TürkTraktör, 2014 Annual Report
Contents Chapter 1 - Company Profile TürkTraktör At a Glance A bou t T ü r k T r a k tör M ISSION AN D V ISION
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4-5 6-7 7
PRODUCT RANGE
M e ss age f rom t h e CEO MILESTONES
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Sh a r eholder St ruct u r e
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I n v e stor R el ations a n d BIST Per for m a nce
• T rac tors
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• A g r ic u lt u ra l Equ ipment s
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• Con st r uc t ion Equ ipment s
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8-9
Dividen d P olic y
10-11
Cor p or at e G ov er na nce
12-13
Chapter 2 - 2014 Overview
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48-49 50-51 52 53-55 56 57
Chapter 4 - Performance in 2014 The Agricultural SECTOR and Tractor Market
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58-63
RISK MANAGEMENT AND THE ACTIVITIES OF RISK ASSESSMENT
New Plant Opening
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16-17
COMMITTEE
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CORPORATE GOVERNANCE BOARD OF DIRECTORS
t h e 60t h a n n iv er s a ry of T ü r k T r a k tör
18-19
R&D
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AWARDS AND ACCOMPLISHMENTS 2014 Highlights
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THE SYMBOL OF POWER tr6
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2nd hand Project
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20-21 22-23 24-25 26-33 34-35 36-37
Chapter 5 - Sustainability
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ARTICLES OF ASSOCIATION
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THE COMMITMENT REPORT
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68 69
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En erg y Ef f ici enc y
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70
INDEPENDENCY
71
AGENDA OF ORDINARY
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Chapter 3 - Messages from the Management
R e vi e w of t h e Ch a i r m a n
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Boa r d of Di r ector s’ R eport
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DIVIDEND PROPOSAL
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38-39 40-41
98 99-101
102 103
104-105
GENERAL ASSEMBLY ................................
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94-97
DECLARATIONS FOR
En vi ron m en t
DATED 18.03.2015
Board of Directors
82-93
THE AMENDMENTS TO THE
Occupational Health and Safety Qua lit y
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64-67 LEGAL EXPLANATIONS
Const ruction Equ ipm en ts T T J AWAR D
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REMUNERATION POLICY
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80-81
PROFIT DISTRIBUTION TABLE AUDIT COMMITTEE REPORT
42-43
Cor p or at e So ci a l R e sponsi bi lit y
44-47
H u m a n R e sou rce s
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72-73
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106 107 108-109 110
FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR’S
Top M a nage m en t 2
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74-77
REPORT
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111-157 3
About TürkTraktör
TürkTraktör, 2014 Annual Report
concep t of innovat ion a nd qua li t y serv ice a nd wor l d-cl a ss m a nufac t ur ing
2012 2013 2014
M A NUFAC T UR ING UNI T S
350 313
2014
14,4 02 2013
39,026 2013
261 280
2013
E X P OR T
total
H aving achieved S A L ES R E V ENUE (MIL L ION T L ) sustainable
1,790
gro w th w ith its 2014
93 4 2014
2,723
2 01 4
2013
EB I T D A
2,175
M A RGIN
2013
and competent 611
15%
2 012
15%
performed very E X P OR T
12%
2 013
16%
2 012
16%
2 01 4
2012 NE T
2012
LOCAL
11%
1,974
total
M A RGIN
2012
ANKARA AKYURT Spare Part Warehouse Opening 01.04.2010 Covered Area 18,279 m2 Total Area 20,820 m2
2014
690
1,363
21%
2 013
2 01 4
2013
22%
2 013 2 012
efficient balance 1,4 85
18%
2 01 4 M A RGIN
LOCAL
2012
ANKARA Plant Engine and transmission manufacturing center Opening 25.06.1954 Covered Area 82,000 m2 Total Area 257,325 m2 ANKARA Construction Equipment Facility Opening 30.10.2014 Covered Area 4,200 m2 Total Area 6,200 m2
P ROFI TA BIL I T Y GROS S P ROF I T
2012
4 0,162
M A RGIN
2012
14,565
OP ER AT ING
25,597
human resources,
3,0 4 0
Manufacturing technology and high quality
268
2014
45,893
2014
15,866
2013
2014
sheet management
2014
2,57 2
Powerful brands with high recognition Strong shareholder structure Superior after-sales service
2012
45,823
38,530
39,574
30,027
201 4
4
R&D competency Broadest distribution network in Turkey
High second-hand value
2013
successfully in 20 14 .
Leader in Turkish tractor market for the last 8 years Experience of 60 years in the sector
S A L ES UNI T S
2 4,62 4
T ürk T rakt ör also
2013
COMPETITIVE ADVANTAGES
NE T P ROFI T (million)
2012
2,378
325
EBI T DA (million) 331
W i t h i t s cus t omer-f ocused a p p roach, sup er ior t echnol ogic a l infr a s t ruc t ur e,
p l a n t s, T ür k T r a k t ör a dds va lue t o t he sec t or a nd i t s cus t omer s.
HE A DCOUN T
297
2012 2013 2014
OP ER AT ING P ROFI T (million)
2012
TürkTraktör at a Glance
294
TürkTraktör at a Glance
2 013 2 012
10% 1 3% 14%
ERENLER Plant Paintshop and assembly process Opening 17.06.2014 Covered Area 68,613 m2 Total Area 396,443 m2 İZMİR Construction Equipment Facility Opening 18.09.2014 Covered Area 3,157 m2 Total Area 6,396 m2 5
TürkTraktör at a Glance
About TürkTraktör
TürkTraktör, 2014 Annual Report
TürkTraktör, the Pride of Turkey
operational profit of 297 million TL as of the end of 2014, TürkTraktör has a share of 50% in the domestic market and is an international player with exports to over 130 countries. Thanks to its deep-rooted corporate culture, the Company has an established customer base and develops relationships with its customers based on reciprocal trust through its 246 tractor and spare part dealers and 509 after-sales service points covering all parts of Turkey ◼
T ür k T r a k t ör , t he l a rge s t t r ac t or m a nufac t ur er of T ur k e y, is ta king i t s succe ss in t o t he w or l d w i t h i t s v ision of dr i v ing t he moder n agr icult ur e, i t s 6 0 y e a r s of e x p ert e x p er ience, i t s R&D p ow er , a nd i t s f or e sigh t a nd s t rong s t r at egie s f or t he f u t ur e.
of the most important industrial enterprises in Turkey, TürkTraktör was born in 1954 and has now reached over 130 countries of the world with its exports. The Company shapes its activities in line with its vision of driving the modern agriculture. Thanks to its ever-expanding manufacturing capacity and constantly improving quality standards, it is the largest tractor manufacturer in Turkey. TürkTraktör has triumphantly brought its tractors, built upon the hard work and care of Turkish engineers, to the world. The Company continues to lead in the sector through the importance given to R&D and the innovations and accomplishments offered. With its 60 years of expert experience, TürkTraktör distinguishes itself to a significant extent from its competitors, thanks to its competency, especially in the field of R&D. As a result of its know-how in this field, the Company was accepted as the R&D Center by CNHI in 1999 and has undertaken new responsibilities in the international production network of CNHI. TürkTraktör was registered by the Ministry of Science, Industry and Technology as the R&D Center in accordance with Law No. 5746 on the Support of Research and Development Activities in 2009. Powered by its sustainable financial performance and strong corporate infrastructure, TürkTraktör has been steadily continuing to invest in the field of R&D while maintaining its competitive superiority and productive competency. TürkTraktör’s manufacturing plants are equipped with gear and heat treatment facilities, over 400 CNC tooling machines, engine manufacturing facilities, paint shops, body and assembly lines as well as modern quality control labs, engine and body testing equipment, together with computer-aided design and production infrastructure, all of which reflect Koç Holding’s professional management approach and the competency of
one
6
T ürk T rakt ö r
CNHI in the field of agricultural equipment manufacturing ◼
has a share of
50% in the domestic market and is an international player w ith exports to over
130 countries .
A world giant at international standards TürkTraktör gives great importance to certification processes and is well-aware of the responsibility carrying out manufacturing activities at international standards has imparted to it. TürkTraktör acquired the ISO 9001:2000 certificate with zero errors on February 25, 2005 and the ISO 14001 Environmental Management System Certificate for its “Industrial Waste Water Treatment Plant” on October 17, 2005. Thanks to the practices actively implemented with the active participation of the employees under the Safety Culture process, which has become a life style at TürkTraktör, the working environment and manufacturing processes are continuously being improved. Through the projects carried out, after successfully completing the audits concerning occupational health and safety practices, TürkTraktör acquired the BS OHSAS 18001 Occupational Health and Safety Management System certificate. TürkTraktör is also the first company in Turkey to acquire the TS ISO/IEC 27001 Information Security Management System certificate. Attracting interest with its innovative practices and quality customer service, TürkTraktör has also acquired the ISO 10002 Customer Satisfaction and Customer Complaint Management Certificate, first in its sector, thanks to its success in the New Holland Call Center’s Customer Complaint Handling Process. In addition, in 2012, TürkTraktör acquired the certificate for the ISO 50001 Energy Management System, which is a standard focused on the identification of energy needs, monitoring and quantifying the energy consumption of organizations, as well as the certificate for achieving the ISO 14064 Greenhouse Gas Emissions Reduction Standard, which is a standard developed for the purpose of classifying greenhouse gas changes in the global atmosphere, and became the first company to acquire the certificates for both standards. Manufacturing 45,823 tractors and reporting an
World-class manufacturing facilities shown as good examples TürkTraktör’s manufacturing facilities, with its 3,040 employees, who have qualifications and experience above the sector average, is capable of manufacturing New Holland, Case IH and Steyr branded tractors simultaneously. Housing an advanced R&D Center for the design and manufacture development requirements of the CNHI international manufacturing infrastructure, TürkTraktör facilities is the worldwide engineering center and the main production center for New Holland TDD and Case IH JX series tractors, sole manufacturing center of Utility Light series tractors and transmissions, the only manufacturing and engineering center of CNHI for TD driveline series and the main producer of S8000 engines. Looking to the future with confidence and hope thanks to its strong strategies, TürkTraktör entered the construction equipment market at the end of 2013 with Case and New Holland products such as tractor backhoe loaders, crawler excavators, skid steer loaders, compact wheel loaders, wheel loaders, mini excavators, tele handlers, adding a new dimension to its corporate development ◼
Mission and Vision MISSION With our experience over half a century and reliance to the Koç Group, as the leader of the domestic market, empowered by the prestige and the global leadership of CNHI with it is well- known brands, New Holland, Case IH and Steyr, by developing our own technology and flexible manufacturing possibilities, by introducing modern and technically advanced agricultural equipment to help our customers to become more productive, by delivering the best experience to our customers in sales and after sales services; we create value for our customers, country, employees, dealers, business partners and our shareholders as a driving force for modern agriculture ◼ VISION To be the driving force for modern agriculture-today and tomorrow ◼
Strategic priorities Operating under the sense of responsibility imparted to it by its status as one of the most deep-rooted industrial establishments in Turkey, TürkTraktör primarily pursues the following strategies when making its investments and future plans: • To compete at the highest level with international manufacturers operating in the same segment, • To follow developments on the world markets as well as innovations in the sector, • To establish a sustainable image as a company offering advantageous prices through investments in R&D and brand recognition in domestic and international markets, • To protect profitability and shareholder interests through increases in quantities and market share, • To maintain performance stability through a balanced EBITDA, high shareholder equity comparable with the leading industrial establishments in the world, and asset profitability, • To ensure high dividend yields ◼ 7
TürkTraktör at a Glance
Product Range / Tractors
TürkTraktör, 2014 Annual Report
Product Range TRACTORS Local Products T 480S T480S 2WD > 48 HP T480S 4WD > 48 HP TTB TT 50B > 50 HP TT 55B > 55 HP TT 65B > 65 HP TT TT 50 TT 55 TT 65 TT 75
> > > >
50 HP 55 HP 65 HP 72 HP
New products Utility Light* 55 > 55 HP 65 > 65 HP 75 > 75 HP TDS TD 65S > 65 HP TD 75S > 72 HP TD 80S > 80 HP TD4B TD 4.65B > TD 4.75B > TD 4.80B > TD 4.90B >
Utility Medium* 85 > 85 HP 95 > 95 HP 105 > 105 HP 115 > 115 HP TR6 TR 120 > 112 HP TR 130 > 122 HP TR 140 > 132 HP
65 HP 72 HP 80 HP 88 HP
TDD TD 65D > 65 HP TD 75D > 75 HP TD 80D > 83 HP TD 90D > 88 HP TD 100D > 98 HP TD 110D > 110 HP
Imported Products TCF TC25F > 22 HP TC30F > 25 HP TC70F > 66 HP
T5000 T5050 > 96 HP T5060 > 106 HP T5070 > 113 HP T5 Electro Command T5.105 Electro Command > 107 HP T5.115 Electro Command > 114 HP T5 Hi-lo T5.105 > 107 HP T5.115 > 114 HP
Local Products
Imported Products
JXC 55 > 55 HP 65 > 65 HP 75 > 75 HP
Quantum N Quantum 75N > 78 HP Quantum 85N > 88 HP Quantum 95N > 98 HP
Utility Light
JXU JXU 95 > 96 HP JXU 105 > 106 HP JXU 115 > 113 HP
55 > 55 HP 65 > 65 HP 75 > 75 HP
T6 AC T6.140 AC > 112 HP T6.150 AC > 121 HP T6.160 AC > 132 HP
Maxxum CVX Maxxum 110 CVX > 112 HP Maxxum 120 CVX > 121 HP Maxxum 130 CVX > 132 HP Puma Puma 130 > 131 HP Puma 145 > 146 HP Puma 160 > 160 HP Puma 170 > 167 HP Puma 185 > 185 HP Puma 185 CVX > 185 HP Puma 215 > 215 HP Puma 230 CVX > 228 HP
Steyr* Compact 4055 S > 55 HP Compact 4065 S > 65 HP
T6000
T6020 T6050 T6060 T6070 T6080 T6090
> > > > > >
112 HP 127 HP 132 HP 141 HP 155 HP 165 HP
T7000 & AC
T7040 > 182 HP T7040 AC > 182 HP T7060 > 213 HP T7070 AC > 225 HP T8
T8.300 > 257 HP T8.360 > 311 HP T8.390 > 340 HP JX
TTJ TT 50J > TT 55J > TT 65J > TT 75J >
70 > 65 HP 75 > 75 HP 80 > 80 HP 90 > 88 HP 100 > 98 HP 110 > 110 HP
50 HP 55 HP 65 HP 72 HP
Utility Medium* 56S 55-56S > 55 HP 65-56S > 65 HP 75-56S > 75 HP
8
TDD Delta TD 75 Delta> 75HP TD 90 Delta > 88HP TD 100 Delta > 98 HP TD 110 Delta > 110 HP
T4 F/N/V T4.75 V > T4.75 N > T4.75 F > T4.85 F > T4.95 F >
78 HP 78 HP 78 HP 88 HP 97 HP
85 > 85 HP 95 > 95 HP 105 > 105 HP 115 > 115 HP
Magnum Farmall U Farmall 105 U > 107 HP Farmall 115 U > 114 HP
Magnum 260 > 257 HP Magnum 315 > 311 HP Magnum 340 > 340 HP
Farmall U Pro Farmall 105 U Pro > 107 HP Farmall 115 U Pro > 114 HP Maxxum Maxxum 110 > 112 HP Maxxum 120 > 121 HP Maxxum 140 > 141 HP
* Only for export markets 9
TürkTraktör at a Glance
Product Range / Agricultural Equipments
TürkTraktör, 2014 Annual Report
Product Range Agricultural Equipments
New products
Square Balers
New Holland Corn Headers
BC5040 HB > 3 Knotters with Chopper BC5060 ET > 2 Knotters Nonchopper BIG BALER 870 > 80X70X260 BIG BALER 890 > 80X90X260 BIG BALER 1270 > 120X70X260 BIG BALER 1290 > 120X90X260
5 rows rigid chassis 6 rows rigid chassis 6 rows folding chassis
Fantini Corn Headers L03 rigid > 5 and 6 rows
Combine Harvesters TC 5070 CX 5080 CX 5090 CX 6080 CX 6090 CX 8070 CR 9080
> > > > > > >
Pneumatic Precision Planters
207 HP 238 HP 272 HP 272 HP 299 HP 326 HP 489 HP
DV40R * DV60R * DV60T Telescopic Chassis * CV40R ** CV50R ** CV60R ** CV60T Telescopic Chassis ** DD40R *** DD60R *** DD80R *** DD100R *** DD120R *** * Disc type ** Coulter type *** No-till seed drill
Sprayers
Self-Propelled Forage Harvesters
Round Balers
FR 450 FR 500 FR 600 FR 700 FR 850
BR6090 RF > 125X120cm BR6090 RC > 125X120cm BR6090 Combi > 125X120cm RB 150 > 120x90-150 cm RB 180 > 120x90-180 cm
> > > > >
424 HP 500 HP 600 HP 685 HP 824 HP
Pedrotti Grain Driers
Olive – Grape Harvesters
Super 120 Super 180 Large 240 XLM 350
VL5080 Plus 9060 LA 9090 XO
> > > >
10-12 ton 16-18 ton 20-24 ton 30-35 ton
SA400 > 400 lt* SA600 > 600 lt* SA1000 > 1000 lt.* SA1600 > 1600 lt.* SA2000 > 2000lt.* SA2002 > 2000lt.* SA2002 HSB Tower > 2000lt.* SP600 > 600lt.** SP800 > 800lt.** SP1000 > 1000lt.** SP2000 > 2000 lt.** Berthoud Mounted Type > 400 lt *Orchard type sprayer **Field type sprayer
Cotton Pickers
Pneumatic Precision Planters
Rotary Tillers
DM40S > 4 rows* DM60S > 6 rows* DM60T* BM40S > 4 rows** BM50S > 5 rows** BM60S > 6 rows** BM60T** * Disc type ** Coulter type
TF 160 > 160 cm TF 180 > 185 cm TF 210(4V) > 210 cm TF 240(4V) > 235 cm TF 160K > 160 cm TF 180K > 185 cm TF 210K > 210 cm TF 180M(4V) > 185 cm TF 205M(4V) > 210 cm TF 230M(4V) > 235 cm TF 265M(4V) > 280 cm TF 300M(4V) > 290 cm
Power Harrows DR 250M(4V) > 250 cm DR 300M(4V) > 300 cm DR 400M(4V) > 400 cm
Square Balers KB290 2 Knotters Nonchopper KB390 3 Knotters Nonchopper KB390H 3 Knotters with Chopper
Cotton Express 420 (4-5 rows) > 275 HP Module Express 635 > 400 HP
Self-Propelled Sprayers Patriot 3330 > 250 HP
Square Balers LB324 LB334 LB424 LB434
> > > >
80X70X260 80X90X260 120X70X260 120X90X260
Mower Conditioners H 7220 > 280 cm H 7230 > 320 cm RDB 313 > 400 cm
10
11
TürkTraktör at a Glance
Product Range / Construction Equipments
TürkTraktör, 2014 Annual Report
Product Range Construction Equipments
12
Tractor Backhoe Loader
Compact Wheel Loader
Mini Excavator
Tractor Backhoe Loader
Compact Wheel Loader
Telehandler
B110B Small front wheels B115B 4 4 big wheels
W50 W60 W70 W80
E16B 1,6 ton E18B 1,8 ton E26B 2,6 ton E29B 2,9 ton E35B 3,5 ton E39B 3,9 ton E45B 4,5 ton E50B 5,0 ton
580ST Small front wheels 695ST 4 big wheels
21E 4,624 kg 121E 4,920 kg 221E 5,418 kg 321E 5,771 kg
TX130-35 13 m TX140-45 14 m TX170-45 17 m
4,800 kg 5,085 kg 5,580 kg 5,930 kg
Skid Steer Loader
Wheel Loader
L213 L215 L218 L220 L223 L225 L230
W110C 11 ton W130C 13 ton W170C 15 ton W190C 18 ton W230C 20 ton W270C 24 ton W300C 28 ton
590 kg 680 kg 818 kg 905 kg 1,020 kg 1,135 kg 1,360 kg
Skid Steer Loader
Wheel Loader
Mini Excavator
Crawler Excavator
SR130 SR150 SR175 SV185 SR200 SR220 SR250 SV250 SV300
521F 11 ton 621F 13 ton 721F 15 ton 821F 18 ton 921F 20 ton 1021F 24 ton 1121F 28 ton
CX15B 1,6 ton CX17B 1,7 ton CX18B 1,8 ton CX26B 2,6 ton CX30B 3,0 ton CX35B 3,5 ton CX39B 3,9 ton CX45B 4,5 ton CX50B 5,0 ton
CX130B 14,3 ton CX210B 20,9 ton CX250C 24,8 ton CX300C 29,9 ton CX370C 37,05 ton CX470C 48,2 ton CX700C 69,3 ton
590 kg 680 kg 790 kg 840 kg 905 kg 1,000 kg 1,135 kg 1,135 kg 1,360 kg
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TürkTraktör, 2014 Annual Report
2014 OVERVIEW
TÜRKTRAKTÖR , W HICH h a s in augur at ed i t s second p l a n t in Er enl er on a l a nd me a sur ing a t o ta l of 396, 4 43 m 2 , h a s r e ached t o t he da ily m a nufac t ur ing c a paci t y of 17 0 t r ac t or s. T he P l a n t w hich h a s f our mobil e a ssembly line s a nd a f ul ly au t om at ed rob o t ic pa in t shop, t he fir s t in t he sec t or , h a s cr e at ed a l a b or f orce of ne a r ly 1,0 0 0 p eop l e. 14
15
2014 Overwiev
New Plant Opening
TürkTraktör, 2014 Annual Report
On its 60th Anniversary, TürkTraktör is Now Even Stronger with its Second Plant 02
T ür k T r a k t ör is p rogr e ssing from s t r eng t h t o s t r eng t h a nd e x pa nding i t s m a nufac t ur ing facili t ie s w i t h t he op ening of
LEED Gold Certificate Achieved
i t s second p l a n t in Er enl er , Sa k a rya t o coincide w i t h t he 01
6 0 t h a nni v er sa ry of i t s f ounding. 01 TürkTraktör, which has inaugurated its second plant in Erenler, Sakarya, has raised its manufacturing capacity to 50,000 units. 02 Nihat Zeybekçi, the Minister of Economy: “It is such a pleasure of seeing the manufacturing of these tractors in Turkey.” 03 Fikri Işık, the Minister of Science, Industry and Technology who attended to the opening ceremony: “Each opening of a new plant is an investment for the future of the country.” 04 Richard Tobin, CEO of CNH Industrial NV : “We focus on the 1 millionth tractor.” 05 Mustafa V. Koç, the Chairman of the Board of Koç Holding: “We have invested to the future of the Country, and will continue.”
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TÜRKTRAKTÖR, celebrated the 60th anniversary of its founding with the opening of a new plant. Having built its first factory in Ankara in 1954, the Company has inaugurated its second factory in Erenler, Sakarya. The foundations for the Erenler Plant were laid on 28 March 2013 on a land measuring a total of 396,442.79 thousand square meters, and construction was completed within just fifteen months. The opening ceremony for the TürkTraktör Erenler Plant was attended by Fikri Işık, the Minister of Science, Industry and Technology, Nihat Zeybekçi, the Minister of the Economy, Mustafa V. Koç, the Chairman of the Board of Koç Holding, Richard Tobin, the CEO of CNH Industrial N.V., and many representatives from the government and business community. Established in 1954 to manufacture the first tractor of Turkey, TürkTraktör is a living example of the phases through which the automotive manufacturing industry in Turkey has passed. Through the investments made the Ankara Plant has become a globally-competitive facility. Exporting over 30% of its production, TürkTraktör has raised its manufacturing capacity to
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50,000 units with its Erenler Plant, became one of the largest manufacturers in Europe ◼
are four mobile assembly lines where parts coming from Ankara, and subsidiary industries, are assembled ◼
Employment for 1,000 people With a daily manufacturing capacity of 170 tractors, the Erenler Plant has created a labor force of nearly 1,000 people. While the manufacture of the main components, such as engines, transmissions and axles remains established at the Ankara Plant, the paint shop and assembly processes have been moved to the Erenler Plant. At the Erenler Plant, there is a fully automated robotic paint shop, the first in the sector, and there
An important step toward the future Having exported approximately 16,000 tractors annually to over 130 countries, including the United States and Japan, since the early 2000s, TürkTraktör will be ready for new export ventures with its new factory. The Company is proceeding firmly in line with Turkey’s 2023 vision with its increased manufacturing, export and enhanced R&D activities, deploying new investments
to raise its processing and manufacturing capacity not only for tractors, but also of transmissions and engines. TürkTraktör has long been a pioneer and innovator in Turkey and with its position as market leader, the Company is constantly raising its level of success thanks to its share in the manufacture of tractors in Turkey, its important role in the development of the agricultural sector, and its ever growing export performance. Achieving a major success in the sector in terms of increase in domestic added value, TürkTraktör will continue to lead the field in this area. The Erenler Plant, together with the Ankara Plant, will carry the name of TürkTraktör to even stronger positions in the agricultural sector ◼
The Erenler Plant supports environmentally-friendly manufacturing with its “green building” concept by using sunlight at the maximum level combined with lower energy and water consumption. The Plant has been awarded the LEED Gold Certificate which is presented by the U.S. Green Building Council to enterprises which support environmentally-friendly construction ◼
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2014 Overwiev
The 60th Anniversary
TürkTraktör, 2014 Annual Report
TürkTraktör Celebrates its 60th Anniversary T ür k T r a k t ör , t he l e a ding n a me in T ur kish agr icult ur e, comp l e t ed i t s 6 0 t h y e a r in 2014 . H av ing pioneer ed se v er a l
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innovat ions a nd l ed t he sec t or in m a n y fiel ds f or ov er 6 0 y e a r s, t he Compa n y cel ebr at ed t his v ery imp orta n t y e a r w i t h a sp l endid g a l a dinner .
01 The Koç Family, Koç Group and TürkTraktör executives hosted the 60th Anniversary Gala of TürkTraktör. 02 Kudret Önen, the President, Defence industry, other Automotive and Iformation Technology Group, 03
Ali Y. Koç, the Board Member of Koç Holding,
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“Our main advantage is our relationship with the Fiat Group” Richard Tobin, the CEO of CNH Industrial N.V., commenced his speech by saying “Today is a historical day for our company which has held its position unchanged for over 60 years in the agricultural industry of Turkey.” He then went on to add that; “today’s celebration of TürkTraktör, which is continuing to operate under the partnership between CNH Industrial and the Koç Group, is also one of the milestones of our company. With the opening of the new factory in Erenler, we are taking an important step for the future of TürkTraktör.” ◼
Marco Votta, the CEO of TürkTraktör 03 Marco Votta, the CEO of TürkTraktör:“We have many reasons to congratulate ourselves” 04 Richard Tobin, the CEO of CNH Indsutrial NV:”We are taking an important step for the future of TürkTraktör.” 05 Mustafa V. Koç, the Chairman of the Board of Koç Holding: “With the confidence and belief we have in the future of Turkey, we have focused on augmenting the added value we
established in 1954 as the first tractor factory in Turkey and cumulatively exported over 100,000 units of tractors to over 130 countries, TürkTraktör celebrated the 60th anniversary of its founding with a gala dinner attended by the Koç Family, Koç Group, CNH Industrial and TürkTraktör executives, dealers, and representatives of the business community ◼
have been creating.” 06 The guests attended to the gala dinner enjoyed with the magnificent concert of Pink Martini at the end of the night.
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“One of every two tractors sold in Turkey today is manufactured by TürkTraktör’’ TürkTraktör is one of Turkey’s major assets with its contributions to the development of modern agriculture, the added value it has created and its ever-increasing exports. Speaking at the TürkTraktör gala evening, Mustafa V. Koç, the chairman of the board of Koç
Holding, reminded the guests that TürkTraktör was the starting point for the partnership between the Fiat Group and Koç Holding. Mentioning that “one of every two tractors sold in the country today is a product of TürkTraktör,” Koç underlined the success of the company in Turkey. Recalling the saying of the late Vehbi Koç, the founder of Koç Holding; “If my country exists, I exist,” Mustafa Koç went on to underline the fact that Koç Holding is continuing to invest in the future of Turkey while experiencing the greatest investment period of its history, saying; “Maintaining a permanent long term perspective and with the confidence and belief we have in the future of Turkey, we have focused on augmenting the added value we have been creating” ◼ 06
“We have many reasons to congratulate ourselves” Speaking during the 60th anniversary gala dinner, Marco Votta, the CEO of TürkTraktör, said
that the Company had reached a total of 700,000 tractors as a result of constant manufacturing which had continued uninterruptedly for 60 years. “We have exported 100,000 of the tractors we manufactured and today we are launching a new manufacturing facility. This alone would be sufficient reason to congratulate ourselves. We are very lucky that we could do all this within this year. I hope the new investment we have made will lead to great gains. I thank everybody who has contributed to the opening process of our new factory. I also hope that everybody who has supported the process will continue in their support.” ◼ 19
2014 Overwiev
Construction Equipmant
TürkTraktör, 2014 Annual Report
TürkTraktör Continued to Invest in Construction Equipment with its Regional Facilities
SERHAD TAŞKINMERİÇ Construction Equipment Director TürkTraktör opened its first construction equipment facility in İzmir.
“We started a new era with our 60th anniversary”
Wor king t o p rov ide a fa s t a nd high va lue- a dded serv ice b y B y conducting distinct marketing
e s ta blishing cl ose con tac t w i t h i t s cus t omer s, T ür k T r a k t ör h a s activities and communication projects
op ened a ne w page, under i t s dis t r ibu t or ship agr eemen t w i t h CNHI, in in 20 14 , T ürk T rakt ör introduced
t he cons t ruc t ion equipmen t sec t or . T he Compa n y l aunched i t s İzmir its brands to customers in various
a nd A nk a r a R egion a l Facili t ie s in 2014 . environments.
THE construction industry is one of the locomotive industries in Turkey and plays a very important driving role in the economy of developing countries such as Turkey. Due to this fact, the Turkish construction equipment sector has grown substantially in recent years to become the 4th largest market in Europe and the 11th largest market in the world, according to the 2014 data. CNHI, one of the most important manufacturers in the world, with an annual turnover of over 30 billion US dollars, and Koç Holding, one of the most important assets of Turkey in terms of its contribution to the economy, have opened a new era with the addition of a Turkish distributorship for Case and New Holland-brand construction equipment to their long-standing tractor manufacturing partnership, under the roof of TürkTraktör. With investments in the construction equipment sector, which has experienced a significant growth trend in recent years, TürkTraktör provides a sales and after-sales services network across Turkey and 20
aims to become one of the most important players in the construction equipment sector in the near future, as it currently is in agriculture, by means of the high-end products of the well-established Case and New Holland brands ◼ İzmir and Ankara Regional Facilities opened Carrying its collaboration with CNH Industrial in the field of agricultural equipment into the field of construction equipment, TürkTraktör is advancing into this sector through important investments. TürkTraktör launched its İzmir and Ankara Regional Facilities in 2014 as the Turkish distributor of Case and New Holland-brand construction equipment. For TürkTraktör, which aims to differentiate itself through the value it contributes to its customers through an ever-present close contact, the newly-opened facilities are the first milestone on this road. The İzmir and Ankara Regional Facilities provide sales, after-sales and spare part services to the region. Product
support and technical support engineers work toward ensuring rapid response by producing instant solutions to meet customer needs with mobile service vehicles. In addition to these investments, TürkTraktör has also established a team of specialist and highly-experienced members confident in their ability to provide such services at the highest standards at all times ◼ Spreading the service all over Turkey through a widespread dealer network In 2014, TürkTraktör, with its widespread dealer network across Turkey and direct sales and service facility investments, launched 8 3S (Sales + Service + Spare Parts) dealer facilities. Together with the appointment of 2S dealers, the Company sells its products through 22 sales dealers and provides servicing to the equipment park across Turkey at a total of 20 points. Thus, TürkTraktör is spreading its overall vision across Turkey through its widespread dealer network ◼
Brands introduced to customers through marketing activities Through marketing activities carried out during 2014, customers were introduced to the Case and New Holland brands. Starting with the Middle East Construction Trade Fair held in Diyarbakır, events continued with iftar meals provided for customers from various regions throughout Ramadan. The Company also sponsored the traditional iftars given by the Association of Asian Side Excavation Contractors and the Association of European Side Excavation Contractors. TürkTraktör attended agricultural trade fairs with its construction equipment throughout the year and thus created a synergy between the brands ◼
“2014 is a special year for TürkTraktör, for the reason that we are celebrating our 60th anniversary. Apart from being special, 2014 is an extraordinary year, because, in addition to the milestones we have experienced so far, we are continuing to complete new, challenging projects. Our aim is to bring together the knowledge of CNHI in the construction equipment sector with our success in the agricultural sector into the construction equipment sector. When doing this, our biggest guarantee is our confidence in the future of the construction equipment sector in Turkey.’’
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2014 Overwiev
Tractor of the Year Award
TürkTraktör, 2014 Annual Report
New Holland TTJ Model Receives the “Tractor of the Year” Award in Europe Offering superior performance in a narrow space In vineyard and orchard agriculture, a field which has been growing day by day, planting distances are shortening and the cultivation of low-growing fruit varieties, such as berries, is gaining prominence. Accordingly, the dimensions of tractors and equipment in use are becoming more important. The new TTJ Series tractors, which offer substantial convenience to farmers dealing with orchards, will be the number one preference in vineyards and orchards thanks to its dimensions and high maneuverability ◼
T ür k T r a k t ör h a s r einf orced i t s s t r eng t h in gl ob a l a r e a once ag a in, h av ing w on one of t he mos t p r e s t igious awa r ds in t he agr icult ur a l sec t or w i t h t he Ne w Hol l a nd TT J model , chosen a s t he “ T r ac t or of t he Y e a r – Be s t of Sp eci a lized” in Europ e.
THE new New Holland TTJ Series for vineyard and orchards, which has been developed in Turkey and manufactured at TürkTraktör facilities with the hard work of Turkish engineers and workers, received the Tractor of the Year 2015 award in Best of Specialized category, which is regarded as one of the most prestigious agriculture sector awards. The award was accepted by Marco Votta, the CEO of TürkTraktör, at a ceremony held in Bologna, Italy, under the aegis of the EIMA (Esposizione Internazionale per la Macchina Agricola - International Agricultural and Gardening Machinery Exhibition) Trade Fair. With New Holland TTJ, which was introduced to the Turkish market in the spring of 2014 from the TürkTraktör manufacturing line and exported to foreign markets under the name of T3F, one of the most important awards in agriculture sector has been won. The award 22
is an important indicator of New Holland’s perfectionist approach in the field of vineyard-orchard tractors. The “Tractor of the Year Award” which has been presented every year since 1998 under the leadership of TRATTORI, the long-established tractor and agricultural equipment magazine published in Italy, is awarded after a challenging selection process. A jury consisting of 23 famous people, recognized in their respective fields from 23 countries in Europe, conducts the tests in an agricultural field. The Tractor of the Year Award consists of three categories; the “Tractor receiving the highest score,” the “Best vineyard-orchard tractor”, and the “Golden design award”. A maximum of seven brands make it to the finals in each category. By winning one of the most prestigious awards in the agriculture sector, TürkTraktör has once more reinforced its strength in the sector internationally ◼
T he award was accepted by M arco Votta , the CEO of T ürk T rakt ör and M atthieu Séjourné,
TTJ the A ssistant
TT 50J > 50 HP General M anager
TT 55J > 55 HP / M arketing,
TT 65J > 65 HP at a ceremony
TT 75J > 72 HP held in B ologna , I taly.
Ideal dimensions for vineyards and orchards The new New Holland TTJ Series, which will bring a breath of fresh air to orchard farming with its ideal dimensions, brings together power and economy through its four models ranging from 50 HP to 72 HP. The TTJ Series enables farmers to readily achieve the speed range desired for agricultural operations with its eight forward and eight backward transmission, offering maximum performance. The new TTJ Series offers farmers a comfortable working environment thanks to an assertive, powerful, modern hood design, ergonomically designed platform, and control levers that deliver ease of use ◼
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AWA R DS & ACCOMPLISHMEN T S
2014 Overwiev
24
TürkTraktör, 2014 Annual Report
TürkTraktör Showered with Awards in 2014 H av ing been r ecognized w i t h se v er a l n at ion a l awa r ds in 2014 , T ür k T r a k t ör h a s con t inued t o m a k e a differ ence w i t h i t s innovat i v e a p p roach a nd
Stars of Export - 1st Prize in the Export Encouragement Awards! The “Stars of Export” competition, held for 12 years with the aim of supporting export and encouraging exporters, as one of the foundations of economic growth and development, and with the further aim of ensuring that Turkey reaches its export targets for 2023, held its annual ceremony. During the ceremony attended by the Deputy Prime Minister, Ali Babacan, the awards were presented to the winners. TürkTraktör, was recognized as worthy of the first prize in the field of “Market and Market Diversity” with its contribution to the target of having export with 500 billion US dollars in the 100th year of the Republic ◼
p roduc t s a nd con t inuously ch a l l enge s i t sel f t o r e ach e v er gr e at er heigh t s.
Double awards for patent applications The companies which made the most local patent applications to the Turkish Patent Institute in 2013 were announced. According to the list, TürkTraktör took the 9th place, with 20 patent applications, in the Turkey-wide rankings and 4th place in the rankings amongst Koç Holding ◼
50th place among the fortune 500
50th place among the Fortune 500 The Fortune 500 list, consisting of the largest, most profitable, fastest growing, and highest employment providing companies in Turkey, has been announced. TürkTraktör rose to the 50th place on the list, with net sales of TL 2,175,319,881 in 2013 ◼
34th place in the ISO 500 The results of the annual study of Turkey’s Top 500 Industrial Enterprises, which has now become a kind of mirror of the Turkish economy, were announced. The study was originally undertaken in 1968 as the Top 100 Industrial Enterprises and has continued under the Istanbul Chamber of Industry and been annually expanded since then. In 2013, TürkTraktör was placed at 34th on the list with net sales from manufacturing amounting to TL 1,835,659,651 ◼
TürkTraktör; Champion of Exports The leading brand in the Turkish agricultural sector, TürkTraktör’s success in export has been recognized once again. During the Turkish Exporters Assembly (Türkiye İhracatçılar Meclisi - TİM) 21st Ordinary General Assembly and Export Champions 2013 Award Ceremony held on 7 June 2014, TürkTraktör, as the company having exported the greatest volume in the category of Machinery and Components, was awarded the first prize. Marco Votta, the CEO of TürkTraktör, received the first prize award from Ali Babacan, the Deputy Prime Minister ◼
Awards from KalDer in 2 categories TürkTraktör was recognized with awards in the Quality Circles and Kaizen categories at the 17th Quality Circles Sharing Conference, held annually by the Turkish Quality Association (Türkiye Kalite Derneği - KalDer) with the aim of encouraging teamwork across Turkey and of sharing this work with other organizations under the philosophy of “the person who knows a job best is the one who does it” ◼
The most successful CIO award The most successful technology leaders of 2014 were announced at the 5th CIO Awards which was organized this year under the leadership of the IDG-licensed CIO magazine. Ergun Özdamar, the TürkTraktör Information Technologies Manager, was selected as one of 23 technology leaders of the year and was recognized as “CIO of the Year” at the 2014 CIO Awards, for his successful work ◼
Two awards from experienced CIOs The “IDC Turkey CIO Summit 2014 Turkey”, the flagship of the International Data Corporation (IDC), a global market intelligence firm leading the field of Information Technologies and Telecommunication, and which is celebrating its 50th anniversary this year, was held for the 5th time. The leaders in business, technology and innovation were announced at the Summit. TürkTraktör won the 1st prize in the Best IT Governance Project category and the 2nd prize in the Best Cost Efficiency Project category ◼ 25
2014 Overwiev
TürkTraktör, 2014 Annual Report
2014 Highlights
In 2014 T ür k T r a k t ör , f ul ly eng aged w i t h t he l aunch of ne w p roduc t s a nd communic at ion ac t i v i t ie s w hich befi t t he me a ning of t he y e a r .
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T5 EC and T6 AC make life easier The choice of medium and large size enterprises, the New Holland T5 Electro Command Series is offered for sale in two different versions; 105 HP and 114 HP. Designed to meet the needs of upper-medium and large-scale enterprises, the T6 Auto Command™ Series is offered for sale in three different versions; ranging from 110 HP to 131 HP. Thanks to the new generation 16 forward, 16 backward semi-automatic Electro Command gearbox, which makes the T5 EC Series special, it is sufficient for the user merely to touch a single button in order to shift gear. Thanks to its constantly variable CVT transmission, the new T6 AC Series enables agricultural operations to be carried out merely by determining the cruising speed without any need to shift gears at all ◼
Budget friendly TDD Delta Series launched In addition to its high-performance engine and farmer-friendly equipment, the TDD Delta Series is environmentally-friendly and economical and also considerate of the farmer’s budget. Drawing attention with its modern design, the new TDD Delta Series is equipped with a stateof-the-art 4-cylinder, high-performance engine. Conforming to Tier III norms, the engine offers four different power alternatives. Power alternatives start from 75 HP, go on to 88 and 98 HP and end with 110 HP. All high-performance engines are standard-equipped with turbo feeding and intercooler. The new TDD Delta Series is equipped with 12x12 transmission, by which all speeds needed by the driver can be achieved thanks to a 3-step, 4-speed gearbox. By means of a mechanical forward-backward shuttle placed next to the steering, the TDD Delta Series enables all forward gear speeds to be used for reverse gear as well. TDD Delta Series models, which have four hydraulic power outlets, are equipped with a superior hydraulic structure with the Lift 0-matic™ system, by which the draft, positioning, mixing and floating functions can be used as standard, and which facilitate end-of-row turns. Thanks to its modern cab, the new TDD Delta Series offers a perfect 360 degree, wide view. The developed cab insulation, presents a silent working environment of 79.5 dB(A) ◼
The T480S takes performance to NEW LEVEL Manufactured at TürkTraktör facilities together with its engine equipment, the new T480S comes to prominence with its ability to perform tasks in different categories easily and with low fuel consumption, thanks to the high torque value produced by its 48 HP, three-cylinder, turbo-fed engine. Equipped with an 8 forward-2 reverse gearbox in the 2WD model and an 8 forward-8 reverse gearbox in the 4WD model, the T480S elevates engine-transmission attunement to the maximum level with its enhanced transmission structure. In the 4WD model, a mechanical shuttle placed next to the steering offers usage ergonomics on the one hand and minimizes loss of time during end-of-row turns, thus ensuring fuel economy on the other. Another feature which ensures fuel economy is the ability of the T480S to maximize PTO speed at revolutions as low as 540 rpm. With its dimensions suited to multi-purpose tasks, the T480S is equally versatile in livestock and on-road tasks, and can comfortably perform its duties in orchards with its narrower model available in both 2WD and 4WD versions. The new T480S tractor series, developed with a view towards the needs of users in different regions of Turkey, was launched in 2014 and has launched to the market ◼
The New Holland TD4B Orchard Series has breathed new life into its class Pleasing to the sight with its new hood design and new platform equipped with ergonomically positioned control levers, the TD4B Orchard Series has brought a breath of fresh air to its class. The TD4B Orchard Series is offered for sale with four different four-cylinder power options. Power options start at 65 HP, continue through to 72 HP and 80 HP and extend up to 88 HP. With a forward-reverse shuttle positioned next to the steering, the TD4B Orchard Series is standard-equipped with a 12-forward and 12-reverse transmission. Electronically controlled dual traction and differential locking systems make forward and backward maneuvering easier with the optional Powershuttle shuttle which eliminates the need to depress the clutch. The Powershuttle shuttle especially makes it easier for farmers to make end-of-row turns. Equipped with robust hydraulic arms comprising a lifting capacity of up to 3,000 kg and 4 hydraulic power outlets, the new TD4B or-
chard series has been designed to be capable of performing all tasks demanded by orchard and vineyard agriculture ◼ Renovation in the orchard series will continue In line with the developing requirements of the market, studies on the renovation of the TDB Orchard tractor series, for the purpose of meeting both domestic and international demand, is ongoing. With the 90 horsepower 4-cylinder option, which will be introduced to the market with broader features in 2015, the series will acquire the capacity to work under heavier conditions. Ease of use has been improved in the series thanks to features such as the hydro-mechanical gearbox and integrated shuttle, whereas driver ergonomics will be improved through the use of a mono-block platform structure, and the tractor will be given a new face with the new NH2 front and rear hood style ◼ 27
2014 Overwiev
2014 Highlights
TürkTraktör, 2014 Annual Report
The Case IH JX L630 is remarkable with its multi-purpose usage The new Case IH JX L630 series front loaders have been manufactured with sufficient strength to be equal to numerous loading and unloading tasks over many years. The new series sports a number of superior design features that have been developed with regard for the areas of use required by many agricultural and construction companies, mainly the livestock companies. With its robust construction, consisting of three functions and standard operable bucket, Case IH JX L630 offers a wide range of use to users. The new series front loaders provide both ease of use with the joystick control lever inside the cab on the one hand, and a wide view through the standard sunroof on the other ◼
The Case IH Farmall U deserves credit for its new cab design and usage ergonomics The Farmall U Series, included in the product range as a continuation of the JXU Series listed under the Case IH product range, is offered for sale with two different horsepower options, each conforming to Tier IV exhaust emission norms. The four-cylinder turbo-fed engines have107 HP power, 444 Nm torque and 114 HP power, 461 Nm torque options. The Farmall U Series, which can be used by small and medium size farmers, not only for field tasks but also for every other kind of agricultural task such as livestock, deserves credit not only for its new engine but also for its new cab design and usage ergonomics. The new Farmall U Pro series, on the other hand, has the characteristic of being the new generation JXU series tractor. With the environmentally friendly Tier 4 engines equipped with the Common Rail injection system, they minimize damage to the environment ◼ 28
Turkey’s CombIne New Holland TC5070 The TC5070 which has managed to remain market leader in combines for a long time thanks to its ease of use, robustness, high harvest capacity and widespread repair and spare parts network has been upgraded to meet customer needs and demands. It’s completely upgraded cabin, which has been positioned to the center point of the combine, has been made much more silent thanks to a wider and upgraded isolation system bringing the noise level down to 75.6 dB. With the new infoView™II monitor ergonomically fitted in the cabin, it is easier and faster to monitor and adjust the combine data ◼
New Holland expands its range of sprayers The New Holland SA2002 HSB tower type orchard sprayer was included in the range of New Holland sprayers in 2014 in order to ensure more efficient spraying, especially in fruit orchards. With a tower height of two meters, 20 nozzle positioned according to air flow, an Italian Annovi Reverberi pump with a flow rate of 200l/min, and a control arm of the same make, the New Holland SA2002 HSB provides ease of use together with an improved spraying performance ◼
The range of TürkTraktör branded equipment is growing The small baler, one of the machines in the livestock group, has been made available to producers in two models; with chopper and nonchopper. Small balers equipped with the chopper are used to gather the straw from agricultural crops such as wheat and barley from field and to make them into bales. At the baling process, crops are gathered up from field, shred into small pieces by the chopper, pressed into bales in the bale chamber, knottered by the globally-recognized and user-favorite German Rasspe brand knotter, and then left on the field. The knotter is used with three knotters on the KB 390 H model baler with chopper, two knotters on the KB 290 model nonchoppered baler and with three knotters on the KB 390 model nonchoppered baler.
Square balers, mostly preferred by contractors, are used by Turkish farmers with great admiration for their • Robust chassis, suitable for working under rough field conditions, • High performance pick-up unit with a width of 155 cm, • Strong plunger, • World famous knotter (Rasspe), one of the most important components of the baler, and • Unrivaled fan structure which ensures the cleanliness of the knotter at all times ◼
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2014 Overwiev
2014 Highlights
TürkTraktör, 2014 Annual Report
The Case IH equipment range has been expanded Imported Case IH LB series large balers have been included in the enriched range of Case IH equipment. With these wide Case IH balers, the range of Case IH equipment has been expanded to meet the capacity demands of all agricultural enterprises from the smallest to the largest. With their high capacity and the heavy bales they make, Case IH LB series large balers offer many advantages, greater baling capacity, fuel economy, low operating costs and lower transportation cost per bale unit weight, together with high performance for agricultural enterprises and baling contractors ◼
C ase IH is the 5 th most preferred brand of T urkey in 7 years.
T ürk T raktör academy, the first and only of its kind in the sector , provided training to 7 20 employees of dealers in 3 years
MATTHIEU Séjourné Assistant General Manager / Marketing
“ Through the Academy, we are disseminating our 60 years of knowledge to the sector ’’ “At the end of our 60 years of business carried out under the name of TürkTraktör, we have come to know the agriculture sector of Turkey very well. TürkTraktör Academy launched in 2013 for the purpose of adopting professionalism and maintaining the continuity of high standards, is still the first and only of its kind in the sector. Through TürkTraktör Academy, we aim to make our colleagues working in our dealer and after-sales network more knowledgeable in their respective areas, and also contribute to their personal development.’’
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TürkTraktör Academy opened its doors to dealers and factory employees for the third time Having commenced operations in 2013, the TürkTraktör Academy aims to increase the number of well-educated employees in the sector and to get high standards of service adopted at all stages by making contributions to the personal development of the employees of dealerships and the TürkTraktör after-sales network. A leading name in the agriculture sector in Turkey, TürkTraktör held its third dealer training camp, the first and only training program of its kind in the sector. The program was heavily attended by dealers. The TürkTraktör Academy Dealer Camp Training Program which was held on a 100 hectare plot of land belonging to the Antalya Akdeniz University Faculty of Agriculture got full marks from attendants for its wide tractor and equipment range. With the aim of maintaining its leadership on the tractor and equipment market and meeting customer demand through more accurate selling, TürkTraktör provided sales employees of the dealers with an opportunity to test its products un-
der field conditions and with various equipment, through the Dealer Camp training program. In the course of the training, carried out on a100 hectare-plot of land, dealers and their employees were informed about all the product ranges, from orchard tractors to locally manufactured tractor series, import tractors, combines and other agricultural equipment, at 4 different training stations. During the TürkTraktör Academy Dealer Camp training, dealers and their employees, who were given opportunities to encounter the current models under field conditions, received instructions about the features and use of new models. TürkTraktör Academy, which aims for all employees in the field to provide sales and after-sales service even beyond customer expectations, is continuing in its educational activities with training courses delivered under four main titles; Sales, Management of Business Processes, and Customer Relations Management, together with the Dealer Camp ◼
İRFAN ÖZDEMİR Assistant General Manager / Sales
“We are grateful for the confidence of Turkish farmers’’
Case IH received its 10,000th customer Case IH, the preferred brand of Turkish farmers, who demand the best, took pride in receiving its 10,000th customer. Case IH JX110, sold by the Case IH dealership in Edirne, was delivered to the brand’s 10,000th customer at a ceremony attended by Kudret Önen, President of the Defense Industry, Other Automotive and Information Technology Group of Koç Holding, together with Marco Votta, the CEO of TürkTraktör. A DV50 R model 5-Rows Planter was also presented as a gift by TürkTraktör at the ceremony. Case IH was introduced to the Turkish market in 2007 with the aim of offering a new alternative to farmers who want more from the sector. Although just seven years have passed since then, the feedback received proves that the correct step has been taken. Case IH succeeded in winning the admiration of Turkish farmers in a short period of time thanks to its high quality and well-developed service network. Case IH JX110, which was sold to the 10,000th customer, is in the medium segment. Combining high performance with fuel economy with its110 HP engine, the JX110 has a user-friendly architecture and is richly equipped. The Viskos fan and compressor are offered as standard features, while the user can shift forward-backward gears without the use of a clutch thanks to Powershuttle, which is also standard-equipped. The standard intermediate hydraulic lever allows ease of equipment control, while a lifting capacity of 4,700 kg enables considerable versatility. Having revolution options of 540-540E & 540-1000 PTO, the JX110 offers a comfortable driving experience with an air-conditioned and spacious cab. The package is completed with the sunroof and passenger seat which are equipped as standard features ◼
R eaching its 10,0 0 0 th customer in its 7 th year of its operation in the sector , C ase IH is continuing to work in the interest of T urkey ’s agricultural development with the power it gains from the confidence of farmers.
“2014 is a year while we were celebrating TürkTraktör’s 60th year and also 7th year of our Case IH brand in Turkish market. Within such a short period of time we become the 5th most preferred brand in Turkey. Thus, we have broken new ground in our history and we have entered the list with two brands listed among the first five. This success stems from our widest sales and after-sales service network and the importance we give to quality. We are justifiably proud of having received our 10,000th customer. I would like to thank all Turkish farmers for their confidence.”
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2014 Overwiev
2014 Highlights
TürkTraktör, 2014 Annual Report
Sedat Tezerişener Assistant General Manager / Purchasing
Hasan Haldun Özgümüş Assistant General Manager / Quality
“Turkish farmers have confidence in TürkTraktör’’
03
“The farmers know that any tractor manufactured by TürkTraktör will not let them down. Every part assembled to the tractor shall meet the requirements. We are purchasing directly from the suppliers that can cover and sustain this quality. Purchasing with an amount of millions of Euro annually TürkTraktör is amongst the most important companies in Turkey.”
01 The Field Days event hosted several activities for guests and families to have a pleasant time. 02 During the “New Holland Field Days”, farmers take the opportunity to test the products of New Holland in the field.
“Quality has important part in manufacturing processes’’ “Thanks to its quality, TürkTraktör become the leader. Quality has important part in manufacturing processes. In this sense, our operators are being trained in every step of manufacturing processes in order to meet quality requirements and also they do their operations by considering the quality control. We are focusing on international standards in terms of quality and these are introduced into TürkTraktör.”
03 Sümer Tilmaç, famous artist, met with farmers in the Field Days event. 01
DURING THE Ne w Hol l a nd F iel d Day s, w hich t ook p l ace in June, fa r mer s h a d t he op p ort uni t y t o t e s t t he p roduc t s of Ne w Hol l a nd in t he f iel d, accompa nied b y t he sp eci a l is t s of T ür k T r a k t ör .
32
The TürkTraktör team has come to the field TürkTraktör comes together with farmers in the field during the “New Holland Field Days” which form an important part of its vision. In the course of the event, farmers are provided with a festive environment where they can enjoy themselves together with their families. The festival-like event is organized for the purpose of coming together with farmers from all parts of Turkey, listening to them, and creating a platform through which farmers can get to know the products through closer inspection. TürkTraktör met with farmers under the aegis of the “Field Days” in June. The “New Holland Field Days” event which took place between June 3rd and
July 1st visited the provinces of Adana, Şanlıurfa, Kayseri, Konya, Eskişehir and Çorlu. In the course of the event, which was open to farmers and their families, visitors took the opportunity to personally test New Holland products in an average area of 200,000 to 300,000 square meters. In the course of the Field Days, the new TürkTraktör KS series baler without shredder, TürkTraktör tillers, New Holland CX6080 combine harvester, TDD Delta Series and two new import tractors with Tier 4 exhaust emission, T5 Electro Command with semi-automatic gearbox and T6 Auto Command with continuous variable transmission and CVT, were tested in field operations ◼
02
In Brief Tractors exported to Japan Marked an important milestone in TürkTraktör’s history, began exporting the NH UTL light 75HP model tractor to Japan, one of the world’s leading and demanding industrial nations ◼ 100,000 tractors exported 100,000 tractors have been exported to over 130 countries in 12 years ◼ A tractor donated to AYDER Under the “For My Country” project, one tractor was donated to the “Alternative Camp” project carried out by the Society for Alternative Living (AYDER) in the village of Çukurbağ in the subprovince of Kaş, Antalya ◼ 33
TürkTraktör at a Glance
About TürkTraktör
THE SYMBOL OF POWER
TürkTraktör, 2014 Annual Report
Local Giant: the New Holland TR6 Series T he ne w Ne w Hol l a nd TR6 ser ie s, w hich r ep r e sen t s a signific a n t e x p ort op p ort uni t y f or t he f u t ur e, h a s been l aunched t o t he dome s t ic m a r k e t a s t he bigge s t l oc a l t r ac t or of T ur k e y. T h a nk s t o t heir
TR6
t echnol ogic a l fe at ur e s, t he TR6 ser ie s t ur ns fiel d w or k in t o a p l e a sur e.
New Holland TR6 Series includes three different local products; in the range of TR6.120, TR6.130 and TR6.140. The new series, which represents a significant export opportunity for the future, was launched to the domestic market, as the biggest local tractor of Turkey, in May 2014. The TR6 Series brings something new to domestic tractors with its technologically-advanced engines equipped with the 16-valve common-rail injection system which automatically enhance power and provide high performance during surface and power take-off applications. The 8 hydraulic power outlets which are standard in all TR6 series models offer the ability to work with many different kinds of equipment. Performing multiple agricultural activities with less labor in a shorter time thanks to their 16x16 semi-automatic transmission system, the TR6 Series has a power take-off system which is operable by an automatic control system at three different power take-off speeds. As a result, models such as the 540/540E/1000 can operate at a higher level of performance and provide fuel saving. The specially-tailored cab minimizes vibration and noise in the course of work and maximizes the comfort of operator. The TR6 series turns working in the field into a pleasure thanks to its cab design, featuring a spacious interior, easy-control console and wide-angled view ◼
THE
TR6 TR 120 > 112 HP | TR 130 > 122 HP | TR 140 > 132 HP 34
35
2014 Overwiev
2nd Hand Project
TürkTraktör, 2014 Annual Report
2nd Hand Market Goes Corporate in Turkey
site created to this end has not been limited to TürkTraktör brands but is offered to serve to all brands. 2nd hand tractors of every brand may be included in the system alongside Case IH and New Holland tractors and equipment ◼
T ür k T r a k t ör , r ecognizing t he need f or fa r mer s t o be a bl e t o p urch a se 2nd h a nd t r ac t or s accor ding t o t heir budge t a nd in t ended p ur p ose a nd cov er ed b y a cor p or at e wa r r a n t y under t he serv ice pack age of a compa n y, h a s e s ta blished t he Cor p or at e 2nd h a nd P l at f or m f or T r ac t or s. In op ening t he p l at f or m t o a l l br a nds in t he sec t or , T ür k T r a k t ör is p l ay ing a n imp orta n t rol e in i t s ins t i t u t ion a liz at ion b y offer ing wa r r a n t y condi t ions a nd sp eci a l fin a ncing op t ions.
oktay yıldırım After Sales Director
“We are controlling the biggest warranty park of Turkey’’ “TürkTraktör keeps its pioneer position in after sales sector as well. As TürkTraktör, we are controlling the biggest warranty park of Turkey. We are always together with our dealer, service points and customers, we believe in face to face study and on-site support.”
36
THE 2nd hand tractor market is continuing to grow rapidly in Turkey as like in the world. However, since there is no corporate structure organizing the 2nd hand tractor market in Turkey, farmers are unable to access corporate warranties for 2nd hand tractors. In recognition of the need in the sector, TürkTraktör has undertaken to institutionalize the 2nd hand market. It has established a platform with the aim of enabling farmers to purchase tractors under corporate warranty on the 2nd hand tractor market, in accordance with their budget and intended purpose. Other than the services and benefits offered directly to Turkish farmers, this system will be an important service for the 2nd hand tractor market in Turkey. The web
The web site brings dealers and purchasers together on a common platform TürkTraktör, which comprises the New Holland and Case IH brands, is continuing to produce consumer focused solutions. With the launch of the Corporate 2nd hand Platform for Tractors by TürkTraktör in 2014, the Turkish 2nd hand tractor market has gained an institutional identity. Using www.newholland2. net and www.caseih2.net, Turkish farmers have already begun purchasing 2nd hand tractors in line with their budget and needs, under the warranty of TürkTraktör. Dealers have the chance to post their stock of 2nd hand tractors and equipment at corporate web sites. Designed for easy use and in accordance with the needs of end users, the web site allows the posting of 2nd hand inventories without any brand discrimination. Consumers can track the 2nd hand inventories of dealers and do their own research regarding brand, model, horse power and price through the web site in order to find the tractor best meeting their needs. Due to the reportable feature of the web site, TürkTraktör will be able to make analyses based on brand, dealer, model, horse power, province, sub-province and region across Turkey. It will then be possible to support the 2nd hand tractor management of dealers according to the statistical results derived from these reports. In this way, 2nd hand CRM records will be provided and 2nd hand customers will be tracked ◼ Everyone’s rights will be protected thanks to warranty transfer In addition to offering tractors of all brands and models under corporate
warranty and service through the created platform, under the terms set out by the a collaboration with Tur Assist, New Holland 3S dealers offer a 1-year warranty for locally manufactured New Holland T480, TT, 56S TD series tractors up to 10 years old and with a usage time of 7,000 hours on sale. There will be no hour limit within this period and when a customer sells his guaranteed tractor to another person, the warranty can be transferred to the new customer. Since the inspection, maintenance and repair of tractors sold under these terms will have been carried out by authorized service points and will be under the warranty of Tur Assist, the rights of 2nd hand tractor customers will be protected in the event of breakdown ◼ Special financing options are offered to 2nd hand customers TürkTraktör is not only providing 2nd handtractors to Turkish farmers with the support of a corporate identity, but also providing financing assistance which farmers may need when purchasing a tractor suited to their budget and purpose. Special interest rates, terms of payment and repayment options are offered to the 2nd hand customers through financial institutions which agreements have been made for the support of 2nd hand sales. Customers can make online applications for loans and gain instant access to the estimated repayment plan for the amount of the loan they intend to take out via www.newholland2.net and www.caseih2.net ◼ 2nd hand dealer standards are being established In addition to all these, in order to state that corporate 2nd hand sales are done at dealers, studies are being carried out to establish 2nd hand Dealer Standards and to implement visual standards of dealer 2nd hand inventories. It is also planned to have 2nd hand sales managed separately from new tractors at dealers ◼ 37
Board of Directors
KUDRET ÖNEN Member
OSMAN TURGAY DURAK Chairman
FRANCO FUSIGNANI Vice Chairman
AHMET CANBEYLİ Member - CFO
STEFANO PAMPALONE Member
ALİ AYDIN PANDIR Member
MARCO VOTTA Member - CEO
TEMEL KAMİL ATAY Member
HAŞİM SAVAŞ ARIKAN Independent Member
ANDREAS CHRISTIAN SCHRÖTER Independent Member
MEMET İLKAN KAMBER Member - CFO (Resigned 30.06.2014)
Board of Directors
OSMAN TURGAY DURAK Chairman
KUDRET ÖNEN Member
MARCO VOTTA Member - CEO
FRANCO FUSIGNANI Vice Chairman
TEMEL KAMİL ATAY Member
Osman Turgay Durak Chairman (24.03.2014-24.03.2015) Osman Turgay Durak received his Master’s degree in Mechanical Engineering at Northwestern University in the USA. He joined the Koç Group as a Product Development Engineer at Ford Otomotiv in 1976 and was appointed Assistant General Manager in 1986. He took office as Deputy General Manager in 2000 and as General Manager of Ford Otosan in 2002. He worked as the President of the Automotive Group of Koç Holding between 2007 and 2009. He was appointed the Deputy CEO of Koç Holding in May 2009. Durak has been the CEO of Koç Holding since April 2010 ◼
Franco FusIgnanI Vice Chairman (24.03.2014 - 24.03.2015) Franco Fusignani completed his under graduated studies in the field of Electrical Engineering. He started his career in 1970 at the Fiat Truck and Bus Factory where he undertook various duties and became the executive in charge of Industrial Operations in the Bus Group. He served as the Vice President of New Holland After-Sales Services, the President of European Commercial Operations, the Vice President of New Holland International Operations and the Vice President of Industrial and Commercial Operations for Fiat from 1981 until 2002 when he was appointed President of CNH Agricultural Operations for Europe, Africa and Asia. He was appointed COO (APAC) and President of CNH International S.A. in 2007 and as CEO and President of New Holland Agricultural Equipment S.p.A. in October 2010. Fusignani has been the COO of IVECO S.p.A. since September 2013 ◼
Kudret Önen Member (24.03.2014 - 24.03.2015) Kudret Önen completed his under graduated studies and received his engineering degree from Gazi University. He joined the Koç Group at Ford Otosan in 1975. He served as the Manager of the R&D Department at Koç Holding in 1980 and as Assistant General Manager of Otokar in 1984. During 1994-2005, he served as the General Manager of Otokar. In 2005, he was appointed Vice-President of Koç Holding Other Automotive Companies Group. In 2006, he was appointed President of the Koç Holding Defense Industry and Other Automotive Group. Önen has been serving in the role of President of the Koç Holding Defense Industry, Other Automotive and Information Group since 2010 ◼
Marco Votta Member - CEO (24.03.2014 – 24.03.2015) Marco Votta completed his undergraduate studies at the Business Administration Department of the Luigi Bocconi University of Commerce. He started his career at Pluritec S.p.A (a manufacturer of industrial machines) in 1994 and continued as a Management Consultant at Andersen Consulting. Votta commenced service at the Business Development Department of New Holland in 1998 and was appointed as Assistant General Manager in charge of Business Control at Türk Traktör ve Ziraat Makineleri A.Ş. and New Holland Trakmak Traktör ve Ziraat Makineleri Ticaret A.Ş. in 1998, where he worked as the CFO during 2006-2010. Votta has been in the position of General Manager since April 2010 ◼
Temel Kamil Atay Member (24.03.2014 - 24.03.2015) Temel K. Atay graduated from the İstanbul Technical University Mechanical Engineering Department and then received an MBA from Wayne State University in the USA. He joined Koç Group in 1966. He served as the General Manager of Otoyol Sanayi A.Ş. and Tofaş Türk Otomobil Fabrikası A.Ş. and worked at top level positions at Koç Holding. During 2000-2001, he served as the CEO of Koç Holding. He has been the Vice Chairman of the Board of Directors of Koç Holding since 1998 ◼
Ahmet Canbeyli Member - CFO (01.07.2014 – 24.03.2015) Ahmet Canbeyli graduated from the Bosporus University Business Administration Department in 1998 and started his career as an Accounting Specialist in 1995. He worked as an Accounting Executive at Ram Dış Ticaret A.Ş. in 2000 and 2002. He was appointed as the Financial Affairs Executive to Tanı Pazarlama ve İletişim Hizmetleri A.Ş. in 2002. He subsequently went on to serve as Financial Affairs and Finance Group Manager, Assistant General Manager in charge of Financial Affairs and Finance and Assistant General Manager in charge of Financial Affairs and Operations at Koç Sistem A.Ş. during the period of 2005-2014. He has been the CFO at Türk Traktör ve Ziraat Makineleri A.Ş. since July 1, 2014 ◼
Stefano Pampalone Member (24.03.2014 - 24.03.2015) Mr. Pampalone who is the Chief Operating Officer APAC, holds a Master degree of Engineering from the University of Trieste. Stefano Pampalone assumed the role of General Manager for CNH in India, Far East and Japan in February 2013.
Since joining CNH in 1998, Mr. Pampalone has always been involved in international assignments. In 2001, after gaining commercial experience in parts and whole goods in Poland, India, Africa and Middle East, he was appointed Business Manager Southern Africa and Iran for all Agricultural Brands in the Fiat Group. In 2004 he became Marketing Director for Agricultural Equipment in Asia, Africa and Middle East. From 2006 till 2009 he first served as Business Director for CNH Agricultural Business in Italy and after one year as Business Director Africa & Middle East. In 2009 he was appointed General Manager of Agricultural and Construction Equipment Business in India and Pakistan ◼
Ali Aydın Pandır Member (24.03.2014 - 24.03.2015) Ali Aydın Pandır received his undergraduate degree from the İstanbul Technical University Department of Mechanical Engineering. He started his career at Koç Holding. After having worked in various positions at Otokar, General Motors Turkey, Opel Germany, General Motors Asia Pacific Operations Singapore, General Motors China, and General Motors Indonesia, he served as the CEO of Tofaş Türk Otomobil Fabrikaları during 2006-2012 period. Currently serving as a Member of the Board of Directors of Tofaş A.Ş. and Türk Prysmian Kablo ve Sistemleri A.Ş., Pandır is also the Chairman of the Board of Directors of Ereğli Demir ve Çelik Fab. T.A.Ş. ◼
Haşim Savaş Arıkan Independent Member (24.03.2014 - 24.03.2015) Haşim Savaş Arıkan graduated as a Mechanical Engineer from the Robert College School of Engineering in 1965.
He was born in İstanbul in 1942. He obtained his Master’s degree from the Middle East Technical University. He joined TOFAŞ Türk Otomobil Fabrikası in 1970 and worked as the Chief of the Press Workshop in 1972, as Assistant Production Manager in 1977, as Assistant Maintenance Manager in 1979, as Manager of Maintenance and Facilities in 1981, as Manager of Technical Services in 1983, as Assistant General Manager (Operations) in 1995 and Production Director in 2001. Arıkan retired from TOFAŞ in 2002. Arıkan is also one of the founders of the Engineering and Architecture Faculty Technology Foundation, founded at Uludağ University in 1996 and currently serves on the Board of Directors as the Second President of the foundation. Arıkan is currently working as a management consultant to Deren Ambalaj Sanayi ve Ticaret A.Ş. and gives lectures on “innovation” as part of the technology course at the Engineering Faculty of Uludağ University ◼
Andreas Chrıstıan Schröter Independent Member (24.03.2014 - 24.03.2015) Andreas C. Schröter graduated from the Besgische University Economics Department in Wuppertal, Germany and completed his professional education as a banker at Deutsche Bank AG in Cologne. He joined the Westdeutsche Landesbank AG in 1983 and worked in the Human Resources Department for several years. In 1991 he was appointed as the President in charge of Human Resources for Germany. He was transferred to the West LB New York Branch Office in 1998 and worked as a Client Relations Manager. During 2003-2014, he worked as the General Manager of the West LB İstanbul Branch Office and President responsible for Turkey. In
addition to his regular assignments, he also served as Global President in charge of Business Management and Development at West LB AG (renamed Portigon AG in July 2012) from 2011 to 2013. In addition, he served as a Member of the Board of Directors of the German-Turkish Chamber of Industry and Commerce from 2009 to 2013 and as a Member of the Board of Directors of the Compagnie Belge de la West LB S.A. (renamed CBAL S.A.) from 2011 to 2013 ◼
Memet İlkan Kamber Member - CFO (resigned 30.06.2014) Memet Kamber completed his undergraduate studies at the Middle East Technical University Economics Department and post-graduate study at the Business Administration Department of Massachusetts University. He started his career as a Trainee in Financial Affairs at Koç Holding in 1991 and continued his career as Financial Affairs Auditor between 1995 and 1998. Kamber was appointed Assistant Coordinator of the Finance Group in 1999, Coordinator of the Finance Group in 2002 and Finance Coordinator in 2004. He worked as the CFO at Türk Traktör ve Ziraat Makineleri A.Ş. during the period of April 2010-June 2014 ◼
TürkTraktör, 2014 Annual Report
Messages from the Management
Review of the Chairman
Operating P rofit of
297 million T L Investment made for the future; T otal capital expenditure amounting to
234
Working with the aim of
million T L
ever increasing the added value created for Turkey, TürkTraktör continues its strong support for the economic targets of Turkey through its successful performance by pioneering the technology and innovation in its sector and by increasing its competitive power both in local and global markets.
42
Dear investors, business partners and employees, According to the IMF, the world economy would grow by 3.3% in 2014 and 3.5% in 2015, remaining below the long term average. Failing to achieve a stable growth trend, the Euro Zone grew by 0.9% in the year 2014. Unemployment remained at high levels and the risk of deflation still exists. On the other hand, positive developments in the US economy continue and the growth rate of 2014 was announced as 2.4%. Thus, the growth rate occurred above 2.2%, the average of 2011-2013 period. The IMF revised its forecast for 2015 to 3.6% in its February report by taking into account these positive developments in the USA. The IMF announced its growth forecast for Turkey as 3.4%. With the effect of the decreased political risk from the third quarter following the Presidential elections in August 2014 and of the relatively optimistic atmosphere in abroad, a positive business environment was seen in the Turkish economy. Developments in the neighbouring countries in 2014 inevitably affected the country negatively. Despite these negative developments in the near geography, in the 3rd quarter, the Turkish economy gave recovery signals, though limited. Introduction of new measures through international cooperation in the fight with mentioned developments which have become threat for the global economy, security and peace has increased to some extent our hopes for ending the adverse situation in the region. Although located in a geography connecting two continents, full of incredible opportunities, Turkey is passing through a long term change and transformation process. In 2014, the year we celebrated our 60th anniversary, we achieved stunning successes with the power from well-established corporate culture of Koç Holding and CNHI, our majority shareholders. Having manufactured 45,823 tractors as of the end of 2014, TürkTraktör succeeded to maintain its share in the domestic market at 49.4% and made exports to more than 130 countries. We are experiencing the proud of breaking a new record in the production over our history of 60 years. TürkTraktör reinforced its strong reputation in the eye of its stakeholders by declaring an operating profit of TL 296,742,363 as of the end of the year. With investment spending of TL 234,219,964, the Company has carried out important projects which will guarantee the sustainability of its corporate structure. As TürkTraktör, with the vision of “being a company which drives the modern agriculture today and in the future,” we are the leading supporter of the productivity in the agricultural economy of the country. With our experience of 60 years, we continue to stand by the farmers as a real friend who raises the wealth of 23 million people living in the rural areas. We continue to represent Turkey with proud in international markets day by day. We reinforced our success in the international platform with the “Tractor of the Year 2015 - Best of Specialized” award
we received in Europe for our orchard tractor, New Holland TTJ, manufactured in Turkey with the Turkish engineering. Exportation will be one of our primary focuses in 2015 as well. Exporting to over 130 countries with its R&D competency enjoying international recognition besides its strong product range, TürkTraktör aims to maintain its strong support for the economic targets of Turkey in the next period as well. As TürkTraktör, our target has been to ever increase the added value created for the country. With an eye on this target, we pioneered the technology and innovation in the sector where we operate and continuously increased our competitive power in both local and global arenas. We will always focus on results and work towards being better at what we do. Within the scope of our R&D works, we aim to carry our success in Turkey to international platforms and to take part in the projects within the scope of the European Union next year. As another strategic goal, we also intend to expand the research projects and patents, currently carried out by only the R&D Department, to other departments within the Company. In the agenda of the R&D there are many product development and research projects. We continue to look for collaborations with universities and Technology Transfer Offices for them. Our fundamental objectives which constitute our strategies are to maintain our leading position in the sector, to raise the productivity, our competitive superiority and profitability by pioneering the change, and to move our products to upper ranks in the world markets by using our technology at the highest level. We will reach these targets together with our employees, suppliers and dealers. On behalf of the Board of Directors, I express my deepest thanks to all of our employees, suppliers, dealers, Turkish Metal Union and business partners who supported the breakthroughs realized by TürkTraktör, which has pioneered in the development of the economy and agriculture of Turkey in the course of its corporate development of 60 years, during the activity period 2014, to our valuable customers who made our successes possible through the continuous support they have extended to us, with the wish for achieving many successes that will make the strong brand image of TürkTraktör sustainable in the next activity period. ◼
Turgay DURAK Chairman 43
Messages from the Management
TürkTraktör, 2014 Annual Report
Board of Directors’ Report T ürk T raktör has maintained its leadership for 7 years in a row
%50
mNet profit of
261 million T L in the period,
total income of
2.7 billion T L ,
with two brands and a market share of approximately
Dear shareholders,
Welcome to the 61st Ordinary General Assembly Meeting of TürkTraktör. We present the 2014 Annual Report for your examination. The report includes general information about the Company and evaluations of the Management regarding the Company’s activities in 2014, and developments in the sector. The last section of the report contains the financial statements, as of December 31, 2014, audited by an independent auditing firm, and the footnotes to the same. The financial results presented in the report have been prepared in accordance with the compulsory format established by the Turkish Accounting Standards/Turkish Financial Reporting Standards (TAS/ TFRS) and the Capital Markets Board (CMB) under the Financial Reporting Communiqué of CMB. A general evaluation of 2014 In 2014, the number of tractors sold increased by 14% over the previous year and reached to 59,459 units according to the traffic registration data of the Turkish Statistical Institute (TURKSTAT). The reasons for the increase include higher crop prices to offset yield losses due to adverse climatic conditions, and loan opportunities offering cheaper rates for retail purchases. Apart from these, grants extended by the European Union Instrument for Pre-Accession Assistance (IPARD) program have played a significant role. Turkey is the 4th largest tractor market of the world. Despite the intensely competitive environment, with regard to the number of tractors sold in a market in which over 40 brands compete, TürkTraktör has managed to maintain its leadership, with two brands for 8 years in a row. The mission of TürkTraktör is to offer the most appropriate product to its customers, who demand a more productive and more comfortable tractor, and whose expectations 44
are steadily rising. With our tractors, developed by our R&D center, and with our ever expanding product range, we are sure that we are able to meet the needs of Turkish farmers. At TürkTraktör, our corporate family is working every day to attain our targets and keep customer satisfaction and loyalty high. Looking at the current industry indicators, we have positive expectations for 2015, in the wake of the last 4 years, which have been satisfactory for the manufacturing industry. We expect that 2015 will be a good year for the tractor sector provided that no negative developments occur in the domestic or global economy and no adverse weather conditions develop. The financing opportunities provided by Ziraat Bank and private commercial banks and state-provided support and incentives for agriculture will be important determining factors for the state of affairs in 2015. About our financial and operational results In 2014, our total production reached 45,823 units, export reached 15,866 unitsand domestic sales reached 30,027 units.We manufactured a total of 2,525 transmissions and exported 2,596 transmissions. According to the financial statements approved by the Board, the Company obtained a total revenue of 2,723,317,809 TL, consisting of 1,789,501,123 TL from domestic sales and 933,816,686 TL from export sales. The gross profit amounted to 489,154,307 TL. Our operating profit was 296,742,363 TL with an operating margin of 10.9%. Our profit before tax reached 293,446,885 TL, and the net profit in the period, after deduction of the tax provisions, amounted to 261,087,272 TL. With the goal of fostering social sensitivity in the coming next generations, TürkTraktör made contributions, in the form of donations and sponsorships, to various non-govern-
T he financing opportunities provided by Ziraat B ank and private commercial banks, together with state-allocated aid and incentives for agriculture will be important determining factors for the state of affairs in 2015.
mental organizations and educational institutions in 2014. The Company made donations and contributed support amounting to 4,400,318 TL. Dividend proposal According to our financial statements for the fiscal period 1 January 2014 to 31 December 2014, the Company’s net income is TL 261,087,272. These financial statements were prepared under International Financial Reporting Standards, and audited by Güney Bağımsız Denetim ve S.M.M.M. A.Ş. (a member of Ernst&Young Global Limited). Our proposal for profit distribution – prepared with due regard for profitability and cash status – is stated below. It has been resolved to distribute dividend as shown below in line with Capital Markets Legislation, 19th article of Articles of Association and Dividend Policy approved by the shareholders at the general assembly on 24.03.2014. Distribute first dividend to the shareholders TL 159,292,554.20 Distribute second dividend to the shareholders TL 40,707,445.80 and to allocate 2nd Type Legal Reserve TL 19,733,155 It has been resolved to pay TL 200,000,000 in cash which is equal to the first and second dividend to be distributed to the shareholders. It has been resolved to determine the dividend payment date as 25th of March and present to the approval of General Assembly held on 18.03.2015. Thereby, the dividend will be distributed in cash; • to the resident taxpayer shareholders and non-resident taxpayer shareholders obtaining dividend income through an office or a permanent representative in Turkey as gross (=net) 3.74749386 kr for each share nominal 1 kr (374.749386%)
and, • to foreign-based taxpayer shareholders; as gross 3.74749386 kr (3.56011917 kr net) for each share nominal 1 kr (356.011917%) • to the rest of our shareholders as gross 3.74749386 kr (3.18536978 kr net) for each share nominal 1 kr (318.536978 %). Dear investors, business partners and employees, This Board of Directors today completes its term in office. This meeting will elect new members of the Board and determine its official term of service. We thank all of you for the trust and support you have shown us during our official term. We present a concise summary of our activities and the results obtained in 2014 together with our Annual Report. Above all, we thank our employees for their self-sacrificing work and strong support, and our stakeholders and business partners, subsidiary industrialists and authorized dealers, Turkish Metal Union and the most important the farmers preferred our tractors with whom we have progressed together. I hope that these strong bonds of unity will bring yet greater success. ◼
Turgay DURAK Chairman 45
TürkTraktör, 2014 Annual Report
Top Management
MARCO VOTTA CEO - Board Member Marco Votta completed his undergraduate studies at the Business Administration Department of the Luigi Bocconi University of Commerce. He started his career at Pluritec S.p.A (a manufacturer of industrial machines) in 1994 and continued as a Management Consultant at Andersen Consulting. Votta commenced service at the Business Development Department of New Holland in 1998 and was appointed as Assistant General Manager in charge of Business Control at Türk Traktör ve Ziraat Makineleri A.Ş. and New Holland Trakmak Traktör ve Ziraat Makineleri Ticaret A.Ş. in 1998, where he worked as the CFO during 2006-2010. Votta has been in the position of General Manager since April 2010 ◼
Ahmet Canbeyli CFO - Board Member - (appointed to the position on 01.07.2014) Ahmet Canbeyli graduated from the Bosporus University Business Administration Department in 1998 and started his career as an Accounting Specialist in 1995. He worked as an Accounting Executive at Ram Dış Ticaret A.Ş. in 2000 and 2002. He was appointed as the Financial Affairs Executive to Tanı Pazarlama ve İletişim Hizmetleri A.Ş. in 2002. He subsequently went on to serve as Financial Affairs and Finance Group Manager, Assistant General Manager in charge of Financial Affairs and Finance and Assistant General Manager in charge of Financial Affairs and Operations at Koç Sistem A.Ş. during the period of 2005-2014. He has been the CFO at Türk Traktör ve Ziraat Makineleri A.Ş. since July 1, 2014 ◼
MEMET İLKAN KAMBER CFO - Board Member (resigned 30.06.2014) Memet Kamber completed his undergraduate studies at the Middle East Technical University Economics Department and post-graduate study at the Business Administration Department of Massachusetts University. He started his career as a Trainee in Financial Affairs at Koç Holding in 1991 and continued his career as Financial Affairs Auditor between 1995 and 1998. Kamber was appointed Assistant Coordinator of the Finance Group in 1999, Coordinator of the Finance Group in 2002 and Finance Coordinator in 2004. He worked as the CFO at Türk Traktör ve Ziraat Makineleri A.Ş. during the period of April 2010-June 2014 ◼ 46
Sedat Tezerişener Assistant General Manager / Purchasing Sedat Tezerişener was graduated from the Middle East Technical University Mechanical Engineering Department. He started his career as a Method Engineer at Türk Traktör ve Ziraat Makineleri A.Ş. in 1984. He went on to serve in the Mechanical Workshop Department, Manufacturing Planning and Control Department and Purchasing Department. Tezerişener has been the Assistant General Manager in charge of Purchasing since 2003 ◼
İrfan Özdemir Assistant General Manager / Sales İrfan Özdemir completed his undergraduate studies in the İstanbul Technical University Business Engineering Department. He started his career as a Marketing Executive at DYO in 1991 and then worked as a Marketing Specialist and Marketing Manager. In 19942007, he served as the Regional Sales Manager and Regional Sales Coordinator at Tofaş. Özdemir has been the Assistant General Manager in charge of Sales at Türk Traktör ve Ziraat Makineleri A.Ş. since 2007 ◼
47
Top Management
Matthieu SÉJOURNÉ Assistant General Manager / Marketing Matthieu Séjourné graduated from the Mechanical Engineering Department of CESTI-Paris University and achieved a post-graduate degree at the SDA Bocconi Milan University Business Administration Department. He started his career at the Commercial Logistics Department of CNH in 2001. He was in charge of planning new product processes for the Asia, Africa, Middle East and Eastern European Regions at CNH in 2003-2005. Then he worked as Regional Manager in charge of the French-speaking countries in Africa and as the Regional Manager for South Africa at CNH. Séjourné was appointed to the position of Assistant General Manager in charge of Marketing at Türk Traktör ve Ziraat Makineleri A.Ş. in 2009 ◼
48
TürkTraktör, 2014 Annual Report
Nebi Doğan Özdöngül Assistant General Manager / Production (appointed to the position on 01.05.2014) Nebi Doğan Özdöngül graduated from the Middle East Technical University Metallurgy Engineering Department and started his career as a Method Engineer at Ford Otomotiv Sanayi A.Ş. in 1993. He worked as a Project Engineer in Engine and Transmission Quality Systems and Inspection, as the Team Leader of Ford Manufacturing Systems, Team Leader of Engine and Transmission Manufacturing Engineering, Quality Assurance Manager, the Truck Area Manager and Engine and Transmission Area Manager during the 1996-2014 period. Özdöngül was appointed the Assistant General Manager in charge of Production at Türk Traktör ve Ziraat Makineleri A.Ş. in May 2014 ◼
Hasan Haldun Özgümüş Assistant General Manager / Quality Hasan Haldun Özgümüş graduated from the Engineering Faculty of the Mechanical Engineering Department of the Middle East Technical University in 1982. He started his career as a Researcher at the Middle East Technical University Isılmaren Institute in the same year. After completing his military service, he worked as a Project Study Engineer at Türk Traktör Factory in 1984, where he took positions as Assembly Inspection Engineer, Quality Assurance Engineer, Quality Assurance Specialist, Quality Assurance Manager and Existing Product Engineering Manager. Özgümüş has been serving as the Assistant General Manager in charge of Quality since 2011 ◼
Siyami Eser Assistant General Manager / Production (retired 30.04.2014) Siyami Eser completed his undergraduate studies at the Middle East Technical University Mechanical Engineering Department and postgraduate study at the same university. He started his career as an Assistant Researcher at the Middle East Technical University Mechanical Engineering Department in 1980. He worked as a Production Executive at Hersek Makine ve Çelik İmalat in 1983. Eser started to work as a Cutting Tool Machines Engineer at Türk Traktör ve Ziraat Makineleri A.Ş. in 1984. He was appointed the Manager of Production Engineering in 1996 and then as Assistant General Manager in charge of Production in 2008. He retired in 2014 ◼
Ali El Idrissi El Bouzidi Assistant General Manager / Product and R&D (appointed to the position on 01.10.2014) El Idrissi El Bouzidi completed his postgraduate studies at the Mechanical Engineering Department of Politecnico di Torino University in 2000 and started his career as a Production Engineering Specialist at the Fiat Group in 2001. He served as a Product Assessment Specialist, Production Methodologies Specialist, Quality Methodologies Specialist and New Product Quality Manager at CNH America LLC during the period of 20022010. He worked as the Compact Tractors and Equipment Platform Manager at CNH Industrial NV from 2010 to 2014 ad then was appointed the New Product Group Manager at Türk Traktör ve Ziraat Makineleri A.Ş. in April 2014. El Bouzidi has been serving as Assistant General Manager in charge of Product and R&D at Türk Traktör ve Ziraat Makineleri A.Ş. since 01.10.2014 ◼
Friedrich Wirleitner Assistant General Manager / Product and R&D (resigned 30.09.2014) Friedrich Wirleitner has a post-graduate degree in the field of Agricultural Equipment. He started his career at Steyr Daimler Puch AG in 1979. He worked as the Steyr Team Leader for the Middle East, then as a Product Specialist in the After-Sales Department. He subsequently served as a Technical and Warranty Executive, AfterSales Executive, Product Executive and Telehandler Product Executive until 2003. He was appointed Product Coordinator to India Tractors in 2004. He was appointed Assistant General Manager in charge of Product and R&D at Türk Traktör ve Ziraat Makineleri A.Ş. in 2008 and resigned from this position in 2014 ◼ 49
Messages from the Management
TürkTraktör, 2014 Annual Report
Message from the CEO In 2014 , w hich wa s a sp eci a l y e a r f or T ür k T r a k t ör , w e GOT t he T ur k e y dis t r ibu t or ship r igh t s f or C a se a nd Ne w Hol l a nd br a nd cons t ruc t ion equipmen t a nd en t er ing in t o a br a nd ne w sec t or . H av ing r e a lized imp orta n t in v e s tmen t s in t he fiel d of cons t ruc t ion equipmen t in 2014 , T ür k T r a k t ör wor k s w i t h t he a im of offer ing t he mos t a p p rop r i at e a nd qua li t y p roduc t s t o our cus t omer s w i t h a high l e v el serv ice a p p roach.
Dear investors, business partners and employees, 2014 is a special year for TürkTraktör as we celebrated our 60th anniversary. Having made significant contributions for Turkey to become one of the world’s leading agricultural product exporter economies through the breakthroughs we have realized since 1954, the year of our foundation, TürkTraktör, besides monitoring closely the developments in the global and local markets, realized projects which will bring efficient solutions to the current needs of the Turkish agriculture. As of the end of 2014, we exported New Holland, Case IH and Steyr brand products in our portfolio through the global dealer network of CNHI to over 130 countries around the world, and this fact alone bears witness to the corporate reputation of our Company and the power of its manufacturing infrastructure which focuses on producing satisfactory solutions for diverse needs. As the seventh largest agricultural economy in the world as of the end of 2014, Turkey derives 7.4% of the GDP according to the data for 9 months of 2014 and 20% of the real employment from the agriculture sector according to November results, and exports 1,630 agricultural products. Works are continuously being carried out toward overcoming the deficiencies against the global competition conditions in the field of industrial agriculture. The average age of the tractor park in Turkey, which consists of 1.6 million tractors, being 23 has made Turkey one of the tractor markets of the world which have the most important renewal potential. Besides the agricultural support mechanisms carried out by the government, attractive financing models offered by the Turkish banking system for the agricultural industry recently comes to fore as another factor which 50
By manufacturing a total of 45,8 23 tractors of Ne w Holland, C ase IH and S teyr brands in 2 0 14 , T ürk T rakt ör
gives dynamism to the tractor market of Turkey. Having a strong brand image identified with innovations thanks to its successes achieved in the tractor and agricultural equipment sector, TürkTraktör is at 34th place in the ranking of “Top 500 Industrial Organizations of Turkey” prepared by the Istanbul Chamber of Industry (ISO) and at the 50th place in the Fortune 500 list ranking the largest, most profitable, most rapidly growing. As seen from these evaluations, which are the basic reference sources for the Turkish economy, TürkTraktör, with its annual tractor manufacturing capacity of 50,000 units and qualified human resources consisting of 3,040 employees at the plants in Ankara and Erenler, is one of the leading players in the private sector of Turkey beyond the agricultural equipment sector ◼
broke a record in its history of 6 0 years.
We completed the Erenler Plant within just 15 months Continuing its manufacturing activities in the manufacturing plant in Ankara since its foundation, TürkTraktör laid the foundations for its second factory in Erenler on March 28, 2013 as a reflection of steadily increasing sales volume and inaugurated the factory on June 17, 2014. I would like to express my sincere thanks to Mr. Fikri Işık, the Minister of Science, Industry and Technology, Mr. Nihat Zeybekçi, the Minister of Economy, Mr. Mustafa V. Koç, the Chairman of the Board of Directors of Koç Holding, Mr. Richard Tobin, the CEO of CNH International N.V. and many representatives from the government, state and business world for attending the inauguration ceremony and supporting us. Constructed within just 15 months thanks to strong support of Koç Group and CNHI, the majority shareholders of the Company, the Erenler Plant has carried the competitive edge of TürkTraktör
in domestic and international markets to higher levels ◼ We got the most prestigious awards of the sector As one of the leading exporters of Turkey, TürkTraktör, by winning one of the most prestigious awards of the agricultural industry for its New Holland TTJ model selected as the Tractor of the Year - Best of Specialized in 2014, showed once again that it is ambitious in competitive markets. Exporting 100,000th tractor in 2014, the Company has created a significant export opportunity for future with its TR6 model added to the product portfolio in 2014. Launched as the Local Giant, our TR6 model tractors are the largest tractors manufactured in Turkey ◼ We made important investments in the field of construction equipment Apart from celebrating our 60th anniversary, there is another reason that makes 2014 special for our Company. Closely monitoring the opportunities offered by the Turkish market, TürkTraktör, in 2014, entered into a brand new sector by getting the Turkey distributorship rights of Case and New Holland brand construction equipment in accordance with the Company’s growth plans. In this connection, important investments were made in the field of construction equipment in 2014. Of these investments, the most significant one is TürkTraktör’s Construction Equipment Facilities in Izmir and Ankara which commenced operations in 2014. Thanks to these facilities established for the purpose of offering the most appropriate and quality products to our customers with a top level service approach, we give support to the region on after-sale issues with a sense of the fastest and quality service to the extent possible ◼ We broke a record in production According to a report issued by TARMAKBİR, 64,342 tractors were manufactured in Turkey in 2014. Total production in the sector increased by 14% over the previous year. In the Turkish tractor market where significant increases were experienced, we, as TürkTraktör, broke a record once again in our history of 60 years. We manufactured a total of 45,823 tractors with our New Holland, Case and Steyr brands. Distinguished from its competitors for its balanced EBITDA and sustainable financial structure based on high profitability, TürkTraktör sold a total of 45,893 tractors in domestic and international markets and announced an operating profit of TL 297 million TL in 2014. TürkTraktör preserved its market shares in domestic and international markets as well as its financial profitability despite the slowdown in the global market, which refreshed the strong reputation of the Company in the eye of our shareholders and stakeholders ◼ R&D spending amounting to TL 26 million and 13 new product patents Having a broad product portfolio in harmony with the geographic conditions in different parts of the world, TürkTraktör is uninterruptedly continuing its investments and R&D works in line with the changing customer needs and expectations. Carrying out product development works under the coordina-
tion of the R&D Center within its organization, the Company made R&D spending amounting to TL 26 million and acquired patents for13 new products in 2014 ◼ We have carried the 2nd hand to an institutional platform Another important development in 2014 was carrying of the 2nd hand tractor sales to an institutional platform. With this new platform launched by TürkTraktör, which will be used by other firms as well, tractor dealers can sell 2nd hand tractors. We expect that 2nd hand tractor sales will have a positive effect on the 1st hand sales as well ◼ Support on the spot, side-by-side service As TürkTraktör, we maintain our characteristic of being the leader of the sector in the after-sales services. We are managing the largest warranty park in Turkey. We are together with our dealers, service points and customers at all times and we believe in the working by seeing and in the support on the spot. With our New Holland and Case IH brands, we provide services at a total of 509 points of service. Within the scope of customer visit and support-in-the-field program, we conducted face-to-face meetings with 2,799 farmers in 2014 ◼ Social responsibility is always our priority Adopting the corporate social responsibility works as an integral part of its essential activities, TürkTraktör focused again on projects which will add value to the community in 2014. Granting tractor assemblies and engines to a number of vocational high schools during the year, TürkTraktör provided useful trainings to vocational high school students and farmers under the aegis of the Agricultural Machinery Lab. Aiming to create awareness about participation of the disabled citizens in the social life with the slogan of “For My Country: Barrier Free Life”, TürkTraktör gave trainings on the “Correct Treatment of the Disabled” to 191 people through volunteered instructors from its staff in 2014. I would like to express my sincere thanks to Koç Group and CNHI, our majority shareholders who gave countenance to us throughout 2014, the employees of TürkTraktör who are the major force behind our success and who always work with sacrifice, our business partners, customers and all stakeholders. Our greatest wish is to enjoy success and achieve more successes in 2015 ◼
Marco VOTTA CEO 51
From 1954 to 2014… From a single factory in Ankara to being a leader in Turkey To being one of the biggest manufacturers in Europe From 1 country to 130 countries To 5 continents To wherever there’s a piece of soil From one factory to a second one From one worker to thousands To the top of the work force capacity, to the top level of contribution to the economy In 60 years, with TürkTraktör… We came such a long way! From research to development From design to implementation To 24-hours customer service To innovation and state-of-the-art technology In 60 years, with TürkTraktör… We came such a long way! From being the first tractor manufacturer of Turkey To the wide product range To one in every two tractors in Turkey From one generation to the next In 60 years, with TürkTraktör… We came such a long way! This country took a huge step in 60 years with TürkTraktör, the manufacturer of one in every two tractors in Turkey We celebrate its 60th year... All together!
52
TürkTraktör, 2014 Annual Report
Internazionale Holding Fiat S.A. and Egemak became partners of the Company.
Milestones
Turkey’s first tractor export Being the first exporter of automotive sector, TürkTraktör exported 300 units of 480-model tractors to Pakistan while celebrating its 25th anniversary.
The 500,000th tractor was manufactured TürkTraktör celebrated the production of its 500,000th tractor with a ceremony held on November 9, 2007. The 500,000th tractor was donated to the Ankara University Agricultural Faculty.
The Legend is back A limited 480 units of the legendary1970s-era orange-colored Fiat 480 series tractor were produced to bring back the legend. CNH Global NV based in the Netherlands transferred its shares in the Company at a value of TL 20,013,375 to CNH Österreich GmbH based in Austria, a 100% owned subsidiary of CNH Global NV. The Tier III project, preparations for which had started in 2009, was completed in 2011 and, thus, TürkTraktör became the first producer of Tier III series agricultural engines in Turkey. Production of the new model agricultural engines enabled the use of a world standard, more environmentally-sensitive product.
Erenler Plant foundation was laid. The first export of the Utility Light 75HP model to Japan, one of the world’s leading and demanding industrial countries, were undertaken with considerable success. Introduced to international markets in 2011, the Utility Light series was introduced to the domestic market in 2013. Production and shipment of Utility Medium model tractors commenced. An Importation and Distributorship Agreement was signed with CNHI International S.A. for the importation and domestic sales, marketing and after-sales services of New Holland and Case branded construction equipment.
2011
2013
1954-2014 The name of Fiat S.p.A was changed to New Holland N.V. toward the end of the year after New Holland N.V. became the Company’s foreign partner.
T ür k T r a k t ör h a s e x p er ienced m a n y imp orta n t
de v el opmen t s in t he cour se of i t s a d v en t ur e of 6 0 y e a r s of de v el oping p roduc t s a nd in t roducing innovat ions
t h at mee t t he m a r k e t dem a nds, a l l w hil e CONTINUOUSLY in
p ur sui t of e xcel l ence. Her e is t he his t ory of T ür k T r a k t ör
First exports to Iran.
m a r k ed ou t w i t h i t s mil e s t one s.
TürkTraktör established Minneapolis Moline TürkTraktör ve Ziraat Makineleri A.Ş. (MMTT) was established in Ankara on June 25, 1954 by MKE, TZDK, Ziraat Bankası, Tariş, Çukobirlik and Minneapolis-Moline from the US.
1954
1955
1963
Garanti Bankası, which was accepted as a partner of the Company in 1982, transferred all its shares to Koç Holding A.Ş. Koç Holding share in the capital of the Company reached 18%.
The name of the Company was changed to “TürkTraktör ve Ziraat Makineleri A.Ş.”
Production of transmission commenced.
1967
A commercial agreement was signed with Egemak, the general distributor of Fiat in Turkey, under which Egemak commenced selling tractors manufactured and assembled at TürkTraktör facilities.
1968
1977
1979
1982
1983
1988
1992
1993
54
1998
1999
2002
2004
2007
2008
2009
Egemak transferred its general distributorship to Trakmak, a 100% owned subsidiary of the Koç Group.
2010
The 200,000th engine was produced.
The company became a wholly public company. State Partnership Administration transferred all of its shares to the Koç Group on 12 September 1992 when the Company became a wholly private company.
The first tractor in Turkey The factory’s opening ceremony, attended by the then-Prime Minister Adnan Menderes, was held on March 4, 1955 and the first Turkish tractor, the UTSD model, was manufactured at the TürkTraktör facilities on March 8, 1955.
New era, new brand Under a partnership agreement signed between Koç Holding A.Ş. and New Holland N.V., the registered shares owned by each company in TürkTraktör were equalized. Thus, TürkTraktör adopted the principle of joint management. The brand name of all formerly “Türk Fiat” branded products was changed to “New Holland”.
New Holland bought out the shares of Case IH and subsequently, CNH - Case New Holland became the partner of TürkTraktör. The serial production, and exports to 5 continents via the CNH sales network, of the TDD and JX series tractors, which were designed and developed by TürkTraktör for domestic and international markets commenced.
From within the New Holland global network, TürkTraktör was selected as the R&D and production center for the 56-66 series tractors in 50-96 HP segment.
Shares in the Company offered to the public in its golden year The 50th anniversary of the Company was celebrated on 6 April 2004. TürkTraktör was awarded the “Circle of Excellence Award” by Case New Holland for its outstanding success in the design of the TDD/JX model. Group C bearer shares in the Company owned by Koç Holding A.Ş. were offered to the public through the Borsa İstanbul at a price of TL 8.00. Trading commenced.
R&D Center registered TürkTraktör R&D Center was registered with the Ministry of Science, Industry and Technology on 02.07.2009 under the Law No. 5746 on the Support of Research and Development Activities and the regulation concerning the implementation and control of the law.
TürkTraktör and New Holland Trakmak merged under the roof of TürkTraktör.
55
2012
110 HP tractors were manufactured.
2014
TürkTraktör at 60 years old In order to expand production facilities on top of the factory in Ankara, the second plant was opened in the municipality of Erenler of the province of Sakarya. The new vineyard and orchard type New Holland TTJ Series tractors , which were developed and produced in Turkey, was awarded the Tractor of the Year - Best of Specialized 2015 one of the most prestigious agricultural industry awards. In May 2014, the local giant New Holland TR6 series tractors, which represent a significant export potential for the future, were introduced to the domestic market as the largest locally produced tractor in Turkey. TürkTraktör was awarded the first prize in the automotive category during the 3rd Private Sector R&D Centers Summit organized by the Ministry of Science, Industry and Technology. 100,000th tractor exported.
TürkTraktör at a Glance Shareholder About TürkTraktör Structure
Investor Relations and BIST Performance
TürkTraktör Moves Toward the Future with a Strong Shareholder Structure
TürkTraktör, 2014 Annual Report
Investor Relations Performance Boosts Company Performance Wor king on t he p r incip l e of de v el oping t r a nspa r en t r el at ions w i t h t he sh a r ehol der s, t he T ür k T r a k t ör In v e s t or R el at ions Depa rtmen t hel d ta l k s w i t h ov er 10 0 e x is t ing a nd
Koç Holding A. Ş. shareholder structure 37.5%
Ac t ing accor ding t o i t s v ision of being
CNH Industrial NV shareholder structure 37.5%
p o t en t i a l in v e s t or s a nd a n a ly s t s t o inf or m t hem a b ou t t he va lue t he Compa n y h a s cr e at ed f or in v e s t or s.
t he compa n y t h at dr i v e s t he moder n The value created by TürkTraktör for its investors
agr icult ur e, T ür k T r a k t ör is confiden t ly
Strong and reliable shareholder structure
s t r iding t owa r d t he f u t ur e, combining t he
The largest tractor manufacturer of Turkey • Accounts for 71% of all tractors manufactured in Turkey • Accounts for 90% of all Turkish tractor exports
p ow er of Koç Hol ding w i t h t he e x p ert ise of i t s in t er n at ion a l pa rt ner , CNHI. Thanks to the long-established business culture and financial strength of Koç Holding and the technical knowledge, sectorial expertise and international experience of CNHI in the field of manufacturing agricultural equipment, TürkTraktör is a company with a strong shareholder structure, which makes its financial and operational successes sustainable. As a result of the merger, registered on 31.03.2008 based on the permission of the Capital Markets Board (SPK) with ref. no. B.02.1.SPK.0.13-276/3197, dated 25.02.2008, the capital issued by TürkTraktör was changed to TL 53,369,000, but the registered capital ceiling remained at TL 250,000,000. The shares representing the increased capital were registered by the letter no. 17/214 of 31.03.2008 of SPK in accordance with the Capital Markets Law No. 2499. The numbers and amounts of the bearer shares in the A, B and C Groups are given in the following table according to grouping.
Koç Holding A.Ş. Koç Holding, which owns 37.50% of the shares in the capital of TürkTraktör, is one of the largest conglomerates in Turkey in terms of turnover and export revenues as well as in terms of trading volume on the Borsa İstanbul as well as jobs created. Having been focused on creating value for its stakeholders for 87 years, Koç Holding provides added value at significant levels to the Turkish economy with its successful activities in the international arena ◼
Trust, high reputation and strong brand management based on 60 years of experience The implementation of principles at universal standards with regard to corporate governance, approach to doing business, ethical principles, environmental policies and working conditions Extensive, consumer-focused service network, comprehensive customer knowledge and customer database management Strong human resources structure New projects to expand the product range and increase capacity Flexible manufacturing system, high productivity and low-cost manufacturing Resilient structure as a result of diversification in export markets
Group
Share Amount (TL)
(%)
Voting Right
Voting Right Ratio (%)
Type of Privilige
Koç Holding A.Ş.
A
20,013,375
37.50%
2,001,337,500
37.50%
Selecting board member
CNH Industrial Osterreich GmbH*
B
20,013,375
37.50%
2,001,337,500
37.50%
Selecting board member
Shareholder
İnan Kıraç
C
17,515
0.03%
1,751,475
0.03%
-
A. Aslıgül Kıraç
C
8,757
0.02%
875,738
0.02%
-
District Treasurer on behalf of A.W. Huff
C
362
0.00%
36,190
0.00%
-
Public Quotation
C
13,315,616
24.95%
1,331,561,597
24.95%
-
*CNH Industrial Osterreich GmbH is 100% subsidiary of CNH Industrial NV. 56
CNH Industrial NV Owning 37.50% of TürkTraktör, CNHI is one of the world’s largest tractor and agricultural equipment manufacturers. The Company’s global organization includes 12 brands, 62 production facilities and 48 R&D centers with over 71,000 employees in total. Carrying out sales and marketing activities in 190 countries of the world, the Company has over 10,000 dealers across the world ◼
High capacity utilization rate Compliance with corporate governance principles • Segregation of duties of CEO and Board Chairman • Executive Committee • Audit Committee • Corporate Governance Committee • Risk Assessment Committee
since 2004, 25% of the shares of TürkTraktör have been traded under the stock code TTRAK.IS on the National Market of Borsa İstanbul. The Company is included on the BIST National, BIST 50, BIST 100, BIST All, BIST Corporate Governance, BIST Dividend, BIST Dividend 25, BIST Industrial, BIST Metal Goods, Machinery, and BIST Ankara Indexes. Having adopted the principle of developing transparent relations with the shareholders, the Investor Relations Department holds one-to-one talks, roadshows, press conferences and meetings with analysts as well as answering all written and verbal questions from shareholders, analysts and fund managers throughout the year. Thanks to such activities, investors are constantly informed and notified about any changes while with corporate governance and investor relations set to international standards, the Investor Relations Department carries out work to increase the interest of existing and potential investors in the company. In 2014, the Investor Relations Department participated in conferences and roadshows at home and abroad and made one-to-one talks with over 100 existing and potential investors and analysts. 140 representatives of the press, analysts and fund managers attended the 3 meetings, attended by the top management, where the quarterly financial results were evaluated ◼
Target management system focused on performance and creation of value for shareholders 57
Investor Relations and BIST Performance
TürkTraktör, 2014 Annual Report
Stock Performance
125 126 129
109 110 99
113 127 130
103 104 89
112 116 117
92 92
91
91
T he aver ag e o f 2013 53.93
91
63.52
T he aver ag e o f 201 4
85
100 100 100
Change
104 117 118
18%
114 119 120
BIST 30
115 111 111
BIST 100
119 118 120
TTRAK
Data from the End of 2014 Stocks in TürkTraktör have been traded on the Borsa İstanbul under the stock code TTRAK.IS since 4 June 2004.
123 121 123
Stock Performance (Change of average price in 2014 Compared with 2013)
Closing price
Highest price
Lowest price
76.85 TL
78.20 TL
51.00 TL
Investor Relations Contact Details İlkiz Karagüllü Investor Relations Manager
[email protected] 0312 233 25 02
Daily average trading volume
In 2014, the price of TürkTraktör stock increased by 18% with regard to the average of 2013, exhibiting performance above the BIST 30 index, which decreased by 5% over the same period.
2014
2013
28/11/14
31/10/14
30/09/14
31/08/14
31/07/14
31/12/14
Analyst Coverage According to the latest reports issued in 2014, 15 analysts actively reporting on TürkTraktör, their ratings were 6 BUY, 9 HOLD and 3 SELL.
sell 3
58
min
max
min
2009
max
2011
min
max
2012
51.00
68.00 48.20 min
22.49
36.86
37.81
min
32.61
max
2010
26.60 14.24
39.10 3.58 2.03
15.10 13.13 max
2008
24.30 14.81
min
23.60 16.38
max
2007
7.95 5.22
min
9.20 6.17
max
2006
3.48 2.04
min
17.40 14.77
max
2005
12.80 8.82
min
18.20 13.70
5.55 4.01
max
2004
9.30 5.53
7.65 5.13
min
9.90 7.33
6.20 4.16
31/12/14
30/11/14
31/10/14
30/09/14
31/08/14
31/07/14
30/06/14
31/03/14
28/02/14
31/01/14
With increased interest from corporate investors, the share of foreign investors in the publicly held stocks of TürkTraktör has risen from 72% to 85% over the last 5 years, whereas the share of foreign investors in BIST decreased from 66% to 64% during the same period.
31/12/13
BIST
78.20
USD
58.25
TL
25.13
4,101
3,725
3,741
3,400 31/05/14
3,763
3,237 30/04/14
2,935
2,989
3,282
The highest and lowest prices of TürkTraktör stock (2004-2014) The highest and lowest prices of TürkTraktör stock (2004-2014) are given in TL and US dollars in the following table.
2014
2012
2011
2013
63
2,775
64
3,917
66
62
hold 9
TTRAK market value (Million TL)
3,682
66
Market Value The market value of the Company has reached 4.1 billion TL as of the end of 2014.
4,029
2012 TTRAK
2010
30/06/14
31/05/14
31/03/14
28/02/14
31/01/14
30/04/14
buy 6
85
70
2011
2010
72
83
Sıla Akçay Investor Relations Specialist
[email protected] 0312 233 25 04
24.76
81
31/12/13
Development in the share of foreign investors in the publicly held stocks of TürkTraktör (%)
4.7 million TL
max
2013
min
max
2014 59
Dividend Policy
TürkTraktör, 2014 Annual Report
Save and Gain with TürkTraktör
Corporate Governance
Dividend Payments and Yield
Dividend (million TL) Dividend yield
60
5.24
5.20
4.89
5.02 3.37
83.02
85.04
89.02
Sub - Categories
Weigh t
A ssigned Grade
Sh a reholders
0.25
84.88
P ubl ic D isc losu re a nd T ra n spa renc y
0.25
93.12
St a keholders
0.15
97.13
Boa rd of D i rec tors
0.35
89.67
Tot a l
1.00
90.46
90.46
2014
Profit per Share (TL)
91.04
2013
TürkTraktör carries out the dividend distribution in accordance with the provisions of the Turkish Commercial Code, Capital Markets Regulations, Tax Regulations and other relevant regulations as well as with the relevant article in the Articles of Association regulating the distribution of profit. In executing the dividend distribution, a balanced and consistent policy is pursued between the shareholders and the interests of the Company, in line with the Principles of Corporate Governance. In principle, a minimum 60% of the net distributable profit in the period, calculated in accordance with the Capital Markets Regulations, is distributed in cash and/or by gratis shares, according to the assessment of market expectations, the Company’s long term strategy, investment and financing policies, profitability and cash situation, to the extent that the relevant regulations and the financial sources permit. It is aimed to execute the dividend distribution at latest within one month following the General Assembly Meeting. The date of the dividend payment is determined by the General Assembly. The General Assembly or, if authorization is granted, the Board of Directors, may decide to pay dividend in installments in accordance with Capital Markets Regulations. As per the Articles of Association of the Company, the Board of Directors may pay advance dividend if authorized to do so by the General Assembly, provided that the Capital Markets Regulations are complied with. Profit distribution is carried out shortly after the General Assembly Meeting within the periods specified in the legislation ◼
Corporate Governance Rating TürkTraktör has been constantly raising its performance in compliance with the Corporate Governance Principles. The Company’s Corporate Governance Rating, which was first established at 7.52 on August 23 2007, has been raised for the seventh time to 9.05, reflecting the improvements achieved in this area. The major factors in the raising of the Corporate Governance Rating of TürkTraktör to 9.05 were; the importance given by TürkTraktör to the principles of corporate governance and the Company’s desire to implement them as a continuous and dynamic process as well as the improvements made in line with these principles over the period since the previous ratings ◼
2012
used to calculate the dividend yield.
Corporate Governance Rating (%)
2011
*Share closing price as of dividend payment date have been
2014
2014*
2013*
2012*
200
“In 2014, company stocks traded on the Borsa İstanbul under the stock code TTRAK.IS saw their lowest price at 51.00 TL and their highest price at 78.20 TL and succeeded in delivering a yield of 25% above the index. Our primary goal is to ensure that the stock is traded above its actual value. In order to achieve this goal, we endeavor to make sure that all information disclosed to analysts and investors is accurate and that investors get the “same” information regardless of their size and trading volume relative to oneanother. TürkTraktör has distributed an average of 75% of its profits to its shareholders over the last five years. Over the last 10 years, the Company has paid dividends amounting to 1.2 billion TL in total.
2013
300
2012
7%
“TürkTraktör stock delivered yield of 25% in 2014.’’
2011
200
10%
2010
10%
2010
Ahmet Canbeyli CFO
TürkTraktör gives the maximum care to compliance with the Corporate Governance Principles of the Capital Markets Board and observes the corporate governance principles of equality, transparency, accountability and responsibility in advancing toward its goals. TürkTraktör intends to present information, with the exception of trade secrets, to shareholders, the public and stakeholders accurately and in an understandable, complete, easily accessible and timely manner, in accordance with the Corporate Governance Principles of the Capital Markets Board. In the provision of such information, the principles of equality, transparency, accountability and responsibility are observed. The Information Policy of the Company is posted on the Investor Relations - Corporate Governance page on the official web site at www.turktraktor.com.tr ◼
61
Performance in 2014
TürkTraktör, 2014 Annual Report
The Agricultural Sector and Tractor Market E x hibi t ing succe ssf ul p er f or m a nce in i t s fiel ds of busine ss, T ür k T r a k t ör cl osely moni t or s de v el opmen t s in t he l oc a l a nd gl ob a l m a r k e t s w her e i t op er at e s, buil ds up i t s s t r at egie s a nd mov e s t owa r d i t s goa l s.
Beset by drought,
The agricultural industry in Turkey in 2014 strategic importance of the agricultural industry is increasing constantly due to the fact that it produces the basic food resources, is a very important source of employment and contributes a great deal to the national economy. One of the key inputs of the agricultural industry is undoubtedly soil. As one of the most essential assets of agriculture, which is one of the main industries in the economy, soil is an indispensable natural resource for continuation of human life and for development and wealth of nations. Food and agricultural industries account for 7.4% of the total GDP of the country according to the data for 9 months of 2014 and provide employment to 20% of the total labor force according to 11 months data. The greater part of the employment in rural areas of Turkey that represent roughly 25% of the population is provided by small and medium size farms ◼ The
frost, hail , storms, excessive precipitation and excessively high temperatures, 2014 was a hard year for agriculture. According to the data released by the T urkish S tatistical Institute ( T UR K S TAT ), the econom y gre w b y 2.8 % ov er a p er iod of 9 mon t hs, w hile the agricultural industry contracted by 3% due to drough t a nd t he effects of other natural disasters.
62
Turkey has significant potential in agriculture With considerable potential in agricultural production, in terms of quantity and diversity of product, Turkey is one of the leading countries of the world in the field of food and agriculture, due to its favorable geographic and ecological conditions. The use of resources efficiently and in a sustainable manner is an important issue in terms of economic development. The total number of plant varieties in Europe amounts to 11,500, while Turkey hosts a total of 11,000 varieties. Turkey has many agricultural products enjoying ecological supremacy and comes in the first place in the world in the production of valuable crops such as nuts, apricots, figs, sour cherries, quinces and poppy seeds. Turkey ranks among the top 5 in the world in the production of a number of agricultural products. According to 2013 year end data, Turkey’s agricultural added value rose to roughly 62 billion US dollars and exports of agricultural products increased to 19 billion US dollars. Turkey ranks 7th in the world and 1st in Europe in terms of national income from agriculture. Turkey increased her competitive power in 2014 and reinforced her position as a net exporter of agricultural products. According to the data released by TURKSTAT, the agricultural industry grew by 3.6% and the GDP share of the agricultural industry was 7.4% in 2013, given in current prices. These rates were 7.6% and 7.4%, respectively, in 9 months of 2014. While the ratio of the sector in the total employment was 23.8% in 2013, this figure was announced as 20% reference to 11 months data for 2014. Exports of foodstuffs and agricultural products amounted to 17 billion US dollars, whereas imports were at 11.2 billion US dollars in 2013. Moreover, exports rose to 14.3 billion US dollars and imports to 10 million US dollars over the period of January-October in 2014 ◼
The sector contracted by 3% Afflicted with drought, frost, hail, storms, excessive precipitation and excessively high temperatures, 2014 was very hard year for agriculture. According to the data released by TURKSTAT, the economy grew by 2.8% in 2014 over the 9-months period, while the agricultural sector contracted by 3% due to drought and other natural disasters. According to the data released by TURKSTAT, production of grains and other crops reduced by 6.6% and fruit by 6.2%, while production of vegetables grew by 4%. The production of wheat decreased by 13.8%, barley by 20.3%, rice by 7.8%, chickpeas by 11.1%, and red lentils by 17.7%. Should weather conditions normalize, it is expected that 2015 will be a better year for the agricultural sector ◼
14 million hectares of land is expected to be consolidated and reclaimed by 2023.
Fertile soils must be protected In order to make the agricultural sector in Turkey more productive as a whole, improvements to the agricultural infrastructure and rural development are among the highest priority issues. One of the primary factors reducing the productivity of agricultural enterprises is the high production costs arising from the small scale of agricultural enterprises and the overly-divided nature of lands of these enterprises. In the Western European countries, the average size of land per enterprise is 400 to 500 decares, while this is down to 59 decares in Turkey. A field of this size is comprised of 10 parcels. In order to ensure the productive use of arable fields, it is the utmost necessity that further division of the land be prevented. Law No. 5403 on Soil Protection and Use of Land was enacted in 2014. This law represents one of the first steps required for the creation of a system enabling benefit to accrue from economies of scale and to prevent the further division of land. The law contains statutory regulations which will prevent the division, and selling by way of division, of agricultural lands. In order to achieve the targeted average land size, very important steps toward the consolidation of agricultural lands are being taken. So far 4.2 million hectares of parceled land has been consolidated. According to the plan, an additional 1 million hectares will have been consolidated during the first half of 2015. It is targeted that 14 million hectares of land will be consolidated and reclaimed by 2023 ◼
63
Performance in 2014
The Agricultural Sector and Tractor Market
Subsidy for the sector continues Agricultural subsidies, which are granted regularly every year and amounted to 8.7 billion TL in 2013, were increased to 9.5 billion TL in 2014. The government program for 2015 has projected a total grant of 10.141 billion TL in subsidies to the agricultural sector. Regarding agricultural subsidy payments, the actual figures in 2013, estimated figures for 2014 and projections in the program for 2015 indicate that the amounts of all subsidies have been increased in real terms. No significant change to the rate of premium payments has been planned. The ratio of subsidies for livestock and rural development to the total payments has decreased, while the ratio of subsidies calculated on the basis of land area is expected to rise. ◼
TürkTraktör, 2014 Annual Report
According to the data released by TA R M A K BİR , 6 4 ,3 42 tractors w ere manufactured in T urkey in 2014 . T otal production in the sector gre w by 14% ov er t he p re v ious y ear . Desp i te region al drought and many adverse conditions, production was at a record high w hen compared w ith the last four years.
Agricultural Support Budget (in current prices, million TL)
2013
2014*
2015*
Agricultural Support Payments on the basis of Land Area
2,435
2,723
2,964
Additional Payment on the basis of Land Area (organic agriculture, good agriculture, soil analysis)
154
199
230
Diesel fuel
607
650
700
Fertilizer
718
785
850
Use of Certified Seeds and Saplings
76
118
130
Protection of Agricultural Fields for Environmental Purposes
40
50
55
Hazel Nuts
720
790
860
Compensatory Payments
123
125
137
Differential Payment Support Services
2,607
2,921
3,065
Cereals and Legumes
1,197
980
992
170
150
155
Products with Supply Deficit
1,240
1,791
1,918
Livestock Support Payments
2,756
2,887
2,953
Agricultural Support for Rural Development Purposes
478
484
500
Agricultural Insurance Support Services
299
356
404
Other Support for Agricultural Purposes
109
99
14
90
129
141
8,774
9,599
10,1 41
The Turkish tractor market in 2014 The world tractor market reached to 1.5 million units at the end of 2014. In China and India, which represent half of the global market, around 868 thousand tractors in total were sold. In Europe where 174 thousand of tractors were sold in 2013, the market contracted and 159 thousand of tractors were sold in 2014. The North America market where 235 thousand of tractors were sold in 2013 was recovered and total sales figure increased 243 thousand in 2014. Statistics show that the largest tractor manufacturers in the world are at the same time the largest tractor importers ◼ Turkey, the 4th largest tractor market of the world Turkey is currently the 4th largest tractor market in the world. This offers significant opportunities to manufacturers. According to the data released by the TURKSTAT, the average age of 1.6 million tractors in the tractor park of Turkey is 23. The fact that more than half a million tractors in the current tractor park have outdated specifications significantly increases the potential for renovation of the tractor park. Additionally, spreading awareness of performance and quality, in parallel with the tendency for branding in the sector, increases interest in products with higher horse power, supported by distinct technological functions. If the potential for renovation of the tractor inventory in Turkey is utilized well, a significant productivity in-
crease in the agricultural sector is expected in the coming period. In parallel with the increased importance of industrial agriculture in the global markets and Turkey, it is expected that the Turkish tractor market will enter a rapid course of development in the next period. In order for this process should run healthily, an increase in incentives for the employment of modern agricultural techniques and agricultural mechanization is vitally important. In addition, should such international standards as transition to 4th generation emission regulation, which will become compulsory in 2017, be made compulsory for the domestic market, it is expected that this will increase the export potential of the sector significantly. ◼ Production grew by 14% over the previous year According to a report issued by TARMAKBİR, 64,342 tractors were manufactured in Turkey in 2014. Total production of the sector grew by 14% over the previous year. Despite regional drought and many adverse conditions, this production is at a record high when compared with that of the last four years. Also the number of tractors registered grew in parallel with the growth in production. According to the traffic registration data released by the TURKSTAT, the number of tractors sold in 2014 grew by 14% over 2013 to 59,459 units. Reasons for this increase include higher crop prices despite low yield due to adverse climatic conditions and easier access to low-cost loans for retail purchases. Apart from these,
Manufacturing units of TürkTraktör
Grand Total *Estimated 64
“Providing employment to over 3 thousand people, TürkTraktör is one of the apple of Turkish industry’s eye. This factory has superior manufacturing technology that can compete with European and global companies. We are following worldwide technological developments and introduced into our products.”
39,574
38,530
2014 45,823 20
13 12
South Eastern Anatolian Project Action Plan Rural Development and Livestock Support
“We are the apple of Turkish industry’s eye with our manufacturing technology’’
20
Tea
Nebi Doğan Özdöngül Assistant General Manager / Production
65
The Agricultural Sector and Tractor Market
Performance in 2014
TürkTraktör, 2014 Annual Report
Market leadership of TürkTraktör
2008
2009
50%
50%
52%
2010
2011
the European Union Instrument for Pre-Accession Assistance (IPARD) support plays an important role. Reference to Agriculture and Rural Development Support Institution data, thanks to the IPARD supports, it was announced that 5,339 tractors have enjoyed support under various projects so far. Apart from the IPARD support, it must be said that loans extended primarily by Ziraat Bank and other commercial banks have had a strong impact on the increase in tractor sales. Every year more advanced models are introduced to the tractor market, which plays an important role in the development of the food sector, considered to be one of the strategic sectors. In a sector where intensive competition, particularly price-based competition, reigns, TürkTraktör has significant competitive advantages thanks to its experience and expertise of 60 years in the sector. Manufacturing the main com-
2012
29,371 49%
48%
2013
2014
ponents such as engine, transmission, axle, hydraulic lift, etc., the Company is appreciated by all stakeholders, primarily farmers, on the account of the high degree of local manufacturing ◼ Market leader for 8 years On the Turkish tractor market, where significant gains are being made, TürkTraktör has had a market share of 49.4% with its New Holland and Case IH brands over the last 8 years, according to the traffic registration data released by TURKSTAT. The Company has a market share of 44% for its New Holland tractors, which meet needs of farmers in all segments with 26,000 tractors sold, and 5% for its Case IH tractors, with 3,000 tractors sold, according to the records of the TURKSTAT ◼
T ürk T rakt ör manufactured 2,525 transmissions for export and 45,823 tractors in 2014 w i t h a gro w t h b y 19 % ov er t he p re v ious y ear , brea k ing a recor d in p roduct ion.
17,555
15,872
Export units according to TARMAKBİR
15,700
64,342
56,407
53,982
Manufacturing units according to TARMAKBİR
Manufacturing coverage ratio TürkTraktör covers 71% of the total production in Turkey where 64,342 tractors were manufactured in 2014.
91%
support to manufacturing
2012 66
2013
2014
2012
2013
2013 39,026
59,459
52,286
50,318 25,344
30,365
36,032 52%
18,565
7,148
13,758
27,022 13,497 50%
45,893
2012 40,162
Market leadership
25,328
Total market
60,341
TürkTraktör
2014
Sales units of TürkTraktör
Export coverage ratio TürkTraktör solely covers 90% of total exportation from Turkey where 17,555 tractors exported.
With an annual production capacity of 50,000 tractors, TürkTraktör manufactured 2,525 transmissions and 45,823 tractors in 2014 with a growth of 19% over the previous year. Thanks to its strong manufacturing infrastructure and high brand recognition, the Company carries out its manufacturing activities uninterruptedly, maintaining its leadership in the domestic market with a market share of 49.4% and making exports to over 130 countries. One of the leading Turkish exporters, TürkTraktör exported 15,866 tractors thanks to its extensive product range and the efficient international CNHI sales network, despite the slow-down on the international markets. The Company exported 2,596 transmissions in 2014. As of the end of 2014, TürkTraktör export revenues amounted to 934 million Turkish liras ◼ Competitive advantages The primary competitive advantages of TürkTraktör over its competitors are as follows: • The most efficient sales and after-sales service network in the field of agricultural tractors and equipment and strong product range with New Holland and Case IH brands, • A rich product range from agricultural tractors with various engine ratings (from 22 HP to 340 HP) to combines, planters and cotton pickers, • Strong brand reputation created by the “Made in Turkey” image among the stakeholders, • Competent human resources in all business processes from manufacturing to sales and marketing, •High brand recognition and customer satisfaction created via product quality, • Range of products equipped with new features thanks to competency in product development ◼
Export units of TürkTraktör
2012 14,565
2013 14,402
2014
Fuat Serdar Aydın Supply Chain Director
“We are working for timely delivering the perfect product’’ “We are working for timely delivering the perfect product. Supply chain management has key role in the success of manufacturing companies. By managing supply chain successfully, you can decrease the inventory level, shorten your time to respond you customer, decrease the costs depend on the efficiency in production plan and you enable to produce the best product with high quality in short period of time.”
15,866
71%
support to export
2014 67
Performance in 2014
R&D
TürkTraktör, 2014 Annual Report
TürkTraktör Selected as the Best in Automotive among R&D Centers
“We took many first in the sector thanks to our R&D centre’’
R egis t er ed a s a n R&D Cen t er in 20 0 9, T ür k T r a k t ör h a s been c a r ry ing ou t r e se a rch a nd de v el opmen t p rojec t s, w hich a r e imp orta n t f or t he de v el opmen t of T ur kish indus t ry. H av ing r e s t ruc t ur ed i t s org a niz at ion in 2014 t o sui t t he condi t ions of t he day, t he Compa n y h a s been wor king, w i t h i t s t e a m consis t ing of 120 p eop l e, t owa r ds achie v ing i t s innovat ion a nd
Ali El İdrissi Assistant General Manager / Product and R&D
“The R&D Centre of TürkTraktör is the first in Turkish market. Having successful team, the R&D centre has undertaking significant designs since its establishment, has designing new products and developing the current ones. The tractors designed by TürkTraktör that is becoming one of the most important engineering centres worldwide, are being sold to all global markets like America, Japan, Europe, Middle East and Africa.”
t echnol og y de v el opmen t ta rge t s.
M aking its mark w ith its R& D projects converted into patents, as of the end of 2014 , T ürk T rakt ör has a portfolio comprising 10 6 patents, 8 industrial designs, 33 trademarks a nd 27 in ter net dom a in names. In the 3rd P rivate Sector R& D Centers Summit organized by the Ministry of Science, Industry and T echnology, T ürk T rakt ör w on the first prize in the automotive sector amongst many national R& D Centers.
68
2014, TürkTraktör’s R&D Center maintained its high tempo of investments and expanded its staff. The staff increased from 55 persons, including the support personnel, in 2009 to 120 in 2014. At TürkTraktör, R&D employees are encouraged to attend master’s and doctorate programs. The number of employees who have doctorate and master’s degrees rose from 15 in the previous year to 26 in 2014. Today there are 22 graduate students and 4 doctorate students working at the R&D center. Particular attention is paid to making sure that master’s and doctorate programs are in line with the projects of the Company through visits to the lecturers of employees starting education programs. Making its mark with its R&D projects converted into patents, TürkTraktör won the first prize in automotive sector in the 3rd Private Sector R&D Centers Summit organized by the Ministry of Science, Industry and Technology, amongst many national R&D centers. Many patent applications are made each year as a result of the importance given to R&D. As a result of patent work started in 2006, the Company has achieved a portfolio comprising 106 patents, 8 industrial designs, 33 trademarks and 27 internet domain names. Patents are acquired not only for the products manufactured but also for any equipment developed to facilitate the work done on the assembly line. Frequent meetings are held with blue collar employees to hear their recommendations and to reward those whose patent applications and recommendations have been adopted ◼
IN
Emphasis will be placed on innovation The R&D Center, an institution which will emphasize innovation, was established in 2014. In view of the conditions of the 21st century created by international trade and globalization, the most essential way of achieving international competitive power depends on a nation’s capacity to create technology and innovation. Countries or companies which raise their capacity for technological innovation achieve significant international competitive advantage as well as faster production and increased incomes. In this connection, one of the prerequisites for gaining international competitive power for the manufacturing industry in the coming years will depend on the capacity to make technological innovation. If Turkey fails to change its production structure rapidly and to reconstruct it on the foundation of high value- added industries based on advanced technologies, it will not have the chance to catch up with the developed countries. A New Technologies Research Department that will carry out basic research activities, monitor only new technologies, conduct research and develop projects based on such technologies has been established under the aegis of the newly established organization. The initial fruits of this restructure have begun to be received, and research projects incorporating innovation were initiated in 10 out of hundreds of project ideas. Looking from a very broad perspective, this department works hard to make use of all internal and external resources. Universities, technology transfer offices, R&D institutions, inventors, customers and employees can be counted among such resources ◼ 69
Performance in 2014
R&D
TürkTraktör, 2014 Annual Report
Work on Patents ARE IN FULL FLOW Regarding Intellectual Property Rights, improvements to the process are continuing at full speed. Being one of the leading organizations in this field in Turkey, TürkTraktör was ranked the 9th organization in Turkey in patent applications in 2014. One of the primary targets of TürkTraktör is to give due emphasis to innovation and research projects and to acquire patents for inventions in order to protect intellectual property rights and increase their total value. In line with this vision, in 2015 licensing work is planned to be carried out, using such means as local and foreign companies, the Internet and the Turkish Patent Institute.
128
Patent applications (including industrial design patents) TürkTraktör distinguishes itself from its competitors to a significant extent on account of the level of competency it has attained in the field of R&D. As a result of knowledge accumulated in this field, TürkTraktör was adopted by CNHI as the R&D Center in 1999 and undertook new assignments in the CNHI international manufacturing network. As a result of such projects, which are very important also for Turkish industry, TürkTraktör was registered in 2009 as an R&D Center by the Ministry of Science, Industry and Technology, in accordance with Law No. 5746 on the Support of Research and Development Activities ◼
Total number of patents
Annual number of patents 103
83
62
66
44
Number of projects 30
Number of projects conducted during the year
Total number of projects
Number of completed projects 83
25
20
18
17
14
12
4 2008
2011
2012
2013
R&D Department
67
62
2010
2009
2014
120
104
Number of employees
55
Number of employees having doctorate and master’s degrees 90
44 77 66
33
60
34
54 49 27 21
40
20 21 26
13
11
15
11
6
70
3
6
2008
2009
6
17
9
2010
2011
8
5
6 2012
2013
2014
2008
2009
12
2010
2011
2012
2013
2014 71
Sustainability
Occupational Health and Safety
Quality
Safety Comes First!
Quality is One of TürkTraktör’s Most Fundamental Values
Occupational Health and Safety Indicators
Accident weight ratio (G)= (∑ Lost work days / ∑ Working hours)*1,000 0.060 11.92
0.052
Accident frequency rate (F)= (∑ Occupational accident / ∑ Working hours)* 1,000,000 0.054
imp rov emen t t hrough i t s In t egr at ed M a n agemen t S y s t em P olic y, 0.047
0.044
commi tmen t t o cus t omer sat isfac t ion, occupat ion a l he a lt h a nd 0.028
2008
5.15
4.92
2009
2010
T ür k T r a k t ör is commi t t ed t o ensur ing qua li t y a nd con t inuous
3.36 4.65 2011
2012
3.10 2013
0.027
sa fe t y p r ac t ice s, eff ort s t o minimize h a r m t o t he en v ironmen t
2.55
a nd r educe emissions of gr eenhouse g a se s, t oge t her w i t h energ y-
2014
efficienc y p r ac t ice s. T ürk T rakt ör
TürkTraktör, which has always cherished the goal of creating a healthy and safe working environment, work on occupational health and safety is progressing in tandem with work on World Class Manufacturing Operations and continuing with the Integrated Management System certification, which also incorporates the OHSAS 18001:2007 Occupational health and Safety Management System. As a result of the independent inspections carried out by TÜV Rheinland at both the Ankara and Erenler factories in July 2014, TürkTraktör has been certified as fulfilling all the requirements of the system in full without any deficiency ◼ AT
Serious improvements seen in the occupational
72
is the first enterprise in T urkey
health and safety performance indicators of T ürk T rakt ör , w hich aims to create a healthy
On-the-job Occupational Health and Safety Talks successfully continue TürkTraktör prioritizes the philosophy of prevention as the foundation of its approach to occupational health and safety, and has set itself the goal of implementing this approach. With the responsibility on creating and disseminating a culture of occupational health and safety among the employees, the Company has increased the hours of training per person by 6.5 hours annually with the practice of “On-the-Job Occupational Health and Safety Talks” and has succeeded in making behavioral changes among the employees, with the full support of the senior management.
In order to cement these changes, dramas, competitions and campaigns on the theme of Occupational Health and Safety are organized, with rewards, throughout the year ◼
and safe w orking environment, are the greatest proof that it is moving closer , step -bystep to its goal of “Zero O ccupational A ccidents”.
The theme “Safety Starts from Childhood” received great interest The theme of “Safety Starts from Childhood”, used in the course of creating the Occupational Health and Safety culture, has been well established thanks to extensive participation of the employees and their children. The project became one of the nominees for “Best Practice” in the sector, under which all the factories under the CNHI were assessed. Furthermore, the TürkTraktör Occupational Health and Safety Committee, which meets regularly every month attended by representatives of all TürkTraktör manufacturing and support departments is the most important indicator of the care and emphasis placed by TürkTraktör on Occupational Health and Safety. Serious improvements seen in the occupational health and safety performance indicators of TürkTraktör upon introduction of the World Class Manufacturing Operations in 2009 are the greatest proof that it is moving closer, step-by-step to its goal of “Zero Occupational Accidents” ◼
w hich has got both the IS O 5 0 0 0 1 Energy M anagement S ystem and IS O 14 0 6 4 Greenhouse G ases R eduction and V erification S tandards C ertificates.
having embraced quality as a fundamental principle, TürkTraktör
measures, monitors and continuously improves all of its processes. Guided by the ISO 9001, the Company has demonstrated the priority it gives to the environment, occupational safety and energy efficiency, by going on to obtain the OHSAS 18001:2007 Occupational Safety Management System and ISO 1401:2004 Environmental Management System standards. Having gathered the requirements for all standards under a common denominator for the purpose of implementing all these management systems more efficiently, TürkTraktör underwent a comprehensive external audit and confirmed the full integration of these systems in 2010. Thanks to this integration, the document controls, internal audits, management review meetings and corrective/preventive actions required to meet the necessary standards are carried out more efficiently. Monitoring audits were successfully completed in July 2014, and as a result, the integrated management system certificate was successfully maintained. In addition to the Integrated Management System, TürkTraktör has also achieved to get the ISO 27001 Information Security Management System and had ISO 10002 Customer Complaints Management System Standards first in its sector as well. In addition, TürkTraktör became the first enterprise in Turkey by having both the ISO 50001 Energy Management System and had ISO 14064 Green House Gases Reduction and Verification Standards. TürkTraktör has determined its Integrated Management System Policy and communicated this policy to all employees. The policy commits the Company to the allocation of all necessary resources to ensure quality and continuous improvement, customer satisfaction, occupational health and safety, the minimization of harm to the environment, reduction of greenhouse gas emissions and the efficient use of energy. TürkTraktör has made this commitment permanent and demands the participation of all employees in ensuring it is met ◼
TürkTraktör, 2014 Annual Report
The Integrated Management System Policy: As its main philosophy, TürkTraktör has embraced the principles of management and continuous improvement of Quality, Customer Complaints Management, Occupational Health and Safety, Environmental and Energy-Efficiency processes and the inclusion of energy efficiency in all process design and purchases. In order to ensure this, TürkTraktör commits itself to • Taking customer expectations into consideration in its designs, • Ensuring unconditional customer satisfaction, • Achieving the goals of highquality, on-time production, energy efficiency and meeting our cost and profit targets with the full participation and support of all employees, • Abiding by all statutory regulations and obligations concerning quality and to providing all necessary resources to ensure occupational health and safety, conserve the environment and energy, and employ new technologies in our fields of operation, • Creating a working environment for all employees, visitors, subcontractors and trainees where occupational accidents and workrelated illnesses are prevented, the environment is protected and awareness of energy efficiency is created, • Conducting work on cultivating the awareness of our employees, service shops, suppliers, dealers and end customers and conducting training aimed at instilling sensitivity and creating a common culture, • Identifying health and safety hazards and environmental impacts in the working environment, systematically taking the necessary measures to reduce such risks, and curbing the emission of greenhouse gases. 73
Sustainability
Environment
Energy Efficiency
TürkTraktör, 2014 Annual Report
We Keep Working Toward Environmental Sustainability!
Savings Are Possible with Correct Energy Management!
Wor king under t he p hil osop h y of achie v ing sus ta in a bl e grow t h w hil e
In 2014 , T ürk T raktör achieved considerable
con t inuously cr e at ing va lue, T ür k T r a k t ör h a s been moni t or ing t he
savings in a number of areas by means of the
en v ironmen ta l impac t of i t s ac t i v i t ie s t hrough t he use of n at ion a l a nd
energy management projects carried out.
in t er n at ion a l en v ironmen ta l m a n agemen t s y s t ems.
In commencing w ork on its “carbon footprint ”, T ürk T rakt ör has taken an important step in the fight against global warming.
74
IN line with the great importance placed on environmental sustainability and activities aimed at minimizing the environmental impacts which may arise in the course of its operations, TürkTraktör organizes training activities and competitions among its employees with the purpose of creating awareness of environmental protection issues. The main practices carried out by the Company in the field of environmental sustainability are as follows: • Environmental audits under the Integrated Management System have recently been successfully completed at the Ankara and Erenler Plants. • The Integrated Management System is externally audited by TÜV Rheinland. • In line with its commitment to passing the agricultural environment on to coming generations and to protecting the life cycle, TürkTraktör has initiated work on its “carbon footprint”, thus taking an important step in the fight against global warming. In July 2014, assessment and reporting under the ISO 14064 greenhouse emissions and removals at the organizational level was carried out. The assessments, taking 2012 as the base year were approved by BSI. Simultaneous ISO 50001 Energy Management
System audits were successfully completed. • At the manufacturing facilities in Ankara, environmental risk analyses were carried out at 8,759 points in 12 departments under seven risk types, and reports were sent to those departments, asking to prepare actions for improvement. • Environmental training courses and competitions involving waste were held under the aegis of the awareness raising work being carried out to ensure separate collection of wastes at-source. The Erenler Plant supports environmentally-friendly manufacturing with its “green building” concept by using sunlight at the maximum level combined with lower energ y and water consumption. The Plant has been awarded the LEED Gold Certificate which is presented by the U.S. Green Building Council to enterprises which support environmentally-friendly construction ◼
In 20 14 , old type EL EC T R IC ENGINE S w ere replaced w ith efficient ones ( IE 3) and savings of approximately 4 0 % w ere ac hie v ed.
In 20 14 , old type lighting fixtures across the factory w ere replaced w ith L ED ones a nd sav ings of 1 1% in consumption of po w er for lighting w ere achieved.
shapes its activities in energy management with an eye both to economic productivity and environmental priorities. The primary projects carried out by the Company in the field of energy management in 2014 were as follows:
TÜRKTRAKTÖR,
The Project to Replace Old Type Electric Engines Today, electric engines are generally manufactured and assessed in three basic efficiency classes; which are: • IE 1: Standard Efficiency • IE 2: High Efficiency • IE 3: Premium Efficiency Although the initial purchase cost of IE3 engines is higher than IE1 and IE2 engines, since the electricity consumption of IE3 electronic engines is lower, it has been seen that IE3 engines become less costly over time, depending on use. In this connection, old type electric engines identified across the factory were replaced with efficient ones (IE3) and savings of approximately 40% were achieved ◼ The Project to Replace Old Type Lighting Fixtures with LED In conventional lighting sources, most of the energy is converted into heat, while the ratio of this conversion is much lower in LED
fixtures. This means the same level of lighting with lower energy consumption. LED fixtures have advantages over conventional fixtures such as lower energy consumption, longer life, smaller size, rapid switching, high durability, low maintenance requirements and reliability. In 2014, old type lighting fixtures across the factory were replaced with LED fixtures and, as a result, savings of 11% in energy consumption from lighting were achieved ◼ Application of PID (Proportional-IntegralDerivative) to Furnaces PID is a general control cycle feedback mechanism used in common industrial control systems. In furnaces, the temperature and processing time required for the processing of each product is determined. In furnaces where a single temperature and processing time are used, the system is operated at maximum temperature. After the application of PID, the temperature and processing time values for all products have been determined and defined in the system. In this way, savings of 17% from electricity consumption per product were achieved ◼
75
Sustainability
Corporate Social Responsibility
TürkTraktör, 2014 Annual Report
In the Midst of Life with Projects That Add Value to the Community 02
T ür k T r a k t ör sup p ort s t he goa l of sus ta in a bili t y w i t h s y s t em at ic a nd l ong-running soci a l r e sp onsibili t y p rojec t s
01 The Read and Imagine project
w hich a dd va lue t o t he communi t y. T he se p rojec t s, in w hich t he
was sponsored. 02 Training specialists of
emp l oy ee s ta k e pa rt volun ta r ily, offer signific a n t sup p ort,
TürkTraktör met with the Agricultural Machinery Labs’
e sp eci a l ly t o chil dr en a nd you t h, in t he fiel d of educ at ion.
places great importance on carrying out social responsibility and sponsorship activities that contribute to the country and community in many areas, mainly in those areas related to its own sector. In these social responsibility projects, apart from the Company’s financial contributions, emphasis is placed on voluntary employee participation. The families and friends of employees are also approached with a view to raising their awareness and encouraging their participation in these social responsibility projects. Through social responsibility projects conducted in in the field of education, a contribution to youth development is made while also raising awareness of social responsibility ◼
TÜRKTRAKTÖR,
TürkTraktör Agricultural Machinery Labs In line with the collaborative project developed from the school-enterprise matching model established under the aegis of the Vocational Education: A Crucial Matter for the Nation Project being carried out by Koç Holding in cooperation with the Ministry of National Education and the Vehbi Koç Foundation, “TürkTraktör Agricultural Machinery Labs” have been established at Gazi Technical and In76
dustrial Vocational High School in Ankara, Gökhöyük Agricultural Vocational High School in Amasya, GAP Agricultural Vocational High School in Şanlıurfa and Osmangazi Agricultural Technical and Agricultural Vocational High School in Bursa. The purpose of these labs, introduced to support education and occupational development, is to raise the quality of vocational education related to the use of agricultural machinery and to contribute to satisfying the demand in the sector for well-qualified and trained personnel. The first of their kind in the sector, the labs, in collaboration with the Ministry of Food, Agriculture and Livestock, also serve the farmers by raising awareness concerning the safe use of agricultural machinery and equipment. In 2012, operating from the understanding that a lack of occupational skills plays an important role in generating unemployment in Turkey, a total of 24 teachers, 142 students and 931 farmers have so far received training in agricultural machinery labs established in four provinces. In 2014, the 3rd of the work books written for students receiving training at the TürkTraktör Agricultural Machinery Labs was published. Students at the Agri-
students. 01
Until today, training has been given to 24 teachers, 142 students a nd 931 far mers, in agricultural machinery labs established in four provinces.
cultural Machinery Labs in Ankara, Amasya and Bursa passed their graduation exams. Successful students were awarded certificates. Students of the TürkTraktör Agricultural Machinery Labs in Ankara, Amasya, Bursa and Şanlıurfa visited TürkTraktör and received two-day training. One student of the TürkTraktör Agricultural Machinery Lab at the Gazi Industrial Vocational High School in Ankara, two students of the lab at the Gökhöyük Agricultural Vocational High School in Amasya and one student from each of the Labs at the Agricultural High Schools in Bursa and Şanlıurfa have started their careers at TürkTraktör ◼ Engines and equipment were donated to 8 schools In 2014, lots of engines, gearboxes, transmissions and testers were donated to eight schools in support of the education of vocational high school students receiving technical education ◼ Two students were given 5-year university scholarships An analysis of the university entrance exam results reveals that a significant majority of the candidates with superior success consists of underprivileged students. Koç University launched the
Anatolian scholarship program in 2011 in order to provide the best educational means to those who represent the brilliant minds of the country, despite their lack of financial resources, and to make greater contributions to science through these students. TürkTraktör continues to financially support two successful but underprivileged students over five years as they pursue their educational goals under the roof of Koç University, in accordance with the protocol signed with Koç University ◼ 2,851 people have received training on the “Correct Treatment of the Disabled” According to the data released by the State Planning Organization and TÜRKSTAT, 12.29% of the population of Turkey is disabled. This rate corresponds to 8,431,937 individuals as per the last census. One of the most important reasons for the fact that we don’t come across many disabled people on the streets in our daily life is that it is impossible for the disabled to go out without the assistance of another person in most cases. For the purpose of creating awareness about the situation of the disabled, a number of activities, such as; social responsibility projects,
awareness and training in issues concerning disability have been carried out at TürkTraktör, as in all other companies of the Koç Group, for the last 2 years under the slogan of “For My Country: Barrier Free Life”. TürkTraktör delivered training on the Correct Treatment of the Disabled to 2,851 people via its volunteer instructors. In addition, under the aegis of the “For My Country: Barrier Free Life” project, a Special Educational Classroom designed to facilitate the educational life of the disabled was introduced into service at the Sincan Özkent Akbilek Elementary School with the contributions of TürkTraktör ◼ TürkTraktör sponsored the ‘Read and Imagine’ project TürkTraktör sponsored the ‘READ and IMAGINE’ project launched by the Educational Volunteers Foundation of Turkey (TEGV)), with the goal of encouraging imagination and the habit of reading in children. Under the project, TEGV conducted reading activities at shopping centers ◼
77
Sustainability
Human Resources
TürkTraktör, 2014 Annual Report
“Our Most Important Asset is Our People” T ür k T r a k t ör m a k e s a differ ence w i t h i t s
Great interest from university students On the occasion of the 10th Meeting with the Sector and Career Days Event, TürkTraktör came together with students from the Ankara University Agricultural Faculty’s Agricultural Machinery Department, of which TürkTraktör is the main sponsor. In addition, by meeting students from the Middle East Technical University Industrial Engineering Department throughout the year, TürkTraktör was able to inform students about its activities through its company introduction, HR processes and WCM basic presentation.
Winner of the Respect for Humans Award for the second time! By replying to more than 99% of over 30,000 job applications within a period of less than 12 days, TürkTraktör, for the second time won the Respect for Humans Award, which is traditionally awarded every year by Kariyer.net with the aim of highlighting diligent work in the field of human resources and of sharing this with the public.
hum a n r e source s ac t i v i t ie s b y con t inuously in v e s t ing in i t s emp l oy ee s under t he p hil osop h y of “Our mos t imp orta n t a sse t is our p eop l e”.
HAVING operated since 1954 with the vision of being the company that drives the modern agriculture, TürkTraktör has built its human resources philosophy upon the saying of Vehbi Koç “Our most important asset is our human resources” ◼
Talent management for the purpose of creating awareness Working together with universities and vocational high schools, the TürkTraktör Human Resources Department offers job opportunities to students and prepares them for working life. A protocol has been signed with the Ministry of National Education (MEB) and the Ministry of Agriculture under the aegis of the Vocational Education: A Crucial Matter for the Nation (MLMM) Project, which is being carried out via the collaboration of Koç Holding and MEB. Under this project, TürkTraktör Agricultural Machinery Training Labs established in four provinces (Gazi Technical and Industrial Vocational High School in Ankara, Gökhöyük Agricultural Vocational High School in Amasya, Agricultural Technical and Agricultural Vocational School in Bursa and GAP Agricultural 78
Vocational High School in Şanlıurfa), aim to raise the importance given to vocational education at the junior highschool level, along with the quality of the education given, to build up qualified manpower by means of people with occupational knowledge and experience, and to promote cooperation between the private sector and schools ◼ Shining Stars are prepared for the future The basic aim of the ‘Shining Stars’ program, as one of the practices supporting the Talent Management process, is to nominate at least one substitute for each executive position within the Company and to identify those individuals with good potential for such positions in a more objective way. Under this program, the talent pool at TürkTraktör, referred to as ‘Shining Stars’, is given direction through HR workshops and HR Planning Meetings held regularly and transparently within the Company every year. Through this process, employee career plans are tracked, and short, medium and long term substitution plans are reviewed annually, so that the Human Resources Strategic Plan is kept continuously updated.
Another goal of the Shining Stars process, introduced with the goal of keeping the Human Resources Strategic Plan alive, is to prepare the employees designated as substitutes for the position immediately above them, starting with the white collar level, and to make those who have been included in the Shining Stars process more competent and loyal to TürkTraktör. Development plans are established through one-to-one interviews with those persons included in the respective process and special educational opportunities are offered to them ◼ Employee loyalty and satisfaction are measured TürkTraktör conducts surveys to measure employee loyalty and satisfaction and implement improvement activities in accordance with the results of these surveys. The “Mark of Excellence” ceremony is held every year with the purpose of sharing employee accomplishments and performance in the course of any activity bringing added value, of appreciating successful employees and encouraging the others ◼
HALUK GÜMÜŞDERELİOĞLU Human Resources Director
“We want to be together for long period of time with our customers and also our employees” “Employing the right person for the right position is important but you shall properly schedule the future carrier of the people. We are developing our whole team from sales to the engineer who works at R&D to design the tractors, by considering the fact that they shall understand the market demands and needs.”
79
Sustainability
Human Resources
TürkTraktör, 2014 Annual Report
Human Resources
Organization Chart
Blue Collar Employees
p
gr
2% GRA DUAT E
4% 0.0
ost
1% Elem enta ry Scho ol o ol
st
e
e
ad
t ua
In dust r ia l High Scho o l 67%
e
25-29 AGES
35%
below 25 ages
18%
po
21% Ass o ciat
66%
Sch
SCHOOL
15%
% 15
at du
DLE
40-54 ages
a gr
MID
GRA DUATE
0.1%
GH HI
educAtion
at e
above 54 ages
ceo
2%
al
7%
ri
M
st
0.2% asso ciat e prof essor
CHOOL HS SCHOOL HIG ol 2% o DLE h ID Sc h Hig
du
% 0.3
In
8% Ass oci
or al 0.5% Do ct ta r y l e m e n o ol 0.2% E Sch
7%
White Collar Employees
Age Distribution
Blue Collar Employees
30-39 AGES
EAR 0-1 Y
YE
ar
Assistant General Manager / Purchasing
s
S
ARS
10+
0-1 ye ar
YE
AR
S2
4%
YEA
ar
Assistant General Manager / Marketing
Assistant General Manager / Production
Assistant General Manager / Product and R&D
Supply Chain Director
Construction Equipment Director
30%
After Sales Director
s
s 16%
14% 6-9
ye 6-9
10+ ye ar
5%
RS
-3 Y E 13% 2
AR
ye
rs
4-5
45
yea
10 %
31 %
Assistant General Manager / Quality
Assistant General Manager / Sales
2-3
32%
CFO
18%
39%
White Collar Employees
Human Resources Director
Seniority
80
81
31 ARALIK 2014 TARİHİ İTİBARİYLE FİNANSAL DURUM TABLOSU (Tutarlar aksi belirtilmedikçe Türk Lirası (“TL”) olarak ifade edilmiştir.)
TürkTraktör, 2014 Annual Report
RISK MANAGEMENT AND THE ACTIVITIES OF RISK ASSESSMENT COMMITTEE Risk Management Risk management is implemented under the policies that were approved by the Company’s Board of Directors. Internal and external factors shall be taken into consideration during risk identification studies and be located under the following categories: Operational Risk: Risks resulting in direct or indirect loss due to insufficient or problematic work processes, employees, systems or external factors. Strategic Risk: Risks that cause a threat for the corporations mid and long term position, profitability and mission in the sector. Financial Risk: Risks that arise from the financial positions and choices against changes on the economic conditions. a) Market Risk Foreign currency risk The Company is exposed to foreign exchange risks resulting from the foreign currency denominated commercial activities with the foreign companies and loans obtained from banks. Currency risk arises due to foreign currency denominated recorded and prospective transactions resulting as assets and liabilities. These risks are monitored regularly and limited by analyses of the foreign currency position. b) Credit Risk Financial assets are in hand carrying the risk of the inability of fulfilling the requirements of the agreements by the counter parties. The Company management manages these risks by limiting the average risk to any individual counterparty, by obtaining guarantees where necessary. The Company limits these risks that may arise from its dealers, by restricting the credit limits determined for the dealers according to the amount of the guarantees received, by updating the guarantee amounts regularly and by receiving the pledge of ownership of the tractors sold. Credit limits are regularly monitored by the Company and the customers’ credit quality are regularly evaluated by considering the customers’ financial position, past experiences and other factors. Trade receivables are evaluated by the management of the Company depending on their past experiences and current economic conditions and are presented in financial statements net of provision for doubtful receivables. c) Liquidity Risk Liquidity risk is managed by mainintaining cash and marketable securities, the availability of funding through an adequate amount of committed credit lines and the ability to close out market positions. 84
Funding risk of the current and future liabilities is managed by providing sustainability of the access to sufficient high quality creditors and the sustainability of the sufficient cash flows obtained from operating activities. The Company management, in order to ensure continuous liquidity, closely follows up the timely collection of receivables, allocates high intensity focus to prevent any financial burden sourcing from late collections and determines cash and non-cash credit limits to be activated in case of need by the Company. Reporting Risks: Risks that threaten the being of data that affect the corporation’s financial tables, the correctness, coherence recording and confidentiality are known as reporting risks. Information Technology Risks: The risks that are exposed in terms of management, safety, confidentiality and coherence systems in which the work and data of the applications used within the corporation are recorded. Legal and Reputation Risks: Risks that form with the corporation breaching the laws that they are supposed to abide by and not fulfilling their legal responsibilities. Information Safety Risks: Risks that threaten the confidentiality, coherence and accessibility of the information in the corporation. Business Continuity Risks: The risk of operations, the main practice of the corporation, being cut. d) Climate Risk Changes on the climatic conditions are another risk factor for the Company. Fluctuations in the agricultural sector due to the climatic conditions, impacts the sales of the Company. Since the main customer of the Company is the farmers; climatic conditions that is the important factor for shaping the agricultural sector, is different risk factor for the Company. e) Market Risk Until 2008, the competition continued between 2 brands but now current situation is getting harder with the addition of new brands every day. The market penetration target is “High Equipment – Low Price” especially for the importers. The new importers, especially India and China are entering the market with “Low Quality – Low Price” strategy. Notwithstanding, the local tractor manufacturers are increasing their market share with “Low Quality – Low Price” strategy implementing on the lower segment that is sensitive to the price. Capital risk management The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern
in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Company monitors capital on the basis of the net financial debt/ shareholder’s equity ratio. Net financial debt calculated as total financial liabilities (including short and long term bank borrowings) less cash and cash equivalents. This ratio is calculated as net financial debt divided by total shareholders’ equity. The determined risks will be detailed and recorded using the “TTF Risk Management Follow up Table” will be reviewed and updated once every 3 months 4 times a year by the officials. Every month, internal reporting shall be made to the responsible persons by the Internal Audit Department after evaluating the summary table of risks. Risks shall be managed according to the classification below: • Low Risks (L:Low): shall be followed at “Supervisor” level. • Moderate Risks (M:Moderate): shall be followed at “Manager” level. • High Risks (H:High): require notification and management at “General Manager” and “Assistant General Manager” level. • Extreme Risks (E:Extreme): shall be submitted by the Risk Management Committee to the consideration of the Board. Continuous follow up is required. Activities of the Risk Assessment Committee The Risk Assessment Committee established in our company’s Board of Directors meeting dated 09.07.2012 for the purpose of complying with the 378th article of Turkish Commercial Code numbered 6102, Capital Markets Board Communique on Corporate Governance and ensuring the effective operation of the committees established under board of directors, and making studies to early recognize the risks that may jeopardize the company’s existence, development and continuity; implementing necessary precautions concerning to the recognized risks and making studies to manage the risks. Mr. Andreas Christian Schröter, independent board member, engages on the chairmanship of the committee. Other members of the committee are Mr. Temel Kamil Atay and Mr. Stefano Pampalone who are the board members as well. The committee convened 6 times in 2016. The committee evaluates Türk Traktör ve Ziraat Makineleri A.Ş. Risk Management system and risk reporting principles, reviews Risk Reports prepared periodically in line with this scope, presents opinions concerning the necessary precautions that need to be taken for the purposes that are not complying with the limits determined at Risk Management System. Reporting studies and committee evaluations are presented to the information of the Board of Directors.
and all kind of risks that may affect the Company, calculating the impact and possibilities, managing these risks in parallel with the company’s risk-taking profile, reporting, ensuring that these risks are taking into consideration by taking decisions and accordingly establishing and integrating efficient internal audit systems. The Audit Committee continuously following the operation and efficiency of the system, sharing the problems and solutions concerning the internal audit mechanism with the board of directors. Board of Internal Audit has been established for the purpose of executing the company activities and services in efficient, reliable and uninterruptedly way, ensuring integrity, consistency, reliability and safety of the information provided by accounting and financial reporting system. A “Risk Management Committee Report” shall be drafted by Board of Internal Audit at least 6 times a year in order to present Risk Management Committee review. The reports approved by the committee shall be distributed to the BoD and Independent Auditor. Internal Audit function: • The Board of Directors and Upper Management of the Company make independent examinations that will enable a security for the company’s operations and they provide the service of giving a detailed report on their examinations. • It fulfills the need of protecting the company’s assets and records. • It enables the security of financial and operational information and reporting. • It meets the need of increasing the company’s practices’ effectiveness and benefits. • It provides support for meeting the policies set by the Company’s Top Management. • It helps the company gain a transparent operation with consciousness of the Company’s high ethical values and responsibilities. Audit Information In the year 2014, Türk Traktör ve Ziraat Makineleri A.Ş. was not subjected to private and public audits. The accounts and financial statements are examined by the Auditing Committee and are audited by the independent audit company, Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi (A member firm of Ernst & Young Global Limited) as well. ◼
Internal Audit System and Internal Audit The Risk Assessment Committee has been established to give opinions to the board of directors for the purpose of determining and evaluating the strategic, financial, operational 85
TürkTraktör, 2014 Annual Report
CORPORATE GOVERNANCE CHAPTER 1 – DECLARATION FOR COMPLIANCE WITH CORPORATE GOVERNANCE PRINCIPLES Our Company complies with the Corporate Governance Principles published by Capital Markets Board and makes regulations about issues to be complied with based on developing conditions in line with development of capital markets. The company aims to perform activities required for corporate governance practices as for rights of shareholders, informing public, ensuring transparency and decisions / transactions as regards stakeholders and the Board of Directors. In this sense, our Company oversees and aims to ensure implementation of the above-stated principles based on equal treatment of all stakeholders, responsibility of information and the principles of corporate governance. Our company completely complies with compulsory principles stipulated in Communiqué on Corporate Governance numbered II-17.1 which was in force in 2014 and most of
the non-compulsory principles have been kept. Although full-compliance is targeted for non-compulsory principles of Corporate Governance, full-compliance has not been achieved yet due to reasons such as difficulties encountered in relation to implementation of some principles, discussions about compliance with some principles in our country and at international level, non-alignment of some principles with the current structure of the market and the company. There are still some efforts aimed at the principles, which are not implemented, and there is a plan to implement these principles administrative, legal and technical infrastructure activities are completed in order to contribute to effective management of our company. Comprehensive activities carried out in our company as regards the principles of corporate governance, the principles, for which compliance has not been achieved yet are described in below table.
REASON FOR NOT FULLY COMPLY W ITH
ANY CONFLICTS OF INTEREST
1.5.2. Minor i t y r igh t s ma y be def ined in the ar ticles of asso ciation f or shar eholder s holding less than one t w en tie th of the capi tal of the cor por ation. T he s cope of minor i t y r igh t s ma y be enlar ged in the ar ticles of asso ciation.
D espi te the f ac t that minor i t y r igh t s has not been def ined in the ar ticles of asso ciation f or shar eholder s holding less than one t w en tie th of the capi tal, r igh t s ha v e been pr o v ided f or the men tioned shar eholder s w i thin the s cope of cur r en t gener al legislations.
No
3.1.2. Ef f e c ti v e and r apid compensation should be of f er ed in case the r igh t s of the s takeholder s that ar e pr ote c ted under the r ele v an t legislation and con tr ac t s ar e v iolated. T he cor por ation shall make i t con v enien t to pr o v ide the u tilization of the me chanisms such as compensation pr o v ided f or the s takeholder s as per the legislation. Fur ther mor e, the cor por ation shall f or m a polic y on compensation to w ar ds the cor por ation’s emplo y ees and dis close this polic y to public v ia the cor por ate w ebsi te.
T her e is not an y appr o v ed compensation polic y bu t the pr epar ing pr o cess is s till con tinuing.
No
4 .3.9. Cor por ation shall de ter mine a tar ge t r ate pr o v ided that i t is not less than 25 % and a tar ge t time f or member ship of w omen in the boar d of dir e c tor s and f or m a polic y f or this tar ge t . T he B oar d of dir e c tor s shall annuall y e v aluate the pr ogr ess in r espe c t to achie v ing this tar ge t .
T he e v aluation s tud y f or de ter mining the tar ge t f or member ship of w omen in the boar d w hich can be consider ed as a tool f or r epr esen ting dif f er en t opinions in the boar d.
No
4 . 4 .7. Member s of the boar d of dir e c tor s shall allo cate a r easonable time f or the business of the cor por ation. In cases w her e the member of the boar d of dir e c tor s is a manager or boar d member in another cor por ation or r ender s consul tanc y ser v ices to another cor por ation, in pr incipal this si tuation should not cause a conf lic t of in ter es t and the member shall not hinder his/her du t y in the cor por ation. W i thin this con te x t , e x ter nal du ties that the member conduc t s shall be condi tional on cer tain r ules or be come limi ted. T he e x ter nal du ties conduc ted b y the member of the boar d of dir e c tor s and the gr ounds ther eof shall be submi t ted f or the shar eholder s’ inf or mation, b y dis tinguishing ei ther such cor por ation is in tr agr oup or ou t of the gr oup, toge ther w i th the agenda i tem r egar ding ele c tion, at the gener al assembl y mee ting in w hich the ele c tion is dis cussed.
No such limi tation is needed as ther e is signif ican t con tr ibu tion f r om member s to the B oar d of Dir e c tor s due to their business e x per ience and se c tor ial e x per ience.
No
4 .5.5. I t shall be noted that an y member of the boar d of dir e c tor s shall not ha v e a du t y in mor e than one commi t tee.
Some boar d member s ha v e du t y in mor e than one commi t tee. Bu t thr ough those member s commi t tees that ha v e r elated du ties enable to ha v e dir e c t conne c tion and incr ease collabor ation possibili ties.
No
Remuner ations pr o v ided f or member s of the boar d of dir e c tor s and e xe cu ti v es ar e dis closed to the public thr ough the f inancial s tatemen t f ootnotes in line w i th gener al pr ac tices.
No
THE PRINCIPLE W HICH FULL COMPLIANCE HAS NOT BEEN ACHIEVED YET
4 .6.5. Remuner ations pr o v ided f or member s of the boar d of dir e c tor s and e xe cu ti v es and all other benef i t s pr o v ided shall be dis closed v ia the annual r epor t to the public. P r incipall y, public dis closur e shall be made on the basis of the per sons.
86
87
Corporate Governance
Comprehensive activities carried out in our company as regards the principles of corporate governance, the principles, for which compliance has not been achieved yet, and conflicts of interest, if any, related to these issues are described in below. In 2014, most important activities in the field of Corporate Governance include activities aimed at compliance with the Capital Markets Law on new regulations about the principles of corporate governance and with the new legislations prepared based on this Law. all amendments envisaged in the new Turkish Commercial Code and Capital Markets Law were enacted in the articles of association of our Company, besides, the board of directors and the board committees established in line with the regulations in corporate governance communique. The established committees of the board of directors are being carried out their activities. Remuneration policy for the board of directors and senior managers was determined and partners were informed about this policy during the general assembly. Through the general assembly information document, our investors were informed about privileged shares to be announced in line with the principles, information about the general assembly such as rights of voting, organizational changes, curriculum vitae for candidates for membership in the board of directors, remuneration policy for the board of directors and senior managers, reports to be prepared and information to be announced about procedures of the related parties 3 weeks prior to the general assembly. Besides, corporate web site and annual report of our Company were reviewed and necessary revisions were made for full-compliance with the principles. Arrangements concerning the number of independent board member have been stated at the 4.3.4th article of Corporate Governance Principles that entered into force through the communique numbered II-17.1 on Corporate Governance. It has also been cited at the 5th item of 5th article that, if the application deemed appropriate by the Capital Markets Board, the criteria determined at the 4.3.4th article concerning the number of independent board members will not been implemented for the joint venture companies constitute of two real or legal entities provided that having 51% equally directly or indirectly capital, not having management or audit relations amongst each other, sharing the managerial control through the agreement that requires affirmative votes of two parties for the important decisions on the company. Two independent board members will be sufficient for such companies. Our Company’s A group privileged shares at the rate of %37,50 belongs to Koç Holding A.Ş. (Koç Group) and B group privileged shares at the rate of %37,50 belongs to CNH Industrial Osterreich GmbH (“CNHI Group”). Controlling our Company’s management equally between Koç Group and CNHI Group is provided with the articles in Our Company’s Articles of Association. Pursuant to the article 10 of the Company’s Articles of Association, half of the Board shall be elected from among the nominees of the A Group privileged shareholders and the other half shall be elected from among the nominees of the B Group privileged shareholders. The whole Board is consti88
TürkTraktör, 2014 Annual Report
tuted equally by Koç and CNHI groups without making discrimination. As it is mentioned in the article 10 subsection 6 of the Company’s Articles of Association, in case of the absence of affirmative vote of two each board selected by proxy of Koç Group and CNHI Group, it is not possible to take a resolution for an issue in the Board. Therefore, Koç Group and CNHI Group have both controls on our Company. According to the article 6 of the Communique in question, our Company is accepted as a joint venture and within this context, determining independent board member number as 2 is approved by the CMB on 16.02.2012 with document numbered 5/129. In the upcoming period, necessary activities will be carried out for compliance with the principles by considering developments in the legislation and the related practices. In this context, SAHA Corporate Governance and Credit Rating Services Inc. (SAHA INC.), which is authorized to perform rating activities in Turkey in line with the Corporate Governance Principles published by Capital Markets Board, increased our Company’s corporate governance rating from 90.02 (9.00 over 10) to 90.46 (9.05 over 10) as a result of its analysis in 2014. The new rating and its breakdown is presented below. The grade (9.05) given by SAHA INC. in the rating activity organized by considering the Corporate Governance Principles shows that our company has significantly achieved compliance with the Corporate Governance Principles of Capital Markets Board, that it has implemented necessary policies and measures and that the activities about compliance with the principles of corporate governance will be strengthened and implemented.
Distribution of our corporate governance-rating grade by main topics is as follows: Sub - C at egor ie s
W eigh t
A s signed Gr a de
Shar eholder s
0.25
8 4.8 8
P ublic Dis closur e and Tr anspar enc y
0.25
93.1 2
Stakeholder s
0.1 5
97.1 3
B oar d of Dir e c tor s
0.35
8 9.67
T o ta l
1.0 0
9 0. 4 6
Compliance report, which includes components of the Corporate Governance Principles (those implemented and those not implemented) for 2014 period in terms of the current management activities based on legal regulations and legislation, is submitted to your information. Besides, it is available in our internet site (www.turktraktor.com.tr). CHAPTER 2 – SHAREHOLDERS 2.1. Investor Relations Department In our company, the Investor Relations Department affiliated under Assistant General Management of Financial Affairs is responsible for regulating and ensuring investor relations and public disclosure activities, implementing and following the Corporate Governance Principles, ensuring that employees of the company comply with these principles, representing company’s corporate entity before Ministries, Capital Markets Board, Borsa İstanbul (BİST), Takasbank (Settlement and Custody Bank), Central Registry Agency, independent audit companies and all other related institutions and organizations, submitting necessary reports and information to these institutions, making necessary notifications to BİST through Public Disclosure Platform, extension of shareholding rights, carrying out stock transactions, responding to information requests of investors and intermediary institutions, organizing General Assembly meetings of Partners, organizing meetings of the Board of Directors and Inspection and keeping records thereof, preparing decisions of the Board of Directors and following the approval process. The Investor Relations Supervisory performs activities such as following and implementing regulations made and to be made in line with the legislation of the Capital Markets Board, establishing relations with shareholders without any discrimination, performing capital increases, keeping records of the shareholders in a sound, safe and updated manner, informing public about the legislation, updating the related parts of the company’s internet site and responding to information requests about the company. The Investor Relations Supervisory responds to information requests of shareholders about the company and plays an active role in protecting and facilitating the use of shareholding rights. Ms. İlkiz Karagüllü who has the Level 3 License of Capital Markets Activities and the License of Corporate Governance Rating is working as the authorized manager and Ms. Sıla Akçay is working as specialist in this unit which is under the Financial Affairs Assistant General Manager, Mr. Ahmet Canbeyli. It is possible to receive information through the e-mail
address,
[email protected], or through telephone number: (0312) 233 25 02 and facsimile number: (0312) 233 33 73. In addition to one-on-one interviews, roadshows and analyst meetings, all kinds of questions from shareholders, analysts and fund managers were answered in written and verbal form during the year. Current and potential investors met with the Investor relations department through 89 investor meetings, 24 conference calls and 5 conference and roadshows participated. Through these meetings, it was ensured that the related people and institutions were informed about TürkTraktör and about recent developments. 2 press conferences and 3 analyst meetings were organized through participation of senior directors in order to reveal quarterly/annual financial results. Feedbacks for 76 information requests coming directly from phone call or e-mail address of the company were provided in a timely manner. Investor presentations were included in our internet site and it was ensured that investors and public were informed in an updated way. Our Company attaches utmost importance to this issue in line with its information policy in terms of individual and corporate investors and ensures updated information flow. The 03.02.2015 dated report that is about the activities carried out by the Investor Relations Department and prepared according to the 11th article 1. Item of the communique numbered II-17.1, presented to the information of board members at the meeting dated 04.02.2015. Material disclosures, financial statements and other information about the Company, which are to be notified to BİST through Public Disclosure Platform, are sent with electronic signature. Mr. Ahmet Canbeyli, Mr. Murat Ünver and Mr. Esat Ozan Berktaş are authorized signatories for notifications to be made through Public Disclosure Platform. 2.2. Use of Information Rights by Shareholders Activities were immediately initiated to ensure that shareholders make use of their information rights in Türk Traktör and Ziraat Makineleri A.Ş. (the company), which became a public company upon initial public offering of shares to bearer by Koç Holding Inc. to BİST on 3-4 June 2004, and necessary arrangements were made on the current web site of the Company in order to inform investors. To this end, information envisaged in line with the legislation of capital markets was added and an e-mail address, which is only available for investors, was brought into use. No discrimination is made for shareholders about use of 89
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the right to information and inspection and all information except for trade secrets is shared with shareholders. Questions directed to the Investor Relations Supervisory except for confidential information and trade secrets are answered through telephone or in written form upon consultation with the most authorized person about the related issue. As explained in Chapter 3.1 of this report, any and all information and explanations, which could affect shareholding rights, are provided in corporate internet site. Although right to request a private auditor is not arranged in our Articles of Association as an individual right, each shareholder may request from the general assembly to clarify specific incidents through a private audit even if it is not included in the agenda in the event that it is necessary for ensuring use of shareholding rights and that right to information or inspection is not previously used. To date, none of the shareholders has made such a request. Besides, activities of the Company are regularly inspected by the Independent Auditor elected in the General Assembly. 2.3. General Assembly Meetings During this period, Ordinary General Assembly meeting of Partners was organized on 24.03.2014 in Ankara headquarters of Company. Calls for General Assembly were made in Turkish Trade Registry Gazette and shareholders included in Shareholders’ Stock Register were informed about the General Assembly in written form and all necessary information was provided in line with the procedures and within legal time limits. The General Assembly was organized in public. All rightful stakeholders and press members were invited to our General Assembly meeting although they do not have any right to speak. During the mentioned general assembly meeting, 5.336.900.000 shares corresponding to a share capital of TL 53.369.000 out of 1.500 shares were represented in person, 4.645.267.100 shares were represented by representative thus 4.645.268.600 shares in total were represented in the meeting which ensured the minimum quorum specified in both the Law and also in the Articles of Association. Meeting procedure of the General Assembly is arranged in a way that will provide the highest level of participation for shareholders. It is ensured that meeting minutes are always available through written copies or in electronic format. Invitation to the General Assembly is made by the Board of Directors in accordance with the provisions stipulated in Turkish Commercial Code, Law on Capital Market and Articles of Association for the company. When a decision is taken by the Board of Directors in order to organize the General Assembly, necessary calls and explanations are made over Public Disclosure Platform and as of 2013, calls, announcements, participation and voting procedures for general assemblies has been carried out through Electronic General Assembly System of Central Registry Agency. Financial statements and activity reports are made available in the Headquarters of our company at least 21 days before the General Assembly. Announcements for meetings of the General Assembly are published on the internet site at least 3 weeks prior to the meeting. Following submission of 90
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financial statements to BİST and publication of the Annual Report, any and all information and report to be handled in the agenda of the General Assembly are sent to those requesting this information through the fastest facility of delivery such as letter, facsimile message or e-mail. Records are kept public in areas, which are easily accessible by shareholders, including electronic media. In addition to the announcement for meeting of the General Assembly, the following issues are available on the internet site of the company. a) Total number of shares and voting rights that reflect the structure of partnership for the company and number of shares and voting rights that represent A and B privileged share groups as of the date on which the announcement is made, b) Information about dismissal, replacement or election of board members and justifications thereof as included in the agenda of the meeting for the General Assembly and people to be nominated for board membership, c) In the event that requests are made by shareholders, Capital Markets Board and/or other public institutions and organizations related to the company for inclusion of items in the agenda, information about these requests, d) In the event that amendment of the Articles of Association is included in the agenda, the related decision of the Board of Directors and former provisions and newly-amended provisions of the Articles of Association. Each motion covered by the agenda items of the General Assembly is clearly described under a separate headline. If requests are made by shareholders to the Investor Relations Supervisory in written form for inclusion of items in the agenda during preparation of the Agenda, these issues are taken into account by the Board of Directors. In addition, in case of the majority of affirmative votes of independent member which is required to get the board resolution does not secure, the issues can be included to the agenda and the General Assembly resolution can be taken related to these issues. General Assembly meeting is may be organized in Ankara, in which headquarters of the company is located, or another city to be determined by the Board of Directors in line with our Articles of Association. However, to this day, all general assembly meetings have been organized in the headquarters of the company upon preference of the Board of Directors. It is quite natural that shareholders ask questions and present their views by taking the floor about an issue during our General Assemblies. Therefore, General Assembly ensures that partners of our company ask questions, present recommendations about items of the agenda and talk about their proposals in line with the related procedures. In the event that these questions are not related to the agenda or if they are too comprehensive to respond immediately, these questions are answered in writing as soon as possible. Within this framework, there is no question asked by the shareholders in the Ordinary General Assembly Meeting on 24 March 2014. All information including Annual Reports, financial statements and independent audit reports, dividend proposals and agenda of the general assembly, the related informa-
tion and documentation, if any, and form for voting by proxy, current Articles of Association, texts of amendment, if any, material disclosures, distribution of the capital by shareholders and Corporate Governance Compliance Report are published on the internet site and this information is also available in electronic format. Open ballot method (through lifting hands) is used for voting items of the agenda during General Assembly meetings. Board members, who are informed about the related items of the agenda, other related people, authorities, who are responsible for preparation of financial statements, and auditors are present in the General Assembly meeting in order to provide necessary information and to respond to questions. It is possible to have access to all general assembly minutes and lists of participants by years from the headquarters of the company. Besides, this information is also available through Turkish Trade Registry Gazette in Ankara Trade Registry Office. Files of the General Assembly Meeting Minutes for the last 5 years can be accessed and reviewed through our internet site. The General Assembly should provide a pre-approval and should be informed about the activities related to shareholders, who have dominance in management, board members, senior directors which have administrative liability and spouses and relatives of these people up to the second degree to carry out activities that may result in conflict of interest with the company and the affiliated partnerships and/or in case of carrying out an activity that may fall into the field of partnerships’ operation on its or other’s behalf or getting into another partnerships which are operated in the similar business area as unlimited partner; and related to activities in the field of partnerships’ operation done by person on its behalf who are able to reach the company’s information. People, who are privileged to have access to the information of the company, inform the board of directors about the activities they carry out in relation to field of activity for the company during the General Assembly. During the year there was not any situation that can be considered as significant procedures in terms of implementing the Corporate Governance Principles like assignment of all or most of the assets of the companies, establishment of real rights on the assets or renting these assets, taking over or hiring an important asset, envisaging privileges or changing scope or subject of the current privileges and dequotation. The company does not have any written donation and aid policy, but all donation and aid amounts accrued during the period and beneficiaries thereof are submitted to the information of the partners through a separate agenda item during the General Assembly meeting. The Ordinary General Assembly held in 2014 is informed about the donation and aid done in 2013 through a separate agenda item and the donation limit for 2014 is determined as the amount of 9 Million TL.
cles of Turkish Commercial Code and Capital Markets Law and regulation are applied in the ordinary and extraordinary meetings of the General Assembly. Shareholders present in the meetings of the General Assembly will cast vote pro-rata to the nominal value of their total shares in the share capital of the Company and there is no privilege for the voting right (Paragraph c, Article 15 of the Articles of Association). Shareholders with privilege A and B group shares are allowed to nominate people for board membership (Paragraph 2, Articles 10 of the Articles of Association). Voting rights are utilized in the General Assembly in line with the arrangements in relation to the type of representation and voting (Paragraphs c and d, Articles 15 of the Articles of Association). The company complies with the regulations of the Capital Markets Board as regards voting by proxy. There is no controlling shareholder on the basis of reciprocal shareholding. There are professional directors from the sector and companies of Koç Holding in the current Board of Directors. As there is a case of voluntary implementation in line with the legislation of capital market and controlling shareholders do not deem this arrangement necessary, no arrangement is made in the Articles of Association for the company with regard to representation of minority shares in the management and cumulative voting method. As for this issue, the current provision about the quorum of the General Assembly shall apply (Paragraph h Article 15 of the Articles of Association). In the Company, using the minority rights is watched over compliance with the CMB and Turkish Commercial Law regulations. Despite the fact that minority rights has not been defined in the articles of association for shareholders holding less than one twentieth of the capital, rights have been provided for the mentioned shareholders within the scope of current general legislations. In 2014, there is not any diatribe or complaint for this issue. All shareholders including minority and foreign shareholders are treated equally.
2.4. Voting Rights and Minority Rights Each shareholder is allowed to make use of the voting right in the easiest and the most proper manner. The related arti-
Dividend Policy Our Company distributes dividend in parallel with the provisions of Turkish Commercial Code, Capital Markets Board
2.5 Right of Dividend There is no privilege about participation in profits of the company and distribution of dividends. Article 19 of the Articles of Association on “Distribution of Profit” shall apply. Dividends are distributed based on long-term strategies, investment and financing policies, profitability of our company and arrangements of Capital Markets Board and distribution of dividends is submitted to the approval of the General Assembly and the company complies with the legal time limits. In line with the policy for distribution of dividends, dividends are distributed to all current shares as of the accounting period on an equal basis irrespective of the dates of exclusion and acquisition. This issue is included in the related article of the Articles of Association and as it is a provision for the General Assembly, it is submitted to the information of shareholders. The dividend policy of Company is given below:
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Corporate Governance
regulations, Tax legislations, other related regulations and the related dividend distribution article of the articles of association. In line with the Corporate Governance Principles, balanced and accurate policy is followed between the benefits of the shareholders and the Company. In principle, as long as the relevant regulations and financial possibilities be convenient, by taking into consideration of the market expectations, long-term company strategy, investment and financing policies, profitability and cash situation, minimum 60% of net distributable profit that calculated in line with Capital Markets Board provisions, shall be distributed in cash and/or as bonus shares. It is aiming to distribute dividend within a month following the General Assembly Meeting at the latest, general assembly decides the date of the dividend distribution. General Assembly or if authorized the Board of Directors may decide to pay the dividend in installments in line with Capital Markets Board regulations. Reference to the articles of association of the company, the board of directors may distribute the dividend in advance only if the board has authorized by the General Assembly and done in parallel with the Capital Markets Board regulations. Dividends distributed and dividend distribution policies implemented in the last 5 years are included in our Annual Report and web site of our company. The form and time of dividend distribution resolved to distribute are determined by General Assembly after the proposal of Board of Directors. 2.6. Assignment of Shares In Article 8 of the Articles of Association on “Assignment of Shares”, principles of selling and assigning registered shares for non-public A and B group are stipulated and there are limitations on assignment of shares in accordance with these rules and arrangements. Assignment of public C group shares is regulated by the Capital Market Board. CHAPTER 3 – PUBLIC DISCLOSURE AND TRANSPARENCY 3.1. Corporate Web Site and Its Content Our Company has an active and up-to-date internet site. This corporate web site is arranged in two languages: Turkish and English. In this internet address, there is comprehensive information about possible requests from our Company. In our internet site, which can be updated based on developments; there is a section for “Investor Relations” that covers minimum components envisaged by Capital Markets Board. Important headlines which can be followed through the web site of the company are as follows: • Stock Information and Investor Tools • Share Chart • Dividend History • Capital Increases • Analyst Coverage • Calendar • Corporate Overview and Governance • Management Team • Trade Registration • Articles of Association 92
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• General Assembly Document • Corporate Governance • Disclosure Policy • Dividend Policy • Corporate Governance Adoption Report • Ethical Rules • Corporate Governance Rating Reports • Policy Regarding Disclosure of Material Event • Policy Regarding Protection of Insider Information • Task and Performance Principles of Committees • Committee Reports • Board of Directors Resolutions • Material Disclosures • Financial Results • Independent Audit Company Report • Investor and Analyst Presentation • Annual Report • Financial Statements • Financial Kit • Investor Registration • Investor Feedback • Contact Us • FAQ • News • Links The related information, which reflects the situation in the last 5 years, is available in our internet site. Our company’s Annual Report may be provided in printed form. Besides, our web-based Annual Report may be reviewed from our internet site. The Investor Relations Supervisory is responsible for preparing content for the section of Investor Relations in our internet site, updating information as they change and adding extra information. Necessary responses are provided to shareholders and stakeholders for questions asked through “Contact Us” section of our internet site and information requested through electronic media. 3.2. Annual Report Board of Directors prepares the Annual Report in a detailed manner in order to inform public about activities of the company in a complete and accurate way. All information required through the 2.2 numbered corporate governance principle and its sub clauses are already included to the annual report. Headlines of the company’s activity report are as follows: • Vision and Mission • Evaluation of the Board Chairman • Message of the General Manager • Results of Activities in 2014 • Report of the Board of Directors • Corporate Governance and Capital Structure • Products and Equipment • General Overview of 2014 and Social Responsibility Activities and Human Resources • Corporate Social Responsibility • Legal Notices
• Risk Assessment – Internal Control and Audit • Agricultural Sector and Tractor Market • Resumes of the Board of Directors and Senior Directors • Members of the Board of Directors, Board of Inspection and Audit Committee in the related period • Statement of Corporate Governance and Compliance Report • Agenda of the General Assembly Meeting • Amendment of the Articles of Association and Agenda Items for the Meeting of Privileged Shareholders • Dividend Distribution Policy – Dividend Distribution Table • Auditor’s Report – Report of the Committee responsible for the audit • Financial Statements and Independent Audit Report • Information about Duties Carried Out by Board Members and Directors out of the Company and Statements about Independence of Board Members • Number of Meetings by the Board of Directors in the related year and Status of Participation by Board Members in these meetings • Information about Significant Administrative Sanctions and Penalties on the Company and Board Members due to Practices, which are contrary to the provisions of the legislation, if any • Information about Amendments of the Legislation, which could significantly affect activities of the company • Information about Considerable Suits Filed Against the Company and Possible Consequences Thereof CHAPTER 4 – STAKEHOLDERS
4.1. Information of the Stakeholders Stakeholders are defined as employees, suppliers, clients and third parties that are directly related to the company. All these stakeholders are informed about issues, which are related to them and arrangements concerning necessary organizations, information meetings and necessary information activities are made by our company. Employees of the company are informed about any and all developments through intranet, over which corporate communication is established. Corporate governance practices of the company ensure that rights of the stakeholders, which are regulated by the related legislation or which have not been regulated, yet, are kept secure. Additionally, the Unusual Event Management Procedure prepared by the Internal Audit Department established in Company is submitted to information of all employees by publishing on intranet. The company has already established the necessary mechanisms to enable the stakeholders to transmit the company’s transactions which are unlawful and unethical directly to Corporate Governance Committee or Audit Committee. According to this procedure, the unusual event is defined as “Fraud, Material Losses, Violation of Legislation and Company Procedures to a Significant Extent, Intellectual and Industrial Right Infringements, Misuse of Computer Sources, Insider Trading, Security or Safety Problems and all other cases which may endanger the Company or the employees and which may damage the reputation of the
Company.” The unusual event notifications may arrive at the Internal Audit Department in the ways below: 1) Verbal and written statements of employees 2) Complaints and notices written on the Company Website 3) Complaints and notices written on the Company Website 4) Written complaints and notices arriving at Company senior management and employees thereof 4.2. Participation of Stakeholders in Management Practices, through which stakeholders can participate in development activities for administrative issues, present opinions and make evaluations about these issues in an active manner, are carried out within the company. There are meetings and training programs, which aim to increase quality and efficiency, and through which employees, suppliers and clients make requests, and studies such as “Survey for Evaluation and Improvement of Business Life” and these activities are performed in line with the policies of the company. Besides, customer satisfaction surveys are organized, feedbacks about customer satisfaction are followed within the system and criteria of objectives are redefined. There are call centers, which work on 7/24 basis in order to respond to needs and questions of customers in the best way possible. Besides, stakeholders are encouraged to participate in management through the system aimed at receiving recommendations and opinions in customer relations over SMS. 4.3. Human Resources Policy Our Human Resources mission is to establish and continuously improve Human Resources Systems that will make employees happy in line with the objectives of the Company. Our vision is to maintain Human Resources practices that will meet needs and expectations of employees in TürkTraktör through an approach of continuous improvement and to make TürkTraktör a preferred company. Criteria for recruitment of personnel specified by Directorate of Human Resources are written and recruitment process is carried out in line with these criteria. “Working Environment Procedures” have been created in order to ensure that employees work in a fair, comfortable and safe environment, to eliminate losses of working days and labor, to increase efficiency and to ensure manufacturing and operational safety; “Improvement Planning Procedures” have been created in order to improve knowledge, skills, manners and talents of employees, to plan, organize and record in-house, external, on-the-job and foreign language training activities so as to increase business efficiency and “Occupational Health and Safety Procedures” have been created in order to ensure that employees comply with health and safety conditions stipulated in Labor Law and the related regulations on Occupational Health and Safety. Implementation of procedures is supported with documents and orders published in parallel with these procedures. Personnel of the Directorate of Human Resources perform activities in order to establish relations with employees. Carrying out communication activities within the Company is defined as one of the current responsibilities of the related personnel and terms of reference, division of labor, criteria 93
Corporate Governance
of performance and reward are shared with all employees. Besides, representatives of trade unions take an active part in activities aimed at strengthening communication. Food Committee, Representative of Health and Safety, representatives of Leave Board and Disciplinary Board, who are assigned through election or appointment, represent employees and strengthen communication in these processes. If employees are participating in these activities, then motivation and efficiency are increased. No complaint was made by employees about discrimination within the year. Team spirit and sharing are adopted as our most important values in all our activities. It is believed that it is only possible to work together and to create a nice working environment through mutual love, respect, positive approach, honesty, hard work and cooperation. 4.4. Rules of Ethics and Social Responsibility “TürkTraktör Ethical Conduct Board” was formed in order to perform activities in relation to Rules of Ethical Conduct and Principles of Implementation stipulated in Personnel Regulation. Corporate activities are performed within “Rules of Ethical Conduct and Principles of Implementation”, which are determined in order to protect and develop reputation of the company name and its corporate structure and the related rules have been published in web site of the company and on intranet, through which corporate communication is established. Our activities are organized in line with the principle of corporate social responsibility and criteria of impact on society by considering the region, in which our factory is located, and other social activities aimed at general public. In this context, information about the related activities carried out within the period is available in the Annual Report. In this period, there is no unfavorable notification in relation to environmental damage and there are records about our activities, in particular, environmental impact assessment reports. CHAPTER 5 – BOARD OF DIRECTORS 5.1. Structure and Composition of the Board of Directors Board of Directors performs its activities in a transparent, accountable, fair and responsible manner. The Board of Directors may distribute duties of management and representation among its members or assign all or some of these duties to delegates, who are board members, or managers, who do not have to be shareholders. The Board of Directors determines human resources and financial resources that will be required by the Company and shapes management according to these needs. The Board of Directors inspects management performance and workflow. The Board of Directors takes strategic decisions, keeps risk, growth and profit balance of the company at the most appropriate level, protects long-term interests of the company through a smart and cautious risk management approach and manages and represents the company. Authorities of the Board of Directors are defined in Article 11 of the Articles of Association. In this sense, the Board of Directors ensures that corporate activities comply with the legislation, the Articles 94
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of Association, internal regulations and the related policies. Following the General Assembly meetings, during which the Board of Directors is elected, Chairman and deputy Chairman of the Board are assigned in order to take decision about assignment of duties. In the event that there are vacancies in Board members during the period, provisions of Article 363 of Turkish Commercial Code shall apply. Chairman of the board and general manager are different people and their duties are carried out by different people. None of our Board members including the Chairman may have any direct execution duty within our company according to the definition stated in the CMB Corporate Governance Principles except for General Manager and Assistant General Manager responsible for Financial Affairs. Considering the 4.4.7 numbered principle, it is ensured that board members allocate sufficient time for activities of the company and there is no limitation on these people about other assignments or duties outside the company due to the fact that their work experience and sectorial knowledge have important contribution to the board. Before the General Assembly, shareholders are informed about resumes of the members and their duties performed outside the company. There is a clear separation between authorities of the General Manager of the company and Chairman of the Board as specified in the Articles of Association for the Company. The Investor Relations Supervisory affiliated under Assistant General Management of Financial Affairs is responsible for preparing agendas for decisions of the Board of Directors, writing these decisions, following these decisions and submitting these decisions to information of the members and maintaining effective communication within shareholders. The Investor Relations Supervisory works in close cooperation with the Corporate Governance Committee. The Board of Directors constituted of 10 members. It will be obligatory to elect five of Board Members out of nominees assigned by A group shareholders and to elect the remaining members out of nominees assigned by B group shareholders. One candidate from nominees assigned by A group shareholders and one candidate from nominees assigned by B group shareholders need to have characteristics of independence stipulated in regulations of the Capital Markets Board. Terms of independent Board members are limited to 3 years and it will be possible for them to be elected through re-nomination. Most of the board of directors’ members have to be non-executive members in line with the definition made by the Capital Markets Board. Our current Board Members are Mr. Osman Turgay Durak, Mr. Franco Fusignani, Mr. Kudret Önen, Mr. Marco Votta, Mr. Ahmet Canbeyli, Mr. Temel Kamil Atay, Mr. Stefano Pampalone, Mr. Ali Aydın Pandır, Mr. Haşim Savaş Arıkan and Mr. Andreas Christian Schröter. Curriculum vitae of Board members and General Manager are included both in Annual Reports and in the internet site of Investor Relations.
N ame – Surname of B oard Member
S tatus of Independence
Date of A ppointment
T erm
Duties in the B oard of Directors and its Committees
Duties Outside the Company
Osman Tur ga y Dur ak
Not independen t member
24.03.20 14
1 Year
Chair man of the B oar d
Ko ç Holding A .Ş. Dir e c tor
Fr anco Fusignani
Not independen t member
24.03.20 14
1 Year
V ice Chair man of the B oar d and Member of E xe cu ti v e Commi t tee
I V ECO S.p. A - Dir e c tor
Kudr e t Önen
Not independen t member
24.03.20 14
1 Year
B oar d Member, Member of E xe cu ti v e Commi t tee and Cor por ate Go v er nance Commi t tee
Ko ç Holding A .Ş. Dir e c tor
Mar co Vot t a
Not independen t member
24.03.20 14
1 Year
B oar d Member
A hme t C anbe y li
Not independen t member
0 1.07.20 14
Un til the f ir s t Gener al A ssembl y Mee ting
B oar d Member, Member of Cor por ate Go v er nance Commi t tee
Temel Kamil At ay
Not independen t member
1 Year
B oar d Member and Member of R isk A ssessmen t Commi t tee
Ko ç Holding A .Ş. Dir e c tor
Stef ano P ampalone
Not independen t member
1 Year
B oar d Member, Member of Cor por ate Go v er nance and R isk A ssessmen t Commi t tee
C NH Indus tr ial In ter national S A Dir e c tor
1 Year
B oar d Member
ER DEMİR – Chair man of B oar d of Dir e c tor s/ Tof aş-B oar d Member/ Tür k P r y smian Kablo v e Sis temler i A .Ş. – B oar d Member
1 Year
B oar d Member, Chair man of A udi t Commi t tee and Cor por ate Go v er nance Commi t tee
D er en P ackaging Ind. Consultan t
1 Year
B oar d Member, Member of A udi t Commi t tee and Chair man of R isk A ssessmen t Commi t tee
P or tigon A G - Dir e c tor
A li Ay dın P andır
Haşim Sa v aş A r ıkan
A ndr eas Chr is tian S chr öter
Not independen t member
Independen t member
Independen t member
24.03.20 14
24.03.20 14
24.03.20 14
24.03.20 14
24.03.20 14
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The following regulations have been made in line with Article 4.3.4 of the Principles of Corporate Governance, which was brought into force through the Communiqué with Serial II.17.1 on Identification and Implementation of the Principles of Corporate Governance: on condition that the application is deemed appropriate by the Capital Markets Board, provisions in relation to number of Independent Board Members in the Board of Directors shall not apply for business partnerships composed of two real or legal persons that equally share management oversight of the partnership in such a way that positive vote of each party is required for important decisions related to the partnership and that these parties share capital of the company, that at least 51% of the capital is direct or indirect capital and that these parties are independent from each other and number of independent board members in these companies is two. A group privileged shares of our company with a rate of 37.50% belong to Koç Group while B group privileged shares of our company with a rate of 37.50% belong to CNHI Group. In this context, the related application has been made to the Capital Markets Board and the General Assembly has approved that number of independent board members will be two depending on the process. It is ensured, through the principles for election of the people to be considered as independent board members, that these members need to fulfill criteria stipulated in Article 4.3.7 of the Principles and a person, who worked as Board Member for more than six years within the last ten years, could not be appointed as an independent board member. Independent Board Member candidate submits to the Corporate Governance Committee a written declaration stating that s/he is independent in line with the Articles of Association and the above-stated criteria during nomination for the related post. The corporate governance committee evaluates the candidate proposals for the independent membership by considering whether the nominee has independency criteria or not and presented the evaluation report to the board. 60 days before the general assembly, the company applies to Capital Markets Board approval for independent board member nominees confirmed by the board. After having capital markets board approval, the company informs public about the final list of independent member candidates together with the call for the general assembly meeting. General assembly decision for appointment of independent board member is announced in the internet site of the company together with dissenting votes and justifications thereof. In the event that independent board member candidates, against whom shareholders that represent one per cent of the capital give dissenting votes, are elected as independent board members, the Capital Markets Board makes an evaluation and decides whether independent members fulfill criteria of independence upon an application to be made by these shareholders within 30 days following the date of general assembly meeting. In the event that a situation for elimination of independence occurs, the board of directors is immediately notified of this change by the related independent member for inform96
TürkTraktör, 2014 Annual Report
ing public. In this case, in principle, the independent board member, who loses his/her independence, resigns. In order to ensure minimum number of independent board members, Corporate Governance Committee makes an evaluation for election of independent members for vacancies for a term that will continue until the next general assembly meeting and notifies the board of directors of the result of the evaluation in writing. As for different duties carried out by board members outside the company, there is no limitation except for arrangements and rules finalized in the General Assembly each year. Provisions of Turkish Commercial Code shall apply for duties assigned in other affiliated group companies and for other issues. Duties of Nomination Committee are carried out by Corporate Governance Committee in our company. Number of independent member candidates proposed for Corporate Governance Committee in 2015 was 2 and declarations of nomination and curriculum vitae for these people were evaluated during meeting of the Corporate Governance Committee and meeting of the Board of Directors on 16.01.2015 and it was decided that these candidates would be independent members. All independent board members submitted their declarations of independence to the Auditing Committee and there is no situation for elimination of independence as of 2014 period. Approval is sought from the General Assembly in order for Chairman and members of the Board to carry out activities in the field of activity for the company by themselves or on behalf of other people and to become partners in companies that work in this field in line with Articles 395 and 396 of Turkish Commercial Code. It is being thought that having variety in board in terms of knowledge, experience and point of view will have positive contribution on company activities and board efficiency. The evaluation study for determining the target for membership of women in the board which can be considered as a tool for representing different opinions in the board. 5.2. Activities of the Board of Directors The Board of Directors manages and represents the company by pursuing long-term interests of the company. The Board of Directors assembles in a frequent manner so as to fulfill its duties effectively. Chairman of the board determines the agenda of the board meetings by talking to other board members and executive chairman/managing director. Members do their best in order to participate in every meeting and to present their opinions. Decisions of the Board of Directors are arranged and prepared in line with the emerging requirements. A total of 40 meetings were organized in 2014. Information and documents related to the issues included in the agenda of the board meeting are submitted to information of the board members in order to ensure equal flow of information. Issues included in the agenda of the board meetings are clearly and comprehensively discussed. Chairman of the board does his/her best to ensure that non-exec-
utive members actively participate in board meetings. Board members ensure that reasonable and detailed justifications for their dissenting votes against related issues are recorded in the decision texts in meetings. Board members make a proposal for amendment of the agenda to the chairman of the board prior to the meeting. Opinions of board members, who cannot participate in meetings, but submit their opinions in writing, are submitted to information of other members. If there is a different vote in decisions of the meetings, an annotation is added to the decision. Questions and explanations are included in the text of the decision. There is no weighted vote or right of veto. As for the quorum of decision approved by the General Assembly in line with the same article, a total of 6 non-independent board members need to be present including at least 2 members representing A Group shares and at least 2 members representing B Group shares in accordance with arrangements of the Capital Markets Board. In 2014, no transaction of affiliated parties or significant transactions were performed for submission to the general assembly because they were not approved by independent members. The board of directors looks out for company’s activities by evaluating whether there is a possibility of conflict of interest and if so evaluates the results of this situation and then take resolutions in order to be act in most appropriate manner. As well as complying with the regulations for related party transactions, the board of directors evaluates the possible abuse risks and precisely reviews the related party transactions. Additionally, since 2011, the Directors & Officers (D&O) insurance is done to cover the responsibilities of board members regarding their duties. Depending the condition and exclusion in the insurance, the protection scope ensured by D&O insurance can be summarize generally as follows: 1) Within the insurance period, it provides a personal protection to board members and managers across the compensation demands came from investors, employees and authority in line with the conditions of insurance. 2) In line with the insurance conditions, it provides a protection to companies in case of compensating the amount by the company while board members and managers supposed to pay within the context of 1. subject. 3) It covers defense costs. 5.3. Number, Structure and Independence of Committees Formed in the Structure of Board of Directors In accordance with Article 17 of the Articles of Association for the Company, there is an Executive Committee of the Board of Directors composed of 2 people (1 member of A group and 1 member of B group). This committee performs necessary activities in between the Board meetings. Members of the committee are Mr. Franco Fusignani and Mr. Kudret Önen. Besides, in line with the related communiqué, the Committee Responsible for auditing was formed in order to follow
financial issues, to analyze periodical financial statements and footnotes and to submit its proposal to the Board of Directors based on the Independent External Audit Report. Board Member Mr. Haşim Savaş Arıkan was appointed as the Chairman of the Committee and Mr. Andreas Christian Schröter as the member of the committee. The Audit Committee convened 5 times in 2014 to evaluate quarterly/annually financial results and to send proposal for independent audit company to the board. All committee members attended to the meetings. Corporate Governance Committee was formed within the Company through a decision of the Board of Directors in order to increase compliance with the Principles of Corporate Governance and Board Member Mr. Haşim Savaş Arıkan was appointed as the Chairman of the Committee while Mr. Kudret Önen, Mr. Stefano Pampalone and Mr. Ahmet Canbeyli were appointed as the members of the committee. The Corporate Governance Committee convened 10 times in 2014 to determine independent board nominees, evaluate remuneration policy and corporate governance adoption report, to review the change in committee membership, to present the material event disclosures to the board, to review the revision made in the corporate governance rating, to evaluate the benefits provided for board members and top management. All committee members attended to the meetings. Risk Assessment Committee was formed within the Company through a decision of the Board of Directors in line with Paragraph 1, Article 378 of Turkish Commercial Code and Board Member Mr. Andreas Schröter was appointed as the Chairman of the Committee while Mr. Kamil Atay and Mr. Stefano Pampalone were appointed as the members of the committee. The Risk Assessment Committee convened 6 times in 2014 to examine the financial statements and receivables account and to check equity, evaluate Risk Report that was included to the Annual Report, to review Competition Law Adoption Procedure and internal control system and internal control activities. All committee members attended to the meetings. There is no committee other than the above-stated Executive Committee, Audit Committee, Risk Assessment Committee and Corporate Governance Committee. In line with the composition of the Board of Directors, no separate Nomination Committee and Remuneration Committee was formed. Corporate Governance Committee fulfills duties of these committees. The members of the committee were elected in line with the Communiqué with Serial Number II.17.1 on the Principles of Corporate Governance and all of the members of Committee Responsible for Inspection and chairman of the Corporate Governance Committee were elected among independent board members. Duties and activities of the committees were determined and published in the internet site of the company. Committee may invite the related directors to the meetings in line with their working principles if deemed necessary. Committees may request consultancy services or receive views of independent experts whenever they need. 97
Corporate Governance
All committee reports are recorded and Auditing and Corporate Governance Committees’ reports published in the internet site of the company. Executive chairman/managing director are not involved in any committee. Despite there is a provision in 4.5.5 numbered corporate governance principle as it shall be noted that any member of the board of directors shall not have a duty in more than one committee, it is not possible to have full compliance because of the board structure. Some board members have duty in more than one committee. But through those members committees that have related duties enable to have direct connection and increase collaboration possibilities. Board of Directors is periodically informed about the activities performed in these committees according to the division of labor. If needed, experts, who are not board members, may be assigned in the committees. Committees act in line with their responsibilities and make recommendations to the Board of Directors. Final decision is taken by the Board of Directors. 5.4. Risk Assessment and Internal Control Mechanism Risk Assessment Committee was formed in order to make recommendations and proposals to the Board of Directors about identification, assessment, calculation of impacts and possibilities of strategic, financial, operational and all other risks that could affect the Company, management of these risks in line with the corporate risk-taking profile of the company, reporting of these risks, considering these risks in decision mechanisms and creation and integration of effective internal control systems. Audit Committee continuously oversees functionality and effectiveness of the system and informs the Board of Directors bout problems and suggestions for solution of these problems in relation to the risk management and internal control mechanism. A risk management system is envisaged and an internal control organization is made depending on the financial and administrative activities of the company and the Committee Responsible for Audit follows functionality and effectiveness of the internal audit in line with the related legislation and regulations of the Capital Markets Board. The Board of Directors is responsible for sound functioning of the internal control system and the related Board Member and Company CEO ensure necessary coordination on behalf of the Board of Directors. The company shall draft A “Risk Management Committee Report” at least 6 times a year in order to present Risk Management Committee review to carry out its activity and services effective, reliable and uninterruptedly, and ensure the integrity, consistency, reliability, timely and safety of information obtained from accounting and financial report system. The reports approved by the committee shall be distributed to the BoD and Independent Auditor. Internal Audit function: In order to carry out the Board of Directors and Upper Management of the Company make independent examinations that will enable a security for the company’s operations and they provide the service of giving a detailed report on their examinations. 98
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• It fulfills the need of protecting the company’s assets and records. • It enables the security of financial and operational information and reporting. • It meets the need of increasing the company’s practices’ effectiveness and benefits. • It provides support for meeting the policies set by the Company’s Top Management. • It helps the company gain a transparent operation with consciousness of the Company’s high ethical values and responsibilities. 5.5. Strategic Objectives of the Company Mission, vision and values of our Company were created and published and these components are revised and renewed depending on emerging developments. Our mission, vision and values, which are prepared by senior management of our company and approved by the Board of Directors, are available in our internet site. Activities of the related units for creation and implementation of strategic objectives of the Company are followed by the senior management and submitted to the Board of Directors. In 2010, as in previous years, strategic decisions of our Company were implemented in line with the priorities. The Board of Directors makes a comparison on objectives of the Senior Management for the new year and makes decisions by reviewing annual activities depending on the strategic objectives. During Board Meetings, which are periodically organized in line with the Articles of Association for the Company, objectives of the company and completed activities including performance in the previous periods are followed. Current status of the company is reviewed and new objectives and strategies are developed as a result of current conditions, if deemed necessary. The Board of Directors oversees compliance of the activities of the company with the legislation, the Articles of Association, internal regulations and the related policies.
out by the Company. In line with the composition of the Board of Directors, no Remuneration Committee was formed. However, Corporate Governance Committee will determine criteria to be used for wages by considering recommendations of board members and senior directors about principles of remuneration and fulfill all duties of the related committee. Besides, within the related period, no lending, extension activity was performed in favor of any Board Member and Senior Director, no interest was provided through a third party and no security such as collateral was provided in favor of board members and directors. Stock options or performance-based payment plans of the company are not used for wages of independent board members. In addition, wages of independent board members have to be at a level that will preserve their independence. Public is being informed about remuneration to be given and all interests to be provided to board members and senior director.
5.6. Financial Rights “Remuneration Policy of Board Members and Senior Directors” of our Company including any and all rights, interests and wages provided to board members and senior director and criteria used for determination of these rights, interests and wages and principles of wages was presented to the shareholders examination 3 weeks before the general assembly dated 24.03.2014 through Information Document and after the general assembly put into practice. Total amount of payments made in line with the Remuneration Policy of Board Members and Senior Directors is annually evaluated by Corporate Governance Committee and the Board of Directors. Public is collectively informed about the payments made to the Board Members and senior directors in footnotes of financial statements in parallel with the general practices. No transaction, which will result in conflict of interest, such as lending, extension and giving a security in favor of our board members or directors is carried 99
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BOARD OF DIRECTORS
Haşim Sa v aş A r ıkan
Duties and Authorities of Board Members The chairman of board and board members have duties and authorities determined in related articles of the Turkish Commercial Law and Company’s Articles of Association. Both chairman of board and board members have the authorities determined in related articles of the Turkish Commercial Law and article number 11 of the Company’s Articles of Association. Board of Directors’ Members During the Period Pursuant to the Turkish Commercial Law and related regulations, within the framework of the Company’s Articles of Association, board members are selected to serve by the General Assembly for one year until the next Ordinary General Assembly. For board members, changes in the period are done with the board resolution in order to submit the approval of the next Ordinary General Assembly. The Company’s Ordinary General Assembly of the year 2013 hold on 24.03.2014. The Board of Directors’ members as of 31.12.2014: N ame – Surname of B oard Member
S tatus of Independence
Date of A ppointment
T erm
Duties in the B oard of Directors and its Committees
Duties Outside the Company
Osman Tur ga y Dur ak
Not independen t member
24.03.20 14
1 Year
Chair man of the B oar d
Ko ç Holding A .Ş. Dir e c tor
Fr anco Fusignani
Not independen t member
24.03.20 14
1 Year
V ice Chair man of the B oar d and Member of E xe cu ti v e Commi t tee
I V ECO S.p. A - Dir e c tor
1 Year
B oar d Member, Member of E xe cu ti v e Commi t tee and Cor por ate Go v er nance Commi t tee
Ko ç Holding A .Ş. Dir e c tor
Kudr e t Önen
Mar co Vot ta
Not independen t member
A hme t C anbe y li
Not independen t member
Temel Kamil Ata y
Stef ano P ampalone
A li Ay dın P andır
100
Not independen t member
Not independen t member
Not independen t member
Not independen t member
24.03.20 14
24.03.20 14
1 Year
B oar d Member
0 1.07.20 14
Un til the f ir s t Gener al A ssembl y Mee ting
B oar d Member, Member of Cor por ate Go v er nance Commi t tee
1 Year
B oar d Member and Member of R isk A ssessmen t Commi t tee
Ko ç Holding A .Ş. Dir e c tor
B oar d Member, Member of Cor por ate Go v er nance and R isk A ssessmen t Commi t tee
C NH Indus tr ial In ter national S A Dir e c tor
B oar d Member
ER DEMİR – Chair man of B oar d of Dir e c tor s/ Tof aş-B oar d Member/ Tür k P r y smian Kablo v e Sis temler i A .Ş. – B oar d Member
24.03.20 14
24.03.20 14
24.03.20 14
1 Year
1 Year
A ndr eas Chr is tian S chr öter
Independen t member
Independen t member
24.03.20 14
24.03.20 14
1 Year
B oar d Member, Chair man of A udi t Commi t tee and Cor por ate Go v er nance Commi t tee
D er en P ackaging Ind. Consultan t
1 Year
B oar d Member, Member of A udi t Commi t tee and Chair man of R isk A ssessmen t Commi t tee
P or tigon A G - Dir e c tor
Changes in the Board of Directors within the Period Since Memet İlkan Kamber, who was appointed as the board member at the Ordinary General Assembly held on 24.03.2014, was appointed another duty in the Koç Holding, Ahmet Canbeyli was appointed as board member effective from 01.07.2014 to complete the remaining term of office of his predecessor through the board resolution dated 25.06.2014. Members of Board of Directors Committees, Meeting Frequency, Working Principles Considering the Continuing Operations and Board of Directors’ Assessment Related to the Effectiveness of Committees The working principles of committees are present under the investor relations link in our website. The detailed information is given in the Annual Report attachment Corporate Governance Adoption Report (Appendix – 2) under the title 5.3. Number, Structure and Independence of Committees Formed in the Structure of Board of Directors. The information regarding committees are given in the tables below. Auditing Committee
T itle
Inception
E xpiry Date
Haşim Sa v aş A r ıkan
Chair man
24.03.20 14
1 8.03.20 1 5
A ndr eas Chr is tian S chr öter
Member
24.03.20 14
1 8.03.20 1 5
Corporate Governance Committee
T itle
Inception
E xpiry Date
Haşim Sa v aş A r ıkan
Chair man
24.03.20 14
1 8.03.20 1 5
Kudr e t Önen
Member
24.03.20 14
1 8.03.20 1 5
Stef ano P ampalone
Member
24.03.20 14
1 8.03.20 1 5
A hme t C anbe y li
Member
01.07.201 4
1 8.03.20 1 5
R isk A ssessment Committee
T itle
Inception
E xpiry Date
A ndr eas Chr is tian S chr öter
Chair man
24.03.20 14
1 8.03.20 1 5
Temel Kamil Ata y
Member
24.03.20 14
1 8.03.20 1 5
Stef ano P ampalone
Member
24.03.20 14
1 8.03.20 1 5
Board of Directors’ Meeting Number within the Year and Participation of Board Members to the Meetings A total of 40 meetings were hold in 2014. Board members attended the meetings regularly. The Payments made to the Board Members The Company made a payment to the Chairman and Members of Board in parallel with the current Remuneration Policy. Payment to board members’ shall be done by considering their task period from inception to expiry date in pro rata basis. The expenses (transportation, telephone, insurance, etc) of which covered by the board members due to their contribution to company, can be met by the company.
101
Board of Directors
RESUMES OF THE BOARD MEMBER NOMINESS OF THE YEAR 2015 Mustafa Vehbi Koç Mustafa V. Koç graduated with a B.A. degree in Business Administration from George Washington University in 1984. At the same year, he began his career in Tofaş as consultant and later he served as the Sales Manager and Assistant General Manager of Ram Dış Ticaret. In 1992, he moved to Koç Holding and served as Vice President, President, Board Member and Vice-Chairman of Board of Directors. He has been Chairman of Koç Holding Board of Directors since 2003. Mr. Koç is Honorary Chairman of the Turkish Industrialists and Businessmen’s High Advisory Council and Honorary Consul General of Finland in Istanbul. He is also a member of the Rolls Royce International Advisory Board, the JP Morgan International Council, the Global Advisory Board of the Council on Foreign Affairs, and the Steering Committee of the Bilderberg Meetings. Mr. Koç was awarded the Cavaliere d’Industria medal by the Government of Italy in 2005 and the International Leonardo Prize, known as the “Oscar of Business” in 2012. He is also a member of the Board of Vehbi Koç Foundation and Board of Trustees of Turkish Volunteers for Education Foundation. Mustafa V. Koç is a controlling shareholder of the Koç Group and currently serves on the Boards of Directors of Group companies, as he has done for the past ten years. Richard Joseph Tobin Richard Joseph Tobin who is CEO of CNH Industrial N.V., Brand Head of Case and New Holland Construction Equipment holds a Bachelor of Arts and Master of Business Administration degrees from Norwich University and Drexel University, respectively. Mr. Tobin carries forth extensive experience in international finance and management that he acquired through regional and global leadership positions of growing responsibility and scope. He began his career with GTE Corporation in Stamford, Connecticut (U.S.), as Vice President of International Marketing. In 1995, he joined Alusuisse-Lonza SA in Zurich, Switzerland, as General Manager and Vice President, where he remained until 2001, and the year when he joined Alcan Aluminum of Montreal, Canada, with a general management role. In 2002, Mr. Tobin joined SGS Group of Geneva, Switzerland, where he became the Chief Operating Officer for North America. In 2004, he became SGS Group’s Chief Finance Officer & Head of Information Technology, a position he retained for six years before finally joining CNH in March 2010. Prior to the integration of Fiat Industrial S.p.A. and CNH Global N.V. into CNH Industrial, Mr. Tobin was Group Chief Operating Officer of Fiat Industrial S.p.A. and President and Chief Executive Officer of CNH, a role he assumed in January 2012 after two years as Chief Financial Officer (CFO) for CNH. Levent Çakıroğlu He graduated from Ankara University School of Political Science in Business Administration and completed his MBA at 102
TürkTraktör, 2014 Annual Report
the University of Illinois. He began his career at the Ministry of Finance as junior accountant in 1988. Between 1997 and 1998, he worked as part-time lecturer at Bilkent University and as Vice President of Financial Crimes Investigation Board at the Ministry of Finance. He joined Koç Holding in 1998 as Finance Group Coordinator. He was the CEO of Koçtaş between 2002 and 2007 and Migros between 2007 and 2008. After becoming the CEO of Arçelik in 2008, he appointed as the President of Consumer Durables Group at Koç Holding in April 2010. He was appointed as CEO of Koç Holding effective from 31.03.2015. Stefano Pampalone Mr. Pampalone who is the Chief Operating Officer APAC, holds a Master degree of Engineering from the University of Trieste. Stefano Pampalone assumed the role of General Manager for CNH in India, Far East and Japan in February 2013. Since joining CNH in 1998, Mr. Pampalone has always been involved in international assignments. In 2001, after gaining commercial experience in parts and whole goods in Poland, India, Africa and Middle East, he was appointed Business Manager Southern Africa and Iran for all Agricultural Brands in the Fiat Group. In 2004 he became Marketing Director for Agricultural Equipment in Asia, Africa and Middle East. From 2006 till 2009 he first served as Business Director for CNH Agricultural Business in Italy and after one year as Business Director Africa & Middle East. In 2009 he was appointed General Manager of Agricultural and Construction Equipment Business in India and Pakistan. Osman Turgay Durak Osman Turgay Durak received his Master’s degree in Mechanical Engineering at Northwestern University in the USA. He joined the Koç Group as a Product Development Engineer at Ford Otomotiv in 1976 and was appointed Assistant General Manager in 1986. He took office as Deputy General Manager in 2000 and as General Manager of Ford Otosan in 2002. He worked as the President of the Automotive Group of Koç Holding between 2007 and 2009. He was appointed the Deputy CEO of Koç Holding in May 2009. Durak has been the CEO of Koç Holding since April 2010. Kudret Önen Kudret Önen completed his under graduated studies and received his engineering degree from Gazi University. He joined the Koç Group at Ford Otosan in 1975. He served as the Manager of the R&D Department at Koç Holding in 1980 and as Assistant General Manager of Otokar in 1984. During 1994-2005, he served as the General Manager of Otokar. In 2005, he was appointed Vice-President of Koç Holding Other Automotive Companies Group. In 2006, he was appointed President of the Koç Holding Defense Industry and Other Automotive Group. Önen has been serving in the role of President of the Koç Holding Defense Industry, Other Automotive and Information Group since 2010.
Marco Votta Marco Votta completed his undergraduate studies at the Business Administration Department of the Luigi Bocconi University of Commerce. He started his career at Pluritec S.p.A (a manufacturer of industrial machines) in 1994 and continued as a Management Consultant at Andersen Consulting. Votta commenced service at the Business Development Department of New Holland in 1998 and was appointed as Assistant General Manager in charge of Business Control at Türk Traktör ve Ziraat Makineleri A.Ş. and New Holland Trakmak Traktör ve Ziraat Makineleri Ticaret A.Ş. in 1998, where he worked as the CFO during 2006-2010. Votta has been in the position of General Manager since April 2010. Ali Aydın Pandır Ali Aydın Pandır received his undergraduate degree from the İstanbul Technical University Department of Mechanical Engineering. He started his career at Tekersan Jant Sanayi and served as Project Engineer at Koç Holding between 19821984 and Production Manager at Otokar between 1984-1989 at Otokar. He worked for General Motors between 19901993, and fro Opel-Germany between 1993-1996, he completed his carreer in foreign countries by serving as CEO and General Manager of General Motor’s plants in Indonesia, Singapore and China between 1996-2006. He served as the CEO and board member of Tofaş Türk Otomobil Fabrikaları during 2006-2012 period, then he appointed as the Head of Turkey at Fiat. Currently serving as a Member of the Board of Directors of Tofaş A.Ş. and independent board member pf Türk Prysmian Kablo ve Sistemleri A.Ş., Pandır is also the Chairman of the Board of Directors of Ereğli Demir ve Çelik Fab. T.A.Ş.
the Engineering Faculty of Uludağ University. Andreas Christian Schröter Andreas C. Schröter graduated from the Besgische University Economics Department in Wuppertal, Germany and completed his professional education as a banker at Deutsche Bank AG in Cologne. He joined the Westdeutsche Landesbank AG in 1983 and worked in the Human Resources Department for several years. In 1991 he was appointed as the President in charge of Human Resources for Germany. He was transferred to the West LB New York Branch Office in 1998 and worked as a Client Relations Manager. During 2003-2014, he worked as the General Manager of the West LB İstanbul Branch Office and President responsible for Turkey. In addition to his regular assignments, he also served as Global President in charge of Business Management and Development at West LB AG (renamed Portigon AG in July 2012) from 2011 to 2013. In addition, he served as a Member of the Board of Directors of the German-Turkish Chamber of Industry and Commerce from 2009 to 2013 and as a Member of the Board of Directors of the Compagnie Belge de la West LB S.A. (renamed CBAL S.A.) from 2011 to 2013. Schröter has been the Director of the Unit for the Origination of Turkey at the Portigon Head Office in Düsseldorf since November 2014.
Haşim Savaş Arıkan Haşim Savaş Arıkan graduated as a Mechanical Engineer from the Robert College School of Engineering in 1965. He was born in İstanbul in 1942. He obtained his Master’s degree from the Middle East Technical University. He joined TOFAŞ Türk Otomobil Fabrikası in 1970 and worked as the Chief of the Press Workshop in 1972, as Assistant Production Manager in 1977, as Assistant Maintenance Manager in 1979, as Manager of Maintenance and Facilities in 1981, as Manager of Technical Services in 1983, as Assistant General Manager (Operations) in 1995 and Production Director in 2001. Arıkan retired from TOFAŞ in 2002. Arıkan is also one of the founders of the Engineering and Architecture Faculty Technology Foundation, founded at Uludağ University in 1996 and currently serves on the Board of Directors as the Second President of the foundation. Arıkan is currently working as a management consultant to Deren Ambalaj Sanayi ve Ticaret A.Ş. and a serves on the superior advisory committee of the Bursa Chamber of Mechanical Engineers, the advisory committee of USİGEM and the board of directors of the Bursa Disaster Society. Being one of the 71 members of the UİG (National Innovation Initiative), which was founded by Sabancı University and TÜSİAD in 2003, Arıkan gives lectures on “innovation” as part of the technology course at 103
TürkTraktör, 2014 Annual Report
REMUNERATION POLICY FOR TOP MANAGEMENT AND BOARD MEMBERS’ This policy document identifies the remuneration system and practices concerning our board members’ and top management whose have administrative responsibility as per the CMB regulations. Fixed compensation for all board members’ is determined in general assembly meetings every year. Payment for executive board members shall be done within the context of below given policy that has been determined for top managers. Performance based compensation is not applied for the independent board members remuneration. Payment to board members’ shall be done by considering their task period from inception to expiry date in pro rata basis. The expenses (transportation, telephone, insurance, etc…) of which covered by the board members due to their contribution to company, can be met by the company. The top management compensation is comprised of two components; fixed and performance based. Top management’s fixed compensation is determined in parallel with international standards and legal obligations by considering macroeconomic data in the market, remuneration policies prevalent in the market, corporate growth and long term targets and the position of the managers’. Top management bonuses are calculated according to bonus based, company performance and personal performance. The information concerning the mentioned criteria is summarized below. Bonus Based: The base of bonus updated at the beginning of every year and can be variable according to the size of managers’ position. While updating the base of the bonuses, the top management bonus policies prevalent in the market shall be considered. Company Performance: The company performance is obtained by evaluating period end values of the financial and operational (market share, export, foreign market activities, efficiency, etc…) targets given at the beginning of every year. The sustainability of the success, covering improvements compared to previous years is the overemphasized principles considering determining the company targets. Personal Performance: Targets concerning employee, customer, process, technology and long term strategy are considered together with the company targets to determine the personal performance. While evaluating the personal performance, in line with company performance, it is paying regard to long term sustainable improvement principle excluding the financial areas, 104
In case the top managers leave the company, post-employment benefits may be paid by taking into consideration of their working period as top manager, their contribution to the company, last target bonus before the leaving date, salaries and the bonuses paid within the last year. Total amount of remuneration of which paid to top management and board members’ within the year, and determined as per the above given principles, shall be presented to the information and/or approval of shareholders in the following general assembly in line with the legislation.
LEGAL EXPLANATIONS
Period of Report 01.01.2014 – 31.12.2014 The name of Company Türk Traktör ve Ziraat Makineleri A.Ş. The Registry of Commerce – Trade Registry Number Ankara Ticaret Sicili Müdürlüğü – 5347 Central Registry System Number 0876005471300012 Contact Information of the Headquarters Adress: Güvercin Yolu No: 111-112 06560 Gazi Yenimahalle Ankara Tel : 0 312 233 33 33 Contact Information of the Branches Erenler Plant: Adress : Bekirpaşa Mahallesi Kozluk Caddesi No:130 Erenler Sakarya Tel : 0 264 289 89 89 Akyurt Branch: Adress : Büğdüz Mahallesi No: 286/3 Akyurt Ankara Tel : 0 312 847 52 77 Ostim Branch: Adress : 1212. Sokak No: 2-4-6-8 ve 1213. Sokak No: 1-3-5-7 Ostim Ankara Tel : 0 312 233 33 33 İzmir Branch: Adress : KOSBI Ansızca Sanayi Sitesi No:327/A-B-C-D Kemalpaşa İzmir Tel : 0 312 233 33 33 web site www.turktraktor.com.tr Manufacturing Capacity Our Company’s annual manufacturing capacity is 50,000 units of tractor with the Ankara and Erenler Plants. (In case of working in double shifts for 5 days a week as per the Chambers of Industry standard). Main Factors Affecting The Company’s Performance, Important Changes Occurred In The Company’s Operating Area and Policies Applied By The Company Against These Changes, Investment and Dividend Policy Applied to Strengthen of Company’s Performance In the related period, there are not any important changes in the operating area of the company.
Employee and Workers’ Movements and Collective Bargaining Applications The personnel number of our company is 3,040 by 31 December 2014. No disagreement or worker movement observed during the period in terms of activities. Our company is subject to collective group agreement signed between Turkish Metal Industry and MESS. Since the Union and Collective Bargaining Agreement Law numbered 6356 has been entered into force on 07.11.2012 and the acquisition of authorization has been served; the collective agreement signed between Turkish Metal Industry and MESS. The conditions concerning the collective group agreement for the period of 01.09.2014-31.08.2016 was announced on 16.12.2014. Within the legal regulations our staff’s social rights are regularly and periodically provided. Reference to the the CMB communiqué with serial no II.14.1 the senior indemnities liability is TL 8,986,321 at the end of period. The Qualification and Amount of the Issued Capital Market Instruments There is not any issued capital market instruments in the related period. Investment Activities In the year 2014, our Company invested total amount of TL 234,219,964. TL 23,567,559 of total investment amount is coming from the capitalized development costs. In 2014, our Company created the amount of TL 36,794.678 of tax asset within the scope of incentivized investment. As of 31.12.2014, total 279,243,226.91 TL has been spent for Erenler Plant investment including the land purchases and total land purchases reached to 396,442.79 m2. Development of Financial Sources and Policies Implemented by the Company in This Development Framework The Company provided its financial needs occurred in the period of 01.01.2014 – 31.12.2014 by using the bank loan. Donations The total amount of TL 4,400,318 donations to the foundations and associations are done in the year 2014. Information about Significant Administrative Sanctions and Penalties on the Company and Board Members due to Practices, which are contrary to the provisions of the legislation, if any There are not any administrative sanctions or penalties for the Company and Board Members due to practices, which are contrary to the provisions. 105
Legal Explanations
Information about Considerable Suits Filed Against the Company and Possible Consequences Thereof There is not any significant sue against the company which could affect our Company’s financial situation and activities. Information about Amendments of The Legislation, Which Could Significantly Affect Activities of the Company There is not any amendment of the legislation, which could significantly affect activities of the company. The Conflicts of Interest Occurred Between the Company and the Corporations Providing Investment Consulting and Rating Services and Information Related to the Taken Measures to Prevent these Conflicts of Interest The investment consulting service is not taken. The Corporate Governance Rating service is taken but the conflict of interest does not occur with the company which provides this service. Organizational Changes within the Year Mr. Memet İlkan Kamber, who was selected as the board member nominated by A Group shareholders in the Ordinary General Assembly held on March 24, 2014, resigned from his Board membership as of July 1, 2014, due to his appointment to another Koç Group company. Pursuant to the decision taken at the Board of Directors’ meeting on June 25, 2014, Mr. Ahmet Canbeyli was appointed a Board member to serve until the next Ordinary General Assembly Meeting. Mr. Memet İlkan Kamber, who was serving in the company as CFO, left his poisiton as of July 1, 2014, due to his appointment to another Koç Group company. Pursuant to the decision taken at the Board of Directors’ meeting on June 25, 2014, Mr. Ahmet Canbeyli was appointed CFO as of July 1, 2014, to replace Mr. Memet İlkan Kamber. Mr. Friedrich Wirleitner, who was serving in the company as Assistant General Manager in charge of Product and R&D, left his position in our company as of September 30, 2014, since he was appointed to a different position at CNHI Group. Pursuant to the decision taken at the Board of Directors’ meeting on October 1, 2014, Mr. Ali El İdrissi El Bouzidi was appointed as Assistant General Manager in charge of Product and R&D as of October 1, 2014, to replace Mr. Friedrich Wirleitner. Mr. Mustafa Siyami Eser, who was serving in the company as Assistant General Manager in charge of Production, left his position in our company as of April 30, 2014, due to his retirement. Pursuant to the decision taken at the Board of Directors’ meeting on April 28, 2014, Mr. Nebi Doğan Özdöngül was appointed Assistant General Manager in charge of Production as of May 1, 2014, to replace Mr. Mustafa Siyami Eser.
TürkTraktör, 2014 Annual Report
Social Rights of Employees, Vocational Education and Other Informations about Company Activities Which Create Social and Environmental Results Social Rights Our employees have some rights such as fuel allowance, paid vacation allowance, financial help for marriage, maternity benefit, assistance in case of death, military service support, child support, educational support, shoes support, towel benefit (big once a year, small twice a year), soap (twice a year), food, services and resting areas. TürkTraktör carries out social responsibility and sponsorship projects in several areas in the sector as we add value to the country and society in general. Through these social responsibility projects, the Company aims to contribute in both a material sense and by encouraging employees to take part in these projects voluntarily and become part of them. TürkTraktör reaches out to the families of employees to increase their awareness of social issues and to encourage more personal involvement. With social responsibility projects focusing on education, the Company contributes to the development of young people as it instills in them a sense of social responsibility. Information about the Extraordinary General Assembly Meeting, If Held During the Year An Extraordinary General Assembly Meeting was not held during the year. Implementation of the General Assebly Meeting’s Resolutions The resolutions taken at the Ordinary General Assembly Meeting held on 24.03.2014, have been implemented. Informations related to shareholders, who have dominance in management, board members, senior directors which have administrative liability and spouses and relatives of these people up to the second degree to carrying out activities that may result in conflict of interest with the company and the affiliated partnerships and to competing Within the framework of articles 395 and 396 of the Turkish Commercial Law, it is need to be getting permission from the General Assembly. Key Indicators and Ratios Financial statements are prepared and audited in accordance with the Capital Markets Board Communiqué on Principles of Financial Reporting in Capital Markets serial no II-14.1 (“Communiqué”), Turkish Accounting Principles/ Turkish Financial Reporting Standards (“TAP/TFRS) and the recommended formats of the CMB.
B a l a nce Shee t ( TL )
31 Decemb er 201 4
31 Decemb er 2013
Cur r en t asse t s
1,31 9,1 9 0,5 0 8
1,0 85,7 1 3,6 0 1
Non- cur r en t asse t s
59 4,856,3 41
4 0 8,8 99,59 0
Tot al asse t s
1,914,0 4 6,8 49
1,49 4,61 3,1 91
Cur r en t liabili ties
7 37,87 9,961
3 85,8 1 1,95 0
Non- cur r en t liabili ties
47 1,3 0 4,17 3
365,4 83,5 1 9
Shar eholder s’ equi t y
7 0 4,8 62,7 1 5
743,317,7 22
T o ta l l i a bil i t ie s
1,91 4 ,0 4 6,8 49
1, 49 4 ,613,191
Income S tat emen t ( TL )
31 Decemb er 201 4
1 Decemb er 2013
Sales (ne t )
2,7 23,317,8 0 9
2,175,31 9,8 8 1
Cos t of sales (-)
(2,23 4,163,5 02)
(1,7 03,022,95 0)
Gr oss pr of i t
4 8 9,1 5 4,3 07
47 2,296,931
Oper ating E x penses / O ther Oper ating Income / E x penses
(1 92,41 1,9 4 4)
(147,23 8,4 41)
Oper ating pr of i t
296,742,363
325,05 8,49 0
In v es tmen t Income / E x penses F inancial Income / E x penses
(3,295,47 8)
(4,8 03,91 9)
P r of i t B ef or e Ta x ation on Income
293,4 4 6,8 85
320,25 4,57 1
Ta xes on Income
(32,359,61 3)
(4 0,3 4 8,632)
Ne t P r of i t
261,0 87,27 2
27 9,9 05,939
Imp orta n t R at ios
201 4
2013
Gr oss P r of i t Mar gin
1 8.0 %
21.7 %
Oper ating P r of i t Mar gin
1 0.9 %
14.9 %
EB I T D A Mar gin
1 2.1%
16.1%
Ne t P r of i t Mar gin
9.6 %
1 2.9 %
Re tur n on A sse t
14%
19%
Re tur n on Equi t y
37 %
38%
Cur r en t Ratio
1.8
2.8
Quick Ratio
1.2
1.2
Legal Disclaimer: This annual report (report) which includes the Board of Directors’ Report concerning the activities and accounts of the year 2014, Financial Statements and Independent Audit Report, has been prepared in line with the legal regulation in order to present at Türk Traktör ve Ziraat Makineleri A.Ş. (the company) Ordinary General Assembly Meeting that will be held on Wednesday 18.03.2015 at the address of company’s headquarter, Güvercin Yolu No:111 06560 Gazi Yenimahalle / ANKARA. This report has been prepared just for the purpose of informing the shareholders, shall not intended to provide a basis for any investment decision. The report includes the forward-looking views and a figure that reflects the Company’s management assumptions for future events and may be differentiates depending on the assumptions and variables constituted realizations and estimated figures. Accordingly, neither the company nor any of its board members, consultants nor employees shall have any liability whatsoever for any information or communication transmitted within the scope of this report or the information contained in this report are not included in an information-based or as a result of incurred losses and loss of a person directly or indirectly. At the time of preparation of this report, all of the information is believed to be accurate; the company shall not accept any responsibility for inaccuracies that may occur typographically and at printing stages.
106
107
TürkTraktör, 2014 Annual Report
THE AMENDMENTS TO THE ARTICLES OF ASSOCIATION Based on the permissions of the Turkish Republic Prime Ministry Capital Markets Board dated 03.03.2014 and no 438-2169, 10.02.2014 and no 290-1383 and the permission of the Domestic Trade General Directorate division of the Turkish Republic Ministry of Customs and Trade dated 20.02.2014 and no. 1365-1021, the proposal of making amendment to the 3rd article entitled “Purpose and Scope”, 6th article entitled “Share Capital”, 8th article entitled “Transfer of Shares and Establishment of Rights of Usufruct on Shares”, 12th article entitled “Daily Management of the Company and the Executive Committee” of the company’s Articles of Association approved in Ordinary General Assembly dated 24.03.2014. The old and new texts of relevant articles are published on the company web site under the investor relations part.
108
THE COMMITMENT REPORT PREPARED WITHIN THE CONTEXT OF ARTICLE 199 OF TURKISH COMMERCIAL LAW Pursuant to the article 199 of Turkish Commercial Code no. 6102 dated 1 July 2012, the board of directors of Türk Traktör ve Ziraat Makineleri A.Ş. shall prepare a report concerning the relations of company with the parents and associated companies, in the first three months of the activity year and the conclusion part of this report shall be given on the Annual Report. The necessary explanations about the transactions done by Türk Traktör ve Ziraat Makineleri A.Ş. with the related parties are given in the financial report’s note number 22. In the report dated 23.02.2015 prepared by the Board of Directors of Türk Tarktör ve Ziraat Makineleri A.Ş., it is said that Board of Directors of Türk Traktör ve Ziraat Makineleri A.Ş. shall conclude that; in 2014, within all the transactions made between the controlling shareholders of Türk Traktör ve Ziraat Makineleri A.Ş. and the subsidiaries of the controlling shareholders, according to terms and conditions known by us at the moment when the transaction is made or the measure is taken or the measure is avoided to be taken, an appropriate return performance is acquired in every procedure, and that there is no measure taken or avoided to be taken that can damage the company, and that there is no procedure or measure requiring a balancing in this regard.
109
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INDEPENDENT BOARD OF DIRECTORS MEMBERS’ DECLARATIONS FOR INDEPENDENCY
110
111
TürkTraktör, 2014 Annual Report
TÜRK TRAKTÖR VE ZİRAAT MAKİNELERİ A.Ş. AGENDA OF ORDINARY GENERAL ASSEMBLY DATED 18.03.2015 1. Opening and Election of the Presidential Board, 2. Reading, discussing and approving the Annual Report of 2014 prepared by Company’s Board of Directors, 3. Reading the summary of Independent Audit Report related to the accounting year of 2014, 4. Reading, discussing and approving the Financial Statements related to the accounting period of the year 2014 5. Approving the change in board membership during the year pursuant to 363rd article of Turkish Commercial Code 6. Acquitting the members of the Board of Directors due to the activities of the company for the year 2014, 7. Full adoption, acceptance by certain changes, or rejection of the Board of Directors’ proposal with respect to distribution of the profit for the year 2014 prepared in line with dividend policy and date of such profit distribution,
14. Granting of permission to shareholders having managerial control, shareholder board members, top managers and up to the second degree blood or affinity relatives in accordance with articles 395 and 396 of Turkish Commercial Code, Capital Markets Board legislation and obtaining information to the shareholders concerning the transactions done in the year 2014 in line with Corporate Governance Principles, 15. Wishes.
DIVIDEND PROPOSAL According to our financial statements for the fiscal period 1 January 2014 to 31 December 2014, the Company’s net income is TL 261,087,272. These financial statements were prepared under International Financial Reporting Standards, and audited by Güney Bağımsız Denetim ve S.M.M.M. A.Ş. (a member of Ernst&Young Global Limited). Our proposal for profit distribution – prepared with due regard for profitability and cash status – is stated below. It has been resolved to distribute dividend as shown below in line with Capital Markets Legislation, 19th article of Articles of Association and Dividend Policy approved by the shareholders at the general assembly on 24.03.2014. Distribute first dividend to the shareholders TL 159,292,554.20 Distribute second dividend to the shareholders TL 40,707,445.80 And to allocate 2nd Type Legal Reserve TL 19,733,155 It has been resolved to pay TL 200,000,000 in cash which is equal to the first and second dividend to be distributed to the shareholders. It has been resolved to determine the dividend payment date as 25th of March and present to the approval of General Assembly held on 18.03.2015. Thereby, the dividend will be distributed in cash; • to the resident taxpayer shareholders and non-resident taxpayer shareholders obtaining dividend income through an office or a permanent representative in Turkey as gross (=net) 3.74749386 kr for each share nominal 1 kr (374.749386%) and, • to foreign-based taxpayer shareholders; as gross 3.74749386 kr (3.56011917 kr net) for each share nominal 1 kr (356.011917%) • to the rest of our shareholders as gross 3.74749386 kr (3.18536978 kr net) for each share nominal 1 kr (318.536978 %). The Dividend Distributed within Last 3 Years and Ratios Di v idend
2012
2013
201 4
A moun t
20 0,0 0 0,0 0 0
3 0 0,0 0 0,0 0 0
20 0,0 0 0,0 0 0
Ratio (%)
74.6
1 07.2
76.6
8. Selecting the board members and determination of the task period, selecting the independent board members 9. Pursuant to Corporate Governance Principles, informing the Shareholders about the remuneration policy towards the Members of the Board of Directors and top managers and about the payments made within the scope of this policy and approving them, 10. Determination of monthly gross remunerations of Board of Directors’ members, 11. Approval of the selection of the Independent Auditing Company proposed by the Board of Director in connection with the provisions of Turkish Commercial Code and Capital Markets Board, 12. Obtaining information to the shareholders about the donations granted in 2014 and determination the upper limit for donations in 2015, 13. Obtaining information to the shareholders about the guarantee, pledge, mortgage and bails given in favor of third parties by the company within the context of Capital Markets Board regulation, 112
113
TürkTraktör, 2014 Annual Report
PROFIT DISTRIBUTION TABLE
A B O U T T H E R AT E O F PA I D D I V I D E N D
GROUP
Di v idend Dis t r ib u t ion Ta b l e of T ür k T r a k t ör v e Zir a at M a k inel er i A .Ş. f or 201 4 ( TL ) 1. P aid- Up / Issued C api tal
53,369,0 0 0.0 0
2. Total L egal Reser v e Fund ( A ccor ding to legal r e cor ds)
143,9 02,267.03
Inf or mation r elating to pr ef er ences, if an y on di v idend dis tr ibu tion accor ding to ar ticles of asso ciation
None
A ccording to C MB
A ccording to L egal R ecords (L R )
3.
P rofit for the P eriod
293,4 4 6,8 85.0 0
233,0 0 4,25 1.0 1
4.
Ta x es Payable ( - )
32,359,61 3.0 0
41,0 03,1 5 4.39
261,0 87,27 2.0 0
1 92,0 0 1,0 96.62
1 92,0 0 1,0 96.62
5.
Net P rofit for the P eriod ( = )
6.
L osses from P revious Y ears ( - )
7.
General L egal R eserve F und ( - )
8.
NE T DIS T R IB U TA B L E P ROF I T ( = )
261,0 87,27 2.0 0
9.
D onations of the Y ear ( + )
4,4 0 0,31 8.3 4
1 0.
Net Distributable P rofit of the P eriod Including D onations
265,4 87,59 0.3 4
1 92,0 0 1,0 96.62
P rimary Dividend to Shareholders
1 59,292,55 4.20
2,6 6 8,45 0.0 0
1 1.
T O TA L DIS T R IB U T ED DI V IDEND A MOUN T
C A SH ( T L )
Ne t
B ONUS SH A R E ( T L )
T O TA L DIS T R IB U T ED DI V IDEND A MOUN T / NE T DIS T R IB U TA B L E P ROF I T R AT E (%)
DI V IDEND COR R E SP ONDING T O ONE SH A R E OF 1 T L NOMIN A L VA LUE
A MOUN T ( T L )
R AT E (%)
A
75,0 0 0,0 0 0
28.7 3
3.74749 4
374.7493 8 6
B
7 1,25 0,0 0 0
27.29
3.56 0 1 1 9
356.0 1 1 917
C
42,5 0 0,0 0 0
16.28
3.1 8537 0
31 8.53697 8
T O TA L
1 8 8,75 0,0 0 0
7 2.29
-
-
- C ash - B onus Share - T otal
1 2.
Dividends Paid to P rivileged Shareholders O ther Distributed Dividend - T o the Members of the B oard
1 3.
- T o the Employees - T o the O thers W ho are not Shareholder
14.
Dividend Distributed to the O wners of Dividend R ight C ertificate
1 5.
Secondary Dividend to Shareholders
4 0,7 07,4 45.8 0
17 2,1 20,5 87.83
16.
General L egal R eserve F und
1 9,7 33,1 55.0 0
17,21 2,05 8.7 8
17.
S tatutory R eserves
1 8.
Special R eserves 41,35 4,1 17.0 0
0.0
1 9.
20.
E XC E SS R E SERV E S O ther R esources that A ssumed to be Distributed
25,21 0,962.17
- F rom E xcess R eserves
25,21 0,962.17
- F rom O ther C apital R eserves - F rom L egal R eserves 21.
General L egal R eserve F und for O ther R esources that A ssumed to be Distributed
2,521,0 96.22
(1) There is not privileged right for dividend. (2) A Group shares are holding by the resident taxpayer shareholders, thus 0% withholding tax is calculated. (3) Foreign-based taxpayer shareholder CNHI Österreich is holding B group shares. Due to the agreement to avoid double taxation between Austria and Turkey, withholding tax is calculated 5%. (4) %15 withholding tax calculated for the remaining C group share owners.
114
115
TürkTraktör, 2014 Annual Report
TÜRK TRAKTÖR VE ZİRAAT MAKİNELERİ A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF FINANCIAL STATEMENTS AT DECEMBER 31, 2013 TOGETHER WITH INDEPENDENT AUDITOR’S REPORT (Originally Issued in Turkish)
116
117
INDEPENDENT AUDITOR’S REPORT ABOUT FINANCIAL STATEMENT
TürkTraktör, 2014 Annual Report
CONTENTS INDEPENDENT AUDITOR’S REPORT ABOUT FINANCIAL STATEMENT........................................................................ 115 - 116 STATEMENTS OF FINANCIAL POSITION.................................................................................................................................... 117 - 118 STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME...................................................................... 119 STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY........................................................................................................... 120 STATEMENTS OF CASH FLOWS...................................................................................................................................................... 121 - 122 EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS............................................................................................... 123 - 159
118
119
STATEMENTS OF FINANCIAL POSITION FOR YEAR ENDED AT DECEMBER 31, 2014 TürkTraktör, 2014 Annual Report
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
No t es
Cur r en t per iod Audi t e d
P r ior per iod A udi ted
Decemb er 31, 201 4
December 31, 20 1 3
ASSETS CURRENT ASSETS C ash and cash equi v alen t s
1.319.19 0.50 8
1.0 85.7 1 3.6 0 1
3
269.229.0 23
20 9.322.936
5
362. 4 4 2.8 0 0
282.1 14.924
22
9 8. 4 4 6.05 4
8 0.7 97.7 29
6
4 36.283.247
41 3.39 8.55 8
5.032.6 05
416.76 8
Tr ade r e cei v ables:
• Trade receivables, other parties • Due from related parties In v en tor ies P r epaid e x penses O ther cur r en t asse t s
9
1 47.756.7 7 9
99.662.6 8 6
59 4 .856.3 41
4 0 8.8 99.59 0
5
-
25 0.659
357. 419
355.1 02
7
45 4 .15 4 .7 23
274.1 93.297
In tangible asse t s
8
93.76 0.0 81
7 7.296.20 6
P r epaid e x penses
10
832.613
20.26 0.7 97
D ef er r ed ta x asse t s
20
NON- CURRENT ASSETS Tr ade r e cei v ables:
• Trade receivables, other parties O ther r e cei v ables:
• Other receivables, other parties P r oper t y, plan t and equipmen t
TOTAL ASSETS
45.751.505
36.5 43.529
1.91 4 .0 4 6.8 49
1.49 4.61 3.1 91
The financial statements prepared as at and for the period ended December 31, 2014 have been approved by the Board of Directors on February 16, 2015 and was signed by the General Manager Marco Votta and Vice President of Financial Affairs Ahmet Canbeyli on behalf of the Board of Directors.
The accompanying notes form an integral part of these financial statements. 120
121
STATEMENTS OF FINANCIAL POSITION FOR YEAR ENDED AT DECEMBER 31, 2014
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED AT DECEMBER 31, 2014
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
No t es
Cur r en t per iod Audi t e d
P r ior per iod A udi ted
Decemb er 31, 201 4
December 31, 20 14
737.879.961
385.811.950
121.626.528
14.702.994
TürkTraktör, 2014 Annual Report
Cur r en t per iod Audi t e d
P r ior per iod Audi t e d
No t es
J a nua ry 1 Decemb er 31, 201 4
J a nua ry 1 Decemb er 31, 2013
Sales
14
2.723.317.809
2.175.319.881
Cost of sales (-)
14
(2.234.163.502)
(1.703.022.950)
489.154.307
472.296.931
LIABILITIES CURRENT LIABILITIES Short-term financial liabilities Short term portion of long term financial liabilities
4 4
94.964.073
-
Trade payables:
• Trade payables, other parties
5
403.905.945
276.743.088
• Due to related parties
22
44.766.757
29.346.571
Employee benefit obligations
12
16.273.738
10.958.597
Other payables:
• Other payables, other parties
11.740.493
7.669.767
Government incentives and aids
3.183.083
3.242.469
11.859.067
11.299.957
-
8.524.578
Deferred income
9
Provision for taxation on income Short-term provisions:
• Short-term provision for employee benefits
11
1.488.479
979.368
• Other short-term provisions
11
28.071.798
22.344.561
471.304.173
365.483.519
4
441.660.937
333.887.601
• Long-term provision for employee benefits
11
8.986.321
15.435.367
• Other long-term provisions
11
20.656.915
16.160.551
704.862.715
743.317.722
NON-CURRENT LIABILITIES Long-term financial liabilities Long-term provisions:
SHAREHOLDERS’ EQUITY Parent’s equity
Marketing, selling and distribution expenses (-)
15
(124.101.198)
(97.248.052)
General administrative expenses (-)
15
(56.382.394)
(40.764.494)
Research and development expenses (-)
15
(11.928.352)
(9.225.895)
Other operating income
17
563.688.910
401.066.375
Other operating expenses (-)
17
(558.977.074)
(376.474.610)
301.454.199
349.650.255
OPERATING PROFIT Income from investment activities Expenses from investment activities (-)
63.135.514
53.956.127
19
(72.833.800)
(83.550.577)
PROFIT BEFORE TAXATION ON INCOME Taxation on income (-)
20
Deferred tax income
20
NET PROFIT FOR THE YEAR Non-controlling interest Equity holders of the parent
(55.246.090)
9.322.420
14.897.458
261.087.272
279.905.939
-
-
261.087.272
279.905.939
572.165
(472.892)
(114.444)
94.578
Other comprehensive income/expense not to be reclassified to profit or loss:
53.369.000
Actuarial loss arising from employee benefits
39.014.356
39.014.356
Deferred tax effect
Merger reserve
(5.569.000)
(5.569.000)
Other comprehensive income/expense after tax
Restricted profit reserves
143.902.267
114.169.112
TOTAL COMPREHENSIVE INCOME Earnings per share (TL)
21
457.721
(378.314)
261.544.993
279.527.625
0,0490
0,0524
(250.526)
Retained earnings
212.851.625
262.678.841
Net profit for the period
261.087.272
279.905.939
1.914.046.849
1.494.613.191
The accompanying notes form an integral part of these financial statements.
320.254.571
(41.682.033)
Other comprehensive income/ (expense)
53.369.000
Provisions, contingent assets and contingent
293.446.885
Attributable to:
13
TOTAL LIABILITIES
(145.224)
18
13
207.195
343.990
(60.118)
Financial income
Adjustments to share capital
• Actuarial gain/loss arising from defined benefit plans
1.751.090
Financial expenses (-)
Paid-in share capital
Other comprehensive income/expense not to be reclassified to profit or loss:
122
GROSS PROFIT
11
The accompanying notes form an integral part of these financial statements. 123
CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEAR ENDED AT DECEMBER 31, 2014
STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED AT DECEMBER 31, 2014
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
Cur r en t P er iod Audi t e d 201 4
Other comprehensive income or loss items not to be reclassified to profit or loss Paid-in share capital January 1, 2014 Transfers
Adjustment to share capital
Merger reserve
Actuarial gain/ (loss) fund arising from benefit plans
Notes
Restricted reserves allocated from profit
Retained earnings
Net profit for the period
Total shareholders’ equity
53.369.000
39.014.356
(5.569.000)
(250.526)
114.169.112
262.678.841
279.905.939
743.317.722
-
-
-
-
29.733.155
250.172.784
(279.905.939)
-
-
-
-
-
-
(300.000.000)
-
(300.000.000)
Total comprehensive income
-
-
-
457.721
-
-
261.087.272
261.544.993
53.369.000
39.014.356
(5.569.000)
207.195
143.902.267
212.851.625
261.087.272
704.862.715
2014
2013 (26.439.655)
Net profit for the period
261.087.272
279.905.939
Adjustments to reconcile net income
112.224.667
36.229.873
Amortization and depreciation
16
34.062.179
24.626.643
Provision for impairment on inventories
6
1.441.643
5.748.166
Provision for employee termination benefits
11
(437.936)
8.461.689
Provision for doubtful receivables
17
-
5.169.012
10.223.593
5.983.439
18, 19
31.619.562
1.623.477
32.359.613
40.348.632
(1.690.971)
(198.766)
Expense accruals Interest income and expense Tax expense
20
Gain/ loss from sales of property plant and equipment Foreign exchange change effect
4.646.984
(55.532.419)
(8.903.777)
(87.569.240)
Change in trade receivables
(77.647.217)
(44.901.578)
Change in due from related parties
(20.298.504)
16.791.744
Change in inventories
(25.311.783)
(116.466.685)
Change in other current assets
(48.094.093)
1.739.440
Changes in working capital Other comprehensive income or loss items not to be reclassified to profit or loss Paid-in Share capital As of January 1, 2013 previously reported Change in accounting policies (2.2) As of January 1, 2013 - restated
53.369.000
Adjustment to share capital
39.014.356
Merger reserve
(5.569.000)
Actuarial gain/ (loss) fund arising from benefit plans
-
Restricted reserves allocated from profit
94.435.957
Retained earnings
214.342.169
Net profit for the period
268.197.615
Total shareholders’ equity
663.790.097
Change in other receivables
(2.317)
(16.864)
Change in prepaid expenses
14.812.347
(19.984.106)
Change in due to related parties
15.517.588
11.881.392
Change in trade payables
127.576.834
67.166.685
Change in deferred income
87.335
(3.306.031)
Change in other liabilities
4.070.726
2.784.982
Change in short term provision for employee termination benefits Change in payables for employee termination benefits -
-
-
127.788
-
(68.377)
(59.411)
-
Employee termination benefits paid
11
Net cash provided by operating activities 53.369.000
39.014.356
(5.569.000)
127.788
94.435.957
214.273.792
268.138.204
663.790.097
Transfers
-
-
-
-
19.733.155
248.405.049
(268.138.204)
-
Dividends paid
-
-
-
-
-
(200.000.000)
-
(200.000.000)
Total comprehensive income/ (expense)
-
-
-
(378.314)
-
-
279.905.939
279.527.625
December 31, 2013
53.369.000
39.014.356
(5.569.000)
(250.526)
114.169.112
262.678.841
279.905.939
743.317.722
P r ior P er iod Audi t e d 2013
(15.873.835)
A.Cash flows from operating activities
Dividends paid
December 31,2014
TürkTraktör, 2014 Annual Report
Dividends paid Interest paid Interest received Tax paid
13
509.111
263.512
5.315.141
(1.018.415)
(5.438.945)
(2.503.316)
364.408.162
228.566.572
(300.000.000)
(200.000.000)
(39.099.280)
(12.622.878)
9.023.894
8.832.078
(50.206.611)
(51.215.427)
The accompanying notes form an integral part of these financial statements. 124
125
STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED AT DECEMBER 31, 2014
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AT DECEMBER 31, 2014
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
Cur r en t P er iod Audi t e d 201 4 Notes B. Cash flows from investing activities Proceeds from sales of property, plant and equipment and intangible assets Payments for purchases of property, plant and equipment and intangible assets Proceeds from government grants C. Cash flows from financing activities
P r ior P er iod Audi t e d 2013
2014
2013
(228.384.117)
(172.973.814)
3.126.226
1.247.282
(231.922.734)
(175.773.794)
412.391
1.552.698
306.581.636
6.856.433
Proceeds from bank borrowings
759.996.287
478.510.949
Repayment of bank borrowings
(453.414.651)
(471.654.516)
Net increase/ (decrease) in cash and cash equivalents before currency translation differences (A+B+C)
62.323.684
(192.557.036)
D. Currency translation differences (net)
(2.726.062)
25.335.514
Net increase/ (decrease) in cash and cash equivalents (A+B+C+D)
59.597.622
(167.221.522)
E. Cash and cash equivalents at the beginning of the period
3
208.997.296
376.218.818
Cash and cash equivalents at the end of the period (A+B+C+D+E)
3
268.594.918
208.997.296
NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS Türk Traktör ve Ziraat Makineleri A.Ş. (the “Company”) was established in 1954 in Ankara, as Minneapolis Moline Türk Traktör ve Ziraat Makineleri A.Ş. to undertake the manufacturing and trade of farm tractors, harvesters and other agricultural machinery and equipment. The name of the Company was changed as Türk Traktör Ziraat Makineleri A.Ş. in 1968 upon the purchase of 25% of the shares held by Ege Makina ve Ticaret A.Ş., a group company of the Koç Holding A.Ş. (“Koç Holding”). As of December 31, 2014, major shareholders of the Company are Koç Holding and CNHI Osterreich GmbH (“CNHI Osterreich”) (Note 13). The number of personnel working within the Company as of December 31, 2014 is 3.040 (Permanent: 2.572, temporary: 468) (2013: 2.572 (Permanent 2.206, temporary 366)). The Company conducts marketing and selling activities in the domestic market, through its 136 sales dealers, 96 spare part dealers and 10 construction equipment dealers (2013: 129 sales dealers, 95 spare part dealers). The Company signed an import and distribution agreement providing after-sales services for activities such as domestic oriented sales and marketing for CNHI International SA, New Holland and Case branded imported construction equipment. The Company is registered in Turkey in the following address: Güvercin Yolu No: 111-112 06560 - Gazi Ankara As of December 31, 2014, the free float of the Company whose shares are traded in the Borsa Istanbul (“BIST”) is 24,77% (2013: 24,66%) (Note 13). NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS 2.1. Basis of presentation The main accounting policies used for preparing the Company’s financial statements are stated below: Principles governing the preparation of financial statements The financial statements and disclosures have been prepared in accordance with the communiqué numbered II-14,1 “Communiqué on the Principles of Financial Reporting In Capital Markets” (the Communiqué) announced by the Capital Markets Board (“CMB”) (hereinafter will be referred to as “the CMB Accounting Standards”) on June 13, 2013 which is published on Official Gazette numbered 28676. In accordance with article 5th of the CMB Accounting Standards, companies should apply Turkish Accounting Standards/ Turkish Financial Reporting Standards (“TAS/ TFRS”) and interpretations regarding these standards as adopted by the Public Oversight Accounting and Auditing Standards Authority (“POA”). According to decision which was made by CMB on March 17, 2005, from the date of January 1, 2005 there is no need for inflation accounting application for the listed companies performing in Turkey. The Company has prepared the financial statements according to this decision. Functional
TürkTraktör, 2014 Annual Report
and representative currency of the Company is TL. The financial statements for the year ended at December 31, 2014 are based on the statutory records, with adjustments and reclassifications for the purpose of fair presentation in accordance with the Accounting Standards of the POA. Such adjustments are mainly composed of deferred tax, retirement pay liability calculation, economic life and pro-rata depreciation implementation of fixed assets depreciation, the recognition of a provision, evaluation of doubtful receivables and the rediscount of trade receivables and payables. 2.2 Comparatives and restatement of prior periods’ financial statements To allow for the detection of financial position and performance trends, the financial statements of the Company for the current period are prepared comparatively with the previous period. To ensure compliance with the presentation of the financial statements for the current period, comparative information may be reclassified when necessary. Pursuant to the decree taken in the CMB’s meeting dated June 7, 2013 and numbered 20/670, for capital market board institutions within the scope of the Communiqué on Principles Regarding Financial Reporting in the Capital Market, financial statement templates and a user guide have been published, effective as of the interim periods ended after March 31, 2013. Various classifications were made in the Company’s statement of financial position pursuant to these formats which have taken effect. The sole classification made in the statement of financial position of the Company as of December 31, 2013 is as follows: - Retirement liability pay interest cost amounting to TL 430.396 previously classified in the cost of sales account group has been classified under financial expenses. 2.3. Changes in TFRS The accounting policies adopted in preparation of the financial statements as at December 31, 2014 are consistent with those of the previous financial year, except for the adoption of new and amended TFRS and TFRIC interpretations effective as of January 1, 2014. The effects of these standards and interpretations on the Company’s financial position and performance have been disclosed in the related paragraphs. i) The new standards, amendments and interpretations which are effective as at January 1, 2014 are as follows TAS 32 Financial Instruments: Presentation - Offsetting Financial Assets and Financial liabilities (Amended) The amendments clarify the meaning of “currently has a legally enforceable right to set-off” and also clarify the application of the TAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. These amendments did not have an impact on the financial statements of the Company.
The accompanying notes form an integral part of these financial statements. 126
127
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AT DECEMBER 31, 2014
TürkTraktör, 2014 Annual Report
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)
TFRS Interpretation 21 Levies The interpretation clarifies that an entity recognizes a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. It also clarifies that a levy liability is accrued progressively only if the activity that triggers payment occurs over a period of time, in accordance with the relevant legislation. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability should be recognized before the specified minimum threshold is reached. The interpretation is not applicable for the Company and did not have any impact on the financial position or performance of the Company. TAS 36 Impairment of Assets- Recoverable Amount Disclosures for Non-Financial assets (Amended) As a consequential amendment to TFRS 13 Fair Value Measurement, some of the disclosure requirements in TAS 36 Impairment of Assets regarding measurement of the recoverable amount of impaired assets has been modified. The amendments required additional disclosures about the measurement of impaired assets (or a group of assets) with a recoverable amount based on fair value less costs of disposal. These amendments did not have an impact on the financial statements of the Company. TAS 39 Financial Instruments: Recognition and Measurement (Amended)- Novation of Derivatives and Continuation of Hedge Accounting Amendments provides a narrow exception to the requirement for the discontinuation of hedge accounting in circumstances when a hedging instrument is required to be novated to a central counterparty as a result of laws or regulations. These amendments did not have an impact on the financial statements of the Company. TFRS 10 Consolidated Financial Statements (Amended) TFRS 10 is amended to provide an exception to the consolidation requirement for entities that meet the definition of an investment entity. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss in accordance with TFRS. This amendment does not have any impact on the financial position or performance of the Company. ii) Standards issued but not yet effective and not early adopted
Standards, interpretations and amendments to existing standards that are issued but not yet effective up to the date of issuance of the financial statements are as follows. The Company will make the necessary changes if not indicated otherwise, which will be affecting the financial statements and disclosures, when the new standards and interpretations become effective.
128
TFRS 9 Financial Instruments – Classification and measurement As amended in December 2012, the new standard is effective for annual periods beginning on or after 1 January 2015. Phase 1 of this new TFRS introduces new requirements for classifying and measuring financial instruments. The amendments made to TFRS 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. The Company will quantify the effect in conjunction with the other phases, when the final standard including all phases is adopted by POA. TAS 19 Defined Benefit Plans: Employee Contributions (Amended) TAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. The amendments clarify that, if the amount of the contributions is independent of the number of years of service, an entity is permitted to recognise such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service. These amendments are to be retrospectively applied for annual periods beginning on or after 1 July 2014. The amendments will not have an impact on the financial position or performance of the Company. TFRS 11 Acquisition of an Interest in a Joint Operation (Amended) TFRS 11 is amended to provide guidance on the accounting for acquisitions of interests in joint operations in which the activity constitutes a business. This amendment requires the acquirer of an interest in a joint operation in which the activity constitutes a business, as defined in TFRS 3 Business Combinations, to apply all of the principles on business combinations accounting in TFRS 3 and other TFRSs except for those principles that conflict with the guidance in this TFRS. In addition, the acquirer shall disclose the information required by TFRS 3 and other TFRSs for business combinations. These amendments are to be applied prospectively for annual periods beginning on or after 1 January 2016. Earlier application is permitted. The amendments will not have an impact on the financial position or performance of the Company.
TAS 16 and TAS 38 - Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to TAS 16 and TAS 38) The amendments to TAS 16 and TAS 38, have prohibited the use of revenue-based depreciation for property, plant and equipment and significantly limiting the use of revenue-based amortisation for intangible assets. The amendments are effective prospectively for annual periods beginning on or after 1 January 2016. Earlier application is permitted. The amendments will not have an impact on the financial position or performance of the Company.
NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)
TAS 16 Property, Plant and Equipment and TAS 41 Agriculture (Amended) – Bearer Plants TAS 16 is amended to provide guidance that bearer plants, such as grape vines, rubber trees and oil palms should be accounted for in the same way as property, plant and equipment in TAS 16. Once a bearer plant is mature, apart from bearing produce, its biological transformation is no longer significant in generating future economic benefits. The only significant future economic benefits it generates come from the agricultural produce that it creates. Because their operation is similar to that of manufacturing, either the cost model or revaluation model should be applied. The produce growing on bearer plants will remain within the scope of TAS 41, measured at fair value less costs to sell. Entities are required to apply the amendments for annual periods beginning on or after 1 January 2016. Earlier application is permitted. The amendment is not applicable for the Company and will not have an impact on the financial position or performance of the Company. Annual Improvements to TAS/TFRSs On September 2014, Public Oversight Authority (POA) has issued the below amendments to the standards in relation to “Annual Improvements - 2010–2012 Cycle” and “Annual Improvements - 2011–2013 Cycle. The changes are effective for annual reporting periods beginning on or after July 1 2014. Annual Improvements - 2010–2012 Cycle IFRS 2 Share-based Payment: Definitions relating to vesting conditions have changed and performance condition and service condition are defined in order to clarify various issues. The amendment is effective prospectively. IFRS 3 Business Combinations Contingent consideration in a business acquisition that is not classified as equity is subsequently measured at fair value through profit or loss whether or not it falls within the scope of IFRS 9 Financial Instruments. The amendment is effective for business combinations prospectively. IFRS 8 Operating Segments The changes are as follows: i) Operating segments may be combined/aggregated if they are consistent with the core principle of the standard. ii) The reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker. The amendments are effective retrospectively. IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets The amendment to IAS 16.35(a) and IAS 38.80(a) clarifies that revaluation can be performed, as follows: i) Adjust the gross carrying amount of the asset to market val-
ue or ii) determine the market value of the carrying amount and adjust the gross carrying amount proportionately so that the resulting carrying amount equals the market value. The amendment is effective retrospectively. IAS 24 Related Party Disclosures The amendment clarifies that a management entity – an entity that provides key management personnel services – is a related party subject to the related party disclosures. The amendment is effective retrospectively. Annual Improvements – 2011–2013 Cycle TFRS 3 Business Combinations The amendment clarifies that: i) Joint arrangements are outside the scope of TFRS 3, not just joint ventures ii) The scope exception applies only to the accounting in the financial statements of the joint arrangement itself. The amendment is effective prospectively. IFRS 13 Amendment to the Basis for Conclusions on TFRS 13 Fair Value Measurement The portfolio exception in TFRS 13 can be applied to financial assets, financial liabilities and other contracts. The amendment is effective prospectively. TAS 40 Investment Property The amendment clarifies the interrelationship of TFRS 3 and TAS 40 when classifying property as investment property or owner-occupied property. The amendment is effective prospectively. The Company does not expect that these amendments will have significant impact on the financial position or performance of the Company. The new standards, amendments and interpretations that are issued by the International Accounting Standards Board (IASB) but not issued by Public Oversight Authority (POA) The following standards, interpretations and amendments to existing IFRS standards are issued by the IASB but not yet effective up to the date of issuance of the financial statements. However, these standards, interpretations and amendments to existing IFRS standards are not yet adapted/ issued by the POA, thus they do not constitute part of TFRS. The Company will make the necessary changes to its financial statements after the new standards and interpretations are issued and become effective under TFRS. Annual Improvements – 2010–2012 Cycle IFRS 13 Fair Value Measurement As clarified in the Basis for Conclusions short-term receivables and payables with no stated interest rates can be held at invoice amounts when the effect of discounting is immaterial. The amendment is effective immediately.
129
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AT DECEMBER 31, 2014
TürkTraktör, 2014 Annual Report
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)
Annual Improvements – 2011–2013 Cycle IFRS 15 Revenue from Contracts with Customers In May 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers. The new five-step model in the standard provides the recognition and measurement requirements of revenue. The standard applies to revenue from contracts with customers and provides a model for the sale of some non-financial assets that are not an output of the entity’s ordinary activities (e.g., the sale of property, plant and equipment or intangibles). IFRS 15 is effective for reporting periods beginning on or after 1 January 2017, with early adoption permitted. Entities will transition to the new standard following either a full retrospective approach or a modified retrospective approach. The modified retrospective approach would allow the standard to be applied beginning with the current period, with no restatement of the comparative periods, but additional disclosures are required. The Company is in the process of assessing the impact of the standard on financial position or performance of the Company. IFRS 9 Financial Instruments - Final standard (2014) In July 2014 the IASB published the final version of IFRS 9 Financial Instruments. The final version of IFRS 9 brings together the classification and measurement, impairment and hedge accounting phases of the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 is built on a logical, single classification and measurement approach for financial assets that reflects the business model in which they are managed and their cash flow characteristics. Built upon this is a forward-looking expected credit loss model that will result in more timely recognition of loan losses and is a single model that is applicable to all financial instruments subject to impairment accounting. In addition, IFRS 9 addresses the so-called ‘own credit’ issue, whereby banks and others book gains through profit or loss as a result of the value of their own debt falling due to a decrease in credit worthiness when they have elected to measure that debt at fair value. The Standard also includes an improved hedge accounting model to better link the economics of risk management with its accounting treatment. IFRS 9 is effective for annual periods beginning on or after 1 January 2018. However, the Standard is available for early application. In addition, the own credit changes can be early applied in isolation witho ut otherwise changing the accounting for financial instruments. The Company is in the process of assessing the impact of the standard on financial position or performance of the Company. IAS 27 Equity Method in Separate Financial Statements (Amendments to IAS 27) In August 2014, IASB issued an amendment to IAS 27 to restore the option to use the equity method to account for investments in subsidiaries and associates in an entity’s separate financial statements. Therefore, an entity must account for these investments either: 130
NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)
• At cost • In accordance with IFRS 9 (or IAS 39), Or • Using the equity method The entity must apply the same accounting for each category of investments. The amendment is effective for annual periods beginning on or after 1 January 2016. The amendments must be applied retrospectively. Early application is permitted and must be disclosed. The Company is in the process of assessing the impact of the standard on financial position or performance of the Company or the amendment is not applicable for the Company and will not have an impact on the financial position or performance of the Company.
will not have an impact on the financial position or performance of the Company.
an accrual basis and dividend income is recognised when the right to receive dividend is established.
IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10 and IAS 28) In December 2014, IASB issued amendments to IFRS 10, IFRS 12 and IAS 28, to address the issues that have arisen in applying the investment entities exception under IFRS 10 Consolidated Financial Statements. The amendments are applicable for annual periods beginning on or after 1 January 2016. Earlier application is permitted. The amendment is not applicable for the Company and will not have an impact on the financial position or performance of the Company.
Inventories Inventories are valued at the lower of cost or net realisable value. Net realisable value is the estimated selling price, less the costs of completion and selling expenses (Note 6). Cost elements included in inventories comprise total purchase costs and other costs incurred in bringing the inventories to their present location and condition. The unit cost of inventories is determined on the weighted average basis.
Annual Improvements to IFRSs - 2012-2014 Cycle In September 2014, IASB issued their annual cycle of improvements to IFRSs, Annual Improvements to IFRSs 20122014 Cycle. The document sets out five amendments to four standards, excluding those standards that are consequentially amended, and the related Basis for Conclusions. The standards affected and the subjects of the amendments are: • IFRS 5 Non-current Assets Held for Sale and Discontinued Operations – changes in methods of disposal • IFRS 7 Financial Instruments: Disclosures – servicing contracts; applicability of the amendments to IFRS 7 to condensed interim financial statements • IAS 19 Employee Benefits – regional market issue regarding discount rate • IAS 34 Interim Financial Reporting – disclosure of information ‘elsewhere in the interim financial report’ The amendments are effective for annual periods beginning on or after 1 January 2016, with earlier application permitted. . The Company is in the process of assessing the impact of the amendments on financial position or performance of the Company.
IAS 1: Disclosure Initiative (Amendments to IAS 1) In December 2014, IASB issued amendments to IAS 1. Those amendments include narrow-focus improvements in the following five areas: Materiality, Disaggregation and subtotals, Notes structure, Disclosure of accounting policies, Presentation of items of other comprehensive income (OCI) arising from equity accounted investments. The amendments are applicable for annual periods beginning on or after 1 January 2016. Earlier application is permitted. These amendments are not expected have significant impact on the notes to the financial statements of the Company.
FRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amended) In September 2014, IASB issued amendments to IFRS 10 and IAS 28, to address the acknowledged inconsistency between the requirements in IFRS 10 and IAS 28 in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture, to clarify that an investor recognises a full gain or loss on the sale or contribution of assets that constitute a business, as defined in IFRS 3, between an investor and its associate or joint venture. The gain or loss resulting from the re-measurement at fair value of an investment retained in a former subsidiary should be recognised only to the extent of unrelated investors’ interests in that former subsidiary. An entity shall apply those amendments prospectively to transactions occurring in annual periods beginning on or after 1 January 2016. Earlier application is permitted. The Company is in the process of assessing the impact of the standard on financial position or performance of the Company. or The amendment is not applicable for the Company and
2.4. Summary of significant accounting policies The principal accounting policies, consistently applied with prior years, adopted in the preparation of these financial statements are set out below:
Prepaid expenses Prepaid expenses are the amounts generally made to suppliers and which will be transferred to expense and cost accounts in the following period or periods. Property, plant and equipment Property, plant and equipment acquired before January 1, 2005 are carried at cost in purchasing power of TL as at December 31, 2004 less accumulated depreciation and impairment losses. Property, plant and equipment acquired after January 1, 2005 are carried at cost less accumulated depreciation and impairment losses. Depreciation is provided on a straight-line basis based on the estimated useful lives of the assets (Note 7). Land is not depreciated as it is deemed to have an indefinite life. The estimated useful lives for property, plant and equipment are as follows: Use f ul li ves
Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposits held with banks, other short-term highly liquid investments with original maturities of three months or less (Note 3). Deposits with Turkish lira is recognised with cost, foreign currency deposits are translated into Turkish lira by using of the buying exchange rate of the Central Bank of the Republic of Turkey. Time deposits include interest accrued as of balance sheet date. Recognition of income Sales is recorded on the basis of accrual over the fair value of the amount received or receivable when product is delivered or services are rendered, the transfers of the risks and benefits related to the product have been made, the amount of income can be determined reliably and it is probable that economic benefits related to the transaction will flow to the Company. Net sales are calculated by deducting the estimated or realized returns and discounts over the sales of products. Sales taxes such as VAT and SCT are not included in revenue (Note 14). Other revenues such as interest income is recognised on an accrual basis using the effective interest rate method, rent income under operating lease agreements is recognised on
Buildings
25-50 years
Land Improvements
10-25 years
Machinery and Equipment
4-10 years
Motor Vehicles
4-5 years
Furniture and Fixtures
5-6 years
Special Costs
4-10 years
An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. Gain or losses on disposals of property, plant and equipment with respect to their restated net book values are included in the related income and expense accounts. Repair and maintenance expenditures are charged to the income statement as they are incurred. Repair and maintenance expenditures are capitalised if they result in an enlargement or substantial improvement of the respective assets and depreciated over remaining useful life of related asset. Intangible fixed assets Intangible fixed assets comprise of rights and computer software. Those acquired before January 1, 2005 are carried at 131
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AT DECEMBER 31, 2014
TürkTraktör, 2014 Annual Report
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)
NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)
cost in the purchasing power of TL as at December 31, 2004; less accumulated depreciation and impairment losses. Those acquired after January 1, 2005 are carried at cost less accumulated depreciation and impairment losses and are depreciated using the straight-line method over their useful lives of four and five years following the acquisition date. Where impairment indicator exists, the carrying amount of any intangible asset is assessed and written down to its recoverable amount (Note 8).
intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
Impairment of assets Property, plant and equipment and other non-current assets including intangible assets, except deferred tax assets, are reviewed for impairment losses at each balance sheet date whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset or any cash generating unit of that asset exceeds its recoverable amount which is the higher of an asset’s net selling price and value in use. Impairment losses are accounted for in the statement of income. Impairment loss on assets can be reversed to the extent of previously recorded impairment losses, in cases where increases in the recoverable value of the asset can be associated with events that occur subsequent to the period when the impairment loss was recorded. Segment reporting As the Company operates only in production and trade of agricultural machinery and equipment, in Turkey, segment reporting of the financial information is not disclosed. Financial assets Financial assets are classified in accordance with the intention at acquisition. Company management determines appropriate classification of its investments at the time of purchase and re-evaluates these classifications in each financial year-end. Receivables Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Company provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in current assets, except for maturities greater than 12 months after the balance sheet date which are classified as non-current assets. Receivables are included in trade and other receivables in the balance sheet. Receivables are recognised initially at the proceeds received, net of any transaction costs incurred. In subsequent periods, receivables are stated at amortised cost using the effective yield method. Maturity differences related to trade receivables are presented in other income/expense from main operations (Note 5, Note 17).
132
Impairment of receivables A risk provision for trade receivables is established if there is objective evidence that the Company will not be able to collect all amounts due. The amount of the provision is the difference between the carrying amount and the recoverable amount, being the present value of all cash flows, including amounts recoverable from guarantees and collateral, discounted based on the original effective interest rate of the originated receivables at inception. If the amount of the impairment subsequently decreases due to an event occurring after the write-down, the release of the provision is credited to other income. Trade payables In subsequent periods, payables are stated at amortised cost using the effective yield method. Maturity differences and foreign exchange gains/ losses related to trade payables are presented in other income/expense from main operations (Note 5, Note 17). Borrowings Borrowings consist of bank loans taken from different banks. Loans are recorded at the value after the transaction costs are deducted from the amount of the loan. Bank loans are presented over the discounted cost value by using the effective interest rate in the subsequent periods. The difference between the amount remaining after the transaction costs are deducted and the discounted cost value is reflected in the financial statements as financing costs during the period of the loan (Note 19). When there are assets which take a significant amount of time to be available for use or sale, the borrowing costs directly attributable to their purchase, manufacture or production are included in the cost of the asset until the asset is available for use or sale. Borrowing costs include other costs borne according to the interest and the borrowing (Note 4, Note 19). Recognition and derecognition of financial assets and liabilities The Company reflects financial asset or liability reflects the balance sheet when the Company becomes a part of financial instrument agreement. The Company derecognises a part of all financial instruments, only if the Company loses controls rights over the related financial asset. The Company derecognise a financial instrument if only when obligation is removed, cancelled or expired. All financial instruments are reflected to the financial statements at the commitment date of sales or purchase. Related sales and purchases are generally transactions required delivery of financial assets, regulated by the regulation and forms in the market within the time allowed. Offsetting Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to set off the recognised amounts and there is an
Related Parties (a) A person or a close member of that person’s family is related to a reporting entity if that person: (i) has control or joint control over the reporting entity; (ii) has significant influence over the reporting entity; or (iii) is a member of the key management personnel of the reporting entity or of a parent of the reporting entity. (b) The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others). (i) The entity and the company are members of the same group. (ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member). (iii) Both entities are joint ventures of the same third party. (iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity. (v) The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity. (vi) The entity is controlled or jointly controlled by a person identified in (a). (vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). For the purpose of these financial statements, shareholders, associated entities, key management personnel and Board of Directors members, in each case together with their families and companies controlled or affiliated with them are considered and referred to as related parties. As a result of ordinary business operations, the Company may have business relations with the related parties. Foreign currency transactions and balances Transactions in foreign currencies during the period have been translated into TL at the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies have been translated into TL at the exchange rates prevailing at the balance sheet dates. Foreign exchange gains or losses arising from the settlement of such transactions and from the translation of monetary assets and liabilities are recognised in the statement of income. Non-monetary assets and liabilities, which are recognised at fair value, have been translated into TL at the exchange rates prevailing at the dates of fair value determined. Currency differences arising from trade receivables and payables related to main operations are shown in from operating income/ expenses (Note 17).
Earnings per share Earnings per share disclosed in the statements of income are determined by dividing net income for the period by the weighted average number of shares that have been outstanding during the period (Note 21). In Turkey, companies can increase their share capital by making a pro-rata distribution of shares (“bonus shares”) to existing shareholders from retained earnings and revaluation surplus. For the purpose of earnings per share computations, the weighted average number of shares outstanding during the period has been adjusted in respect of bonus shares issues without a corresponding change in resources, by giving them retroactive effect for the year in which they were issued and for each earlier year. Subsequent events Events after the balance sheet date are those events, even if those events occur after the public announcement of profit or of other selected financial information, that occur between the balance sheet date and the date when the financial statements are authorised for issue. The Company adjusts the amounts recognized in its financial statements to reflect adjusting events after the balance sheet date. The events that occur subsequent to the balance sheet date and not require a correction to be made are disclosed in accompanying notes, where the decisions of the users of financial statements are affected. Provisions, contingent assets and contingent liabilities Possible assets or obligations that arise from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company are treated as contingent assets or liabilities. The Company does not recognize contingent assets and liabilities. A contingent liability is disclosed, unless the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is disclosed, where an inflow of economic benefits is probable (Note 11). Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are not recognised for future operating losses.
133
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AT DECEMBER 31, 2014
TürkTraktör, 2014 Annual Report
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)
NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)
In cases where the time value of money is material, provisions are determined as the present value of expenses required to be made to honor the liability. The rate used to discount provisions to their present values is determined taking into account the interest rate in the related markets and the risk associated with the liability. This discount rate does not consider risks associated with future cash flow estimates and should be pre-tax.
financial statements. Tax bases of assets and liabilities reflect the amounts affecting the future tax bases under the current tax legislation. Deferred income tax is determined using tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets or liabilities are reflected to the financial statements to the extent that they will provide an increase or decrease in the taxes payable for the future periods where the temporary differences will reverse. Deferred income tax liabilities are recognized for all taxable temporary differences, where deferred tax assets resulting from deductible temporary differences are recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary difference can be utilised. To the extent that deferred income tax assets will not be utilised, the related amounts have been deducted accordingly. Deferred tax assets and deferred tax liabilities related to income taxes levied by the same taxation authority are offset accordingly, if current tax assets can be offset against current tax liabilities (Note 20).
Leases The Company - as the lessee Financial Leases Finance leases are capitalized at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in other liabilities and reduced as they are paid. The interest element of the finance cost is charged to the statement of income over the lease period. The property, plant and equipment acquired under finance leases are depreciated over the useful life of the asset (Note 7). Operating Leases Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease. Research and development expenses Research expenditure is recognized as an expense as incurred (Note 15). Costs incurred on development projects (relating to the design and testing of new or improved products) are recognized as intangible assets when the following criteria are fulfilled: • it is technically feasible to complete the intangible asset so that it will be available for use; • management intends to complete the intangible asset and use or sell it; • there is an ability to use or sell the intangible asset; • it can be demonstrated how the intangible asset will generate probable future economic benefits; • adequate technical, financial and other resources to complete the development and to use or sell the intangible asset are available; • the expenditure attributable to the intangible asset during its development can be reliably measured. Other development expenditures that do not meet these criteria are recognized as an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period. Capitalised development costs are recorded as intangible assets and am134
ortised from the point at which the asset is ready for use on a straight-line basis over its useful life, not exceeding five years (Note 8). Development assets are tested for impairment annually, in accordance with IAS 36. Government grants and aids All government grants, including non-monetary government grants followed up at fair values, are taken into account in the financial statements when there is reasonable assurance that the Company will comply with the conditions attaching to it and that the grant will be received or when the grant is actually received by the Company. Government grants shall be recognized in profit or loss on a systematic and pro rata basis over periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate. There are investment incentive certificates to which the Company has been entitled by the official authorities in connection with certain capital expenditures. The Company has two incentives Ankara Modernization and Adapazarı Investment as of December 31, 2014. The rights of the Company due to these incentives are as follows: a) 100% exemption from customs duty on machinery and equipment to be imported, b) Value-added tax exemption with respect to purchases of investment goods both from domestic and export markets, c) Incentives under the jurisdiction of the research and development law (100% corporate tax exemption, Social Security Institution incentives, etc.), d) Inward processing permission certificates, e) Cash refund from Tübitak - Teydeb for research and development expenses, f) Discounted corporate tax incentive, g) Exemption of taxes and funds, h) Incentive of environmental costs support by law 9715, i) Patent incentives, j) Corporate tax exemption based on investment contribution rates. Taxes on income Taxes on income included in statement of income comprise current and deferred tax. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of prior years (Note 20). Deferred income tax is provided for all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes with the enacted tax rates as of the balance sheet date (Note 20). Deferred income tax is provided in full, using the liability method, on all temporary differences arising between the tax bases of assets and liabilities and their carrying values in the
Payables related to employee benefits These are the amounts payable within the scope of employee benefits such as remunerations, wages and social security contributions. These amounts are reflected in personnel expenses in the period when they are accrued. Provisions related to employee benefits In accordance with the laws in effect, the Company is obliged to pay employment termination benefits to employees whose employment is terminated for reasons other than retirement, resignation or behavior mentioned in the Labour Law. The provision for employment termination benefits has been calculated reflected in the financial statements according to the net current value of the amount of liabilities expected to arise in the future due to the retirement of all employees. Actuarial loss or gain is recognized under other comprehensive expense. According to employment contract, if employment contract ends for any reason, provision of unused vacation has to be paid to employees or right holders. Provision is calculated based on the employee wage when the contract expired. Statement of cash flow The statement of cash flows reports cash flows during the year classified by operating, investing and financing activities. Cash flows from operating activities are derived from the principal revenue producing activities of the Company. Cash flows related to investing activities represent cash flows generated from and used in the investing activities (fixed assets and financial investments) of the Company. Cash flows related to financing activities represent cash flows generated from Company’s financing activities and re-
payment of such generated cash-in flows. Cash and cash equivalents include cash in hand, bank deposits and other short-term highly liquid investments with original maturities of three months or less. Share capital and dividends Ordinary shares are classified as capital. Dividends distributed over ordinary shares are recorded by deducting from retained earnings within the year in which they are declared. 2.5. Significant accounting estimates and decisions Preparation of the financial statements requires the usage of the estimates and judgements affecting the amounts of the assets and liabilities as of the balance sheet date and the income and expenses recorded through the year and explanations of contingent assets and liabilities. Estimations and assumptions can differ from actual results in spite of these estimations and assumptions are based on Company management’s best knowledge. The useful life of tangible and intangible assets The Company’s management has made significant assumptions in determining the useful life of tangible and intangible assets (Note 2.4). Provision for doubtful receivables Company management reviews customer collection history and their current economic situations in order to provide estimates regarding doubtful receivables within Company’s trade receivables portfolio (Note 5). Provision for employment termination benefits Provisions for retirement payments, discount rate, future salary increases and employee turnover rates are determined by actuarial calculations based on certain assumptions. Due to the long term nature of these plans, such estimates are subject to significant uncertainty (Note 11). Warranties Warranty expenses are recorded as a result of repair and maintenance expenses for products produced and sold, authorised services’ labour and material costs for products under the scope of the warranty terms without any charge to the customers, initial maintenance costs and estimated costs based on statistical information for possible future warranty services and returns of products with respect to the products sold during the period (Note 11). The Company estimates ratio based on statistical information for possible future warranty services and returns of products, and calculates provision amount with respect to the products sold during the period. The Company gives guarantee services for each tractor sold during two years. The Company reflects estimated cost incurred in one year to short term.
135
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AT DECEMBER 31, 2014
TürkTraktör, 2014 Annual Report
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)
Provision for lawsuits The Company determines lawsuit provision for ongoing legal cases at the preparation date of the Company’s statement of financial position by consulting with Company’s legal counsel on cases that could potentially lead to a cash outflow (Note 11). Provision for impairement of inventories Inventory is evaluated at each period in order to determine whether there is a need to have provision for potential impairment costs at the date of statement of financial position (Note 7). Deferred tax assets Deferred tax assets represent the amounts that are recoverable in the future periods which are related to taxes collected over the income as a result of deductible temporary differences, accumulated financial losses transferred into future periods and accumulated tax advantages transferred into
future periods. Deferred tax asset item cannot be used for amounts which are not deductible (constant) in terms of tax regulations. The Company has recorded its deferred tax asset as of December 31, 2014 since it is highly probable that sufficient profit will be made which will cause a tax liability which may be offsetted in the subsequent periods. 2.6. Convenience translation into English of financial statements originally issued in Turkish The accounting principles described in Note 2 (defined as Turkish Accounting Standards/Turkish Financial Reporting Standards) to the accompanying financial statements differ from International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board with respect to the application of inflation accounting, classification of some balance sheet, income statement items and also for certain disclosures requirement of the POA.
NOTE 3 - CASH AND CASH EQUIVALENTS 2014 Cash
2013
1.596
-
4.403.897
8.200.808
144.825.231
132.231.418
4.959.334
1.787.232
115.038.965
67.103.478
269.229.023
209.322.936
Banks: - TL denominated demand deposits - TL denominated time deposits - Foreign currency denominated demand deposits - Foreign currency denominated time deposits
As of December 31, 2014, the weighted average effective annual interest rates for TL and Euro (“EUR”) time deposits are 9,58% and 1,55% (2013: TL: 8,70%, EUR: 2,42%). As of December 31, 2014 and 2013, remaining time to maturity of time deposits is less than three months. The cash and cash equivalents included in the statement of cash flows at December 31, 2014 and 2013 are as follows: 2014
2013
269.229.023
209.322.936
Less: Interest accruals
(556.637)
(35.894)
Less: Restricted bank deposits (*)
(77.468)
(289.746)
268.594.918
208.997.296
Banks
Cash and cash equivalents
(*) This account consists of receivables collected via the direct debit system. The blockage on this account is terminated following the closure of the term.
NOTE 4 - FINANCIAL LIABILITIES a) Short-term financial liabilities Short-term bank borrowings Original currency amount
Weighted average effective interest rate p.a. (%)
2014
2014
2013
8,30 1,78 2,92
3,35
TL bank borrowings
83.859.778
USD bank borrowings
10.032.699
EUR bank borrowings
5.141.250
2013 5.006.979
TL equivalent 2014
2013
-
83.859.778
-
-
23.264.826
-
14.501.924
14.702.994
121.626.528
14.702.994
Current portion of long term bank borrowings Original currency amount
Weighted average effective interest rate p.a. (%)
TL equivalent
2014
2013
2014
2013
2014
2013
EUR bank borrowings
26.459.415
-
2,44
-
74.634.073
-
TL bank borrowings
20.330.000
-
10,79
-
20.330.000
-
94.964.073
-
b) Long-term financial liabilities Long-term bank borrowings Original currency amount
Weighted average effective interest rate p.a. (%)
TL equivalent
2014
2013
2014
2013
2014
2013
EUR bank borrowings
83.705.125
80.092.571
2,44
2,64
236.107.047
235.191.834
TL bank borrowings
207.328.208
100.459.111
10,79
10,83
207.328.209
100.459.111
443.435.256
335.650.945
Prepaid commission for debt (*)
(1.774.319)
(1.763.344)
Total long-term financial liabilities
441.660.937
333.887.601
(*) Prepaid commission for debt consists of unrealized commission expenses paid to bank related to borrowings. Redemption schedule of the long-term bank borrowings as of December 31, 2014 and 2013 are as follows: Year
2014
2013
2015
-
176.575.101
2016
305.864.380
62.925.000
2017
83.009.171
62.925.000
2018
52.787.386
31.462.500
441.660.937
333.887.601
As of December 31, 2014 the Company has long-term investment loans amounting to EUR 75.000.000 and EUR 20.000.000 136
137
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AT DECEMBER 31, 2014
TürkTraktör, 2014 Annual Report
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 4 - FINANCIAL LIABILITIES (Continued)
NOTE 5 - TRADE RECEIVABLES AND PAYABLES (Continued)
(2013: EUR 75.000.000). The EUR 75.000.000 loan’s maturity period is 5 years with an interest payment of every 6 months and with an interest rate of 2.20% + Euribor with no principle payments for the following 2 years. The EUR 20.000.000 loan’s maturity period is 4 years with an interest payment of every 6 months and with an interest rate of 2.20% + Euribor with no principle payments for the following 2 years. In accordance with the agreements signed with respect to the investment loans used by the Company, there is an obligation of not exceeding the below mentioned rate calculated over the financial statements prepared in accordance with the Financial Reporting Standards by the Public Oversight Authority: Obligation rate is; • Net financial liability (*) / Earnings before interest, taxes, depreciation and amortization: 3,75. (*) Net financial liability is calculated by deducting the cash and cash equivalents from total of financial liabilities (including short term and long term financial debts). The Company met these conditions as of December 31, 2014. Carrying values and fair values of the bank borrowings are as shown below:
Long-term trade receivables:
Carrying value Bank borrowings
2013
-
391.920
Less: Provision for doubtful receivables
-
(139.484)
Unearned financial income
-
(1.777)
-
250.659
Movements of the provisions for long term doubtful receivables for the years ended December 31, 2014 and 2013 are as shown below:
Fair value
2014
2013
2014
2013
660.025.857
350.353.939
658.251.538
340.317.920
As of December 31, 2014, fair values of the loans are determined by using the discounted cash flow method over annual average effective discount rates which is 2,61% for EUR loans, 1,78% for USD loans and 10,42% for TL denominated bank borrowings respectively (2013: EUR 3,63% and TL: 12,10%).
January 1 Transfer from long term to short term December 31
2014
2013
(139.484)
(527.671)
139.484
388.187
-
(139.484)
2014
2013
Trade payables:
NOTE 5 - TRADE RECEIVABLES AND PAYABLES
Supplier current accounts
407.771.045
278.698.990
Less: Unincurred financial expense
(3.865.100)
(1.955.902)
Short-term trade receivables:
Trade payables
403.905.945
276.743.088
Customer current accounts
Due to related parties (Note 22)
44.766.757
29.346.571
Total trade payables
448.672.702
306.089.659
2014
2013
2014
Notes receivables Protested notes Less: Provision for doubtful receivables
2013
402.918.762
304.819.369
1.320.755
16.455.393
617.225
5.163.779
404.856.742
326.438.541
(39.866.049)
(42.169.877)
Unearned financial income
(2.547.893)
(2.153.740)
Short-term trade receivables
362.442.800
282.114.924
Due from related parties (Note 22)
98.446.054
80.797.729
Total short-term trade receivables
460.888.854
362.912.653
Movements of the provisions for short term doubtful receivables for the years ended December 31, 2014 and 2013 are as shown below: 2014
2013
(42.169.877)
(37.784.114)
Transfer from long term to short term
(139.484)
(388.187)
Cancelled during the year (Note 17)
2.443.312
1.171.436
-
(5.169.012)
(39.866.049)
(42.169.877)
January 1
Charge during the year (Note 17) December 31
138
2014 Notes receivables
NOTE 6 - INVENTORIES
197.505.879
151.293.846
Work in progress
Raw materials
3.281.225
4.345.695
Finished goods
57.969.537
45.944.910
Commercial goods
77.897.423
93.471.041
Spare parts
26.636.862
22.048.260
Goods in transit (*)
85.951.535
107.812.377
Provision for impairment of inventory (-)
449.242.461
424.916.129
(12.959.214)
(11.517.571)
436.283.247
413.398.558
The cost of inventories recognised as expense in the current year, amounted to TL 2.027.175.878 (2013: TL 1.524.046.351). (*) Goods in transit comprised of commercial goods and spare parts are not arrived, but invoices are received as of period end.
139
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AT DECEMBER 31, 2014
TürkTraktör, 2014 Annual Report
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 6 - INVENTORIES (Continued)
NOTE 7- PROPERTY, PLANT AND EQUIPMENT (Continued)
Movement of provision for impairment of inventory during the period is as follows: 2014
2013
Cost
(11.517.571)
(5.769.405)
Land
Cancelled due to sales of inventory during the year
1.462.705
2.212.745
Charge during the year for impairment of inventory
(2.904.348)
(7.960.911)
December 31
(12.959.214)
(11.517.571)
January 1
Raw materials
2014
2013
(9.293.104)
(7.595.685)
Commercial goods
(2.097.278)
(2.544.396)
Spare parts
(1.568.832)
(1.377.490)
(12.959.214)
(11.517.571)
NOTE 7- PROPERTY, PLANT AND EQUIPMENT
January 1, 2014
Additions
Disposals
Transfers
December 31, 2014
34.957.864
2.010.500
(248.164)
-
36.720.200
Cost Land Land improvements
5.967.701
38.717
(75.841)
4.201.099
10.131.676
53.297.382
29.801.083
(1.223.080)
149.219.196
231.094.581
409.412.790
58.581.939
(11.439.942)
48.268.497
504.823.284
2.712.138
976.488
-
-
3.688.626
Machinery and equipment Special costs Motor vehicles
1.915.576
2.163.460
(207.940)
-
3.871.096
Furniture and fixtures
36.581.561
10.063.690
(123.984)
8.364.022
54.885.289
Construction in progress
108.180.493
104.153.680
-
(210.052.814)
2.281.359
653.025.505
207.789.557
(13.318.951)
-
847.496.111
3.584.995
242.288
(54.467)
-
3.772.816
Accumulated depreciation Land improvements Buildings
38.195.591
3.205.848
(352.383)
-
41.049.056
Machinery and equipment
309.305.795
17.820.635
(11.378.098)
-
315.748.332
Special costs
2.653.578
41.314
-
-
2.694.892
Motor vehicles
1.416.890
334.930
(194.540)
-
1.557.280
Furniture and fixtures Net book value
140
23.675.359
4.918.154
(74.501)
-
28.519.012
378.832.208
26.563.169
(12.053.989)
-
393.341.388
274.193.297
Disposals
Transfers
December 31, 2013
30.171.026
4.786.838
-
-
34.957.864
Land improvements
5.448.242
425.123
-
94.336
5.967.701
52.951.936
345.446
-
-
53.297.382
379.404.095
12.630.855
(5.781.050)
23.158.890
409.412.790
2.705.188
6.950
-
-
2.712.138
Machinery and equipment Motor vehicles
1.906.576
9.000
-
-
1.915.576
Furniture and fixtures
31.440.063
4.105.427
(639.532)
1.675.603
36.581.561
Construction in progress
18.201.769
115.232.218
(14.535)
(25.238.959)
108.180.493
522.228.895
137.541.857
(6.435.117)
(310.130) (*)
653.025.505
3.344.573
240.422
-
-
3.584.995
Accumulated depreciation Land improvements Buildings
36.651.959
1.543.632
-
-
38.195.591
Machinery and equipment
300.372.133
13.694.671
(4.761.009)
-
309.305.795
Special costs
2.641.633
11.945
-
-
2.653.578
Motor vehicles
1.204.620
212.270
-
-
1.416.890
-
Furniture and fixtures
Buildings
Additions
Buildings Special costs
Allocation of the provision for impairment on inventories in terms of inventory type is as follows:
January 1, 2013
Net book value
21.020.832
3.280.119
(625.592)
365.235.750
18.983.059
(5.386.601)
156.993.145
23.675.359 378.832.208 274.193.297
(*) Transferred to intangible assets. For the year ended at December 31, 2014, of the total depreciation expense amounting to TL 26.563.169 (2013: TL 18.983.059), TL 18.959.958 (2013: TL 13.792.439) is allocated to production costs, TL 3.762.675 (2013: TL 2.883.977) is allocated to general administrative expenses, TL 2.609.285 (2013: TL 1.530.037) is allocated to research and development expenses and TL 1.231.251 (2013: TL 776.606) is allocated to marketing, selling and distribution expenses. The depreciation expense amounting to TL 2.297.230 (2013: TL 1.283.912) is capitalized during the year as it is related to the development costs. The Company has capitalized total TL 7.263.322 financial costs arose from foreign exchange denominated borrowings on construction in progress as of December 31, 2014 (2013: TL 9.505.715). There is no mortgage on property, plant and equipment as of December 31, 2014 (2013: None).
454.154.723
141
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AT DECEMBER 31, 2014
TürkTraktör, 2014 Annual Report
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 9 - OTHER ASSETS AND LIABILITIES (Continued)
2014
2013
9.311.734
5.600.348
NOTE 8 - INTANGIBLE ASSETS b) Deferred income:
January 1, 2014
Additions
Disposals
Transfers
December 31, 2014
Rights
10.940.879
2.862.848
(170.292)
-
13.633.435
Development costs
37.632.894
-
-
14.099.155
51.732.049
Cost
Development costs in progress
49.875.974
23.567.559
-
(14.099.155)
59.344.378
98.449.747
26.430.407
(170.292)
-
124.709.862
6.436.499
1.879.059
-
-
8.315.558
14.717.042
7.917.181
-
-
22.634.223
21.153.541
9.796.240
-
-
30.949.781
Accumulated amortisation Rights Development costs Net book value
77.296.206
Advances received
2.547.333
5.699.609
Other short-term liabilities
11.859.067
11.299.957
(*) Deferred income represents the sales amount of the tractors for which the invoices are issued but are not yet shipped to customers as of December 31, 2014 and 2013. NOTE 10 - PREPAID EXPENSES Long-term prepaid expenses 2014
2013
Advances given for fixed assets
832.613
20.260.797
Long-term prepaid expenses
832.613
20.260.797
93.760.081
January 1, 2013
Additions
Disposals
Transfers
December 31, 2013
7.955.531
2.675.218
-
310.130
10.940.879
Development costs
27.966.944
269.138
-
9.396.812
37.632.894
Development costs in progress
13.195.578
46.077.208
-
(9.396.812)
49.875.974
49.118.053
49.021.564
-
310.130
98.449.747
Rights
5.205.768
1.230.731
-
-
6.436.499
Development costs
9.020.277
5.696.765
-
-
14.717.042
Cost Rights
Deferred income (*)
NOTE 11 - PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS a) Short term provisions Short term provision for employee benefits
Accumulated amortisation
14.226.045
Net book value
6.927.496
-
-
34.892.008
77.296.206
NOTE 9 - OTHER ASSETS AND LIABILITIES 2013
Deferred value added tax (“VAT”)
72.988.039
59.756.795
Reclaimed VAT
71.660.884
39.648.268
2.796.797
-
311.059
257.623
147.756.779
99.662.686
a) Other current assets:
142
1.488.479
979.368
1.488.479
979.368
2014
2013
January 1
979.368
715.856
Charge/ (used) for the year, net
509.111
263.512
1.488.479
979.368
Provision for unused vacation
Movements of the provision for unused vacation rights for the years are as follows:
December 31
Other short term provisions
Warranty provision 2014
Other
2013
21.153.541
Development costs includes intangible assets generated by the Company. Capitalized development costs are recorded as intangible assets and amortised from the point at which the asset is ready for use. The amortisation is not calculated for the development costs in progress as the development process has not yet been completed. For the year ended at December 31, 2014, of the total amortisation expenses amounting to TL 9.796.240 (2013: TL 6.927.496), TL 1.341.213 (2013: TL 894.207) is allocated to production costs, TL 266.169 (2013: TL 186.977) is allocated to general administrative expenses, TL 8.101.760 (2013: TL 5.795.962) is allocated to research and development expenses and TL 87.098 (2013: TL 50.350) is allocated to marketing, selling and distribution expenses.
Assets related to prepaid tax
2014
Provision for legal cases (*) Other provisions (**)
2014
2013
20.609.316
16.908.966
7.343.170
4.097.031
119.312
1.338.564
28.071.798
22.344.561
(*) The balance represents provision for legal cases which were opened against the Company. (**) Includes various expense accruals as of December 31, 2013.
143
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AT DECEMBER 31, 2014
TürkTraktör, 2014 Annual Report
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 11 - PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS (Continued)
NOTE 11 - PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS (Continued) Sensitivity analysis of key assumptions used for termination benefits calculations as at December 31, 2014 are as follows:
Movements of the lawsuit provisions for the period are as follows:
January 1
2013
4.097.031
1.369.143
Sensitivity level
%0,5 decrease
%0,5 increase
%0,5 decrease
%0,5 increase
(%3,0)
(%4,0)
(%92,59)
(%93,59)
579.990
(533.049)
(592.974)
644.345
Charge for the year (Note 17)
3.246.139
2.727.888
Rate
December 31
7.343.170
4.097.031
Change in employee benefits liability
b) Long term provisions Long term provision for employee benefits
Provision for employee termination benefits
Other long term provisions
2014
2013
8.986.321
15.435.367
8.986.321
15.435.367
Provision for employee termination benefit is recorded in line with the legal arrangements explained below: Under the Turkish Labour Law, the Company is required to pay termination benefits to each employee who has completed one year of service and whose employment is terminated without due cause, or who is called up for military service, dies or retires after completing 25 years of service (20 years for women) and achieves the retirement age (58 for women and 60 for men). The amount payable consists of one month’s salary limited to a maximum of TL 3.438,22 for each year of service as of December 31, 2014 (2013: TL 3.254,44). The liability is not funded, as there is no funding requirement. The provision has been calculated by estimating the present value of the future probable obligation of the Company arising from the retirement of the employees. Communiqué require actuarial valuation methods to be developed to estimate the enterprises’ obligation under defined benefit plans. Accordingly, the following actuarial assumptions were used in the calculation of the total liability:
Inflation rate (%) Discount rate (% Turnover rate to estimate the probability of retirement (%)
2014
2013
4,50
4,50
8,16
9,50
93,09
98,52
The principal assumption is that the maximum liability for each year of service will increase in line with inflation. Thus, the discount rate applied represents the expected real rate after adjusting for the anticipated effects of future inflation. The maximum amount of TL 3.541,37 which is effective from January 1, 2015 has been taken into consideration in calculating the provision for employee termination benefits of the Company. Movements of the provision for employee termination benefits during the period are as follows:
144
Turnover related to the probability of retirement
Net Discount Rate
2014
2014
2013
January 1
15.435.367
9.004.102
Interest cost
1.466.360
430.396
Current year service cost
(1.904.296)
8.031.293
Paid in the year
(5.438.945)
(2.503.316)
Actuarial (gain)/loss
(572.165)
472.892
December 31
8.986.321
15.435.367
Warranty provision
2014
2013
20.656.915
16.160.551
20.656.915
16.160.551
Movements of the short term and long term warranty provisions for the years are as follows:
January 1
2014
2013
33.069.517
30.746.095
(38.455.529)
(37.117.210)
Charge for the year (Note 15)
46.652.243
39.440.632
December 31
41.266.231
33.069.517
Used during the year
c) Contingent liabilities The commitments and contingent liabilities that are not expected to cause material loss or debts to the Company are summarized below: As of December 31, 2014 and 2013 the Company’s guarantee/pledge/mortgage positions are as follows:
A. The total amount of collaterals given on behalf of its own legal entity
2014
2013
101.091.071
9.327.007
B. The total amount of collaterals given in favor of the companies in the scope of full consolidation
-
-
C. The total amount of collaterals given for the purpose of providing debt to third parties in the course of ordinary business activities
-
-
D. The total amount of other collaterals given
-
-
i. The total amount of collaterals given in favor of the parent companies
-
-
ii. The total amount of collaterals given in favor of other group companies which are not in the scope of items B and C
-
-
iii. The total amount of collaterals given in favor of third parties other than the parties stated in item C
-
-
101.091.071
9.327.007
As at December 31, 2014, the Company has given in its own legal entity on behalf of the original collateral denominated in foreign currency amounts of EUR 2.676.108 and USD 38.860.836 (2013: EUR 2.676.108).
145
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AT DECEMBER 31, 2014
TürkTraktör, 2014 Annual Report
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 11 - PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS (Continued)
NOTE 13 - SHAREHOLDERS’ EQUITY (Continued)
d) Contingent assets
from that date. As of 31 December 2014, 24,77% (31 December 2013: 24,66%) of the Company shares are quoted at BIST. Foreign currency amount 2014
Letters of guarantees received Direct debit
TL equivalent 2013
EUR
USD
TL
EUR
USD
TL
December 31, 2014
December 31, 2013
73.530
270.000
381.193.800
1.569.142
303.000
326.287.850
382.027.310
331.542.328
-
-
295.670.892
-
-
244.616.204
295.670.892
244.616.204
Mortgages
-
-
788.714
-
-
5.452.214
788.714
5.452.214
Security bonds
-
-
2.500.000
-
-
2.722.000
2.500.000
2.722.000
Cash TL guarantees
-
-
177.530
-
-
-
177.530
-
Cash foreign currency guarantees
-
-
-
8.457
-
-
18.051
681.164.446
584.350.797
NOTE 12 - PROVISION FOR EMPLOYEE BENEFITS Liabilities for employee benefits
Taxes payable and liabilities (*) Accrued premiums and liabilities to personnel
2014
2013
10.330.249
6.272.971
5.943.489
4.685.626
16.273.738
10.958.597
(*) The balance consists of social security and witholding debt for the employees of the Company. NOTE 13 - SHAREHOLDERS’ EQUITY Paid-in Share Capital The Company’s registered share capital amounts to TL 250.000.000 (2013: TL 250.000.000). The Company’s share capital is composed of 5.336.900.000 units of shares each Kr 1 nominal value. The nominal value of share capital is TL 53.369.000. The composition of the Company’s statutory share capital at December 31, 2014 and December 31, 2013 are as follows: 2014
Koç Holding
2013
Participation (%)
Share Amount (TL)
Participation (%)
Share Amount (TL)
37,50
20.013.375
37,50
20.013.375
CNHI Osterreich
37,50
20.013.375
37,50
20.013.375
Public quotation in BİST
24,93
13.306.859
24,93
13.306.859
Other Adjustments to share capital
0,07
35.391
0,07
35.391
100,00
53.369.000
100,00
53.369.000
39.014.356
39.014.356
92.383.356
92.383.356
Adjustments to share capital represent the restatement effect of cash and cash equivalent contributions to share capital. The Company’s shares were organized as A, B and C Groups. A and B Group shares are privilege shares, and five Board members are selected from Group A’s and five Board members are selected from Group B’s nominated candidates. As of June 11, 2004, the Company has been quoted to BIST and its shares started to be traded in the stock exchange market 146
Retained earnings, restricted profit reserves, fair value reserves, and other capital reserves The legal reserves consist of first and second reserves, appropriated in accordance with the Turkish Commercial Code (“TCC”). The TCC stipulates that the first legal reserve is appropriated out of statutory profits at the rate of 5% per annum, until the total reserve reaches 20% of the Company’s paid-in capital. The second legal reserve is appropriated at the rate of 10% per annum of all cash distributions in excess of 5% of the paid-in capital. Under the TCC, the legal reserves can be used only to offset losses and are not available for any other usage unless they exceed 50% of paid-in capital. In accordance with the CMB regulations effective until 1 January 2008, the inflation adjustment differences arising at the initial application of inflation accounting which are recorded under “accumulated losses” could be netted off from the profit to be distributed based on CMB profit distribution regulations. In addition, the aforementioned amount recorded under “accumulated losses” could be netted off with net income for the period, if any, undistributed prior period profits, and inflation adjustment differences of extraordinary reserves, legal reserves and capital, respectively. In addition, in accordance with the CMB regulations effective until 1 January 2008, “Capital, Share Premiums, Legal Reserves, Special Reserves and Extraordinary Reserves” were recorded at their statutory carrying amounts and the inflation adjustment differences related to such accounts were recorded under “inflation adjustment differences” at the initial application of inflation accounting. “Equity inflation adjustment differences” could have been utilised only in issuing bonus shares and offsetting accumulated losses, carrying amount of extraordinary reserves could have been utilised in issuing bonus shares, cash dividend distribution and offsetting accumulated losses. In accordance with the Communiqué No:XI-29 and related announcements of CMB, effective from 1 January 2008, “Share capital”, “Restricted Reserves” and “Share Premiums” shall be carried at their statutory amounts. The valuation differences arised due to implementing the communique (such as inflation adjustment differences) shall be disclosed as follows: • if the difference is arising due to the inflation adjustment of “Paid-in Capital” and not yet been transferred to capital should be classified under the “Inflation Adjustment To Share Capital”; • if the difference is due to the inflation adjustment of “Restricted Reserves” and “Share Premium” and the amount has not been utilised in dividend distribution or capital increase yet, it shall be classified under “Retained Earnings”, Other equity items shall be carried at the amounts calculated based on TAS/TFRS. Capital adjustment differences have no other use other than being transferred to share capital.
Dividend Distribution Listed companies distribute dividend in accordance with the Communiqué No. II-19.1 issued by the CMB which is effective from 1 February 2014. Companies distribute dividends in accordance with their dividend payment policies settled and dividend payment decision taken in general assembly and also in conformity with relevant legislations. The communiqué does not constitute a minimum dividend rate. Companies distribute dividend in accordance with the method defined in their dividend policy or articles of incorporation. In addition, dividend can be distributed by fixed or variable installments and advance dividend can be paid in accordance with profit on interim financial statements of the Company. Companies should include at least the following in their profit distribution policies: a) Whether dividends will be distributed, and if distributed, the dividend distribution rate for shareholders and for others participating in the distribution. b) Payment type of dividend distribution. c) Time of dividend distribution; on condition that the distribution procedures to be started at the latest of the end of the annual period in which general assembly meeting was held in which the distribution was agreed upon. d) Whether dividend advances will be distributed, and if distributed, the related principles. In accordance with the Turkish Commercial Code (TCC), unless the required reserves and the dividend for shareholders as determined in the article of association or in the dividend distribution policy of the company are set aside, no decision may be made to set aside other reserves, to transfer profits to the subsequent year or to distribute dividends to the holders of usufruct right certificates, to the members of the board of directors or to the employees; and no dividend can be distributed to these persons unless the determined dividend for shareholders is paid in cash. In dividend distribution, the Company follows a balanced and consistent policy between the benefits of the shareholders and the benefits of the Company in accordance with the Corporate Management Principles. The Board of Directors of the Company has decided; that at least 20% of the distributable net profit for the period calculated in accordance with the TCC, CMB regulations and the main agreement should be distributed to the shareholders as dividends, taking into consideration the economic conditions, long-term investment financing and business plans as well as profitability; that the dividend to be distributed may be realized in cash or by capital increase through bonus shares or partly in cash and partly through bonus shares; that the calculable dividend amount may remain undistributed in the event that it is less than 5% of the paid-in capital; and that this dividend distribution policy should be revised annually by the Board of Directors. The part of the of accumulated losses of the Company exceeding the total of retained earnings, general legal reserves including premiums related to shares and costs arising from 147
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AT DECEMBER 31, 2014
TürkTraktör, 2014 Annual Report
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 13 - SHAREHOLDERS’ EQUITY (Continued) the adjustment of equity items except for capital stock in accordance with inflation accounting is accounted for as discount items in the calculation of net distributable profit for the period. In the statutory financial statements of the Company, in addition to the statutory profit amounting to TL 192.001.097 and retained earnings amounting to TL 252.298.747 for the year ended December 31, 2014; there are inflation adjust-
NOTE 15 – RESARCH AND DEVELOPMENT EXPENSES, MARKETING, SELLING AND DISTRIBUTION EXPENSES, GENERAL ADMINISTRATIVE EXPENSES (Continued) ment difference and other capital reserves that can be subject to a possible tax liability amounting to TL 47.110.422 and TL 14.076.203 if dividend distribution is made. The decision of dividend payment amounting to TL 300.000.000 was taken in the Company’s 60th General Assembly dated March 24, 2014 and payment has been made to shareholders in cash on March 25, 2014 (Note 22). Dividend payment distribution has been 5,62 Kr per share (2013: 3,74 Kr).
NOTE 14 - SALES AND COST OF SALES
Domestic sales
January 1 - December 31, 2014
January 1 - December 31, 2013
2.007.494.638
1.658.881.576
Export sales
944.418.345
698.327.376
Sales income (gross)
2.951.912.983
2.357.208.952
Less: Discounts and returns
(228.595.174)
(181.889.071)
Sales income (net)
2.723.317.809
2.175.319.881
Cost of sales
(2.234.163.502)
(1.703.022.950)
Gross profit
489.154.307
472.296.931
January 1 - December 31, 2014
January 1 - December 31, 2013
Personnel expenses
13.673.900
11.264.909
Service expenses received from shareholders
9.160.259
5.233.921
Entertainment expenses
4.767.601
1.849.983
General administrative expenses:
Remuneration of key management personnel (Note 22) (*)
4.715.983
4.123.771
Donations and aids
4.400.318
4.156.770
Depreciation and amortisation expenses (Note 7, 8) (***)
4.028.844
3.070.954
Outsourced expenses
3.365.086
1.627.081
Consultancy services
2.467.419
1.033.091
Service expenses
2.197.584
2.882.347
Taxes and other legal expenses
1.583.859
843.081
Transportation and travel expenses
1.211.215
797.040
Insurance expenses
786.700
484.130
Subscription expenses
721.162
662.487
Legal colsultancy and lawsuit expenses
549.645
691.418
Provision for employment termination benefits (Note 11) (**)
235.142
318.346
Other
NOTE 15 – RESARCH AND DEVELOPMENT EXPENSES, MARKETING, SELLING AND DISTRIBUTION EXPENSES, GENERAL ADMINISTRATIVE EXPENSES
1.725.165 40.764.494
January 1 - December 31, 2014
January 1 - December 31, 2013
January 1 - December 31, 2014
January 1 - December 31, 2013
Depreciation and amortisation expenses (Note 7, 8) (***)
8.413.815
6.042.087
Warranty expenses (Note 11)
46.652.243
39.440.632
Personnel expenses
1.541.716
1.560.007
Personnel expenses
23.698.018
16.663.472
Project expenses
883.365
641.300
Transportation and insurance expenses
21.407.137
16.784.868
Outsourced expenses
703.609
310.965
Press relations, advertisement and promotion expenses
7.073.610
5.028.746
Provision for employment termination benefits (Note 11) (**)
7.768
75.765
Dealers meeting and fair expenses
6.576.447
4.553.398
Remuneration of key management personnel (Note 22.v) (*)
Transportation and travel expenses
4.261.568
3.394.615
Other
Remuneration of key management personnel (Note 22.v) (*)
2.213.863
1.795.451
Outsourcing expenses
2.044.999
1.908.774
Rent expenses
1.915.672
1.253.785
Marketing, selling and distribution expenses:
Depreciation and amortisation expenses (Note 7, 8) (***)
1.318.349
826.956
Service expenses
1.028.254
957.761
Material expenses
989.068
961.589
Provision for employment termination benefits (Note 1) (**)
347.441
291.698
Other
148
2.517.677 56.382.394
4.574.529
3.386.307
124.101.198
97.248.052
Research and development expenses:
-
79.393
378.079
516.378
11.928.352
9.225.895
(*) The amount of remuneration of key management personnel allocated to production costs is TL 4.113.581 (2013: TL 2.433.006), and capitalized amount is TL 932.989 (2013: TL 943.057). (**) The amount of provision for employment termination benefits allocated to production costs is TL (2.519.763) (2013: TL 7.345.484). The amount capitalized during this period is TL 25.116 (2013: None). (***) The amount of depreciation and amortization expenses allocated to production costs is TL 20.301.171 (2013: TL 14.686.646).
149
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AT DECEMBER 31, 2014
TürkTraktör, 2014 Annual Report
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 16 – EXPENSES BY NATURE
NOTE 19 – FINANCIAL EXPENSE January 1 - December 31, 2014
January 1 - December 31, 2013
1.705.898.731
1.210.479.855
Foreign exchange losses (*)
Cost of merchandise sold
302.623.126
298.825.619
Personnel and provision for employment termination benefits expenses
165.228.467
132.476.710
Raw materials
Material expenses
49.133.777
42.866.439
Warranty expenses
46.652.243
39.440.632
Depreciation and amortisation expenses
34.062.179
24.626.643
Transportation and insurance expenses
29.619.232
22.520.265
Energy expenses
14.719.793
10.936.242
Remuneration of key management personnel
11.043.427
8.431.621
Donations and aids Changes in finished goods and work in process Other
Financial expenses
(72.833.800)
(83.550.577)
(*) Consists of foreign exchange rate expenses from accounts other than trade receivables and payables. NOTE 20 - TAX ASSETS AND LIABILITIES 2014 Corporate taxes payable
74.154.310
59.151.605
(Tax asset)/ tax liabilty - net
1.850.261.391
January 1 - December 31, 2013
45.449.197
16.042.893
2.443.312
1.171.436
Incentive income
568.373
400.000
Other income
4.331.761
2.356.423
563.688.910
401.066.375
(520.603.598)
(355.912.173)
(34.610.581)
(9.754.867)
-
(5.169.012)
(3.246.139)
(2.727.888)
(516.756)
(2.910.670)
(558.977.074)
(376.474.610)
41.682.033
55.246.090 (46.721.512)
(2.796.797)
8.524.578
January 1 - December 31, 2014
January 1 - December 31, 2013
(41.682.033)
(55.246.090)
Deferred tax income Tax expense
January 1 - December 31, 2014
January 1 - December 31, 2013
14.897.458 (40.348.632)
Deferred taxes The Company recognizes deferred tax assets and liabilities based upon temporary differences arising between the financial statements prepared in accordance with the CMB Financial Reporting Standards and their statutory financial statements, using the currently enacted tax rates. These temporary differences result in the recognition of revenue and expenses in different reporting periods for CMB Financial Reporting Standards and tax purposes. The currently enacted tax rate for deferred tax assets and liabilities is 20% (2013: 20%). The breakdown of cumulative temporary differences and the resulting deferred tax assets/ (liabilities) at December 31, 2014 and 2013 are as follows: Temporary differences
Unearned finance income on due from related parties
Deferred tax assets/ (liabilities)
2014
2013
2014
2013
48.938.089
20.270.382
(9.787.618)
(4.054.076)
(5.696)
(26.287)
1.139
5.257
(8.986.321)
(15.435.367)
1.797.264
3.087.073
Foreign exchange gain(*)
53.590.877
45.174.088
Provision for employee termination benefits
Interest income
9.544.637
8.782.039
Warranty provision
(41.266.231)
(33.069.517)
8.253.246
6.613.903
53.956.127
Provision for lawsuits
(7.343.170)
(4.097.031)
1.468.634
819.406
1.078.777
(282.633)
(215.755)
56.527
Financial income
63.135.514
(*) Consists of foreign exchange rate income from accounts other than trade receivables and payables.
Unearned finance income on trade receivables and payables Provision for doubtful receivables
(2.191.705)
(7.489.117)
438.341
1.497.823
Provision for impairment of inventory
(12.959.214)
(11.517.571)
2.591.843
2.303.514
Sales premium accrued
(13.443.441)
(13.560.049)
2.688.688
2.712.010
134.335
(925.022)
(26.867)
185.004
Other expense provisions
Temporary differences 150
9.322.420 (32.359.613)
Corporation tax is payable, at a rate of 20% as of 2014 (2013: 20%) on the total income of the companies registered in Turkey after adjusting for certain disallowable expenses, exempt income and investment and other allowances (e.g. R&D allowance).
Property, plant and equipment and intangible assets, restatement and useful life differences
NOTE 18 - FINANCIAL INCOME
2013
(44.478.830)
Current period corporate tax expense
Termination of provision for doubtful receivables (Note 5)
Other operating expenses
(3.746.603)
2.426.575.446
Financial income from credit sales
Provision for legal cases (Note 11)
(10.405.516)
(4.242.890)
Less: Prepaid taxes
381.095.623
Other expenses
(41.164.199)
Other
4.156.770
510.896.267
Provision for doubtful receivables (Note 5)
Interest expenses of bank borrowings
(3.651.010)
Foreign exchange gain from trade receivables and payables
Financial expense on credit purchases
(69.398.458)
4.400.318
January 1 - December 31, 2014
Foreign exchange losses on trade receivables and payables
January 1 - December 31, 2013
(27.426.711)
(10.960.157)
NOTE 17 – OTHER OPERATING INCOME/ EXPENSES
Other operating income
January 1 - December 31, 2014
Deferred tax assets/ (liabilities) 151
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AT DECEMBER 31, 2014
TürkTraktör, 2014 Annual Report
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 20 - TAX ASSETS AND LIABILITIES (Continued)
NOTE 22 - RELATED PARTY EXPLANATIONS (Continued)
2014
2013
2014
2013
-
-
36.794.678
22.553.029
Deferred income
(4.552.091)
(368.483)
910.418
73.697
Other
(4.187.470)
(3.451.806)
Investment incentive tax assets
Deferred tax assets
837.494
690.362
45.751.505
36.543.529
as follows: i) Balances with related parties as of December 31, 2014 and 2013: 2014
2013
2.470.743
28.481.316
2.470.743
28.481.316
2014
2013
40.072.667
-
40.072.667
-
a) Bank deposits and borrowings Deposits with related parties: Yapı ve Kredi Bankası A.Ş. (“Yapı Kredi”)
Movements of deferred tax assets during the years are as follows: 2014
2013
January 1
36.543.529
21.551.493
Reflected to profit for the year
9.322.420
14.897.458
Reflected to other comprehensive income/ (expense)
(114.444)
94.578
December 31
45.751.505
36.543.529
Borrowings from related parties: Yapı Kredi
The reconciliation of the current period tax charge is as follows:
Profit before tax Tax calculated at enacted tax rate Investment incentives Research and development incentives Disallowable expenses Other Total tax charge
Earnings per share (1 Kr nominal value per share as TL)
60.196.245
494.268
10.309.551
b) Due from related parties
293.446.885
320.254.571
Due from group companies
58.689.377
64.050.914
CNHI International SA (“CNHI International”) (*)
(21.464.950)
(19.351.996)
CNHI Argentina SA (“CNHI Argentina”)
(4.930.162)
(4.429.419)
CNHI Italy SPA (“CNHI Italy”)
4.300.148
8.686.937
1.432.319
1.003.496
191.963
735.902
CNHI Latin America Ltda.
(126.615)
(656.769)
Other
32.359.613
40.348.632
January 1 -December 31, 2014
January 1 -December 31, 2013
261.087.272
279.905.939
5.336.900.000
5.336.900.000
0,0490
0,0524
There is no difference between basic and diluted earnings per share in any period. NOTE 22 - RELATED PARTY EXPLANATIONS The Company is jointly controlled by Koç Holding and CNHI Osterreich. Related party balances and transaction disclosure are grouped by joint venture companies and group companies of joint venture companies. Summary of the intercompany balances as of December 31, 2014 and 2013 and significant intercompany transactions were
152
91.430.770
January 1 -December 31, 2013
Less: Unearned financial income
Weighted average number of the ordinary shares
2013
January 1 -December 31, 2014
NOTE 21 - EARNINGS PER SHARE Earnings per share stated in the income statement are calculated by dividing the net income to the weighted average number of ordinary shares outstanding during the period. Companies can increase their share capital by making a pro-rata distribution of shares (“Bonus Shares”) to existing shareholders from statutory retained earnings and statutory revaluation surplus. For the purpose of earnings per share computations, the weighted average number of shares in existence during the year has been adjusted in respect of bonus share issues without a corresponding change in resources, by giving them retroactive effect for the year in which they were issued and each earlier year. Basic earnings per share are calculated by dividing the net income attributable to shareholders by the weighted average number of ordinary shares in issue. Nominal value of one share of company is 1 Kr.
Net profit for the year
2014
794.245
627.787
98.451.750
80.824.016
(5.696)
(26.287)
98.446.054
80.797.729
(*) Due from related parties is arising from export sales of the Company realized via CNHI International. These receivables are collected on a regular basis in specified maturities within the business deals. 2014
2013
3.711.509
1.939.893
c) Due to related parties Koç Holding Due to shareholders
3.711.509
1.939.893
Zer Merkezi Hizmetler ve Ticaret A.Ş. (“Zer”)
12.100.893
6.397.486
Opet Fuchs Madeni Yağ Sanayi ve Ticaret A.Ş. (“Opet Fuchs”)
8.081.328
4.374.305
Ark İnşaat Sanayi ve Ticaret A.Ş.
6.498.031
7.565.470
New Holland Fiat India Pvt. Ltd. (“New Holland India”)
4.177.625
2.512.605
Koç Sistem Bilgi ve İletişim Hizmetleri A.Ş. (“Koç Sistem”)
2.373.805
3.609.295
Arçelik A.Ş.
2.201.521
-
Eltek Elektrik İth. İhracat ve Toptan Tic. A.Ş. (“Eltek”)
1.680.858
-
Koçtaş Yapı Marketleri A.Ş. (“Koçtaş”)
1.153.621
605.461
Setur Servis Turistik A.Ş. (“Setur”)
1.035.020
-
Otokoç Otomotiv San. ve Tic. A.Ş (“Otokoç”)
510.667
279.575
Opet Petrolcülük A.Ş. (“Opet”)
171.238
60.882
153
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AT DECEMBER 31, 2014
TürkTraktör, 2014 Annual Report
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 22 - RELATED PARTY EXPLANATIONS (Continued)
NOTE 22 - RELATED PARTY EXPLANATIONS (Continued)
2014
2013
7.312
760.127
Other
1.378.490
1.409.163
2014
2013
Due to group companies
41.370.409
27.574.369
(315.161)
(167.691)
44.766.757
29.346.571
Otokar Otomotiv ve Savunma Sanayi A.Ş. (“Otokar”)
Less: Unearned financial expenses
ii) Significant sales and purchases transactions with related parties for the periods between January 1 – December 31, 2014 and 2013: a) Product sales to related parties January 1 -December 31, 2014
January 1 -December 31, 2013
c) Product purchases from related parties January 1 -December 31, 2014
January 1 -December 31, 2013
CNHI International (1)
132.017.598
321.977.243
Opet Fuchs (2)
38.120.534
29.377.064
New Holland India (3)
21.438.578
25.303.899
Product purchases from group companies
Zer
15.296.880
10.268.269
Koç Sistem
10.650.683
2.504.429
Akpa Dayanıklı Tüketim LPG ve Akaryakıt Ürünleri Pazarlama A.Ş.
4.000.369
2.406.372
Opet (2)
1.333.025
872.629
Other
Product sales to group companies CNHI International (*)
922.191.761
671.762.570
11.119.313
7.095.227
CNHI Argentina SA
5.127.373
11.698.252
CNHI Latin America Ltda.
5.087.866
6.875.242
Other
1.174.208
972.265
944.700.521
698.403.556
CNHI Italy
d) Service purchases from related parties January 1 -December 31, 2014
January 1 -December 31, 2013
5.077.442
2.896.856
5.077.442
2.896.856
Ark İnşaat San. ve Tic. A.Ş. (1)
188.194.156
80.377.694
Zer (2)
60.732.522
51.148.132
CNHI International (4)
8.785.479
35.513.794
Service purchases from shareholders
b) Service sales to related companies
Koç Holding (3) January 1 -December 31, 2014
January 1 -December 31, 2013
Service sales to group companies CNHI International (1)
5.756.060
787.560
CNHI Italy(2)
3.873.674
3.084.828
Service purchase from group companies
45.961
-
Eltek (8)
8.219.613
-
9.675.695
3.872.388
Setur (6)
6.880.920
3.692.927
Otokar (5)
(1) S ervices sold to CNHI International is related to engineering, consultancy and various services. (2) Services sold to CNHI Italy is related to engineering and various services.
5.327.189
7.743.126
4.000.000
4.000.000
Otokoç
1.938.601
1.270.485
Ram Sigorta Aracılık Hizmetleri A.Ş. (7)
1.878.874
1.214.453
766.991
1.513.981
-
171.282
Vehbi Koç Vakfı
c) Other income and expenses from related parties January 1 -December 31, 2014
January 1 -December 31, 2013
CNHI International
-
618.262
Other
-
-
-
618.262
CNHI Italy
-
-
Other
-
(7.371)
-
(7.371)
Other income from group companies
Koç Sistem Aygaz Doğalgaz Toptan Satış A.Ş. Other
Other expenses from group companies
154
3.916.198 396.626.103
(1) T he Company purchases tractors, agricultural machinery, engine and spare parts. (2) The Company makes various oil purchases for use in production and fuel purchases for use in company vehicles. (3) The Company purchases ponte and front axles for use in production.
(*) The Company realizes export sales through CNHI International.
Other
5.749.730 228.607.397
3.185.903
2.680.014
289.910.248
189.325.888
294.987.690
192.222.744
(1) Services purchased from Ark İnşaat San. ve Tic. A.Ş. is related to services taken for construction of assembly factory in Sakarya. (2) Services purchased from Zer are related with security, cleaning, transportation and other services (3) Services purchased from Koç Holding is related with human resources, strategy development, consulting and brokerage. (4) Services purchased from CNHI International is related with engineering services for Tier 4, strategy development, consulting and brokerage. 155
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AT DECEMBER 31, 2014
TürkTraktör, 2014 Annual Report
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 22 - RELATED PARTY EXPLANATIONS (Continued)
NOTE 23 - FINANCIAL INSTRUMENTS AND NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (Continued)
(5) Service purchased from Otokar is related with assembly and assembly support services. (6) Services purchased from Setur are generally arising from plane tickets, accommodation and associated with various organizations within the sales and marketing activities. (7) Insurance service purchased from Ram Sigorta Aaracılık Hizmetleri A.Ş. is related interim period include premium amounts paid and accrued ended on 31 December 2014. (8) Services purchased from Eltek related to electricity. iii) Financial income and expenses arising from transactions with related parties for the periods between January 1 – December 31, 2014 and 2013:
a) Market Risk Foreign currency risk The Company is exposed to foreign exchange risks resulting from the foreign currency denominated commercial activities with the foreign companies and loans obtained from banks. Currency risk arises due to foreign currency denominated recorded and prospective transactions resulting as assets and liabilities. These risks are monitored regularly and limited by analyses of the foreign currency position. The amounts of foreign currency assets, liabilities and TL equivalents of the Company as of December 31, 2014 and 2013 are as follows:
Financial income and expense from group companies 2014 January 1 -December 31, 2014
January 1 -December 31, 2013
831.315
398.629
1 Ocak - 31 Aralık 2014
1 Ocak - 31 Aralık 2013
(3.224.222)
(372.770)
Yapı Kredi Yatırım Menkul Değerler A.Ş.
-
(2.790)
Yapı Kredi Finansal Kiralama A.O.
-
(23)
(3.224.222)
(375.583)
Interest income Yapı Kredi Interest expense Yapı Kredi
iv) Dividends paid to related parties:
TL Equivalent
USD
EUR
GBP
DKK
CHF
YEN
1.Trade receivables
116.805.527
914.419
40.658.376
-
-
-
-
2. Monetary financial assets (including banks accounts) (Note 3)
119.998.299
765.276
41.723.337
148.301
-
577
-
3.Other
82.285.342
5.957.255
24.274.493
-
-
-
-
4. Current assets (1+2+3)
319.089.168
7.636.950
106.656.206
148.301
-
577
-
-
-
-
-
-
-
-
5. Trade receivables 6.Other
22.760.414
1.019
8.068.228
-
-
-
-
7. Non-current assets (5+6)
22.760.414
1.019
8.068.228
-
-
-
-
8. Total assets (4+7)
341.849.582
7.637.969
114.724.434
148.301
-
577
-
9. Trade payables
53.292.272
-
18.893.279
-
-
-
-
10. Financial liabilities (Note 4)
112.400.823
10.032.699
31.600.665
-
-
-
-
11. Other monetary liabilities
10.034.483
28.362
3.534.128
-
January 1 -December 31, 2014
January 1 -December 31, 2013
12. Current liabilities (9+10+11)
175.727.578
10.061.061
54.028.072
-
-
-
-
Koç Holding
112.500.000
75.000.000
13. Financial liabilities (Note 4)
236.107.047
-
83.705.125
-
-
-
-
CNHI Osterreich
112.500.000
75.000.000
14. Non-current liabilities (13)
236.107.047
-
83.705.125
-
-
-
-
Public quotation
74.801.056
49.867.371
15. Total liabilities (12+14)
411.834.625
10.061.061
137.733.197
-
-
-
-
16. Net foreign currency asset/ (liability) position (8-15)
(69.985.043)
(2.423.092)
(23.008.763)
148.301
-
577
-
17. Net monetary foreign currency asset/ (liability) position (8-15)
(69.985.043)
(2.423.092)
(23.008.763)
148.301
-
577
-
TL Equivalent
USD
EUR
GBP
DKK
CHF
YEN
Other
198.944
132.629
300.000.000
200.000.000
v) Other transactions with related parties for the periods between January 1 – December 31, 2014 and 2013:
Remuneration of key management personnel (*)
January 1 -December 31, 2014
January 1 -December 31, 2013
11.976.416
9.374.678
(*) Key management personnel are identified as Board of Directors, general manager and vice general managers. NOTE 23 - FINANCIAL INSTRUMENTS AND NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS The Company’s activities expose it to a variety of financial risks. These risks are market risk, currency risk, fair value interest rate risk, price risk and cash flow interest rate risk, credit risk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance of the Company. Risk management is carried out in accordance with the program set by the Board of Directors of the Company.
156
2013 1.Trade receivables
101.677.059
650.023
34.152.806
-
-
-
-
2. Monetary financial assets (including banks accounts) (Note 3)
68.890.710
24.853
23.436.469
4.033
-
969
-
3.Other
95.276.963
10.655.199
24.572.228
85.695
-
-
3.871.040
4. Current assets (1+2+3)
265.844.732
11.330.075
82.161.503
89.728
-
969
3.871.040
250.659
76.489
29.766
-
-
-
-
5. Trade receivables 6.Other
20.262.971
1.019
6.899.641
-
-
-
-
7. Non-current assets (5+6)
20.513.630
77.508
6.929.407
-
-
-
-
8. Total assets (4+7)
286.358.362
11.407.583
89.090.910
89.728
-
969
3.871.040
9. Trade payables
54.035.952
10.019.740
10.906.669
57.509
-
-
20.831.892
10. Financial liabilities (Note 4)
14.702.994
-
5.006.979
-
-
-
157
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AT DECEMBER 31, 2014
TürkTraktör, 2014 Annual Report
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 23 - FINANCIAL INSTRUMENTS AND NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (Continued)
NOTE 23 - FINANCIAL INSTRUMENTS AND NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (Continued)
2013
2013 TL Equivalent
ABD Doları
Avro
GBP
DKK
CHF
YEN
11. Other monetary liabilities
11.324.615
3.793
3.853.744
-
-
-
-
12. Current liabilities (9+10+11)
80.063.561
10.023.533
19.767.392
57.509
-
-
20.831.892
13. Financial liabilities (Note 4)
235.191.834
-
80.092.571
-
-
-
-
14. Non-current liabilities (13)
235.191.834
-
80.092.571
-
-
-
-
15. Total liabilities (12+14)
315.255.395
10.023.533
99.859.963
57.509
-
-
20.831.892
16. Net foreign currency asset/ (liability) position (8-15)
(28.897.033)
1.384.050
(10.769.053)
32.219
-
969
(16.960.852)
Profit/ Loss
(28.897.033)
1.384.050
(10.769.053)
32.219
-
969
(16.960.852)
Profit/(loss) from USD net asset position Net effect of USD
Profit/(loss) from other net liability position
698.327.376
Net effect of other
571.016.789
Total net effect
The Company is exposed to foreign exchange risk primarily with respect to EUR and USD. The effect of the Company’s EUR and USD foreign currency position as of December 31, 2014 and 2013 under the assumption of the appreciation and depreciation of TL against other currencies by 10% with all other variables held constant, is as follows: 2014 Shareholders’ equity
Depreciation of foreign currency
Appreciation of foreign currency
Hedged amount against USD risk (-) Net effect of USD
Depreciation of foreign currency
(561.891)
561.891
-
-
-
-
-
-
(561.891)
561.891
-
-
Hedged amount against EUR risk (-) Net Effect of EUR
(6.490.082)
6.490.082
-
Hedged amount against other (-) Net effect of other Total net effect
158
-
295.398
(295.398)
-
-
(3.162.332)
3.162.332
-
-
-
-
-
-
(3.162.332)
3.162.332
-
-
(22.769)
22.769
-
-
-
-
-
-
(22.769)
22.769
-
-
(2.889.703)
2.889.703
-
-
Interest rate risk The table of the financial instruments that have interest rate sensitivity are shown below: Financial instruments with fixed interest rate 2014
2013
Time deposits (Note 3)
259.864.196
199.334.896
Financial liabilities (Note 4)
390.336.142
129.864.519
-
-
-
-
-
(6.490.082)
6.490.082
-
-
53.469
(53.469)
-
-
-
-
-
-
53.469
(53.469)
-
-
(6.998.504)
6.998.504
-
-
Had TL appreciate/ (depreciate) by 10% against other Profit/(loss) from other net liability position
-
-
Financial instruments with floating interest rate
Had TL appreciate/ (depreciate) by 10% against EUR Profit/ (loss) from EUR net liability position
-
-
Price Risk The Company does not have financial assets exposed to price risk.
Had TL appreciate/ (depreciate) by 10% against USD Profit/(loss) from USD net asset position
(295.398)
-
Hedged amount against other (-)
944.418.345
Appreciation of foreign currency
295.398
Hedged amount against EUR risk (-)
January 1 -December 31, 2013
Profit/ Loss
Depreciation of foreign currency
Had TL appreciate/ (depreciate) by 10% against EUR
January 1 -December 31, 2014 736.170.777
Appreciation of foreign currency
Had TL appreciate/ (depreciate) by 10% against other
The import and export amounts of the Company for the years ended December 31, 2014 and 2013 are as follows:
Total import amount
Depreciation of foreign currency
Hedged amount against USD risk (-)
Net Effect of EUR
Total export amount
Appreciation of foreign currency Had TL appreciate/ (depreciate) by 10% against USD
Profit/ (loss) from EUR net liability position 17. Net monetary foreign currency asset/ (liability) position (8-15)
Shareholders’ equity
Financial liabilities (Note 4)
2014
2013
267.915.396
218.726.076
For financial instruments with variable interest rates, if the interest on December 31, 2014 in all currencies was higher/lower by 100 base points with all other variables held constant, the profit for the period before tax as a result of high/low interest rate income/ expense consisting of loans with variable interest rates would be higher/lower by TL 1.783 (2013: TL 12.297). b) Credit Risk Financial assets are in hand carrying the risk of the inability of fulfilling the requirements of the agreements by the counter parties. The Company management manages these risks by limiting the average risk to any individual counterparty, by obtaining guarantees where necessary. The Company limits these risks that may arise from its dealers, by restricting the credit limits determined for the dealers according to the amount of the guarantees received, by updating the guarantee amounts regularly and by receiving the pledge of ownership of the tractors sold. Credit limits are regularly monitored by the Company and the customers’ credit quality are regularly evaluated by considering the customers’ financial position, past experiences and other factors. Trade receivables are evaluated by the management of the Company depending on their past experiences and current economic conditions and are presented in financial statements net of provision for doubtful receivables (Note 5). 159
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AT DECEMBER 31, 2014
TürkTraktör, 2014 Annual Report
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 23 - FINANCIAL INSTRUMENTS AND NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (Continued)
NOTE 23 - FINANCIAL INSTRUMENTS AND NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (Continued)
The Company’s maximum exposure to credit risk as of December 31, 2014 and 2013 is as follows:
2013 Trade Receivables
2014 Trade Receivables Third party
Related party
Third party
Bank deposits
Derivative instruments
98.446.054
359.417.489
-
357.419
269.227.427
-
Net book value of restructured financial assets, otherwise that - will be considered as due dated or impaired
-
-
-
-
-
-
Net book value of due dated but not impaired assets
-
2.752.280
-
-
-
-
Net book value of impaired assets
-
273.031
-
-
-
-
Net book value of financial assets which are undue and not impaired
Related party
Third party
Related party
Third party
Bank deposits
Derivative instruments
80.797.729
273.967.582
-
355.102
209.322.936
-
Net book value of restructured financial assets, otherwise that - will be considered as due dated or impaired
-
-
-
-
-
-
Net book value of due dated but not impaired assets
-
2.580.519
-
-
-
-
Net book value of impaired assets
-
5.817.482
-
-
-
-
- Due dated (gross book value)
-
47.268.302
-
-
-
-
- Provision (-)
-
(41.450.820)
-
-
-
-
Other Receivables
Related party
- Due dated (gross book value)
-
39.770.692
-
-
-
-
- Provision (-)
-
(39.497.661)
-
-
-
-
- Undue (gross book value)
-
368.388
-
-
-
-
- Provision (-)
-
(368.388)
-
-
-
-
Off-balance sheet items exposed to credit risk
-
-
-
-
-
Amount exposed to maximum credit risk (*)
98.446.054
362.442.800
-
357.419
269.227.427
Other Receivables
Net book value of financial assets which are undue and not impaired
- Undue (gross book value)
-
858.541
-
-
-
-
- Provision (-)
-
(858.541)
-
-
-
-
-
Off-balance sheet items exposed to credit risk
-
-
-
-
-
-
-
Amount exposed to maximum credit risk (*)
80.797.729
282.365.583
-
355.102
209.322.936
-
(*) The factors, increasing the credit reliability and the guarantees received are not taken into consideration in calculation of the amount. As of December 31, 2014, the guarantee amount of the maximum exposure to credit risk is TL 675.364.122. Besides, all assets which are due but not impaired and are impaired are guaranteed.
(*) The factors, increasing the credit reliability and the guarantees received are not taken into consideration in calculation of the amount. As of December 31, 2013, the guarantee amount of the maximum exposure to credit risk is TL 566.630.979. Besides, all assets which are due but not impaired and are impaired are guaranteed. As of December 31, 2014 and 2013, assets that are overdue but not impaired are as follows: 2014 Receivables Trade Receivables
Other Receivables
Bank Deposits
Derivative Instruments
Other
-
-
-
-
-
1-3 months past from maturity
-
-
-
-
-
3-12 months past from maturity
1.840.538
-
-
-
-
911.742
-
-
-
-
-
-
-
-
-
2.752.280
-
-
-
-
1-30 days past from maturity
1-5 years past from maturity Over 5 years from maturity Total overdue
160
161
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED AT DECEMBER 31, 2014
TürkTraktör, 2014 Annual Report
(Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 23 - FINANCIAL INSTRUMENTS AND NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (Continued) 2013 Receivables Trade Receivables
Other Receivables
Bank Deposits
Derivative Instruments
Other
1-30 days past from maturity
15.725
-
-
-
-
1-3 months past from maturity
29.248
-
-
-
-
3-12 months past from maturity
1.157.733
-
-
-
-
1-5 years past from maturity
1.377.299
-
-
-
-
514
-
-
-
-
2.580.519
-
-
-
-
Over 5 years from maturity Total overdue
Consist of guarantees, guarantee letters received from customers, collateral securities and mortgages. c) Liquidity Risk Liquidity risk is managed by mainintaining cash and marketable securities, the availability of funding through an adequate amount of committed credit lines and the ability to close out market positions. Funding risk of the current and future liabilities is managed by providing sustainability of the access to sufficient high quality creditors and the sustainability of the sufficient cash flows obtained from operating activities. The Company management, in order to ensure continuous liquidity, closely follows up the timely collection of receivables, allocates high intensity focus to prevent any financial burden sourcing from late collections and determines cash and non-cash credit limits to be activated in case of need by the Company. As of December 31, 2014 and 2013, the undiscounted cash flows and liabilities according to their remaining maturities are presented in the following tables: 2014 Book value
Less than 3 months
Between 3-12 months
Between 1-5 years
On Demand
Total cash outflows according to contract
Financial liabilities (Note 4)
658.251.538
103.669.787
139.431.306
476.484.511
-
719.585.604
Trade payables (Note 5)
403.905.945
407.771.043
-
-
-
407.771.043
Due to related parties (Note 22)
44.766.757
45.081.918
-
-
-
45.081.918
Other payables
11.740.493
11.740.495
-
-
-
11.740.495
1.118.664.733
568.263.243
139.431.306
476.484.511
-
1.184.179.060
-
-
-
-
-
-
Non-derivative financial instruments Derivative cash inflows Derivative cash outflows
-
-
-
-
-
-
Derivative financial instruments
-
-
-
-
-
-
2013 Book value
Less than 3 months
Between 3-12 months
Between 1-5 years
On Demand
Total cash outflows according to contract
Financial liabilities (Note 4)
348.590.595
46.875
26.336.313
357.790.571
-
384.173.759
Trade payables (Note 5)
276.743.088
278.698.990
-
-
-
278.698.990
29.346.571
29.514.262
-
-
-
29.514.262
Due to related parties (Note 22) Other payables Non-derivative financial instruments
162
7.669.767
7.669.767
-
-
-
7.669.767
662.350.021
315.929.894
26.336.313
357.790.571
-
700.056.778
Derivative cash inflows
-
-
-
-
-
-
Derivative cash outflows
-
-
-
-
-
-
Derivative financial instruments
-
-
-
-
-
-
NOTE 23 - FINANCIAL INSTRUMENTS AND NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (Continued) Capital risk management The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Company monitors capital on the basis of the net financial debt/ shareholder’s equity ratio. Net financial debt calculated as total financial liabilities (including short and long term bank borrowings) less cash and cash equivalents. This ratio is calculated as net financial debt divided by total shareholders’ equity. 2014
2013
269.229.023
209.322.936
Less: Financial liabilities (Note 4)
(658.251.538)
(348.590.595)
Net financial (debt)/ asset
(389.022.515)
(139.267.659)
Total shareholders’ equity
704.862.715
743.317.723
(0,55)
(0,19)
Cash and cash equivalents (Note 3)
Net financial debt/ shareholders’ equity ratio
Fair value of financial assets Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation, and is best evidenced by a quoted market price, if one exists. The estimated fair values of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies. However, judgement is necessarily required to interpret market data to estimate the fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realise in a current market exchange. The following methods and assumptions were used to estimate the fair value of the financial instruments for which it is practical to estimate fair value: Financial assets The fair values of balances denominated in foreign currencies, which are translated at period-end exchange rates, are considered to approximate carrying value. The fair values of cash and cash equivalent are considered to approximate their respective carrying values due to their shortterm nature. The discounted carrying values of trade receivables along with the related allowances for uncollectability are estimated to be their fair values. Financial liabilities The fair values of short-term and long-term bank borrowings are presented in Note 4. Trade payables, which are measured at amortised cost, are considered to approximate their carrying value. NOTE 24 - SUBSEQUENT EVENT None.
163
NOTES
164
