CONVENIENCE TRANSLATION INTO ENGLISH OF THE INDEPENDENT AUDITORS’ REPORT RELATED TO ANNUAL REPORT ORIGINALLY ISSUED IN TURKISH
To the Board of Directors of Katmerciler Araçüstü Ekipman Sanayi ve Ticaret A.Ş. ,
Report On The Audit Of Board Of Directors’ Annual Report Based On The Standards On Auditing Which Is A Component Of The Turkish Auditing Standards Published By The Public Oversight Accounting And Auditing Standards Authority (“POA”)
We have audited the accompanying annual report of Katmerciler Araçüstü Ekipman Sanayi ve Ticaret Anonim Şirketi (“the Company”) and its subsidiaries (collectively referred to as “the Group”), for the year ended 31 December 2016.
Board of Directors’ Responsibility for the Annual Report
Pursuant to the article 514 of the Turkish Commercial Code numbered 6102 (“TCC”) and Communiqué on the Principles of Financial Reporting In Capital Markets numbered II – 14.1 (“Communiqué”), management is responsible for the preparation of the annual report fairly and consistent with the consolidated financial statements and for such internal control as management determines is necessary to enable the preparation of such annual report.
Auditors’ Responsibility
Our responsibility is to express an opinion on the Group’s annual report based on our audit in accordance with article 397 of the TCC and Communiqué whether the financial information included in the accompanying annual report is consistent with the audited consolidated financial statements expressed in the auditor’s report of the Group dated 6 March 2017 and provides fair presentation.
Our audit has been conducted in accordance with the Standards on Auditing which is a component of the Turkish Auditing Standards (“TAS”) published by the POA. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial information included in the annual report is consistent with the consolidated financial statements and provide fair presentation. An audit also includes performing audit procedures in order to obtain audit evidence about the historical financial information. The procedures selected depend on the auditor’s judgement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial information included in the annual report is consistent, in all material respects, with the audited consolidated financial statements and provides a fair presentation.
Report on Other Regulatory Requirements
1) In accordance with the third clause of the article 402 of TCC, no material issue has come to our attention that shall be reported about the Group’s ability to continue as a going concern in accordance with TAS 570 Going Concern.
AC İSTANBUL ULUSLARARASI BAĞIMSIZ DENETİM VE SMMM A.Ş. Member of ENTERPRISE WORLDWIDE
Cemal ÖZTÜRK, CPA Partner
İstanbul, 13 March 2017 01 JANUARY 2016 – 31 DECEMBER 2016
ANNUAL REPORT
Sayfa No:0
01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT CONTENTS
1. GENERAL INFORMATIONS, PARTNERSHIP STRUCTURE, BOARD MEMBERS AND SHARE PERFORMANCE ...... 2
2. HUMAN RESOURCE POLICY, EMPLOYEE STATUS AND ORGANIZATIONAL STRUCTURE ...... 3
3. COMMITTEES ORGANIZED BY BOARD MEMBERS AND SENIOR EXECUTIVE ...... 5
4. FINANCIAL BENEFITS TO BOARD OF DIRECTORS AND EXECUTIVES ...... 6
5. CHANGES AND REASONS OF THE ARTICLES OF ASSOCIATION WITHIN THE PERIOD ...... 6
6. QUALIFICATION AND AMOUNT OF CAPITAL MARKET INSTRUMENTS ISSUED IN THE PERIOD ...... 6
7. RESEARCH AND DEVELOPMENT ACTIVITIES ...... 6
8. COMPANY ACTIVITIES AND SIGNIFICANT DEVELOPMENTS RELATED TO ACTIVITIES ...... 7
9. PRODUCTION AND SALES QUANTITIES ...... 9
10. FINANCIAL POSITION AND ANNUAL PERFORMANCE ...... 10
11. DIVIDEND POLICY ...... 12
12. FINANCIAL RESOURCES AND RISK MANAGEMENT POLICIES ...... 12
13. FORECASTS REGARDING THE DEVELOPMENT OF THE COMPANY ...... 13
14. DECENTRALIZED ORGANIZATIONS...... 13
15. CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT ...... 13
Sayfa No:1 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
1. GENERAL INFORMATIONS, PARTNERSHIP STRUCTURE, BOARD MEMBERS AND SHARE PERFORMANCE Reporting Period : 01.01.2016 - 31.12.2016 Company Title : Katmerciler Araç Üstü Ekipman Sanayi ve Ticaret A.Ş. Trade Register Number : Merkez 64547 - K - 3164 Mersis No : 0-5280-0425-100018 Headquarters Address : 10032 Sk. No:10 A.O.S.B. Çiğli - İzmir Kızılırmak Mah. 1445 Cad.No:2B/82 The Pragon İş Mrk. Ankara Branch Address : Çukurambar Çankaya / Ankara Ankara Başkent OSB Production Branch : Malıköy Mah.23.Cad.No:3 Sincan Ankara Address Küçükbakkalköy Mahallesi, Küçük Setli Sokak, İstanbul Branch Address : Denge Panaroma No: 5/9 D:24 Ataşehir İstanbul
Website : www.katmerciler.com.tr
E-mail : [email protected] Capital : 25.000.000 TL Paid-in Capital : 25.000.000 TL
Company’s partnership structure is as follows and İsmail Katmerci is the ultimate shareholder with his 46.11% share. Shareholders Share Amount (TL) Share Rate (%)
İsmail Katmerci 11.528.333 46,11 Halka Açık Kısım 9.071.667 36,29 Mehmet Katmerci 1.100.000 4,40 Furkan Katmerci 1.100.000 4,40 Havva Katmerci 1.100.000 4,40 Ayşenur Çobanoğlu 1.100.000 4,40 Total 25.000.000 100,00
Explanations on privileged shares and voting rights:
A group shares amounting to TL 2.000.000 nominal value has right to nominate for the Board of Directors. Each share amounting to TL 1 nominal value has one vote right.
Board of Directors:
Board Members has been elected for three (3) years at the 30 June 2016 dated Ordinary General Assembly Meeting and were registered on 14 July 2016 and announced on 20.07.2016 dated and 9119 numbered Turkish Trade Registry Gazette. Board Member’s duty term is shown as below however their resumes are not disclosed here because disclosed in Corporate Governance Principles Compliance Report.
Name Surname Title Duty Term İsmail Katmerci Chairman Of The Board 14.07.2016 14.07.2019 Mehmet Katmerci Vice President, General Manager 14.07.2016 14.07.2019 Oğuz Kağan Yüksel Board Member 14.07.2016 14.07.2019 Osman Nuri Filiz Independent Board Member 14.07.2016 14.07.2019 İbrahim Reyhan Özal Independent Board Member 14.07.2016 14.07.2019 Sayfa No:2 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
Authorities and Responsibilities of Board Members :
The authorities and responsibilities of the Board Members are determined in accordance with Articles 10, 11 and 12 of the Company's Articles of Association. The movements of the share prices within the period :
Each lot of Company shares which are traded in main market of İstanbul Stock Exchange (ISE) were traded amounting to TL 5,20 at lowest and amounting to TL 9,07 at highest within the period of 1 January 2016 - 31 December 2016. The market value of the Company was realized as amounting to TL 183.000.000 according to TL 7,32 closing price.
The development of the market value of the Company's shares during the period 01.01.2016 - 31.12.2016 is shown as below.
Katmerciler Market Value Graph (TL 1000)
2. HUMAN RESOURCE POLICY, EMPLOYEE STATUS AND ORGANIZATIONAL STRUCTURE Human Resource Policy
The Company has adopted and implemented polices stated as below ;
Providing an efficient and safe working environment to ensure that our employees are proud of our company, Providing continuous training and self-improvement opportunities, Protecting the pecuniary and non-pecuniary rights of our employees, Planning a good career and bringing existing potential to the top level, Implementing transparent and open management policy, Improving and enhancing human resource policies continuously, Protecting and providing equal opportunity among employees, Programming and implementation of production tools, equipment and control and supervision of employees to ensure Job Safety, Preventing work accidents and occupational diseases,
Sayfa No:3 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
Organizational Structure
Finance Manager
Financial Accounting Accounting Cheif Coor. Manager
Management Human Resources Representative Chief
Procurement Manager
Elec. & Electronic Manager
IT Manager International
Project Trade Coor. Manager
Production Logistics and Institution Investor Planning Manager Operation Management Relations Manager Commitee Overseas Sales Director North Africa Area Board of Executive General Manager Directors Booard Manager R&D Manager Overseas Area Audit Commitee Executive Sales Manager Assistant Private Sale s Manager Overseas Area Early Detection of Sales Manager Risk Commitee Ankara Factory Manager Ankara Area Manager Domestic Sales Manager Marmara Area Manager Project Design Manager
Quality & Quality Contol OversalesTechnical Service Manager Cheif Production Assistant Manager
Production Production Cheif Manager
Dyehouse Cheif
Employee Status and Employee Benefits
As of 31 December 2016, 353 people has been employed by the Company which was 349 as at 2015.
Company has amounting to TL 3.498.780 severance pay liability as of 31.12.2016.
Sayfa No:4 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
3. COMMITTEES ORGANIZED BY BOARD MEMBERS AND SENIOR EXECUTIVE Committees Organized By Board Members and Independent Audit
Company’s executive committee was established on 21.11.2012 with 2012/29 numbered board decision.
Executive Committee Name Surname Title Mehmet Katmerci Executive President / General Manager Furkan Katmerci Deputy Chief Executive Officer
With the Board of Director’s 01.07.2016 and 2016/21 numbered decision;
In accordance with the Capital Markets Board's Series: II-17.1 "Communiqué on the Determination and Implementation of Corporate Governance Principles" and the Company's Articles of Association;
- Independent Board Members Mr. Osman Nuri Filiz and Mr. İbrahim Reyhan Özal to be elected as audit committee members, Mr. Osman Nuri Filiz to be preside to committee,
- Independent Board Members Mr. Osman Nuri Filiz, Mr. İbrahim Reyhan Özal and Investor Relations Department Executive Mr. Musa Karaca to be elected as corporate governance committee members, Mr. İbrahim Reyhan Özal to be preside to committee,
- Independent Board Members Mr. Osman Nuri Filiz, Mr. İbrahim Reyhan Özal to be elected as early detection of risk committee member, Mr. Osman Nuri Filiz to be preside to committee in accordance with the Communiqué on the determination and application of Corporate Governance Principles Serial: II-17.1 of the Capital Markets Law and Article 378 of the Turkish Commercial Code, has been decided.
Independent Audit
The Company has elected AC İstanbul Uluslararası Bağımsız Denetim ve SMMM A.Ş. as the independent auditing company in the calendar year 2016 with the 04.02.2016 dated Board Decision in accordance with Auditing Committee’s 04.02.2016 dated and 2016/01 numbered offer and the offer was accepted by stakeholders at the 2015 Ordinary Meeting Of The General Assembly held on 30.06.2016 and registered by İzmir Commercial Registry Office on 14.07.2016.
Senior Executive
There was not any change in Company management during the period. Company Executives are as follows; Professional Name Surname Title Profession Experience Vice President of The Executive Board, Mehmet Katmerci Businessman 24 Years General Manager, Executive President Furkan Katmerci Deputy Chief Executive Officer Businessman 5 Years Gökmen Ölçer Financial Coordinator CPA 24 Years Mechanical İsmail Hakkı Kırkıl Overseas sales Director 27 Years Engineer Sayfa No:5 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
4. FINANCIAL BENEFITS TO BOARD OF DIRECTORS AND EXECUTIVES
The amount and nature of the benefits to be provided to the Board Member are determined annually by the Ordinary General Assembly according to the Company's Articles of Association. The Board Members are paid a monthly salary within the framework of the Board Decision. In the period of 01.01.2016 - 31.12.2016, a total gross payment amounting to TL 5.630.460 was made which includes amounting to TL 4.678.898 to executives and amounting to TL 951.562 to board members.
5. CHANGES AND REASONS OF THE ARTICLES OF ASSOCIATION WITHIN THE PERIOD
There was not any amendments in the Company's Articles of Association in the period of 01.01.2016 - 31.12.2016.
6. QUALIFICATION AND AMOUNT OF CAPITAL MARKET INSTRUMENTS ISSUED IN THE PERIOD
In the period of 01.01.2016 - 31.12.2016, the Company applied to the Capital Markets Board on 21.03.2016 with the purpose of issuing amounting to TL 100.000.000 Private Sector Bonds with a maturity of 1 year and paying interest on a quarterly basis to be sold to qualified investors outside the stock exchange and as a result of the application, the Board Issuance Certificate was approved on 15.04.2016.
Company has been sold amounting to TL 36.000.000 nominal valued and 365 days term floating rated bonds to qualified investors on 10.05.2016 over the Oyak Yatırım Menkul Değerler A.Ş. according to related issue document. The coupon payment dates for the bond issue are 09.08.2016, 08.11.2016, 07.02.2017 and 10.05.2017 and the first coupon payment was made on 09.08.2016, the second coupon payment was made on 08.11.2016 and the third coupon payment was made on 07.02.2017. The interest rate for the fourth coupon was determined as 3.9629 %. The redemption for the issue will be made on 10.05.2017.
Company has been sold amounting to TL 12.000.000 nominal valued and 365 days term floating rated bonds to qualified investors on 10.08.2016 over the Oyak Yatırım Menkul Değerler A.Ş. according to related issue document. The coupon payment dates for the bond issue are 09.11.2016, 08.02.2017, 10.05.2017 and 10.08.2017 and the first coupon payment was made on 09.11.2016, the second coupon payment was made on 08.02.2017. The interest rate for the fourth coupon was determined as 3.9425 %. The redemption for the issue will be made on 10.08.2017.
The Company has realized redemption and the fourth coupon interest payment on 01.02.2016 of Financial Bill amounting to TL 20.000.000 which was issued in 2015.
7. RESEARCH AND DEVELOPMENT ACTIVITIES
The Company has worked on 32 projects in the period of 01.01.2016 - 31.12.2016. 15 of projects have been completed and 17 projects still ongoing. For all of these projects, R&D expenditures amounting to TL 6.924.513 have been realized within related period. The amounting to TL 5.424.459 of these expenditures are development projects and are capitalized. The remaining amount TL 1.500.054 are research project and booked as an expense.
Sayfa No:6 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
8. COMPANY ACTIVITIES AND SIGNIFICANT DEVELOPMENTS RELATED TO ACTIVITIES
a) Information on investments made in the related accounting period
The Company has made a total of TL 16.282.393 investment in the related accounting period. The amounting to TL 5.424.459 part is R&D investment and the the remaining part of this amount is related with investment has been announced in Public Disclosure Platform on 01.03.2011, construction of the factory building which is located in Ankara Capital City Organized Industrial Zone has been announced in Public Disclosure Platform on 07.12.2015 and purchased land which is located in Ankara Capital City Organized Industrial Zone has been announced in Public Disclosure Platform on 23.03.2016.
b) Information related to Company's internal control system and internal audit activities and the opinion of the managing body on this subject
Group is auditing by Audit Committee and the Early Detection of Risk Committee established within the Board of Directors regarding subjects as compliance with legislations, accurate and timely financial reporting and operational efficiency within the framework of the Corporate Governance Principles and necessary improvements are made to ensure coordination among the group companies.
c) Information on Company’s direct and indirect subsidiaries
The main activities of the companies included in the consolidation and the participation rates are as follows:
31.12.2016 31.12.2015 Subsidiaries Main Activity (%) (%) Gimkat Araç Üstü Ekipman Sanayi ve Ticaret On-Board Equipment 100,00 100,00 A.Ş. Production Katmerciler Profil Sanayi ve Ticaret A. Ş. Painting Work 100,00 100,00 Isıpan Otomotiv ve Üst Ekipman Metal Makine Weld Work 95,67 95,67 San.ve Tic. A.Ş.
The consolidation has realized within parent Katmerciler Araç Üstü Ekipman Sanayi ve Ticaret A.Ş.
The accounting policies applied by the companies included in the consolidation have been adapted to the parent company's accounting policies. All intra-group transactions, balances, income and expenses have been eliminated in consolidation.
Sayfa No:7 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
d) Information on Company’s reacquired shares
1. Company re-acquired amounting to TL 16.000 nominal valued shares to amounting to TL 38.827 value on 27.01.2014 according to in accordance with share repurchase program mentioned in 27.12.2013 dated and 2013/29 numbered Board Decision and this transaction has been announced in Public Disclosure Platform. Share buyback program was terminated with the 23.05.2014 dated and 2014/17 numbered Board Decision and has been announced in Public Disclosure Platform on the same date.
2. Company re-acquired amounting to TL 35.099 nominal valued shares to amounting to TL 199.946 value on 22.07.2016, amounting to TL 16.510 nominal valued shares to amounting to TL 97.723 value on 25.07.2016, amounting to TL 43.000 nominal valued shares to amounting to TL 289.114 value on 24.08.2016, amounting to TL 45.000 nominal valued shares to amounting to TL 303.039 value on 29.08.2016, amounting to TL 33.500 nominal valued shares to amounting to TL 232.648 value on 15.12.2016 as a result in total amounting to TL 189.109 nominal valued shares to amounting to TL 1.161.298 value according to in accordance with share repurchase program mentioned in 22.07.2016 dated and 2016/24 numbered Board Decision and all these transactions were announced in Public Disclosure Platform
e) Information on special audit and public audit within the accounting period
The Company was signed full approval contract with FK Yeminli Mali Müşavirlik Ltd. Şti. on 20.01.2016. There was not any public audit during the related accounting period.
f) Information on whether the targets set in past have been met or not and whether General Assembly Resolutions have been fulfilled or not
The Company has reached the targets set in the previous periods and has fulfilled the General Assembly Resolutions.
g) Information on the extraordinary general assembly held during the year
There was not any extraordinary general assembly was held during the year.
h) Donations, charities and social responsibility projects made by the Company in 2016
The Company made a donation amounting to TL 440.000 in the period of 01.01.2016 - 31.12.2016. In the General Assembly, shareholders are informed regarding donations and charities that the company has made during the related periods. (31.12.2015: TL 48.921)
i) All other precautions taken or avoid on behalf of group company, with parent company, subsidiary company or directed by parent company
The loyalty reports prepared by Gimkat, Isıpan and Profil’s board of directors are passed from the Company’s board of directors and it has been determined that there are no transactions that are not in compliance with the legislation in this frame.
Sayfa No:8 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
j) If the Company is a part of Group, the legal action mentioned in article (ı) is made and precaution are taken or not, for each legal action, hether an appropriate return action is being taken or not and if damage from taken or untaken decision is ofset tor not
There was not any action taken against the legislation.
k) Legal activites
- Lawsuits filed against the Company that could affect the Company's financial position and operations
There is 2 employee claim lawsuits filed against the Company amounting to TL 45.772 however the amount and content that will not affect the company's financial position.
- Administrative and judicial enforcement against Company and Board of Directors
There was not any administrative and judicial enforcement against Company and Board of Directors.
9. PRODUCTION AND SALES QUANTITIES Company manufactures its production in production facility which is located in 10032 Sokak No:8/10 Çiğli – İzmir address. A total of 581 pieces of equipment were produced in the year 2016.
01 January 2016 01 January 2015 Production Quantity 31 December 2016 31 December 2015 Hydraulic compacted garbage truck 177 392 Fuel tanker 77 41 Water tanker 61 141 Dumper body 60 76 Fire truck with portable or fixed ladder 57 99 Sewage truck 34 23 Street sweeper 30 47 Fire sprinkler 30 5 Fire rescue vehicle 14 16 Armed loader backhoe 11 24 Armed excavator 5 - Riot control vehicle 5 337 Low bed 5 - Breakdown crane 4 9 Mobile maintenance vehicle 4 26 Other equipment 7 67
Total Production Quantity 581 1303
Total Production Quantities Total Sales Quantities
1303 1266 1500 1500 1000 581 1000 649 500 500
0 0 Aralık 2016 Aralık 2015 Aralık 2016 Aralık 2015
Sayfa No:9 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
01 January 2016 01 January 2015 Sales Quantity 31 December 2016 31 December 2015 Hydraulic compacted garbage truck 202 358 Fuel tanker 77 44 Water tanker 70 132 Dumper body 67 98 Fire truck with portable or fixed ladder 62 75 Sewage truck 34 40 Street sweeper 30 - Fire sprinkler 27 53 Fire rescue vehicle 24 7 Armed loader backhoe 18 12 Armed excavator 11 24 Riot control vehicle 5 - Low bed 5 - Breakdown crane 5 336 Mobile maintenance vehicle 5 9 Other equipment 7 78
Total 649 1266
10. FINANCIAL POSITION AND ANNUAL PERFORMANCE As of December 31, 2016, some base ratios with comparative figures are as follows.
(TL) 31.12.2016 31.12.2015 Sales Revenue - Net 144.583.597 310.672.906 Export Revenue 64.101.416 115.716.922 Gross Sales Margin 56.436.465 73.893.456 Gross Profit Margin 39,03% 23,78% Operating Profit 37.208.640 45.747.758 Operating Profit Margin 25,74% 14,73% Ebitda 37.733.829 47.323.424 Ebitda Margin 26,10% 15,23% Pre-Tax Profit 11.558.763 23.749.946 Net Profit 9.601.472 18.629.856 Net Profit Margin 6,64% 6,00%
(TL) 31.12.2016 31.12.2015 Current Assets 224.326.660 177.197.627 Non-Current Assets 69.037.189 51.477.313 Total Assets 293.363.849 228.674.940 Short Term Liabilities 158.989.222 111.129.914 Long Term Liabilities 62.199.402 54.865.376 Equity Capital 72.175.225 62.679.650 Total Liabilities 293.363.849 228.674.940 Financial Liabilities 164.776.461 102.342.439 Investment Expenditures 16.282.393 6.173.544
Sayfa No:10 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
LIQUIDITY RATIOS 31.12.2016 31.12.2015 CURRENT RATIO 1,41 1,59 TRADE RECEIVABLES/ASSETS 0,34 0,33
FINANCIAL POSITION RATIOS TOTAL LIABILITIES (S.T.+L.T.) / TOTAL ASSETS 0,75 0,73 EQUITY / TOTAL ASSETS 0,25 0,27 FINANCIAL LIABILITIES / EQUITY 2,28 1,63 TOTAL LIABILITIES / EQUITY 3,06 2,65
RATIOS REGARDING PROFITABILITY GROSS SALES MARGIN / NET SALES 0,39 0,24 EBITDA MARGIN 0,27 0,15 NET PROFIT MARJI 0,07 0,06 OPERATING PROFIT MARGIN 0,26 0,15
Determination of whether the Company's capital loss or whether debts are sunk and management body evaluations
The company is not heavily in debt, preserves its capital.
Export
In the period of January 2016 – December 2016, Automotive Primary Industry Exports reached to USD 14.82 billion, Subsidiary Industry Exports which including our company reached to USD 8.97 billion and total exports of the automotive industry realized around USD 23.80 billion.
Total Automotive Industry exports shrink by 18,24% and Subsidiary Industry exports shrink by 3,81% in In the period of January 2016 – December 2016 (Turkish Exporters' Assembly). Company exports decreased by half in 2016 due to the fact that the weighted orders were taken from domestic and public tenders.
The On-Board Equipment Sector which Company is included considered as the Sub-Sector of the Automotive Subsidiary Industry.
Company’s domestic and overseas production and sales figures are statistically included in the automotive supplier industry figures.
AUTOMOTIVE SUBSIDIARY INDUSTRY EXPORTS USD 1 January - 31 December 2016 1 January - 31 December 2015 Turkey 8.974.042.485 8.644.790.795 Katmerciler 21.822.219 43.255.133 Katmerciler's Share 0,24% 0,50% Source: TİM (www.tim.org.tr)
Sayfa No:11 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
11. DIVIDEND POLICY The Company's profit distribution policy created with Board of Directors dated 25.02.2011 and numbered 2011/12 decision was revised with Board of Directors dated 29.04.2014 and numbered 2014/13 decision in the framework of II.19 1 numbered Profit Distribution Disclosure published on 25.02.2011 in accordance to 6362 numbered Capital Market Law and was accepted at the Ordinary General Assembly meeting of the year 2013 held on 30.05.2014.
12. FINANCIAL RESOURCES AND RISK MANAGEMENT POLICIES Company's main financing sources are; funds created as a result of activities and short-term and long-term loans obtained from financial institutions established in the country.
Early Detection Of Risk Committee was established by 01.07.2016 dated Board Decision in compliance with Article 378 of the Turkish Commercial Code No. 6102 to identify risks might imperil Company’s existence, development and continuance and to take precautions regarding the risks identified and to manage the risks. The Committee President is Independent Board Member Mr. Osman Nuri Filiz and other Member is Independent Board Member Mr. İbrahim Reyhan Özal. The Early Detection Of Risk Committee reports bi- monthly and reports relevant information to the Board of Directors.
Explanations regarding the Company's financing and risk management policies are disclosed in note 39 at 2016 year-end audit report.
Credit Risk
Credit risk is the risk that a customer or other party will not meet its contractual obligations. The Company’s collection risk is mainly based on trade receivables. The risk of not being collected is low because significant part of trade receivables consist of the most important truck frame producers of the world and Turkey and overseas receivables are collecting in advance or by letter of credit.
Liquidity Risk
Company manages liquidity risk by monitoring cash flows regularly and matching of the maturities of financial assets and liabilities.
Prudential liquidity risk management refers to power holding sufficient cash, sufficient amounts of credit facilities and funding resources and the ability to close market positions.
The risk of funding existing and future debt requirements is managed by perpetuate accessibility to sufficient number and reliable creditors.
Interest Rate Risk
The Company is exposed to the interest rate risk arising from the changes in interest rates due to interest bearing assets and interest paid liabilities. This risk is managed by using in-balance sheet methods or using derivative instruments when necessary by balancing the amounts and maturities of interest rate sensitive assets and liabilities.
Sayfa No:12 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
Exchange Rate Risk The Company is exposed to foreign currency risk arising from various income and expense items denominated in foreign currencies and foreign currency borrowings, receivables and financial liabilities.
If necessary, Company allowed to be exposed to exchange rate risk an acceptable level by trading foreign currency at Company’s spot rates in terms of monetary assets and liabilities.
Sometimes, Company reduces the risk by using derivative products in order to minimize the exchange risk from foreign currencies.
Operational Risks
Katmerciler might expose to risks arise from production, quality-assurance, employee, productivity and information systems which has operational risk potential. The Company closely monitors all processes from production to sales and after sales services and manages them according to the determined targets. In addition, changes in legislation are regularly monitored by the Company's Legal and Financial Advisory Department and necessary information is provided to prevent the occurrence of legal risks.
13. FORECASTS REGARDING THE DEVELOPMENT OF THE COMPANY Company’s priority target for the coming period is to realize “fastest, best, best quality" production according to competitors. Company taking automation-enhancing precautions in this framework, continuing market research in Europe regarding high value-added equipment and planning to accelerate investments towards the defense industry. Company predicts its profitability target as 15 % and above Ebitda ratio in 2017 and the following years.
14. DECENTRALIZED ORGANIZATIONS Company has branches for sales and marketing activities located in Kızılırmak Mah. 1445 Sok. No: 2b/82 The Pragon İş Merkezi Çukurambar – Çankaya / ANKARA and Küçükbakkalköy Mahallesi, Küçük Setli Sokak , Denge Panorama Plaza No:5 D:24 K:6 Ataşehir İstanbul. In addition, has a factory in the Ankara Başkent organized industrial zone in order to make production for the defense industry.
15. CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT Statement of Compliance with Corporate Governance Principles :
As usual, Company continues to expand its Corporate Governance approach in line with the implementation of Corporate Governance Principles. In future activities, Company will continue make necessary works and show the necessary sensitivity in Corporate Governance activities and practices and ensure compliance with the CMB’s Serial: II No: 17.1 numbered Corporate Governance Communiqué. Katmerciler believes in full compliance with the Corporate Governance Principles. However, full compliance with certain Corporate Governance principles has not been achieved yet.
As an example; a target rate and time for female Board members has not been determined yet.
Board members’ serve outside the company are restricted as explained in section 4.6.
Compensation policy has not been established for company employees.
Sayfa No:13 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
In order to comply with the Corporate Governance Principles, necessary works will be carried out considering the developments and applications in the legislation in 2016.
SECTION I - SHAREHOLDERS
1.1. Investor Relations Unit
The exercise of shareholder rights is in compliance with legislations, Articles of Association and other intercorporate regulations and the precaution are taken to ensure that these rights are exercised. Financial Affairs Coordination Department carries out relations with shareholders in Katmerciler. The main purpose of the Company is to ensure that shareholders' right to information is fulfilled fairly and completely. In addition, the Company fulfills its shareholders' rights arising from the partnership in a timely and complete manner.
The main activities carried out by the Investor Relations Unit are as below :
•To ensure that records relating to shareholders are kept in a safe, secure and up-to-date.
•To meet the shareholders’ oral and written information requests regarding the Company, except for information not disclosed to the public, confidential and business information.
•To ensure that the General Assembly Meeting is held in accordance with the applicable legislation, the Articles of Association and other intercorporate regulations.
•To prepare the documents that shareholders could use in the General Assembly Meeting.
• To ensure that the voting results are kept in record and the reports on the results are sent to the requesting shareholders.
•To observe and monitor all kinds of issues related to public disclosure, including legislation and the Company's information policy.
•To prepare the content of the Investor Relations section of the Company's corporate website (www.katmerciler.com.tr), to update it as frequently as possible, and to ensure that shareholders can access Company information quickly and easily via the internet.
•To inform the public by announce “Special Circumstances Disclosures” to ISE through the PDP (Public Disclosure Platform) by taking into consideration the CMB's Serial II, No: 15.1 " Special Circumstances Communiqué ".
•To follow the amendments in the legislation related to the Capital Markets Law and to present them to the attention of related units within the Company.
•To represent the Company in the presence of Capital Markets Board, İstanbul Stock Exchange (ISE) and the Central Securities Depository.
Sayfa No:14 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
Employees responsible for the Investor Relations unit:
Name License Title License Certificate Type Surname Number Investor Relations Capital Market Activities Level 3 License, 207113 / Musa Karaca Manager Corporate Governance License 702649 Gökmen Ölçer Financial Coordinator Atanur Onur Accounting Manager
Telephone : 0232 376 75 75 Fax : 0232 394 01 97 e-mail : [email protected]
Informing investors in 2016
In 2016, all written and oral applications made to the Investor Relations Unit in the Company were answered and the statistics are as follows:
Number of notifications by phone calls : 262 Number of notifications by email : 41 Number of information at Company Headquarters : 6
5 reports prepared by the Investor Relations Unit on the activities carried out in 2016 has been presented to the Board of Directors for review by the Corporate Governance Committee
1.2. Use of Shareholders' Right to Get Information There is no distinction between shareholders in the use of the right to receive and review information.
In order to expand the right of shareholders to acquire information and exercise their rights in a sound manner, financial statements as well as necessary information and documents are continuously updated and presented to the shareholders as electronic corporate web site of the Company (www.katmerciler.com.tr).
Written and verbal information requests received from shareholders during the period were responded either verbally or in writing, without discrimination among the shareholders within the scope of the Capital Markets Legislation.
Special case disclosures, financial statements and other information about the Company which are obliged to be sent to BIST within the scope of PDP are also sent electronically signed. Article 14 of the Articles of Association provides for the appointment of a special auditor.
With the advice of the Audit Committee, Ac İstanbul International Independent Auditing and CPA Company is proposed by the Board of Directors and elected by the general assembly as an independent auditor for the year 2016.
1.3. General Assembly Information
All of the group A shares of the company are nominative, group B shares are bearer shares. The Company's 2015 Annual Ordinary General Meeting was held on 30 th June 2016 at the headquarter of the Company. 2015 Annual Ordinary General Assembly Information Document, Meeting Minutes and List of Attendees in the Meeting are published on our website (www.katmerciler.com.tr).
Sayfa No:15 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
1.4. Voting Rights and Minority Rights
The voting procedure at the General Assembly Meetings is announced to shareholders at the beginning of the meeting. The Company avoids complicating applications for voting rights and provides the opportunity to use each share in the easiest and most convenient way possible.
The Company does not have a concession to the Articles of Association for the use of voting rights. Each share has one vote right. Among the shareholders of the Company, there is no legal entity that the Company participates in. There is not any domination for preventing non-shareholder to vote on behalf of a representative. The stakeholders representing minority interests form the majority together with the stakeholders, with the participation in the General Assembly. Cumulative voting is not included in the Articles of Association.
1.5. Minority Rights
Within the framework of Article 15 of the Company's Articles of Association referring to Turkish Trade Law numbered 411, Shareholders holding 1/20 of the capital of the company by stating the justification and agenda of the General Assembly to be called to the meeting or if the General Assembly is already convened, They may ask the Board of Directors to put matters that they want to be linked into consideration.
1.6. Profit Distribution Policy and Profit Distribution Time
With the decision of our Board of Directors dated 25.02.2011 and numbered 2011/12, the profit distribution policy of our company for 2010 and the following years was established. However, this time in the framework of the Communiqué II.19 1, dated January 23, 2014 profit share notification published in the light of the Capital Markets Law No. 6362, according to the decision of our Board of Directors dated 29.04.2014 and numbered 2014/12, the dividend distribution policy has been revised as follows.
In principle, the Company distributes at least 20% of its distributable profit each year as cash and / or bonus shares to its shareholders. Profit share is distributed equally to all of the existing shares at the date of distribution, regardless of their issuance and acquisition dates in the case of extraordinary economic developments, the profit share below the above mentioned ratio may be distributed or not distributed at all. In this case, it is decided with the decision of the Board of Directors and announced to the public with a special case explanation.
The Board of Directors annually submits a proposal on dividend distribution within the framework of profit distribution policy and submits it to the approval of the General Assembly. In case of general assembly or authorization, the board of directors may decide to distribute dividends in accordance with Capital Markets regulations. In the case of deciding to pay dividends in installments, Installment payments shall be distributed equally to all of the existing shares as of the date of payment, regardless of their issuance and acquisition dates.
If the dividend distribution proposal of the Board of Directors is approved by the General Assembly, it is valid to start dividend distribution on 31 st May. The General Assembly may determine the profit share distribution date provided that it does not exceed the last day of the accounting period in which the General Assembly meeting in which the profit distribution decision is given is made. Our company does not distribute profit share advance during the year.
In accordance with Article 21 of the Company's Articles of Incorporation entitled “Determining and Distributing Profits” has been edited according to The Turkish Commercial Code and the Capital Markets Law.
Sayfa No:16 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
1.7. Transfer of Shares
The Company's capital consists of 2.000.000 nominative shares of group A and 23.000.000 bearer shares of group B. 9.80.000 bearer shares of group B are traded in İstanbul Stock Exchange (BIST). According to the Company's Articles of Association; Owners (Including ownership through inheritance and grant) of A group nominative shares cannot sell or transfer their shares in their hands to others without the written consent of the company's board of directors. The Board of Directors has the right to refuse such requests even if the reasons are justified. Group A of nominative shareholders may change their shares to group B bearer shares with the condition of obtaining the written approval of the board of directors. There are no restrictions on the group B bearer shares and the transfer of these shares is subject to the provisions of the Turkish Commercial Code, Capital Markets Law and other relevant legislation.
PART II – PUBLIC DISCLOSURE AND TRANSPARENCY
2.1. Company Disclosure Policy
Purpose
Katmerciler sees itself as responsible to all of its stakeholders, as well as the investor relations, as it is the case in every area it operates. Katmerciler puts forward an open and transparent attitude towards all investors and stakeholders with a share certificate, as well as to relevant public authorities and financial and capital market institutions. It acts in accordance with corporate citizenship principles, taking the form of natural behavior. This approach is also the basis of Katmerciler's Information Policy.
Purpose in Information Policy; taking into account the company's strategies and performance, to share Katmerciler’s Past performance, future expectations, strategies, goals and vision outside of trade secrets with the public, authorized institutions, existing and potential investors and shareholders on an equal basis, withn the framework of Katmerciler's financial information is based on generally accepted accounting principles and International Financial Accounting Standards (IFRS), Capital Markets Law declaring accurately, fairly, timely and detailed, ,it provides a continuous, effective and open communication platform by the Investor Relations Unit. Katmerciler is in compliance with the regulations of the Capital Markets Board (CMB) and the Istanbul Stock Exchange (BİST) in all applications for enlightening the public.
Authority and Responsibility
The Board of Directors is responsible for establishing, supervising and updating the information policy. The Disclosure Policy approved by the Board of Directors is presented to the information of the shareholders and disclosed to the public on the website. The Financial Affairs Coordination Office has been tasked with monitoring all aspects of public lighting.
Methods and Tools
Within the frame of CMB and BİST and TCC regulations; Katmerciler uses the following methods and tools when determining the public lighting and information policy: — Special case statements to BIST (PDP notifications are made simultaneously in electronic environment.) — Financial reports submitted periodically to BİST (In the electronic environment, PDP notifications are made simultaneously.) —Annual and interim activity reports (published in print and on the company's website www.katmerciler.com.tr) — Corporate website (www.katmerciler.com.tr). — Informational and promotional documents prepared for investors. — Statements, circulars, announcement texts and documents that must be prepared in accordance with CMB regulations. — Press releases and press bulletins made through written and visual media. —Announcements and announcements made through Turkish Trade Registry Gazette and daily newspapers — Bulletins for direct investor and shareholder information when necessary.
Sayfa No:17 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
Disclosure of Special Circumstances to the Public
Disclosures of material events are disclosed to the public in accordance with the “Notification of special cases” of CMB Communiqué Series II-No: 15.1. Disclosures of material events is written Accurate, understandable, sufficient, and misleading statements to help people and organizations to make informed decisions. These disclosures cannot be used for advertising purposes. When there are developments that may affect the capital market instruments, the disclosure to be made to the public is prepared by the Investor Relations Unit, Work flow and approval procedure signed by the Accounting Manager, Financial Coordinator and General Manager and notified to the BİST until 09.00 on the same day or the next day.
Special case disclosure and financial statements are sent to the Public Disclosure Platform system (PDP) with electronic signature under BIS and CMB regulations. At the latest, the announcement will be published on the company website on the next business day after the announcement.
The site includes our company history, current and historical information. Highlights of the Investor Relations section of the Company website are summarized below: 1-) Shareholder and Investor Information 2-) Privileged Share 3-) Financial Reports 4-) Borrowing Tool Issuer and Credit Notation 5-) Corporate Identity and Management 6-) Special Case Disclosures 7-) Public Offering Documents Security measures have been taken to prevent the information published in our website from being changed from outside.
Disclosure of Financial Statements to the Public The Company Financial Statements are prepared in accordance with International Financial Reporting Standards (IFRS) within the framework of the provisions determined by CMB. Annual and semi-annual financial statements are disclosed to the public through independent auditing in accordance with International Auditing Standards. Financial statements and footnotes are submitted to the Board of Directors for approval before the announcement to the public, from the Audit Committee, within the framework of CMB regulations. After signing the declaration of accuracy, financial reports, footnotes and independent audit report are forwarded to BİST (PDP) in line with CMB and BİST regulations financial tables, footnotes and the Independent Audit Report can be accessed from Katmerciler's website.
Announcement of the Activity Report to the Public
Katmerciler annual report is prepared in accordance with international standards, CMB regulations and corporate governance principles. The annual report is passed by the Board of Directors after it is prepared by the Investor Relations Unit. Printed copies of the activity report, which can be accessed at the latest from the General Assembly three weeks in advance, can be obtained from the Investment Relations unit.
In addition, interim activity reports prepared on quarterly basis are announced to the public via PDP and presented to the investors' information on the company's website.
Web Site
Katmerciler website is being used effectivley in Turkish and English for public disclosure, as a communication environment in which share and stakeholder share performance can be monitored in an up-to-date and easy manner with detailed and up-to-date content on company activities.
Sayfa No:18 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
Announcements and Notice
According to the Capital Markets Law, the Turkish Commercial Code and the Articles of Association of Katmerciler, announcements regarding the General Assembly Meeting, Amendment of the Articles of Association, capital increase and dividend payment are made through Trade Registry Gazette, PDP and company website. The Investor Relations unit monitors the news that may be positively or negatively affecting the Katmerciler shares in the written or visual media, inform the public in detail in accordance with the developments experienced. Only people authorized to make disclosures on behalf of the company may provide information to the press and the public.
Information Authorities Those who are authorized to make disclosures about the above information, except for material disclosures and publicly disclosed information are Chairman of the Board of Directors and General Manager.
Contact with Capital Markets Participants
According to Article 11 of Corporate Governance Communiqué Series II-17.1 which was published in the Official Gazette dated January 3, 2014 of the Capital Markets Board, In order to operate in accordance with the General Directorate of the Company and to ensure communication between the companies and investors, in accordance with the decision of the Board of Directors dated 01.07.2016 and numbered 2016/21, creating an Investor Relations department, Financial Affairs Coordinator Gökmen Ölçer, Accounting Manager Atanur Onur and Investment Relations Manager Musa Karaca are charged for the task.
In 2014, an e-mail address [email protected] was created in order to answer investors' written questions more quickly.
2.2. Material Disclosures
The Company has made 38 material disclosures during the period. There have been no cases where the CMB or BİST requested additional disclosure regarding the disclosures made to the public during the relevant period. As the Company is not a capital market instrument quoted abroad, there are no exceptional disclosures other than BİST. The CMB has not enforced any special case disclosures since it was made during the period prescribed by law.
2.3. Company Web Site and Content
The Company actively uses the corporate web site www.katmerciler.com.tr as required by the CMB Corporate Governance Principles in order to inform the shareholders and the public. CMB Corporate Governance Principles' are all included in the website.
The Investor Relations Department is responsible for preparing the content of the Investor Relations section of the website, updating the changed information, and adding additional information. Efforts to better serve the site are continuing.
In addition to the obligatory information required under the legislation, in the web site of the company there are trade registry information, partnership and management structure, explanations about the shares of the concession, latest version of the company's articles of association, special case disclosures, financial reports, annual reports, Prospectuses and other public lighting documents, general assembly documents, proxy voting form, profit distribution and information policies. In this context, the information of the last five years is included in the website.
Sayfa No:19 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
2.4. Disclosure of Real Person Ultimate Controlling Shareholder (s)
Our company’s real person ultimate controlling shareholder with %46,11 of shares is İsmail Katmerci. Our controlling shareholder is publicly disclosed in the Company General Information Form of the Public Disclosure Platform.
2.5. Disclosure of Insider Information to the Public
It is important that all Company employees pay attention to the rules regarding the use of insider information in the absence of a balance between transparency and protection of Company interests. All necessary precautions are taken to prevent the use of insider information.
Information learned during the work, belonging to the Company, to be known by other than necessary people is undesirable for the company, information that may be considered trade secrets is considered as “Comapany Information”. All employees maintain Company information during and after working in Katmerciler, not directly or indirectly. None of Katmerciler may engage in any activity that would generate profits with the purchase and sale of Katmerciler shares based on insider information on account of his / her duties.
Managers where the company can access the quality of information that may affect the value of the capital market instruments; In the case of trading with the capital market instruments issued by the Company, these transactions are disclosed to the public. The disclosures are also posted on the Company's website.
Below is our list of Insider Learners prepared according to 31.12.2016.
BOARD OF DIRECTORS MEMBERS Name Surname Duty İsmail Katmerci Chairman of the Board Vice Chairman of the Board of Directors / General Manager / Chief Mehmet Katmerci Executive Officer Oğuz Kağan Köksal Board Member Osman Nuri Filiz Independent Board Member İbrahim Reyhan Özal Independent Board Member
RELATIVES OF BOARD MEMBERS Name Surname Duty Havva Katmerci Wife of İsmail Katmerci Ayşenur Çobanoğlu Daughter of İsmail Katmerci Tuğba Katmerci Wife of Mehmet Katmerci Olcay Köksal Wife of Oğuz Kağan Köksal Nezihe Köksal Daughter of Oğuz Kağan Köksal Bahadır Köksal Son of Oğuz Kağan Köksal Gülay Filiz Wife of O.Nuri Filiz H.İbrahim Filiz Son of O.Nuri Filiz Nagehan Yıldırım Filiz Daughter of O. Nuri Filiz Merve Özal Wife of İ.Reyhan Özal B.İrem Özal Daughter of İ.Reyhan Özal H.Ceyda Özal Daughter of İ.Reyhan Özal Y.Kerim Özal Son of İ.Reyhan Özal
Sayfa No:20 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
RELATIVES OF SENIOR EXECUTIVES Name Surname Duty Furkan Katmerci Deputy Chief Executive Officer Ayşe Tosun Katmerci Furkan Katmerci's Wife Gökmen Ölçer Financial Coordinator İsmail Hakkı Kırkıl Overseas Sales Director
AUDITOR/ INDEPENDENT AUDITOR/ LAWYER Name Surname Duty Cemal Öztürk Ac Bağımsız Denetim A.Ş. Alper Gün Ac Bağımsız Denetim A.Ş. Çağla Gönül Karabay Ac Bağımsız Denetim A.Ş. Gürsel Erkul Ilız FK YMM A.Ş. Erkan Gül FK YMM A.Ş. A.Buğra İlter Avukat
COMPANY EMPLOYEES Name Surname Duty Atanur Onur Accounting Manager of Katmerciler A.Ş. Mustafa Karamemiş Accounting Manager of Gimkat A.Ş. Erol Arık Chief Accountant of Katmerciler A.Ş. Musa Karaca Investor Relations Manager Fethiye Büker Finance Manager Tarkan Özateşoğlu Purchasing Manager Şahan Sümer Ankara Factory Manager Yaşar Ali Kamsız Export Sales Manager Omar Safar Export Sales Manager Erkan Yeğencik Domestic Sales Manager Faruk Ungan IT Manager Süleyman Mutlu Production Manager Rıza Aslan Technical Service Manager Aydın Akyüz Gimkat A.Ş. Eren Cinal Logistics Manager Serap Lor Quality Management Representative Gülden Han Planning Manager Samer Osman Export Sales Manager
Sayfa No:21 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
PART III - STAKEHOLDERS
3.1. Informing the Stakeholders
Taking into account that the Company will be in the Company's interest in long term cooperation with stakeholders, Respects and protects the interests that stakeholders have acquired through legislation, mutual agreements and contracts.
3.2. Participation of Stakeholders
‘Employees’ participation in management as stakeholders' is supported by the company with “suggestions, questionnaire, etc” in such a way that it does not interfere with its activities.
3.3. Human Resources Policy
Katmerciler Group; Since its inception, it continues to work in a humanistic manner based on the principle of keeping employees' commitment and satisfaction at the highest level. Efficient management of human resources is the basis of our human resources policy. Our fast-growing company manages human resources processes within the framework of corporate culture and ethical rules. The basic principles of human resources management in our Company are human dignity, competence (right person), career planning, science, equality of opportunity, fairness, impartiality and job security. As of the end of 2016, the total number of employees is 353.
3.4. Information About Customers and Suppliers
In relation to customers and suppliers; honesty, trust, consistency, professionalism, independence, respect for mutual interests are respected. It is aimed to fulfill customer needs and expectations fully in product production. Confidential and trade secret information of the company and personal information of employees and information of customers are kept confidential. The donations made by the company are announced to all stakeholders and to the public.
3.5. Social Responsibility
Protection of the environment and natural life, consumer rights and public health are sensitive to the issues and legal legislation issued in these matters. Cooperate with non-governmental organizations established for social responsibility.
PART IV – BOARD OF DIRECTORS
4. Structure of Board of Directors, Formation and Independent Members
According to the Articles of Association, the business and administration of the Company are held by the General Assembly within the provisions of the Turkish Commercial Code Is run by a Board of Directors consisting of at least five members to be elected from the candidates nominated by the shareholders. Number of Board Members is determined to make efficient and constructive work for board members, quick and rational decisions and enable them to effectively organize the formation and work of the committees. All members of the Board of Directors are required to be elected from among the candidates to be nominated as shareholders. The Company's Board of Directors consists of five members, two of them are independent. Mr. Mehmet Katmerci is a member of the Board of Directors as an Executive Member.
Sayfa No:22 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
Board Members
Name Surname Duty İsmail Katmerci Chairman Not in charge in execuitve board Mehmet Katmerci Deputy Chairman In charge in execuitve board Oğuz Kağan Köksal Member Not in charge in execuitve board Osman Nuri Filiz Member Not in charge in execuitve board. (Independent Board Member) İbrahim Reyhan Özal Member Not in charge in execuitve board. (Independent Board Member)
İsmail Katmerci - Chairman
He was born in 1949 in Konya. He is graduated from Istanbul Technical University. In 1982, he started his business life establishing Katmerciler Profil A.Ş. one of the groups company, for trading profile and sheet metal and in 1985, he established Katmerciler Araç Üstü Ekipman A.Ş. which is group’a Admiral Company for production. He still continues to serve as Chairman of the Board of Directors in Katmerciler.
İsmail Katmerci who is married and 3 children, has carried out 22 and 23rd semester the deputy of AKP Izmir, has made İzmir chamber of commerce parliamentary membership.
Mehmet Katmerci – Deputy Chairman
He started to work in the group in 1992 and worked in all departments of the company and came to the headquarters of the General Management and the Board of Directors in 2002. Mr. Mehmet Katmerci, who has made important contributions to the increase in the number of exports and production which the company has made in recent years, is still continuing his duty as Chairman of the Board of Directors and Chief Executive Officer.
Mehmet Katmerci who is married and has two children knows English at a good level.
Oğuz Kağan Köksal – Board Member
After completing primary, secondary and high school education in Kırıkkale, he entered Ankara University Faculty of Political Sciences. He graduated from the Department of Economics and Finance of this faculty in 1972 and was appointed as the Ministry of Finance's Accounting Controller. During his four years of service, he inspected and supervised General and Annexed Budget Administration, Accounting and Revenue Departments. Meanwhile, he wrote a book on Governmental Accounting Practice.
He was on duty district governorship Bozkurt and Cizre respectively. At the same time he took on mayorship in both counties. He served in the Deputy Governor of Gaziantep for 3.5 years and during this period he worked as Deputy Governor for 7 months because of the discharge of the Governor of Gaziantep. He was appointed as the governor of Tekirdağ in February 1988. He was appointed Governor of Malatya on April 9, 1990, Governor of Denizli on February 8, 1992, and Governor of Adana on April 18, 1996. Appointed to Bursa Governor on February 18, 2003. During the Governorship of Bursa, many projects such as Rural Development, Sevgi Village, Education and Sports Valley have been passed over for the past two years and have been awarded as the Governor of the Year. With the decision of the Council of Ministers dated 18 July 2005, he was appointed to Izmir Governor and started his duty on 29 July 2005. He was appointed chief police constable on 7 March 2007 with the decision of the Council of Ministers. On March 10, 2007, he started this assignment. Sayfa No:23 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
He served as deputy of Kırıkkale in the period of 24 and 25 ,he served as the President of the National Defense Commission of the Turkish Grand National Assembly in the period 24.
Koksal is married and has two children, who speaks moderate English and has an honorary doctorate degree from Ribat University in Sudan.
Osman Nuri Filiz – Independent Board Member
He was born in 1950, Çal. Graduated from Ankara University, Faculty of Political Sciences Department of Business Administration and graduated from Gazi University, Department of Industrial Engineering. He started his civil service in the Ministry of Internal Affairs in 1976. He worked as deputiy inspector in ,Turkish Electricity Administration, assistant specialist and specialist in State Planning Organization, Higher Education Student Loans and Dormitories Institution, Presidency of Family Research Association, 22nd term Denizli Deputy and Tariş Coordinator.
Mr Filiz is married and has two children who was in charge in Turkish Volleyball Federation board member, Sümerbank Manisa Mensucat A.Ş. board member.
İbrahim Reyhan Özal - Independent Board Member
He was born in 1965, London. Having completed his high school education in America, he graduated from higher education in Canada in 1984-1985 after two years. In 1989, he completed the Department of Electrical and Electronic Engineering of Boğaziçi University. He started his career in 1989 in Balsu Gıda A.Ş. as CEO assistant, after having various duties in Kuveyt Türk Katılım Bankası, Teksu Dağıtım Hizm A.Ş., Azizler Holding A.Ş. respectively, from 1993 to 1996, being a partner in Kaynak Döviz A.Ş. he has been in the financial sector. In 1996, establishing Dost Tekstil A.Ş. ve Dost Sigorta Hizmetleri Lts., as of today he continues his duty in these companies. At the same time, he continues his duty in Vadi Dış Ticaret A.Ş as a partner since 2009, and Yatırım Danışmanlık Ltd.Şti. since the begining of 2013.
Mr Özal is married and has three children who was in charged as a İstanbul deputy in 22nd term, member of Council of Europe Parliamentary Assembly between 2004 and 2007, member of TBMM EU Adjustment Commission and member of West European Union Parliamentary Assembly.
If for any reason one of the memberships is opened, the new member is appointed by the remaining members of the board of directors. Appointment process will be presented for the approval of the general assembly to be held first. In this way, the member appointed to the board of directors shall serve until the first general meeting to be convened, and in the case of approval of the general assembly, completes the period of the former member.
According to Corporate Governance Communiqué 4.2.8., for all board members, the executive liability insurance has been made.
The Company's Board of Directors has two independent members. All members are selected to represent certain shareholders. The Company benefits from the knowledge and experience of Board Members at the highest level.
Two persons submitted to the Board of Directors by the Audit Committee were designated as independent candidates and their independence criteria are also taken within the framework of the legislation and presented to the approval of the general assembly.
The declarations of independence of the independent members of the Board of Directors are given below.
Sayfa No:24 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
Board of Directors Activities
The Company's Board of Directors convened forty times during the year, All members of the Board of Directors have participated in the meetings and the decisions have been taken by a vote of unity and have not been a member of a dissenting opinion.
4.1. Qualifications of Board Members
The Company's Board of Directors is structured to provide the highest level of efficiency. Members of the Board of Directors carry the qualifications set forth by the CMB's Corporate Governance Principles.
4.2. Mission, Vision and Strategic Goals of the Company
Vision
Katmerciler; Growing together with its partners, employees, suppliers and customers, has set its main goal as being a global brand in the on-board equipment sector.
Mission
• With a production understanding based on customer happiness • With sales and after sales support, always protecting customer rights • Technological developments followed closely by a conscious • Always sensitive to environment and people in the working • Taking the power from the will and support of its employees • To achieve the best for our country, our customers, our employees, our business partners and our stakeholders • Continuing to grow in domestic and international markets, the mission of becoming a leader in the sector has made
Strategic Principles
• Concentration in defense industry
• To be dominant in the Africa and the Middle East fire truck and garbage truck market.
• To become Katmerciler brand more known in the on-board equipment sector in the world.
4.3. Risk Management and Internal Control Mechanism
The activities of our Company regarding risk management are carried out by the Financial Affairs Coordination Department under the coordination of the risk early determination committee. Our company is also regularly audited by the Certified Public Accountant and Independent Audit Organization, which has a full certification contract.
The findings obtained on the basis of both audit work are firstly shared with the Audit Committee and reported to the Board of Directors. The workflows and procedures of our company, authority and responsibilities of our employees within the framework of risk management and internal control system, are under the control within the framework of risk management and internal control system.
4.4 Authorities and Responsibilities of Board Members and Administrators
The authorities and responsibilities of the members of the Company's Board of Directors are clearly defined in the Articles of Association.
Sayfa No:25 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
4.5. Activity Principles of the Board of Directors
According to the Company's Articles of Association, the board of directors convenes at least once a month when the company requires business, but on the president and vice president's call. Each member may request the chairman to summon the board of directors in writing. Board meetings are held at the company headquarters. However, with the decision of the board of directors, the meetings can be held elsewhere. The meeting agenda of the Board of Directors is determined by the chairman of the board of directors. Changes may be made on the agenda with the decision of the Board of Directors.
4.6. Doing Business with the Company and Prohibiting Competition
The Chairman and the members of the Board of Directors, being engage in the business activities of the company in person or on behalf of others and to be partners with companies engaged in such business, are approved by the General Assembly within the scope of articles 395 and 396 of the Turkish Commercial Code.
4.7. Codes of Conduct
There is no distinction of race, ethnicity, nationality, religion or gender between company employees. Equal opportunity is provided to employees on equal terms, based on performance and efficiency in terms of salary and performance. Employees at work are provided with a safe and healthy work environment as well as opportunities to improve their careers. Mutual respect, trust and understanding of cooperation are essential in the relations among the employees. Employees can not use confidential and non-public information about the company for themselves or others. Employees are trained on individual and professional issues, as well as on natural disasters such as first aid, earthquake and fire. As a company, we support our employees on voluntary participation in social and social activities, and monitor the balance between business and private lives.
4.8. Number, Structure and Independence of the Committees Established in the Board of Directors
a- Audit Committee :
In the company,for the purpose of the duties and responsibilities of the Board of Directors are carried out in a healthy manner, Disclosure of the accounting system to the public through the audit of financial information and supervision of the operation and effectiveness of the internal control system, an audit committee has been formed from the members of the independent board of directors who are not in charge of the committee, and the distribution of the committee's duties is as follows . The Audit Committee held six meetings in 2016.
Name Surname Title Company Relation
Osman Nuri Filiz Committee President Independent Board Member İbrahim Reyhan ÖZAL Committee Member Independent Board Member
b- Early Detection of Rick Committee
Early Detection of Risk Committee was formed on 01.07.2016 by two independent members with the decision of Board of Directors numbered 2016/21. Early Detection of Risk Committee held 8 meetings in 2016.
Name Surname Title Company Relation
Osman Nuri Filiz Committee President Independent Board Member İbrahim Reyhan ÖZAL Committee Member Independent Board Member
Sayfa No:26 01 JANUARY – 31 DECEMBER 2016 ANNUAL REPORT
c- Corporate Governance Committee
In order to determine and apply the Capital Markets Board's Corporate Governance Principles Serial II No: 17.1 and the Corporate Governance Committee, consisting of two independent members within the framework of the related provisions, was established with the decision of the Board of Directors dated 01.07.2016 and numbered 2016/21. The Corporate Governance Committee held five meetings in 2016.
Name Surname Title Company Relation
İbrahim Reyhan ÖZAL Committee President Independent Board Member Osman Nuri Filiz Committee Member Independent Board Member Musa Karaca Committee Member Investor Relations Manager
Sayfa No:27