2012 trakya cam sanayii a.ﬁ. 2012 annual report - sisecam flat glass … · · 2016-03-25coated...

www.trakyacam.com.tr

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Trakya Cam Sanayii A.fi.

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A N N U A L R E P O R T

3 5 t h YE A R

Mersin

Contents

Consolidated Financial Indicators 02 Management 04 Report of the Board 07 Report of the Board of Auditors 16 Independent Auditors’Report 19 Corporate Governance Principles Compliance Report 68 Agenda for the General Assembly 78 Text of Draft Amendment toArticles of Association of Trakya Cam Sanayii A.fi. 79 Contact Information for Trakya Cam Group of Companies / Plants 87

Lüleburgaz-K›rklareliLüleburgaz-K›rklareli

‹stanbul‹stanbul

BulgariaTargovishteBulgariaTargovishte

Mersin

EgyptEl SukhnaEgyptEl Sukhna

YeniflehirYeniflehir

TatarstanAlabugaTatarstanAlabuga

RomaniaBuzauRomaniaBuzau

Polatl›Polatl›

Basic Glass

Home Appliances Glass

Solar Glass

Automotive Glass

Basic Glass (Investment)

Automotive Glass (Investment)

Field of activity

Headquarters

Founded in 1978 as a subsidiary of Turkiye fiifle ve Cam Fabrikalar› A.fi.,Trakya CamSanayii A.fi. cames out the activities of the fiiflecam Group in the field of flat glass andstands as the 6th largest producer in the world, and 4th in Europe. By inaugurating anew facility in 1981, Trakya Cam became the first company in Eastern Europe, theBalkans, the Middle East and Northern Africa to utilize the modern float technology forproduction and continued to introduce numerous innovations to the flat glass industryboth in Turkey and the region.

Today performing production activities through its seven float lines, Trakya Cam is activein four main segments:

• Basic glass products (flat glass, patterned glass, mirror, laminated glass and coatedglass)

• Automotive and other transportation vehicles glass,• Solar glass,• Home appliances glass

In line with its vision of regional leadership and notion of multi-focused production,Trakya Cam expanded its activities beyond Turkey in the second half of the 2000’s. Afterthe commissioning of the first float line in Balkans in 2006 through, Trakya Glass BulgariaEAD that is established in Bulgaria, mirror and tempered glass lines were introduced,and the autoglass plant became operational in 2010. In 2009 the company decided toestablish a joint venture with Saint-Gobain, a leading player in the global glass industry,in order to perform flat glass activities in Egypt and Russia.

Trakya Cam carried out its domestic development through introducing two float and onecoated glass lines put into use in 2007 and one laminated glass line in 2008 in BursaYenisehir. Today, the Company is a strong supplier in the region, serving the construction,automotive, energy and home appliances industries through its partnerships and sevenfloat lines in five different locations.

Trakya Cam in Brief

Consolidated Financial Indicators

Summary Consolidated Balance Sheets

Million TL Million USD

2012 2011 2010 2012 2011 2010

Current Assets 1,011 1,173 901 567 621 583

Fixed Assets 1,639 1,175 1,146 919 622 741

Total Assets 2,649 2,348 2,047 1,486 1,243 1,324

Current Liabilities 241 242 158 135 128 102

Long Term Liabilities 399 312 339 224 165 219

Shareholders' Equity 2,010 1,794 1,550 1,128 950 1,003

Total Liabilities and Shareholders' Equity 2,649 2,348 2,047 1,486 1,243 1,324

Net Financial Debts 13 (216) (190) 7 (114) (123)

Summary Consolidated Income Statements

Million TL Million USD

2012 2011 2010 2012 2011 2010

Net Sales 1,249 1,255 1,079 697 751 720

Costs Of Sales (919) (809) (720) (513) (484) (480)

Gross Profit 330 447 359 184 267 239

Operating Expenses (254) (219) (183) (142) (131) (122)

Other Income/Expenses (Net) 4 6 6 2 3 4

Operating Profit (EBIT) 80 233 182 45 139 121

Equity Method Effect 4 (1) 17 2 (0) 11

Financing Income/Expenses (Net) 7 52 51 4 31 34

Profit Before Taxes 91 284 250 51 170 166

Tax Provisions According to Turkish Tax Legislations (22) (53) (31) (12) (32) (21)

Deferred Tax Provisions 12 5 4 7 3 3

Net Profit After Taxes 81 236 223 45 141 149

Minority Interests (9) (11) (12) (5) (7) (8)

Net Profit /Loss 72 224 211 40 134 141

Depreciations 126 129 124 70 77 83

Earnings Before Interest, Taxes and Depreciation (EBITDA) 206 361 306 115 216 204

Financial Ratios

2012 2011 2010

Current Assets/Short Term Liabilities (Current Ratio) 4 5 6

Total Liabilities/Total Assets 24% 24% 24%

Total Liabilities/Sherholders' Equity 32% 31% 32%

Gross Profit/Net Sales 26% 36% 33%

Net Profit/Net Sales 6% 18% 20%

Operating Profit (EBIT)/Net Sales 6% 19% 17%

EBITDA / Net Sales 17% 29% 28%

Trakya Cam Sanayii A.fi. 2

Financial Indicators

EBITDA

20

6

36

1

30

6

12 11 10

Tangible Fixed Assets

1.1

88

95

7

95

7

12 11 10

Total Sales (Net)

1.2

49

1.2

55

1.0

79

12 11 10

Net Profit

81

23

6

22

3

12 11 10

Flat Glass Production(Thousand Tons)

1.3

00 1

.60

0

1.4

00

12 11 10

Total Shareholders Equity

2.0

10

1.7

94

1.5

50

12 11 10

Total Assets

2.6

49

2.3

48

2.0

47

12 11 10

2012 Annual Report

Trakya Cam Sanayii A.fi.3

EBIT

80

23

3

18

212 11 10

Investments

36

6

97

88

12 11 10


Management

Teoman YenigünChairman of Board of Directors

(61) Mr. Yenigün is a graduate of theBosphorus University Department ofMechanical Engineering, He started hiscareer in the fiiflecam Group in 1975. Heserved the Group at a various manageriallevels. Mr. Yenigün was Executive VicePresident of Glass Packaging Group betweenSeptember 1998 – February 2011. He wasappointed as Executive Vice Chairman ofFloat Glass Group on 15 February 2011.

Teoman Yenigün is assigned in executivebody in accordance with CorporateGovernance Principles of the CMB (theCapital Markets Board), and he is not anindependent member.

N. Burak SeyrekVice Chairman of Board of Directors

(43) Mr. Seyrek is a graduate of AnkaraUniversity School of Political Sciences-Department of International Relations. Thesame year he started to work with Türkiye‹fl Bankas› as an Assistant Specialist. Hewas appointed as Commercial Banking SalesDirector in 2011. Burak Seyrek was ViceChairman of Board of Directors of AnkaraBranch of Association of Members of ‹flBankasi until November 2011. He is anauditor to Pension Fund of Türkiye ‹fl Bankas›A.fi. since June 24, 2011.

He was a Member of Board of Directors ofAnadolu Hayat Emeklilik A.fi. from October27, 2011 to March 29, 2012.

N.Burak Seyrek is not assigned in executivebody in accordance with CorporateGovernance Principles of the CMB (theCapital Markets Board), and he is not anindependent member.

Zeynep Hansu UçarMember

(41) Ms. Uçar is a graduate of Middle EastTechnical University Faculty of Economic -Department of Business Administration.She started her professional carrier as anAssistant Specialist in investments at theDepartment of Subsidiaries of Türkiye ‹flBankas› A.fi. in 1994. After holding severealpositions at the same department, Ms Uçarhas been serving as Unit Manager of theSubsidiaries Department since 2007.

Zeynep Hansu Uçar is not assigned inexecutive body in accordance with CorporateGovernance Principles of the CMB (theCapital Markets Board), and she is not anindependent member.

2012 Annual Report


Müfit ÖzkaraMember

(55) Mr. Özkara is a graduate of Faculty ofIstanbul and Istanbul University School ofManagement, Institute of EnterpriseEconomy. He started his career in thefiiflecam Group in December 1985. Heserved the Group at a various manageriallevels such as Director of FinancialResources and Vice Chairman. Currently heis Member of Board of Directors and auditorat various companies of the group.

Müfit Özkara is not assigned in executivebody in accordance with CorporateGovernance Principles of the CMB (theCapital Markets Board), and he is not anindependent member.

Prof Dr. Turkay BerksoyIndependent Member

(62) Prof Dr. Turkay Berksoy is a graduateof Istanbul University, Faculty of Economics.He holds a master’s degree from BosphorusUniversity and a doctorate degree fromMarmara University.

He lectured at the University of East AngliaSchool of Development Studies as a visitingprofessor and has served as a facultymember and administrative staff memberin various universities in Turkey. Prof. Dr.Turkay Berksoy is a faculty member andChairman of Marmara University School ofFinance. The author of several books,articles, research papers and otherpublications, Prof. Dr. Berksoy is a CertifiedPublic Accountant and has served as a BoardMember at various companies andorganizations, including Ifl Bank Board(auditing member), The Tax ReformCommission, TOBB Special Commission,Günefl Hayat Sigorta A.fi., Petkim A.fi.,Ataköy Otelcilik A.fi., Türkiye Denizcilik‹flletmeleri A.fi., and Tax Council of theTurkish Ministry of Finance.

Prof. Dr. Turkay Berksoy is an independentmember in accordance with CorporateGovernance Principles of the CMB (theCapital Markets Board), and he has norelationship with fiiflecam and interestedparties.

Prof. Dr. Atilla Murat Demircio¤luIndependent Member

(66) Prof. Dr. Atilla Murat Demircio¤lu is agraduate of Istanbul University Faculty ofLaw and obtained his second bachelor’sdegree from the Bern University Faculty ofLaw. He became Associate Professor andsubsequently Professor in Labor and SocialSecurity Low. Having served as facultymember and director at various universities,he continues to serve as a member of theY›ld›z Technical University Senate and Board.The author of several books, articles,research papers and publ icat ions,Demircio¤lu served as a Member of theEditorial Board of the Ministry of Culture’sEncyclopedia of Trade Unions, BoardMember at Hamburg Turkish-EuropeanResearch Institute, and Deputy Chairman atJapan Research Association, in addition tohis services as Consultant to the Ministryof Labor and Social Security, HonoraryConsultant to TRNC Government, Memberof the THY Audit Committee, Board Memberof THY, Legal Advisor to ICC and Advisor toIstanbul 2010 European Capital of CultureAgency. He currently serves as Consultantin Antalya Chamber of Commerce andIndustry.

Prof. Dr. A. Murat Demircio¤lu is anindependent member in accordance withCorporate Governance Principles of the CMB(the Capital Markets Board), and he has norelationship with fiiflecam and interestedparties.


Management

Board of Directors

Teoman YenigünChairman

Nevzat Burak SeyrekVice Chairman

Zeynep Hansu UçarMember(**)(***)

Müfit ÖzkaraMember(**)

Prof.Dr.Turkay BerksoyIndependent Member(*)(**)(***)

Prof.Dr. A.Murat Demircio¤luIndependent Member(*)(**)(***)

Audit Committee

Baflak ÖgeAuditor

Mükremin fiimflekAuditor

Managers

Teoman YenigünChairman of Board of Directors

Selçuk Yılmaz Demirk›ranVice Chairman onProduction of Basic Glasses

Reha AkçakayaVice Chairman on Glasses forAutomotive and Home Appliances

Haluk Sar›alt›nVice Chairman onMarketing and Sales

M. Görkem ElvericiFinancial Director

M. Haluk GürerenDevelopment Director

Özlem VergonPlanning Director

Mahmut TemizHuman Resources Director

A. Alper CanTrakya Glass Bulgaria EADFloat Glass Factory Director

Sedat ÇavufllarTrakya Glass Bulgaria EAD Automotive andHome Appliances Factory Director

Gökhan AtikkanTrakya Cam Sanayii A.fi.Trakya Factory Director

Haflim EkiciTrakya Cam Sanayii A.fi.Mersin Factory Director

Gökçen TuralTrakya Cam Sanayii A.fi.Automotive Glass Factory Director

Serkan fiahinTrakya Yeniflehir Cam Sanayii A.fi.Factory Director

Beytullah fiahinGeneral Director of Trakya Glass Rus ZAO

Gürcan GürçayGeneral Director of Automotive Glass Alliance Rus ZAO

Ça¤atay SunerGeneral Director of GlassCorp SA

(*) Stated members make up audit committee,(**) Stated members make up corporate governance committee,(***) Stated members make up early risk detection committee.

Dear Shareholders;

In its 35th year of operation, we kindly submitthe balance sheet and income statement ofTrakya Cam Sanayii A.fi., issued for theperiod of 01.01.2012 - 31.12.2012 preparedin accordance with the provisions of theCommuniqué No.29 of the Capital MarketsBoard and the communiqués which imposeattachments, amendments and clarificationsto this Communiqué, for your supervision.

Our company is an affiliate of Türkiye fiifleve Cam Fabrikalar› A.fi, founded by Türkiye‹fl Bankas› in 1935 to "establish and developthe glass industry in Turkey" in line with thedirectives of the Great Leader Ataturk. Flatglass, patterned glass, mirror, laminatedglass, coated glass, automotive glass, solarglass and home appliances glass are producedthrough state-of-the-art technologies in ourcompany. In 2012, our company has beenattentive to fulfill its duties and responsibilitiesin order to increase its contribution to thedevelopment of the national economy andto create value for its shareholders andcompleted its 35th year of operation withsuccess.

II. Economic Developments and Prospects(2012-2013)

A. Global Overview

Although vulnerability of the world economyand adverse conditions that has emergeddue to global economic crisis, weretransformed into a relative growth duringperiod of 2010-2011, slowdown in growthrate, deepening of crisis and deteriorationof expectations were apparent in 2012. Thissituation shows that systematic problemscaused by the crisis in the world economy

were not fully solved yet. Besides, the globaleconomy poles could not yet developcommon solution the whole world needs.

Developed economies have begun toimplement primarily classic monetary andfiscal policies to revitalize economic activity,and tried to decrease savings and encourageconsumption by bringing interest rate nearto zero level. Trillion dollars of money wasinjected into markets mainly through centralbanks. Attempts for revitalizing the economythrough emerging monetary policies adoptedby central banks of EU and USA could nothelp to activate markets for long period oftime. Increase in money supply was notsuccessfully transferred from banking systemto real economy. Major part of this moneywas shared by various countries in globalmarkets. Thus, foreign currency and exchangerate risks have increased in countries wheremajor part of this money is accumulated.Central banks and governments tackling thissituation led to so called ‘currency wars’.This situation combined with other factorshas dramatically decreased growth rate ofinternational trade. In a word, such a chaoticstructure of crisis management continuedin 2012 as well, and expectations foreconomic situation ensuring total increaseof global welfare were postponed.

Failure of economic recovery in EU countrieshas led to deepening of consumer mistrust,and demand in certain sectors, includingglass products, has significantly decreased.Growth of Germany, the largest economyof the European Union, in 2012 was under1%. And growth in France was close to“zero”. United Kingdom also could notmanage to recover from global economiccrisis. Debates on “fiscal cliff” increasing inthe USA towards the end of year and adverseeffects of “Hurricane Sandy” caused concerns

on consumers and business circles. Thesefactors have drawn back the USA’s growthperformance. Measures taken against “fiscalcliff” negatively influenced budget deficit interms of both revenues and expenditures,and reached unsustainable level in relationto national domestic income. The Americaneconomy has grown by 2.2% in 2012.

Developing countries were affected fromstagnation and decrease of demand morethan the developed countries when comparedto previous years. Countries ensuring growththanks to export of goods and services suchas China and India, which are driving forceof global growth, completed the years withgrowth rate under forecasted values due todecrease of demand in export markets.

The impact of the “Arabian Spring” on theMiddle East has diminished, but level ofdemand in the region has not reached desiredlevel due to negative conjuncture, especiallyin Iran and Syria. The CIS market is continuingto grow rapidly. This growth is also boostedthanks to Russia’s membership in the WorldTrade Organization. It is estimated that LatinAmerica’s growth in 2012 could be only0.5%.

One of the most important globaldevelopments of 2012 is that China’s foreigntrade volume outran that of USA, to becomethe world leader for the first time in thehistory, despite the fact that China had thelowest growth performance of the last 13years.

High rate of unemployment, which is oneof the most significant result indicators, isobserved in USA, Europe and Japan. Thissituation has negative impact on expectationsand also hinders investment, consumptionand purchasing tendencies in spite of all

2012 Annual Report


Report of the Board

growth policies. Thus, Purchasing ManagersIndex (PMI) continued to decrease duringthe year both in Europe and USA. Energyprices maintained their current level despitepoor global demand and unexpected increasewas observed in prices of commodity andprecious metals, also due to China’s influence.

B. 2012 Overview of Turkey’s Economy

The following policies were implemented in2012;• Decreasing mechanism of covering savings

gap by outsourcing (current deficit) tosustainable rate,

• Limiting loan enlargement with a threshold,decreasing attractiveness of interest byimplementation of a corridor, and increasingreserve ratios,

• Ensuring slowdown of import and domesticconsumption,

• Diminishing destructive impact of thesemeasures by increasing export;

• Controlling increase in budget deficit dueto dependence of budget revenue toindirect taxes such as VAT and specialconsumption tax mainly supplied bydomestic consumption and import bypublic taxation/pricing.

Implemented policy partially prevented threatof current deficit in the expense of “slowdownin growth”. Extraordinary growth in supplyof reserve currencies (USD, EURO) depressedexchange rates. Thus, major changes wereprevented in consumer inflation. Long-termgoal of 5% inflation was near as a result ofrehabilitation of public finance, restrainingimported inflation through exchange rates,and monetary policy implemented by theCentral Bank.

Besides, current transactions deficit, whichwas basic problem of 2012 as well,significantly decreased when compared toprevious year. Furthermore, compositionof current deficit financing has also changed.Current deficit financing of Turkey in years2010-2011 mainly consisted of purchasingshares, deposits and loans. But in 2012,they mostly consisted of public bonds. Thehighest purchase of bonds took place duringthis period. This led to increase of foreigncurrency reserves of the CBT (the CentralBank of Turkey), supplying TL againstcurrency. Turkey’s reserves together withgold reached a historic level of $125 Billion.Turkey managed to almost totally repay itsdebts to the IMF, which became a symbolof the 2001 crisis, and for the first timeundertook to make $5 Billion contributionto the Fund.

However, situation in real economy doesnot allow us to be very optimistic. Accordingto official data, industrial production sloweddown during the last quarter and evendecreased in December 2012. In the lightof these facts, it is estimated that Turkey’seconomy cannot provide 3,2% growth in2012 as it was stated in MTP (medium-term

program), and it is estimated to completethe year with a growth of around 2-2,5%. As a result, domestic demand was stagnantthroughout 2012. Consumer trust fell downto the lowest point in the last quarter of theyear just like in other countries. Turkey’seconomy demonstrated rapid growth in2010 and 2011, but growth performancewas at low levels in 2012 due to lack ofprogress in domestic demand.

Although budget deficit increased in 2012,when compared to 2011, ratio of budgetdeficit to domestic income has completedthe year at a level of 2% thanks to strictfinancial policies implemented in the lastquarter of the year. Taxes were increasedat the end of year, and at the same time,expenditures except interests weredecreased. Moreover, valuation of TL waspromoted through strict financial policies.

Increasing of Turkey’s credit rating by Fitchfrom “BB+” to investing grade of “BBB-”was one of the most significant events forTurkish economy in 2012. Thus, Turkey’scredit rating reached the “investment level”for the first time since 1994. The followingare considered as main reasons for increaseof credit rating to investment level:• Moderate and decreasing public debt of

economy while it is directed to soft landing,• Strong banking system, relative and

diversified economy,• Positive medium-term growth expectations,• Decreasing of Turkey’s short-term macro

financial risks.

Increase in credit rating resulted in increaseof credibility and reliability of public debtinstruments. This enabled the governmentto undertake debts with lower interest ratesand costs, and the country became moreattractive for foreign capital.

C. Expectations of World Economy in2013

“Prudence” is expected to dominate 2013due to the events occured in the previousyear. Rich and developed countries areexpected to weaken their currencies andbecome more aggressive in supporting theireconomies in foreign trade, and resulting ofthis situation in further fueling of destructivecompetition known as “currency wars”.Central banks are trying to manipulatecurrency exchange rates in such a way tofurther support export in their policy decisions.It is foreseen that developed countries (forexample G-10) will be in such an attitude to“closely follow developing economies andtheir markets” in regulating exchange ratesor at least policies focused on exchangerates.

It is observed that negative risk perceptionin relation to Europe has begun to slightlydecrease in 2013. Debt crises going out ofcountries’ agenda since the last quarter of2012, further valuation of Euro in internationalmarkets and positive development in industrialproduction during first months of 2013 areperceived as positive signals for Europeregion in 2013. However, work force reformto increase productivity is still needed forpermanent solution. As a matter of fact,economies will not recover without increasingproductivity. This may lead to impossibilityof resolving the debt crisis and replacementof relative stability and recovery in financialmarkets with disorder once again. The ECB’sintervention will be expected again in thiscase. Upcoming events that in 2013 willmake it clear whether such a negativesituation comes back or not.

Nevertheless, another basic problem isexpected to keep its presence: EU countries


2012 Annual Report


with different economic conditions but usingthe same currency are experiencing realissues in implementing monetary policiesthat will satisfy the needs of all the interestedparties. Although strong Euro is disadvantageof the Union in export to foreign countries,it works in favor of Germany. Economiesthat became equal in environment of thesame currency are forced to struggle againstpowerful German industry, Germantechnology, and German productivity.Discussions that may be triggered by suchunrest may continue in 2013 and beyond it.

USA’s economy is giving controversial signalsfor 2013. Some economists argue that USA’seconomy is not ready to stand on its ownfeet yet, and therefore, FED needs to continuewith an expansionary monetary policy untillate 2015. Decreasing of unemployment ratedown to level of 8% is not consideredsatisfactory. It is generally accepted thateconomy has not sufficiently recovered yet.The greatest risk for Obama’s Governmentthat took new measures against budgetdeficit is refueling of debates on fiscal cliff.

China’s economy is expected to achievegrowth similar to 2012. On the other hand,some economists claim that China is ableto achieve increase of growth in 2013, andthis will partly base on recovery of domesticconsumption.

Japan’s policies for 2013 led to certainconcerns in circles of economy. Ratio ofJapan’s debts to its domestic income is over200%. Public authority is determined to endchronic deflation process that has beencontinuing for almost 25 years. Analystsallege on scenarios that pressure imposedon the Central Bank of Japan to increaseinflation target will result in increase ofinterest together with inflation, which willin turn lead to increase of Japan’s obligationsand risks of interest payment due to highindebtedness rate.

Latin America is expected to achieve 4%growth in 2013. Tax deductions to beimplemented in Brazil are expected to recoverindustrial production, accelerate the country’seconomy, and contribute in developmentrate of the region. Specialists forecast thatincrease in growth rate of Brazil will positivelyinfluence Argentina’s economy, andArgentinian firms will benefit from increasein demand of Brazilian producers.

To sum up, basic ground for “prudence”that is expected to dominate 2013 is creatingserious uncertainty resulting from currentsituation. Main fields of uncertainty are;repeated breakout of debt problem in Europedespite all development and possible failureof measures, policies, and pumping moneyinto markets aimed at bringing unemploymentrate in the USA to acceptable level. Besidespolitical formation in basin of EasternMediterranean and the Middle East, turningof rock gas into significant energy alternative

in Northern America, and threats of thissituation on economies producing traditionaloil and gas also fuel up this uncertainty.However, quick change (technology, lifestyle,forms of conducting business, and newproducts) is basic element of “uncertainty”.

D. 2013 Expectations for Turkish Economy

The CBT determined target of 5% growth,5% inflation, and 5% current deficit forTurkey’s economy in 2013. The EuropeanBank for Reconstruction and Development(EBRD) forecasts that following Turkey’sslowdown in 2012 it will continue to growrelatively faster in 2013, and growth rate in2013 will be around 3.7%. JP Morgan expectsthat the CBT will implement policies aimedat keeping loan growth around level of 15%during the forthcoming period and narrowinterest rate corridor in order to restraininflow of short-term capital. Morgan Stanleyforesees that Turkey may receive increaseof credit rating from Moody’s in 2013 whiletesting the new lowest levels of interestrate. It is almost obvious that interest rates,which floats at a level equal to or even lowerthan inflation in many term components, istended to be decreased, if no significantbreakdown happens.

Turkish economy greatly benefited fromopportunities of vibrant and expansive globalconjuncture during 2000s. Even thoughdesired rate could not be achieved inconstructive reforms, especially improvementof public finance resulted in less publicdemand for tight resourcesand significant progress inmoney and capital markets.Besides, public financeobtained more resistantstructure against drawbacksof “financial rule” comparedt o p r e v i o u s p e r i o d s .Consecutively, significantincome was received throughprivatization in 2013 – evenif i t has not continualcharacter because it was aone-off transaction.Turkey is expected to import$ 65 Billion worth of energyresources, if oiloil pricesremain at current levels.Possible decrease in oiloilprices (and natural gas priceswith delayed impacts) mayresult in reduction of thisamount lower than 60 billiondollars. In any case in 2013Turkey will maintain profileof economy that importsconsumed energy, and thus,transfers created valuesoutside. Conversion tonuclear energy in productionof electricity, becoming pointof energy transfer in naturalgas, and solutions based onusage of local lignite in

thermal energy may provide results only inlong term, and these attempts cannot diminishimpact of energy expenditures on currentdeficit in 2013. On the other hand,investments aimed at efficient use of energyare considered as the only controllable fieldthat will provide benefit within short term.

The World Bank estimated in its last reportthat Turkey’s economy may grow by 4% in2013. According to the same report Turkeyachieved notable success in coping withinflation.

Briefly, 2013 is expected to be relativelymoderate year for Turkey, as well as for theworld without inflation-related risks, duringwhich current situation will be preserved.Common view of economists is that inflationdoes not any more represent a risk for Turkeythanks to stagnation of global economy andoil prices without dramatic increase (in spiteof current high level) in addition to domesticdevelopment. The main threat is seen asstagnation of consumer demand. Thegovernment considers possible uncontrolledoutside fluctuations, particularly in fields ofeconomy and finances as the main risk areaof Turkey in 2013.

Turkey faced the global economic crisis witha certain degree preparation thanks toreorganization and economic programs in2001 and 2002. However, they were notsufficient to prevent significant impact ofthe crisis. Most likely this situation will remainunchanged in 2013.


shows that volume of sales decreased inthe Balkans and Eastern Europe, whereeconomic stagnation is at the highest level.On the other hand, despite negative impactof stagnation on consumption number ofcustomers and market share of Trakya Camincreased in Bulgaria, where the companyis a local producer, and Romania which isalso a very important market. Sales wereconducted in a controlled way taking intoaccount profitability in Central and WesternEurope where limiting of supply happenedmost of all. Market’s condition andopportunities were quickly evaluated in regionof Middle East and Africa hit by decrease ofdemand and oversupply due to political andeconomic instability. Demand was met atthe maximum level within the first half, andsales were fulfilled in a controlled way duringthe second half. General economic uncertaintywas observed in Russia. Demand wasincreased in this market during second halfof the year. It was evaluated at the highestlevel considering new investment inproduction of float glass in 2013.

All these events helped to maintain level of2011 in basic sales of glass, and significantincrease was achieved in sales volume ofcoated glass.

Overview and SalesInformation in Markets

Construction Industry

Global stagnation thatalso influenced floatglass consuming sectorsfrom beginning of 2012had negative impact onfloat glass consumptionin many countr iesincluding Turkey whereTrakya Cam conductsits activities. Producersthroughout Europesignificantly restrainedsupply due to decreasinglevels of consumptionand prices. Negativeimpact of pol i t ica linstability in the MiddleEast and Northern Africain addition to economicstagnat ion great lyaffected the market.Partial activity wasobserved in Russia’smarket. Trakya Camcarried out its salestaking into accountprofitability under thesemarket conditions.

Slowdown of domesticdemand in Turkey led tostagnation and decreasein vo lumes o f a l lsubsectors. The most affected among themwas construction industry. Rapid growthwas observed in construction industry duringperiod following 2009 shrinkage of theindustry. But in 2012 for the first time sincethen level of growth was as low as 1%.

Nevertheless, increase in building permitsby 22% in 2012, increase in the housingsales by 4.6% and urban regeneration projectsin the housing industry is expected tostimulate sales in the next periods andpositively affect the consumption of flatglass. In addition, building renovations andsupervision of energy identity documentationfor buildings will lead to use of higher qualitywindows with thermal insulation.

Trakya Cam has intensified regional activitiesin order to expand its field of influence underthese conditions. It maintained constantlyhigh quality of services, widened productrange with new products, efficiently metdemand in all market segments, and increasedvolume sales.

Trakya Cam is constantly monitoring thedevelopments in international markets anddirected sales activities towards moreprofitable markets. Evaluation of regions

SITUATION AND SALES IN MARKETS

General Overview of 2012

Despite negative impacts of stagnation inEurope’s economy and slowdown of growthin Turkey and developing countries onconstruction and automotive sectors, mainmarkets of float glass, Trakya Cam managedto maintain level of sales turnover achievedin 2011, continued its investments launchedwith the vision of becoming a fast growingand global float glass company, and tookimportant steps towards expanding itsfootprint into new territories.

Slowdown in demand for float glassthroughout 2012 mainly in markets out ofTurkey and increase in prices of inputsnegat ively inf luenced prof i tabi l i ty .Nevertheless, Trakya Cam managed torestrict this negative impact on profit thanksto measures aimed at increasing efficiencyand output, and decreasing costs, mainlyenergy savings.

Trakya Cam put into use second mirrorproduction line in Turkey in July in order tomeet growing demand for mirror in Turkeyunder growth projects of 2012. The companyconcurrently continued investments in threefloat lines in three different countries, namelyRussia, Bulgaria, and Turkey. Besides itcommenced investment in coated glass linein Bulgaria aimed at expansion of value addedproduct range. Automotive glass investmentin Russia continued deliberately.

Furthermore, pursuant to its decision toenter in India, one of the most rapidly growingfloat glass markets, the Company signed aJoint-Venture Agreement with HindusthanNational Glass & Industries Limited (HNGIL),one of the largest glass producers of India,in January 2013 following its Memorandumof Understanding signed with this companyin 2012.

Trakya Cam went into an organizationalrestructuring in order to support its growth,increase efficiency and productivity of itsactivities, strengthen its decision-makingmechanisms, and fulfilled important projectswithin the group for the purpose of makingdata systems including ERP projects.

Trakya Cam is determined to use its growthpotential in the best way in future, and aimingfor further enhancement of studies relatedto energy-saving production processes,development of new products with highadded value, carry on projects of decreasingcosts, simplification of processes, andadvance on the way to become a global firmby strengthening its infrastructure.

Home Appliances Industry

Production in home appliances industry ofTurkey increased by 8% compared to 2011.Growth of segments supplying inputs fromTrakya Cam also increased; production ofrefrigerators by 12% and ovens by 4%.Production of home appliances in Europemaintained level of 2011.

Trakya Cam focused on European marketin sales of glass for home appliances suchas ovens and refrigerators, and continuedits growth in this market. The company’ssales of glass for home appliances in Europeincreased by 27% compared to the previousyear. It continues to develop new andfunctional products in order to maintaincompetitive power in cooperating with leadingEuropean manufacturers of home appliances.Energy efficiency is top priority in all products.

Solar Glass Industry

After the rapid increase of installed capacityof solar batteries producing electricity usingsolar energy rapidly increased in 2011 allaround the world it was followed by ahorizontal tracking installation reached 100GW in 2012.

Currently Europe is the largest market forphotovoltaic (PV) installation. Mainly America,China, Japan, and India, as well as South-East Asia, Latin America, Middle East andNorthern Africa countries are emergingmarkets in this field. Together with thevarious forecasts for development of globalsolar battery market during forthcomingperiod this industry is expected to be a veryimportant potential market for float glassproduction in long term.

Sales of Trakya Cam’s energy glassesdesigned for solar batteries and solar collectorsmainly in markets outside Turkey decreased

to a certain level due to shrinkage in themarket and transfer of solar battery productionto China.

Turkey has important potential in using solarenergy within the global solar energy market.The Ministry of Energy set out a target of“supplying 30% of energy consumption withrenewable energy sources” in its plancomprising period of 2010–2014. The EnergyMarket Regulatory Authority (EMRA) isplanning to issue license for 600 MW inJune 2013 for solar energy stations in orderto achieve this target. Such measures areexpected to boost growth in installed powerof solar energy and market of energy glassesin Turkey.Trakya Cam is aimed at increasing sales tocurrent customers and gaining newcustomers in new markets. Therefore, thecompany is continuing its studies to developglass products that will contribute in increasingefficiency of solar energy systems.

PRESENTATION AND PROMOTIONACTIVITIES

Trakya Cam is carrying out effectivepresentation activities for each product groupaimed at increasing popularity, expandingapplication range of solar glass, input forconstruction, automotive, furniture, home

2012 Annual Report


Automotive Industry

Slowdown of growth in Turkey’s economy,uncertainty of loan costs, and increase inspecial consumption tax led to shrinkage ofTurkey’s automotive market and lightcommercial vehicles. As a result Turkey’sautomotive market shrunk by 10% comparedto 2011.Europe’s automotive market,especially Western Europe, continued toshrink due to economic crisis. Automotivemarket of Western Europe shrunk by 8%while more positive situation is was observedin market of Eastern Europe. Automotivemarket of Russia, one of potential marketsof world automotive industry, approachedto level before the crisis.

Shrinkage of Europe’s market by 8% putthe same impact on Turkey’s automotiveexport. Export of vehicles in 2012 decreasedby 8% compared to 2011.

Decrease of demand in domestic andforeign markets directly influencedautomotive manufacturing as well. Totalautomotive manufacturing decreased by10% in 2012.

In spite of shrinkage of automotive industryin markets of Turkey and Europe, comparedto 2011 Trakya Cam managed to increasevolume of sales by 8% in 2012 thanks toincreasing share in new projects launchedin Turkey and Europe. Trakya Cam began toprocure glass to new projects of Renaultand Ford in Turkey and Romania in 2012,and completed infrastructure works in orderto commence new projects of Ford, Nissan-Russia, Toyota, and Hyundai in 2013. Thecompany signs agreements with variousfirms on new projects aimed at forthcomingperiod.

Trakya Cam supports increase in sales ofautomotive glass by widening portfolio ofproduct with high added value.

appliances, agriculture, and energy sectors,and distinguishing them from similar products.

Individual training and seminars titled “Glassin Energy Efficiency” were delivered forcustomers, manufacturers of PVC andaluminum profiles, architects, engineers,and public agencies in various cities in orderto expand application range Trakya Cam’sproducts. Presentation of our new productsis supported by various studies.

An extensive advertisement campaign waslaunched to present and promote products‘Is›cam Synergy’ and ‘Is›cam Comfort’ thatplay an important role in energy saving andprotection of environment, and provide 50%more heat insulation compared to standarddouble-glazing. Slogan of this campaign was“Is›cam Comfort, Is›cam Synergy. Becauseyour money is valuable, your home isvaluable”. Importance of glass in selectionof house and insulation provided by glasswere emphasized during this advertisementcampaign arranged on television, newspapers,radio, and digital environments. Presentationmaterials were sent to 5.000 sales pointsin order to inform consumers. Campaigntitled “Advantageous Double-Glazing” wasarranged in Izmir province in order to supportthe advertisement, and Is›cam web site wasrenewed.

The company sponsored films on heat andnoise insulat ion within “Y TEAM”advertisement campaign prepared withsupport provided by members of the Heat,Water, Sound Insulation and FireproofingAssociation (IZODER).

The company participated in fairs within thecountry and abroad, including Glasstec, oneof the largest glass fairs of the world. Itpresented products in specially designedstands, and shared them with all partnersat international level. These fairs helped tostrengthen Trakya Cam’s market image,meet industry professionals, and set up newtrade connections.


All opportunities were used in order toincrease company and product recognition.Our corporate and product announcementswere published in local and foreign magazinesand web sites.

We carried on close cooperation with theAssociation of Free Architects, took part inproduct presentation meetings of theAssociation in Istanbul, Ankara, and Izmir topresent products directly to target group.

PRODUCTION AND DEVELOPMENT

Effective Capacity Management and High-Output Production

Trakya Cam is carrying out its activities with7 float lines at five different and withautomotive glass, mirror, laminated glass,coated glass, and glass for home appliances,patterned glass, and solar glass productionfacilities. Trakya Cam balanced its capacityat these production facilities in the mostsuitable way in order to meet market demandsin 2012 in the best way ensuring low cost-high quality, wide product range taking intoaccount current market conditions, and triedto produce all product groups with highoutput. Cold repair of a float line, of whosefurnace life has expired, at Luleburgaz Factoryin Turkey was conducted during this period.The line is expected to be commissioned atearly 2013.

Trakya Cam is developing current productionfacilities for effective use of energy, andimplementing various designs and newtechnologies aimed at reducing energyconsumption in all new furnaces to thelowest level.

Cost Saving and Effective Usage of Energy

Trakya Cam tried to use all resources in themost effective way in 2012 as it was thecase during previous years consideringcurrent market conditions and increasing

input prices in order to achieve goal sustainableand profitable growth focused on effectivetotal cost management, and ensuredsignificant cost saving thanks to increase ofoutput and productivity.

Trakya Cam is paying great attention toprotection of environment and cost saving.Therefore, it is striving to fulfill glass productionprocess using less energy. The companymanaged to achieve important results fromactivities carried out in 2012 as well. Theseactivities enabled the company to reduceenergy consumption in glass furnaces usedfor production of glass. Moreover, “WasteHeat Electricity Production Facility” designedfor recycling heat energy emitted toatmosphere from chimneys in float glassproduction in order to produce electricitywas put into use at Yeniflehir Factory, andthe company launched production of electricitywith auto-producer license. Projects aimedat implementing similar system in all ourfactories are quickly commenced.

Cost saving and reducing energy consumptionwill continue to be among the most importantissues in Trakya Cam’s agenda, and thecompany will carry on developing new projectsin forthcoming period.

R&D and Range of Products with AddedValue

Trakya Cam is growing in different territorieswith new capacities, and “widening portfolioof products with added value” is the mostimportant element of its growth strategy. Inparticular, Trakya Cam speeded up R&Dactivities in field of coatings that providedifferent functionality to surface of glass in2012, and achieved noteworthy success inthis field.

Widening product range of coated glassesthat provide energy savings thanks to heatand solar control features, and increasingrevenue of these products became the main

2012 Annual Report


goal of Trakya Cam. The company offeredfive new products to the market in this field,and achieved 27% increase in sales volumeof coated glass.

The company conducted activities in orderdevelop high-performance coated glasssuitable for architectural use that enablesheat processing of coated glasses. Inparticular, commissioning of coated glassfacility constructed in Bulgaria is expectedin 2013. This facility will be a significant stepin widening product range of high qualitycoated glass.

Infrastructural works aimed at increasingsupply of high-transmission glass for solarbatteries and thermal collector systems infield of energy glasses, as well as productionof antireflective coating in order to furtherincrease light transmission were completedin 2012. Commercial production of theseproducts will begin in 2013.

Furthermore, studies on development oflow-iron glass for home appliances andfurniture sectors were completed andcommercial production was launched.

Issues such as reduction of CO2 emissionand making vehicles lighter for this purpose,decreasing cooling load, fuel saving, andusing unleaded materials are gaining moreimportance in Europe’s automotive industry.Trakya Cam is continuing various R&D projectsin field of automotive glass in line with theseissues. The company is developing specialcoating with heat insulation features.

Works on development of coated glass withvarious functional features are being fulfilledin field of glass for home appliances.

Investments

Trakya Cam implemented a stipulated growthplan during 2012. It carried on importantinvestment projects, took essential decisions,and set up new enterprises that will be basisfor rapid growth.

Significant growth projects are being fulfilledin Turkey, Russia, Bulgaria, Romania, andIndia.

Second mirror production line put into usein Mersin in July 2012 in order to meetgrowing demand for mirrors in Turkey.

Trakya Cam is continuing investments forconstruction of two float lines with totalcapacity of 580 thousand ton/year in AnkaraPolatli Industrial Estate in order to fully meetcustomer demands in accordance withgrowth expectations in Turkey’s float glassmarket. These facilities will be graduallycommissioned beginning from 2013. It is asignificant step towards rapid growth and

enhancing competitive power of Trakya Camin Turkey’s market. Number of Trakya Cam’sfloat lines in four different regions of Turkeywill increase to total of eight together withthese two float glass lines.

Trakya Cam commenced investment for thesecond float line in Bulgaria parallel to thefirst line in order to advance its presence inthe Balkans’ float glass market and meetdemand for automotive glass and greenglass pursuant to growth strategies outsideTurkey. Trakya Cam is making investmentfor coated glass line in addition to investmentfor the second float line in order to increasemarket share in the Balkans and CentralEurope especially in field of products withadded value and meet the market’s demandwith wide product range. These facilitiesplanned to be put into use in 2013 will allowTrakya Cam carry out activities in Bulgariain fields of float glass, mirror, glass for homeappliances, automotive glass, and coatedglass.

Float glass investment launched in theRepublic of Tatarstan, Russia in partnershipof 70% Trakya Cam - 30% Saint-Gobain isbeing continued. The company is aimed atbecoming a local producer in Russia as wellthanks to this investment and gaining powerin the market within short period of time.

Investment in automotive glass manufacturingfacility is continued in the Republic ofTatarstan, Russia pursuant to developmentpotential of Russia’s automotive industry.

Both float glass line and automotive glassmanufacturing facility in the Republic ofTatarstan are expected to be put into use in2013. Trakya Cam is planning to launch mirrorand coated glass production projects inaddition to the above-mentioned investments.Thus, the company is aiming at getting useof growth potential in Russia’s float glassindustry in the most effective manner.

Trakya Cam is expected to put into use totalof three new float lines and a coated glassfacility at the same time during the nextyear.

Trakya Cam bought 90% shares of GlassCorp S.A. in order to construct automotiveglass factory in Romania pursuant to its goalof becoming a strong supplier of automotiveglass.

Trakya Cam signed a Joint-VentureAgreement (JVA) with Hindusthan NationalGlass & Industries Limited (HNGIL), one ofthe largest glass producers of India, in January2013 to become partner of HNG Float GlassLimited following its Goodwill Agreementsigned with this company in 2012 pursuantto its decision to enter in India’s float glassmarket. These steps were taken pursuant

to vision of rapid growth aimed at developingcountries with high potential. The partiesare carrying on activities in order to establisha partnership.

TRAKYA CAM IN NEW ERA

Although currently there is slowdown in floatglass demand mainly in Europe’s market,world float glass demand is expected togrow 4-5% on average in the upcomingperiod.

Growth in the industry is basically expectedin developing countries. Development ofsolutions for energy saving and protectionof environment, products with added valueand enhancement in coated glass productionbecame main dynamics for growth in theindustry. On one hand increase in capacityis foreseen in developing countries thanksto new investments, on the other handgrowth of added value is expected particularlyin developed markets with innovative solutionsand rapidly developed new products.

Trakya Cam is determined to carry on itsregional leadership successfully maintaineduntil today considering current competitiveconditions, and further enhance its growthpursuant to vision of “Being a fast growingglobal flat glass company with strong brandsand innovative solutions” in forthcomingperiod.

Aspiration of Trakya Cam, in line with thisvision, is to grow in current markets andalso expand its footprint to different regionsthanks to new capacit ies, developtechnological solutions for energy savingand protection of environment to ensuresustainable development, offer its customersa wide range of products with high addedvalue, enhance processes aimed at increasingcustomer satisfaction, speed up productinnovation and R&D activities, and takesignificant steps towards becoming a globalfloat glass manufacturer thanks to effectivetotal cost management.


BRANDS

TRC Helio clear®

TRC Helio extra clear®

TRC Helio® green, gray, bronze, blue

TRC EcothermTRC EcosolTRC Tentesol®

TRC Tentesol T®

TRC Aura ReflektaTRC Lameks®

TRC Acoustic LameksTRC Duracam®

TRC Elit GlassTRC Deco classic®

TRC Deco wired®

TRC Flotal®

TRC Flotal ETRC Flotal S®

TRC RainbowTRC Durasolar® P+

Automotive Glass Brands

Duracam®

Lameks®

Toflex®

Toglas®

2012 Annual Report


Capital Structure and Changes in Capital Structure

Türkiye fiifle ve Cam Fabrikalar› A.fi. owns 70% of our Company’s capital that amounts to TL 693.680.000. The registered authorizedcapital is TL 1.500.000.000.

Dividends Distributed in the Last Three Years

The gross dividend corresponding to 4% of paid-in capital had been paid to the shareholders as bonus shares in 2009. The gross dividendcorresponding to 7,5% of paid-in capital had been distributed to shareholders in cash in 2010. The gross dividend corresponding to 15%of paid-in capital had been distributed to shareholders as bonus shares in 2011.

Miscellaneous

In all transactions of the Company with the holding company and its auxiliary companies regulations concerning the distribution ofconcealed gains through transfer pricing have been upheld and as a result of the procedures explained in the report, there occurred noloss to be covered in 2012.

Distribution of 2012 Profit

Our company has closed the 2012 accounting period with a net profit of TL 72.404.236.

Our net consolidated profit of TL 224.321.039, reflected in the consolidated balance sheet as of 31 December 2012, prepared in compliancewith the "Communiqué Series: XI and No.29, ‘’Principles Regarding Finanacial Reporting in Capital Markets’’ by the Capital Markets Board(CMB) shall be segregated as follows according to Clause 29 of Master Contract and to the CMB regulations and Company’s “ProfitDistribution Policy” revised at meeting of the Board of Directors dated February 23, 2013 and announced to the public on the same date;

• The gross dividend corresponding to 2,3858% of paid-in capital in amount of TL16.550.000 to be distributed in cash, and grossdividend corresponding to 2,3527% of paid-in capital in amount of TL16.320.000 to be added to the capital and then to bedistributed as shares to the shareholders.

• The distribution of cash dividents to take effect on May 31’st 2013, and the distribution of bonus shares to be completed withinlegal term.

• The aforementioned issues about distribution of profit are resolved by the BoD to be submitted to the review and approval ofthe Ordinary General Assembly meeting to be held on April 05, 2013.

Proposal for the Distribution of the Profit of the Year of 2012

Profit for the period 82.261.988,00Taxes Payable (-) (9.857.752,00)Net profit for the period 72.404.236,00Legal Reserve (6.911.145,73)Net Distributable Profit 65.493.090,27Donations Made During the Fiscal Year 197.044,11Net Distributable Profit for the First Dividends Including Donations 65.690.134,38First Dividend to Shareholders 32.870.000,00Extraordinary Reserves 32.623.090,23

We would like to express our sincere thanks to our customers, suppliers, shareholders and group companies that have provided us withthe support and confidence that we have needed to achieve the aforesaid results.

Teoman Yenigün Müfit ÖzkaraChairman of the Board of Directors Member of the Board of Directors

Business TitleHead OfficeRegistered Authorized CapitalIssued CapitalField of Activity

Statutory auditors’ names, surnamesTerms of office and whether theyhave a shareholding interest in thecompany

Number of meetings of Board ofDirectors attended andof Board of Auditors held

Scope, dates and conclusionof the examination made onthe accounts, books anddocuments of theCompany

Numbers and results ofthe cash counts held in theCompany’s pay desk pursuantto the relevant articles ofTurkish Commercial Code

Dates and results of examinationsmade pursuant to,the relevant articles ofof the Turkish Commercial Code

Complaints, irregularitiesreceived and actions takenin relation thereto


To the General Assembly of Trakya Cam Sanayii A.fi.;

Trakya Cam Sanayii A.fi.Report of the Board of Auditors for 2012

: Trakya Cam Sanayii A.fi.: ‹stanbul: 1.500.000.000.-TL.: 693.680.000.- TL.: Production and sales of basic glass, autoglass, solar glass and

home appliances glass.

: Baflak Öge 17.05.2012 - 05.04.2013Mükremin fiimflek 17.05.2012 - 05.04.2013Statutory auditors don’t have a shareholding interest in thecompany nor they are the employees of the company

: Meetings of Board of Directors participated in; 7Meetings of Board of Auditors held: 6

: Based on the examinations of the company’s books and documentscarried out on 06.01.2012, 13.04.2012, 04.05.2012, 06.07.2012,05.10.2012 and 23.11.2012, it has been established that the books are kept inaccordance with the applicable laws and generally acceptedaccounting principles.

: In 2012, 6 cash counts were conducted and it was determinedthat cash balance in the Company accounts accuratelyreflects the actual cash on hand.

: As a result of the examinations carried out on 06.01.2012,13.04.2012, 04.05.2012, 06.07.2012, 05.10.2012 and23.11.2012 it has been ascertained that all types of valuablepapers provided as pledge or guarantee, or entrusted to theCompany’s pay desk for safekeeping are present and that thesame conform to the records.

: During our term of office as auditors, neither complaints norreports of irregularities have been reported.

We have examined the accounts and transactions of Trakya Cam Sanayii Anonim fiirketi for the period 1.1.2012 - 31.12.2012 withrespect to their compliance with the Turkish Commercial Code, the Company’s Articles of Association, and other applicablelegislation, as well as generally accepted accounting principles and standards. In our opinion, the attached balance sheet drawnup on 31 December 2012, the contents of which we acknowledge, fairly and accurately presents the Company’s financial statuson the date, and the income statement for the period 1 January 2012-31 December 2012 fairly and accurately presents theoperating results for the period, and the dividend distribution proposal is in compliance with the laws and the Company’s Articlesof Association.

We hereby submit the balance sheet and income statement for your approval and the acquittal of the Board of Directors. Membersof the Board of Auditors.

Statutory Auditors

Basak Öge Mükremin fiimflek

TRAKYA CAM SANAY‹‹ A.fi.

CONVENIENCE TRANSLATION INTO ENGLISH OF

CONSOLIDATED FINANCIAL STATEMENTS

AT 31 DECEMBER 2012 and 2011

TOGETHER WITH AUDITOR’S REPORT

(ORIGINALLY ISSUED IN TURKISH)

To the Board of Directors of Trakya Cam Sanayii A.fi.

1. We have audited the accompanying consolidated financial statements of Trakya Cam Sanayii A.fi., its subsidiaries and its joint-ventures(collectively referred to as the “Group”) which comprise the consolidated balance sheets as of 31 December 2012 and the consolidatedstatements of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows forthe year then ended and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

2. The Group management is responsible for the preparation and fair presentation of these consolidated financial statements in accordancewith the financial reporting standards issued by the Capital Markets Board (“CMB”). This responsibility includes: designing, implementingand maintaining internal control relevant to the proper preparation of financial statements that are free from material misstatement,whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that arereasonable in the circumstances.

Auditor’s Responsibility

3. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our auditin accordance with the auditing standards issued by the CMB. Those standards require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance on whether the consolidated financial statements are free from materialmisstatement.

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

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

Opinion

4. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financialposition of Trakya Cam Sanayii A.fi. as of 31 December 2012, and its financial performance and its cash flows for the year then endedin accordance with the financial reporting standards issued by the CMB (Note 2).

Additional paragraph for convenience translation into English

5 The accounting principles described in Not 2 to the consolidated financial statements (defined as ‘’CMB Financial Reporting Standards’’)differ from International Financial Reporting Standards (‘’IFRS’’) issued by the International Accounting Standards Board with respectto the application of inflation accounting for the period 1 January-31 December 2005. Accordingly, the accompanying consolidatedfinancial statements are not intended to present the financial position and results of operations in accordance with IFRS.

Baflaran Nas Ba¤›ms›z Denetim veSerbest Muhasebeci Mali Müflavirlik A.fi.a member ofPricewaterhouseCoopers

Gökhan Yüksel, SMMMPartner

Istanbul, 6 March 2013

INDEPENDENT AUDITOR’S REPORT


TRAKYA CAM SANAY‹‹ A.fi.CONSOLIDATED BALANCE SHEETS AT 31 DECEMBER 2012 AND 2011(Amounts are expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

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


31December 31 DecemberASSETS Notes 2012 2011

Current Assets 1,010,588,661 1,173,031,851 Cash and Cash Equivalent 6 334,243,426 513,849,993

Trade receivables 10 325,688,880 349,520,159

- Due from related parties 37 2,437,209 -

- Other trade receivables 10 323,251,671 349,520,159

Other receivables 53,783,517 40,860,823

- Due from related parties 37 51,560,080 38,505,313

- Other receivables 11 2,223,437 2,355,510

Inventories 13 247,791,699 245,455,117

Other current assets 26 49,081,139 23,345,759

Non - Current Assets 1,638,857,532 1,175,285,807 Other receivables 11 845,125 533,916

Financial investments 7 166,312,130 97,697,448

Associates 16 149,569,473 67,637,667

Property, plant and equipment 18 1,188,090,651 956,726,489

- Financial leasing 6,656,426 -

- Other tangible assets 1,181,434,225 956,726,489

Intangible assets 19 1,274,635 976,243

Goodwill 20 13,573,346 -

Deferred tax assets 35 25,756,145 15,456,379

Other non - current assets 26 93,436,027 36,257,665

TOTAL ASSETS 2,649,446,193 2,348,317,658

31 December 31 DecemberNotes 2012 2011

Current Liabilities 240,637,183 242,255,562 Financial liabilities 8 92,417,595 77,831,792

Trade payables 115,440,439 99,902,410

- Due to related parties 37 23,057,214 18,517,920

- Other trade payables 10 92,383,225 81,384,490

Other payables 24,696,466 43,036,470

- Due to related parties 37 2,236,241 21,160,682

- Advances received 11 8,518,954 7,866,768

- Other payables 11 13,941,271 14,009,020

Current tax liabilities 35 3,776,895 13,292,843

Provisions for employee benefits 24 1,075,861 1,359,978

Provisions 22 793,589 1,209,765

Other current liabilities 26 2,436,338 5,622,304

Non Current Liabilities 398,638,652 312,363,715 Financial liabilities 8 304,076,350 237,588,916

Other payables 11 217,940 58,817

Provision for employee benefit 24 47,103,496 31,512,748

Deferred tax liabilities 35 45,988,245 42,749,521

Other non current liabilities 26 1,252,621 453,713

EQUITY 27 2,010,170,358 1,793,698,81Shareholders’ Equity 1,906,481,174 1,720,686,625 Paid-in capital 693,680,000 603,200,000

Adjustment to share capital 5,576,528 5,576,528

Share premium 22,703 22,703

Revaluation fund 127,439,148 42,277

Currency translation differences 58,318,173 72,324,731

Restricted reserves 109,606,914 95,075,508

Retained earnings 839,433,472 720,123,839

Net profit for the year 72,404,236 224,321,039

Non controlling interest 103,689,184 73,011,756

TOTAL EQUITY AND LIABILITIES 2,649,446,193 2,348,317,658


2012 Annual Report


TRAKYA CAM SANAY‹‹ A.fi.CONSOLIDATED BALANCE SHEETS AT 31 DECEMBER 2012 AND 2011(Amounts are expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

TRAKYA CAM SANAY‹‹ A.fi.CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED 31 DECEMBER 2012 AND 2011(Amounts are expressed in Turkish Lira (“TRY”) unless otherwise indicated.)



1 January - 1 January -Notes 31 December 2012 31 December 2011

Revenue 28 1,249,230,426 1,255,468,033

Cost of sales (-) 28 (919,173,481) (808,922,919)

GROSS PROFIT 330,056,945 446,545,114Marketing selling and distribution expenses (-) 29 (142,441,326) (127,827,558)

General and administrative expenses (-) 29 (100,142,268) (80,552,495)

Research and development expenses (-) 29 (11,123,215) (11,049,492)

Other operating income 31 19,494,716 13,252,212

Other operating expenses (-) 31 (15,399,266) (7,615,468)

OPERATING PROFIT 80,455,586 232,752,313Profit / (loss) from associates 16 3,523,100 (791,487)

Financial income 32 183,657,064 200,712,156

Financial expenses (-) 33 (176,734,145) (148,902,833)

PROFIT BEFORE TAX 90,891,605 283,770,149Current tax expense 35 (21,575,542) (52,639,119)

Deferred tax income 35 11,717,790 4,621,596

PROFIT FOR THE YEAR 81,033,853 235,752,626Attributable to

Non controlling interest 8,629,617 11,431,587

Equity holders of the parent 72,404,236 224,321,039

Earnings per share (per TRY1 share) 36 0.1044 0.3234


2012 Annual Report


TRAKYA CAM SANAY‹‹ A.fi.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED 31 DECEMBER 2012 AND 2011(Amounts are expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

1 January - 1 January -Comprehensive Statement of Income Notes 31 December 2012 31 December 2011

PROFIT FOR THE PERIOD 81,033,853 235,752,626

Other comprehensive income

Currency translation differences (13,198,746) 42,961,691

Fair value gain/ (loss) on financial assets 7 78,115,825 -

Revaluation differences on non-current assets 16 53,974,897 -

Tax loss / (gain) on other comprehensive income 35 (4,693,852) -

Other comprehensive income 114,198,124 42,961,691

TOTAL COMPREHENSIVE INCOME 195,231,977 278,714,317

Attributable to:

Non - controlling interest 9,437,429 11,586,690

Equity holders of parent 185,794,548 267,127,627

Earnings per share (per TRY1 share) 36 0.2678 0.3851

TRAKYA CAM SANAY‹‹ A.fi.CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED 31 DECEMBER 2012 AND 2011(Amounts are expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

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1 January - 1 January -Cash flows from operating activities Notes 31 December 2012 31 December 2011

Net profit for the period 81,033,853 235,752,626Adjustments to reconcile net profit to net cash provided b operating activities Depreciation of property plant and equipment 18 125,196,804 128,189,039 Amortization of intangible assets 19 642,116 496,591 Loss/ (gain) on disposal of property, plant and equipment, net 31,32 2,945,908 (2,571,039) Unrealized exchange loss/ (gain) on cash and cash equivalent, net 23,815,147 ( 87,941,755) Unrealized exchange (gain)/loss on financial liabilities, net (20,350,644) 58,762,860 Provision for employment termination benefit 24 19,961,876 5,135,995 Allowance for doubtful receivables 10 1,491,099 1,127,135 Allowance for impairment on inventory 13 1,685,325 3,414,420 Change in other provisions (1,008,970) 445,702 Impairment loss on financial assets 31 6,701,158 - Gain on sale of financial assets 32,33 - - Interest income 32 (27,377,520) (25,681,417) Interest expenses 33 19,201,137 15,583,558 Income from non cash capital increase in available for sale investments 32 (6,022,614) - Dividend income 32 (2,577,041) (374,484) Share of profit from associates 16 (3,523,100) 791,487 Tax expense 35 9,857,752 48,017,523Operating cash flows before changes in the working capital 231,672,287 381,148,241

Operating cash flows provided before changes in the working capital Trade receivables 10 22,493,102 (135,653,080) Inventories 13 (3,457,961) (89,702,210) Other receivables and payables 11,22,24,26 (25,661,743) (11,554,885) Trade payables 10 8,915,782 29,838,772 Trade payables to related parties 37 4,539,294 11,120,264 Other payables and liabilities 11,22,24,26 (6,346,026) 812,684Cash used in operations 232,154,735 186,009,786 Taxes paid 35 (31,091,490) (47,862,339) Employment termination benefits paid 24 (4,371,128) (3,845,415) Proceed from doubtful receivables 10 1,064,909 (1,420,435)Net cash provided by operating activities 197,757,025 132,881,597

Acquisition of additional shares of financial assets 7 (19,182,399) (9,649,541) Purchase of property, plant and equipment 18 (365,018,981) (96,237,185) Purchase of intangible assets 19 (821,558) (362,813) Proceeds from fixed asset sales 6,221,775 8,982,361 Dividends received from financial assets 32 2,577,041 374,484 Dividends received from associates 16 - 2,802,030 Advances given for property, plant and equipment 26 (57,430,349) (21,421,580) Acquisition of subsidiary (net of cash acquired) 3 (4,529,402) - Currency translation differences (4,142,064) 3,666,203Net cash used in investing activities (442,325,937) (111,846,041)

Cash flows from financing activities Capital increases attributable to non-controlling interest 40,029,611 12,871,882 Proceeds from financial liabilities 169,234,014 - Repayment of financial liabilities (78,200,841) (60,994,676) Dividends paid to equity holders of the Company - (45,240,000) Dividends paid to non-controlling interest (18,150,000) (3,080,665) Change in non trade receivables / payables to related parties 37 (31,979,208) 37,453,949 Interest paid (19,201,137) (15,261,612) Interest received 27,194,379 25,282,123Net cash provided by/ (used in) financing activities 88,926,818 (48,968,999)

Foreign exchange gain/loss on cash and cash equivalent 6 (23,815,650) 87,941,755Net (decrease)/increase in cash and cash equivalents 6 (155,642,094) (27,933,443)Cash and cash equivalents at the beginning of the year 513,191,267 453,182,955Cash and cash equivalents at the end of the period 333,733,523 513,191,267


2012 Annual Report


TRAKYA CAM SANAY‹‹ A.fi.CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED 31 DECEMBER 2012, AND 2011(Amounts expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 1 - GROUP’S ORGANISATION AND NATURE OF OPERATIONS

Trakya Cam Group (the “Group”) consists of a holding company, Trakya Cam Sanayii A.fi. (“Company”) and 9 subsidiaries, 3 investmentsin associates and 3 joint ventures.

Trakya Cam Sanayii A.fi. was established on 17 January 1978 and started production in 1981. The Company is a subsidiary of Türkiyefiifle ve Cam Fabrikalar› A.fi. Group (“fiiflecam Holding”) which is under the control of Türkiye ‹fl Bankas› A.fi. The Company producesand sells basic flat glass, patterned glass, mirror, automotive glass, tempered glass, laminated glass, coated glass, processed glass andglassware in its production facilities at K›rklareli (Lüleburgaz), Mersin (Tarsus) and Bursa (Yeniflehir). There are also overseas factories atBulgaria (Targovishte) and Romanya (Buzau).

The Head Office and the Shareholder Structure of the Company

The shareholder structure of the Company is presented in Note 27. The Company is registered in Turkey and the contact information is as below:

‹fl Kuleleri Kule 3, 4. Levent 34330, Befliktafl / Istanbul / TurkeyPhone : +90 212 350 50 50Fax : +90 212 350 50 80http://www.trakyacam.com.tr

The Company’s shares have been on the traded Istanbul Stock Exchange (“ISE”) since 5 November 1990.

Details of the number of personnel are as follows:31 December 31 December

2012 2011Personnel charged by monthly pay 840 811

Personnel charged by hour 2,138 1,957

Total 2,978 2,768

Approval of Financial Statements:

Financial statements were approved by the board of directors and authorized for publication on 6 March 2013. The General Assemblyhas the authority to change these financial statements.

Consolidated subsidiaries, joint ventures and associates:

The subsidiaries, joint ventures and associates of the Group, their country of incorporation, nature of business and the proportion ofownership interest and the effective interest of the Company in these subsidiaries are as follows:

Subsidiaries:Company Name Nature of business Country of incorporationTrakya Yeniflehir Cam Sanayii A.fi. Production and Sale of Flat Glass TurkeyTrakya Polatl› Cam Sanayii A.fi. Production and Sale of Flat Glass TurkeyTrakya Investment B.V. Finance and Investment Company NetherlandsTrakya Glass Rus ZAO Production and Sale of Flat Glass RussiaTRSG Glass Holding B.V. Finance and Investment Company NetherlandsTRSG Autoglass Holding B.V. (**) Finance and Investment Company NetherlandsAutomotive Glass Alliance Rus ZAO (**) Automotive Glass Company RussiaTrakya Glass Kuban OOO (*) Production and Sale of Flat Glass RussiaGlass Corp S.A. Production and Sale of Automobile Glass Romania

(*) Investment and operations of this company had not started as at the balance sheet date.(*) These subsidiaries were established in 2012.

31 December 2012 31 December 2011Direct and Effective Direct and Effective

Indirect ownership indirect ownershipownership ratio ratio ownership ratio ratio

Company Name % % % %Trakya Yeniflehir Cam Sanayii A.fi. 85.0 85.0 85.0 85.0Trakya Polatl› Cam Sanayii A.fi. 85.0 84.9 85.0 84.9Trakya Investment B.V. 100.0 100.0 100.0 100.0Trakya Glass Rus ZAO 70.0 70.0 70.0 70.0TRSG Glass Holding B.V. 70.0 70.0 70.0 70.0TRSG Autoglass Holding B.V. (*) 70.0 70.0 - -Automotive Glass Alliance Rus ZAO (*) 70.0 70.0 - -Trakya Glass Kuban OOO 100.0 100.0 100.0 100.0Glass Corp S.A. (**) 90.0 90.0 - -

(*) These subsidiaries were established in 2012.

TRAKYA CAM SANAY‹‹ A.fi.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED 31 DECEMBER 2012, AND 2011(Amounts expressed in Turkish Lira (“TRY”) unless otherwise indicated.)


2012 Annual Report


Joint Ventures:Company Name Nature of business Country of incorporationTrakya Cam Investment BV Finance and investment Netherlands

Trakya Glass Bulgaria EAD Production and sale of flat glass,

mirror, white goods and glassware Bulgaria

Trakya Glass Logistics EAD Logistics Bulgaria

31 December 2012 31 December 2011Direct and Effective Direct and Effective

Indirect ownership indirect ownershipOwnership ratio ratio ownership ratio ratio

Company Name % % % %Trakya Cam Investment BV 70.0 70.0 70.0 70.0

Trakya Glass Bulgaria EAD 70.0 70.0 70.0 70.0

Trakya Glass Logistics EAD 70.0 70.0 70.0 70.0

Associates:31 December 2012 31 December 2011

Ownership OwnershipNature of Country of ratio ratio

Company Name business incorporation % %Çay›rova Cam San. A.fi. Commercial activity (*) Turkey 28.1 28.1

Camifl Elektrik A.fi. Electricity production and sales Turkey 34.4 34.4

Saint Gobain Glass Egypt Production of Flat Glass Egypt 20.0 15.4

(*) Çay›rova Cam San. A.fi. generates rent income by leasing its warehouses and facilities to the Group companies.

NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS

2.1 Basis of Presentation

Preparation of Financial Statements and Accounting Standards

The Company and its Turkish subsidiaries maintain their books of accounts and prepare their statutory financial statements in accordancewith the Turkish Commercial Code (“TCC”), tax legislations and the Uniform Chart of Accounts issued by the Ministry of Finance andaccounting principles issued by the Capital Markets Board (“CMB”). The foreign subsidiaries maintain their books of account in accordancewith the laws and regulations in force in the countries in which they are registered.

The CMB regulates the principles and procedures of preparation, presentation and announcement of financial statements prepared byentities through the "Communique No: XI-29, “Principles of Financial Reporting in Capital Markets” (the “Communique”). This Communiquéis effective for the annual periods starting from 1 January 2008 and supersedes the Communiqué No: XI-25, “The Financial ReportingStandards in the Capital Markets”. According to the Communiqué, entities shall prepare their financial statements in accordance withInternational Financial Reporting Standards (“IAS/IFRS”) endorsed by the European Union. Until the Public Oversight Accounting andAuditing Standards Authority (“POAASA”) announces the differences between IAS/IFRS as adopted by the European Union and thoseissued by the International Accounting Standards Board (“IASB”), Turkish Accounting Standards/Turkish Financial Reporting Standards(“TAS/TFRS”) issued by the POAASA will continue to be in line with standards issued by the IASB.

As the differences of the IAS/IFRS endorsed by the European Union from the ones issued by the IASB have not been announced byPOAASA as of the date of preparation of these consolidated financial statements, the consolidated financial statements have beenprepared within the framework of Communiqué XI, No:29 and related promulgations to this Communiqué as issued by the CMB inaccordance with the accounting and reporting principles accepted by the CMB (“CMB Financial Reporting Standards”) which are basedon IAS/IFRS. The consolidated financial statements and the related notes to them are presented in accordance with the formats requiredat the announcements of CMB dated 14 April 2008, 9 January 2009 and 25 October 2010. As per CMB’s Communiqué Serial XI, No:29and its announcements clarifying this communiqué, enterprises are obliged to present the hedging rate of their total foreign exchangeliability and export and import amounts in the notes to the financial statements.

The Company and its Turkish subsidiaries maintain their books of account and prepare their statutory financial statements (“StatutoryFinancial Statements”) in TRY in accordance with the Turkish Commercial Code (“TCC”), tax legislation and the Uniform Chart of Accountsissued by the Ministry of Finance and accounting principles issued by the CMB for listed companies. The foreign Subsidiaries and JointVentures maintain their books of account in accordance with the laws and regulations in force in the countries in which they are registered.These consolidated financial statements are based on the statutory records, which are maintained under historical cost conversion exceptfor the valuation of certain financial assets and liabilities, with the required adjustments and reclassifications reflected for the purposeof fair presentation in accordance with the CMB Financial Reporting Standards.

Presentation and Functional Currency

The individual financial statements of each entity of the Group, are presented in the currency of the primary economic environment inwhich the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financialposition of each entity are expressed in Turkish Lira (“TRY”), which is the functional and presentation currency of the Group.

The functional currency of Trakya Cam Investment BV, a joint venture operating in Netherlands is the Euro. The functional currencies ofTrakya Glass Bulgaria EAD and Trakya Glass Logistics EAD, the joint ventures operating in Bulgaria are the Bulgarian Leva. The functionalcurrency of Trakya Investment BV, TRSG Holding BV and TRSG Autoglass Holding B.V subsidiaries operating in Netherlands is Euro.Functional currency of Trakya Glass Rus ZAO and Automotive Glass Alliance Rus ZAO, subsidiaries operating in Russia are Roubles Thefunctional currency of Glass Corp S.A. subsidiaries operating in Romania is Ron. Financial statements of these subsidiaries and jointventures are consolidated by converting balance sheet items with TRY/Euro, TRY/Bulgarian Leva TRY/Ruble ,TRY/ Ron exchange ratesprevailing at the balance sheet date and by converting income / expenses and cash flows with annual average exchange rates for TRY/Euro,TRY/Bulgarian Leva , TRY/ Ruble and TRY/ Ron. Translation differences arising from conversion are accounted in “currency translationdifferences” under equity.

The functional currency of subsidiaries of the Company operating in Turkey is TRY.

Preparation of Financial Statements in Hyperinflationary Periods

In accordance with the CMB’s resolution No: 11/367 issued on 17 March 2005, companies operating in Turkey which prepare theirfinancial statements in accordance with the CMB Accounting Standards (including the application of IFRS) are not subject to inflationaccounting effective from 1 January 2005. Therefore, as of 1 January 2005, IAS 29 “Financial Reporting in Hyperinflationary Economies”is not applied in the accompanying consolidated financial statements. Hyperinflation impact on the paid-in capital of the Company wasaccounted for in “adjustments to share capital” under shareholders’ equity.

Going Concern

The consolidated financial statements including the accounts of the parent company, its subsidiaries, joint ventures and associates havebeen prepared assuming that the Group will continue as a going concern on the basis that the entity will be able to realize its assetsand discharge its liabilities in the normal course of business.

Comparative information and correction of prior period financial statements

The consolidated financial statements of the Group include comparative financial information to enable the determination of the financialposition and performance. Comparative figures are reclassified, where necessary, to conform to changes in presentation in the currentyear consolidated financial statements.

The Group has made corrections on prior year’s consolidated financial statements in Note 38, to be consistent with current year consolidatedfinancial statements. Correction is related to the calculation of net debt / total equity ratio. This correction has no effect on consolidatedfinancial statements. In this context net debt / total capital ratios as of 31 December 2012 and 31 December 2011are as follows:

Group’s share in Cam Elyaf Sanayi disclosed as 20,93% in Note 7 in the financial statements as at 31 December 2011 has been revisedas 12.6% in the financial statements as at 31 December 2012.

31 December 31 December2012 2011

Total financial liabilities 398,730,186 336,581,390

Less: cash and cash equivalents and financial assets (385,803,506) (552,355,306)

Net debt 12,926,680 (215,773,916)

Total equity 2,010,170,358 1,793,698,381

Total capital 1,997,243,678 2,009,472,297

Net debt / total equity ratio 1% (11%)


2012 Annual Report


The Group has made reclassification on prior year’s consolidated financial statements in Note 5, to be consistent with current yearconsolidated financial statements. Classification is related to the presentation of “Basic glass and Other glass” operating segments and“Turkey and out of Turkey” geographical segments. This correction has no effect on consolidated financial statements. In this context,presentation of Note 5 has revised accordingly for the period between 1 January – 31 December 2012.

Consolidation1 January- 31 December 2011 Basic glass Other glass Total eliminations ConsolidatedNet sales 878,597,064 391,688,293 1,270,285,357 (14,817,324) 1,255,468,033

Cost of sales (528,213,066) (291,902,127) (820,115,193) 11,192,274 (808,922,919)

Gross profit 350,383,998 99,786,166 450,170,164 (3,625,050) 446,545,114Operating expense (157,249,611) (51,130,442) (208,380,053) - (208,380,053)

Other incomes 9,978,094 3,274,118 13,252,212 - 13,252,212

Other expense (6,017,511) (1,597,957) (7,615,468) - (7,615,468)

Operating Profit 197,094,970 50,331,885 247,426,855 (3,625,050) 243,801,805Purchases of tangible and intangible fixed asset 73,478,421 23,121,580 96,600,001 - 96,600,001

Depreciation and amortization on fixed assets 93,406,847 35,932,447 129,339,294 (653,664) 128,685,630

1 January- 31 December 2011 Turkey Out of Turkey Total eliminations ConsolidatedNet sales 1,040,111,334 230,174,023 1,270,285,357 (14,817,324) 1,255,468,033

Cost of sales (657,854,175) (162,261,018) (820,115,193) 11,192,274 (808,922,919)

Gross profit 382,257,159 67,913,005 450,170,164 (3,625,050) 446,545,114Purchases of tangible and intangible fixed asset 57,561,725 39,038,276 96,600,001 - 96,600,001


Total assets at 31 December 2011 2,421,428,504 544,816,907 2,966,245,411 (617,927,753) 2,348,317,658

Financial statements of foreign Subsidiaries and Joint Ventures

Financial statements of subsidiaries, associates and joint ventures operating in foreign countries are prepared in accordance with thelegislation of the country in which they operate and assets and liabilities in financial statements prepared according to the Group’saccounting policies are translated into TRY from the foreign exchange rate at the balance sheet date whereas income and expenses aretranslated into TRY at the average foreign exchange rate. Exchange differences arising from the translation of the opening net assetsof foreign undertakings and differences between the average and balance sheet date rates are included in the “currency translationdifferences” under shareholders’ equity..

Foreign exchange rates used for the translation of the foreign operations incorporated in the consolidation are as follows:

31 December 2012 31 December 2011Currency Period End Period Average Period End Period AverageEuro 2.3517 2.3043 2.4438 2.3244Bulgarian Leva 1.2024 1.1782 1.2495 1.1884Ruble 0.0581 0.0572 0.0582 0.0564Ron 0.5260 0.5130 0.5609 0.5437

Consolidation Principles

Subsidiaries

Control is provided with influence on financial and operational policy in order to obtain economic benefit from enterprise benefit.

Subsidiaries are companies over which the parent company has capability to control the financial and operating policies for the benefitof parent company, either (a) through the power to exercise more than 50% of the voting rights relating to shares in the companiesowned directly and indirectly by itself; or (b) although not having the power to exercise more than 50% of the voting rights, otherwisehaving the power to exercise control over the financial and operating policies.

The table in Note 1 sets out all Subsidiaries included in the scope of consolidation and shows the ownership and effective interest ratesas at 31 December 2012 and 31 December 2011 .

Subsidiaries are consolidated from the date on which the control is transferred to the Group and are no longer consolidated from thedate that the control ceases. Where necessary, accounting policies for Subsidiaries have been changed to ensure consistency with thepolicies adopted by the Group.

The balance sheets and the statements income of the subsidiaries are consolidated on line-by-line basis and the carrying value of theinvestment held by the Company and its subsidiaries is eliminated against the related equity. Intercompany transactions and balancesbetween the Company and its subsidiaries are eliminated during the consolidation. The cost of, and the dividends arising from, sharesheld by the Company in its Subsidiaries are eliminated from equity and income for the period, respectively.

The non-controlling shareholders’ share in the net assets and results of Subsidiaries for the year are separately classified as non-controllinginterest in the consolidated balance sheets and statements of income. The non-controlling interests consist of shares from the initialbusiness combinations and the non-controlling shares from the changes in equity after the business combinations date. When the lossesapplicable to the non-controlling portion exceed the non-controlling interest in the equity of the subsidiary, the excess loss and the furtherlosses applicable to the non-controlling are charged against the non-controlling interest (Note 2.4).

Joint Ventures

Joint Ventures are companies in respect of which there are contractual arrangements through which an economic activity is undertakensubject to joint control by the Company and one or more other parties. The Company exercises such joint control through the power toexercise voting rights relating to shares in the companies as a result of ownership interest directly and indirectly by itself whereby theCompany exercises control over the voting rights of the shares held by them. The table in Note 1 sets out all Joint Ventures included inthe scope of consolidation and shows the ownership and effective interest rates as at 31 December 2012 and 31 December 2011 .

The Group’s interest in Joint Ventures is accounted for by way of proportionate consolidation. According to this method, the Groupincludes its share of the assets, liabilities, income and expenses of each Joint Venture in the relevant components of the financialstatements. Liabilities and expenses incurred directly in respect of interests in jointly controlled assets are accounted for on an accrualbasis. Income from the sale or use of the Group’s share of the output of jointly controlled assets, and its share of joint venture expenses,are recognized when it is probable that the economic benefits associated with the transactions will flow to/from the Group and theiramount can be measured reliably.

The accounting policy of goodwill resulting from the acquisition of the joint-venture is the same as the accounting policy of goodwillresulting from the acquisition transaction of the subsidiary (Note 2.4).

Unrealized profits and losses resulting from the transactions between the Group and the Group’s joint-ventures are eliminated to theextent of the Group’s interest in the joint-ventures.

Associates

Associates are companies in which the Group has the interest that is more than 20% and less than 50% of the ordinary share capitalheld for the long-term and over which a significant influence is exercised. Equity method is used for accounting of associates.

Unrealized gains on transactions between the group and its associates are eliminated to the extent of the group’s interest in the associates.When the group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivablesor the significant influence ceases the Group does not continue to apply the equity method, unless it has incurred obligations or madepayments on behalf of the associate. Subsequent to the date of the caesura of the significant influence the investment is carried eitherat fair value when the fair values can be measured reliably or otherwise at cost when the fair values cannot be reliably measured.

Available-for-sale investments

Available-for-sale investments, in which the Group has controlling interests equal to or above 20%, or over which are either immaterialor where a significant influence is not exercised by the Group, that do not have quoted market prices in active markets and whose fairvalues cannot be reliably measured are carried at cost less any provision for impairment.

Available-for-sale investments, in which the Group has the interests that is below 20% or in which a significant influence is not exercisedby the Group, that have quoted market prices in active markets and whose fair values can be reliably measured, are carried to the financialstatements at their fair value.

2.2 Restatement and Errors in the Accounting Policies and Estimates

The effect of changes in accounting estimates affecting the current period is recognized in the current period; the effect of changes inaccounting estimates affecting current and future periods is recognized in the current and future periods. There has not been any significantchange in accounting estimates of the Group for the current period.

Material changes in accounting policies or material errors are corrected, retrospectively by restating the prior period consolidated financialstatements.

2.3 Amendments in International Financial Reporting Standards

The Group has applied new standards, amendments and interpretations to existing standards published by IASB and IFRIC that areeffective as at 1 January 2012 and are relevant to the Group’s operations. There are no relevant amendments or interpretations for theGroup which have been enforced as of 1 January 2012 and in interim periods subsequent to 1 January 2012. Standards, amendmentsand interpretations effective from 1 January 2012:

a. Standards, amendments and IFRICs applicable to 31 December 2012 year ends

- IFRS 7 (amendment), “Financial instruments: Disclosures on transfers of assets”, is effective for annual periods beginning onor after 1 July 2011. This amendment will promote transparency in the reporting of transfer transactions and improve users’understanding of the risk exposures relating to transfers of financial assets and the effect of those risks on an entity’s financialposition, particularly those involving securitisation of financial assets.

IFRS 1 (amendment), “First-time adoption of IFRS”, is effective for annual periods beginning on or after 1 July 2011. The


2012 Annual Report


amendment provides guidance on how an entity should resume presenting financial statements in accordance with IFRSs aftera period when the entity was unable to comply with IFRSs because its functional currency was subject to severe hyperinflation.Earlier adoption is permitted.

- IAS 12 (amendment), “Income taxes” on deferred tax, is effective for annual periods beginning on or after 1 January 2012. Thisamendment introduces an exception to the existing principle for the measurement of deferred tax assets or liabilities arising oninvestment property measured at fair value.

b. New IFRS standards, amendments and IFRICs effective after 1 January 2013:

- IAS 19 (amendment), “Employee benefits”, is effective for annual periods beginning on or after 1 January 2013. These amendmentseliminate the corridor approach and calculate finance costs on a net funding basis. Early adoption is permitted. Based on theaforementioned standard, an actuarial loss of TRY 4.075.147 would be reversed from the income statement and accounted forunder other comprehensive income for the year ended 31 December 2012.

- IAS 1 (amendment), “Presentation of financial statements”, regarding other comprehensive income is effective for annual periodsbeginning on or after 1 July 2012. The main change resulting from these amendments is a requirement for entities to group itemspresented in ‘other comprehensive income’ on the basis of whether they are potentially reclassifiable to profit or loss subsequently(reclassification adjustments). The amendments do not address which items are presented in other comprehensive income. Earlyadoption is permitted.

- IFRS 10, “Consolidated financial statements”, is effective for annual periods beginning on or after 1 January 2013. The standardbuilds on existing principles by identifying the concept of control as the determining factor in whether an entity should be includedwithin the consolidated financial statements of the parent company. The standard provides additional guidance to assist in thedetermination of control where this is difficult to assess. This new standard might impact the entities that a group consolidatesas its subsidiaries.

- IFRS 11, “Joint arrangements”, is effective for annual periods beginning on or after 1 January 2013. IFRS 11 is a more realisticreflection of joint arrangements by focusing on the rights and obligations of the arrangement rather than its legal form. Thereare two types of joint arrangement: joint operations and joint ventures. Proportional consolidation of joint ventures is no longerallowed. Please refer to Note 3 for the effects of the aforementioned standard on the consolidated financial statement.

- IFRS 12, “Disclosures of interests in other entities”, is effective for annual periods beginning on or after 1 January 2013. Thestandard includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates,special purpose vehicles and other off balance sheet vehicles.

- IFRS 10, 11 and 12 on transition guidance (amendment), is effective for annual periods beginning on or after 1 January 2012.The amendment also provides additional transition relief in IFRSs 10, 11 and 12, limiting the requirement to provide adjustedcomparative information to only the preceding comparative period. For disclosure related to unconsolidated structured entities,the amendments will remove the requirement to present comparative information for the periods before IFRS 12 is applied.

- IFRS 13, “Fair value measurement”, is effective for annual periods beginning on or after 1 January 2013. The standard aims toimprove consistency and reduce complexity by providing a precise definition of fair value and a single source of fair valuemeasurement and disclosure requirements for use across IFRSs.

- IAS 27 (revised), “Separate financial statements”, is effective for annual periods beginning on or after 1 January 2013. The standardincludes the provisions on separate financial statements that are left after the control provisions of IAS 27 have been includedin the new IFRS 10.

- IAS 28 (revised), “Associates and joint ventures”, is effective for annual periods beginning on or after 1 January 2013. The standardincludes the requirements for joint ventures, as well as associates, to be equity accounted following the issue of IFRS 11.

- IFRS 7 (amendment), “Financial instruments: Disclosures’, on offsetting financial assets and financial liabilities”, is effective forannual periods beginning on or after 1 January 2013. These new disclosures are intended to facilitate comparison between thoseentities that prepare IFRS financial statements and those that prepare US GAAP financial statements.

- IAS 32 (amendment), “Financial instruments”: Presentation’, on offsetting financial assets and financial liabilities”, is effectivefor annual periods beginning on or after 1 January 2014. The amendment updates the application guidance in IAS 32, ‘Financialinstruments: Presentation’, to clarify some of the requirements for offsetting financial assets and financial liabilities on the balancesheet.

- IFRS 1 (amendment), “First time adoption”, on government loans”, is effective for annual periods beginning on or after 1 January2013. The amendment addresses how a first-time adopter would account for a government loan with a below-market rate ofinterest when transitioning to IFRS.

- Annual Improvements to IFRSs 2011 is effective for annual periods beginning on or after 1 January 2013. Amendments effectfive standards: IFRS 1, IAS 1, IAS 16, IAS 32 and IAS 34.

- IFRS 9, “Financial instruments: Classification and Measurement”, is effective for annual periods beginning on or after 1 January2015. The standard addresses the classification, measurement and recognition of financial assets and financial liabilities. It replacesthe parts of IAS 39 that relate to the classification and measurement of financial instruments.

- IFRS 10, (amendment) “Consolidated Financial Statements”, IFRS 12 and IAS 27 for investment entities is effective for annualperiods beginning on or after 1 January 2013. These amendments mean that many funds and similar entities will be exempt from

consolidating most of their subsidiaries. Instead, they will measure them at fair value through profit or loss. Changes have alsobeen made IFRS 12 to introduce disclosures that an investment entity needs to make.

- IFRIC 20, “Stripping costs in the production phase of a surface mine” is effective for annual periods beginning on or of 1 January2013.

The Group will evaluate the effect of the aforementioned changes within its operations and apply changes starting from the effectivedate. It is expected that the application of the standards and the interpretations above will not have a significant effect on the consolidatedfinancial statements of the Group, except the standards of which effects are disclosed above.

2.4 Summary of Significant Accounting Policies

Revenue recognition

Revenues are recognized on an accrual basis at the fair values incurred or to be incurred when the goods are delivered, the risks andrewards of ownership of the goods are transferred, when the amount of revenue can be reliably measured and it is probable that thefuture economic benefits associated with the transaction will flow to the entity. Net sales represent the fair value of goods shipped lesssales discounts and returns. When the arrangement effectively constitutes a financing transaction, the fair value of the consideration isdetermined by discounting all future receipts using an imputed rate of interest. The difference between the fair value and the nominalamount of the consideration is recognized in the period on an accrual basis as financial income (Note 28).

Sale of Goods

Revenue from sale of goods is recognized when all the following conditions are satisfied:

• The Group has transferred to the buyer the significant risks and rewards of ownership of the goods,

• The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective controlover the goods sold;

• The amount of revenue can be measured reliably;

• It is probable that the economic benefits associated with the transaction will flow to the Group; and

• The costs incurred or to be incurred in respect of the transaction can be measured reliably.

Interest income

Interest income is accrued using the effective interest method which brings the remaining principal amount and expected future cashflows to the net book value of the related deposit during the expected life of the deposit.

Dividend income

Dividend income is recognized by the Group at the date the right to collect the dividend is realized. Dividend payables are recognizedas a result of profit distribution in the period they are declared.

Inventory

Inventories are valued at the lower of cost or net realizable value. Cost elements included in inventories are materials, labour and anappropriate amount for factory overheads. The cost of borrowings is not included in the costs of inventories. The cost of inventories isdetermined on the weighted average basis for each purchase. Net realizable value is the estimated selling price in the ordinary courseof business, less the costs of completion and selling expenses. When the net realizable value of inventory is less than cost, the inventoryis written down to the net realizable value and the expense is included in statement of income/(loss) in the period the write-down orloss occurred. When the circumstances that previously caused inventories to be written down below cost no longer exist or when thereis clear evidence of an increase in net realizable value because of the changes in economic circumstances, the amount of the write-downis reversed. The reversal amount is limited to the amount of the initial write-down (Note 13).

Property, plant and equipment

Property, plant and equipment are carried at acquisition cost, less any accumulated depreciation and impairment losses.

Assets in the course of construction for rental or administrative purposes, or for purposes not yet determined, are carried at cost, lessany recognized impairment loss. Cost includes professional fees. For assets that need considerable time to be ready for sale or use,borrowing costs are capitalized in accordance with the Group’s accounting policy. As it is for the other fixed assets, such assets aredepreciated when the assets are ready for their intended use.

Cost amounts of property, plant and equipment assets excluding land and construction in progress are subject to amortization by usingthe straight-line method in accordance with their expected useful life. There is no depreciation allocated for lands due to indefinite usefullives. Expected useful life, residual value and amortization method are evaluated every year for the probable effects of changes arisingin the expectations and are accounted for prospectively (Note 18).

Leased assets are subject to similar amortization procedures, as with the other tangible assets on the shorter of the related leasing periodand economic life of the asset.

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


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Useful lifeBuildings 25-50 yearsLand improvements 8-50 yearsMachinery and equipment 8-15 yearsMotor vehicles 4-5 yearsFurniture and fixtures 2-15 yearsSpecial costs 4-5 years

Property, plant and equipment are reviewed for impairment losses whenever events or changes in circumstances indicate that the carryingamount may not be recoverable. An impairment loss is recognized for the amount by which the carrying amount of the asset exceeds itsrecoverable amount, which is the higher of asset net selling price or value in use. The recoverable amount of the property, plant andequipment is the higher of future net cash flows from the utilization of this property, plant and equipment or fair value less cost to sell.

Costs to property plant and equipment are included in the asset’s carrying amount or recognized as a separate asset as appropriate, onlywhen it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measuredreliably. All other repairs and maintenance are charged to the income statements during the financial period in which they were incurred.

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

Intangible assets

Intangible assets acquired

Intangible assets acquired separately are carried at cost, less accumulated amortization and any accumulated impairment losses.Amortization is charged on a straight-line basis over their estimated useful lives. Estimated useful life and amortization method arereviewed at the end of each annual reporting period, with the effect of any changes in the estimate being accounted for on a prospectivebasis (Note 19).

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

Rights 3-5 yearsOther intangible assets 3-5 years

Computer software’s

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software.These costs are amortized over their estimated useful lives (3 - 5 years).

Costs associated with developing or maintaining computer software programs are recognized as an expense as incurred. Costs that aredirectly associated with the development of identifiable and unique software products controlled by the Group, and that will probablygenerate economic benefits exceeding costs beyond one year, are recognized as intangible assets. Costs include software developmentemployee costs and an appropriate portion of relevant overheads. Computer software development costs recognized as assets areamortized over their estimated useful lives (not exceeding five years) (Note 19).

Impairment of Assets

The carrying amounts of the Group’s assets other than goodwill are reviewed at each balance sheet date to determine whether thereis any indication of impairment. When an indication of impairment exists, the Group compares the carrying amount of the asset with itsnet realizable value which is the higher of value in use or fair value less costs to sell. Impairment exists if the carrying value of an assetor a cash generating unit is greater than its recoverable amount which is the higher of value in use or fair value less costs to sell. Animpairment loss is recognised immediately in the comprehensive statement of income.

The increase in carrying value of the assets (or a cash generated unit) due to the reversal of recognised impairment loss shall not exceedthe carrying amount of the asset (net of amortization amount) in case where the impairment loss was reflected in the consolidatedfinancial statements in prior periods. Such a reversal is accounted for in the comprehensive statement of income.

Financial Leasing

Leasing of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as financeleasing. Finance leased are capitalised at the inception of the lease at the lower of the fair value of the leased property or the present valueof the minimum lease payments. Financial costs of leasing are distributed over the lease period with a fixed interest rate. The property,plant and equipment acquired under financial leases are depreciated over the useful lives of the assets. If there is a decrease in the valueof the property, plant and equipment under financial leasing, the Group provides impairment. The foreign exchange and interest expensesrelated with financial leasing have been recorded in the income statement. Lease payments have been deducted from leasing debts.

Borrowing costs

Borrowings are recognized initially at the proceeds received, net of transaction costs incurred. Borrowings are subsequently stated atamortized cost using the effective yield method; any difference between proceeds, net of transaction costs, and the redemption valueis recognized in the statement of income over the period of the borrowings (Note 8).

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part ofthe cost of that asset in the period in which the asset is prepared for its intended use or sale.

All other borrowing costs are recognized in the profit or loss in the period in which they are incurred.


Related Parties

For the purpose of these consolidated financial statements, shareholders, key management personnel (general managers, head of group, vicegeneral managers, vice head of group and factory managers) and Board members, in each case together with the companies controlled by/oraffiliated with them, associated companies and other companies within the Group are considered and referred to as related parties (Note 37).

Offsetting

All items with significant amounts and nature, even with similar characteristics, are presented separately in the financial statements.Insignificant amounts are grouped and presented by means of items having similar substance and function. When the nature of transactionsand events necessitate offsetting, presentation of these transactions and events over their net amounts or recognition of the assets afterdeducting the related impairment are not considered as a violation of the rule of non-offsetting.

Financial assets

Classification

The group classifies its financial assets in the following categories: loans and receivables, available-for-sale financial assets and held tomaturity financial assets. The classification depends on the purpose for which the financial assets were acquired. Management determinesthe classification of its financial assets at initial recognition.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Theyare included in current assets, except for maturities greater than 12 months after the balance sheet date. Those with maturities greaterthan 12 months are classified as non-current assets. The group’s loans and receivables are classified as “trade and other receivables” inthe balance sheet (Note 10).

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of theother categories. They are included in non-current assets unless management intends to dispose of the related investments within 12months of the balance sheet date (Note 7).

Held to maturity financial assets

Debt securities with fixed maturities, where management has both the intent and the ability to hold to the maturity excluding the financialassets classified as originated loans and advances to customers are classified as “held-to-maturity financial assets”. Held-to-maturity financialassets are carried at amortized cost using the effective yield method.

Recognition and measurement

Regular purchases and sales of financial assets are recognized on the trade date - the date on which the group commits to purchase orsell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value throughprofit or loss. Financial assets carried at fair value through profit or loss are initially recognized at fair value and transaction costs are expensedin the income statement. Financial assets are derecognized when the rights to receive cash flows from the investments have expired orhave been transferred and the group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets andfinancial assets at fair value through profit or loss are subsequently carried at fair value.

Loans and receivables are carried at amortized cost using the effective yield method.

Gains and losses arising from changes in fair value of available-for-sale financial assets are recognized in other comprehensive income andaccumulated in the investments revaluation reserve with the exception of impairment losses, interest calculated using the effective interestmethod, and foreign exchange gains and losses on monetary assets, which are recognized in profit or loss. When the available-for-salefinancial asset is disposed or is determined to be impaired, the cumulative gain or loss previously accumulated in the investments revaluationreserve is reclassified to profit or loss.

Interest on available-for-sale securities calculated using the effective interest method is recognized in the income statement as part of otherincome. Dividends on available-for-sale equity instruments are recognized in the income statement as part of other income when the group’sright to receive payments is established.

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlistedsecurities), the group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, referenceto other instruments that are substantially the same, discounted cash flow analysis, and option pricing models. Available for sale investmentsthat do not have a quoted market price in active markets and whose fair value cannot be measured reliably are carried at cost less anyprovision for diminution in value.

The group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets isimpaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the securitybelow its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets,the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on thatfinancial asset previously recognized in profit or loss - is removed from equity and recognized in the income statement. Impairment lossesrecognized in the income statement on equity instruments are not reversed through the income statement.

Trade receivables

Trade receivables that are created by way of providing goods or services directly to a debtor are carried at amortized cost. Trade receivables,net of unearned financial income, are measured at amortized cost, using the effective interest rate method, less the unearned financial

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income. Short duration receivables with no stated interest rate are measured at the original invoice amount unless the effect of imputinginterest is significant.

A doubtful receivable provision for trade receivables is established if there is objective evidence that the Group will not be able to collectall amounts due. The amount of provision is the difference between the carrying amount and the recoverable amount, being the presentvalue of all cash flows, including amounts recoverable from guarantees and collateral, discounted based on the original effective interestrate 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 iscredited to other income (Note 10).

Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with originalmaturities of three months or less, and bank overdrafts (Note 6).

Financial liabilities

Financial liabilities are initially measured at fair value including the transaction costs which are directly attributable.

Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Financial liabilities are subsequently measured at amortized cost using the effective interest method plus the interest expense recognizedon an effective yield basis.

The effective interest method calculates the amortized cost of a financial liability and of allocating interest expense over the relevant period.The effective interest rate discounts the estimated future cash payments through the expected life of the financial liability, or, whereappropriate, a shorter period.

Trade payables

Trade payables are payments to be made arising from the purchase of goods and services from suppliers within the ordinary course ofbusiness. Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interestmethod (Note 10).

Business combinations and Goodwill

The cost of a business combination is allocated by recognizing the acquiree’s identifiable assets, liabilities and contingent liabilities at thedate of acquisition. If the acquisition cost is higher than the fair value of the identifiable assets, liabilities and contingent liabilities acquired,the difference is accounted for as goodwill. In business combinations, the acquirer recognizes identifiable assets, intangible assets and/orcontingent liabilities which are not included in the acquiree’s financial statements and which can be separated from goodwill, at their fairvalues in the consolidated financial statements. The goodwill previously recognized in the financial statements of the acquiree is notconsidered as an identifiable asset.

If the acquisition cost is lower than the fair value of the identifiable assets, liabilities and contingent liabilities acquired, the difference isaccounted for as income in the related period.

The carrying value of goodwill is reviewed annually at the same time for impairment and the impairment provision, if any, is immediatelyrecognized in the consolidated income statements. For the purpose of impairment testing, goodwill acquired in a business combination isallocated to each of the CGUs, or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or groupof units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internalmanagement purposes. Goodwill is monitored at the operating segment level.

Legal mergers arising between companies controlled by the Group are not considered within the scope of IFRS 3. Consequently, there isno recognition of any goodwill in these transactions. Similarly, the effects of all transactions between the legally merged enterprises, whetheroccurring before or after the legal merger, are eliminated in the preparation of the consolidated financial statements.

Foreign Currency Transactions

The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which theentity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of eachentity are expressed in Turkish Lira (“TRY”), which is the functional currency of the Company, and the presentation currency for theconsolidated financial statements.

In preparing the financial statements of the individual entities, transactions in currencies other than functional currencies are recorded atthe rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreigncurrencies are retranslated at the rates prevailing on the balance sheet date.

Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date whenthe fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are expressedin TRY using exchange rates prevailing at the balance sheet date. Income and expense items are translated at the average exchange ratesfor the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactionsare used. Exchange differences arising, if any, are classified as equity and transferred to the Group’s translation differences. Such exchangedifferences are recognized in profit or loss in the period in which the foreign operation is disposed of.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operationand translated at closing rates.


Earnings per share

Earnings per share disclosed in the accompanying consolidated statement of income is determined by dividing net income by the weightedaverage number of shares circulating during the year concerned.

In Turkey, companies can raise their share capital by distributing “Bonus Shares” to shareholders from retained earnings. In computingearnings per share, such “bonus share” distributions are assessed as issued shares. Accordingly, the retrospective effect for those sharedistributions is taken into consideration in determining the weighted-average number of shares outstanding used in this computation (Note36).

Events after the balance sheet date

Events after the balance sheet date comprise any events between the balance sheet date and the date of authorization of the financialstatements for issue, even if any events after the balance sheet date occurred subsequent to the announcement on the Group’s profit orfollowing the publicly disclosed financial information.

The Group restates its consolidated financial statements if such adjusting subsequent events arise (Note 40).

Provisions, Contingent Assets and Liabilities

Provisions are recognized when the Group has a present obligation as a result of a past event, and it is probable that the Group will berequired to settle that obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheetdate considering the risks and uncertainties surrounding the obligation.

Where the effect of the time value of money is material, the amount of provision shall be the present value of the expenditures expectedto be required to settle the obligation. The discount rate reflects current market assessments of the time value of money and the risksspecific to the liability. The discount rate shall be a pre-tax rate and shall not reflect risks for which future cash flow estimates have beenadjusted.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable isrecognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Segment reporting

The Group has two business segments determined by the management based on the information available for the evaluation of performancesand the allocation of resources. These segments are managed separately because they are affected by the economical conditions andgeographical positions in terms of risks and returns. The Group management has determined gross profit as the most suitable method forassessing the segmental performance (Note 5).

Operating segments are reported in a manner consistent with the reporting provided to the chief operating decision- maker. The chiefoperating decision-maker is responsible for the decisions related to the allocation of resources to the segments and assessment of performanceof segments.

A reportable segment is a business segment or a geographical segment identified based on the foregoing definitions for which segmentinformation is required to be disclosed. A business segment or geographical segment should be identified as a reportable segment if amajority of its revenue is earned from sales to external customers and its revenue from sales to external customers and from transactionswith other segments is 10% or more of the total revenue, external and internal, of all segments; or its segment result, whether profit orloss, is 10% or more of the combined result of all segments in profit or the combined result of all segments in loss, whichever is the greaterin absolute amount; or its assets are 10% or more of the total assets of all segments. Operating segments that do not meet any of thequantitative thresholds listed above, may still be considered reportable, and separately disclosed, if the management believes that theinformation about the segment would be useful to the users of the financial statements.

The Group classified its operations into two operational divisions for management accounting purposes which constitute the basis for thesegment reporting (Note 5).

Government grants

Grants from the government are recognized at fair value where there is a reasonable assurance that the grant will be received and the Groupwill comply with all the required conditions (Note 21).

The government grants are recognized as income over the periods necessary to match them with the related costs which they are intendedto compensate, on a systematic basis. Accordingly, government grants are recognized as income when the related costs which they areintended to compensate were incurred.

Similarly, grants related to depreciable assets are recognized as income over the periods and in the proportions in which depreciation onthose assets is charged.

Current and deferred income tax

The tax expense for the year comprises current and deferred tax. Tax is recognized in the statement of income, except to the extent thatit relates to items recognized directly in equity (Note 35). In such case, the tax is recognized in shareholders’ equity.

The current year tax on income is calculated for the Group’s subsidiaries, associates and joint ventures considering the tax laws that areapplicable in the countries where they operate.

Deferred tax liability or asset is recognized on differences between the carrying amounts of assets and liabilities in the financial statements

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and the corresponding tax bases which are used in the computation of taxable profit. Deferred income tax is determined using tax ratesand tax regulations that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the relateddeferred income tax asset is realised or the deferred income tax liability is settled.

The main temporary differences are from the time differences between carrying amount of tangible assets and their tax base amounts,the available expense accruals that are subject to tax and tax allowances that are not utilised.

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

When the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority and there is a legallyenforceable right to set off current tax assets against current tax liabilities, deferred tax assets and deferred tax liabilities are offset accordingly.

Employee benefits

Under the Turkish law and union agreements, severance payments are made to employees retiring or involuntarily leaving the Group. Suchpayments are considered as being part of defined retirement benefit plan as per International Accounting Standard No: 19 (Revised) “EmployeeBenefits” (“IAS 19”). In that respect, in addition to the salary, social rights such as; employee benefits including bonuses, fuel, leave, nationalholidays, educational incentives, food, marriage, private pension plans, birth and death are provided to the Group employees.

Provision for employment termination benefits represents the present value of the estimated future probable obligation of the Companyarising from the retirement of the employees calculated in accordance with the Turkish Labor Law. In accordance with existing sociallegislation and Turkish Labor Law in Turkey, the Company is required to make lump-sum termination indemnities to each employee whoseemployment is terminated, who has completed at least one year of service, who has been called for military service or who dies. All actuarialgains and losses are recognized in the income statement (Note 24).

Statement of Cash Flows

The Group prepares statements of cash flows as an integral part of its of financial statements to enable financial statement analysis aboutthe change in its net assets, financial structure and the ability to direct cash flow amounts and timing according to evolving conditions. Cashflows include those from operating activities, working capital, investing activities and financing activities.

Cash flows from operating activities represent the cash flows generated from the Group’s activities.

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

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

Dividends

Dividend income is recognized by the Group at the date the right to collect the dividend is realized. Dividend payables are recognized as aresult of profit distribution in the period they are declared.

2.5 Significant Accounting Estimates and Assumptions

The preparation of consolidated financial statements requires estimates and assumptions to be made regarding the amounts for the assetsand liabilities at the balance sheet date, and explanations for the contingent assets and liabilities as well as the amounts of income andexpenses realized in the reporting period. The Group makes estimates and assumptions concerning the future. The accounting estimatesand assumptions, by definition, may not be equal to the related actual results. The estimates and assumptions that may cause a materialadjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below:

The Group’s associate Çay›rova Sanayi A.fi. has classified Çay›rova property located in Gebze, Kocaeli, as investment property due to thetermination of operational use as of 31 December 2012. The fair value of the property is determined as TRY 217,707,575, as of 31 December2012. Revaluation gains, related to the Group’s share, amounting to TRY 53,974,897, including the deferred tax, determined as a result ofvaluation reports of two separate CMB licensed valuation firms, is accounted for under “Revaluation funds”(Note 27).

The Group recognizes deferred tax assets and liabilities based upon temporary differences arising between their financial statements preparedin accordance with CMB Financial Reporting Standards and their statutory financial statements. These temporary differences usually resultin the recognition of revenue and expenses in different reporting periods for CMB Financial Reporting Standards and tax purposes. Deferredincome tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combinationthat at the time of the transaction affects neither an accounting nor taxable profit/ (loss). The fully or partially recoverable amount of deferredtax assets are estimated under available circumstances. The future income projections, current period losses, unused losses and expirationdates of other tax assets and tax planning strategies that can be used when necessary are considered during the evaluation of estimations.

The Group receives corporate tax allowances (in accordance with Corporate Tax Law No. 5520, article 32/A). As of 31 December 2012, theamount of corporate tax allowances related to temporary differences and that can be utilized during the period of corporate tax allowanceright is TRY 14,386,765 (2011: TRY 5,715,297) (Note 35).

Fair value of one of the Group’s unquoted available for sale financial asset, Cam Elyaf Sanayi A.fi. 23.8% of which is owned by the Group,consisting of 12.6% of Cam Elyaf Sanayi A.fi. shares owned directly and 11.2% of the shares owned indirectly through Çay›rova Cam SanayiA.fi., is determined based on the valuations performed on 5 September 2012 by an independent and international valuation firm which hasthe required professional knowledge and experience sector knowledge. The fair value of the available-for-sale financial assets has beendetermined based on the available market information by the valuation methods of discounted cash flows. Discount rate used in cash flowanalysis is around 11%.

2.6 Convenience translation into English of the consolidated financial statements originally issued in Turkish

The accounting principles described in Note 2 to the consolidated financial statements (defined as CMB Financial Reporting Standards) differfrom International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board with respect to theapplication of inflation accounting for the period between 1 January and 31 December 2005. Accordingly, the accompanying consolidatedfinancial statements are not intended to present the financial position and results of operations in accordance with IFRS.

NOTE 3 - BUSINESS COMBINATIONS

The Group acquired 90% of the shares of Glass Corp. S.A., for a purchase consideration of Euro 3,098,613 on11 July 2012. Euro 2,050,840of the total amount was paid in cash whereas the remaining amount of Euro 1,047,773 was accounted for in current payables related toacquisitions. Goodwill arising from the acquisition through which the Group aimed to gain a large share of market in Romania and supportingits target of growing, in emerging markets, is represented below. The goodwill calculation is based on temporary amounts and will befinalized 12 months after the acquisition date. If necessary, revision on the calculation will be reflected in the financial statements as ofthe acquisition date.

Glass Corp. SA contributed TRY 2,463,176 in revenues after the acquisition, as included in the consolidated income statement. In the sameperiod, the profit attributable to equity holders is TRY 2,404,238. Had Glass Corp S.A. been included in the consolidation as of 1 January2012 an additional net revenue of TRY 3,847,207 and a decrease in the consolidated income statement by TRY 1,130,177 would have beenrecognized.

Assets Fair Value Group' ShareCurrent Asset 1,216,947 1,095,253Cash and Cash Equivalent 1,023 921

Trade receivables 651,193 586,074

Trade receivables from related parties 732 6 5 9

Other Trade Receivables 650,461 585,415

Other Receivables 785 707

Inventories 563,946 507,551

Non Current Asset 6,409,545 5,768,591Tangible Fixed Assets 6,364,853 5,728,368

Other Fixed Assets 44,692 40,223

Total Assets 7,626,492 6,863,843

LiabilitiesCurrent Liabilities 4,609,021 4,148,119Financial Liabilities 179,529 161,576

Trade Payables 2,082,953 1,874,658

Other Payables 2,310 2,079

Other Short Term Liabilities 2,344,229 2,109,806

Non-Current Liabilities 9,413,582 8,472,224Financial Liabilities 9,063,508 8,157,157

Other Payables 350,074 315,067

Total Liabilities 14,022,603 12,620,343

Total Net Asset (6,396,111) (5,756,500)Total paid in cash 4,530,425

Current payable related with the acquisition (Note 11) 2,314,592

Total purchases 6,845,017Goodwill 12,601,517

Currency translation differences 971,829

Goodwill (Note 20) - 13,573,346Net cash paid for acquisition of subsidiaryTotal paid in cash 4,530,425

Cash and Cash Equivalent (1,023)

Net Cash Out Flow 4,529,402


2012 Annual Report


NOTE 4 - JOINT VENTURES

Joint ventures are accounted using proportionate consolidation in the Group’s financial statements. Proportionate consolidation is similarto line by line consolidation. The Group’s share of assets, liabilities, income and expenses of Joint Ventures are consolidated in thefinancial statements by mapping each financial statement line item. The financial information presented below represents 100% of theJoint Ventures and not the Group’s share.

The nature of business, share percentages and summarized financial information of joint ventures accounted under the proportionateconsolidation are presented in Note 1.

31 December 2012 31 December 2011Current assets 187,616,111 132,273,032

Non current assets 610,469,252 509,090,058

Current liabilities (67,200,355) (61,878,087)

Non current liabilities (206,297,165) (18,824,611)

Net assets 524,587,843 560,660,391

1 January - 1 January -31 December 2012 31 December 2011

Income 338,932,697 336,939,936

Expense (-) (353,173,769) (254,099,534)

Net income (14,241,072) 82,840,401

The Group has no contingent commitments regarding to Joint Ventures.

NOTE 5 - SEGMENT REPORTING

The Group has adopted IFRS 8 starting from 1 January 2009 and has identified relevant operating segments based on internal reportsabout the components of the Group that are regularly reviewed by the chief operating decision maker of the Group, identified as theboard of directors.

The chief operating decision maker reviews results and operations on a product line segment basis as well as on a geographic segmentbasis in order to monitor performance and to allocate resources. Product line segments of the Group are defined in the following categories:basic glass and other glass. Geographic segments of the Group are defined in the following regions: Turkey and abroad.

The reconciliation of operating profit to income before tax is as follows;


Operating profit for reportable segments 98,270,016 243,801,805

Impairment losses on financial assets (6,701,215) -

Research and development expenses (-) (11,123,215) (11,049,492)

Share in result of associates and joint ventures 3,523,100 (791,487)

Financial income, net 6,922,919 51,809,323

Income before tax 90,891,605 283,770,149

a) Operational segmentsConsolidation

1 January- 31 December 2012 Basic glass Other glass Total eliminations ConsolidatedNet sales 870,366,987 407,842,790 1,278,209,777 (28,979,351) 1,249,230,426

Cost of sales (595,508,944) (348,008,963) (943,517,907) 24,344,426 (919,173,481)

Gross profit 274,858,043 59,833,827 334,691,870 (4,634,925) 330,056,945

Operating expense (177,450,827) (65,564,240) (243,015,067) - (243,015,067)

Other incomes 17,010,375 6,642,490 23,652,865 - 23,652,865

Other expense (11,712,260) (711,967) (12,424,227) - (12,424,227)

Operating Profit 102,705,331 200,110 102,905,441 (4,634,925) 98,270,516

Purchases of tangible and intangible fixed asset 235,328,787 129,906,592 365,235,379 605,160 365,840,539



Consolidation1 January- 31 December 2011 Basic glass Other glass Total eliminations ConsolidatedNet sales 878,597,064 391,688,293 1,270,285,357 (14,817,324) 1,255,468,033

Cost of sales (528,213,066) (291,902,127) (820,115,193) 11,192,274 (808,922,919)

Gross profit 350,383,998 99,786,166 450,170,164 (3,625,050) 446,545,114

Operating expense (157,249,611) (51,130,442) (208,380,053) - (208,380,053)

Other incomes 9,978,094 3,274,118 13,252,212 - 13,252,212

Other expense (6,017,511) (1,597,957) (7,615,468 - (7,615,468)

Operating Profit 197,094,970 50,331,885 247,426,855 (3,625,050) 243,801,805

Purchases of tangible and intangible fixed asset 73,478,421 23,121,580 96,600,001 - 96,600,001


The Group reviews its product line segments on the basis of net sales, cost of sales, gross profit, operating profit, purchases of tangiblefixed and intangible assets and depreciation and amortisation of tangible fixed and intangible assets. Other income statement items arenot allocated to segments.

Research and development expenses are not allocated to segments since such amounts are not regularly provided to the chief operatingdecision maker.

b) Geographical segments

Consolidation1 January- 31 December 2012 Turkey Out of Turkey Total eliminations ConsolidatedNet sales 1,044,768,665 233,441,112 1,278,209,777 (28,979,351) 1,249,230,426

Cost of sales (751,114,288) (192,403,620) (943,517,907) 24,344,426 (919,173,481)

Gross profit 293,654,377 41,037,492 334,691,870 (4,634,925) 330,056,945

Purchases of tangible and intangible fixed asset 153,909,477 211,325,901 365,235,378 605,161 365,840,539



Consolidation1 January- 31 December 2011 Turkey Out of Turkey Total eliminations ConsolidatedNet sales 1,040,111,334 230,174,023 1,270,285,357 (14,817,324) 1,255,468,033

Cost of sales (657,854,175) (162,261,018) (820,115,193) 11,192,274 (808,922,919)

Gross profit 382,257,159 67,913,005 450,170,164 (3,625,050) 446,545,114

Purchases of tangible and intangible fixed asset 57,561,725 39,038,276 96,600,001 - 96,600,001



The Group reviews its geographical segments on the basis of net sales, cost of sales, gross profit, purchases of tangible fixed andintangible assets and depreciation and amortisation of tangible fixed and intangible assets. Other income statement items are not allocatedto segments.

NOTE 6 - CASH AND CASH EQUIVALENTS31 December 2012 31 December 2011

Cash 39,333 44,951

Demand deposits 29,785,175 12,390,060

Time deposits 304,418,918 501,414,982

334,243,426 513,849,993

Time depositsCurrency Interest rate (%) Maturity 31 December 2012USD 3,25 - 3,50 January 2013 212,760,063

EUR 3,10 - 4,10 January 2013 89,156,343

TRY 6,25 - 8,75 January 2013 2,502,512

304,418,918

Currency Interest rate (%) Maturity 31 December 2011USD 4,40 - 4,85 January 2012 282,949,542

EUR 4,00 - 4,70 January 2012 214,762,277

TRY 6,25 January 2012 3,703,163

501,414,982

Nature and the level of risk related to cash and cash equivalents are explained in Note 38.

Cash and cash equivalents as of 31 December 2012 and 2011 presented in the consolidated statements of cash flows are as follows:

31 December 2012 31 December 2011Cash and cash equivalents 334,243,425 513,849,993

Less: interest accrual (509,901) (658,726)

333,733,524 513,191,267

NOTE 7 - FINANCIAL INVESTMENTS31 December 2012 31 December 2011

Available for sale financial assetsa) Listed financial investments 109,754,941 -

b) Unlisted financial investments 56,557,189 97,697,448

166,312,130 97,697,448a) Listed financial investments

Share % 31 December 2012 Share % 31 December 2011Soda Sanayii A.fi (*) 10.72 109,754,941 - -

b) Unlisted financial investmentsShare % 31 December 2012 Share % 31 December 2011

Cam Elyaf San. A.fi. 12.60 34,078,911 12.60 34,078,911

Paflabahçe Cam San. ve Tic. A.fi. 7.11 31,424,425 7.11 31,424,425

Camifl Madencilik A.fi. <1.00 50 <1.00 50

Saint Gobain Glass Egypt S.A.E.(**) 15.41 - 15.41 32,194,062

‹stanbul Porselen San. A.fi. 0.03 - 0.03 -

Bünsa Döküm Makine Alet Sanayi A.fi. 0.02 209,048 0.02 209,048

Impairment (9,155,245) (209,048)

56,557,189 97,697,448

(*) Camifl Elektrik Üretim A.fi (“ Çamifl Elektrik”), one of the associates of the Group which the Group holds 34.43% of its shares, is accounted by equity accounting methodin the consoliated financial statements (Note 16). Mersin Co-generation Plant Operation included in the assets of Camifl Elektrik was transferred to Soda Sanayi A.fi., one ofthe related parties of the Group (subsidiary of the parent company of the Group), via partial spin-off on 28 March 2012. There has been a decrease in the net assets of CamiflElektrik Üretim A.fi and decrease in the investment of the Group resulted by this spin- off. The decrease has been compensated by the transfer of 39,518,855 shares of SodaSanayi A.fi. with a fair value of TRY138,315,993 to the Group as of the date of spin-off. Number of shares transferred has been determined based on the fair value of the assetstransferred due to partial spin- off. A financial asset accounted at fair value has been recognised in exchange of an asset previously accounted by equity accounting methodrather than its fair value in the consolidated financial statements.

(**) With an additional share purchase on 4 October 2012, the Group gained significant influence over this financial asset. Accordingly the Group began to account for thisinvestment using the equity method (Note 16).

2012 Annual Report


1 January - 1 January - 31 December 2012 31December 2011

1 January 97,697,448 84,699,428

Non cash capital increase of financial assets 6,022,614 -

Acquisition of additional shares of financial assets 19,182,399 9,649,541

The effect of the restructuring of the Group 138,315,993

Changes in fair value financial assets (34,781,261) -

Transfers from investments valued using the equity method (Note 16) (50,417,968) -

Provision for impairment for Cam Elyaf San.A.fi. (8,946,200) -

Foreign currency translation differences (760,895) 3,348,479

31 December 166,312,130 97,697,448

NOTE 8 - FINANCIAL LIABILITIES

Short-term and long-term bank loans are summarized below:

31 December 2012 31 December 2011Short term borrowings 3,016,709 -

Current portion of long term borrowings 87,525,343 77,831,792

Liabilities for financial leasing 1,875,543 -

Total short term financial liabilities 92,417,595 77,831,792

Non current portion of long term borrowings 296,287,123 237,588,916

Non current portion of financial leasing 7,789,227 -

Total long term financial liabilities 304,076,350 237,588,916Total financial liabilities 396,493,945 315,420,708

Repricing schedule of borrowings 31 December 2012 31 December 20116 months and shorter 321,641,952 303,456,515

6 - 12 months 26,824 254,249

1 - 5 years 65,160,399 11,619,944

386,829,175 315,420,708

Financial leasing debt amounting to TRY 9,664,770 has been paid by equal instalment.

The impact of discounting is not significant due to given interest rates for short-term loans and their carrying values approximate theirfair values. The fair values are determined using the weighted average effective annual interest rates. The long-term financial liabilitiesare generally subject to repricing within three and six month periods and a large amount of those liabilities consists of foreign currencydenominated loans. Therefore, it is expected that the carrying value of the financial liabilities that are calculated by effective interest ratemethod approximate to their fair values.

31 December 2012Currency Weighted average

interest rate (%) Short - term Long - termUSD Libor +2.00-3.50 25,071,770 59,171,175

EUR Euribor+0.08-3.50 59,025,931 237,115,948

TRY and other - 8,319,894 7,789,227

92,417,595 304,076,350

31 December 2011Currency Weighted average

interest rate (%) Short - term Long - termUSD Libor+2.00-3.50 7,544,553 86,284,952

EUR Eurolibor+0.08-3.50 70,287,239 151,303,964

77,831,792 237,588,916


The main shareholder of the Group, Türkiye fiifle ve Cam Fabrikalar› A.fi. and its subsidiaries are collectively guarantors for the Group’sbank loans.

The redemption schedule of financial liabilities is as follows:

31 December 2012 31 December 2011Up to 1 year 92,417,595 77,831,792

Between 1-2 years 100,242,198 86,639,962

Between 2-3 years 83,837,085 73,800,960

Between 3-4 years 48,515,817 57,305,310

Exceed 4 years 71,481,250 19,842,684

396,493,945 315,420,708

NOTE 9 - OTHER FINANCIAL LIABILITIES

None.

NOTE 10 - TRADE RECEIVABLES AND PAYABLES

Trade receivablesShort-term trade receivables 31 December 2012 31 December 2011Trade receivables 322,567,702 348,855,145

Notes receivables and cheques received 3,902,230 3,457,085

Receivables from related parties (Note 37) 2,437,209 -

Allowance for doubtful receivables (-) (3,218,261) (2,792,071)

325,688,880 349,520,159

Domestic sales term for flat glass are either in advance or average 90 days maturity.

Average sales term for flat glass products is 90 days (2011: 115 days). For overdue payments, 1.5% interest is charged on a monthlybasis (2011:1.5 %).

Average sales term for auto glass and glassware products is 45 days (2011: 45 days).

Export sales are either in advance or with 60 days maturity.

The Group has allocated allowance for its doubtful receivables. Allowance for doubtful receivables is determined by referring to pastdefault experience. In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of thetrade receivable from the date credit was initially granted to the reporting date. The Group has no significant concentration of credit risk,with exposure spread over a large number of counterparties and customers. Accordingly, the management believes that no further creditprovision is required in excess of the allowance for doubtful debts.

The movement in the allowance for doubtful receivable is as follows:


1 January 2,792,071 3,085,371

Additions 1,491,099 1,127,135

Collections (1,064,909) (1,420,435)

31 December 3,218,261 2,792,071

Nature and level of risks related to trade receivables are explained in Note 38.

Trade payablesShort term trade payables 31 December 2012 31 December 2011Trade payables 92,383,225 81,384,490

Trade payables to related parties (Note 37) 23,057,214 18,517,920

115,440,439 99,902,410

Average credit term for purchases of goods is one month. The Group has financial risk management policies to ensure that all liabilitiesare paid within credit terms.

2012 Annual Report


NOTE 11 - OTHER RECEIVABLES AND PAYABLES

Other receivables 31 December 2012 31 December 2011

Other receivables from related parties (Note 37) 51,560,080 38,505,313

Deposit and guarantees given 485,014 455,964

Receivables from personnel 291,537 144,171

Other 1,446,886 1,755,375

53,783,517 40,860,823

Long- term receivables 31 December 2012 31 December 2011

Deposits and guarantees given 845,125 533,916

Other current liabilities 31 December 2012 31 December 2011Advances received 8,518,954 7,866,768

Payables to personnel 3,389,153 5,855,123

Social security premiums payable 3,372,928 3,692,052

Taxes and funds payable 3,276,725 3,596,512

Other payables to related parties (Note 37) 2,236,241 21,160,682

Deposits and guarantees received 237,123 198,319

Other (*) 3,665,342 667,014

24,696,466 43,036,470

(*)The Group has acquired 90% of the shares of Glass Corp S.A. amounting to EUR 3,098,613 determined on a temporary basis. The Group has paid a portioncorresponding to EUR2,050,840 and the remaining balance of EUR1,047,773 (TRY2,314,592) is accounted under current liabilities as at 31 December 2012 (Note 3).

Other non-current liabilities 31 December 2012 31 December 2011Deposits and guarantees received 217,940 58,817

NOTE 12 - RECEIVABLES AND PAYABLES FROM FINANCE SECTOR OPERATIONS

None.

NOTE 13 - INVENTORIES31 December 2012 31 December 2011

Raw materials 58,042,346 51,953,636

Work in process 23,638,793 21,071,128

Finished goods 128,886,112 134,715,394

Operating supplies 34,460,253 34,305,691

Trade goods 6,866,731 7,733,653

Provision for diminution in the value of inventories (-) (4,102,536) (4,324,385)

247,791,699 245,455,117

Movement of the allowance for impairment on inventory is as follows:

31 December 2012 31 December 2011Opening balance as of 1 January (4,324,385) (2,215,932)

Charge for the year (1,685,325) (3,414,420)

Provision released during the year 1,907,174 1,305,967

Closing balance as of 31 December (4,102,536) (4,324,385)

NOTE 14 - BIOLOGICAL ASSETS

None.

NOTE 15 - CONSTRUCTION CONTRACTS

None.


NOTE 16 - ASSOCIATES

Net assets of associates accounted for under the equity method which are included in the accompanying balance sheets are as follows:

Share % 31 December 2012 Share % 31 December 2011Çay›rova Cam San. A.fi. 28.13 81,475,727 28.13 25,226,993

Camifl Elektrik A.fi. 34.43 18,739,364 34.43 42,410,674

Saint Gobain Glass Egypt. 20.00 49,354,382 - -

149,569,473 67,637,667

Summarised financial statements of the Group’s associates accounted under the equity method is as follows:

Çay›rova Cam San. A.fi. Camifl Elektrik A.fi. Saint Gobain Egypt 31 December 2012 31 December 2011 31 December 2012 31 December 2011 31 December 2012 31 December 2011

Total Assets 291.394.059 91.236.542 62.014.380 247.390.988 421.209.306 -

Total Liabilities 1.754.090 1.556.511 7.586.948 125.475.849 174.437.395 -

Net Assets 289.639.969 89.680.031 54.427.432 121.915.139 246.771.911 -

Group's share's at net assets 81.475.727 25.226.993 18.739.364 42.410.674 49.354.382 -

Çay›rova Cam San. A.fi. Camifl Elektrik A.fi. Saint Gobain Egypt1 January- 1 January- 1 January- 1 January- 1 January- 1 January-

31 December 2012 31 December 2011 31 December 2012 31 December 2011 31 December 2012 31 December 2011Period Profit / Loss 102.365 47.272.756 5.649.693 3.435.820 (37.263.911) -

Group's share at Profit / Loss 28.796 13.297.648 1.945.190 1.182.953 (7.452.782) -

On 4 October 2012, the Group gained significant influence over Saint Gobain Egypt through the acquisition of additional shares from that dateon, it has reclassified this assets as an associate and accounted for it using the equity method. The Group’s share in the associate’s profit coversthe period from the date of purchase until the year end. The Company acquired the related additional shares based on the strategic partnershipmade with Saint Gobain in Egypt and Russia with the purpose of gaining an expanding market share in the Middle East. The net asset amountingto TRY 49,354,382 including goodwill was accounted for in the financial statements as a result of this acquisition.

Movement of the associates is as follows:1 January 1 January-

31 December 2012 31 December 2011Opening Balance 67,637,667 71,231,184

Effect of reorganization of the Group (*) (25,616,500) -

Associates' profit / (loss) share 3,523,100 (791,487)

Sales of available-for-sale investments held by associates

Investments in associates are classified as financial assets (Note 7) 50,417,968 -

The effect of the increase in fair value of investment associates (**) 53,974,897 -

Increase in fair value of available-for-sale financial assets of associates 2,245,042 -

Foreign currency translation differences (2,612,701) -

Dividend income from associates - (2,802,030)

Closing balance 149,569,473 67,637,667

(*) Effects of the reorganisation of the Group include the decrease in net assets of Camifl Elektrik Üretim A.fi., one of the Group's associates, related to the transfer of MersinCo-generation Plant Operation to Soda Sanayi A.fi., one of the related parties of the Group (subsidiary of the parent company of the Group), via partial spin-off. The decrease inthe net assets of the associate has been compensated through transferring the shares of Soda Sanayi A.fi. with a fair value of TRY138,315,993 to the Group (Note 7).

(**) The Group’s associate Çay›rova Sanayi A.fi. has classified Çay›rova property located in Gebze, Kocaeli, as investment property due to the termination in operational use as of31 December 2012. The fair value of the property has been determined as TRY 217,.707,.575, as of 31 December 2012. A revaluation gain, relating to the Group’s share, amountingto TRY 53,974,897, which also includes deferred tax and has been determined as a result of valuation reports of two separate CMB licensed valuation firms, is accounted forunder “Revaluation Funds”(Note 27).

The fair value of the investment property of Çay›rova is determined based on the valuations made by two different valuation firms holding licenses and are authorized by CMB.The valuation firms have the required professional experience and up-to-date information concerning the classification and location of the investment property. The fair value ofinvestment property has been calculated by the arithmetical average of the amounts stated in the valuation reports. The fair value of investment property was determined basedon recent market conditions, using the ‘Benchmark Method’ in the first report whereas it has been determined by using the ‘Replacement Cost Method’ in the second report.The assumptions that are expected to impact the value of investment property in the Benchmark Method are convenience of transportation facilities, connection to motorwaysand access roads, the surrounding industrial structuring, the industrial potential of the area and available zoning status. Three different benchmarks were evaluated. The assumptionsthat were used to determine the fair value of the investment property in the replacement cost method were the value of the land and the value of constructional investments onthe land. The real unit costs that are subject to assessment of constructional investments have been determined by considering the construction methods and their availablephysical conditions.

NOTE 17 - INVESTMENT PROPERTIES

None.

2012 Annual Report



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11,7

53,4

7533

,477

,614

3,04

0,31

53,

079,

442

12,6

90-

2,69

4,59

356

,186

,101

Addi

tions

-44

9,37

62,

970

2,41

5,53

336

6,41

72,

848,

702

10,0

2675

090

,143

,414

96,2

37,1

88D

ispo

sals

(265

)(1

0,12

2)-

(1,7

19,7

85)

(3,3

70,9

91)

(1,5

88,3

33)

(240

,917

)-

(1,3

44,2

96)

(8,2

74,7

09)

Tran

sfer

s1,

281,

482

3,77

8,03

916

,631

,607

69,3

01,8

2119

5,86

12,

835,

409

2,49

9,90

0-

(96,

524,

119)

-31

Dec

embe

r 201

17,

177,

672

64,0

46,6

4943

5,69

9,58

31,

451,

240,

622

20,8

49,5

7898

,687

,695

12,7

66,7

464,

190,

739

44,7

42,8

882,

139,

402,

172

Accu

mul

ated

dep

reci

atio

n1

Janu

ary

2011

-

(25,

984,

088)

(89,

060,

839)

(822

,644

,854

) (1

3,57

7,32

4)(7

4,16

8,40

7)(8

,451

,275

)(3

,973

,459

)-(1

,037

,860

,246

)Tr

ansl

atio

n di

ffere

nces

-(2

67,1

74)

(1,1

84,6

27)

(14,

999,

361)

(1,4

93,8

54)

(2,1

47,5

52)

(17,

183)

--

(20,

109,

751)

Addi

tions

-(2

,388

,768

)(9

,174

,652

)(1

06,3

78,4

63)

(2,5

62,7

11)

(6,6

52,4

93)

(880

,170

)(1

51,7

82)

-(1

28,1

89,0

39)

Dis

posa

ls-

1,88

4-

440,

259

2,32

6,78

058

7,52

912

6,90

1-

-3,

483,

353

31 D

ecem

ber 2

011

-(2

8,63

8,14

6)(9

9,42

0,11

8)(9

43,5

82,4

19)

(15,

307,

109)

(82,

380,

923)

(9,2

21,7

27)

(4,1

25,2

41)

-(1,1

82,6

75,6

83)

Net

boo

k va

lue

as a

t 31

Dece

mbe

r 201

17,

177,

672

35,4

08,5

0333

6,27

9,46

550

7,65

8,20

35,

542,

469

16,3

06,7

723,

545,

019

65,4

9844

,742

,888

956,

726,

489

NO

TE 1

8 - P

RO

PER

TY, P

LAN

T A

ND

EQ

UIP

MEN

Dep

reci

atio

n ex

pens

e of

TR

Y 1

10,2

39,1

33 (2

011:

TR

Y 1

10,0

36,7

56) h

as b

een

allo

cate

d to

cos

t of

goo

ds s

old,

TR

Y 3

50,7

22 (2

011:

TR

Y 7

61,6

01) t

o co

st o

f se

rvic

es r

ende

red,

TRY

14,

606,

949

(201

1: T

RY

17,

390,

682)

to

oper

atin

g ex

pens

es.

NOTE 19 - INTANGIBLE ASSETS

Other intangibleCost Rights assets Total1 January 2012 6,369,085 426,648 6,795,733Translation differences 143,471 (34,969) 108,502

Additions 35,813 785,745 821,558

Disposals - - -

Effect of acquisition of subsidiary 201 2,186 2,387

31 December 2012 6,548,570 1,179,610 7,728,180

Accumulated amortization1 January 2012 (5,420,916) (398,574) (5,819,490)Translation differences (13) 10,461 10,448

Additions (430,934) (211,182) (642,116)

Disposals (201) (2,186) (2,387)

31 December 2012 (5,852,064) (601,481) (6,453,545)Net book value as at 31 December 2012 696,506 578,129 1,274,635

Other intangibleCost Rights assets Total1 January 2011 7,752,343 357,988 8,110,331Translation differences - 68,660 68,660

Additions 362,813 - 362,813

Disposals (1,746,071) - (1,746,071)

31 December 2011 6,369,085 426,648 6,795,733

Accumulated amortization1 January 2011 (5,081,201) (336,599) (5,417,800)

Translation differences - (31,204) (31,204)

Additions (465,820) (30,771) (496,591)

Disposals 126,105 - 126,105

31 December 2011 (5,420,916) (398,574) (5,819,490)Net book value as at 31 December 2011 948,169 28,074 976,243

Allocation of amortization expenses is as follows: TRY 646,116 (2011: TRY 469,591) included in operating expense.

Useful lifeRights 3-5 years

Other intangible assets 3-5 years

NOTE 20 - GOODWILL31 December 31 December

2012 2011Opening balance as of 1 December 2012 - -

Occurred during the period 12,601,517 -

Foreign currency translation differences 971,829 -

Closing balance as of 31 December 2012 13,573,346 -

NOTE 21 - GOVERNMENT GRANTS AND INCENTIVES

None.

2012 Annual Report


NOTE 22 - PROVISIONS, CONTINGENT ASSETS AND LIABILITIES

Provisions31 December 2012 31 December 2011

Short term provisions

Provision for legal exposures (*) 718,667 631,836

Employee related provisions 74,922 -

Bonus provisions - 340,125

Royalty provision - -

Other - 237,804

793,589 1,209,765

(*) As of 31 December 2012, Group management determined a provision of TRY 718,667(2011: TRY 631,836,) which is the possible cash outflow related to lawsuitsagainst the Group based on opinions of legal counsels. The related provision expense is included in general administrative expenses.

NOTE 23 - COMMITMENTS

Guarantee, Pledge, Mortgage (“GPM”)

The Guarantee, pledge, mortgage (“GPM”) position of the Group as of 31 December 2012and 31 December 2011is as follows:

31 December 2012 31 December 2011Collaterals given 515,370,812 525,309,257

Letters of guarantee given 12,339,818 12,339,818

Other 117,401 117,401

527,828,031 537,766,476


2012 Annual Report


31 D

ecem

ber

2012

31 D

ecem

ber

2011

TRY

US

DEU

RO

ther

TRY

US

DEU

RO

ther

A.G

pms

give

n on

beh

alf

of it

s le

gal e

ntity

(*)

78,0

35,5

8715

,680

,000

16,0

00,0

0012

,457

,219

98,3

55,6

5919

,600

,000

20,0

00,0

0012

,557

,219

B.G

PM

s gi

ven

on b

ehal

f of

cons

olid

ated

sub

sidi

arie

s23

1,64

2,45

0-

98,5

00,0

00-

171,

473,

301

-70

,166

,667

-

C. G

PM

s gi

ven

on b

ehal

f of

oth

er t

hird

par

ty-

--

--

--

D. O

ther

GP

Ms

218,

149,

994

77,5

55,5

5633

,975

,193

267,

937,

516

86,4

44,4

4442

,823

,719

-

- i.

Tota

l am

ount

of

GP

M

on b

ehal

f of

the

par

ent

218,

149,

994

77,5

55,5

5633

,975

,193

-26

7,93

7,51

686

,444

,444

42,8

23,7

19

- ii.

Tot

al a

mou

nt o

f G

PM

on

beha

lf of

ot

her

grou

p co

mpa

nies

not

cov

ered

in B

and

C-

--

--

--

-

- iii

. To

tal a

mou

nt o

f G

PM

on

beha

lfof

oth

er t

hird

par

ties

not

cove

red

in C

--

--

--

--

Tota

l52

7,82

8,03

193

,235

,556

148,

475,

193

12,4

57,2

1953

7,76

6,47

610

6,04

4,44

413

2,99

0,38

612

,457

,219

(*)I

nclu

des

GP

M’s

giv

en b

y th

e G

roup

’s s

ubsi

diar

ies

and

join

t ve

ntur

es o

n be

half

of t

hem

selv

es.

(**)

Incl

udes

GP

M’s

giv

en in

con

nect

ion

with

the

ban

k bo

rrow

ings

of

the

pare

nt a

nd t

he s

ubsi

diar

ies

of t

he G

roup

.

Pro

port

ion

of G

PM

s gi

ven

to t

he G

roup

’s e

quity

as

at 3

1 D

ecem

ber

2012

is 1

1% (3

1 D

ecem

ber

2011

:15)

.

NOTE 24 - EMPLOYEE BENEFITS31 December 2012 31 December 2011

Short-term benefits to employees

Unused vacation liability 1,075,861 1,359,978

1,075,861 1,359,978

Provision for employment termination benefits

Under the Turkish Labor Law, the Group is required to pay employment termination benefits to each employee who has qualified forsuch benefits as the employment ended. Also, employees who are entitled to a retirement are required to be paid retirement pay inaccordance with Law No: 2242 dated 6 March 1981 and No: 4447 dated 25 August 1999 and the amended Article 60 of the existingSocial Insurance Code No: 506. Some transition provisions related to the pre-retirement service term were excluded from the law sincethe related law was changed as of 23 May 2002.

The amount payable consists of one month’s salary limited to a maximum of TRY 3,129,25 for each period of service as of 31 December2012 (31 December 2011: TRY 2,805,04).

The liability of employment termination benefits is not subject to any funding as there is no obligation. The provision is calculated byestimating the present value of the future probable obligation of the Group arising from the retirement of the employees. Revised IAS19 “Employee Benefits” requires actuarial valuation methods to be developed to estimate the Group’s obligation under the definedbenefit plans. Accordingly, the following actuarial assumptions are used in the calculation of the total liability:

The principal assumption is that maximum liability for each year of service will increase in line with inflation. Thus, the discount rateapplied represents the expected real rate after adjusting for the anticipated effects of future inflation. Consequently, in the accompanyingconsolidated financial statements as of 31 December 2012, the provision is calculated by estimating the present value of the futureprobable obligation of the Group arising from the retirement of the employees. Provisions at the balance sheet date were calculated byassuming an annual inflation rate of 5.00% (31 December 2011: 5.00%) and a discount rate of 8.37% (31 December 2011: 9.60%), thereal discount rate is approximately 3.21% (31 December 2011:4.38%). The anticipated rate of forfeitures is also considered. The probabilityof employees likely to obtain the termination benefit is estimated to be 98.94% (31 December 2011: 95.65%)

31 December 2012 31 December 2011Long-term benefits to employees

Employment termination benefit 47,103,496 31,512,748

47,103,496 31,512,748

The movement of the provision for employment termination benefits is as follows:1 January - 1 January -

31 December2012 31 December 20111 January 31,512,748 30,222,168Service cost 14,320,328 2,384,457

Interest cost 1,566,401 834,446

Actuarial loss 4,075,147 1,917,092

Termination benefits paid (4,371,128) (3,845,415)

31 December 47,103,496 31,512,748

NOTE 25 - PENSION PLANS

None.

NOTE 26 - OTHER ASSETS AND LIABILITIESOther current assets 31 December 2012 31 December 2011Other VAT 32,876,016 12,492,373

Advances given 12,695,874 9,910,109

Prepaid expenses 876,938 765,162

Other 2,632,311 178,115

49,081,139 23,345,759

Other non - current assets 31 December 2012 31 December 2011Advances given for property, plant and equipment 86,945,529 29,515,179

Prepaid expenses 6,490,498 6,742,486

93,436,027 36,257,665


2012 Annual Report


Other current liabilities 31 December 2012 31 December 2011Deferred revenue 2,194,373 5,120,806

Expense accruals 191,322 500,000

Other 50,643 1,498

2,436,338 5,622,304

Other non - current liabilities 31 December 2012 31 December 2011Deferred revenue 1,252,623 453,713

1,252,623 453,713

NOTE 27 - EQUITY

a) Capital / Treasury shares

The approved and paid-in capital of the Company consists of 69,368,000,000 (2011: 60,320,000,000) shares issued on bearer with anominal value of Kr 0.1 (Kr one) each.

31 December 2012 31 December 2011Registered capital ceiling (*) 1,000,000,000 1,000,000,000

Shareholder structure as of 31 December 2012and 31 December 2011 is as follows:

Shareholder % 31 December 2012 % 31 December 2011fiiflecam Holding 69.38 481,305,968 69.38 418,526,929

Publicly traded 30.15 209,140,919 30.15 179,861,668

fiiflecam group companies 0.41 2,782,310 0.41 4,419,400

IFC 0.06 450,803 0.06 392,003

Nominal capital (**) 100.00 693,680,000 100.00 603,200,000

Inflation adjustment 5,576,528 5,576,528

Share capital 699,256,528 608,776,528

(*) Registered capital has been increased to TRY 1.500.000.000 in the general assembly held on 22 January 2013.(**) Nominal capital has been increased to TRY 693,680,000 through non- cash increase from retained earnings.

b) Revaluation funds

Revaluation funds 31 December 2012 31 December 2011Change in value of available- for- sale financial assets, net 73,464,250 42,277

Investment property revaluation difference 53,974,897 -

127,439,148 42,277

Revaluation fund related to financial assets

The revaluation fund related to financial assets arises from the measurement of available-for-sale financial assets at their fair value. Incase of disposal of assets carried at fair value, the cumulative gain or loss related to that asset previously recognized in equity is includedin the profit or loss for the period. Gains and losses arising from the changes in fair value are recognised directly in equity, until the assetis determined to be impaired, at which time the cumulative gain or loss previously recognized in equity is included in the profit or lossfor the period.

Gains and losses arising from changes in fair value of Soda Sanayi A.fi. shares transferred to the Group regarding the partial spin offCamifl Elektrik Üretim A.fi., one of the Group's associates, has been accounted under revaluation funds.

c) Restricted reserves

Restricted reserves 31 December 2012 31 December 2011

Legal reserves 109,606,914 95,075,508

Legal reserves consist of first and second legal reserves, calculated in accordance with the Turkish Commercial Code. The first legalreserve is calculated as 5% of the financial statutory profits per annum until the total reserve reaches 20% of the historical paid-in sharecapital. The second legal reserve is calculated after the first legal reserve and dividends, at the rate of 10% per annum of all cash dividenddistributions; however, holding companies are not subject to this application.

d) Retained earnings / Accumulated deficits

Prior periods’ income of the Group amounting to TRY 839,433,472 is classified to retained earnings in the consolidated balance sheetas at 31 December 2012 (31 December 2011: TRY720,123,839 31).

Profit Distribution

In accordance with the Capital Market Board’s (“CMB”) decision dated 27 January 2010, concerning allocation basis of profit fromoperations of 2009, minimum profit distribution obligation will not be applied for the corporations in the traded stock exchange (2008:20%). According to the Board’s decision and Communiqué No: IV-27 issued by CMB regarding allocation basis of profit of publicly ownedcompanies, the distribution of the relevant amount may be realized as cash, as bonus shares, partly as cash and bonus shares or therelevant amount can be retained within the company.

In addition, according to mentioned Board Decision, it is stipulated that companies which have the obligation to prepare consolidatedfinancial statements, calculate the net distributable profit amount by taking into account the net profits for the period in the consolidatedfinancial statements that will be prepared and announced to the public in accordance with the Communiqué IX No: 29 providing theprofits can be met by the sources in their statutory records.

Reserves subject to distribution of dividend

As of the balance sheet date, the profit available for distribution in company’s statutory registers and other resources subject to distributionof profit are as follow.

31 December 2012 31December 2011Extraordinary reserves 331,308,293 266,331,580

Profit available for distribution 131,311,769 161,488,713

NOTE 28 - SALES AND COST OF SALES1 January - 1 January -

Net Sales 31 December 2012 31 December 2011Sales revenue 1,340,220,088 1,327,784,441

Sales returns (6,110,987) (4,418,922)

Sales discounts (83,682,575) (66,839,766)

Other discounts (1,196,100) (1,057,720)

1,249,230,426 1,255,468,033

1 January - 1 January -Cost of sales 31 December 2012 31 December 2011Raw materials used (581,879,569) (537,357,640)

Employee benefits (68,000,531) (63,873,297)

Production overheads (145,469,874) (144,571,638)

Depreciation (110,239,133) (110,036,756)

Change in work in process 2,444,213 (6,425,874)

Change in finished goods (5,992,160) 60,520,071

(909,137,054) (801,745,134)

Cost of trade goods sold (6,389,148) (351,937)

Cost of services rendered (3,647,279) (6,825,848)

(919,173,481) (808,922,919)

NOTE 29 - RESEARCH AND DEVELOPMENT EXPENSES, MARKETING, SELLING AND DISTRIBUTION EXPENSES, GENERALADMINISTRATIVE EXPENSES


Research and development expenses (11,123,215) (11,049,492)

Marketing, selling and distribution expenses (142,441,326) (127,827,558)

General administrative expenses (100,142,268) (80,552,495)

(253,706,809) (219,429,545)


NOTE 30 - EXPENSES BY NATURE


Payroll Expenses (77,273,640) (55,942,745)

Transportation expenses (61,162,329) (62,795,691)

Depreciation expenses (15,249,065) (17,390,682)

Holding service fees (14,887,855) (5,966,331)

Outsourcing expenses (11,587,623) (9,529,676)

Insurance expenses (9,767,197) (8,784,186)

Holding research and development fees (9,742,794) (9,548,195)

Rent expenses (7,475,384) (5,937,926)

Promotion expenses (6,718,374) (2,651,622)

Electricity expenses (5,280,252) (3,997,420)

Commission expenses (5,189,497) (6,425,244)

Indirect material expenses (4,935,829) (2,157,683)

Loading, dispatching and customs expenses (4,799,994) (6,293,658)

Tax expenses (3,286,674) (2,754,886)

Technical Consultancy (3,105,924) (3,569,316)

Exhibition expenses (2,268,664) (1,521,754)

Maintenance expenses (2,114,437) (3,143,634)

Fuel expenses (1,483,310) (1,695,651)

Cleaning expenses (1,266,344) (2,026,937)

Communication expenses (1,175,108) (1,326,076)

Representation expenses ( 978,255) (445,752)

General administrative expenses (3,958,261) (5,524,480)

(253,706,809) (219,429,545)

NOTE 31 - OTHER OPERATING INCOME AND EXPENSES1 January - 1 January -

31 December 2012 31 December 2011Gain on sales of mould and material 5,123,147 1,495,662

Gain on sales of silver sludge 2,369,027 836,708

Gain on sales of property, plant and equipment 1,689,877 2,571,039

Service charges 1,629,704 1,471,822

Commission income 1,409,893 1,798,521

Rent income 1,377,346 1,112,153

Insurance compensation income 1,050,768 2,049,287

Income from distribution rights of tempered glass 515,024 454,460

Other 4,329,930 1,462,560

19,494,716 13,252,212


Provision for impairment of financial assets (6,701,158) -

Loss on sale of property, plant and equipment (4,635,785) -

Provision expenses (1,597,610) (1,119,727)

Commission expenses (154,900) (5,438,618)

Other (2,309,813) (1,057,123)

(15,399,266) (7,615,468)

2012 Annual Report


NOTE 32 - FINANCIAL INCOME1 January - 1 January -

31 December 2012 31 December 2011Foreign exchange gains 147,679,889 174,656,255Interest income - Interest income from time deposits 9,362,405 15,444,953 - Interest income from related parties 12,169,536 5,284,546 - Interest income on trade receivables 5,278,941 4,951,918Dividend income 2,577,041 374,484Income from non cash capital increase in financial assets 6,022,614 -Other finance income 566,638 -

183,657,064 200,712,156

NOTE 33 - FINANCIAL EXPENSES1 January - 1 January -

31 December 2012 31 December 2011Foreign exchange losses (157,533,008) (132,078,102)Interest expense (19,201,137) (15,583,558)Credit finance charges - (1,241,173)Loss on sales of available for sale financial assets - -

(176,734,145) (148,902,833)

NOTE 34 - ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

None.

NOTE 35 - TAX ASSETS AND LIABILITIES

Tax provisions as at 31 December 2012 and 31 December 2011 are as follows:

Current tax liability: 31 December 2012 31 December 2011Current corporate tax provision 21,575,542 52,639,119Less: Prepaid taxes and funds (17,798,647) (39,346,276)

3,776,895 13,292,843


Corporate tax expense (21,575,542) (52,639,119)Deferred tax income 11,717,790 4,621,596Tax expense in the income statement (9,857,752) (48,017,523)

Corporate Tax

The Group is subject to Turkish corporate taxes. Tax legislation in Turkey does not permit a parent company and its subsidiaries to file aconsolidated tax return. Therefore, provisions for taxes as reflected in the accompanying consolidated financial statements are calculatedon a separate-entity basis.

Corporate tax is applied on taxable corporate income, which is calculated from the statutory accounting profit by adding back non-deductible expenses, and by deducting the revenues exempted from tax, non taxable revenues and other discounts (if any previous yearlosses, if preferred investment allowances and also R&D centre incentive) are deducted.

In Turkey, the corporate tax rate applied in 2012 is 20% (2011: 20%)

In Turkey, advance tax returns are filed on a quarterly basis. 20% of temporary tax rate is applied during the taxation of corporate income(2011: 20 %)

Losses can be carried forward for offset against future taxable income for up to 5 years (Russia: ten years). Losses cannot be carriedback for offset against profits from prior periods.

In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Companies file their tax returns between1 - 25 April following the close of the accounting year to which they relate (Companies with special accounting periods file their tax returnsbetween 1- 25 of the fourth month subsequent to the fiscal year end). Tax authorities may, however, examine such returns and theunderlying accounting records and may revise assessments within five years.

Subsidiaries in Russia are subject to 15.5% corporate tax rate (2011: 15.5). Subsidiary in Romania is subject to 15% tax rate.


2012 Annual Report


Trakya Glass Bulgaria EAD, a joint venture operating in Bulgaria, is subject to 10% corporate tax according to Bulgarian legislation.However, Trakya Glass Logistics EAD has a tax exemption up to 50% of an capital expenditure and used this tax exemption in years2012 and 2011.

Income Withholding Tax

In addition to corporate taxes, companies should also calculate income withholding taxes and funds surcharge on any dividends distributed,except for companies receiving dividends who are resident companies in Turkey and Turkish branches of foreign companies. This ratewas changed to 15% for all Companies as of 23 July 2006. Undistributed dividends incorporated in share capital are not subject to incomewithholding tax.

A tax charge of 19.8% applies to investment incentives that were utilized via investment incentive certificates that were obtained before24 April 2013. After this date, 40% of investment expenses incurred without an incentive certificate can be deducted from taxablerevenue. There is no tax charge for capital expenditures qualifying for government incentive.

Investment Allowance

Investment allowances are not applicable after 1 January 2006. If companies’ taxable incomes are not sufficient, the amount of unusedinvestment allowance as of 31 December 2005 and the incentive allowances incurred from 1 January 2006 onwards, can be transferredto the following years in order to be deducted from the taxable revenues of the following years.

Law No.6009 published on 1 August 2010 allows for unused investment allowances to be used in future periods without limitation. A20% corporate tax is calculated on earnings after deducting investment incentives. The arrangements made with the Law No.6009 cameinto force in 1 August 2010 to be applied on income for the year 2010.

The investment incentive that is utilized by the Company in 2012 is TRY 955,242 and the investment incentive eligible for utilization inthe following years is TRY 71,933,825.

Deferred tax assets and liabilities

The Group recognizes deferred tax assets and liabilities based upon the temporary differences between financial statements as reportedin accordance with CMB and its tax base of statutory financial statements. These differences usually result in the recognition of revenueand expense items in different periods for CMB and statutory tax purposes.

Turkish tax legislation does not permit a parent company and its subsidiary to file a consolidated tax return. Therefore, provisions fortaxes, as reflected in the accompanying consolidated financial statements, are calculated on a separate-entity basis. In this respect,deferred tax assets and liabilities of the consolidated entities in the accompanying consolidated financial statements are not offset.

31 December 2012 31 December 2011Deferred tax assets 25,756,145 15,456,379

Deferred tax liabilities (45,988,245) (42,749,521)

Deferred tax liabilities (net) (20,232,100) (27,293,142)

Cumulative temporary differences 31 December 2012 31 December 2011Useful life and valuation differences on

tangible and intangible assets 207,557,650 211,920,125

Provision for employee termination benefits (47,103,496) (31,512,748)

Investment incentives (71,933,825) (28,576,485)

Impairment on inventory (1,214,965) (1,311,075)

Discount on receivables and payables (1,506,920) (2,971,975)

Provision for legal exposures (718,667) (631,836)

Doubtful receivables (2,136,820) (1,499,265)

Differences in the valuation of financial assets available for sale 93,877,040 -

Carry forward tax losses (844,570) -

Other income and expense accruals (net) (4,407,150) (8,951,031)

171,568,277 136,465,710

Deferred tax (assets) / liabilities 31 December 2012 31 December 2011Useful life and valuation differences on

tangible and intangible assets 41,511,530 42,384,025

Provision for employee termination benefits (9,420,699) (6,302,550)

Investment incentives (14,386,765) (5,715,297)

Impairment on inventory (242,993) (262,215)

Discount on receivables and payables (301,384) (594,395)

Provision for legal exposures (143,733) (126,367)

Doubtful receivables (427,364) (299,853)

Differences in the valuation of financial assets

available for sale 4,693,852 -

Carry forward tax losses (168,914) -

Other income and expense accruals (net) (881,430) (1,790,206)

20,232,100 27,293,142

The movement of the deferred tax liabilities/ (assets) is as follows:

1 January - 1 January -The movement of the deferred tax (assets) / liabilities 31 December 2012 31 December 20111 January 27,293,142 31,351,635

Translation differences (37,104) 563,103

Tax effect recognized in equity 4,693,852

Deferred tax income (11,717,790) (4,621,596)

31 December 20,232,100 27,293,142

1 January - 1 January -Reconciliation of taxation 31 December 2012 31 December 2011Profit before tax 90,891,605 283,770,149

Effective tax rate 20% 20%

Calculated tax 18,178,121 56,754,030

Tax effects of

- Non deductible expenses 1,791,507 1,146,785

- Investment incentives (8,671,468) (3,995,589)

- Income exempt from taxation (2,213,103) (3,542,631)

- Foreign entities subject to different tax rates 772,695 (2,345,072)

Income tax expense recognized in the income statement 9,857,752 48,017,523

NOTE 36 - EARNINGS PER SHARE1 January - 1 January -

31 December 2012 31 December 2011Net income for the period 72,404,236 224,321,039

Average number of shares existing through the period (KR 1/Share) 69,368,000,000 69,368,000,000

Earnings per share 0.1044 0.3234

(per TRY1 share)

Comprehensive income attributable to equity holders of parent 185,794,548 267,127,627

Earnings per share from total comprehensive income ( per TRY1 share) 0.2678 0.3851


NOTE 37 - RELATED PARTY TRANSACTIONS

Türkiye fiifle ve Cam Fabrikalar› A.fi. is the main shareholder of the Group and Türkiye ‹fl Bankas› A.fi. is the ultimate controlling party.All transactions and balances between the Group and its consolidated subsidiaries are eliminated on consolidation and not disclosed inthis note.

Transactions amongst the Group and other related parties are disclosed below.

Deposits held at Türkiye ‹fl Bankas› A.fi. 31 December 2012 31 December 2011Demand deposits 23,862,144 11,731,223

Time deposits 288,880,496 459,590,987

312,742,640 471,322,210

Loans received 31 December 2012 31 December 2011Türkiye ‹fl Bankas› A.fi. - -

Through fiiflecam D›fl Ticaret - -

Through fiiflecam Holding 97,114,812 330,004,315

97,114,812 330,004,315

The non-trade receivables and payables of the Group with its related parties consist of financial loans given to and received from Türkiyefiifle ve Cam Fabrikalar› A.fi. and its subsidiaries. These non-trade receivables and payables do not have maturities. Interest is accruedusing a monthly current account interest rate determined by Türkiye fiifle ve Cam Fabrikalar› A.fi. based on money markets. The monthlyinterest rate used for December 2012 was 0.85% (December 2011: 0.82%)

31 December 2012 Receivables Payables

Current CurrentBalance with related parties Trade Non-Trade Trade Non-TradeTürkiye fiifle ve Cam Fabrikalar› A.fi - 39,851,971 - 1,789,418

Saint Gobain Glass Egypt S.A.E. - 8,690,772 - 446,823

fiiflecam D›fl Ticaret - - 8,602,448 -

Soda Sanayi A.fi. - - 3,731,717 -

Asmafl A¤›r Sanayi Makinalar› A.fi 2,437,209 - 660 -

Camifl Madencilik A.fi. - 187,438 4,399,105 -

Cam Elyaf Sanayii A.fi - 640 57,416 -

Anadolu Cam Eskiflehir San A.fi - 30,344 - -

fiiflecam Sigorta Arac›l›k Hizmetleri A.fi- - - 422,169 -

Camifl Elektrik Üretim A.fi. - - 3,312,155 -

Trakya Glass Bulgaria EAD - 374,435 468,950 -

Paflabahçe Cam Sanayi ve Tic A.fi - 418,352 582,374 -

Camifl Egypt Mining Ltd.Co - - 256,053 -

Anadolu Cam Yeniflehir A.fi - 63,130 - -

Paflabahçe Eskiflehir Cam San. Ve Tic.A.fi - 2,470 - -

fiiflecam Bulgaria Ltd. - - 818,301 -

Anadolu Cam Sanayi A.fi - - 48,403 -

Trakya Cam Investment B.V - 273,901 - -

Paflabahçe Glass Gmbh. - - 181,875 -

Anadolu Cam Investment B.V - - 22,274 -

Çay›rova Cam Sanayii A.fi - 1,607,474 - -

Other related parties - 59,153 153,314 -

2,437,209 51,560,080 23,057,214 2,236,241

2012 Annual Report


31 December 2011Receivables Payables

Current CurrentBalance with related parties Non-trade Trade Non-tradeTürkiye fiifle ve Cam Fabrikalar› A.fi 24,906,252 - 20,491,024

Saint Gobain Glass Egypt S.A.E. 11,552,214 - -

Trakya Glass Bulgaria EAD 1,089,444 - -

Trakya Cam Investment BV 261,916 - -

Paflabahçe Cam Sanayi ve Tic. A.fi. 229,190 - -

Camifl Madencilik A.fi. 212,110 5,423,206 -

Camifl Elektrik Üretim A.fi. 179,200 2,212,624 -

Anadolu Cam Sanayi A.fi. 54,853 - -

Soda Sanayi A.fi. - 5,731,568 -

fiiflecam D›fl Ticaret A.fi. - 4,119,368 -

fiiflecam Sigorta Arac›l›k Hizmetleri A.fi. - 409,504 -

fiiflecam Bulgaria Ltd. - 368,660 -

Other related parties 20,134 252,990 669,658

38,505,313 18,517,920 21,160,682

1 January - 1 January -Short term compensation to key management personnel 31 December 2012 31 December 2011Trakya Cam Sanayi A.fi. 4,269,936 2,207,407

Consolidated entities 937,410 625,513

Total 5,207,346 2,832,920

Key management personnel are composed of top management, members of board of directors, general manager and general managerassistants and factory directors. The Group did not provide key management with post-employment benefits, benefits due to unemployment,share-based payment and other long-term benefits in 2012 and 2011.


2012 Annual Report


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2012 Annual Report


NOTE 38 - FINANCIAL RISK MANAGEMENT

a) Capital risk management

The Group manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to stakeholdersthrough the optimization of the debt and equity balance.

The capital structure of the Group consists of debt, which includes the borrowings and other debts disclosed in Note 8 and 10, cashand cash equivalents disclosed in Note 6 and equity attributable to equity holders of the parent, comprising issued capital, reserves andretained earnings as disclosed in Note 27.

The Group controls its capital using the net debt / total capital ratio. This ratio is calculated as net debt divided by the total equity amount.Net debt is calculated as its total liability less cash and cash equivalents and other receivables from related parties. Total capital is calculatedas the total of equity and net debt.

Net debt / total capital ratios as of 31 December 2012 and 31 December 2011are as follows:

31 December 2012 31 December 2011Total financial liabilities 398,730,186 336,581,390

Less: cash and cash equivalents and financial assets (385,803,506) (552,355,306)

Net debt 12,926,680 (215,773,916)

Total equity 2,010,170,358 1,793,698,381

Total capital 1,997,243,678 2,009,472,297

Net debt / total equity ratio 1% (11%)

The general strategy of the Group is consistent with previous periods.

b) Financial Risk Factors

The Group’s activities expose it to various financial risks, market risk (including currency risk, fair value interest rate risk, cash flow interestrate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability offinancial markets and seeks to minimize the potential adverse effects over the Group’s financial performance.

The Group manages its financial instruments centrally in accordance with the Group’s risk policies via Financial Transactions Department.The Group’s cash inflows and outflows are monitored by the reports prepared on a daily, weekly and monthly basis and compared tothe monthly and yearly cash flow budgets.

Risk management is carried out by the Risk Management Department, which is independent from steering, under the policies approvedby the Board of Directors. The Group’s Risk Management Department identifies, evaluates and hedges financial risks in close cooperationwith the Group’s operating units. The Board of Directors sets out written principles for overall risk management, as well as written policiescovering specific areas, such as; foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

b.1 Credit risk management

ReceivablesCredit risk of financial instruments Trade receivables Other receivables31 December 2012 Third party Related party Third party Deposits at bankMaximum credit risk as of balance sheet date (*) (A+B+C+D+E) 323,251,671 51,560,080 2,223,437 334,204,093 - Hedged part of maximum risk with collateral (**) (183,831,365) - - -

A. Net book value of financial assets that are neither past due nor impaired 274,293,016 51,560,080 2,223,437 334,204,093

B. Net book value of financial assets that are renegotiated,otherwise that will be considered as past due or impaired - - - -

C. Net book value of financial assets that are past due but not impaired 45,740,394 - - - - The part of which is under guarantee with collateral (24,054,844) - - -

D. Net book value of impaired assets - - - - - Past due (gross carrying amount) 3,218,261 - - - - Impairment (-) (3,218,261) - - - - The part of net value under guarantee with collateral - - - - - Not past due (gross carrying amount) - - - - - Impairment (-) - - - - - The part of net value under guarantee with collateral - - - -

E. Off balance sheet items with credit risk - - - -

(*) Factors that increase credit reliability, such as; guarantees received, are not considered in the calculation.

(**) Guarantees are composed of guarantee letters received from customers and mortgages.

ReceivablesCredit risk of financial instruments Trade receivables Other receivables31 December 2011 Third party Related party Third party Deposits at bankMaximum credit risk as of balance sheet date (*) (A+B+C+D+E) 349,520,159 38,505,313 2,355,510 513,805,042 - Hedged part of maximum risk with collateral (**) (189,659,345) - - -

A. Net book value of financial assets that are neither past due nor impaired 325,649,065 38,505,313 2,355,510 513,805,042

B. Net book value of financial assets that are renegotiated,otherwise that will be considered as past due or impaired - - - -

C. Net book value of financial assets that are past due but not impaired 23,871,094 - - - - The part of which is under guarantee with collateral (8,591,344) - - -

D. Net book value of impaired assets - - - - - Past due (gross carrying amount) 2,792,071 - - - - Impairment (-) (2,792,071) - - - - The part of net value under guarantee with collateral - - - - - Not past due (gross carrying amount) - - - - - Impairment (-) - - - - - The part of net value under guarantee with collateral - - - -

E. Off balance sheet items with credit risk - - - -

(*) Factors that increase credit reliability, such as; guarantees received, are not considered in the calculation.

(**) Guarantees are composed of guarantee letters received from customers and mortgages.

Credit risk refers to the risk that counterparty will default on its contractual obligations. The Group’s management mitigates this riskthrough limitations on the contracts made with counterparties and obtaining sufficient collaterals where appropriate. The Group’s creditrisks mainly arise from its trade receivables. The Group manages this risk by the credit limits up to the guarantees received from customers.Use of credit limits is monitored by the Group by taking into consideration the customer’s financial position, past experiences and otherfactors and customer’s credibility is evaluated on a consistent basis. Trade receivables are evaluated based on the Group’s policies andprocedures and presented net of doubtful provision in the financial statements accordingly (Note 10).

Trade receivables consist of many customers operating in various industries and locations. Credit risk of the receivables from counterpartiesis evaluated periodically.

Aging of overdue receivables which are not subject to impairment is as follows:

31 December 2012 31 December 2011Overdue 1-30 days 16,717,977 11,923,191

Overdue 1-3 months 17,569,902 6,973,017

Overdue 3-12 months 11,452,515 4,155,829

Overdue by 12 months and above - 819,057

Total overdue receivables 45,740,394 23,871,094

The part under guarantee with collateral (24,054,844) (8,591,344)

Collaterals obtained for trade receivables past due but not impaired

31 December 2012 31 December 2011Letters of guarantee 24,054,844 8,128,863

Mortgages and other guarantees - 462,481

24,054,844 8,591,344

b.2) Liquidity risk management

The Group manages its liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities through a constantmonitoring forecast and actual cash flows and matching the maturity profile of the financial assets and liabilities.

Conservative liquidity risk management requires maintaining adequate reserves in addition to having the ability to utilize adequate levelof credit lines and funds as well as closing market positions. Funding risk attributable to the current and future potential borrowing needsis managed by providing continuous access to adequate number of creditors with high quality.


2012 Annual Report


The below table shows the Group’s expected maturity for its non-derivative financial liabilities. The tables below have been drawn upbased on the undiscounted contractual maturities of the financial assets. Interest to be paid in future on financial liabilities is included inthe table below.

31 December 2012Total cash

outflowaccording to

Maturities in accordance contract Less than 3 3-12 More than 5with contract Carrying value (I+II+III+IV) months (I) months (II) 1-5 years (III) years (IV)Non-derivative financialLiabilitiesBank borrowings 386,829,175 400,960,828 15,325,506 83,429,083 254,071,543 48,134,696Financial leasing liabilities 9,664,770 9,664,770 - 1,875,543 7,789,227 -Trade payables 92,383,225 92,521,604 92,297,510 224,094 - -Due to related parties 25,293,455 25,293,455 25,293,455 - - -Other payables 14,159,211 14,159,211 13,941,271 - 217,940 -

Total liabilities 528,329,836 542,599,868 146,857,742 85,528,720 262,078,710 48,134,696

31 December 2011Total cash

outflowaccording to

Maturities in accordance contract Less than 3 3-12 More than 5with contract Carrying value (I+II+III+IV) months (I) months (II) 1-5 years (III) years (IV)Non-derivative financialLiabilitiesBank borrowings 315,420,708 332,376,194 21,385,495 57,042,955 248,766,909 5,180,835Trade payables 81,384,490 82,625,662 82,625,662 - - -Due to related parties 39,678,602 39,678,602 39,678,602 - - -Other payables 14,067,837 14,067,837 14,009,020 - 58,817 -

Total liabilities 450,551,637 468,748,295 157,698,779 57,042,955 248,825,726 5,180,835

Expected maturities of the non-derivative financial liabilities of the Group are the same as the maturities subject to the agreement.

b.3) Market risk management

The Group’s activities expose it primarily to the financial risks of changes in foreign exchange rates and interest rates.

At a Group level, market risk exposures are measured by sensitivity analysis.

When compared to prior periods, there has been no change in the Group’s exposure to market risks, hedging methods used or themeasurement methods used for such risks.

b.3.1) Foreign currency risk management

Transactions denominated in foreign currencies result in foreign currency risk.

The breakdowns of the Group’s foreign currency denominated monetary and non-monetary assets and liabilities as of the balance sheetdate are as follows:

Bulgarian Leva is fixed at EUR. Assets and liabilities of Trakya Glass Bulgaria EAD (except imports and exports) denominated in EUR arenot included the table below since the Group is not exposed to foreign currency risk due to these assets and liabilities.

31 December 2012TRY equivalent

(functional currency) USD EUR Other1. Trade receivables 60,893,768 10,923,514 15,973,285 3,857,1372a. Monetary financial assets 274,562,954 120,376,532 25,178,027 768,5822b. Non-monetary financial assets - - - -3. Other - - - -4. CURRENT ASSETS 335,456,722 131,300,046 41,151,312 4,625,7195. Trade receivables - - - -6a. Monetary financial assets - - - -6b. Non-monetary financial assets - - - -7. Other - - - -8. NON-CURRENT ASSETS - - -9. TOTAL ASSETS 335,456,721 131,300,046 41,151,312 4,625,71910. Trade payables (15,465,397) (932,760) (5,482,594) (909,243)11. Financial liabilities (81,088,723) (14,064,720) (23,819,770) -12a. Other monetary liabilities - - -12b. Other non-monetary liabilities - - - -13. CURRENT LIABILITIES (96,554,120) (14,997,480) (29,302,364) (909,243)14. Trade payables - - - -15. Financial liabilities (144,006,951) (36,260,000) (33,750,000) -16a. Other monetary liabilities - - - -16b. Other non-monetary liabilities - - - -17. NON-CURRENT LIABILITIES (144,006,951) (36,260,000) (33,750,000) -18. TOTAL LIABILITIES (240,561,071) (51,257,480) (63,052,364) (909,243)19. Net foreign currency asset / (liability) position 94,895,650 80,042,566 (21,901,052) 3,716,47620. Net foreign currency position for monetary 94,895,650 80,042,566 (21,901,052) 3,716,476

items (1+2a+5+6a-10-11-12a-14-15-16a)21. EXPORTS 393,098,061 48,634,129 126,583,237 14,246,91022. IMPORTS 312,359,263 26,641,069 98,151,749 38,439,385

31 December 2011TRY equivalent

(functional currency) USD EUR Other1. Trade receivables 54,153,267 12,889,832 10,152,247 4,995,6022a. Monetary financial assets 464,213,546 150,932,827 71,935,867 3,319,6572b. Non-monetary financial assets - - - -3. Other - - - -4. CURRENT ASSETS 518,366,813 163,822,659 82,088,114 8,315,2595. Trade receivables - - - -6a. Monetary financial assets - - - -6b. Non-monetary financial assets - - - -7. Other - - - -8. NON-CURRENT ASSETS - - -9. TOTAL ASSETS 518,366,813 163,822,659 82,088,114 8,315,25910. Trade payables (8,985,983) (1,090,605) (2,437,096) (970,163)11. Financial liabilities (66,321,977) (3,994,152) (24,051,651) -12a. Other monetary liabilities - - -12b. Other non-monetary liabilities - - - -13. CURRENT LIABILITIES (75,307,960) (5,084,757) (26,488,747) (970,163)14. Trade payables - - - -15. Financial liabilities (226,303,888) (45,680,000) (57,295,579) -16a. Other monetary liabilities - - - -16b. Other non-monetary liabilities - - - -17. NON-CURRENT LIABILITIES (226,303,888) (45,680,000) (57,295,579) -18. TOTAL LIABILITIES (301,611,848) (50,764,757) (83,784,326) (970,163)19. Net foreign currency asset / (liability) position 216,754,966 113,057,902 (1,696,212) 7,345,09620. Net foreign currency position for monetary 216,754,966 113,057,902 (1,696,212) 7,345,096

items (1+2a+5+6a-10-11-12a-14-15-16a)21. EXPORTS 417,585,629 82,468,105 105,365,135 4,320,30922. IMPORTS 240,103,239 28,949,043 74,625,149 3,052,453

The group is mainly exposed to Euro and US Dollar risks


2012 Annual Report


The table below presents the Group’s sensitivity to a 10% deviation in US dollar and Euro. 10% is the rate used by the Group when generatingits report on exchange rate risk; the related rate stands for the presumed possible change in the foreign currency rates by the Group’smanagement. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translationat the period end for a 10% change in foreign currency rates. This analysis includes foreign currency denominated bank loans other thanthe functional currency of the ultimate user or borrower of the bank loans. Positive amount indicates increase in profit or equity.

31 December 2012 31 December 2011Profit / Loss Profit / Loss

Appreciation of Devaluation of Appreciation of Devaluation offoreign currency foreign currency foreign currency foreign currency

Appreciation of USD against TRY by 10%1- US Dollars net asset / liability 14,268,388 (14,268,388) 21,356,638 (21,356,638)2- USD risk hedged amount (-) - - - -

3- USD net effect (1 +2) 14,268,388 14,268,388 21,356,638 (21,356,638)

Appreciation of EURO against TRY by 10%4 - Euro net asset / liability (5,150,470) 5,150,470 (414,520) 414,5205 - Euro risk hedged amount (-) - - - -

6- Euro net effect (4+5) (5,150,470) (5,150,470) (414,520) 414,520

Appreciation of other currencies against TRY by 10%7- Other currencies net asset / liability 371,648 (371,648) 734,510 (734,510)8- Other currencies risk hedged amount (-) - - - -

9- Other currencies net effect (7+8) 371,648 371,648 734,510 (734,510)

TOTAL (3 + 6 +9) 9,489,566 (9,489,566) 21,676,628 (21,676,628)

b.3.2) Interest rate risk management

The Group is exposed to interest rate risk as the Group borrows funds at both fixed and floating interest rates. The risk is managed bythe Group by maintaining an appropriate mix between fixed and floating rate borrowings and by either positioning the balance sheet orprotecting interest expense through different interest rate cycles. Strategies protecting from risk are assessed regularly to be in line withinterest rate expectation and risk defined. With this optimal hedging strategy, review of balance sheet position and controlling of interestexpenditure under different interest rates is aimed.

Interest rate sensitivity

The Group’s financial instruments that are sensitive to interest rates are as follows:

31 December 2012 Floating Fixed Non-interest

Interest interest bearing TotalFinancial assets - 684,736,440 196,136,638 880,873,078Cash and cash equivalents - 304,418,918 29,824,508 334,243,426Available for sale financial assets - - 166,312,130 166,312,130Trade receivables - 323,251,671 - 323,251,671Due from related parties - 53,997,289 - 53,997,289Other receivables - 3,068,562 - 3,068,562

Financial liabilities 305,877,501 227,954,580 3,016,709 536,848,790Bank borrowings 305,877,501 77,934,965 3,016,709 386,829,175Financial Leasing liabilities 9,664,770 - 9,664,770Trade payables - 92,383,225 - 92,383,225Due to related parties - 25,293,455 - 25,293,455Other payables - 22,678,165 - 22,678,165

31 December 2011 Floating Fixed Non-interest

Interest interest bearing TotalFinancial assets - 891,795,964 110,132,459 1,001,928,423Cash and cash equivalents - 501,414,982 12,435,011 513,849,993Available for sale financial assets - - 97,697,448 97,697,448Trade receivables - 349,520,159 - 349,520,159Due from related parties - 38,505,313 - 38,505,313Other receivables - 2,355,510 - 2,355,510

Financial liabilities 315,420,708 142,997,697 - 458,418,405Bank borrowings 315,420,708 - - 315,420,708Trade payables - 81,384,490 - 81,384,490Due to related parties - 39,678,602 - 39,678,602Other payables - 21,934,605 - 21,934,605


The sensitivity analysis below have been determined based on the exposure to interest rates at the balance sheet date and the stipulatedchange taking place at the beginning of the financial year and held constant throughout the reporting period. A 0.25% increase or decreaseon interest rates is used when reporting interest rate risk internally to key management personnel and represents management’sassessment of the possible change in interest rates.

If interest rates had been 0.25% higher/lower and all other variables were held constant, net income before tax and non-controllinginterest at 31 December 2012 would have been lower/higher by TRY 370,049 (31 December 2011: TRY 422.949)

b.3.3) Other price risks

The Group is exposed to market price risk due to its equity share investments. Equity share investments are held for strategic purposesrather than trading purposes. The Group does not trade equity share investments.

Equity price sensitivity

Sensitivity analyses presented below are determined based on the equity share price risks as of the reporting date.

If the equity shares prices were increased / decreased by 10% with all other variables held constant as of the reporting date.

Net profit/loss would not be affected as of 31 December 2012and 31 December 2011 to the extent that equity share investmentsclassified as available for sale assets are not disposed of or impaired.

The other equity funds would increase/decrease by TRY11,021,036 (2011: None). This change results from the fair value change of equityshare investments classified as available for sale.

NOTE 39-FINANCIAL INSTRUMENTS (FAIR VALUE AND HEDGE ACCOUNTING DISCLOSURES)

Available for FinancialLoans and sale liabilities

31 December 2012 receivables financial assets at amortized cost Carrying value Note

Financial assets

Cash and cash equivalents 334,243,426 - - 334,243,426 6

Trade receivables 323,251,671 - - 323,251,671 10

Due from related parties 53,997,289 - - 53,997,289 37

Financial investments - 166,312,130 - 166,312,130 7


Financial liabilities - - 396,493,945 396,493,945 8

Trade payables - - 92,383,225 92,383,225 10

Due to related parties - - 25,293,455 25,293,455 37

Available for FinancialLoans and sale liabilities

31 December 2011 receivables financial assets at amortized cost Carrying value Note

Financial assets

Cash and cash equivalents 513,849,993 - - 513,849,993 6

Trade receivables 349,520,159 - - 349,520,159 10

Due from related parties 38,505,313 - - 38,505,313 37

Financial investments - 97,697,448 - 97,697,448 7


Financial liabilities - - 315,420,708 315,420,708 8

Trade payables - - 81,384,490 81,384,490 10

Due to related parties - - 39,678,602 39,678,602 37

2012 Annual Report


The Group believes that the carrying values of its financial instruments reflect their fair values.

Fair value of financial assets and liabilities is determined as follows:

• First category: In determining the fair value of assets and liabilities, active market trading price is used for valuation purposes

• Second category: In determining the fair value of assets and liabilities, should other market price be observed other than firstdegree market prices, then observed market price is used for valuation purposes.

• Third category: In determining the fair value of assets and liabilities, data which is not based on market observation is used forvaluation purposes.

Category classification of financial assets and liabilities presented with their fair values are as follows:

31 December 2012 Level 1 Level 2 Level 3 Total

Financial assets

Financial investments 109,754,941 - 56,557,189 166,312,130

109,754,941 - 56,557,189 166,312,130

31 December 2011 Level 1 Level 2 Level 3 Total

Financial assets

Financial investments - - 97,697,448 97,697,448

- - 97,697,448 97,697,448

NOTE 40 - SUBSEQUENT EVENTS

The following decision was taken at the Board of Directors meeting of Trakya Cam Sanayii A.fi. held on

19 February 2013: The Capital Markets Board of Turkey will be appealed for the waiver of the merger of the Trakya Cam Sanayii A.fi.with Trakya Yeniflehir Cam Sanayii A.fi. and Trakya Polatl› Cam Sanayii Afi, which was publicly announced on 29 August 2012, due tothe fact that the secondary legislation regarding the article 24 “Right of Disassociation” of Capital Markets Board Law numbered 6362has not yet been legislated. The merger will be re-evaluated after the enactment of the secondary legislation.

The total registered share capital ceiling of the Company was decided to be increased from TRY1.000.000.000 to TRY1.500.000.000 inthe Extraordinary General Assembly Meeting held on 22 January 2013.

The Group signed a joint-venture agreement with Hindusthan National Glass & Industries Limited (HNGIL) and usufruct shareholders toacquire HNG Float Glass Limited (HNGFL), which is the largest float glass producer of India, on 10 January 2013. Consequently, the Grouphas acquired 45% of HNGFL of which 88% belongs to HNGIL and usufruct shareholders. The share of IFC will be decreased from 12%to 10% subsequent to the share transfer. The process of share transfer and closing transactions are in progress.

Trakya Cam, signed a Memorandum of Understanding on 19 February 2013 to acquire 100% of Fritz Holding GmbH incorporated inGermany. The acquisition is deemed to be a significant opportunity for Trakya Cam to become a stronger auto-glass supplier in line withits growth strategies, to create additional capacity to meet market demand and to enhance the capabilities on encapsulated auto-glassas an integral part of its product.

NOTE 41 - OTHER ISSUES THAT SIGNIFICANTLY AFFECT THE FINANCIAL STATEMENTSOR OTHER ISSUES REQUIRED FOR THE CLEAR UNDERSTANDING OFFINANCIAL STATEMENTS

The Group’s consolidated financial statements as at 31 December 2012 audited by independent auditors and the semi-annual reportprepared in accordance with the Capital Markets Board’s Communiqué Serial: XI, No: 29 are reviewed by also considering the AuditCommittee’s opinion on the matter. It has been concluded that the consolidated financial statements present fairly the consolidatedfinancial position of the Company and the results of its operations in accordance with the regulations issued by the Capital Markets Boardand Group accounting policies. With the Board of Directors’ decision dated 6 March 2013, Board Member Müfit Özkara, and the FinanceManager Beyza Genç are authorized to sign electronically the consolidated financial statements for public announcement.


1. Statement of Compliance With Principles of Corporate Governance

This statement articulates, in the framework of the Corporate Governance Principles exacted by Capital Markets Board (the CMB)Communique Serial: IV, No: 56 ‘’Corporate Governance Principles and Practices Pertaining to the Determination’’ and Communique-Amending this Communique – Serial IV, No: 57 ’’Determination and implementation of Corporate Governance Principles’’, published inthe Official Gazette dated 30 December 2011 numbered 28158, the manner in which relations with shareholders and stakeholders shouldbe carried out, identification of the tasks and responsibilities of the Board of Directors, its managers and its committees, the followingresponsibilities of Trakya Cam Sanayii Anonim fiirketi (the Company).

Established in 1978 as a subsidiary of Turkiye fiifle ve Cam Fabrikalar› A.fi. Trakya Cam is the leading float, auto glass and processedglasses producer in Turkey. Carrying out production using the latest technologies the Company contributes to the country’s economyby its export, employment, and inputs supplied to fields of construction, automotive, home appliances, furniture, energy, and agriculture.

Today Trakya Cam stands as the 6th largest flat glass producer in the world, and 4th in Europe, and is also a strong supplier for theautomotive, energy and home appliances industries in Europe and the region. With the inauguration of the ongoing investments in Ankara-Polatl›, Russia-Tatrstan and Bulgaria (2.line) in the second half of 2013, Trakya Cam’s float lines will increase to 10 in one year.

The Saint- Gobain Glass Egypt Factory in Egypt- that Trakya Cam participates in was put into use in 2010.

Trakya Cam’s strengths that have brought it to its position today, its modern management structure, industrialism, high level ofinstitutionalization, its focus on the market and R&D, are also the guarantee of a bright future. Trakya Cam intends to reinforce its visionof “Being a fast growing global flat glass company with strong brands and innovative solutions’’ with the support of Corporate GovernancePrinciples.

In this regard, the non-obligatory principles among the Corporate Governance Principles in the period ending 31 December 2012 as setforth in the Appendix of the Communique on Determination and Implementation of Corporate Governance Principles have been presentedin the relevant parts of this report.

The details of the relevant and noteworthy work done in this period to obtain compliance with the Corporate Governance Principles arepresented below:

- In compliance with Corporate Governance Principles, an article has been added to Articles of Associations entitled “Compliancewith Corporate Governance Principles”. In addition, Article 8 of the Articles of Association entitled “Board of Directors” has beenamended so that the Article of Association states the number and characteristics of independent members of the Board ofDirectors in accordance with Corporate Governance Principles, and the said amendments were approved at the Ordinary GeneralAssembly Meeting of Shareholders held on May 17, 2012.

- Since no ‘’Nomination Committee’’ existed on December 2011, the date the “Communique on the Determination and Applicationof Corporate Governance Principles” Series: IV, No: 56, entered into effect, independent member candidates were nominatedby “Audit Committee” on March 16, 2012 according to principles stipulated in Corporate Governance Principles of the CapitalMarkets Board, and were presented for approval to the Board of Directors.

- Approved by Board of Directors, the independent members were presented for approval of the Capital Markets Board on March19, 2012, and no negative response was given by the CMB regarding the nominees. Election of independent members of Boardof Directors approved by the CMB was accepted at the Ordinary General Meeting of Shareholders held on May 17, 2012.

- In order for the Board of Directors to properly undertake their duties and responsibilities, an Audit Committee, a CorporateGovernance Committee, and Early Risk Detection Committee have been formed within the body of the Board of Directors inaccordance with Corporate Governance Principles and these were announced to the public.

- The committees’ area of responsibility, method of functioning, and composition have been determined at the Board of Directors’meeting dated May 17, 2012, and announced to the public on the same date.

- The principles of remunerations of the Board of Directors were stipulated in writing, and presented to shareholders as a separateitem in General Assembly Meeting’s agenda, as well as being announced to the public on the Company’s official website.

- In order to expand the right of shareholders to information, the Company’s official website has been made accessible to shareholdersand beneficiaries. Important and noteworthy information on the website is also translated into English for the use of internationalinvestors.

In this frame, announcements regarding Corporate Governance Principles in 2012, prepared in accordance with “Announcement andResolutions” in the Weekly Bulletin number 2013/4 of the CMB are presented below in sections.

SECTION I. SHAREHOLDERS

2. Shareholder Relations Unit

Our Group embraced a centralized approach to fulfill its liabilities imposed by the Capital Markets legislations and to continue its activitiesin a more efficient manner. Therefore, the Company employed a structuring process accordingly. All liabilities of Trakya Cam and its listedsubsidiaries imposed by the Turkish commercial Law and Capital Markets Law is being supervised, managed and coordinated by our"Shareholder Relations Unit", which was established within the body of the main company fiiflecam, Financial Affairs Group in compliancewith the Corporate Governance Principles set forth by the CMB. In this context, the "Shareholder Relations Unit” is playIng an activerole in facilitating and preserving the use of shareholder rights, particularly the right to access and assess information.

CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT

All information and announcements, which may affect the use of shareholder rights are updated and disclosed on the Company's officialwebsite.

Main activities during the period are as follows:

a) Shareholders’ oral and written inquiries about the company-except for non-public material that are confidential- were replied

b) The annual general meetings of shareholders (AGM) were held according to legislation in force, AoA and other in-house regulations

c) Documents for the utilization of shareholders during the general assembly meeting were prepared

d) Voting results were recorded and a report of voting results was sent to the shareholders

e) All matters regarding public access to information including regulations and the firms policy on information access were compliedwith

f) A healthy, secure and up-to-date record of shareholders was kept

g) The meetings held at the Company Head Office and the meetings and conferences organized by various Institutions in Turkeyand abroad were attended; the investors were provided information

h) Analysts evaluating the Company were given information

i) The official website of the Company has been updated; shareholders were enabled to access information quickly and efficiently

j) All information and announcements, which may affect the use of shareholder rights were updated and disclosed on the Company’sofficial website

k) With reference to CMB Communiqué Serial VIII- No:54, Special Circumstance Explanations were announced to the public byinforming IMKB (Istanbul Stock Exchange) via the Public Disclosure Platform (PDP).

I) The changes in the legislation related to the Capital Markets Law were closely followed and brought to the attention of the relevantdepartments of the Company.

List of officers of the Shareholder Relations Unit is given below:

Name and Surname Position/Title Telephone e-mail

M.Görkem Elverici Finance Director 0212 350 50 16 [email protected]

Beyza Genç Finance Manager 0212 350 50 16 [email protected]

Nihal Topçuo¤lu General Accounting Manager 0212 350 35 07 [email protected]

Baflak Öge Corporate Finance andInvestor Relations Manager 0212 350 32 62 [email protected]

Moreover, on the official website of the holding company, all investors inquiries received via the ‘’Investor Relations CommunicationForm’’ accessible on the ‘’Investor-Relations - How my we help You’’ page were replied to immediately.

3. The Right of Sherholders to Access Information

In enabling the exercise of the shareholders' right of accessing and assessing information, the shareholders are treated equally. Eachshareholder has the right to access and assess the information. Our Articles of Association (AoA) does not include any terms restrictingthe right to access information.

In the frame of the present regulations, with the aim of extending the shareholders’ right access to information and enabling themexercise their rights in a healthy nature, the Company’s official website is being benefited very effectively. In this scope, the Corporatewebsite is providing the Corporate Governance Principles and the relevant information and data as required by the regulatory authorities.

With the aim of public disclosure and providing information, the corporatewebsite includes: fields ofactivity, annual avtivity reports andinterim period financial statements, corporate governance compliance report, Articles of Association, trade registry info, specialsircumstanses disclosure, shreholding structure, agendas of general assembly meetings, minutes of general assembly meetings, listof attendees of general assembly meetings, votes by Proxy, codes of conduct, information policies. Utmost atention is paid to keep theofficial website up to date.

According to the regulations, non-controling shareholders are entitled to request the appointment by the General Assembly of a specialauditor. Shareholder(s) of a company representing at least %10 of the capital are entitled to demand the appointment of a special auitorwith regard to special matters. Our Company’s Articles of Assocciation does not include an article regarding the assignment of a specialauditor. During the fiscal period such a request hasnot been made.

4. General Assembly Meetings

In line with the legislation the announcement of the General Assembly Meeting date is made three weeks prior to the meeting via PublicDisclosure Platform (KAP), Electronic General Assembly System(EGKS), the Company’s official website and the Turkish CommercialRegistry Gazette, with the aim of reaching as many shareholders as possible.

2012 Annual Report


On the corporate website at www.trakyacm.com, the date of the General Assembly Meeting is announced as ‘’Investor Relations’’-‘’Announcements and documents of the General Assembly’’-‘’Informative Documents’’along with the notifications and statements thathave to be made according to the legislation. Moreover the following points are disclosed to the shareholders in an attention-drawingmanner:

a) Total number of shares reflecting the Company’s partnership structure and their voting rights, as of the date of announcement

b) Any changes in the management and actions of the Company, which may change the Company’s operations and which areprojected for the coming fiscal period or which have been executed in the past fiscal period of the Company or of the mainsubsidiaries

c) If any on the General Assembly Meeting Agenda, information on the dismissal, replacement and selection of Board of Directorsmembers, the reasons of dismissal or replacement, information on the new candidates of board membership.

d) The requests by shareholders, CMB and/or the other public authorities and institutions the Company is engaged with of includingtopics in the meeting agenda

e) In case there is an amendment in the Articles of Association on the agenda, the relevant Board of Directors resolution and theold and new versions of the amended clause of the Articles of Association.

Regarding the execution of the liability mentioned in clause (c), the resumes of the candidates of membership for the Board of Directors,the positions they took through the past decade, the reasons for their resignations, the importance and details of their relations withthe Company and Company- related parties, whether they are independent members or not, and information on the similar issues whichmay interfere with the Company's operations should these people be selected as Board of Directors members, are all disclosed to thepublic by the Company within one week following the announcement of the General Assembly Meeting date.

In preparing the General Assembly Meeting agenda, utmost attention is paid to State each request under a separate topic. The agendais itemized clearly to avoid any ambiguity. Special attention is shown to avoid using words like “Other" or “Miscellaneous" on the agenda.

In preparing the agenda, the issues shareholders have sent to the Shareholder Relations Unit in writing and requested to have themincluded in the agenda, are taken into attention by the Board of Directors. During this term, no such requests have been received.

Utmost attention is paid to organize the General Assembly Meetings to enable highest attendance putting the least financial burden onthe shareholder and to avoid any unfair treatment to any shareholder. Therefore, various factors, such as traffic, transportation etc., aretaken into account in setting the timing of the General Assembly Meetings.

The agenda of a General Assembly Meeting is itemized clearly, objectively and in detail. Shareholders are offered equal opportunitiesto express their views and ask any questions they may have in mind. All questions asked by the shareholders during the General AssemblyMeetings - except for non- public material that are commercially confidential- are replied during the General Assembly Meeting. In casethe question is irrelevant to the agenda or too extensive to be replied immediately, it is answered by the Shareholder Relations Unit inwriting within 30 days maximum.

Any operation, executed by the members of the Board of Directors based on the authorization they have taken at the previous GeneralAssembly Meeting to engage in activities that are considered as Company operations as set forth in Articles 395 and 396 of TurkishCommercial Code, is reported to the General Assembly Meeting.

Board of Directors members, who are responsible for the areas related to the agenda topics, other relevant executives, all authorizedmanagers and auditors who have participated in the preparation of the financial statements attend the General Assembly Meeting toprovide information and answer questions.

A public statement is released on the day of the resolution by the Board of Directors via the Public Disclosure Platform (PDP), announcingthe date of the General Assembly Meeting. Moreover, with the aim of informing the local and foreign shareholders about the GeneralAssembly Meeting announcements and agenda items, the General Assembly documents are published on the official website.

As required by the CMB legislation, financial statements have to be disclosed within 14 weeks following the end of the fiscal period.On the other hand, the Company aims to finalize and disclose its financial statements as quickly as possible in order to inform itsshareholders in a timely manner. Based in this principle, the financial statements of 2011 have been disclosed within almost 10 weeks.

In case there is a significant change in the Company's management and operational organization, the details of such change is disclosedto the public as required by the legislation.

Moreover, in compliance with the Corporate Governance Principles set forth by the CMB and as required by the principle regardingsignificant activities, prior to the Ordinary General Assembly Meeting to be held on 17 May 2012, the necessary authorizations have beenreceived to make amendments on the Articles of Association.

In compliance with the CMB’s corporate governance principles Regarding significant transactions and related party transactions, providingguarantee, pledge, and mortgage in favor of third persons issues relevant regulation is made in the Company’s articles of association.

In this frame;

The merger between Trakya Cam Sanayii A.fi. - Trakya Yeniflehir Cam Sanayii A.fi. and Trakya Polatl› Cam Sanayii A.fi and the mergerbetween Türkiye fiifle ve Cam Fabrikalar› A.fi. and Çay›rova Cam Sanayii A.fi. were still under examination by CMB, the Capital Markets


Law was substantially amended and the new Capital Markets Law number 6362 came into effect on the date it was published in theOfficial Gazette dated 30 December 2012 and number 28513. Those shareholders who attended to the General Assembly meeting whereArticle 24 of afforementioned law entitle ‘Right of Dissociation’’ and the important procedures described in Article 23 of the said Lawand voted against the decisions and had their dissenting opinions included in the minutes of the meeting were required to use their rightto dissociation and sell their share to the Company in accordance with the principles discribed in the Law, and public companies wererequired to buy these shares from the shareholders at the price thus determined. Since the secndary regulations pertaining to theapplicatipon of Article 24 of the Capital Markets Law number 6362 entitled ‘Right of Dissociation’’ had not yet been published, withrespect to the postponement of the merger procedures announced to the public on the aforementioned dates for a second evaluationafter these secondary regulations are published, it was annunced to the public on 19 February 2013 that an application has been fieldwith the CMB on the same date for the suspension of the merger application at this stage.

On a separate agenda topic, information is given to the General Assembly Meeting on the donations and charities given to associationsand foundations with social aid purpose. The General Assembly Meetings are open to the public, including the press members andbeneficiaries without the right to speak. The minutes of the General Assembly meetings published on the official website are kept opento the examination of the shareholders at the Company Head Office.

Within the period, Ordinary General Assembly Meeting for the year 2011 was held on 17 May 2012 with a quorum of 73.94%.

In the announcements and statements of the General Assembly Meetings the following points have been noted:

• The agenda, place, date and time of the General Assembly Meeting; the proxy form for those who wish to be represented by aproxy and the instructions for filling in the proxy form,

• That General Assembly meetings wil be held physically and virtually, and that for virtual general assembly meetings the rightsto have an attorney, make proposals, disclose opinions, and vote will be used through Electronic General Assembly System (EGKS)made available by the Central Registry Office (MKK) and that those shareholders who wish to attend the virtual general asemblyin person or through the attorney will do so in accordance with the principles laid out by the EGKS

• That those shareholders who wish to attend to General Assembly physically need to present their identities or letters of attorneyif they wish to use their rights regarding their shares registered on the ‘Shareholders List available in the Central Registry Office(MKK) system,

• That all the financial statements including the annual report, Independent External Auditing Reports, profit distribution suggestionof the Board of Directors, if any, the new and old versions of the amended article of the Articles of Association shall be presentedfor the examination of the shareholders on the company website and at the Head Office, at least 3 weeks prior to the GeneralAssembly Meeting.

5. Right to Vote and Non-controlling Rights

The Articles of Association does not include privileges of right to vote. Pursuant to our Articles of Association, each share grants oneright to vote. In case the mutual shareholding relation concurs a relationship of dominance, the companies having a mutual shareholdingrelation, do not vote in each other’s General Assembly Meetings, unless there are requisites like forming a quorum.

Non-controlling shares are not represented in the management. Cumulative vote method is not included in our Articles of Associationand in 2011 no complaints or criticisms have been directed to our Company regarding this issue.

6. Right for Dividend

The profit distribution policy of our Company has been determined in accordance with the Turkish Trade Law, the Capital Markets Lawand other regulations applicable to the company, as well as the Articles of Association. As such:

a) Our Company chooses to istribute a maximum of %50 net of period profit calculated at the end of each year in accordance withthe Capital Markets Law and relevant regulations, in cash and/or in the form of no-par shares. The Ordinary General Assemblyof Shreholders may decide on a different percentage due to economic conditions, investment plans and cash flow.

b) The profit distribution proposals of our Board of Directors, which includes relevant details of CMB regulations and CorporateGovernance Principles, will be disclosed to the public within legally determined periods through the Public Disclosure Platform,the official Company website, and annual reports.

c) Cash profit dividents determined at the General Assembly will be distributed on the determined date by the General Assembly.Steps to be taken for the distribution of profit dividents in the form of no-par shares will be completed within the periods specifiedby CMB regulations.

d) In accordance with the profit distribution policy, profit dividents will be distributed equally to all existing shareholders on the daydetermined without consideration of dates of sale and acquisition.

e) In case the Board of Directors suggests to the General Assembly that no profit distribution should be made, the reasons fort hissuggestion and the details of the undistributd profit are presented to the shareholders during the General Assembly Meeting.

f) Profit distribution is based on a policy that balances shareholders’ interest with the Company’s interests.

g) There are no preference shares in respect to receiving shares from the profit.

2012 Annual Report


h) Enforcement for paying profit shares with founder divident shares to the Members of our Board of Directors and to our employeesis not contained in our Articles of Association.

i) According to the Articles of Assocciation, advance profit dividents can be paid if the Board of Directors is thus authorized by theGeneral Assembly, and in compliance with the Capital Markets Law and relevant regulations of the CMB. Such authority givenby the General Assembly to the Board of Directors to make advance payments of profit dividents is restricted to the year theauthority is given.

7. Transfer of Shares

There are no provisions restricting the transfer of shares in our Articles of Association.

SECTION II. PUBLIC DISCLOSURE AND TRANSPARENCY

8. Information Policy

The CMB Communiqué on “Guidelines for Disclosure of Special Conditions to Public"- Serial: VIII, No: 54, published on the Official Gazettedated 6 February 2009 and numbered 27133 imposes the obligation on the partnerships, shares of which are traded at the exchangefor creating an information policy aimed at public enlightenment and announcing such policy to the public via the website of the partnership.

The "Information Policy”, created in this context and approved at the Meeting of our Board of Directors dated 2 April 2012 and numbered12, has been announced to the public in the section “Investor Relations" on our company’s website.

The Information Policy outlines the following topics: the information - apart from those detailed in the legislation- shall be disclosed, howfrequently and through which ways shall the information be shared with the public, how frequently should the members of the Boardof Directors or other executives make statements to the press, how frequently should meetings to inform the public be held, how shouldthe questions addressed to the Company be replied, etc.

The personel responsible for carrying out the information policy are listed below:

Name and Surname Position Telephone e-mail

M.Görkem Elverici Finance Director 0212 350 50 16 [email protected]

Beyza Genç Budget and Financial Control Manager 0212 350 36 87 [email protected]

Nihal Topçuo¤lu Accounting Manager 0212 350 35 07 [email protected]

Baflak Ö¤e Corporate Financing andInvestors Relations Manager 0212 350 32 62 [email protected]

9. Company Website and Content

As required by the Corporate Governance Principles set forth by the CMB, our Company is actively using its official website to maintainan efficient and strong relation with its shareholders and to have a continuous contact with its stakeholders. Information published onthe website is regularly updated by the Shareholder Relations Unit. Including statements made in the frame of legislative requirements,the information on the website does not have any contradictory and incomplete data.

In addition to the data, the disclosure of which is required by regulations, the corporate website Includes: trade registry info, updatedshareholding structure and organizational pattern, whether there are preferential shares, the dates and numbers of the trade registrygazette issues the amendments are published on, final version of the Articles of Association, special circumstances explanations, financialstatements, annual activity reports, explanation notes and public offering circulars, the agendas of the General Assembly Meetings, thelist of attendants to the General Assembly Meetings, minutes of the General Assembly Meetings, proxy vote forms, Profit DistributionPolicy, Information Policy, Code of Conduct and answers to the FAQ. In this context, the Company’s official website includes informationof the past 5 years minimum. Important and special information published on the website are also provided in English to enable theinternational investors benefit from the data.

10. Annual Report

The Board of Directors Annual Report is prepared in detail to enable the public access accurate and complete information on the Company'soperations.

In addition to the data, the disclosure of which is required by regulations and the relevant clauses of the Corporate Governance Principles,the annual report includes:

a) Information on the other positions the members of the Board of Directors are holding (in their resumes),

b) Members of the Board of Directors committees, frequency of their meetings, the activities carried out by these committees,

c) The number of Board of Directors meetings held during the year, the attendance of the Board of Directors members to thesemeetings,

d) If any, explanations for the administrative sanctions and penalties imposed on the Company or members of the Board of Directorsdue to any violation of regulations,


e) Information on the regulation amendments, which may significantly affect the company operations,

f) Information on the significant lawsuits brought against the company and on their possible outcomes,

g) Information on the social rights of the company personnel, their professional trainings and information on the corporate socialresponsibility activities, which may have social and environmental consequences.

SECTION III - BENEFICIARIES

11. Informing the Beneficiaries

Beneficiaries are legal entities, real people, institutions or interest groups, such as non-governmental organizations, worker unions,suppliers, customers, creditors, workers, who benefit from the Company's operations and pursuit of its goals and targets. In its activitiesand operations, the Company ensures the beneficiaries’ rights, which are defined with mutual contracts and under relevant regulations.In cases, where the beneficiary rights are not ensured with the regulations and mutual contracts, the interests of the beneficiaries areprotected with utmost good will and at the maximum extend possible by the Company.

Beneficiaries are provided information on the Company policies and procedures regarding the protection of their rights. The Companyhas established the necessary mechanisms to notify the Auditory Committee about the unethical or illegal transactions or actions by thebeneficiaries. In case of a conflict of interest among beneficiaries or in case a beneficiary falls into more than one interest group, a well-balanced policy is pursued to protect the rights. The ultimate target is to protect both interests independently.

12. The Beneficiaries’ Participation In Management

Support is given to the beneficiaries, particularly the Company workers, to participate in the Company management, in ways not interruptingthe Company's operations. The views of the beneficiaries are asked on important decisions which have consequences with regard tothe interests of the beneficiaries.

13. Human Resources Policy

Within the context of human resources, procedures and basics of recruitment, working conditions, rating systems, management ofwages, financial and social rights, evaluation of performance, career management and termination of contract of employment have beenformed. Relations with employees are carried out by the department of human resources.

Guidelines pertaining to employment of personnel have been presented in writing in the Company’s Human Resources Systems, andthese guidelines are being followed. In setting the recruitment policies and making the career planning, the principle of “equal opportunityto equal candidates” has been embraced. During the period, no complaints on any discrimination or favoritism has been addressed theCompany executives.

Employees are treated equally with regard to their rights. Various training programs are designed to improve their knowledge, skills andwork experience.

The HR department is organizing meetings with the personnel to inform them on matters such as Company's financial state, wage policy,training programs, or health-related topics. Decisions taken on the personnel or any developments affecting the workers are notifiedeither directly to them or through their representatives. The views of the relevant worker union are asked when such decisions are tobe made. The job descriptions and distribution and the criteria of performance and rewarding are explained to the workers. In determiningthe wage and other benefits of the workers, efficiency is taken into consideration. The workers are not discriminated based on their race,religion, language or gender. Precautions are taken to avoid any mobbing within the Company.

14. Ethical Codes and Social Responsibility

14.1 Social Responsibility

Being aware of its responsibility for the laws and environmental values, Trakya Cam believes in the requisite of leaving a habitable wordto the future generations. In every stage of its activities, the Company takes this approach into consideration, which it perceives as oneof the main elements of strategic management. Our aim is the execution of the environmental protection work carried out in our Groupwith an understanding of environmental management system and maintaining a sustainable improvement with the support of all employees.

14.2 Ethical Codes

fiiflecam Group's Code of Conduct, arranged under the general Principles of honesty, transparency, confidentiality, impartiality and obeyingthe laws with the resolution dated 20.07.2010 No.49 of the Board of Directors of our Company have been put into effect and arrangementsbearing the characteristics of a guidance that would lead the relationships of all Group employees with the customers, suppliers,shareholders and other stakeholders have been realized.

General outline of the Company’s Ethical Codes as ann›unced to the public on the Company’s official websitw is stated below:

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14.2.1.General Principles

- In fiiflecam Group, truthfulness and honesty constitute the basis of acts in relationship to employees, customers, suppliers,shareholders and all stakeholders.

- fiiflecam Group is transparent and open with all its stakeholders.

- In fiiflecam Group, no distinction among stakeholders is made due to reasons such as religion, language, race, gender, state ofhealth, marital status and political view. Everybody is treated equally and prejudiced behaviors are avoided.

- In fiiflecam Group, utmost attention is paid to protecting the private information of employees, customers and suppliers andsharing such information with third parties is not allowed.

- fiiflecam Group runs all its operations in line with the laws. The Group follows laws and regulations closely and takes the necessaryprecautions required to ensure compliance with the laws.

14.2.2.Responsibilities

The Board of Directors and the Auditing Committee are responsible at top level for applying the Code of Conduct of fiiflecam Groupthroughout the entire Group. All members of Group personnel are obliged to act in accordance with the Code of Conduct of fiiflecamGroup.

14.2.3.Applications

- In fiiflecam Group, utmost attention is always paid to efficient and productive use of Group resources and the principle ofeconomizing is taken into consideration. Group personnel use and protect the Group resources only for the good of the Group.

- Utmost attention is paid to protect of all kinds of non-public information. Regulations and procedures related to the security ofinformation belonging to the Group are keenly applied and required precautions to carefully keep and archive this Informationand for non-disclosure thereof are adopted.

- In fiiflecam Group, the personnel consider Group interests within the framework of legal and in-Group regulations and pay attentionto keep away from conflicts of interest, in the tasks they perform.

- In fiiflecam Group, gifts exceeding a reasonable extent from customers, suppliers and other institutions are not accepted. However,gifts having a symbolic value such as plaquets and shields, granted at the meetings or seminars attended to represent the Groupcan be accepted.

- In case business relationships with family members, close relatives and friends are required to be established by the fiiflecamGroup personnel, occurrence of conflict of interest is not allowed.

- In fiiflecam Group, in relationships with customers and suppliers, rules of respect, equality, courtesy and justice are regardedand laws and code of conduct are followed at utmost level. No misleading and dishonest manners are adopted towards customersand consumers.

- In fiiflecam Group, rules of the honesty and sincerity in competitiveness are always closely followed in all the countries whereactivities are carried out.

- The relations of fiiflecam Group with official bodies are always transparent and explicit. Any kind of information and documentrequested by the official bodies are provided correctly, fully and on time. Any act to deceive or mislead the official bodies arenever tolerated or allowed.

14.2.4. Compliance with the Ethical Codes fiiflecam Group

Employees of the Group show utmost care to comply with the fiiflecam Group Code of Conduct. Compliance with Code of Conductthroughout Group Activities is monitored by effective communication.

SECTION IV - BOARD OF DIRECTORS

15. Structure and Composition of the Board of Directors

The Board of Directors is formulated in such a way as to enable its memebers to work productevely and constructively, make fast andrational decisions and effectively organize committee activities. The Board of Directors includes both executive and non-executivemembers. A non-executive member of the board is a memeber who does not have an administrative position in the Company other thanhis/her membership to the Board of the Directors and who does not interfere with the Daily business and regular operations of theCompany. The majority of the Board of Directors is comprised of non-executive members.

Pursuant to the Articles of Association, the business of the Company is carried out by a Board of Directors, comprising at least 5 (five)members as stipulated by the Turkish Commercial Code and CMB Corporate Governance Guidelines. With the amendment made onthe Articles of Association in the Ordinary General Assembly Meeting on 17 May 2012, two independent members meeting the criteriaset forth in the CMB Corporate Governance Guidelines have been elected.


Following the General Assembly Meetings, when the Board of Directors members are ELECTED, THE Chairperson and the Vice-Chairpersonof the Board of Directors are elected upon a resolution for the division tasks. The Company’s Board of Directors comprises the followingsix members- one executive and five non-executive.

Name and Surname Title

Teoman Yenigün Chairman

Nevzat Burak Seyrek Vice Chairman

Zeynep Hansu Uçar Member

Müfit Özkara Member

Prof. Dr. Atilla Murat Demircio¤lu Independent member

Prof. Dr. Turkay Berksoy Independent member

According to the Articles 395 and 396 of the Turkish Commercial Code, the Board members have to receive the approval of the GeneralAssembly to conduct businesses personally or on behalf of third parties that fail under the Company’s area of operations or to becomepartners with companies engaged in such businesses.

The Board memebers can freely express their ideas, without being affected by any external pressures. Even though it is not obligatoryaccording to the Corporate Governance Principles, our Company’s Board of Directors includes Zeynep Hansu Uçar as a female member.

The Board of Directors manages and represents the Company by preserving first and foremost the long-term interests of the Companyin its strategic desicions, in the balance its strikes between growth and profit, and with its rational and cautios risk management approach.The Board of Directors determines the strategic goals of the Company, determines the human and fiscal resources necessary for theCompany, and supervises the performance of the management. It ascertains that the workings of the Company is in compliance withlaws, the Articles of Association, internal regulations and policies.

The Company has affiliates and subsidiaries. As it is considered that having Board of Directors members take part in the the managementof these companies is in the best interest of the Company, no restriction is set for undertaking these tasks outside the parent Company.

16. Procedures of the Board of Directors

The Board of Directors functions in a transperent, accountable, fair and responsible manner. The Chairperson and Vice Chaireperson arechosen from among the members of the Board of Directors. In addirtion, Presidents and Members of committees are also chosen inthis manner.

As stated in the Articles of Association, the Board of Directors meetings are held as and when required by the Company business andoperations. However, a meeting must be held at least once a month. In this scope 45 desicions have been taken during the meetingsheld in 2012. In the absence of Chairperson the Board Directors is chaired by the Vice Chairperson. If the Vice Chaireperson is not presenteither, a temporary Chairperson elected among its own body for that meeting chairs the Board. The date and agenda of the Board isdetermined by the Chaireperson. In the absence of Chairperson these duties are performed by the Vice Chairperson. However, themeeting date may also be determined by the Board decision. The information and documents related to the topics of the Board ofDirectors meeting are submitted to the board members to allow a reasonable time for their examination. Prior to the meeting the membersof the Board of Directors may suggest amendments to the agenda to the Chairperson. The views of an absent member, who hadsubmitted his/her opinions on a topic in writing to the Board of Directors, are shared with the fellow members. Each member of theBoard of Directors has a single vote.

The duties of the secretary of the Board of Directors are properly carried out by Company employees assigned in compliance with theCorporate Govermnance Principles.

The topics on the agenda of the Board of Directors are being discussed thoroughly and openly during the board meetings. The Chairmanof the Board of Directors spends effort to encourage the non-executive members to participate in the meetings effectively. Regardingthe topics, the members of the Board of Directors are opposing to, the reasons for their opposition and negative votes are noted downon the resolution record in detail. The detailed explanation of the dissenting votes is disclosed to the public. However, since there hasnot been any opposition to the decisions taken in the Board of Directors meetings held in 2012, no such disclosure has been made forthis year.

The Board of Directors meetings are held at the Company Head Office. Significant decisions of the Board of Directors are disclosed viathe PDP. The text disclosed to the public is also published on the Company’s website.

The powers and responsibilities of the members of the Board of Directors have been clearly set out in the Articles of Association. Thesepowers are represented in greater details in the Copmany’s circular.

These documents have been registered and made public in the manner set forth by law. The Board of Directors plays a leading role inmaintaining effective communication between the Company and its shareholders and resolving possible conflicts, and closely cooperateswith the Relations with Shareholders Unit.

17. The Number, Composition and Independence of Committees Formed by the Board of Directors

In order for the Board of Directors to effectively carry out its duties and responsibilities, the ‘’Audit Committee’’,the ‘’Corporate GovernanceCommittee’, and the ‘’Early Risk Detection Committee’’ have been established and annaunced to the public in compliance with Corporate

2012 Annual Report


Governance Principles. The committees’ area of work, guidlines and compositions were determined at the Board of Directors meetingon 17 May 2012 and disclosed to the public on the same date.

At the Board of Directors meeting on 17 May 2012:

- Prof. Dr.Turkay Berksoy, independent member of the Board, was choosen as the Cahirperson of the Audit Committee, withindependent Board member Prof.Dr. Atilla Murat Demircio¤lu as a committee member,

- Prof.Dr. Atilla Murat Demircio¤lu, independent member of the Board, was choosen as the Chairperson of the Corporate GovernanceCommittee, with independent Board member Prof. Dr. Turkay Berksoy, and members Zeynep Hansu Uçar and Müfit Özkara ascommittee members.

- Prof. Dr. Turkay Berksoy, independent member of the Board, was choosen as the Cahirperson of the Early Risk DetectionCommittee, with independent Board member Prof.Dr. Atilla Murat Demircio¤lu, and member Zeynep Hansu Uçar as committeemember.

Due to the provision in the Corporate Governance Principles that all members of the Audit Committee and the chairman of the othercommittees be independent members, and due to the fact that the Board of Directors has only two independent members, some boardmembers have had to serve on more than one committee.

The Corporate Governance Committee, the Audit Committee, and the Early Risk Detection Committee carry out their work in compliancewith the CMB Codes and the Corporate Governance Principles; the Audit Committee and the Early Risk Detection Committee holdquarterly meetings with set agenda, whereas the Corporate Governance Committee meets whenever necessary with set agenda.

The Board of Directors receives the opinion of relevant committees in formulating internal control mechanisms including risk managementand information systems and processes that will minimize the effects of risks on shareholders and other beneficieries of the Company.The Board of Directors reviews the effectiveness of risk management and internal control systems at least once a year. The annual reportcontains information on the existence, functioning and effectiveness of internal controls and internal auditing.

18. Risk Management and the Internal Control Mechanism

In the Group, risk managemen and internal auditing is carried out under the coordination of the ‘’Risk Management‘’ department of theholding company.

Internal auditing and risk management functions communicate with each other at the highest level, and risk-focused internal auditingefforts aim to increase corporate governance. Work is carried out, and regularly reported, to build a corporate structure, give necessaryassurance to shareholders and stakeholders, protect the financial and non-financial assets of the Group, minimize the losses created byuncertainties and maximize gains from opportunities.

Risk management and internal auditing work in our Group is carried out with a significant level of support from top management andthe contribution of all employees. Established in 2012, the Early Risk Detection Committee and the Audit Committee have been closelymonitoring the risk management and internal auditing work throught the Group and providing necessary guidence.

At our Group approaches Risk Management in a holistic and proactive manner, and corporate risk management applications are followed.Risk catalogs prepared at our Group on the basis of businesses are periodically updated and risks are listed in the order of importance.Taking into consideration the risk appetite of the Board of Directors, appropriate strategies for the analyzed risks are determined andnecessary precautions taken.

This work is not limited to financial and strategic risks but also covers operational risks such as production, sales work health and safety,emergency management and information technologies.

Internal auditing in our Group has been carried out for many years within a corporate framework under the Main Company Board ofDirectors. The main purpose of internal auditing in our Group is to help Group companies to grow in a healthy and well-coordinatedmanner, to carry out constructive and efficient control in order to ensure all work is done in accordance with legal codes, and to takecorrective measures in a timely fashion. Internal auditing is carried out according to the annual audit program approved by the Board ofDirectors. In preparing the annual audit program, results from the risk management studies are also used.

19. Stratrgic Goals of the Company

The process of determining reviewing, and updating the Company’s strategic goals begins with the Board of Directors finalizing the Visionstatement. The Board of Directors specified the point the Group wants to reach in 2020 as ‘’ Being a fast growing global flat glasscompany with strong brands and innovative solutions’’. At the second stage, a series of analyses are carried out to understand underwhat conditions work has to be done to meet the requirements of the vision. The analysis pertaining to internal workings is called InternalAnalysis, while the one pertaining to the board field covering the market, competitors, sectors in which the Group is active, variousregions, consumers, suppliers, etc.is called External Analysis. Following these analyses, Strategic Maps are vreated and/or updated.

The strategic map determines the focuses areas of the Group in terms of Finance, Customers, Processes and Non-Financial Assets, andthe differentiating (strategic) factors it needs to excel in. The Strategic Map can be created on the level of the Group as wll as forbusinesses. As a result, the road map for future work is created. The maps are put into practice by means of Corporate Report Card.Every strategy identified on the map is linked to a Performance Criterion, the level of success this criterion needs to attain, the projectsnecessary for this activity, and the organizational structure.


At the end of the year, executive branches share all aspects of the plan, beginning with the Vision and Strategic Map. The developedplan is then presented to the approval of the Board of Directors. After changes deemed necessary by the Board, the plan is put intoexecution under leadership of the General Manager. All executive branches monitör how the plan fares-monthly through the Annual report(budget), quarterly through Group Meetings, and independently of the calendar through the Decision Support Units, ManagementInformation Systems, etc. ‹n the short and long term; if necessary, these branches change strategic priorities in the new plan period.All monitoring results are presented to the Board of Directors during the term concerned.

The vision is a long-term text within the newly structured Strategic Planning system. Full Internal and External analyses are repeatedevery year. Once the Strategic Map is created, the text is renewed every year with updates. The Corporate Report Card is also a systemthat functions on an annual cycle.

20. Financial Rights

All rights, benefits, and salaries granted to the Board Members are annually determined by the General Assembly as specified in theArticles of Association. In the 2011 Ordinary General Assembly held on 17 May 2012, the amounts to be paid to the board membershave been determined and publicly disclosed.

The Group President and other Executives are not granted any payments, which may technically be viewed as premiums, directly indexedto the turnover or other basic indicators. In addition to their payments made in cash, such as the monthly salary, bonus and social aids,the Group President and other Executives are offered a gratification payment once a year. The amount paid may be increased or keptunchanged, depending on the prevailing circumstances and the criteria taken into consideration including inflation rate, general salaryincreases and the Company’s profitability. The amounts to be paid ate determined taking several factors into account: Company's operationvolume, the quality and risk level of the operations, the size of the managed structure, the sector of activity etc. In addition, the CompanyExecutives are allocated a company vehicle. In this scope, a total payment of 4.269.936 TL was made to the Executives.

No loans or credits are provided to the Board Members and Executives; they are not allowed to use credit under the name of personalcredits through a third person or no warrants are given like bails in favor of them.

2012 Annual Report



1. Election of the members of the Chairmanship Council and granting Chairmanship Council the power to sign the

minutes of the General Meeting,

2. Reading of the summaries of the Reports prepared by the Board Of Directors, the Auditing Board and the Independent

Auditor on the activities that have been performed by our Company in the year 2012,

3. Reviews and Discussions on and Approval of the 2012 Balance Sheet and Income Statement Accounts,

4. Acquittals of the Members of the Board of Directors and the Auditing Board,

5. Determination of the Compensations to the Members of the Board of Directors,

6. Granting permissions to the Members of the Board of Directors as per the Articles 395 and 396 of the Turkish

Commercial Code,

7. Furnishing information to the shareholders in respect of the Company’s ‘’Profit Distribution Policy’’ as per the

arrangements provided by the Capital Markets Board,

8. Taking a Resolution on the Distribution Type and Date of the 2012 Profit,

9. Taking a resolution on amendment of the Company’s Articles of Association as indicated in the attached ammendment

draft, provided that the required permissions are obtained from Capital Markets Board and from the Ministry of

Customs and Trade of Republic of Turkey,

10. Taking a resolution on appintment of an independent auditing firm, carried out by the Board of Directors as per the

Turkish Commercial Code and the arrangements provided by the Capital Markets Board,

11. Taking a resolution on the ‘’Internal Directive pertaining to the General Assemblies’’ which has been prepared by

the Board of Directors and whereby the working principles and procedures concerning the Company’s General

Assemblies are determined,

12. Furnishing information to the shareholders in respect of the ‘’Compensation Policy’’ pertaining to the Members of

the Board of Directors and Top Executives,

13. Furnishing information to the shareholders in respect of the associated party transactions that are continuous and

common, within the scope of the arrangements provided by the Capital Markets Board,

14. Furnishing information to the shareholders in respect of the Company’s ‘2Company Information Policy’’ as per the

Corporate Governance Principles,

15. Furnishing information to the shareholders in respect of the donations granted within the year, as per the arrangements

provided by the Capital Markets Board and; determination of the limits pertaining to the donations to be granted in

2013,

16. Furnishing information to the shareholders in respect of the securities, pledges and hypothecates provided in favour

of third parties.

AGENDA FOR THE GENERAL ASSEMBLY 2012(APRIL 5’TH,2013)

Previous Text

FOUNDATIONArticle 1-

Founders, whose name, surname, full address and nationality areshown below, founded a joint-stock company in accordance withprovisions of the Turkish Commercial Code related to instantfoundation of joint-stock companies.

1- Türkiye fiifle ve Cam Fabrikalar› A.fi.Citizen of R.T., Istanbul R›ht›m Caddesi Karaköy/Istanbul

2- Çay›rova Cam Sanayii A.fi.Citizen of R.T., Gebze Çay›rova/Gebze

3- Topkap› fiifle Sanayii A.fi.Citizen of R.T., Istanbul Davutpafla Caddesi Topkap›/Istanbul

4- Cam Pazarlama A.fi.Citizen of R.T., Istanbul Vali Kona¤› Caddesi Niflantafl›/Istanbul

5- Paflabahçe Cam Sanayii A.fi.Citizen of R.T.,Istanbul Sahip Molla Caddesi Paflabahçe/Istanbul

NAME OF THE COMPANYArticle 2:

Name of the company is Trakya Cam Sanayii Anonim fiirketi.Hereinafter in this articles of association it shall be referred to asthe "Company".

PURPOSE AND ACTIVITIESArticle 3-

The following are purpose and activities of the company:

1- Establish, develop glass industry and side, auxiliary,completing, and supply industries directly or indirectly relatedto this industry, and other industries providing input forthese industries, participating in establish industries.

2- Guarantee profitable development and sustainability of thecompany in cases when needed due to economic conjuncturerelated to its field of activities by distributing risk, and conductof other industrial, commercial, and financial activities aimedat using its potential, establishing companies in these fieldsand participate in established companies.

3- Form economic and social services within the company.

In order to achieve these purposes the company may:

1- Establish facilities and companies to conduct commercialand financial activities within the country and abroad.Participate in established companies. Employ foreign expertsor personnel if needed.

2- Carry out all industrial, commercial, and financial transactionsrelated to its field of activities. Enter into official and privateundertakings. Participate in authorized capital of banks,insurance and other financial organizations.

3- Carry out domestic and overseas sales transactions of thecompany and its affiliates. Establish companies for thispurpose within the country and abroad. Participate in them.Establish warehouse, store, exhibition, representative office,etc. Take necessary measures and establish companies fordomestic and foreign supply, customs clearance, and storageof raw materials, auxiliary materials, packing materials,energy, ore, machines, equipment, semi-products, andproducts related to field of activities of these companies.

Text of Draft Amendment to Articles of Association ofTrakya Cam Sanayii A.fi.

New Text

FOUNDATIONArticle 1-

Founders, whose name, surname, full address and nationality areshown below, founded a joint-stock company in accordance withprovisions of the Turkish Commercial Code numbered 6762 relatedto instant foundation of joint-stock companies.

1- Türkiye fiifle ve Cam Fabrikalar› A.fi.Citizen of R.T., Istanbul R›ht›m Caddesi Karaköy/Istanbul

2- Çay›rova Cam Sanayii A.fi.Citizen of R.T., Gebze Çay›rova/Gebze

3- Topkap› fiifle Sanayii A.fi.Citizen of R.T., Istanbul Davutpafla Caddesi Topkap›/Istanbul

4- Cam Pazarlama A.fi.Citizen of R.T., Istanbul Vali Kona¤› Caddesi Niflantafl›/Istanbul

5- Paflabahçe Cam Sanayii A.fi.Citizen of R.T.,Istanbul Sahip Molla Caddesi Paflabahçe/Istanbul

NAME OF THE COMPANYArticle 2:

Name of the company is “Trakya Cam Sanayii Anonim fiirketi”.

PURPOSE AND ACTIVITIESArticle 3-

The following are purpose and activities of the company:

1- Establish, develop glass industry and side, auxiliary,completing, and supply industries directly or indirectly relatedto this industry, and other industries providing input forthese industries, participating in establish industries.

2- Guarantee profitable development and sustainability of thecompany in cases when needed due to economic conjuncturerelated to its field of activities by distributing risk, and conductof other industrial, commercial, and financial activities aimedat using its potential, establishing companies in these fieldsand participate in established companies.

3- Form economic and social services within the company.

In order to achieve these purposes the company may:

1- Establish facilities and companies to conduct commercialand financial activities within the country and abroad.Participate in established companies. Employ foreign expertsor personnel if needed.

2- Carry out all industrial, commercial, and financial transactionsrelated to its field of activities. Enter into official and privateundertakings. Participate in authorized capital of banks,insurance and other financial organizations.

3- Carry out domestic and overseas sales transactions of thecompany and its affiliates. Establish companies for thispurpose within the country and abroad. Participate in them.Establish warehouse, store, exhibition, representative office,etc. Take necessary measures and establish companies fordomestic and foreign supply, customs clearance, and storageof raw materials, auxiliary materials, packing materials,energy, ore, machines, equipment, semi-products, andproducts related to field of activities of these companies.

2012 Annual Report



4- Own necessary concession, permit, trademark license,patents for invention, and other rights. Transfer them tothird persons within the country and abroad.

5- Own immovable property and material rights in order tocarry out transactions related to its field of activities. Alienatethem. Rent them. Provide mortgage, pledge immovableproperty of other persons in the company’s favor, and cancelsuch pledge, and acquire any rights in relation to them.

6- Enter into construction contracts related to purpose andfield of activities of the company.

7- Research and develop mines directly and indirectly relatedto purpose and field of activities of the company.

8- Establish research centers related its field of activities.Participate in such organizations.

9- Become partner to established or future local and/or foreigncompanies. Purchase shares and/or other securities providedit does not operate securities portfolio and commissioningactivities. Sell its own shares (or participatory shares) orother securities. Transfer them to other persons. Pledgethem. Accept pledge.

10- Provide any logistics and transportation services related toits group of companies within above-mentions purpose andfields of activities, and provide the following services forthis purpose.

a. carry out any domestic and international carriage by land,sea, and air transportation vehicles.

b. carry out any loading, unloading, port operation, and customsclearance activities.

c. carry out any storage, warehousing, packing, and packagingactivities.

d. carry out any dealership, representation, agency, andcommissioning activities, and make agreements in relationto matters stated in subsections a-b-c above.

e. purchase, lease, repair and provide maintenance servicesfor any land, sea, and air transportation vehicles in order toprovide the above-mentioned services, carry out import,domestic trade, and representation activities for thesevehicles.

f. Rent its own land, sea, and air transportation vehicles toother persons and use them in this way.

11- The company may provide warranty for foundation, increaseof authorized capital, bank loans, emission of bonds andfinancial notes, and other debts of stock corporations, incapital and/or management of which it directly or indirectlyparticipates.

Matters related to provision by the company of guarantee,warranty or establishing right of pledge including mortgagein its own name or in favor of 3rd persons shall be subjectto terms and conditions stipulated under capital marketregulations.

REGISTERED OFFICE AND BRANCHES OF THE COMPANYArticle 4:

Registered office of the company is in Istanbul.

4- Own necessary concession, permit, trademark license,patents for invention, and other rights. Transfer them tothird persons within the country and abroad.

5- Own immovable property and material rights in order tocarry out transactions related to its field of activities. Alienatethem. Rent them. Provide mortgage, pledge immovableproperty of other persons in the company’s favor, and cancelsuch pledge, and acquire any rights in relation to them.

6- Enter into construction contracts related to purpose andfield of activities of the company.

7- Research and develop mines directly and indirectly relatedto purpose and field of activities of the company.

8- Establish research centers related its field of activities.Participate in such organizations.

9- Become partner to established or future local and/or foreigncompanies. Purchase shares and/or other securities providedit does not operate securities portfolio and commissioningactivities. Sell its own shares (or participatory shares) orother securities. Transfer them to other persons. Pledgethem. Accept pledge.

10- Provide any logistics and transportation services related toits group of companies within above-mentions purpose andfields of activities, and provide the following services forthis purpose.

a. carry out any domestic and international carriage by land,sea, and air transportation vehicles.

b. carry out any loading, unloading, port operation, and customsclearance activities.

c. carry out any storage, warehousing, packing, and packagingactivities.

d. carry out any dealership, representation, agency, andcommissioning activities, and make agreements in relationto matters stated in subsections a-b-c above.

e. purchase, lease, repair and provide maintenance servicesfor any land, sea, and air transportation vehicles in order toprovide the above-mentioned services, carry out import,domestic trade, and representation activities for thesevehicles.

f. Rent its own land, sea, and air transportation vehicles toother persons and use them in this way.

11- The company may provide warranty for foundation, increaseof authorized capital, bank loans, emission of bonds andfinancial notes, and other debts of stock corporations, incapital and/or management of which it directly or indirectlyparticipates.

Matters related to provision by the company of guarantee,warranty or establishing right of pledge including mortgagein its own name or in favor of 3rd persons shall be subjectto terms and conditions stipulated under capital marketregulations.

12- The company may make donations according to socialresponsibility pursuant to procedure and bases stipulatedby the Capital Markets Board.

REGISTERED OFFICE AND BRANCHES OF THE COMPANYArticle 4:

Registered office of the company is in Istanbul. Address: “Is KuleleriKule 3 34330 4. Levent - Besiktas / Istanbul”dur.

2012 Annual Report


The company may establish branches within the county and abroadprovided notifying the Ministry of Commerce.

TERMArticle 5:

The company is founded for unlimited term.

AUTHORIZED CAPITALArticle 6:

The company accepted system of registered capital according toprovisions of Capital Markets Law, and implemented this systemunder permission of the Capital Markets Board dated 9.11.1990and number 825.

Registered capital of the company amounts to 1.500.000.000 TurkishLiras. This authorized capital is divided into 150.000.000.000 shareseach with nominal value of 1 Kurus.

Issued capital of the company amounts to 693.680.000 TurkishLiras, and this capital is divided into 69.368.000.000 shares to bearereach with nominal value of 1 Kurus. 693.680.000 Turkish Lirascorresponding to issued capital was fully undertaken and paid in.

Permission of upper limit for registered capital provided by theCapital Markets Board is valid for years 2012-2016 (5 years). Evenif upper limit for registered capital is not reached by the end of2016, it is obligatory to obtain permit of the Capital Markets Boardfor previously permitted upper limit or new amount of upper limit,and authorization of general meeting for new term in order to takedecision of board of directors for increase of authorized capital. Incase of failure to obtain this authorization the company shall beconsidered out of system of registered capital.

Board of directors is authorized to take and implement decisionson increasing issued capital by issuing shares to bearer in accordancewith provisions of the Turkish Commercial Code and the CapitalMarkets Law whenever it deems necessary during years of 2012-2016, issuing participation shares with nominal value, and partiallyor fully limiting right of shareholders to purchase new shares.

BOND, PROF‹T AND LOSS SHAR‹NG CERT‹F‹CATE, AND ISSUEOF FINANCIAL BONDArticle 7-

The company may issue exchangeable share and other types ofbonds, financial note, profit and loss sharing certificate accordingto legal provisions. Authority to issue exchangeable share and othertypes of bonds, financial notes is vested upon board of directorsin accordance with provisions of the T.C.C. and Law number 2499.General meeting may authorize board of directors to stipulateconditions other than maximum amount of profit and loss sharingcertificates.

BOARD OF DIRECTORS:Article 8:

Affairs of the company shall be conducted by board of directorsconsisting of at least 5 (five) members formed by general meetingof founders according to provisions of the Turkish Commercial Codeand regulations of the Capital Markets Board.

In case of change of address new address shall be registered intrade registry and announced in Trade Registry Gazette of Turkeyand on the company’s web site. Notice served to registered andannounced address shall be deemed as served to the company.

The company may establish branches within the county and abroadprovided notifying the Ministry of Commerce.

TERMArticle 5:

The company is founded for unlimited term.

AUTHORIZED CAPITALArticle 6:

The company accepted system of registered capital according toprovisions of Capital Markets Law, and implemented this systemunder permission of the Capital Markets Board dated 9.11.1990and number 825.

Registered capital of the company amounts to 1.500.000.000 TurkishLiras. This authorized capital is divided into 150.000.000.000 shareseach with nominal value of 1 Kurus.

Issued capital of the company amounts to 693.680.000 TurkishLiras, and this capital is divided into 69.368.000.000 shares to bearereach with nominal value of 1 Kurus. 693.680.000 Turkish Lirascorresponding to issued capital was fully undertaken and paid in.

Permission of upper limit for registered capital provided by theCapital Markets Board is valid for years 2012-2016 (5 years). Evenif upper limit for registered capital is not reached by the end of2016, it is obligatory to obtain permit of the Capital Markets Boardfor previously permitted upper limit or new amount of upper limit,and authorization of general meeting for new term in order to takedecision of board of directors for increase of authorized capital. Incase of failure to obtain this authorization the company shall beconsidered out of system of registered capital.

Shares representing the capital shall be observed by recordingpursuant to terms of registration.

EMISSION OF BONDS AND OTHER DEBT INSTRUMENTS:Article 7:

The company may issue any type of bonds, financial note, profitand loss sharing certificate, instruments of capital markets and/orsecurities acceptable by the Capital Markets Board to be sold tonatural and legal persons within the country and/or abroad accordingto provisions of the Turkish Commercial Code, Law on CapitalMarkets and other current legislation.

Authority of emission in capital markets with nature of debtinstruments is vested on the Board of Directors in accordance withprovisions of Law on Capital Markets.

Limit and recorded follow-up of debt instruments to be issued shallbe subject to provisions of Law on Capital Markets and other relevantlegislation.

BOARD OF DIRECTORS:Article 8:

Affairs of the company shall be conducted by board of directorsconsisting of at least 5 (five) members formed by general meetingof founders according to provisions of the Turkish Commercial Codeand regulations of the Capital Markets Board.


Number and qualities of independent members of board of directorsshall be stipulated according to regulations of the Capital MarketsBoard related to corporate governance.

TERM AND ELECTION OF BOARD OF DIRECTORS:Article 9-

Members of board of directors shall be selected for term of notmore than 3 (three) years. In case if any membership becomesvacant or an independent member of board of directors loses hisindependency election shall be carried out according to provisionsof the Turkish Commercial Code and regulations of the CapitalMarkets Board, and submitted to approval of the first generalmeeting.

Members whose term of service is ended may be reelected. Generalmeeting may replace members of board of directors any time uponits own discretion regardless of term of their office.

BINDING OF THE COMPANYArticle 10-

Representation and binding of the company shall be vested onboard of directors elected by general meeting among the company’spartners. Signature of person or persons authorized to bind thecompany put under the company name is required for validity of alldocuments to be issued and agreement to be made by the company.

AUTHORITIES OF BOARD OF DIRECTORSArticle 11-

Board of directors shall be authorized to take decisions in relationto all matters except those vested on exclusive powers of generalmeeting under provisions of the Turkish Commercial Code, managethe company, and represent and bind it. Board of directors shall beauthorized to conduct the company’s activities in accordance withits purpose, keep the company’s books and records, prepare balancesheets, appoint and supervise General Director, Director, and otherofficers of the company, and any other management powersprovided by the law and this articles of association.

DISTRIBUTION OF POSITIONS AT BOARD OF DIRECTORSArticle 12-

Board of directors shall elect a chairman and a deputy chairmanamong its members following general meeting. Board of directorsmay delegate all or some of authorities to manage and representthe company to one or several of its authorized members, GeneralDirector and Directors of the company, and decide to assign someof its members for offices at the company. Term of office of GeneralDirector and Directors, and other authorized signatories shall notbe limited to term of board of directors’ office. Signatory authoritiesof these persons shall be valid until repealed by the board ofdirectors.

MEETINGS OF BOARD OF DIRECTORSArticle 13-

Board of directors shall meet when necessary for affairs andtransactions of the company. However, it must meet at least oncea month.

Number and qualities of independent members of board of directorsshall be stipulated according to regulations of the Capital MarketsBoard related to corporate governance.

TERM OF BOARD OF DIRECTORS:Article 9-

Members of board of directors shall be selected for term of notmore than 3 (three) years. In case if any membership becomesvacant or an independent member of board of directors loses hisindependency election shall be carried out according to provisionsof the Turkish Commercial Code and regulations of the CapitalMarkets Board, and submitted to approval of the first generalmeeting.

Members whose term of service is ended may be reelected. Generalmeeting may replace members of board of directors any time uponits own discretion regardless of term of their office.

REPRESENTATION AND BINDING OF THE COMPANYArticle 10:

Board of directors shall be authorized to manage and represent thecompany. Documents and agreements made on behalf of thecompany must be signed by authorized signatories in order to bevalid and binding upon the company. Board of directors shall stipulateauthorized signatories on behalf of the company and forms ofsignature. Such decision of board of directors shall be registeredand announced.

Board of directors may delegate representation authority to one ormore authorized members or third persons acting in capacity of adirector. At least one member of board of directors must haverepresentation authority.

AUTHORITIES OF BOARD OF DIRECTORSArticle 11:

Board of directors shall be authorized to take decisions on all mattersrelated to conduct of the company’s business except those vestedon general meeting according to provisions of law and articles ofassociation.

Board of directors may partially or wholly delegate managementauthority to one or more members of board of directors or thirdperson with an internal directive.

Term of office and signatory authorities of general director, directors,and all authorized signatories shall not be limited to office term ofmembers of board of directors. Signatory authorities of such personsshall be valid until repealed by board of directors.

The article is omitted from text of the articles of association.

MEETING AND ORDER OF WORKING OF BOARD OFDIRECTORS:Article 12:

Board of directors shall elect a chairman and a deputy chairmanfollowing each General Meeting of Shareholders. However, in case

2012 Annual Report


REMUNERATION FOR MEMBERS OF BOARD OF DIRECTORSArticle 14-

General meeting shall stipulate monthly wage or remuneration forChairman and members of board of directors, and authorizedmembers.

AUDITORSArticle 15-

General meeting shall elect not more than three auditors amongshareholders as well as among third persons for term of three years.

DUTIES OF AUDITORSArticle 16-

Auditors shall be obliged to fulfill duties stated in article 353 of theTurkish Commercial Code, and additionally, submit proposals toboard of directors in relation to any measures necessary for goodgovernance of the company and protection of its interests, call thegeneral meeting whenever it is necessary, determine agenda ofmeeting, and prepare report stated in article 354 of the code.Auditors are obliged to use these powers immediately in case ofarising important and urgent reasons. Auditors shall be jointly andseverally liable to fulfill duties imposed on them by the law andarticles of association.

REMUNERATIONArticle 17-

General meeting shall stipulate monthly or annual remuneration ofauditors.

GENERAL MEETINGArticle 18-

General meetings shall be held ordinary and extraordinary. Ordinarygeneral meetings shall be held as required by provisions of theTurkish Commercial Code, the Capital Markets Law, and otherrelevant regulations. Extraordinary general meetings shall be heldas necessary for affairs of the company according to provisions ofthe code and this articles of association, and relevant decisionsshall be taken. Authorized members and at least one member of

of dismissal of chairman and/or deputy chairman for any reasonboard of directors shall hold new election for vacant positions.

Deputy chairman shall chair board of directors during absence ofchairman.

If deputy chairman is also absent, board of directors shall elect atemporary chairman among its members only for that meeting.

Date and agenda of board of directors’ meeting shall be determinedby chairman. Deputy chairman shall determine these issues duringabsence of chairman. However, date of meeting may be determinedby decisions of board of directors. Board of directors shall meetwhenever necessary for affairs and transactions of the company.However, it must meet at least once a month.

Decision of board of directors shall be subject to quorums formeeting and decision stipulated in the Turkish Commercial Code,Capital Markets Law and relevant legislation.

Board of directors may establish committees and commissions toconduct the company’s business, implement relevant decisionsand policies or to supervise them apart from committees andcommissions set forth by the Capital Markets Board. Establishmentof such committees shall be subject to regulations of the CapitalMarkets Board.

REMUNERATION FOR MEMBERS OF BOARD OF DIRECTORSArticle 13:

General Meeting of Shareholders shall decide on remuneration,bonus, and share from annual profit for members of board ofdirectors in accordance with provisions of the Turkish CommercialCode, Capital Markets Law and other relevant legislation.

AUDITArticle 14:

Audit of the company shall be carried out in accordance withprovisions of the Turkish Commercial Code, Capital Markets Lawand other relevant legislation applicable to the company.



GENERAL MEETINGArticle 15:

General meetings shall be held ordinary and extraordinary. Ordinarygeneral meetings shall be held as required by provisions of theTurkish Commercial Code, the Capital Markets Law, and otherrelevant regulations. Extraordinary general meetings shall be heldas necessary for affairs of the company according to provisions ofthe code and this articles of association, and relevant decisionsshall be taken. Authorized members, if any, and at least one member


board of directors must participate general meeting.

Participating general meeting in electronic media: Persons entitledto participate in general meeting may participate in these meetingsin electronic media according to article 1527 of the TurkishCommercial Code. The company may establish system of electronicgeneral meeting to enable entitled persons to participate in meeting,express their opinion, submit proposals, and use their votes inelectronic media according to Guidelines on General Rules of HoldingGeneral Meeting of Joint-Stock Companies in Electronic Media,and purchase service from services established for this purpose.Use of rights of entitled persons and their representatives stipulatedin the said Guidelines through established systems shall be ensuredaccording to this provision of the articles of association.

PLACE OF MEETINGArticle 19-

Place of general meeting shall be corporate seat of the company.However, board of directors may call general meeting at anotherplace of the city where corporate seat of the company located orin another city.

COMMISSIONERArticle 20:

Presence of commissioner of the Turkish Ministry of Commerceat ordinary, as well as extraordinary general meetings, and signingminutes of meetings together with other relevant persons isobligatory. Decisions taken at general meetings held in absence ofa commissioner and minutes of meetings, which do not bear acommissioner’s signature shall not be valid.

QUORUM:Article 21-

Quorum for general meetings and decisions at these meeting shallbe subject to provisions of the Turkish Commercial Code and theCapital Markets Law.

VOTINGArticle 22-

Appointment of representative for ordinary and extraordinary generalmeetings; Shareholders or their representatives present at generalmeeting shall have one vote for each share.

VOTINGArticle 23-

Shareholders may appoint representatives among other shareholdersor third persons for attending general meetings. Representativesthat are shareholders of the company shall be entitled to use ownvotes and votes of shareholders whom they represent.

ANNOUNCEMENTArticle 24

Announcements of the company shall be published in Turkish TradeRegister Gazette and Internet sites according to regulations of theCapital Markets Board subject to provisions of article 37 of theTurkish Commercial Code.

Announcements related to invitation for general meeting shall bemade at least three weeks beforehand excluding days ofannouncement and meeting subject to regulations of the CapitalMarkets Board and article 368 of the Turkish Commercial Code.

of board of directors and independent auditor must participate ingeneral meeting.

Participating general meeting in electronic media: Persons entitledto participate in general meeting may participate in these meetingsin electronic media according to article 1527 of the TurkishCommercial Code. The company may establish system of electronicgeneral meeting to enable entitled persons to participate in meeting,express their opinion, submit proposals, and use their votes inelectronic media according to Guidelines on General Rules of HoldingGeneral Meeting of Joint-Stock Companies in Electronic Media,and purchase service from services established for this purpose.Use of rights of entitled persons and their representatives stipulatedin the said Guidelines through established systems shall be ensuredaccording to this provision of the articles of association.

PLACE OF MEETINGArticle 16:

Place of general meeting shall be corporate seat of the company.However, board of directors may call general meeting at anotherplace of the city where corporate seat of the company located orin another city.

REPRESENTATIVE OF THE MINISTRY:Article 17:

Presence of representative of the ministry at General Meetings ofShareholders shall be subject to regulations of the Ministry ofCustoms and Trade.

QUORUM:Article 18:

Quorum for general meetings and decisions at these meeting shallbe subject to provisions of the Turkish Commercial Code and theCapital Markets Law.

VOTING:Article 19:

Shareholders or their representatives present at ordinary andextraordinary general meetings shall have one vote for each share.


ANNOUNCEMENT:Article 20:

Announcements of the company shall be made in according toregulations of the Capital Markets Board subject to provisions ofthe Turkish Commercial Code related to announcements.

Announcements related to invitation for general meeting shall bemade in accordance with provisions of the Turkish CommercialCode, Capital Markets Law and other relevant legislation.

2012 Annual Report


FORM OF VOTINGArticle 25-

Voting at general meetings shall be made by raising hands. However,verbal voting may be implemented upon request of shareholderspresent at meeting who represent at least on tenth of authorizedcapital.

AMENDMENT OF ARTICLES OF ASSOCIATIONArticle 26-

Any amendment and implementation of this articles of associationshall be subject to permit of the Ministry of Trade and Industry.Such amendments shall be valid as of announcement date afterdue approval and registration at trade registry.

ANNUAL REPORTSArticle 27-

Board of directors and auditor’s reports, annual balance sheet,minutes of general meeting, table containing names and shares ofpartners present at general meeting shall be sent in triplicate to theMinistry of Commerce not later than a month from date of meetingor shall be submitted to a commissioner participated the meeting.

ANNUAL REPORTING PERIODArticle 28-

Reporting year of the company shall commence on the first day ofJanuary and end on the last day of December. However, the firstreporting year shall commence from date of final foundation of thecompany and end on the last day of December of that year.

DISTRIBUTION OF PROFIT AND RESERVE FUNDArticle 29-

Amount obtained after deducting general expenses of the company,depreciation costs, and other necessary amounts from revenuegained from transactions within a balance period shall make up netprofit of the company. Relevant allocations shall be deducted fromnet profit determined in this way according to the following order.

a) 5 per cent shall be allocated to legal reserve fund and forfinancial liabilities of the company.

b) 1st dividend shall be paid from remaining amount accordingto provisions of Law number 2499 and regulations of theCapital Markets Board effective as of date of determiningdividend.

c) The remaining amount of the profit may be fully or partlydistributed to shareholders as second dividend, or may beused for extraordinary needs.

FORM OF VOTING:Article 21:

Voting at general meetings shall be made openly and by raisinghands. However, secret voting may be implemented upon requestof shareholders present at meeting who represent at least on tenthof authorized capital. Regulations of the Capital Markets Board shallapply therewith.

Voting at General Meeting of Shareholders shall be subject toregulations of the Capital Markets Board and provisions of theTurkish Commercial Code.

IMPORTANT TRANSACTIONSArticle 22:

Transactions accepted as important transactions under capitalmarkets legislation and any interested party transactions of thecompany shall be fulfilled according to procedures stipulated bydecisions taken pursuant to relevant regulations of the CapitalMarkets Law.

AMENDMENT OF ARTICLES OF ASSOCIATIONArticle 23:

Completion and implementation of any amendments to this articlesof association shall be subject to provisions of the Turkish CommercialCode and Capital Markets Law. Any such amendments shall bevalid as of registration date at trade registry following approvalaccording to stipulated order.

APPOINTMENT OF REPRESENTATIVEArticle 24:

Shareholders may be represented at general meetings by othershareholders or third persons. Representatives that are shareholdersof the company shall be entitled to use own votes and votes ofshareholders whom they represent. Board of directors shall stipulateand announce form of authorization document subject to regulationsof the Capital Markets Board related to voting by representation atpublic joint-stock companies and provisions of the Turkish CommercialCode in relation to general meetings to be held in electronic media.


ANNUAL REPORTSArticle 25:

Reporting year of the company shall commence on the first day ofJanuary and end on the last day of December.

DISTRIBUTION OF PROFIT:Article 26:

Distribution of profit at the company shall be fulfilled according todecision of General Meeting of Shareholders taken based on boardof directors’ proposal submitted within the framework of profitdistribution policy set forth by general meeting pursuant to provisionsof the Turkish Commercial Code, Capital Markets Law and otherrelevant legislation applicable to the company.

Dividend advance may be distributed in accordance with proceduresand conditions stipulated in capital markets legislation.


d) Provisions of Section 3 of Article 466 of the TurkishCommercial Code shall apply.

e) Legal reserve fund shall be allocated by the company untilit reaches 20 per cent of the company’s authorized capital.

DATE OF DISTRIBUTION OF PROFITArticle 30-

General meeting shall decide on date and form of distributing annualprofit among partners according to proposal of board of directors.Profit distributed according to provisions of this articles of associationshall not be taken back. Provisions of Article 473 of the TurkishCommercial Code shall apply therewith.

TO THE MINISTRYArticle 31-

The company shall print this articles of association, provide themto partners, and send ten copies to the Ministry of Commerce.

LEGAL PROVISIONSArticle 32-

The matters that are not stipulated in these articles of associationshall be subject to provisions of the Capital Markets Law and theTurkish Commercial Code.

CONFORMITY WITH PRINCIPLES OF CORPORATEGOVERNANCEArticle 33-

Principles of Corporate Governance stipulated as mandatory by theCapital Markets Board shall be observed. Transactions conductedand decisions of board of directors taken contrary to obligatoryprinciples shall be deemed invalid and contrary to the articles ofassociation.

Regulation of the Capital Markets Board in relation to corporategovernance shall be observed in transactions deemed important inregard to implementation of Corporate Governance Principles,transactions to which the company is a party, and transactionsrelated to providing guarantee, pledge, and mortgage in favor orthird persons.

DATE OF DISTRIBUTION OF PROFITArticle 27:

General meeting shall decide on date and form of distributing annualprofit among partners according to proposal of board of directorssubmitted pursuant to regulations of the Capital Markets Board.Profit distributed according to provisions of this articles of associationshall not be taken back. Provisions of the Turkish Commercial Coderelated to right of return shall apply therewith.


DECISION ON LIQUIDATION:Article 28:

The company shall be liquidated due to reasons stated in the TurkishCommercial Code or according to court’s decision or decision ofGeneral Meeting of Shareholders taken in accordance with relevantprovisions of the Turkish Commercial Code.

LIQUIDATION OFFICERArticle 29:

If the company is liquidated or terminated due to any reason exceptbankruptcy, liquidation officers shall be appointed by General Meetingof Shareholders.

RESPONSIBILITY OF LIQUIDATION OFFICERSArticle 30:

Liquidation of the company, form of liquidation, and responsibilityof liquidation officers shall be stipulated in relevant articles of theTurkish Commercial Code.

LEGAL PROVISIONSArticle 31:

The matters that are not stipulated in these articles of associationshall be subject to provisions of the Turkish Commercial Code,Capital Markets Law, and other relevant legislation.

CONFORMITY WITH PRINCIPLES OF CORPORATEGOVERNANCEArticle 32:

Principles of Corporate Governance stipulated as mandatory by theCapital Markets Board shall be observed. Transactions conductedand decisions of board of directors taken contrary to obligatoryprinciples shall be deemed invalid and contrary to the articles ofassociation.

Regulation of the Capital Markets Board in relation to corporategovernance shall be observed in transactions deemed important inregard to implementation of Corporate Governance Principles,transactions to which the company is a party, and transactionsrelated to providing guarantee, pledge, and mortgage in favor orthird persons.

Contact Information for Trakya Cam Group of Companies / Plants

Trakya Cam Sanayii A.fi.Head Office

Activity: Management and SalesAdress: ‹fl Kuleleri Kule 3, 34330, 4. Levent - ‹stanbul, TurkeyPhone: (0212) 350 50 50Fax: (0212) 350 50 59www.trakyacam.com.trwww.isicam.com.tr

Trakya Cam Sanayii A.fi.Trakya Plant

Products: Float glass, laminated glass, mirrorAdress: Büyükkar›flt›ran Mevkii, P.K. 98

39780, Lüleburgaz - K›rklareli, TurkeyPhone: (0288) 400 80 00Fax: (0288) 400 77 99

Trakya Cam Sanayii A.fi.Automotive Glass Plant

Products: Automotive glassAdress: Büyükkar›flt›ran Mevkii, P.K. 28

39780, Lüleburgaz - K›rklareli, TurkeyPhone: (0288) 400 85 31Fax: (0288) 400 83 58

Trakya Cam Sanayii A.fi.Mersin Plant

Products: Float glass, patterned glass, solar glassAdress: Mersin Tarsus Organize Sanayi Bölgesi,

Atatürk Caddesi No.133400, Akdeniz Mersin, Turkey

Phone: (0324) 676 40 70Fax: (0324) 676 40 73

Trakya Glass Bulgaria EADFlat Glass Plant

Products: Float glass, mirrorAdress: District “Vabel” Industrial Area,

7700 Targovishte - BulgariaPhone: +359 601 4 78 01Fax: +359 601 4 77 97

Trakya Glass Bulgaria EADGlass Processing Plant

Products: Home appliances glassAdress: District "Vabel" Industrial Area,

7700 Targovishte - BulgariaPhone: +359 601 4 79 25Fax: +359 601 4 79 26

2012 Annual Report


Trakya Glass Logistics EAD

Activity: Transportation of jumbo-sized glassAdress: District “Vabel” Industrial Area,

7700 Targovishte - BulgariaPhone: +359 601 4 80 33

+359 601 4 80 35Fax: +359 601 4 80 30

Trakya Glass Bulgaria EADAutomotive Glass Plant

Products: Automotive glassAdress: District "Vabel" Industrial Area,

7700 Targovishte, BulgariaPhone: +359 601 4 79 66Fax: +359 601 4 79 72

Trakya Yeniflehir Cam Sanayii A.fi.

Products: Float glass, laminated glass, coated glassAdress: Atatürk Organize Sanayi Bölgesi

16900, Yeniflehir - Bursa, TurkeyPhone: (0224) 280 12 05Fax: (0224) 773 27 55


Glass Corp S.A.

Activity: Production and sales of automotive glass,home appliances glass

Adress: 1BIS, Industriilor Alley, 120068 Buzau/RomaniaPhone: + 407 480 6 87 66

+ 359 886 8 09 780Fax: + 402 387 1 05 52