OYAK Çimento Fabrikalari : Çimento Fabrikaları A.Ş. - Financial Statements 31.12.2021

(CONVENIENCE TRANSLATION OF THE REPORT AND THE CONSOLIDATE FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH)

OYAK ÇİMENTO FABRİKALARI

ANONİM ŞİRKETİ

AND ITS SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REPORT AS OF 31 DECEMBER 2021

DRT Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. Maslak no1 Plaza Eski Büyükdere Caddesi Maslak Mahallesi No:1 Maslak, Sarıyer 34485 İstanbul, Türkiye

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www.deloitte.com.tr

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0291001097600016

Ticari Sicil No : 304099

(CONVENIENCE TRANSLATION OF

INDEPENDENT AUDITOR'S REPORT ORIGINALLY ISSUED IN TURKISH)

INDEPENDENT AUDITOR'S REPORT

To the General Assembly of

Oyak Çimento Fabrikaları A.Ş.

1. Report on the Audit of the Consolidated Financial Statements

1. Opinion

We have audited the accompanying consolidated financial statements of Oyak Çimento Fabrikaları A.Ş. ("the Company") and its subsidiaries ("the Group"), which comprise the consolidated statement of financial position as at 31 December 2021, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of 31 December 2021, and its consolidated financial performance and its consolidated cash flows for the period then ended in accordance with Turkish Financial Reporting Standards (TFRSs).

1. Basis for Opinion

We conducted our audit in accordance with the standards on auditing issued by Capital Markets Board and the Standards on Independent Auditing ("SIA") which is a part of Turkish Auditing Standards published by the Public Oversight Accounting and Auditing Standards Authority ("POA"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics for Independent Auditors (Code of Ethics) published by the POA, together with the ethical requirements that are relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

1. Emphasis of Matters

As explained in detail in Note 1, Mardin Çimento Sanayii ve Ticaret A.Ş., Bolu Çimento Sanayii A.Ş., Adana Çimento Sanayii Türk A.Ş., Aslan Çimento A.Ş. and Ünye Çimento Sanayi ve Ticaret A.Ş. were merged and continued their operations under the name of OYAK Çimento Fabrikaları A.Ş. as of 14 May 2020. Additionally, as of 31 December 2020, OYAK Beton Sanayi ve Ticaret A.Ş. one of the subsidiaries of the Company, merged within OYAK Çimento Fabrikaları A.Ş. together with all its assets and liabilities. This matter does not affect our opinion.

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© 2022. For information, contact Deloitte Touche Tohmatsu Limited.

1. Emphasis of Matters (cont'd)

As stated in Note 6 of the accompanying consolidated financial statements, the Group has trade receivables from various customers that have declared concordat and whose legal processes are continuing. This issue does not affect our conclusion.

1. Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matter	How the matter was addressed in the audit
Revenue recognition
Main operation of the Group comprises production	During our audit, the following audit procedures have
and sale clinker, cement and concrete.	been applied regarding the revenue recognition:
The Group recognizes revenue according to the five-	The revenue process of the Group has been evaluated,
step model as described in TFRS 15 "Revenue from	the relevant controls within this process have been
Contracts with Customers". Five step model	determined, and the design and implementation of
comprises identification of contract, identification of	these controls have been understood.
performance obligations, determination and allocation
of transaction price to performance obligations and	Satisfaction of performance obligations are assessed
recognition of revenue when these performance	based on the timing for transfer of control of goods to
obligations are satisfied.	customers. Revenue amounts recognized closed to
	year end, are tested by selecting samples and
As revenue is a measurement criterion for evaluating	controlling proof of shipments / deliveries from
the results of the strategy implemented during the year	supporting documents.
and monitoring performance, and due to its unique
nature, being susceptible to risks due to fraud and	With the additional substantive procedures performed,
error, considered to be a material account balance.	completeness and accuracy of the revenue recognized
Determining when the related performance obligations	in the consolidated financial statements have also been
are satisfied and recognition of revenue in the correct	tested.
period has been identified as a key audit matter.
	In addition to the procedures mentioned above, the
The Group's accounting policies regarding revenue,	adequacy of the disclosures in Note 6, Note 21 and
revenue amounts, receivables and additional	Note 32 has been evaluated within the scope of the
explanations regarding the risk levels of these	relevant TFRSs.
receivables are presented in Note 2.5, Note 21, Note 6
and Note 32, respectively.

1. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with TFRSs, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

1. Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

In an independent audit, our responsibilities as independent auditors are as follows:

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Standards on Independent Auditing published by the Capital Markets Board will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the standards on auditing issued by Capital Markets Board and SIA, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
  Group's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

1. Auditor's Responsibilities for the Audit of the Financial Statements (cont'd)

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

1. Report on Other Legal and Regulatory Requirements

In accordance with paragraph four of the Article 398 of the Turkish Commercial Code No. 6102 ("TCC"), the Auditor's Report on the System and the Committee of Early Detection of risk has been submitted to the Board of Directors of the Company on 7 March 2022.

In accordance with paragraph four of the Article 402 of TCC, nothing has come to our attention that may cause us to believe that the Company's set of accounts and financial statements prepared for the period 1 January-31 December 2021 does not comply with TCC and the provisions of the Company's articles of association in relation to financial reporting.

In accordance with paragraph four of the Article 402 of TCC, the Board of Directors provided us all the required information and documentation with respect to our audit.

The engagement partner on the audit resulting in this independent auditor's report is Nazlı İvak.

DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş. Member of DELOITTE TOUCHE TOHMATSU LIMITED

Nazlı İvak, SMMM

Partner

İstanbul, 7 March 2022