, Portugal, Germany, Tunisia and the USA,
Gap Güneydoğu Tekstil plans to increase its market share in
the Los Angeles area and Japan. To this end, the Company will
carry out a restructuring process in Los Angeles and Bangladesh,
continuing its efforts to shape the world denim market along its
vision of manufacturing high quality and innovative products.
Closely monitoring industry-related technological developments,
Gap Güneydoğu Tekstil makes every effort to conduct all of its
business operations, from raw material supply to manufacturing,
in a sustainable manner and in close harmony with the natural
environment. With a strong focus on R&D and innovation, the
Company has set up the 99th largest R&D center in Turkey
– and seventh largest in the textile industry – in order to
coordinate efforts to design and develop innovative products and
technologies that can be commercialized.
21
Boasting an annual fabric production capacity of 40 million
meters, the Company goes from strength to strength as a robust,
dynamic and reliable solutions partner for leading global
brands with its integrated manufacturing facility and R&D
Center in Malatya; sales and marketing group in Istanbul; and
representatives and representative offices across the world.
Continuing to move forward in leaps and bounds guided by
Çalık Holding’s strong corporate culture, the Company bolsters
its market position day by day, by capitalizing on its experience,
entrepreneurial spirit, boldness and skilled human capital in
a world where the competitive environment changes rapidly. I
would like to take this opportunity to extend my gratitude to our
esteemed business partners, customers and associates who have
perpetuated our track record of success and who continue to
inspire us to become ever stronger.
Best regards,
Ahmet Çalık
Chairman
22
At a Glance
Management
Operations
Sustainability
Financial Tables
Board of Directors
Having made his first investments in
the energy sector in late 1980s, Ahmet
Çalık restructured Çalık Enerji (Çalık
Energy) in 1998 to focus on power plant
projects in challenging areas, such as
Central Asia, the Middle East and Africa.
Currently, Ahmet Çalık undertakes
major energy sector projects via Çalık
Enerji while also coming to play an
effective role in electricity distribution
by both acquiring companies and
establishing strategic partnerships in
Turkey and neighboring countries.
Ahmet Çalık
Chairman
With rich business experience gained
as a member of the Çalık Family, which
has been active in the textile industry
since 1930, Ahmet Çalık founded his first
enterprise in 1981. Today, Ahmet Çalık
is the founder and Chairman of Çalık
Holding, one of Turkey’s largest business
conglomerates with nearly 27 thousand
employees in 17 countries and operating
in six different industries.
In 1987, Ahmet Çalık established Gap
Güneydoğu Tekstil. The Company’s
denim factory in Malatya stands out
as one of the leading private sector
investments in Turkey’s Eastern Anatolia
region. Following the creation of the
independent Turkic Republics in Central
Asia, Ahmet Çalık set up industrial
facilities in Turkmenistan and undertook
investments in the region, becoming one
of the very first Turkish investors to do
so.
Entering the construction sector in the
1980s, Ahmet Çalık restructured Gap
İnşaat (Gap Construction) in 1996.
Today, Gap İnşaat ranks among the
world’s largest contracting companies
and specializes in infrastructure,
superstructure, industry, energy and
healthcare facilities and complexes.
Ahmet Çalık set up Çalık Holding in
1997 to bring Group companies together
under a single umbrella. With its
ambitious investments and highly skilled
workforce, Çalık Holding figures among
the pioneering Turkish business groups,
both domestically and abroad.
After entering the finance sector by
establishing Çalık Bank in 1999, Çalık
Holding renamed the entity Aktif
Bank in 2008; since that time, it has
become Turkey’s largest privately owned
investment bank. In addition, Çalık
Holding has expanded its financial
investments to the international arena
by acquiring BKT, one of Albania’s two
largest banks.
Ahmet Çalık established Çalık Maden
İşletmeleri (Çalık Mining Enterprises)
in 2006 in order to tap into Turkey’s rich
underground natural resources. Since
2010, the company has continued to
operate under the name Lidya Madencilik
(Lidya Mining) and has geared up its
operations in gold and polymetal mining.
In 2007, Ahmet Çalık acquired Albania’s
fixed line operator ALBtelecom and
then established Eagle Mobile in 2008,
becoming one of the biggest Turkish
investors in the Balkans.
In order to expand his construction
investments in Turkey into the areas
of property development, modern
urbanization and urban transformation,
Ahmet Çalık set up Çalık Gayrimenkul
(Çalık Real Estate) in 2007. Çalık
Gayrimenkul’s 2013 project “Tarlabaşı
360,” which was designed to create a
more pleasant, safe and secure living
environment worthy of central Istanbul,
was designated as Europe’s best “Urban
Renewal Project” at the European
Property Awards.
One of the biggest supporters of the
domestic economy and employment with
his various Group companies, Ahmet
Çalık has continuously raised the bar
of success with his trustworthy yet risktaking personality, focus on innovation
and entrepreneurial spirit. Under the
helm of Ahmet Çalık, who abides by
the principle of serving people and
society-at-large in both professional and
social aspects, Çalık Holding continues
to formulate pro-growth strategies and
establish strong partnerships.
Awards and Medals
Turkmenistan State Medal (1997);
Mahdum Guli Award (1997);
Entrepreneur of the Year Award, Para
Magazine (1997); Industrial Enterprise
of the Year Award, GESİAD (1997);
Distinguished Service Award, İpek Yolu
Foundation (1998); Turkish Republic
Distinguished Service Medal (1999);
Turkmenistan “Gayrat” Medal (1999);
Turkmenistan Golden Century Medal
(2001); Turkish Ministry of Foreign
Affairs Distinguished Service Medal
(2002); Businessman of the Year Award,
Turkish National Productivity Center
(2004); Istanbul University, Faculty
of Business Administration, Dünya
Newspaper – Turkish Entrepreneur of the
Year Award (2005); TGNA Distinguished
Service Award (2006); Dünya Newspaper
– Turkish Entrepreneur of the Year
Award (2006); Turgut Özal Award for
Economics (2008); Turkey in Europe
– Franco Nobili (2010); Turkish Red
Crescent Gold Medal (2012); Japan
Matsumoto Dental University Honorary
Ph.D. (2014); Ellis Island Honor Medal
(2014); Albanian Ministry for Social
Welfare and Youth Social Solidarity
Award (2014); Tirana University
Honorary Ph.D. (2014).
23
Mehmet Ertuğrul Gürler
Ender Hıdıroğlu
Ali Cüreoğlu
Mehmet Ertuğrul Gürler was born
in 1958, graduated from Marmara
University, Faculty of Economics, and
went on to build a 37-year career in
business. Mr. Gürler worked from 1987
until 1994 at Dow Turkey holding various
posts such as Finance Manager and Board
Member. Between 1994 and 1998, he
served as Deputy General Manager and
Deputy Chairman at Total Oil Turkey;
subsequently, he joined Çalık Holding
in 1998 as General Manager. Mehmet
Ertuğrul Gürler currently is Deputy
Chairman at Çalık Holding, Banka
Kombetare Tregtare and Gap Güneydoğu
Tekstil; Board Member at Aktif Bank,
ALBtelecom, Gap İnşaat and Gap
Pazarlama; and Chairman at YEPAŞ.
Ender Hıdıroğlu is a graduate of Middle
East Technical University, Department
of Mechanical Engineering. He has held
senior management positions in various
companies, including GATEKS, UPISAS,
SANKO, SASA, YURTAS, Paktaş and
İSKO. In 1992, he joined Çalık Holding,
and served as General Manager at Gap
Pazarlama for three years. During the
following ten years, Mr. Hıdıroğlu served
as Board Member, General Manager and
Project Manager at Gap İnşaat. Currently,
he holds senior management and board
membership posts at Çalık Holding
companies, and serves as Advisor to the
Chairman at Çalık Holding.
Ali Cüreoğlu was born in 1955 in
Malatya and graduated from Middle
East Technical University, Department
of Geological Engineering. After serving
as Manager at Tadal Gıda and Malatya
Municipality’s Esenlik Construction
Company, Mr. Cüreoğlu joined Gap
Güneydoğu Tekstil in 1999. Since 2009,
he has been a Board Member of the
Company.
Deputy Chairman
Advisor to the Chairman
Board Member
24
At a Glance
Management
Operations
Message from the
General Manager
Continuing its capital
investments apace in 2014, Gap
Güneydoğu Tekstil increased
its yarn production capacity by
45% and weaving capacity by
15%. It also doubled its coating
capacity with a new investment
in dye finishing.
Sustainability
Financial Tables
25
26
At a Glance
Management
Operations
Sustainability
Financial Tables
Message from the
General Manager
Distinguished shareholders,
2014 marked a period in which we witnessed fluctuations in
the world economic environment and in Turkey. The global
economy closed the year with 3% growth while the US economy
posted 2% growth, its fastest rate of expansion in 11 years, clearly
demonstrating that it had rebounded from the financial crisis. The
European recovery, on the other hand, continued at a slower-thanexpected pace.
Developing economies are going through a rough patch, however,
now that the Federal Reserve has ended its quantitative easing
program. The de facto emerging market leader, China, reported its
lowest growth rate in 24 years, expanding just 7% in 2014.
In our view, R&D investments
constitute the most important
investment area. We allocate
about 2% of our turnover to
the R&D Center, which is the
seventh largest establishment
of its kind in the Turkish textile
industry. The products and
methods developed in this
center have provided us with an
immense competitive edge in the
industry.
Due to these global developments, the crisis between Russia
and Ukraine, and the Syrian civil war, the Turkish economy
was destined to experience a slowdown: it closed the year with
2.9% growth. Measures to curb the current account deficit have
suppressed domestic demand and exports became the country’s
economic growth driver in 2014.
As for the textiles industry, the sharp devaluation of the ruble
due to the Russian-Ukrainian conflict and the EU’s sanctions
on Russia had a negative impact on the world’s apparel markets.
Turkey’s USD 900 million of exports to Russia and Ukraine
initially fell 30%. If this regional crisis worsens, exports to these
two markets could plunge as much as 50% from pre-conflict levels.
The recession in Europe, the rise in the foreign exchange rate, and
the expansion of the EU Free Trade Deal to include Pakistan and
Vietnam have also had an unfavorable effect on the textile sector.
Meanwhile, high levels of cotton inventory compared to prior
years, the anti-dumping measure applied to American cotton
in Turkey, the appreciation of the US dollar and China’s
announcement that it will reduce purchases have brought cotton
prices down significantly, from USD 2.20/kg to USD 1.60/kg.
Despite this challenging environment, Gap Güneydoğu Tekstil
continues to bolster its market position among the giants of the
world textile industry, thanks to a business volume that grows
steadily day by day. Having executed a sustainable growth drive
with its robust corporate structure, the Company increased
sales by 32% in 2014 and ended the year with net profit of TL 13
million.
Forging ahead with innovation
The main factors that have helped us figure among the top three
in the Turkish denim sector and the top ten worldwide are a high
quality and rich product range, and an innovative approach.
While developing our fabrics, we take into account the needs of
both customers and consumers to create our collections. This
approach to our business has helped us become the solutions
partner of the world’s leading brands. In addition, we also
continue to contribute significantly to the Turkish economy with
our strong success in exports.
We export to nearly 40 countries
We export our high quality products to almost 40 countries,
including Italy, Germany, USA, Netherlands, France,
Scandinavia, Portugal, Tunisia, Morocco, Colombia, Canada
and the Far East. In 2014, due to the strong export performance
we achieved in the face of tough competition, Gap Güneydoğu
Tekstil was honored with the Export Stars Platinum Award
granted by the Istanbul Textile and Apparel Exporter
Associations (İTKİB) and the Export Achievement Bronze Award
from the Uludağ Textile Exporter Association (UTİB). However,
we do not plan to rest on our laurels and remain content with
these accomplishments. As a result, in 2014, we continued efforts
to increase both the number of our export markets and our
export volume. To this end, we initiated sales and marketing
activities designed to increase our clout in Japan and Los
Angeles, which we view as strategically important regions for us.
We are fully confident that these efforts will bear fruit from 2015
onwards.
Our goal is to increase our production capacity
to 60 million meters by the end of 2017.
27
Making a difference through R&D
In our view, R&D investments constitute the most important
investment area. We allocate about 2% of our turnover to the
R&D Center, which is the seventh largest establishment of its
kind in the Turkish textile industry. The products and methods
developed in this center have provided us with an immense
competitive edge in the industry. Our 70-strong R&D Center
team continues to develop and introduce innovative approaches
to the textile industry.
In 2014, the Company filed three project applications as part
of the SAN-TEZ program, and two projects applications under
the TÜBİTAK-TEYDEB 1505 program. Of these, two SAN-TEZ
projects and one TÜBİTAK-TEYDEB 1505 project were deemed
worthy of support and were implemented. Out of a total of 43
projects carried out at the center in 2014, 13 projects have been
completed while 30 are ongoing.
Supporting people and society
Our high skilled workforce plays a crucial role in helping Gap
Güneydoğu Tekstil to develop innovative solutions and meet
customer needs and demands quickly and efficiently. Open
to new ideas, creative and reliable, our employees allow the
Company to move forward, from strength to strength.
Powered by our employees and our “people-first” approach,
we continue add value to all personnel and society as a whole.
Employing some 1,500 personnel in Malatya, Gap Güneydoğu
Tekstil ranks among the top employers of that city. The Company
not only supports the local community and economy, but also
wins hearts and minds by carrying out social responsibility
projects in the area of education.
Viewing social responsibility as an integral part of its corporate
culture, Gap Güneydoğu Tekstil embraces eco-friendly methods
in all operational processes, from raw material supply onwards.
The Company’s respect for human health and the natural
environment is reflected in its products, which include 100%
GOTS organic fabric and between 5% to 95% OCS organic fabric.
In parallel with our rising business volume, we are continually
working to expand our production capacity. In 2014, our capital
investment program continued without interruption. During
the year, Gap Güneydoğu Tekstil increased its yarn production
capacity by 45% and raised its weaving capacity by 15%. In
addition, we doubled our coating capacity with a new investment
in dye finishing.
In closing, I would like to extend my gratitude to the Çalık
Holding management for their unwavering support during our
journey to success, to our customers, suppliers, employees as well
as all our other valued stakeholders.
With the total investments realized in 2010-2014 we increased
our production capacity to over 40 million meters. Our target is
to raise our production capacity to 60 million meters by 2017.
General Manager
Best regards,
Hamit Yenici
28
At a Glance
Management
Operations
Sustainability
Financial Tables
Senior Management
Hamit Yenici
Ahmet Serhat Karaduman
Hamit Yenici was born in 1969 in Bursa and graduated from
Uludağ University, Department of Textile Engineering. He
started his professional career in 1990 at İSKO as a Weaving
Operations Engineer and ultimately became a Product
Development Manager. In 2014, he transitioned to Çalık Holding
and currently serves as General Manager at Gap Güneydoğu
Tekstil.
Ahmet Serhat Karaduman was born in 1972 in Muş and
graduated from Selçuk University, Department of Mechanical
Engineering. He started his professional career in 1996 as
Weaving Manager at Gap Güneydoğu Tekstil and held various
posts at the Company until 2003. Between 2004 and 2013, Mr.
Karaduman served as Weaving/Indigo/Product Development
Manager at Çalık Turkmenistan’s facilities. Appointed in 2013 as
R&D Manager, Mr. Karaduman became Factory Director in 2014.
General Manager
Fatih Doğan
Director for Financial and Administrative Affairs
Fatih Doğan was born in 1976 and graduated from İnönü
University, Faculty of Economics and Administrative Sciences,
Department of Economics; subsequently, he received a Master’s
degree in Economics from the same institution. After a brief stint
in academia, he entered the business world in 2000 as Accounting
Specialist at Gap Güneydoğu Tekstil, and went on to hold senior
positions at Gap Türkmen and Çalık Alexandria. Mr. Doğan was
appointed to the position of Director for Financial Affairs at Gap
Güneydoğu Tekstil in 2009.
Factory Director
Aysun Salmanlı Şengür
Director for Financial Affairs
Aysun Salmanlı Şengür was born in 1975 in Istanbul and
graduated from Istanbul University, Faculty of Science,
Department of Mathematics. She started her professional career
in 1997 at Yalova Elyaf ve İplik A.Ş. and joined Gap Güneydoğu
Tekstil in 2001. After holding various posts at the Company, Ms.
Şengür currently serves as Director for Financial Affairs.
From left to right: Fatih Doğan, Hamit Yenici, Ahmet Serhat Karaduman, Aysun Salmanlı Şengür.
29
30
4
0
Million Me
ters
Production Capacity
From left to right: Abdullah Dağdelen, Mehmet Faruk Avcı, Ahmet Serhat Karaduman, İsmet Kalalı.
31
Employing about 1,500
personnel, and adding
significant value to the
nation’s economy, Gap
Güneydoğu Tekstil operates
368 weaving looms across
a total covered area of
150,000 m2. The Company
continues to expand its
production capacity with
eco-friendly technologies.
32
At a Glance
Management
Operations
Production
At its integrated manufacturing
facilities in Malatya, Gap
Güneydoğu Tekstil operates
across a total production
area of 375,000 m2, of which
150,000 m2 is covered space.
The Company boasts an annual
production capacity of 40
million meters.
375 Thousand m2
Total Production Area
16 Million kg
Annual Yarn Production Capacity
Sustainability
Financial Tables
33
34
At a Glance
Management
Operations
Production
Gap Güneydoğu Tekstil,
figures among the world’s leading denim manufacturers that
guide the sector. At its integrated manufacturing facilities
in Malatya, Gap Güneydoğu Tekstil operates across a total
production area of 375,000 m 2, of which 150,000 m2 is covered
space. The Company boasts an annual production capacity of 40
million meters.
Yarn Facilities
Gap Güneydoğu Tekstil has the capability to develop its own yarn
and fabric, and implement production and finishing processes.
In addition, thanks to ring spinning machines equipped with
advanced features such as multi-twist, multi-count and “draw
your slub,” the Company formulates original yarn designs.
At Gap Güneydoğu Tekstil’s manufacturing facilities, it is
possible to produce yarns with a wide variety of folds and twists
by utilizing open-end rotor, ring and indigo colored yarn. The
Company also produces straight, core-spun, dual-core yarns and
twisted yarns with a range between NE 6-30.
Gap Güneydoğu Tekstil typically uses cotton from Urfa (Turkey),
the US and the Aegean region, as well as BCI (Better Cotton
Initiative) and organic cotton.
Annual Production Capacity
Yarn
16,000,000 kg
Indigo Dyeing
40,000,000 m
Weaving
40,000,000 m
Finishing
44,000,000 m
Total Production Area
375,000 m2
Covered Area
150,000 m2
Sustainability
Financial Tables
35
Indigo Facilities
The Company’s indigo facilities are capable of both rope dyeing
and beam dyeing. The yarn dyeing lines consist of two rope
dyeing and two beam dyeing lines. Warp dyeing operations
can be conducted in a wide range, including indigo, reactive,
pigment, sulfur, bottom and topping. After upgrades and
modifications implemented in 2014, the capacity and work
productivity have been boosted.
Weaving Facilities
At Gap Güneydoğu Tekstil’s weaving facilities, three types of
looms are used: the Dornier, Sulzer and Picanol models. These
facilities can produce a wide range of fabrics, including standards
weaves, as well as more complex variations such as plain weave,
scotch plaid, herringbone, piqué, skipping, double-layer and
gabardine fabric.
Finishing Facilities
The Company’s finishing facilities perform three operations: prefinishing, dyeing and finishing. In these sections, it is possible
to perform on fabrics such operations as cauterization, desizing,
mercerization, bleaching, dyeing, extension, sanforization,
coating and calendaring, on demand.
Quality Control
During the production process, 100% of the fabrics undergo
quality control. The fabrics are visually checked, scores are
assigned for any deficiencies, and the fabrics are divided into
quality categories. The pieces taken from the orders are washed
according to either standard formulas or the formulas demanded
by customers. Following color assessment, color classification,
and testing and controls in physical laboratories, shipping
approvals are given.
36
Generating over 50%
of the Company’s
fabric revenue
from exports, Gap
Güneydoğu Tekstil
sells its products to
numerous markets,
in particular Italy.
The Company is
taking ambitious
steps to raise its
production capacity
in the coming years
in order to increase
the number of its
export destinations
and expand its export
volume.
8
3
Countr ies
From left to right: Ümran Yazıcı, Elmas Özanlar, Emrah Gün, Mehmet Serdar Özcan, Selen Ergül, Aleks Başoğlu.
37
38
At a Glance
Management
Operations
Sales & Marketing
Having sold some 30 million
meters of fabric in 2014, Gap
Güneydoğu Tekstil generates
over 50% of its fabric revenue
from exports.
TL 506,284 Thousand
Net Sales Revenue
34.35%
Share of Exports in Total Sales
Sustainability
Financial Tables
39
40
At a Glance
Operations
Management
Sales & Marketing
As one of Turkey’s top denim manufacturers, Gap Güneydoğu
Tekstil is a strong, dynamic and reliable supplier for many global
brands, including Diesel, Topshop, Benetton, Ann Taylor, G Star,
Salsa, Next, Jack Jones, H&M, VF, Inditex, Ahlers, Mavi, Replay,
Scotch & Soda, Calvin Klein, River Island, Hugo Boss, Gerry
Weber and Zerres.
Having sold some 30 million meters of fabric in 2014, Gap
Güneydoğu Tekstil generates over 50% of its fabric revenue from
exports. The Company exports to 38 countries and its most
important export markets include Italy, Germany, the USA,
Netherlands, France, Scandinavia, Portugal, Tunisia, Morocco,
Colombia, Canada and the Far East.
In 2014, Gap Güneydoğu Tekstil participated in nine
international fairs, including those in Munich, Barcelona,
Amsterdam, Medellin and Shanghai, and two additional fairs
in Turkey. In addition, the Company strengthens its ties with
customers via a number of different marketing activities and
product launches. The Company also makes efficient use of social
media channels and communicates with end-consumers via
LinkedIn, Instagram, YouTube and other similar platforms.
Breakdown of Sales (%)
TL Sales
Share %
Europe
426,228,508
82.99%
Africa
43,208,141
8.41%
Asia
40,280,174
7.84%
North America
1,963,059
0.38%
South America
1,886,293
0.37%
47,826
0.01%
513,614,000
100.00%
Oceania
Total
Sustainability
Financial Tables
41
Gap Güneydoğu Tekstil also regularly places adverts in
relevant international trade publications. In 2014, the Company
significantly enhanced its brand image and reputation in the
eyes of the target audience thanks to a major photo shoot. Gap
Güneydoğu Tekstil has sponsored the Art Basel fair in the US
and the Treviso Comic Book Festival in Italy. Additionally, it has
provided support to fashion design undergraduates at Germany’s
University of Hannover.
While designing its fabrics, the Company analyzes the needs of
the market, customer and the end-consumer and develops its
collections accordingly.
Moving towards becoming a solutions provider for the brands its
works with, Gap Güneydoğu Tekstil always stands by its clients
as a partner focused on innovation and effective solutions. The
Company provides clients not only fabrics, but also know-how
and value-added services, closely noting their demands and
expectations during customer visits and responding to these
quickly and efficiently.
In the face of ever intensifying market competition, Gap
Güneydoğu Tekstil strives to become the company that first
comes to mind for top-quality brands with its customer-focused,
flexible approach, new generation products, wide product range,
and reliable services.
42
At a Glance
Management
Operations
Investments
Gap Güneydoğu Tekstil has
increased its annual production
capacity to 40 million meters with
the investments realized from 2010
to 2014. The Company plans to
undertake an additional investment
by 2017 in order to raise its total
production capacity to 60 million
meters.
60 Million Meters
Total Production Capacity Target for 2017
Sustainability
Financial Tables
43
44
At a Glance
Management
Operations
Investments
A leading denim manufacturer that helps steer the global
sector, Gap Güneydoğu Tekstil continues to undertake capital
investments, upgrades and modernization initiatives to increase
production capacity and quality. The Company closely monitors
cutting edge technologies and industry developments, and makes
needed investments to adapt to these changes and continually
raise its product quality.
In line with investment plans, the Company increased the
yarn department’s capacity by 45% and that of the weaving
department by 15%. In addition, it doubled the coating capacity
of the dye finishing department.
In 2014, the Company also initiated the Production Optimization
Program, which served to make work processes faster and more
accurate due to the Automatic Robotic Handling System.
Sustainability
Financial Tables
45
Gap Güneydoğu Tekstil has increased its annual production
capacity to 40 million meters with the investments realized from
2010 to 2014. The Company is keen to become the biggest supplier
of the world’s denim and sportswear brands and export – directly
or indirectly – 90% of its production to international brands. Gap
Güneydoğu Tekstil plans to undertake an additional investment
by 2017 in order to raise its total production capacity to 60
million meters as part of a three-stage investment program (30%
+ 30%+ 30%) spread across a five year period.
46
From left to right: Cem Ozan Sarı, Kerem Beyazıt, Müzeyyen Üngün, Münevver Ertek, İbrahim Ethem Büyükpepe.
47
Target
0
6
Million
Meters
With a production capacity
reaching 60 million meters,
by the investments that will
be realized until the end
of 2017, Gap Güneydoğu
Tekstil leads the pack with
unique collections featuring
innovative fabrics. The
Company continues to stand
apart from the competition
thanks to its pioneering
solutions under the Çalık
Denim brand.
48
At a Glance
Management
Operations
Sustainability
Research & Development and
Product Development
Having started up operations in 2011,
Gap Güneydoğu Tekstil’s R&D Center
is the 7th largest R&D facility in the
Turkish textile industry. In textilerelated research and development
efforts, it is critical to develop products
with a high visual appeal, as well as
high added value and performance.
The Company’s objective is to go
beyond merely offering fabrics to
clients; instead, it strives to ensure
that each fabric it produces is a high
quality, functional product supported
with advanced technology.
6,683
Total R&D Investment (TL thousand)
65 Employees
Total R&D Personnel
Financial Tables
49
50
At a Glance
Management
Operations
Sustainability
Financial Tables
Research & Development and
Product Development
Gap Güneydoğu Tekstil owes its achievements in the highly
competitive international textile market to innovative products
that stand out in the sector. As one of a handful of textile
companies to boast an in-house R&D Center, Gap Güneydoğu
Tekstil has capitalized on its extensive experience and knowhow to implement numerous innovative projects and develop
groundbreaking products and industry applications. The
Company actively embraces cutting edge technology and rapidly
responds to the evolving demands of the market, adding to its
long list of pioneering achievements day by day.
Since its inception, the R&D Center has embarked on 96 projects,
61 of which have been completed. With a workforce of nearly 70
professionals, the Center has introduced innovative approaches
to the Turkish textile industry and has become a pioneering force
in the sector. It has also been honored with various “R&D” and
“R&D Pioneers” awards.
Setting an example for the entire textile industry, Gap
Güneydoğu Tekstil’s R&D Center is engaged in advanced
research and analytical studies to ensure that Turkey’s economy
can effectively compete on a global level. At the same time, the
R&D Center strives to generate technological know-how and
commercialize its efforts related to products and production
processes in order to add value both to the Company and the
nation’s economy as a whole.
The Center conducts joint projects with 13 universities across
the country. These include Çukurova University, Dokuz
Eylül University, Erciyes University, Gaziantep University,
Gaziosmanpaşa University, Hacettepe University, İnönü
University, Istanbul Technical University, Süleyman Demirel
University, Sütçü İmam University, Tunceli University, Uludağ
University and Fırat University. It also collaborates with various
overseas R&D centers and universities.
The goals of Gap Güneydoğu Tekstil’s R&D Center include:
• Developing innovative products, equipment and processes,
generating new information, analyzing this data on a scientific
basis and designing scientific projects to resolve technological
issues;
• Designing eco-friendly products that prioritize consumer
demands, focus on current and future needs, comply with
world standards and create a competitive edge;
• Generating data through our operations, protecting
information and technologies that could be commercialized,
and accordingly expanding our intellectual property portfolio
with patents, models, registered products and the like;
• Anticipating advanced technologies and developments
that could lead to shifts in the industry, and subsequently
evaluating and implementing these;
• Participating in domestic and international conferences,
congresses, fairs and seminars, and monitoring the latest
developments and technologies in the sector.
The Company’s R&D Center strives to cooperate with not
only Turkish universities but also overseas universities and
other various R&D centers. The Company plans to work with
institutions that function like R&D centers on a global scale to
discuss projects that could be carried out jointly, and implement
these in the coming periods. To this end, R&D Center staff
members made on-site visits to various research centers and
assessed their infrastructure work areas, capabilities and
capacities.
Established in 2011, the Company’s R&D Center operates in a
covered space of 1,830 m 2 that includes offices, a library, a lab and
hygiene areas.
In 2014, the R&D Center’s findings about denim fabric resulted
in additional denim sales, corresponding to about a 7% uptick in
overall sales.
Gap Güneydoğu Tekstil has also filed the necessary applications
to protect its intellectual property rights. In addition, the
Company has IP applications that are currently in the
preparatory phase. Furthermore, certain of our file applications
to the Turkish Patent Institute (TPE) are undergoing evaluation.
51
R&D Investment (TL thousand)
6,683
2014
4,254
2013
4,690
2012
Gap Güneydoğu Tekstil is a major denim manufacturer that
is widely known worldwide for its product quality and service
philosophy. Diesel, Benetton, H&M, Calvin Klein, G-Star,
Tommy Hilfiger, Ann Taylor, Marks & Spencer, Topshop, Jack &
Jones and Zara are some of the leading global brands that Gap
Güneydoğu Tekstil works with. The Company places a huge
emphasis on various elements of its production, such as visual
richness, design, technical performance and quality. Ensuring
that all these elements coexist in its products, the Company
continues to stand apart in the sector with its unrivaled
collections.
While developing its fabrics, Gap Güneydoğu Tekstil takes into
account the needs of the end-consumer. The Company designs its
collections with a thorough analysis of the requirements of the
market, customers and end-consumers.
In 2014, Gap Güneydoğu Tekstil’s outstanding collections
included Thin Up, Skinflex and Extend Plus. In particular, very
elastic products with a high recovery and soft touch designed for
women were rapidly commercialized. In addition, the Company
has rolled out products offering maximum comfort to men
within its Extend Plus concept.
52
At a Glance
Management
Operations
Sustainability
Financial Tables
Human Resources
In addition to its sector
leadership in terms of growth
and change, Gap Güneydoğu
Tekstil also makes a point of
monitoring and embracing
the latest human resources
practices.
1,481
Total Number of Employees
A robust, dynamic and reliable supplier to global brands with
its integrated production facilities and R&D Center in Malatya,
Sales & Marketing Center in Istanbul, and offices around the
globe, Gap Güneydoğu Tekstil employs nearly 1,500 personnel.
In addition to its sector leadership in terms of growth and
adaptability, Gap Güneydoğu Tekstil also makes a point of
monitoring and embracing the latest human resources practices.
Gap Güneydoğu Tekstil continually spends quality time and
shares information with employees without ever compromising
the Company’s ethical approach. As such, the Company inspires
trust among and stands by its staff by pursuing a human
resources policy based on creativity, reliability, empathy, and
openness to new ideas to enrich its mission and vision.
53
Number of Employees
1,414
Malatya Factory
67
Istanbul Head Office
1,481
Total
Employee Breakdown/Malatya Factory
White Collar Blue Collar
Age
Tenure
Average
37
35
35
8
7
7
Employee Breakdown/Istanbul Head Office
Average Age
Average Tenure
34.40
5.10
The pillars of Gap Güneydoğu Tekstil’s human resources policy
include:
• Placing the right people in the right position with a customeroriented approach;
• Making the best use of existing high potential human capital;
• Measuring employee performance with the performance
management system;
• Providing career planning with the right job appointments;
• Establishing a long-term cooperation with personnel to ensure
the sustainability of the corporate culture.
54
At a Glance
Management
Operations
Sustainability
Financial Tables
was granted OHSAS 18001
Occupational Health and Safety
Certification in 2014 by SGS,
an independent international
company, in recognition of its
efforts in this key area.
In order to ensure its corporate sustainability in both economic
and social terms, Gap Güneydoğu Tekstil places a priority on
quality, people and the environment in all its business operations.
The Company devises internal policies, regulations and
guidelines to minimize risk in occupational health and safety,
and ensure the active participation of all employees in adhering
to these regulations.
Successfully implementing effective policies and practices related
to quality, the environment and OHS, the Company also expends
efforts to obtain relevant certifications. Gap Güneydoğu Tekstil
was granted OHSAS 18001 Occupational Health and Safety
Certification in 2014 by SGS, an independent international
company, in recognition of its efforts in this key area. This
certification relates to measures in the following OHS areas:
• Monitoring risk assessment and measures;
• OHS training activities;
• Root cause analysis in occupational accidents and follow-up
for the measures to be taken in response;
• OHS controls and follow-up;
• Supervision and measurements in the work environment
related to noise, dust, gas, vibration and lighting;
• Emergency plans and drills;
• Health tests and checks upon recruitment and at certain
specified intervals;
• Suggestions and near-miss reports;
• Controlling the choice and use of the right personal protective
equipment for the right work at hand;
• Periodic meetings of the OHS Committee;
• OHS statistics and reporting;
• Controlling subcontracting companies and visitors;
• Tests and checks on lifting and transmission devices.
100%
Respect to the
Natural Environment and
People
From left to right: Mehmet Akif Olgun, Cem Ozan Sarı, Elmas Özanlar
55
56
At a Glance
Management
Operations
Sustainability
Financial Tables
The Environment
Continuing to ramp up
its sustainability-focused
efforts, Gap Güneydoğu
Tekstil conducts all its
business operations, from the
collection of raw material to
manufacturing, in line with
international standards and
certifications meant to minimize
its environmental footprint.
Gap Güneydoğu Tekstil continually enhances its products that
protect people and the natural environment, and prioritizes the
protection of nature while pursuing its performance targets.
Gap Güneydoğu Tekstil’s goal is to minimize any negative
environmental impact its business activities may have and to
prevent any harm to employees, customers and society that may
occur from its operations. The Company takes a wide perspective
on its potential environmental impacts. Under this approach,
Gap Güneydoğu Tekstil carries out and supports research and
development, and system, process and product improvement
efforts and investments in order to manage these risks efficiently
and effectively.
Gap Güneydoğu Tekstil’s environmental policy includes:
• Raising environmental awareness to keep the natural
environment clean;
• Creating a healthy and safe work environment, and avoiding
occupational accidents and illnesses by taking necessary
precautions;
• Being mindful of legal requirements, customer requirements,
and Group requirements, protecting human health and safety,
and using natural resources in the right way;
• Setting goals and targets to prevent pollution, to leave a green
future to coming generations and to protect human health;
• Leading the way for and setting an example to other
textile companies in Malatya with regard to protecting the
environment and human health;
• Making no compromises in terms of environmental
protection, and taking robust steps in order to reach our goals
in preserving the quality of the air, water and soil;
• Creating the right work environment with the participation of
all employees, minimizing OHS related risks, and improving
our management system to attain sustainability;
• Reaching for the very best with the awareness that
Environment = Quality = Human Health.
Continuing to ramp up its sustainability-focused efforts, Gap
Güneydoğu Tekstil conducts all its business operations, from
the collection of raw material to manufacturing, in line with
international standards and certifications meant to minimize its
environmental footprint. The Company’s manufacturing facility
has two sources of carbon emissions as well as units for physical,
chemical, biological and slob-based treatment.
Holding both Recycle and Ekoteks certifications, the facility
recycles waste such as paper, nylon, cardboard, wood, cuttings
and metal by dispatching these to licensed firms. Gap Güneydoğu
Tekstil has also received the following certifications:
•GOTS
•OCS
• OEKO-TEX STANDARD 100
•GRS
• ISO 9001
• ISO 14001
• BCI (Better Cotton Initiative)
• OHSAS 18001 Occupational Health and Safety
In order to minimize the consumption of natural resources, the
Company has implemented numerous projects that include the
following:
• Recycling waste heat from the drying machinery;
• Reducing the amount of salt used in the water softening
system;
• Installing a recycling economizer for the waste chimney gas of
the coal fired boiler;
• Minimizing electricity use in lighting;
• Recycling caustic agents;
• Recycling indigo dye;
• Administering training programs on safeguarding the
environment and conserving water;
• Separating and recycling waste paper in the Company’s offices;
• Recycling waste machine oil and vegetable oil;
• Eliminating the use of filter bags in the coal fired boiler.
57
Thanks to the “Eco-save” production method developed by
the R&D Center, the Company’s manufacturing facilities now
consume 65% less water and have cut waste volume by 70%.
Placing a great emphasis on the natural environment and human
health, Gap Güneydoğu Tekstil also shapes its production with
this approach by manufacturing 100% organic GOTS (Global
Organic Textile Standard) and 5-95% OCS (Organic Cotton
Standard) fabric.
Other eco-friendly products manufactured by the Company
include:
• Denim fabric produced with recycled cotton;
• Denim fabric produced with recycled polyester;
• “Paper Denim” fabrics produced via the transformation of
waste paper into yarn;
• Denim/gabardine fabrics produced with raw materials
manufactured with fewer natural resources (e.g. CRAiLAR
flax, linen, and the like) in line with our sustainability
approach;
• Denim/gabardine fabrics produced with organic materials and
BCI;
• Denim/gabardine fabrics produced with zero emissions and
zero use of chemicals;
• Natural denim/gabardine fabrics produced exclusively from
completely natural raw material.
58
At a Glance
Management
Operations
Corporate Social
Responsibility &
the Society
The principle of creating added value for society forms the
foundation of Gap Güneydoğu Tekstil’s approach to corporate
social responsibility.
Well aware of the necessity to continuously improve its social and
environmental performance to achieve sustainable success, Gap
Güneydoğu Tekstil makes significant contributions to the society
at large in order to help meet its needs. These activities and efforts
are primarily in the area of education, and are supported with
volunteer work by the Company’s employees.
Malatya Education Foundation
Çalık Denim provides scholarships and support to students
in need with the intermediation of the Malatya Education
Foundation, which offers scholarship assistance to successful
university students. Çalık Denim and all other Group companies
make regular annual donations to the Foundation, which
provides scholarships to students in need after performing an
assessment.
As part of the “Hundred Percent Support to Education” initiative,
Gap Güneydoğu Tekstil sponsored the construction of the
Anadolu High School section of the Mahmut Çalık Educational
Complex, which opened its doors in the 2012 academic year.
Located in Malatya on a 40,000 m 2 tract, the Mahmut Çalık
Educational Complex will be completed in three stages. Planned
to consist of a kindergarten, primary schools and a high school,
the Complex will also feature dormitories for girls and boys, a
gymnasium, housing for teachers, auxiliary social facilities and a
conference hall.
The Company’s contributions to education were not limited to
the Mahmut Çalık Educational Complex. In 2014, the Company
covered the lunch expenses of the Turgut Özal Special Education
School, Abdulkadir Eriş Special Education School and Ali
Kuşçu Special Education Center for Autistic Children – a total
of 425 students each day. In 2014, the Company also donated
textile products to the Turkish Red Crescent, and contributed to
the protection of the environment with a tree planting project
conducted employee volunteers.
Sustainability
Financial Tables
59
Sanayi ve Ticaret Anonim Şirketi
and its Subsidiaries
Consolidated Financial Statements
As at and for the Year Ended
31 December 2014
With Independent Auditor’s Report
KPMG Akis Bağımsız Denetim ve Serbest Muhasebeci Mali
Müşavirlik Anonim Şirketi 6 April 2015
This report includes 1 pages of independent auditor’s report and
59 pages of consolidated financial statements together wtih their
explanatory notes and 5 pages of supplementary information.
Gap Güneydoğu Tekstil Sanayi ve Ticaret Anonim Şirketi
and its Subsidiaries
Table of Contents
Independent Auditor’s Report
Consolidated Statement of Financial Position
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
1 Reporting entity
2 Basis of prepration
3 Significant accounting policies
4 Related party disclosures
5 Cash and cash equivalents
6 Disposal group held for sale
7 Financial investments
8 Trade receivables and payables
9 Other receivables and other payables
10 Inventories
11 Prepayments and deferred revenue
12 Investments in equity-accounted investees
13 Property, plant and equipment
14 Intangible assets
15 Other assets and liabilities
16 Loans and borrowings
17 Payables related to employee benefits
18 Provisions
19 Commitments and contingencies
20 Taxation
21 Capital and reserves
22 Revenue and cost of sales
23 Administrative expenses, selling, marketing and distribution expenses and research and development expenses
24 Other operating income and expenses
25 Gain from investing activities
26 Finance income/(costs)
27 Financial instruments – Fair values and risk management
28 Subsequent events
Appendix: Supplementary information
Page
63
64-66
67
68
69
70-128
70-71
71-72
72-89
90-92
92
93
93-94
95
96
97
98
98
99-100
101
101
102
103
103-104
105
105-110
110-111
111
112-114
114
115
115
115-123
123
124-128
INDEPENDENT AUDITOR’S REPORT
To the Board of Directors of Gap Güneydoğu Tekstil Sanayi ve Ticaret Anonim Şirketi
We have audited the accompanying consolidated financial statements of Gap Güneydoğu Tekstil Sanayi ve Ticaret Anonim Şirketi and its subsidiaries, which
comprise the consolidated statement of financial position as at 31 December 2014, the consolidated statements of profit or loss and other comprehensive
income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory
information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial
Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with
International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The
procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of
the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of Gap Güneydoğu Tekstil Sanayi ve
Ticaret Anonim Şirketi and its subsidiaries as at 31 December 2014, and of its consolidated financial performance and its consolidated cash flows for the year
then ended in accordance with International Financial Reporting Standards.
Other matters
Without qualifying our opinion, we draw attention to the following matters:
Our audit was made for the purpose of forming an opinion on the consolidated financial statements taken as whole. The supplementary information
included in Appendix is presented for the purposes of additional analysis and is not a required part of the basic consolidated financial statements. The US
Dollar amounts presented in Appendix are solely for the convenience of the reader as additional analysis and have not been subjected to the audit procedures
applied in the audit of the basic consolidated financial statements. Accordingly, we do not express an opinion on this supplementary information.
Akis Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş.
A member of KPMG International Cooperative
Hakan Ölekli, SMMM
Partner
10 April 2015
Istanbul, Turkey
64
At a Glance
Management
Operations
Sustainability
Financial Tables
Gap Güneydoğu Tekstil Sanayi ve Ticaret Anonim Şirketi and its Subsidiaries
as at 31 December 2014
(Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)
ASSETS
Current assets
Cash and cash equivalents
Trade receivables
Due from related parties
Due from third parties
Other receivables
Inventories
Derivatives
Prepayments
Current tax assets
Other current assets
Subtotal
Assets held for sale
Total current assets
Non- current assets
Financial investments
Property, plant and equipment
Intangible assets
Other intangible assets
Prepayments
Deferred tax assets
Total non-current assets
Total assets
Notes
31 December 2014
31 December 2013
5
8
4
14.529
110.650
959
109.691
144.932
23.707
121.225
133.102
361
35.145
2.857
12.291
453.867
24.657
478.524
2.793
187.727
92.899
94.828
4.641
1.081
3.560
105.484
-60.050
1.645
7.839
370.179
24.941
395.120
20.765
143.079
861
861
1.970
38.016
204.691
21.245
110.849
923
923
443
24.981
158.441
683.215
553.561
9
4
10
11
20
15
6
7
13
14
11
20
The accompanying notes form an integral part of these consolidated financial statements.
65
Consolidated Statement of Financial Position (Continued)
LIABILITIES
Current liabilities
Short term loans and borrowings
Short term portion of long term loans and borrowings
Trade payables
Due to related parties
Due to third parties
Payables related to employee benefits
Other payables
Deferred revenue
Current tax liabilities
Short term provisions
Short term employee benefits
Other short term provisions
Other short term liabilities
Subtotal
Liabilities held for sale
Total current liabilities
Non-current liabilities
Long term loans and borrowings
Long term provisions
Long term employee benefits
Deferred tax liabilities
Total non-current liabilities
Total liabilities
EQUITY
Equity attributable to the owners of the Company
Share capital
Legal reserves
Other comprehensive income will never be reclassified to profit or loss
Other comprehensive income that is or may be reclassified to profit or loss
Accumulated losses
Profit for the year
Total equity attributable to the owners of the Company
Total non-controlling interests
Total equity
Total equity and liabilities
Notes
31 December 2014
31 December 2013
16
16
8
4
320.235
14.048
49.007
50
48.957
3.006
28.181
27.601
580
3.004
64
2.726
1.693
1.033
4.608
424.879
7.533
432.412
188.076
53
42.409
-42.409
2.674
124.001
123.467
534
4.281
67
1.719
1.557
162
1.980
365.260
9.399
374.659
48.798
12.110
12.110
60
60.968
493.380
-11.841
11.841
-11.841
386.500
164.740
23.094
(3)
9.759
(35.643)
11.234
173.181
16.654
189.835
683.215
164.740
22.899
(757)
9.556
(36.436)
988
160.990
6.071
167.061
553.561
17
9
4
11
20
18
15
6
16
18
20
21
21
66
At a Glance
Management
Operations
Sustainability
Financial Tables
Consolidated Statement of Financial Position (Continued)
Notes
22
22
22
2014
506.284
(406.812)
99.472
2013
383.649
(309.489)
74.160
General and administrative expenses
Selling, marketing and distribution expenses
Research and development expenses
Other income
Other expenses
Operating profit
23
23
23
24
24
(24.559)
(35.003)
(6.619)
35.940
(15.205)
54.026
(20.536)
(32.293)
(4.447)
12.386
(13.963)
15.307
Gains from investing activities
Losses from investing activities
Share of loss of equity accounted investees, net of taxes
Operating profit before finance costs
25
3.434
(2.691)
-54.769
1.208
(208)
(4.504)
11.803
-(53.529)
(53.529)
1.240
(1.394)
13.163
11.769
13.009
-(29.596)
(29.596)
(17.793)
(423)
19.401
18.978
1.185
11.234
1.775
13.009
988
197
1.185
Revenue
Cost of sales
Gross profit
Finance income
Finance costs
Net finance costs
Profit/(loss) before tax from continuing operations
Current tax expense
Deferred tax benefit
Total tax benefit
Profit for the year
Profit for the year attributable to:
Owners of the Company
Non-controlling interests
Net profit for the year
26
20
20
67
Consolidated Statement of Profit or Loss and Other Comprehensive Income (continued)
for the Year Ended 31 December 2014
Notes
2014
2013
18
20
942
(188)
(1.086)
216
11
817
765
(53)
Total comprehensive income
13.744
1.132
Total comprehensive income attributable to:
12.191
1.583
13.774
935
197
1.132
Other comprehensive income
Items that will never be reclassified to profit or loss
Defined benefit obligation actuarial differences
Tax on defined benefit obligation actuarial differences
Items that are or may be reclassified to profit or loss
Foreign currency translation differences for foreign operations and
reporting currency translation differences
Total other comprehensive income
--
Transfers
195
--
Balances at 31 December 2014
164.740
--
Share capital increase in subsidiaries
Transfers
--
--
Foreign currency translation differences for
foreign operations and reporting currency
translation differences
--
(3)
--
--
9.759
--
--
203
--
--
9.556
9.556
--
--
817
--
--
8.739
(35.643)
793
--
--
--
--
(36.436)
(36.436)
33.121
(19.868)
--
--
--
(49.689)
Accumulated
losses
11.234
(988)
--
--
--
11.234
988
988
(33.126)
--
--
--
988
33.126
Profit for the year
173.181
--
--
203
754
11.234
160.990
160.990
--
(17.930)
817
(870)
988
177.985
Total
16.654
--
9.000
(192)
--
1.775
6.071
6.071
--
--
--
--
197
5.874
Non-controlling
interests
189.835
--
9.000
11
754
13.009
167.061
167.061
--
(17.930)
817
(870)
1.185
183.859
Total equity
Sustainability
23.094
--
754
--
(757)
(757)
--
--
--
(870)
--
113
Translation reserve
Operations
--
--
Defined benefit obligation actuarial
differences, net of tax
--
--
22.899
22.899
5
1.938
--
--
Profit for the period
164.740
--
Dividend distribution
Balances at 1 January 2014
--
Foreign currency translation differences for
foreign operations and reporting currency
translation differences
164.740
--
Defined benefit obligation actuarial
differences, net of tax
--
20.956
Legal Defined benefit obligation
reserves
actuarial differences
Other comprehensive
income that is or
may be reclassified
to profit or loss
Management
Balances at 31 December 2013
--
164.740
Balances at 1 January 2013
Share
capital
Other comprehensive
income will never be
reclassified to profit or loss
At a Glance
Attributable to owners
of the Company
Consolidated Statement of Changes in Equity
68
Financial Tables
69
Consolidated Statement of Cash Flows
Notes
Adjustments for depreciation and amortization
Adjustments for doubtful receivables
Adjustments for inventory impairment, net
Adjustments for provision for long term employee benefits
Adjustments for lawsuit provisions, net
Adjustments for vacation pay liability
Adjustment for derivative financials
Adjustments for share of (profit)/ loss of equity accounted investees
Dividend income
Adjustments for interest expenses
Rediscount interest losses, net
Unrealized foreign currency (income)/loss
Adjustments for tax benefit
Adjustments for the losses/(gains) on sales of property and equipment, net
Adjustments to reconcile cash flow generated from operating activities:
Adjustments for change in inventories
Adjustments for change in trade receivables
Adjustments for change in other receivables
Adjustments for change in restricted cash and cash equivalents
Adjustments for change in payables related to employee benefits
Adjustments for change in assets held for sale
Adjustments for change in other assets
Adjustments for change in trade payables
Adjustments for change in other payables
Adjustments for change in prepayments
Adjustments for change in deferred income
Adjustments for change in other liabilities related with operating activities
Changes in working capital
Collection from doubtful receivables
Employee termination benefit paid
Taxes paid
Cash flows from operating activities
A.CASH FLOWS FROM OPERATING ACTIVITIES
Proceeds from sales of property and equipment and intangible assets
Dividend received
Dividend payment
Capital injection in financial investments
Share transfer in financial investments
Capital injection in subsidiaries by non controlling interests
Acquisition of property, plant and equipment
Acquisition of intangible assets
B. CASH FLOWS FROM INVESTING ACTIVITIES
Interest paid
Proceeds from/(repayment of ) short term loans and borrowings, net
Proceeds from/(repayment of ) long term loans and borrowings, net
C. CASH FLOWS FROM FINANCING ACTIVITIES
D. NET INCREASE/DECREASE IN CASH AND CASH EQUIVALENTS (A+B+C)
E. CASH AND CASH EQUIVALENTS AT THE BEGINING OF THE PERIOD
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD (A+B+C+E)
13,14
8
10
18
8
18
25
26
24
20
8
18
20
13
14
5
2014
13.009
13.566
506
314
1.347
871
136
(361)
-(458)
27.925
166
(914)
(11.769)
(2.537)
41.801
(27.932)
74.575
(140.291)
(1.726)
332
(1.582)
(4.452)
6.598
(95.820)
23.378
(1.277)
2.625
(123.771)
1.830
(136)
(2.609)
(915)
(124.686)
7.647
458
--480
9.000
(50.817)
(16)
(33.248)
(28.249)
149.815
46.378
167.944
10.010
2.793
12.803
2013
1.185
14.490
2.454
296
946
33
1.557
(980)
4.504
-16.955
(17)
(213)
(18.978)
215
22.447
(17.124)
(85.063)
87.609
-698
1.805
10.674
(9.198)
120.612
(40.427)
(394)
471
92.110
--(2.300)
(2.300)
89.810
468
980
(17.930)
(4.376)
30
-(41.444)
(27)
(62.299)
(13.205)
(15.578)
(3.565)
(32.348)
(4.837)
7.630
2.793
70
At a Glance
Management
Operations
Sustainability
Financial Tables
Notes to Consolidated Financial Statements
as at and for the Year Ended 31 December 2014
1 Reporting entity
Gap Güneydoğu Tekstil Sanayi ve Ticaret A.Ş. (the “Company” or “Gap Tekstil”) was established in 1987 in Turkey. Gap Tekstil has a
branch, namely Gap Güneydoğu Mersin Free Zone and it is engaged in the importation and exportation of textile products.
Gap Tekstil’s registered address is as follows:
Keresteciler Sitesi Fatih Caddesi Ladin Sokak No:17 Merter
İstanbul/Turkey.
As at 31 December 2014, Gap Tekstil has 5 (31 December 2013: 5) subsidiaries (“the Subsidiaries”), and 1 (31 December 2013:1) associate
(‘’the Associate’’) (reffered to as ‘’the Group’’herein and after). The consolidated financial statements of the Group as at and for the years
ended 31 December 2014 and 2013 comprise Gap Tekstil, its subsidiaries and the Group’s interest in its associate.
As at 31 December 2014, the number of employees of the Group is 1.507 (31 December 2013: 1.541).
As at 31 December 2014 and 2013, the subsidiaries and the associate included in the consolidation scope of Gap Tekstil, their country of
incorporation and the nature of businesses and ownership rates are as follows:
Company Name
Type of partnership
Çalık Alexandria For Readymade Garments
Çalık Korea Inc.
Çalık Pamuk Doğal ve Sentetik Elyaf Ticaret A.Ş.
Çalık USA
Gap Güneydoğu FZE Jebel Ali Free Zone
Gap Türkmen-Türkmenbaşı Jeans Kompleksi
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Associate
Country
Egypt
Korea
Turkey
USA
UAE– Dubai
Turkmenistan
2014
94,00
100,00
55,00
100,00
100,00
34,80
Ownership rate%
2013
94,00
100,00
55,00
100,00
100,00
34,80
Çalık Alexandria For Readymade Garments (“Çalık Alexandria”)
Çalık Alexandria was established in 2006 in Egypt for the purpose of engaging in the business of manufacturing and marketing ready
wear, yarn and textures.
Çalık Korea Inc.
Çalık Korea Inc. was established in 2007 for the purpose of importing and exporting textile and ready wear, and also distribution and
transportation services.
Gap Güneydoğu FZE Jebel Ali Free Zone (“Gap Güneydoğu FZE”)
Gap Güneydoğu FZE is engaged in the trading of textile products in Dubai.
Çalık Pamuk Doğal ve Sentetik Elyaf Ticaret A.Ş. (“Çalık Pamuk”)
Çalık Pamuk was founded in 2011 for the purpose of conducting international cotton trade activities and rendering consultancy services
in all matters related to cotton.
Çalık USA
Çalık USA is engaged in the trading of textile products in the USA.
Gap Türkmen -Türkmenbaşı Jeans Kompleksi (“TJK”)
TJK has been established as a joint venture of Gap Tekstil and the Ministry of Textiles Industry of Turkmenistan in 1995 within the frame
of Turkmenistan regulations for the purpose of yarn and denim fabric production and marketing. TJK has a denim fabric and jean factory
and makes domestic and foreign sales to USA and European countries.
71
1 Reporting entity (continued)
Group reclassified assets and liabilities of foreign subsidiaries located in Egypt, Korea, and USA as “Disposal group held for sale” based
on the decision made by the management and all assets and liabilities of these entities except the cash and cash equivalents have been
classified as “assets held for sale” and “liabilities held for sale” in the consolidated financial statements, respectively.
2 Basis of preparation
a) Statement of compliance
Group entities operating in Turkey maintain their books of account and prepare their statutory financial statements in Turkish Lira (“TL”)
in accordance with the accounting principles per Turkish Uniform Chart of Accounts, Turkish Commercial Code and Tax Legislation.
Group’s foreign entities maintain their books of accounts and prepare their statutory financial statements in accordance with the generally
accepted accounting principles and the related legislations applicable in the countries they operate.
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”).
The consolidated financial statements were approved by the Company management for the submission of the approval of General
Assembly on 10 April 2015. Gap Tekstil’s General Assembly and the other regulatory bodies have the power to amend the statutory
financial statements which after their issue.
b) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis and for the Turkish entities as adjusted for the effects
of inflation that lasted by 31 December 2005, except for derivative instruments.
The methods used to measure the fair values are discussed further in Note 27.
c) Functional and presentation currency
The accompanying consolidated financial statements are presented in TL which is Gap Tekstil’s functional currency. Except as otherwise
indicated, financial information presented in TL has been rounded to the nearest thousand.
The table below summarizes the functional currencies of the entities:
Company Name
Çalık Alexandria For Readymade Garments
Çalık Korea Inc.
Çalık Pamuk Doğal ve Sentetik Elyaf Ticaret A.Ş.
Çalık USA
Gap Güneydoğu FZE Jebel Ali Free Zone
Gap Türkmen-Türkmenbaşı Jeans Kompleksi
Functional currency
USD
USD
TL
USD
USD
USD
72
At a Glance
Management
Operations
Sustainability
Financial Tables
2 Basis of preparation (continued)
d) Use of estimates and judgements
The preparation of the consolidated financial statements in conformity with IFRSs requires management to make judgements, estimates
and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period
in which the estimate is revised and in any future periods affected.
Information about significant areas at estimation uncertainty and critical judgment in applying accounting policies that have the most
significant effect on the amounts recognised in the consolidated financial statements are described in the following notes:
•
•
•
•
•
•
Note 3 (f) and (g) – Useful lives of property and equipment and intangible assets
Note 18 – Provisions
Note 20 – Taxation
Note 27 – Financial instruments – Fair values and risk management
Note 10 – Impairment in value of inventories
Note 8 – Allowance for doubtful receivables
e) Reclassifications
The Group has made certain reclassifications between cost of sales and other expenses. As a result of these reclassifications cost of sales
increased by TL 11.067 and other expense decreased by TL 11.067 as at 31 December 2013.
3 Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements,
and have been applied consistently by Group entities.
a) Basis of consolidation
The accompanying consolidated financial statements include the accounts of the parent company, Gap Tekstil, its subsidiaries and its
associate on the basis set out in sections below. The financial statements of the entities included in the consolidation have been prepared as
at the date of the consolidated financial statements.
i) Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is
transferred to the Group. The Group has control over an entity when the group has power over the entity, exposure, or rights, to variable
returns from its involvement with the entity and the ability to use its power over the entity to affect the amount of the Group’s returns. In
assessing control, the Group takes into consideration potential voting rights that are currently exercisable.
The Group measures goodwill at the acquisition date as:
•
•
•
the fair value of the consideration transferred; plus
the recognised amount of any non-controlling interests in the acquiree; plus
if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree; less
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
3 Significant accounting policies (continued)
a) Basis of consolidation (continued)
i) Business combinations (continued)
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts generally are
recognised in profit or loss.
Transactions costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a
business combination are expensed as incurred.
Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classified
as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the
contingent consideration are recognised in profit or loss.
ii) Non-controlling interests
The Group measures non-controlling interests at their proportionate share of the subsidiary’s net assets.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as transactions with owners in their
capacity as owners. Adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary. No
adjustments are made to goodwill and no gain or loss is recognised in profit or loss.
iii) Subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that control ceases.
The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group.
73
74
At a Glance
Management
Operations
Sustainability
Financial Tables
a) Basis of consolidation (continued)
iv) Loss of control
On the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other
components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If
the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost.
Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of
influence retained.
v) Associates (Equity-accounted investees)
Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies.
Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity. Investments
in associates are accounted for using the equity method and are initially recognised at cost. The cost of investments includes transaction
costs.
The consolidated financial statements include the Group’s share of profit and loss and other comprehensive income of associates, after
adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date
that significant influence ceases.
When the Group’s share of losses exceeds its interest in an associates, the carrying amount of that interest, including any long-term
interests that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the
Group has an obligation or has made payments on behalf of the investee.
vi) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated
in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity accounted investees are
eliminated against the investment to the extent of Group’s interest in the investee.
Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
Carrying value of shares owned by the Group and dividends arising from these shares has been eliminated in equity and profit or loss
accounts.
In consolidation of operating results and financial positions of subsidiaries whose functional currency is other than TL, main
consolidation transactions are made such as elimination of related party balances and transactions. But, a monetary asset (or liability)
of related parties regardless of short-term or long-term (except for monetary items which are part of net investment of the Group in its
subsidiaries whose functional currency is different than TL) cannot be eliminated with related party liability (or related party asset)
without presenting results of fluctuation of foreign currencies in consolidated financial statements. Because, a monetary item provides
obligation of translation of any currency to other currency and makes the Group exposed to gain or losses arising from fluctuation of
foreign currencies. Correspondingly, these kind of foreign exchange differences are recognized in profit or loss of consolidated financial
statements of the Group.
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3 Significant accounting policies(continued)
b) Foreign currency
i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates
of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the
functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between the
amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and
the amortised cost in foreign currency translated at the exchange rate at the end of the year.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional
currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured
in terms of historical cost are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on
retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments
(except on impairment in which case foreign currency differences that have been recognised in other comprehensive income are
reclassified to profit or loss), a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the
hedge is effective; or qualifying cash flow hedges to the extent the hedge is effective.
As at 31 December 2014 and 2013, foreign exchange rates are as follows:
Euro/TL
USD/TL
31 December 2014
2,8207
2,3189
31 December 2013
2,9365
2,1343
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b) Foreign currency (continued)
ii) Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to TL
at exchange rates at the reporting date. The income and expenses of foreign operations are translated to TL at average exchange rates at the
dates of the transactions.
Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve
(translation reserve) in equity. However, if the foreign operation is a non-wholly-owned subsidiary, then the relevant proportion of the
translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant
influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit
or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign
operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests.
When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining
significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.
When the settlement of a monetary item receivable from or payable to a foreign operations is neither planned nor likely in the foreseeable
future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign
operation and are recognised in other comprehensive income, and presented within equity in the translation reserve.
c) Financial instruments
i) Non-derivative financial assets
The Group initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets are
recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to
receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of
the financial asset are transferred. Any interest in such transferred financial assets that is created or retained by the Group is recognised as
a separate asset or liability.
Financial assets and liabilities are offset and the net amount is presented in the consolidated statement of financial position when, and
only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the
liability simultaneously.
The Group classifies non-derivative financial assets into the following categories: loans and receivables, and available-for-sale financial
assets.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are
recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables
are measured at amortised cost using the effective interest method, less any impairment losses. Loans and receivables comprise trade
receivables and other receivables.
c) Financial instruments (continued)
i) Non-derivative financial assets (continued)
Cash and cash equivalents comprise cash balances, bank deposits and other liquid assets with original maturities of three months or less
from the acquisition date that are subject to an insignificant risk of changes in their fair value.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale and that are not classified
in loans and receivables, at fair value through profit or loss and held to maturity of financial assets. The Group’s investments in equity
instruments are classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and
changes therein, other than impairment losses and foreign currency differences on available-for-sale equity instruments, are recognised in
other comprehensive income and presented within equity in the fair value reserve, except that any instrument that does not have a quoted
market price in an active market and whose fair value cannot be reliably measured is stated at cost. When an instrument is derecognised,
the cumulative gain or loss in other comprehensive income is transferred to profit or loss.
ii) Non-derivative financial liabilities
The Group initially recognises non-derivative financial liabilities on the date that they are originated.
All other financial liabilities are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual
provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
Financial assets and liabilities are offset and the net amount is presented in the consolidated statement of financial position when, and
only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the
liability simultaneously.
The Group classifies non-derivative financial liabilities into other financial liabilities which mainly are comprise loans and borrowings,
trade and other payables and due to related parties.
Such financial liabilities are recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial
recognition these financial liabilities are measured at amortised cost using the effective interest method.
iii) Derivative financial instruments
The Company enters into commodity future contracts for the purpose of avoiding price risk which is resulting from fluctuations in the
price of commodities required for the final sale. This contracts are recognized as derivative instruments in the statement of financial
position.
The Group does not designate the derivative transaction as a hedging instrument. For that reason derivative financial instruments are
measured at fair value than changes in fair value are recognized immediately in profit or loss as incurred.
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c) Financial instruments (continued)
iv) Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a
deduction from equity, net of any tax effects.
d) Property, plant and equipment
i) Recognition and measurement
The costs of items of property, plant and equipment of Group’s Turkish entities purchased before 31 December 2005 are restated for
the effects of inflation in TL units current at 31 December 2005 pursuant to IAS 29. Property, plant and equipment purchased after this
date are recorded at their historical cost. Accordingly, property, plant and equipment of the Group are carried at costs, less accumulated
depreciation and impairment losses, if any.
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the
following:
•
•
•
•
cost of materials and direct labor;
any other costs directly attributable to bringing the asset to a working condition for its intended use;
when the Company has an obligation to remove the assets or restore the site, an estimate of the costs of dismantling and removing the
items and restoring the site on which they are located; and
capitalised borrowing costs.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major
components) of property, plant and equipment.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use
or disposal. Any gain or loss arising on derecognition of an item of property, plant and equipment (calculated as the difference between
the net proceeds from disposal and the carrying amount of the asset) is recognised in “Gains from investing activities” or “Losses from
investing activities” under profit or loss.
ii) Subsequent costs
Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with the expenditure will flow
to the Group. Ongoing repairs and maintenance is expensed as incurred.
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d) Property, plant and equipment (continued)
iii) Depreciation
Items of property, plant and equipment are depreciated from the date that they are available for use or, in respect of self-constructed
assets, from the date that the asset is completed and ready for use.
Depreciation is calculated to write off the cost of items of property, plant and equipment using the straight-line basis over their estimated
useful lives. Depreciation is generally recognised in profit or loss, unless the amount is included in the carrying amount of another asset.
Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will
obtain ownership by the end of the lease term. Land is not depreciated.
The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows:
Description
Land, land improvements and building
Machinery and equipments
Vehicles
Furniture and fixtures
Leasehold improvements
Other tangible assets
Leasehold improvements are depreciated over the shorter of the lease term and their useful lives, also on a straight-line basis.
Depreciation methods and useful lives are reviewed at each reporting date and adjusted if appropriate.
Year
5-50
3-40
4-6
2-15
5-10
3-5
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e) Intangible assets
Intangible assets of the Group mainly consist of rights and computer software acquired by the Group, which have finite useful lives, and
are measured at cost less accumulated amortisation and any accumulated impairment losses, if any.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it
relates. All other expenditure, including expenditure on internally generated goodwill and brands is recognised in profit or loss as
incurred.
Intangible assets are amortised on a straight-line basis in profit or loss over their estimated useful lives (3-5 years), from the date that they
are available for use.
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
f) Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is mainly based on the weighted average, and
includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to
their existing location and condition. In case of manufactured inventories and works in progress, cost includes an appropriate share of
production overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and estimated
costs necessary to make the sale.
The provision for impairment in value of inventories was provided for slow moving and obsolete inventories with respect to sales forcasts
and net realizable value estimations.
g) Impairment
i) Non-derivative financial assets
A financial asset not classified as at fair value through profit or loss is assessed at each reporting date to determine whether there is
objective evidence that it is impaired. A financial asset is impaired if objective evidence of impairment as a result of one or more events
that occurred after the initial recognition of the asset, and that the loss event(s) had an impact on the estimated future cash flows of that
asset that can be estimated reliably. Objective evidence that financial assets are impaired can include default or delinquency by a debtor,
restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer
will enter bankruptcy, adverse changes in the payment status of borrowers or issuers in the Group, economic conditions that correlate
with defaults or the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or
prolonged decline in its fair value below its cost is objective evidence of impairment.
g) Impairment (continued)
i) Non-derivative financial assets (continued)
Available-for sale financial assets
Impairment losses on available-for-sale investment securities are recognised by reclassifying the cumulative loss that has been recognised
in other comprehensive income, and presented in the fair value reserve in equity, to profit or loss. The cumulative loss that is reclassified
from other comprehensive income and recognised in profit or loss is the difference between the acquisition cost, net of any principal
repayment and amortisation, and the current fair value, less any impairment loss previously recognised in profit or loss. Changes in
cumulative impairment losses attributable to application of the effective interest method are reflected as a component of interest income.
If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related
objectively to an event occurring after the impairment loss was recognised, then the impairment loss is reversed, by the amount of the
reversal recognised in profit or loss. However, any subsequent recovery in the fair value of an impaired available-for-sale equity security is
recognised in other comprehensive income.
For an investment in unquoted equity instruments carried at cost because their fair value cannot be measured reliably, impairment losses
is not reversed.
Financial assets measured at amortised cost
The Group considers evidence of impairment for these assets at both an individual asset and a collective level. All individually significant
assets are individually assessed for impairment. Those found not to be impaired are then collectively assessed for any impairment that
has been incurred but not yet individually identified. Assets that are not individually significant are collectively assessed for impairment.
Collective assessment is carried out by grouping together assets with similar risk characteristics. In assessing collective impairment,
the Group uses historical information on the timing of recoveries and the amount of loss incurred, and makes an adjustment if current
economic and credit conditions are such that the actual losses are likely to be greater or lesser than suggested by historical trends.
An impairment loss is calculated as the difference between an asset’s carrying amount and the present value of the estimated future cash
flows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account.
When the Group considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount
of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was
recognised, then the previously recognised impairment loss is reversed through profit or loss.
Equity-accounted investees
An impairment loss in respect of an equity-accounted investee is measured by comparing the recoverable amount of the investment
with its carrying amount. An impairment loss is recognised in profit or loss, and is reversed if there has been a favourable change in the
estimates used to determine the recoverable amount.
ii) Non-financial assets
The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting
date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is
estimated. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit (“CGU”) exceeds its
recoverable amount.
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g) Impairment (continued)
ii) Non-financial assets (continued)
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets are grouped together
into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other
assets or CGUs. Subject to an operating segment ceiling test, CGUs to which goodwill has been allocated are aggregated so that the level at
which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill
acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.
Impairment losses are recognised in profit or loss. For the other assets, impairment losses recognised in respect of CGUs are allocated first
to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the carrying amounts of the
other assets in the CGU (group of CGUs) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. Impairment loss is reversed when there is a change in the estimates used in the
calculation of recoverable amount. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does
not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised.
h) Employee benefits
i) Reserve for employee severance indemnity
Reserve for employee severance indemnity represents the present value of the estimated future probable obligation of the Group arising
from the retirement of the employees of the Group’s entities operating in Turkey and calculated in accordance with the Turkish Labour
Law. It is computed and reflected in the consolidated financial statements on an accrual basis as it is earned by serving employees. The
computation of the liabilities is based upon the retirement pay ceiling announced by the Government. The ceiling amounts applicable for
each year of employment were TL 3,43and TL 3,25 at 31 December 2014 and 2013, respectively.
IFRSs require actuarial valuation methods to be developed to estimate the entity’s obligation under defined benefit plans. The total
liability for employee severance benefit was calculated by an independent actuary based on past service cost methodology using the
observerable statistical market data such as mortality, inflation and interest rates or retirement pay ceilings applicable to the relevant
periods and assumptions derived from the specific historic date of the Group such as retention and employee turnover rates or salary
increase rates.
Actuarial gains/losses are comprised of adjustment of difference between actuarial assumptions and realised and change in actuarial
assumptions. As a result of the adoption of IAS 19 (2011), all actuarial differences are recognised in other comprehensive income.
Reserve for employee severance indemnity is not subject to any statutory funding.
ii) Vacation pay liability
Short-term employee benefit obligations are consisting of reserve for the vacation pay liability due to the earned and unused vacation
rights of its employees of the Group’s Turkish entities, and measured on an undiscounted basis and are recognised in profit or loss as the
related service is provided.
i) Revenue
Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or
receivable, net of returns and allowances and trade discounts. Revenue is recognised when persuasive evidence exists, usually in the
form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the buyer, recovery
of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing
management involvement with the goods and the amount of revenue can be measured reliably. If it is probable that discounts will be
granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sale is recognised.
Transfers of risks and rewards vary depending on the individual terms of the contract of sale but usually take place when the goods are
delivered to the customers.
j) Assets held for sale or distribution
Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale or
distribution rather than through continuing use, are classified as held for sale or distribution.
Immediately before classification as held for sale or distribution, the assets, or components of a disposal group, are remeasured in
accordance with the Group’s accounting policies. Thereafter generally the assets, or disposal group, are measured at the lower of their
carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to the
remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets and deferred tax assets,
which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for
sale or distribution and subsequent gains and losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess
of any cumulative impairment loss.
Intangible assets and property, plant and equipment once classified as held for sale or distribution are not amortised or depreciated. In
addition, equity accounted investee is no longer equity accounted.
k) Leases
i) Leased assets
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. On initial
recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease
payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.
Other leases are operating leases are not recognised on the Group’s consolidated statement of financial position.
ii) Lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives
received are recognised as an integral part of the total lease expense, over the term of the lease.
Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding
liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the
remaining balance of the liability.
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k) Leases (continued)
iii) Determining whether an arrangement contains a lease
At inception of an arrangement, the Group determines whether such an arrangement is or contains a lease. The following two criteria
must be met for a “lease”:
•
•
the fulfillment of the arrangement is dependent on the use of a specific asset or assets; and
the arrangement contains a right to use the asset(s).
At inception or upon reassessment of the arrangement, the Group separates payments and other consideration required by such an
arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Group concludes for a
finance lease that it is impracticable to separate the payments reliably, an asset and a liability are recognised at an amount equal to the fair
value of the underlying asset. Subsequently the liability is reduced as payments are made and an imputed finance charge on the liability is
recognised using the Group’s incremental borrowing rate.
l) Finance income and finance costs
Finance costs comprise interest expense on borrowings and foreign currency losses (excluding those on trade receivables and payables).
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in
profit or loss using the effective interest method.
Foreign currency gains and losses are reported on a net basis as either finance income or finance cost depending on whether foreign
currency movements are in a net gain or net loss position by each entity of the Group.
m) Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent
that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.
Current tax
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences:
the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor
taxable profit or loss, and differences relating to investments in subsidiaries, joint ventures and associates to the extent that it is probable
that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised for taxable temporary differences arising on
the initial recognition of goodwill.
m) Income tax (continued)
Deferred tax (continued)
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates
enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to
income taxes levied by the same tax authority on the same taxable entity.
A deferred tax asset is recognised for unused tax losses, tax credits and deductable temporary differences, to the extent that it is probable
that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Tax exposures
In determining the amount of current and deferred tax the Group takes into account the impact of uncertain tax positions and whether
additional taxes and interest may be due. The Group believes that its accruals for tax liabilities are adequate for all open tax years based
on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and
assumptions and may involve a series of judgements about future events. New information may become available that causes the Group to
change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period
that such a determination is made.
n) Subsequent events
Subsequent events represents the events after reporting date comprising any event between the reporting date and the date of
authorisation for the consolidated financial statements’ issue to the benefit or loss of the entity. Conditions of subsequent events are as
follows:
•
•
to have new evidences of subsequent events as of reporting date (adjusting events after reporting date); and
to have evidences of related subsequent events occurred after reporting date (non adjusting events after reporting date).
The Group adjusts its consolidated financial statements according to the new condition if adjusting subsequent events arise subsequent to
the reporting date. If it is not necessary to adjust the consolidated financial statements according to subsequent events, these subsequent
events must be disclosed in the notes to the consolidated financial statements.
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o) Statement of cash flows
Cash flows during the period are classified and reported by operating, investing and financing activities in the cash flow statements.
Cash flows from operating activities reflect cash flows mainly generated from main operations of the Group. The Group presents the cash
flows from operating activities by using the indirect method such as adjusting the accruals for cash inflows and outflows from gross profit/
loss, other non-cash transactions, prior and future transactions or deferrals.
Cash flows from investment activities express cash used in investment activities (direct investments and financial investments) and cash
flows generated from investment activities of the Group.
Cash flows relating to financing activities express sources of financial activities and payment schedules of the Group.
Cash and cash equivalents comprise cash on hand and demand deposits and other bank deposits which their maturities are three months
or less from date of acquisition.
p) Related parties
Parties are considered related to the Group if:
(a) Directly, or indirectly through one or more intermediaries, the party:
(i) controls, is controlled by, or is under common control with the Group (this includes parent, subsidiaries and fellow subsidiaries);
(ii) has an interest in the Group that gives it significant influence over the Group; or
(iii)has joint control over the Group;
(b) the party is an associate of the Group;
(c) the party is a joint venture/operation in which the Group is a venturer;
(d) the party is member of the key management personnel of the Group and its parent;
(e) the party is a close member of the family of any individual referred to in (a) or (d);
(f) the party is an entity that is controlled or significantly influenced by, or for which significant voting power in such entity resides with
directly or indirectly, any individual referred to in (d) or (e);
(g) the party is a post-employment benefit plan for the benefit of employees of the Group, or of any entity that is a related party of the
Group.
A related party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a price is
charged.
A number of transactions are entered into with related parties in the normal course of business.
r) New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 31 December 2014, and
have not been applied in preparing these consolidated financial statements.
IFRS 9 Financial Instruments – Classification and measurement
As amended in December 2012, the new standard is effective for annual periods beginning on or after 1 January 2015. Phase 1 of this new
IFRS 9 introduces new requirements for classifying and measuring financial assets and liabilities. The amendments made to IFRS 9 will
mainly affect the classification and measurement of financial assets and measurement of fair value option (FVO) liabilities and requires
that the change in fair value of a FVO financial liability attributable to credit risk is presented under other comprehensive income. Early
adoption is permitted. The Group is in the process of assessing the impact of the standard on the consolidated financial position or
performance of the Group.
IAS 16 and IAS 38 – Clarification of acceptable methods of depreciation and amortisation
The amendments to IAS 16 Property, Plant and Equipment explicitly state that revenue-based methods of depreciation cannot be used for
property, plant and equipment. The amendments to IAS 38 Intangible Assets introduce a rebuttable presumption that the use of revenuebased amortisation methods for intangible assets is inappropriate. The amendments are effective for annual periods beginning on after
1 January 2016, and are to be applied prospectively. Early adoption is permitted. The Group does not expect that these amendments will
have significant impact on the consolidated financial position or performance of the Group.
IFRS 9 Financial Instruments – Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39-(2013)
In November 2013, the IASB issued a new version of IFRS 9, which includes the new hedge accounting requirements and some
related amendments to IAS 39 and IFRS 7. Entities may make an accounting policy choice to continue to apply the hedge accounting
requirements of IAS 39 for all of their hedging transactions. Further, the new standard removes the 1 January 2015 effective date of
IFRS 9. The new version of IFRS 9 issued after IFRS 9 (2014) introduces the mandatory effective date of 1 January 2018 for IFRS 9, with
early adoption permitted. The Group is in the process of assessing the impact of the standard on the consolidated financial position or
IFRS 9 Financial Instruments (2014)
IFRS 9, published in July 2014, replaces the existing guidance in IAS 39 “Financial Instruments Recognition and Measurement”. IFRS
9 includes revised guidance on the classification and measurement of financial instruments including a new expected credit loss model
for calculating impairment on financial assets, and the new general hedge accounting requirements. It also carries forward the guidance
on recognition and de-recognition of financial instruments from IAS 39. IFRS 9 is effective for annual reporting periods beginning
on or after 1 January 2018, with early adoption permitted. The Group is in the process of assessing the impact of the standard on the
consolidated financial position or performance of the Group.
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r) New standards and interpretations not yet adopted (continued)
IFRS 14 Regulatory Deferral Accounts
IASB has started a comprehensive project for Rate Regulated Activities in 2012. As part of the project, IASB published an interim standard
to ease the transition to IFRS for rate regulated entities. The standard permits first time adopters of IFRS to continue using previous
GAAP to account for regulatory deferral account balances. The interim standard is effective for financial reporting periods beginning
on or after 1 January 2016, although early adoption is permitted. The Group does not expect that these amendments will have significant
impact on the consolidated financial position or performance of the Group.
IFRS 15 Revenue from Contracts with customers
The standard replaces existing IFRS and US GAAP guidance and introduces a new control-based revenue recognition model for contracts
with customers. In the new standard, total consideration measured will be the amount to which the Group expects to be entitled, rather
than fair value and new guidance have been introduced on separating goods and services in a contract and recognising revenue over time.
The standard is effective for annual periods beginning on or after 1 January 2017, with early adoption permitted under IFRS. The Group is
in the process of assessing the impact of the amendment on the consolidated financial position or performance of the Group.
Sale or contribution of assets between an investor and its associate or joint venture (Amendments to IFRS 10 and IAS 28)
The amendments address the conflict between the existing guidance on consolidation and equity accounting. The amendments require
the full gain to be recognized when the assets transferred meet the definition of a “business” under IFRS 3 Business Combinations. The
amendments apply prospectively for annual periods beginning on or after 1 January 2016. Early adoption is permitted. The Group does
not expect that these amendments will have significant impact on the consolidated financial position or performance of the Group.
Equity method in separate financial statements (Amendments to IAS 27)
The amendments allow the use of the equity method in separate financial statements, and apply to the accounting not only for associates
and joint ventures, but also for subsidiaries. The amendments apply retrospectively for annual periods beginning on or after 1 January
2016. Early adoption is permitted. The Group does not expect that these amendments will have significant impact on the consolidated
financial position or performance of the Group.
Disclosure Initiative (Amendments to IAS 1)
The narrow-focus amendments to IAS 1 Presentation of Financial Statements clarify, rather than significantly change, existing IAS 1
requirements. In most cases the amendments respond to overly prescriptive interpretations of the wording in IAS 1. The amendments
relate to the following: materiality, order of the notes, subtotals, accounting policies and disaggregation. The amendments apply for
annual periods beginning on or after 1 January 2016. Early adoption is permitted. The Group does not expect that these amendments will
have significant impact on the consolidated financial position or performance of the Group.
Improvements to IFRSs
The IASB issued Annual Improvements to IFRSs-2012–2014 Cycle. The amendments are effective as of 1 January 2016. Earlier application
is permitted. The Group does not expect that these amendments will have significant impact on the consolidated financial position or
r) New standards and interpretations not yet adopted (continued)
Annual Improvements to IFRSs – 2012–2014 Cycle
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
The amendments clarify the requirements of IFRS 5 when an entity changes the method of disposal of an asset (or disposal group) and no
longer meets the criteria to be classified as held-for-distribution.
IFRS 7 Financial Instruments: Disclosures
IFRS 7 is amended to clarify when servicing arrangement are in the scope of its disclosure requirements on continuing involvement in
transferred financial assets in cases when they are derecognized in their entirety. IFRS 7 is also amended to clarify that the additional
disclosures required by Disclosures: Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7).
IAS 19 Employee Benefits
IAS 19 has been amended to clarify that high-quality corporate bonds or government bonds used in determining the discount rate should
be issued in the same currency in which the benefits are to be paid.
IAS 34 Interim Financial Reporting
IAS 34 has been amended to clarify that certain disclosure, if they are not included in the notes to interim financial statements, may
be disclosed “elsewhere in the interim financial report” – i.e. incorporated by cross-reference from the interim financial statements to
another part of the interim financial report (e.g. management commentary or risk report).
89
90
At a Glance
Management
Operations
Sustainability
Financial Tables
4 Related party disclosures
Related party balances
As at 31 December, the Group had the following balances outstanding from its related parties:
Trade receivables
Taçyıldız Örme ve Teks. San. Tic. A.Ş.
Akbulut Tekstil Ticaret ve Sanayi A.Ş.
Ontk Tekstil San. ve Tic. A.Ş.
Anateks Anadolu Tekstil Fabrikası A.Ş.(*)
Other
Total
Other receivables
Çalık Holding A.Ş.(**)
Mahmut Can Çalık
Gap İnşaat Dubai FZE
Çalık Enerji Dubai FZE
Aktif Bank Yatırım Bankası A.Ş.
Gap Pazarlama Dubai FZE
Akbulut Tekstil Ticaret ve San. A.Ş.
Ontk Tekstil San. ve Tic. A.Ş.
Other
Total
31 December 2014
31 December 2013
506
317
136
--959
481
--91.930
488
92.899
22.177
752
403
240
110
25
---23.707
--311
166
64
96
81
143
220
1.081
Anateks Anadolu Tekstil Fabrikası A.Ş. sells the yarn which is produced by processing the cotton purchased from the Group to the other companies in the textile
sector in addition to the Group Companies. As at 31 December 2014, since Anateks Anadolu Tekstil Fabrikası A.Ş. is no longer a releted party of the Group, the Group
classified as other receivables third parties as at 31 December 2014.
(**)
As at 31 December 2014, there is no spesific maturity for the receivables due from Çalık Holding A.Ş. and the Group charges the interest to Çalık Holding A.Ş.
monthly with an annual interest rate of 18%.
(*)
91
4 Related party disclosures (continued)
Related party balances (continued)
31 December 2014
31 December 2013
27
23
50
----
25.991
1.577
23
-10
27.601
121.525
207
200
768
767
123.467
238.421
238.421
77.340
77.340
Trade payables
Gap Pazarlama A.S.
Albtelecom
Total
Other payables
Çalık Holding A.Ş. (***)
Çalık Hava Taşımacılık
Albtelecom
Mahmut Can Çalık
Other
Total
Loans and borrowings
Aktifbank Yatırım Bankası A.Ş.
As at 31 December 2014, there is no spesific maturity for the payables due to Çalık Holding and the Çalık Holding charges the interest to the Group monthly with the
annual interest rate of 18% (2013: 17%).
(***)
No impairment losses have been recognised against balances outstanding as at 31 December 2014 (31 December 2013:None) and no
allowance has been made for impairment losses on balances with the related parties.
Related party transactions
For the year ended 31 December, relared party transactions comprised the following:
2014
Anateks Anadolu Tekstil Fabrikaları A.Ş.
Çalık Holding A.Ş. (*)
Çalik Enerji Sanayi ve Ticaret A.Ş.
Gap Pazarlama A.Ş.
Gap Pazarlama Dubai FZE
Gap İnşaat Dubai FZE
Çalık Enerji Dubai FZE
Atayurt Insaat A.S.
Aktifbank Yatırım Bankası A.Ş.
Çalik Enerji TRM Branch
Çalık Hava Tasimacilik
GAP Insaat Yatırım ve Dış Ticaret A.S.
Lidya Madencilik Sanayi ve Ticaret A.S.
Other
Income
24.608
4.951
513
362
91
91
93
-------30.709
2013
Expense
3.259
16.593
-309
208
29
29
-21.940
-64
--23
42.454
Income
-9.322
85
202
70
68
68
1
-----1
9.817
Expense
-9.190
9
921
143
9
65
-6.882
7
68
18
2
2
17.316
92
At a Glance
Management
Operations
Sustainability
Financial Tables
4 Related party disclosures (continued)
Related party transactions (continued)
For the year ended 31 December 2014, the transactions with Calık Holding comprised of interest expense amounting to TL 8.934 and foreign exchange income
amouting to TL 4.479, and charges of share of holding general administrative expenses amounting to TL 6.558, charges of share of holding marketing and selling
expenses amounting to TL 1.101.
(**)
Anateks
(***)
Aktifbank
(*)
Transactions with key management personnel
On a consolidated basis, key management costs included in general and administrative expenses for the year ended 31 December 2014
amounted to TL 2.034 (2013: TL 1.173).
5 Cash and cash equivalents
At 31 December, cash and cash equivalents comprised the following:
Cash on hand
Cash at banks
- Demand deposits
Other
Restricted balances(*)
Cash and cash equivalents in cash flow statement
(*)
31 December 2014
110
12.693
12.693
1.726
14.529
1.726
12.803
Restricted balances of the Group consists of balances deposited against cotton future transactions.
The Group’s exposure to currency risks related to cash and cash equivalents are disclosed in Note 27.
31 December 2013
131
2.662
2.662
-2.793
-2.793
93
6 Disposal group held for sale
The Group has reclassified assets and liabilities of Çalık Alexandria, Çalık Korea and Çalık USA as “Disposal group held for sale” as the
Group plans to sell its production and retail facilities of these subsidiaries. All assets and liabilities of these entities except the cash and
cash equivalents have been classified as “Assets held for sale” and “Liabilities held for sale” in the financial statements, respectively.
As at 31 December 2014, assets held for sale and liabilities held for sale are TL 24.657 and TL 7.532 (31 December 2013: TL 24.941 and TL
9.399), respectively, and details are as follows:
Inventories
Intangible assets
Prepaid expenses
Other non-current assets
Other receivables
Trade and other payables
Loans and borrwings
Other current liabilities
31 December 2014
22.373
1.592
593
46
36
17
-24.657
31 December 2013
22.171
1.529
1.160
48
6
16
11
24.941
7.329
70
134
7.533
1.003
8.291
105
9.399
As at 31 December 2014, the provisions for impairment in value of property, plant and equipment amouting to TL 4.239 (31 December
2013: TL 3.902) and in value of inventories amounting to TL 3.714 (31 December 2013: TL 3.567) were provided.
7 Financial investments
At 31 December, financial investments comprised the following:
Non-current assets
Available-for-sale financial investments
31 December 2014
20.765
20.765
31 December 2013
21.245
21.245
31 December 2014
20.765
20.765
31 December 2013
21.245
21.245
Available-for-sale financial investments
As at 31 December, available-for-sale financial investments comprised the following:
Equity securities not traded in an active market
94
At a Glance
Management
Operations
Financial Tables
Sustainability
7 Financial investments (continued)
The equity securities that are not traded in an active market comprised following:
Çalık Turizm Kültür İnşaat Sanayi ve Ticaret A.Ş.
Aktif Yatırım Bankası A.Ş.
Ataks Tekstil Dış Ticaret A.Ş.
Malatya Teknokent Teknoloji Gelişme Bölgesi A.Ş.
Çalık Enerji Dağıtım Sanayi ve Ticaret A.Ş.
Ayas Rafineri ve Petrokimya A.Ş.
Telemed Telekom A.Ş.
Other
31 December 2014
31 December 2013
Ownership rate (%)
Carrying amount Ownership rate (%)
Carriyng amount
6,35
17.320
6,35
17.320
0,30
2.874
0,30
2.874
3,10
200
3,10
200
5,00
125
5,00
125
0,20
9
0,20
172
--0,20
125
--0,20
108
-237
-321
20.765
21.245
Carriying amount of the available-for-sale equity instruments that does not have a quoted market price in an active market and whose fair
value cannot be reliably measured is stated at cost after deducting impairment losses, if any.
The movements in financial investments during the years ended 31 December 2014 and 2013 were as follows:
As at 1 January
Additions through capital increases
Disposals (sale and redemption)
As at 31 December
2014
21.245
-(480)
20.765
2013
16.899
4.376
(30)
21.245
95
8 Trade receivables and payables
Short-term trade receivables
As at 31 December, short-term trade receivables comprised the following:
Due from related parties(Note 4)
Total
31 December 2014
109.691
959
110.650
31 December 2013
94.828
92.899
187.727
31 December 2014
74.156
20.606
15.269
1.130
111.161
(1.130)
(340)
109.691
31 December 2013
70.039
11.742
13.220
2.454
97.455
(2.454)
(173)
94.828
As at 31 December, short-term trade receivables comprised the following:
Accounts receivables
Notes receivables
Cheques receivables
Doubtful receivables
Allowances for doubtful trade receivables (-)
Discount on trade receivables (-)
Total
Movements of allowance for doubtful receivables for the years ended at 31 December were as follows:
Balance at 1 January
Allowance for the period(Note 24)
Recoveries of amounts previously impaired (-)(Note 24)
Foreign currency translation difference
Total
31 December 2014
2.454
506
(1.830)
-1.130
31 December 2013
2.832
560
(815)
(123)
2.454
31 December 2014
48.957
50
49.007
31 December 2013
42.409
-42.409
31 December 2014
48.957
-48.957
31 December 2013
41.792
617
42.409
Short-term trade payables
As at 31 December, short-term trade payables comprised the following:
Due to related parties (Note 4)
Total
As at 31 December, due to third parties comprised the following:
Accounts payables
Notes payable
Total
The Group’s exposure to credit and currency risks related to trade receivables and payables and liquidity and currency risks of trade
payables are disclosed in Note 27.
96
At a Glance
Management
Operations
Sustainability
Financial Tables
9 Other receivables and other payables
Other short term receivables
As at 31 December, other short-term receivables comprised the following:
Due from related parties (Note 4)
Receivables from tax authorities
Deposits and guarantees given
Other receivables(*)
Total
31 December 2014
23.707
3.554
222
117.449
144.932
31 December 2013
1.081
3.381
165
14
4.641
The Group has receivables from Anateks Anadolu Tekstil Fabrikası A.Ş., a former related party of the Group, amounting to TL 116.692 as at 31 December 2014 (31
December 2013: trade receivable amounting to TL 91.930)
(*)
Other short term payables
As at 31 December, other short-term payables comprised the following:
Due to related parties (Note 4)
Deposits and guarantees received
Total
31 December 2014
27.601
580
28.181
31 December 2013
123.467
534
124.001
97
10 Inventories
As at 31 December, inventories comprised the following:
Raw materials
Finished goods
Trading goods
Semi finished goods
Other inventories
Allowance for impairment in value of inventories
Total
31 December 2014
69.060
33.148
20.298
12.937
80
(2.421)
133.102
31 December 2013
55.989
32.042
10.266
9.229
65
(2.107)
105.484
As at 31 December 2014, total insurance coverage on inventories is TL 107.884 (31 December 2013: TL 88.095).
As at 31 December 2014, there is no pledges or mortgages on inventories (31 December 2013: none).
Movements of impairment in value of inventories for the years ended at 31 December were as follows:
Beginning balance
Current year provision
Closing balance
2014
2.107
314
2.421
2013
1.811
296
2.107
For the year ended 31 December 2014, a provision for impairment in value of inventories amounting to TL 314 were provided considering
the evaluation of obsolete inventories and net reliazable value (31 December 2013: TL 296). Furthermore, included the assets held for sale,
there is an impairment of inventories of Çalık Alendria amounting to TL 3.714 as at 31 December 2014 (31 December 2013: TL 3.567).
98
At a Glance
Management
Operations
Sustainability
Financial Tables
11 Prepayments and deferred revenue
Current prepayments
As at 31 December, current portion of prepayments comprised the following:
Advances given
Prepaid expenses
Work advances
Total
31 December 2014
33.209
1.485
451
35.145
31 December 2013
59.478
257
315
60.050
31 December 2014
1.374
596
1.970
31 December 2013
-443
443
31 December 2014
3.004
3.004
31 December 2013
4.281
4.281
Non-current prepayments
As at 31 December, non-current prepayments comprised the following:
Advances given
Prepaid expenses
Total
Short-term deferred revenue
As at 31 December, short-term portion of deferred revenue comprised the following:
Short term deferred revenue
Advances received
Total
12 Investments in equity-accounted investees
Associates
Group holds 34,8% ownership in TJK. Since the equity of equity accounted investee remains uncovered due to recurring losses, the
Group’s interests in the equity accounted investees are reduced to nil. Due to the fact that the Group does not have any commitment
for the equity accounted investee, incremental losses over the Group’s interests are not recognized. In case of income generation
subsequent to the reporting date, excess portion of income over accumulated losses, which were not recognized, are to be accounted in the
consolidated financial statements as monitored per each period-end. The Group recognized TL 4.504 losses from its investments in TJK
for the year ended 31 December 2013.
272.958
104
29.527
(121.975)
(6.786)
173.828
(4.694)
(97)
43.689
252.122
685
23.578
(3.427)
272.958
45.994
357
2.129
42.345
-3.649
-45.994
(15)
(2.353)
3.597
3.144
2.821
--
2.281
1.190
62
(389)
3.144
Vehicles
(5.255)
(845)
17.255
20.719
2.128
508
18.554
1.407
777
(19)
20.719
Furniture
and fixtures
(10)
-201
211
---
211
---211
Other
tangible assets
--31.395
20.415
45.193
(34.213)
10.609
37.872
(28.066)
-20.415
Construction
in progress
(27)
-3.823
1.587
214
2.049
1.297
290
--1.587
Leasehold
improvements
Construction in progress comprised of additional building and machinery and equipment constructed within the scope of governmet grants.
As at 31 December 2014, there is no mortgage on property, plant and equipment (31 December 2013: none).
As at 31 December 2014, net carrying amount of property, plant and equipment acquired under finance leases amounted to TL 1.151 (31 December 2013: TL 4.689).
As at 31 December 2014, total insurance coverage on property, plant and equipment is TL 474.376 (31 December 2013: TL 390.756).
Balance at 1 January 2014
Additions
Transfers
Write off of items that are fully
depreciated
Disposals
Balance at 31 December 2014
Cost
Additions
Transfers
Disposals
Land, land
improvements
Machinery
and buildings and equipment
Movements of property, plant and equipment, and related accumulated depreciation during the years ended 31 December were as follows:
13 Property, plant and equipment
As at and for the Year Ended 31 December 2014
(131.976)
(10.081)
273.788
365.028
50.817
--
327.419
41.444
-(3.835)
365.028
Total
99
(121.975)
(3.417)
96.968
47.404
60.183
76.860
(4.694)
(24)
19.416
21.531
23.428
24.273
(15)
(743)
1.043
1.315
1.966
2.554
1.178
623
966
420
(208)
1.178
(5.255)
(800)
11.641
3.015
4.161
5.614
16.558
1.138
15.539
1.038
(19)
16.558
(10)
-201
----
211
--
211
--211
---10.609
20.415
31.395
---
-----
Construction
in progress
(27)
-1.440
590
696
2.383
891
576
707
184
-891
Leasehold
improvements
(131.976)
(4.984)
130.709
84.464
110.849
143.079
254.179
13.490
242.955
14.376
(3.152)
254.179
Total
Operations
Depreciation and amortization expenses according to their function are disclosed in note 23.
212.775
9.585
204.718
10.982
(2.925)
212.775
22.566
1.568
20.814
1.752
-22.566
Furniture
Other
and fixtures tangible Assets
Management
Current year depreciation
Write off of items that are fully
depreciated
Disposal
Net carrying value at 1 January 2013
Net carrying value 31 December 2013
Net carrying value at 31 December 2014
Accumulated depreciation
Current year depreciation
Disposal
Vehicles
At a Glance
Land, land
improvements
Machinery
and buildings and equipment
13 Property, plant and equipment (continued)
As at and for the Year Ended 31 December 2014
100
Sustainability
Financial Tables
101
14 Intangible assets
Movements of intangible assets and related accumulated amortisation during the years ended 31 December 2014 and 2013 were as follows:
Rigths
Other intangibles
Total
Cost
Additions
1.662
14
1.676
3.275
13
3.288
4.937
27
4.964
Additions
Write off of items that are fully depreciated
Disposal
1.676
16
(55)
-1.637
3.288
-(130)
(22)
3.136
4.964
16
(185)
(22)
4.773
Accumulated amortisation
Current year amortisation
742
79
821
3.185
35
3.220
3.927
114
4.041
Current year amortisation
Write off of items that are fully depreciated
Disposals
Net carrying value at 1 January 2013
Net book value at 31 December 2013
Net book value at 31 December 2014
821
39
(55)
-805
920
855
832
3.220
37
(130)
(20)
3.107
90
68
29
4.041
76
(185)
(20)
3.912
1.010
923
861
31 December 2014
11.761
530
-12.291
31 December 2013
7.806
3
30
7.839
31 December 2014
4.576
32
4.608
31 December 2013
1.781
199
1.980
There is no pledge of mortgage on intangible assets (31 December 2013: none).
15 Other assets and liabilities
Value Added Tax (“VAT”) receivables
Advances given to personnel
Income accruals
Taxes and funds payable
Other current liabilities
102
At a Glance
Management
Operations
Sustainability
Financial Tables
16 Loans and borrowings
As at 31 December, loans and borrowings comprised the following:
Short term bank borrowings
Current portion of long term loans and borrowings
Factoring payables
Total
31 December 2014
295.182
14.048
25.053
334.283
31 December 2013
185.228
53
2.848
188.129
Long term bank borrowings
Total
31 December 2014
48.798
48.798
31 December 2013
---
As at 31 December 2014, the terms and conditions of outstanding loans and borrowings comprised the following:
Secured bank borrowings(*)
Unsecured bank borrowings
Factoring payables
Currency
USD
EUR
TL
USD
TL
TL
31 December 2014
Nominal
interest rate (%)
3,00-10,00
8,00
13,00-17,00
4,40-8,00
13,00-14,00
14,47
Year of Maturity
2015-2016
2015
2015
2015
2015
2015
Face value
213.172
46.654
79.227
13.566
4.903
25.052
382.574
Carrying
amount
213.827
46.654
79.005
13.587
4.956
25.052
383.081
Face Value
104.038
55.794
21.579
2.134
2.837
186.382
Carrying
Amount
105.318
55.803
22.033
2.138
2.837
188.129
As at 31 December 2013, the terms and conditions of outstanding loans and borrowings were as follows:
Secured bank borrowings (*)
Unsecured bank borrowings(*)
Faktoring payables
(*)
Currency
USD
EUR
EUR
TL
TL
31 December 2013
Nominal
interest rate (%)
4,00-8,00
7,00
8,00-17,95
3,85
--
Year of maturity
2014
2014
2014
2014
2014
There is personal suretyship of Ahmet Çalık for bank borrowings.
The repayment terms of the bank borrowings and issued bonds are as follows:
0-3 months
3-12 months
1-5 years
Total
31 December 2014
160.584
173.699
48.798
383.081
31 December 2013
95.612
89.669
-185.281
103
17 Payables related to employee benefits
As at 31 December, payables related to employee benefits comprised the following:
Due to personnel
Social security premiums payable
31 December 2014
1.932
1.074
3.006
31 December 2013
1.777
897
2.674
31 December 2014
31 December 2013
1.693
1.033
2.726
1.557
162
1.719
12.110
12.110
14.836
11.841
11.841
13.560
31 December 2014
31 December 2013
1.693
1.693
1.557
1.557
12.110
12.110
11.841
11.841
31 December 2014
1.033
1.033
31 December 2013
162
162
18 Provisions
As at 31 December, provisions comprised the following items:
Total short term provisions
Total long term provisions
Total provisions
As at 31 December, short-term and long-term employee benefits comprised the following items:
Short-term
Vacation pay liability
Long term
Employee termination benefits
As at 31 December, other provisions comprised the following items:
Short-term
Provision for litigations
Reserve for employee severance indemnity
In accordance with the existing labour law in Turkey, the Group entities operating in Turkey are required to make lump-sum payments to
employees who have completed one year of service and whose employment is terminated without cause or who retire (age of 58 for women,
age of 60 for men) or completed service years of 20 for women or 25 for men, are called up for military service or die. According to change
of regulation, dated 8 September 1999, there are additional liabilities for the integration articles.
104
At a Glance
Management
Operations
Sustainability
Financial Tables
18 Provisions (continued)
Reserve for employee severance indemnity(continued)
For the years ended 31 December, the movements in the reserve for employee severance indemnity were as follows:
Balance at the beginning of the year
Interest cost
Cost of services
Paid during the year
Actuarial difference
Balance at the end of the year
2014
11.841
977
370
(136)
(942)
12.110
2013
10.025
746
1.552
(1.568)
1.086
11.841
The reserve has been calculated by estimating the present value of future probable obligation of the Group arising from the retirement of
the employees.
Actuarial valuation methods were developed to estimate the Group’s obligation under defined benefit plans. Accordingly, the following
actuarial assumptions were used in the calculation of the total liability:
Expected rate of salary/limit increase
Interest rate
2014
%7,50
%8,89
2013
%6,74
%7,96
The computation of the liability is predicated upon retirement pay ceiling announced by the Government. As at 31 December 2014, the
ceiling amount was TL 3,43 thousand (31 December 2013: TL 3,25 thousand).
Litigation and claims
As at 31 December 2014, the expected cash outflow amount for the pending claims filed against to the Group is TL 1.033 (31 December
2013: TL 162). As at 31 December 2014, the provision for litigation and claims are mainly related to the labor cases against the Group.
Pending tax audits
In Turkey, the tax and other government authorities (Social Security Institution) have the right to inspect the Group’s tax returns and
accounting records for the past five fiscal years. The Group has not recognised a provision for any additional taxes for the fiscal years
that remained unaudited, as the amount cannot be estimated with any degree of uncertainty. The Group’s management believes that no
material assessment will arise from any future inspection for unaudited fiscal years.
105
19 Commitments and contingencies
Guarantee, pledge and mortgages (“GPM”) in respect of commitment and contingencies realised in the ordinary course of business were
given as at 31 December 2014 are as follows:
31 December 2014
A Total amount of GPMs given in the name of its own legal personality
B Total amount of GPMs given in the name of the consolidated
subsidiaries and joint ventures
- Total amount of GPMs given in the name of the consolidated subsidiaries
C Total amount of GPMs given to be able to conduct ordinary business
transactions to secure payables of third parties
D Other GPMs given
Total
USD
148
Original currency
Euro
500
TL
1.651
TL Equivalent
Total
3.404
---
---
---
---
--148
--500
--1.651
--3.404
GPMs in respect of commitment and contingencies realised in the ordinary course of business were given as at 31 December 2013 are as
follows:
USD
1.148
Original
currency
Euro
525
TL
316
TL Equivalent
Total
4.307
---
---
---
---
--1.148
--525
--316
--4.307
31 December 2013
A Total amount of GPMs given in the name of its own legal personality
B Total amount of GPMs given in the name of the consolidated
subsidiaries and joint ventures
Total amount of GPMs given in the name of the consolidated subsidiaries
C Total amount of GPMs given to be able to conduct ordinary business
transactions to secure payables of third parties
D Other GPMs given
Total
20 Taxation
Turkey
Corporate income tax is levied on the statutory corporate income tax base, which is determined by modifying income for certain tax
exclusions and allowances.
Corporate income tax is levied at the rate of 20% (2013: 20%) and advance tax returns are filed on a quarterly basis.
According to the new Corporate Tax Law, 75% (2013: 75%) of the capital gains arising from the sale of properties and investments owned
for at least two years are exempted from corporate tax on the condition that such gains are kept under equity as restricted funds within
five years from the date of the sale. The remaining 25% of such capital gains are subject to corporate tax.
106
At a Glance
Management
Operations
Sustainability
Financial Tables
20 Taxation (continued)
There is also a withholding tax on the dividends paid and is accrued only at the time of such payments. According to the amendments in
the tax legislations, which became effective from
24 April 2003, dividends that are paid to the shareholders from the profits of the years between 1999 and 2002 are immune from the
withholding tax, if such profits are exempted from corporation tax bases of the companies. As per the decision no.2006/10731 of the
Council of Ministers published in the Official Gazette no.26237 dated 23 July 2006, certain duty rates included in the articles no.15 and
30 of the new Corporate Tax Law no:5520 revised. Accordingly, the withholding tax rate on the dividend payments other than the ones
paid to the non resident institutions generating income in Turkey through their operations or permanent representatives and the resident
institutions, was increased from 10% to 15%. In applying the withholding tax rates on dividend payments to the non resident institutions
and the individuals the withholding tax rates covered in the related Double Tax Treaty Agreements are taken into account.
In Turkey, the tax legislation does not permit a parent company and its subsidiaries to file a consolidated tax return. Therefore, provision
for taxes shown in the consolidated financial statements reflects the total amount of taxes calculated on each entity that are included in the
consolidation.
Under the Turkish taxation system, tax losses can be carried forward to be offset against future taxable income for up to five years. Tax
losses cannot be carried back.
In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Companies file their tax returns within four
months following the close of the accounting year to which they relate. Tax returns are open for five years from the beginning of the year
that follows the date of filing during which time the tax authorities have the right to audit tax returns, and the related accounting records
on which they are based, and may issue reassessments based on their findings.
Transfer pricing regulations
In Turkey, the transfer pricing provisions have been stated under the Article 13 of Corporate Tax Law with the heading of “disguised profit
distribution via transfer pricing”. The General Communiqué on disguised profit distribution via Transfer Pricing, dated 18 November
2007 sets details about implementation.
If a tax payer enters into transactions regarding sale or purchase of goods and services with related parties, where the prices are not set
in accordance with arm’s length principle, then related profits are considered to be distributed in a disguised manner through transfer
pricing. Such disguised profit distributions through transfer pricing are not accepted as tax deductible for corporate income tax purposes.
Tax applications for foreign subsidiaries and associate of the Group
Arab Republic of Egypt
The applicable corporate tax rate for the subsidiaries operating in Egypt is 20% (31 December 2013: 20%). Since the Group is operating in
free trade zone of Egypt, the Group is not subject to corporate tax.
United Arab Emirates
As at 31 December 2014, the Group has one subsidiary in the United Arab Emirates located in Dubai. There is no federal corporate tax
in United Arab Emirates. However, certain taxes are implemented in different sectors in different emirates. As at 31 December 2014, the
Group’s subsidiary operating in Dubai is not subject to corporate tax.
107
Regional government grants
The Company has obtained regional investment incentive certificate for the capacity increase and modernizations at the yarn production
facilities at 19 July 2012 and denim production facilities at 2 January 2013 in Malatya.
According to these investments incentive certificates 55% of the investment is going to be compensated by the government. The
government is not going to pay this balance in cash, but the tax rate applied to the income generated from this investment is going to be
lower (2% instead of 20%). Since the corporate tax discount rate of the investment incentives is 90%, corporate tax rate is going to be 2%,
(20% (20%*90%=2%).
Hereunder, the discounted tax rate is going to be applied and the Company is going to make tax savings until the income generated from
these investments reach to 55% of the investment. When the uncollected tax amount reach to the government contribution, the standart
tax rate will be applied.
As described at the related articles of the Announcement Regarding to the Applications of Arbitraments Concerning Government Grants
at Investments (Announcement No: 2009/1) and the special terms on the investment incentive certificates, for acceptance of the inception
of the investment, the Company has to invest at least 10% of the total investment amount defined at the certificate and has to apply to the
Undersecretariat of Treasury and register the investment amount to the investment incentive certificate. The Company has realized the
special terms of investment incentive certificate for the capacity increase and modernizations of the clothing, yarn and denim production
facilities in Malatya.
As at 31 December 2014, total amount of investments of the Company within the context of those investment incentive certificates is TL
67.573 with 90% investment contribution rate (31 December 2013: TL 45.439). Unused portion of the government grant amounting to TL
37.165 with 55% incentive rate has been recognised as deferred tax assets (31 December 2013: TL 24.991).
Deduction of research and development
The research and development deduction regulated in Income and Corporation Tax Law, the regulations are introduced under the Law
no. 5746. Within the context of this law, in technology centers, research and development centers, public institutions and bodies and
research and development and innovation projects supported by foundations established by law or international funds, in pre-competition
cooperation projects; all innovation and research and development expenditures made by beneficiaries of technopreneurship capital
support and in research and development centers which employ full time equivalent of 500 or more research and development personnel,
and also half of the increase in current year’s research and development and innovation expenditures compared to previous years, are
deemed as matters of allowance in the identification of public body earnings as per article 10 of the Cooperation Tax Law.
Tax recognised in profit or loss
Income tax expense/benefit for the years ended 31 December comprised the following items:
Corporate tax expense
Deferred tax benefit
Tax benefit recognised in profit or loss
Deferred tax benefit/(expense) recognised in other comphrensive income
Total tax benefit
2014
(1.394)
13.163
11.769
(188)
11.581
2013
(423)
19.401
18.978
216
19.194
108
At a Glance
Management
Operations
Financial Tables
Sustainability
Reconciliation of effective tax rate
The reported income tax benefit for the years ended 31 December are different than the amounts computed by applying statutory tax rate
to profit before tax as shown in the following reconciliation:
2014
Reported profit/(loss) before taxation
Taxes on reported profit per statutory tax rate of the Company
Permanent differences:
Disallowable expenses
Tax exempt income
Investment incentives effect
Consolidation adjusments
Effect of different tax rates in foreign jurisdictions
Effect of share of profit of equity-accounted investees
Others, net
Tax benefit
Amount
1.240
(248)
(348)
1.158
12.174
-(797)
-(170)
11.769
2013
%
(20)
Amount
(17.793)
3.559
%
(20)
(28)
93
981
-(64)
-(14)
948
(575)
1.159
17.061
(13)
(2.024)
(901)
712
18.978
(3)
7
50
-(11)
(5)
4
60
Current tax assets/liabilities
As at 31 December, current tax assets and liabilities comprised the following:
Taxes on income
Corporation taxes paid in advance
Current tax assets/(liabilities), net
2014
(1.394)
4.187
2.793
2013
(423)
2.001
1.578
As at 31 December 2014, current tax liabilities on income amounting to TL 64 (31 December 2013: TL 67) is not offset with prepaid taxes
amounting to TL 2.857 (31 December 2013: 1.645) since they are related to different tax jurisdictions.
Deferred tax assets and liabilities
Deferred tax is provided in respect of taxable temporary differences arising between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes, except for the differences relating to goodwill not deductible for
tax purposes and the initial recognition of assets and liabilities which affect neither accounting nor taxable profit.
Unrecognised deferred tax assets and liabilities
As at 31 December 2014, there is no unregnised deferred tax assets of the Group (31 December 2013:none).
109
Deferred tax assets and liabilities (continued)
Recognised deferred tax assets and liabilities
Deferred tax assets and deferred tax liabilities at 31 December are attributable to the items detailed in the table below:
Asset
170
507
-2.382
545
37.165
--40.769
(2.753)
38.016
Trade and other receivables
Inventories
Property, plant and equipment and intangible asset
Employee severance indemnity
Provisions
Investment incentives
IAS 39 effect on loans and borrowings
Other temporary differences
Total deferred tax assets/(liabilities)
Set off of tax
Deferred tax assets/(liabilities) net
2014
Liability
--(2.659)
---(95)
(59)
(2.813)
2.753
(60)
Asset
409
283
-2.525
62
24.991
344
13
28.627
(3.646)
24.981
2013
Liability
--(3.646)
-----(3.646)
3.646
--
Movements in deferred tax balances during the year 2014 were as follow:
Inventories
Property, plant and equipment and intangible asset
Provisions
1 January 2014
409
283
(3.646)
2.525
62
24.991
344
13
24.981
Recognised
in profit or loss
(239)
224
987
45
483
12.174
(439)
(72)
13.163
Recognised in other
comprehensive income
---(188)
----(188)
31 December 2014
170
507
(2.659)
2.382
545
37.165
(95)
(59)
37.956
110
At a Glance
Management
Operations
Financial Tables
Sustainability
Deferred tax assets and liabilities (continued)
Movements in deferred tax balances during the year 2013 were as follow:
Inventories
Intangible assets
Prepaid expenses
Provisions
1 January 2013
358
362
(4.784)
-1.204
95
26
7.930
(16)
52
137
5.364
Recognised
in profit or loss
51
(79)
408
730
1.105
(95)
36
17.061
16
292
(124)
19.401
Recognised in other
comprehensive income
----216
------216
31 December 2013
409
283
(4.376)
730
2.525
-62
24.991
-344
13
24.981
21 Capital and reserves
Paid in capital
As at 31 December 2014, the Company’s statutory nominal value of authorised and paid-in share capital is TL 164.740 (31 December 2013:
TL 164.740) comprising of 164.740.000 registered shares (31 December 2013: 164.740.000) having par value of full TL 1 (31 December
2013: full TL 1) each.
As at 31 December, the shareholder structure of the Company based on the number of shares is presented below:
2014
Çalık Holding A.Ş.
Gap İnşaat Yatırım ve Dış Ticaret A.Ş.
Çalık Enerji Sanayi ve Ticaret A.Ş.
Ahmet Çalık
Diğer
Total
TL
82.751
42.786
37.850
1.313
40
164.740
2013
%
50,23
25,97
22,98
0,82
-100
TL
82.751
42.786
37.850
1.313
40
164.740
%
50,23
25,97
22,98
0,82
-100
Legal reserves
The legal reserves are established by annual appropriations amounting to 5% of income disclosed in the Group’s Turkish entities’ statutory
accounts until it reaches 20% of paid-in share capital (first legal reserve). Without limit, a further 10% of dividend distributions in excess
of 5% of share capital is to be appropriated to increase legal reserves (second legal reserve). The first legal reserve is restricted and is not
available for distribution as dividend unless it exceeds 50% of share capital. In the accompanying consolidated financial statements, the
total of the legal reserves amounted to TL 23.094 as at 31 December 2014 (31 December 2013: TL 22.899).
111
21 Capital and reserves(continued)
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign
operations.
22 Revenue and cost of sales
For the years ended 31 December, revenue comprised the following:
Domestic sales
Export sales
Other sales
Sales discounts (-)
Sales returns(-)
Subtotal
Cost of sales (-)
Gross profit
2014
337.174
176.440
1.583
(2.662)
(6.251)
506.284
(406.812)
99.472
2013
222.239
157.973
7.979
(1.711)
(2.831)
383.649
(309.489)
74.160
2014
328.357
33.589
19.381
12.072
3.374
2.226
1.061
164
111
104
83
82
28
16
6.164
406.812
2013
225.966
30.905
20.905
13.055
3.030
1.366
686
221
143
132
100
49
41
29
12.861
309.489
For the years ended 31 December, cost of sales comprised the following:
Changes in raw materials trading goods and auxiliary expenses
Personnel expenses
Lighting, gas and water expenses
Depreciation and amortisation expenses
Office expenses
Maintenance and repair expenses
Insurance expenses
Travel and accommodation expenses
Cleaning expenses
Communication and information expenses
Consultancy expenses
Rent expenses
Representation expenses
Taxes, duties and fees other than on income
Other
112
At a Glance
Management
Operations
Sustainability
Financial Tables
23 General and administrative expenses, selling, marketing and distribution expenses, and research and development expenses
For the years ended 31 December, general and administrative expenses comprised the following:
Personnel expenses
Charges from Çalık Holding A.Ş. for participation to expenses
Rent expenses
Insurance expenses
Cleaning expenses
Office expenses
Other
2014
8.679
6.558
1.753
1.020
851
751
730
379
274
226
221
180
-2.937
24.559
2013
7.647
5.246
136
940
1.161
457
529
279
212
176
123
131
344
3.155
20.536
2014
6.428
6.302
4.686
4.345
1.923
1.731
1.303
1.246
1.208
1.101
407
396
296
268
184
84
3.095
35.003
2013
6.829
4.458
3.183
4.854
1.890
990
973
580
1.255
854
449
511
253
197
230
-4.787
32.293
For the years ended 31 December, selling, marketing and distribution expenses comprised the following:
Personnel expenses
Advertising and promotion expenses
Transportation expenses
Commission expenses
Office expenses
Rent expenses
Fair expenses
Insurance expenses
Cleaning expenses
Other
113
(continued)
For the years ended 31 December, research and development expenses comprised the following:
Personnel expenses
Rent expenses
Office expenses
Cleaning expenses
Other
2014
4.360
802
189
133
125
67
28
15
5
3
892
6.619
2013
3.600
271
101
52
5
46
14
---358
4.447
2014
328.357
53.056
19.381
13.566
7.659
6.302
4.686
4.345
3.619
4.903
2.599
2.204
2.854
1.769
1.736
1.208
496
557
-13.696
472.993
2013
225.966
48.981
20.905
14.490
6.100
4.458
3.183
4.854
2.911
4.126
1.578
1.091
2.352
165
1.218
1.255
507
948
1.857
19.820
366.765
For the years ended 31 December, expenses by nature comprised the following:
Raw materials and auxiliary expenses ve changes in trading goods
Personnel expenses
Lightning, gas and water expenses
Advertising and promotion expenses
Transportation expenses
Commission expenses
Office expenses
Rent expenses
Insurance expenses
Fair expenses
Represantation expenses
Donations
Other
114
At a Glance
Management
Operations
Sustainability
Financial Tables
(continued)
For the years ended 31 December, personnel expenses comprised the following:
Wages and salaries
Social security expenses
Severance expenses
Premiums
Provision for vacation pay liability
Other personnel expenses
2014
42.790
5.221
1.368
1.045
136
2.496
53.056
2013
36.410
4.676
1.568
4.274
1.557
496
48.981
2014
12.072
1.020
407
67
13.566
2013
13.055
940
449
46
14.490
2014
2013
22.400
7.570
2.868
1.830
194
1.078
35.940
6.827
-4.224
815
146
374
12.386
2014
10.652
2.768
871
506
166
-242
15.205
2013
2.989
3.998
33
560
85
6.280
18
13.963
For the years ended 31 December, depreciation and amortisation expenses comprised the following:
Cost of sales
General and administrative expense
Selling, marketing and distribution expense
Research and development expense
24 Other income and expenses
For the years ended 31 December, other income comprised the following:
Interest income from related parties
Foreign exchange gains, net
Catering income
Collection from doubtful receivables
Insurance claim income
Other income from operating activities
For the year ended 31 December, other operating expenses comprised the following
Interest expense to related parties
Cost of catering services
Lawsuit provision expenses
Provision for doubtful receivables
Rediscount interest expense
Foreign exchange losses,net
Other expense from operating activities
115
25 Gains from investing activities
For the years ended 31 December, gains from investing activities comprised the following:
Gain on sale of property, plant and equipment
Dividend income
Other
2014
2.930
458
46
3.434
2013
215
980
13
1.208
2014
27.925
22.195
654
2.755
53.529
2013
16.955
6.856
3.566
2.219
29.596
26 Finance income and finance costs
For the years ended 31 December, finance costs comprised the following:
Interest expense on borrowings
Foreign exchange losses on borrowings, net
Factoring expenses
Other finance costs
Total
27 Financial instruments – Fair values and risk management
Financial risk management
Overview
The Group has exposure to the following risks from its use of financial instruments:
•
•
•
credit risk
liquidity risk
market risk
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for
measuring and managing risks, and the Group’s management of capital. Further quantitative disclosures are included throughout these
consolidated financial statements.
Risk management framework
Risk management activities are conducted by a realistic organizational structure and it is fully supported with the commitment of top
level management.
Group acts proactively in terms of risk management in order to ensure that its business operations in different industries and regions
are not adversely affected as a result of market, operational, liquidity and counterparty risks. Risk Management and internal audit
departments within Çalık Holding A.Ş. and at the Group level provide and maintain awareness for different types of risks, including
emerging risks, and ensure that appropriate risk management mechanisms are in place.
116
At a Glance
Management
Operations
Financial Tables
Sustainability
27 Financial instruments – Fair values and risk management (continued)
Credit risk:
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s receivables from customers and investment securities.
The Group’s principal financial assets are cash and cash equivalents, financial investments, trade receivables and other receivables. The
Group requires a certain amount of collateral in respect of its account receivable. Credit evaluations are performed on all customers
requiring credit over a certain amount on individual level.
At reporting date, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the
carrying amount of each financial asset in the consolidated statement of financial position.
31 Aralık 2014
Maximum credit risk exposure at reporting date
(A+B+C+D)
Portion of maximum risk covered by guarantees
A. Carrying value of financial assets that are
neither past due nor impaired
B.Carrying value of financial assets that are past
due but not impaired
C. Carrying value of impaired assets
Past due (gross carrying amount)
Impairment (-)
The part of net value under guarantee with
collateral etc
Not past due (gross carrying amount)
Impairment (-)
D. Elements including credit risk on off satatment
of financial position
31 Aralık 2013
Maximum credit risk exposure at reporting date
(A+B+C+D)
Portion of maximum risk covered by guarantees
A. Carrying value of financial assets that are
neither past due nor impaired
B.Carrying value of financial assets that are past
due but not impaired
C. Carrying value of impaired assets
Past due (gross carrying amount)
Impairment (-)
The part of net value under guarantee with
collateral etc
Not past due (gross carrying amount)
Impairment (-)
D. Elements including credit risk on off satatment
of financial position
Receivables
Trade receivables
Other receivables
Related party
Third party
Related party
Third party
Cash at banks
Derivatives
959
--
109.691
--
23.707
--
121.225
--
14.689
--
361
--
959
107.648
23.707
4.533
14.689
361
-----
2.043
-1.130
(1.130)
-----
116.692
----
-----
-----
----
----
----
----
----
----
--
--
--
--
--
--
Receivables
Trade receivables
Other receivables
Related party
Third party
Related party
Third party
Cash at banks
Derivatives
92.899
--
94.828
--
1.081
--
3.560
--
2.662
--
---
92.899
94.828
1.081
3.560
2.662
--
-----
--2.454
(2.454)
-----
-----
-----
-----
----
----
----
----
----
----
--
--
--
--
--
--
117
Credit risk (continued)
Impairment losses
The aging of trade receivables at the reporting date was:
2014
Not past due
Past due 0-30 days
Past due 31-120 days
Past due 121-365 days
More than one year
Total
Gross
108.607
--2.043
1.130
111.780
2013
Impairment
----(1.130)
(1.130)
Gross
197.727
---2.454
190.181
Impairment
----(2.454)
(2.454)
Liquidity risk
Liquidity risk arises in the general funding of the Group’s activities and in the management of positions. It includes both risk of being
unable to fund assets at appropriate maturities and rates and risk of being unable to liquidate an asset at a reasonable price and in an
appropriate time frame. The Group has access to funding sources from banks and keeps certain level assets as cash and cash equivalents.
The Group continuously assesses liquidity risk by identifying and monitoring changes in funding required in meeting business goals and
targets set in terms of the overall Group strategy.
118
At a Glance
Management
Operations
Financial Tables
Sustainability
Liquidity risk (continued)
As at 31 December, the followings are carrying amounts, contractual cash flows and the contractual maturities of financial liabilities are
as follows:
2014
Non-derivative financial liabilities
Trade payables-due to related parties
Trade payables-due to third parties
Other payable-due to related parties
Other payable-due to third parties
2013
Non-derivative financial liabilities
Factoring payables
Trade payables-due to related parties
Trade payables-due to third parties
Other payable-due to related parties
Other payable-due to third parties
Carrying
amount
Contractual
cash flows
3 months
or less
3-12 Months
1-5 Years
More than
five year
383.081
50
48.957
27.601
580
460.269
393.206
50
48.957
27.601
580
470.394
179.007
50
48.957
27.601
580
256.195
159.420
----159.420
54.779
----54.779
-------
Carrying
amount
Contractual
cash flows
3 months
or less
3-12 Months
1-5 Years
More than
five year
185.281
2.848
-42.409
123.467
534
354.539
189.605
2.848
-42.409
123.467
534
358.863
117.694
2.848
-42.409
123.467
534
286.952
71.911
-----71.911
--------
--------
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the Group’s
income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market
risk exposures within acceptable parameters, while optimising the return.
Currency risk
The Group is exposed to currency risk through the impact of rate changes on the translation of foreign currency denominated payables
and bank borrowings from financial institutions. The currencies in which these transactions primarily are denominated are Euro and
USD. Such risk is monitored by the Board of Directors and limited through taking positions within approved limits as well as using
derivative instruments where necessary.
In respect of other monetary assets and liabilities denominated in foreign currencies, the Group ensures that its net exposure is kept to an
acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.
To minimise risk arising from foreign currency denominated statement of financial position items, the Group sometimes utilises
derivative instruments as well as keeping a part of its idle cash in foreign currencies.
119
Currency risk (continued)
31 December 2014
Trade receivables
Other receivables
Total foreign currency monetary assets
Borrowings
Trade payables
Other payables
Total foreign currency liabilities
Net statement of financial position
Off balance sheet derivative assets denominated in foreign currency
Off balance sheet derivative liabilities denominated in foreign
currency
Net off statement of financial position
Net foreign currency position
TL Equivalent
12.211
66.842
22.903
101.956
274.068
34.612
7.046
315.726
(213.770)
14.471
USD
1.365
13.495
9.862
24.722
98.070
12.168
872
111.110
(86.388)
6.240
EUR
3.206
12.603
12
15.821
16.540
2.267
1.781
20.588
(4.767)
--
Other
Currencies
-----------
(1.698)
12.773
(200.997)
(732)
5.508
(80.880)
--(4.767)
----
31 December 2013
Trade receivables
Other receivables
Total foreign currency monetary assets
Borrowings
Trade payables
Other payables
Total foreign currency liabilities
Net position
TL Equivalent
1.991
64.366
849
67.206
163.259
22.160
81.655
267.074
(199.868)
USD
235
10.267
388
10.890
50.347
2.772
46.354
99.473
(88.583)
EUR
507
14.458
7
14.972
19.003
5.531
(5.884)
18.650
(3.678)
Other
Currencies
-----1
-1
(1)
120
At a Glance
Management
Operations
Sustainability
Financial Tables
Sensitivity analysis
A 10% strengthening/weakening of the TL against the other currencies below would have increased/ (decreased) the comprehensive
income and profit/loss (excluding the tax effect) as of 31 December 2014 and 2013 as follows
31 December 2014
Increase/(decrease) 10% of US Dollar parity
1-US Dollar net asset/liability
2-Hedged portion of US Dollar amounts(-)
3-Net effect of US Dollar (1+2)
Increase/(decrease) 10% of EUR parity
4-EUR net asset/liability
5-Hedged portion of EUR amounts(-)
6-Net effect of EUR (4+5)
Increase/(decrease) 10% of other parities
7-Other foreign currency net asset/liability
8-Hedged portion of other foreign currency amounts(-)
9-Net effect of other foreign currencies (7+8)
TOTAL (3+6+9)
31 December 2013-
Increase/(decrease) 10% of US Dollar parity
1-US Dollar net asset/liability
2-Hedged portion of US Dollar amounts(-)
3-Net effect of US Dollar (1+2)
Increase/(decrease) 10% of EUR parity
4-EUR net asset/liability
5-Hedged portion of EUR amounts(-)
6-Net effect of EUR (4+5)
Increase/(decrease) 10% of other parities
7-Other foreign currency net asset/liability
8-Hedged portion of other foreign currency amounts(-)
9-Net effect of other foreign currencies (7+8)
TOTAL (3+6+9)
Profit/(Loss)
Weakening of TL
Strengthening of TL
(18.755)
-(18.755)
18.755
-18.755
(1.345)
-(1.345)
1.345
-1.345
----
----
(20.100)
20.100
Profit/(Loss)
Weakening of TL
Strengthening of TL
(18.906)
-(18.906)
18.906
-18.906
(1.080)
-(1.080)
1.080
-1.080
----
----
(19.986)
19.986
121
Interest rate risk
The Group’s operations are subject to the risk of interest rate fluctuations to the extent that interest-earning assets and interest-bearing
liabilities mature or reprise at different times or in differing amounts. In the case of floating rate assets and liabilities the Group is also
exposed to basis risk, which is the difference in reprising characteristics of the various floating rate indices, such as six months Libor
and different types of interest. Risk management activities are aimed at optimizing net interest income, given market interest rate levels
consistent with the Group’s business strategies.
Profile
As at 31 December, the interest rate profile of the Group’s interest-bearing financial instruments was as follows:
Fixed rate instruments
Financial assets
Financial liabilities
2014
2013
138.768
409.072
121.525
188.129
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss and the Group does not
designate derivatives (interest rate swaps) as hedging instruments under fair value hedge accounting model. Therefore, a change in interest
rate as of the reporting date would not affect profit or loss and equity.
Capital management
The Group’s objectives when managing capital include:
•
•
•
to comply with the capital requirements required by the regulators of the financial markets where the Group operates;
to safeguard the Group’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits
for other stakeholders; and
to provide an adequate return to shareholders.
The Group’s debt to equity ratio at the end of year was as follows:
Total liabilities
Less: cash and cash equivalents
Less: deferred revenue
Net debt
2014
493.380
14.529
3.004
475.847
2013
386.500
2.793
4.281
379.426
Equity
Debt to equity ratio at 31 December
189.835
2,51
167.061
2,27
122
At a Glance
Management
Operations
Sustainability
Financial Tables
Fair value information
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date in the principal or in its absence, the most advantageous market to which the Group has access at
that date.
When available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A
market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing
information on an ongoing basis. If there is no quoted market price in an active market, then the Group uses valuation techniques that
maximise the use of relevant observable inputs and minimise the use of unobservable inputs.
31 December 2014
Carrying amount
Fair value
31 December 2013
Carrying amount
Fair value
Loans and receivables
Trade receivables
Derivatives
Other receivables
Total assets
14.529
110.650
361
144.932
270.472
14.529
110.650
361
144.932
270.472
2.793
187.727
-4.641
195.161
2.793
187.727
-4.641
195.161
Financial liabilities
Borrowings
Trade payables
Other payables
Total liabilities
383.081
49.007
28.181
460.269
383.081
49.007
28.181
460.269
188.129
42.409
124.001
354.539
188.129
42.409
124.001
354.539
The Group estimated that the carrying values of financial assets and liabilities approximate their fair values due to their short-term nature.
Fair value hierarchy
The fair value hierarchy consists of three levels, depending upon whether fair values are determined based on quoted prices in an active
market (Level 1), valuation techniques with observable inputs (Level 2) or valuation techniques that incorporate inputs which are
unobservable and which have significant impact on the fair value of the instrument (Level 3):
The Group measures fair values using the following fair value hierarchy, which reflects the significance of the inputs used in making the
measurements.
•
Level 1: This category includes inputs that are quoted market prices (unadjusted) in active markets for identical instruments. These
are instruments where the fair value can be determined directly from prices which are quoted in active, liquid markets and where the
instrument observed in the market is representative of that being priced in the Group’s portfolio.
123
Fair value information (continued)
Fair value hierarchy (continued)
•
Level 2: This category includes inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as
prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market prices in active
markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or
other valuation techniques in which all significant inputs are directly or indirectly observable from market data.
•
Level 3: This category includes all instruments where the valuation technique uses inputs based on unobservable data, which could
have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices
for similar instruments where significant, unobservable adjustments or assumptions are required to reflect differences between
instruments. Unobservable in this context means that there is little or no current market data available from which the price at which
an arm’s length transaction would be likely to occur can be derived.
Financial instruments measured at fair value
The table below analyses financial instruments measured at fair value, by the level in the fair value hierarchy into which the fair value
measurement is categorised. The amounts are based on the values recognised in the consolidated statement of financial position.
31 December 2014
Financial assets
Derivatives
28 Subsequent events
None.
Level 1
Level 2
Level 3
Total
---
361
361
---
---
124
At a Glance
Management
Operations
Sustainability
Financial Tables
Supplementary Information Convenience Translation to USD
31 December 2014
Appendix: Supplementary information
The USD amounts shown in the consolidated statement of financial position and consolidated statement of profit or loss and other
comprehensive income on the following pages have been included solely for the convenience of the reader. For the current period’s
consolidated financial statements, USD amounts are translated from TL consolidated financial statements using the official TL exchange
rate of 2,3189 TL/USD prevailing on 31 December 2014 and TL consolidated statement of profit or loss and other comprehensive income
using TL average exchange rate of 2,1863 TL/USD prevailing on for the year ended 31 December 2014. For the prior year’s financial
statements, USD amounts are translated from TL financial statements using the official TL exchange rate of 2,1343 TL/USD prevailing
on 31 December 2013 and TL consolidated statement of profit or loss and other comprehensive income using TL average exchange rate of
1,9033 TL/USD prevailing on for the year ended 31 December 2013.
Such translation should not be construed as a representation that the TL amounts have been converted into USD pursuant to the
requirements of IFRSs or Generally Accepted Accounting Principles in the United States of America or in any other country.
125
As at 31 December 2014
(Amounts expressed in thousands of USD unless otherwise stated.)
Appendix: Supplementary information (continued)
ASSETS
Current assets
Trade receivables
Other receivables
Inventories
Derivative
Prepayments
Current tax assets
Subtotal
Total current assets
Non- current assets
Financial investments
Investments in equity-accounted investees
Intangible assets
Other intangible assets
Prepayments
Deferred tax assets
Total non-current assets
Total assets
31 December 2014
31 December 2013
6.265
47.717
414
47.303
62.500
10.223
52.277
57.399
156
15.156
1.232
5.300
195.725
10.633
206.358
1.309
87.957
43.527
44.430
2.174
506
1.668
49.423
-28.136
771
3.673
173.443
11.686
185.129
8.955
-61.701
371
371
850
16.394
88.271
9.954
-51.937
432
432
208
11.705
74.236
294.629
259.365
126
At a Glance
Management
Operations
Sustainability
Financial Tables
Consolidated Statement of Financial Position (continued)
As at 31 December 2014
LIABILITIES
Short term liabilities
Short term portion of long term loans and borrowings
Trade payables
Employee benefit liabilities
Other payables
Deferred revenue
Current tax liabilities
Subtotal
Total short term liabilities
Long term liabilities
Deferred tax liabilities
Total long term liabilities
Total liabilities
EQUITY
Equity attributable to the owners of the Company
Share capital
Legal reserves
Other comprehensive income will never be reclassified to profit or loss
Other comprehensive income that is or may be reclassified to profit or loss
Accumulated losses
Profit for the year
Total equity attributable to the owners of the Company
Total non-controlling interests
Total equity
Total equity and liabilities
31 December 2014
31 December 2013
138.098
6.058
21.134
22
21.112
1.296
12.153
11.903
250
1.296
28
1.176
730
446
1.991
183.230
3.248
186.478
88.121
25
19.870
-19.870
1.253
58.099
57.849
250
2.006
31
806
730
76
927
171.138
4.404
175.542
21.043
5.222
5.222
26
26.291
212.769
-5.548
5.548
-5.548
181.090
92.415
10.818
(175)
(17.379)
(16.642)
5.138
74.175
7.685
81.860
294.629
92.415
10.729
(520)
(10.640)
(17.072)
519
75.431
2.844
78.275
259.365
127
For the Year Ended 31 December 2014
Revenue
Cost of sales
Gross profit
General and administrative expenses
Selling, marketing and distribution expenses
Research and development expenses
Other income
Other expenses
Operating profit
Gains from investing activities
Losses from investing activities
Share of loss of equity accounted investees, net of taxes
Operating profit before finance costs
Finance income
Finance costs
Net finance costs
Profit/(loss) before tax from continuing operations
Current tax expense
Deferred tax benefit/(expense)
Total tax benefit
Profit for the year
Total profit attributable to:
Net profit for the year
2014
231.571
(186.073)
45.498
2013
201.570
(162.607)
38.963
(11.233)
(16.010)
(3.027)
16.439
(6.955)
24,712
(10.790)
(16.967)
(2.336)
6.508
(7.336)
8.042
1.571
(1.231)
-25.052
635
(109)
(2.366)
6.202
-(24.483)
(24.483)
569
(639)
6.020
5.381
5.950
-(15.550)
(15.550)
(9.348)
(222)
10.193
9.971
623
5.138
812
5.950
519
104
623
128
At a Glance
Management
Operations
Sustainability
Financial Tables
For the Year Ended 31 December 2014
2014
2013
431
(86)
(569)
112
Items that are or may be reclassified to profit or loss
Foreign currency translation differences for foreign operations and
reporting currency translation differences
(6.734)
3.464
Total other comprehensive income
(6.389)
3.007
(439)
3.630
(1.251)
812
(439)
3.526
104
3.630
Other comprehensive income
Items that will never be reclassified to profit or loss
Defined benefit obligation actuarial differences
Tax on defined benefit obligation actuarial differences
Total comprehensive income attributable to:
Contents
Gap Güneydoğu Tekstil at a Glance
02
06
08
12
16
Gap Güneydoğu Tekstil in Brief
Key Financial and Operational Indicators
Milestones
Our Mission, Vision and Values
Certifications
Management
18
22
24
28
Message from the Chairman
Board of Directors
Message from the General Manager
Senior Management
Operations
32
38
42
48
Production
Sales & Marketing
Investments
Research & Development and Product Development
Sustainability
52
54
56
58
Human Resources
The Environment
Corporate Social Responsibility & Society
Financial Tables
61
Independent Audit Report, Financial Tables and Footnotes
Head Office
Keresteciler Sitesi, Fatih Cad. Ladin Sok. No: 17
34169 Merter, Istanbul
T: +90 (212) 459 26 26 pbx
F: +90 (212) 677 41 17
www.calikdenim.com/tr
Factory
Gap Güneydoğu Tekstil San. ve Tic. A.Ş.
1. Organize Sanayi Bölgesi 2. Cadde No: 6
44900 Yeşilyurt, Malatya
T: +90 (422) 237 54 18
F: +90 (422) 237 54 17

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