Quarterly Report • May 23, 2024
Quarterly Report
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MİGROS TİCARET A.Ş.
CONVENIENCE TRANSLATION INTO ENGLISH OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE INTERIM PERIOD 1 JANUARY - 31 MARCH 2024
(ORIGINALLY ISSUED IN TURKISH)
| INTERIM CONSOLIDATED BALANCE SHEETS |
1-3 | |
|---|---|---|
| INTERIM CONSOLIDATED STATEMENTS OF PROFIT OR LOSS |
4 | |
| INTERIM CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME |
5 | |
| INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY |
6 | |
| INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS |
7-8 | |
| NOTES TO THE INTERIM CONDENSED | ||
| CONSOLIDATED FINANCIAL STATEMENTS | 9-40 | |
| NOTE 1 | ORGANISATION AND NATURE OF OPERATIONS | 9-10 |
| NOTE 2 | BASIS OF PRESENTATION OF CONDENSED CONSOLIDATED | |
| FINANCIAL STATEMENTS | 10-15 | |
| NOTE 3 | PROPERTY, PLANT AND EQUIPMENT | 16-17 |
| NOTE 4 | INTANGIBLE ASSETS | 18 |
| NOTE 5 | RIGHT OF USE ASSETS | 19 |
| NOTE 6 | INVENTORIES | 19 |
| NOTE 7 | BORROWINGS | 20-23 |
| NOTE 8 | PROVISIONS, COMMITMENTS, CONTINGENT ASSETS AND LIABILITIES | 23-25 |
| NOTE 9 | EMPLOYEE BENEFITS | 25-26 |
| NOTE 10 | REVENUE | 26-27 |
| NOTE 11 | EXPENSES BY NATURE | 27-28 |
| NOTE 12 | OTHER OPERATING INCOME AND EXPENSES | 28 |
| NOTE 13 | INCOME AND EXPENSES FROM INVESTMENT ACTIVITIES | 29 |
| NOTE 14 | FINANCIAL INCOME | 29 |
| NOTE 15 | FINANCIAL EXPENSES | 29 |
| NOTE 16 | TAX ASSET AND LIABILITIES | 30-32 |
| NOTE 17 | CAPITAL, RESERVES AND OTHER EQUITY ITEMS | 33 |
| NOTE 18 | RELATED PARTY DISCLOSURES | 34-35 |
| NOTE 19 | EARNINGS PER SHARE | 36 |
| NOTE 20 | EXCHANGE RATE RISK AND FOREIGN CURRENCY POSITION | 36-39 |
| NOTE 21 | FINANCIAL INSTRUMENTS | 39 |
| NOTE 22 | SUBSEQUENT EVENTS | 39 |
| APPENDIX - 1 EBITDA | 40 |
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
| Notes | Unaudited 31 March 2024 |
Audited 31 December 2023 |
|
|---|---|---|---|
| ASSETS | |||
| Current assets: | |||
| Cash and cash equivalents | 14,031,072 | 14,215,985 | |
| Financial investments | 64,916 | 532,177 | |
| Trade receivables | 1,131,224 | 425,719 | |
| -Trade receivables from related parties | 18 | 12,968 | 1,956 |
| -Trade receivables from third parties | 1,118,256 | 423,763 | |
| Other receivables | 752,399 | 2,447,744 | |
| -Other receivables from third parties | 752,399 | 2,447,744 | |
| Derivative instruments | 8,265 | - | |
| Inventories | 6 | 22,729,019 | 25,232,150 |
| Prepaid expenses | 1,243,079 | 648,394 | |
| Other current assets | 75,078 | 79,212 | |
| Total current assets | 40,035,052 | 43,581,381 | |
| Non-current assets: | |||
| Financial investments | 1,171,156 | 1,330,086 | |
| Other receivables | 31,273 | 22,006 | |
| -Other receivables from third parties | 31,273 | 22,006 | |
| Property, plant and equipment | 3 | 24,141,833 | 23,351,711 |
| Right of use assets | 5 | 21,097,468 | 18,670,328 |
| Intangible assets | 17,216,631 | 16,997,546 | |
| -Goodwill | 15,915,385 | 15,756,383 | |
| -Other intangible assets | 4 | 1,301,246 | 1,241,163 |
| Prepaid expenses | 1,801,132 | 2,054,809 | |
| Total non-current assets | 65,459,493 | 62,426,486 | |
| Total assets | 105,494,545 | 106,007,867 |
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
| Notes | Unaudited 31 March 2024 |
Audited 31 December 2023 |
|
|---|---|---|---|
| LIABILITIES | |||
| Current liabilities: | |||
| Short-term borrowings | 261,430 | 460,821 | |
| -Bank loans | 7 | 261,430 | 460,821 |
| Short-term portion of long-term borrowings |
2,798,529 | 2,966,746 | |
| -Bank loans | 7 | 595,991 | 865,585 |
| -Lease liabilities | 2,202,538 | 2,101,161 | |
| Trade payables | 39,507,135 | 43,022,940 | |
| -Trade payables to related parties | 18 | 1,687,177 | 1,445,715 |
| -Trade payables to third parties | 37,819,958 | 41,577,225 | |
| Payables related to employee benefits | 9 | 2,542,392 | 1,887,277 |
| Other payables | 730,506 | 800,863 | |
| -Other payables to third parties | 730,506 | 800,863 | |
| Derivative instruments | 24,721 | - | |
| Deferred income | 1,632,368 | 1,059,172 | |
| Current tax liabilities |
16 | 147,557 | 135,536 |
| Short-term provisions | 1,123,325 | 1,325,248 | |
| -Short-term provisions for | |||
| employee benefits | 9 | 938,489 | 1,079,010 |
| -Other short-term provisions |
8 | 184,836 | 246,238 |
| Total current liabilities | 48,767,963 | 51,658,603 | |
| Non-current liabilities: | |||
| Long-term borrowings | 9,582,649 | 8,389,481 | |
| -Bank loans | 7 | 722,672 | 996,932 |
| -Lease liabilities | 8,859,977 | 7,392,549 | |
| Other payables | 50,573 | 51,108 | |
| -Other payables to third parties | 50,573 | 51,108 | |
| Deferred income | 348,879 | 431,743 | |
| Long-term provisions | 1,012,343 | 1,375,413 | |
| -Long-term provisions for | |||
| employee benefits | 9 | 1,012,343 | 1,375,413 |
| Deferrex tax liabilities | 16 | 2,923,114 | 2,386,058 |
| Total non-current liabilities | 13,917,558 | 12,633,803 | |
| Total liabilities | 62,685,521 | 64,292,406 |
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
| Notes | Unaudited 31 March 2024 |
Audited 31 December 2023 |
|
|---|---|---|---|
| EQUITY | |||
| Attributable to equity holders of parent | 42,540,809 | 41,451,022 | |
| Share capital | 17 | 181,054 | 181,054 |
| Share capital adjustment differences |
17 | 2,640,616 | 2,640,616 |
| Treasury shares | 17 | (686,639) | (686,639) |
| Other comprehensive income/(expense) | |||
| not to be classified to profit or loss | 212,394 | 228,110 | |
| -Defined benefit plans | |||
| re-measurement (losses) | (1,889,954) | (1,889,954) | |
| -Revaluation fund of property, plant and eqiupment | 2,102,348 | 2,118,064 | |
| Other accumulated comprehensive income/(expense) | |||
| to be classified to profit or loss | 898,625 | 1,097,190 | |
| -Currency translation differences | 194,036 | 352,599 | |
| -Gains on financial assets measured | |||
| at fair value through other compherensive income | 704,589 | 744,591 | |
| Other reserves | 1,429,383 | 1,141,289 | |
| Retained earnings | 36,623,814 | 26,690,751 | |
| Net income for the period |
1,241,562 | 10,158,651 | |
| Non-controlling interest | 268,215 | 264,439 | |
| Total equity | 42,809,024 | 41,715,461 | |
| Total liabilities and equity | 105,494,545 | 106,007,867 |
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
| Notes | Unaudited 1 January - 31 March 2024 |
Unaudited 1 January - 31 March 2023 |
|
|---|---|---|---|
| Revenue | 10 | 52,406,305 | 46,975,901 |
| Cost of sales (-) | 10 | (41,741,539) | (37,673,758) |
| Gross profit | 10,664,766 | 9,302,143 | |
| General administrative expenses (-) | 11 | (1,110,248) | (780,354) |
| Marketing expenses (-) | 11 | (10,734,931) | (9,025,866) |
| Other operating income | 12 | 443,798 | 159,464 |
| Other operating expenses (-) |
12 | (2,519,608) | (848,177) |
| Operating loss | (3,256,223) | (1,192,790) | |
| Income from investment activities | 13 | 1,866 | 7,176 |
| Expenses from investment activities (-) |
13 | (6,035) | (2,689) |
| Operating loss before financial expense |
(3,260,392) | (1,188,303) | |
| Financial income | 14 | 728,817 | 532,396 |
| Financial expense (-) |
15 | (1,377,269) | (890,651) |
| Net monetary position gains |
5,789,129 | 4,952,129 | |
| Net profit before tax from continuing operation |
1,880,285 | 3,405,571 | |
| Tax expense from continuing operations | (614,249) | (996,046) | |
| Income tax expense (-) Deferred tax expense (-) |
16 16 |
(48,126) (566,123) |
- (996,046) |
| Net income for the period |
1,266,036 | 2,409,525 | |
| Net income attributable to: |
|||
| - Non-controlling interest |
24,474 | 9,902 | |
| - Equity holders of parent |
19 | 1,241,562 | 2,399,623 |
| Profit per share ("TRY") |
19 | 6.86 | 13.25 |
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
| Unaudited 1 January - 31 March 2024 |
Unaudited 1 January - 31 March 2023 |
|
|---|---|---|
| Net profit for the period |
1,266,036 | 2,409,525 |
| Items that not to be reclassified to profit or loss |
||
| Tangible fixed asset revaluation increases | - | - |
| Tax effect of items not to be reclassified | ||
| to profit or loss | 4,954 | 4,157 |
| Tangible fixed asset revaluation decreases, tax effect | 4,954 | 4,157 |
| Items to be reclassified to profit or loss | (215,709) | (135,316) |
| - Other comprehensive expense on financial assets |
||
| at fair value through other comprehensive income -Currency translation differences |
(57,146) (158,563) |
(99,231) (36,085) |
| Tax effect of items to be reclassified | ||
| to profit or loss | 17,144 | 24,808 |
| - Tax effect other comprehensive expense on financial assets |
||
| at fair value through other comprehensive income | 17,144 | 24,808 |
| Other comprehensive expense, after tax | (193,611) | (106,351) |
| Total comprehensive income | 1,072,425 | 2,303,174 |
| Allocation of total comprehensive income | ||
| -Non-controlling interests | 24,474 | 9,902 |
| -Equity holders of parent | 1,047,951 | 2,293,272 |
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
| Other comprehensive income and expenses not to be reclassified to profit or loss |
Other comprehensive income and expenses to be reclassified to profit or loss |
Retained earnings | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Share capital Share adjustment capital differences |
Other reserves |
Treasury shares |
Defined benefit plans revaluation and measurement losses |
Increase of revaluation fund of property plant and equipment |
Gains on financial assets at fair value through other translation comprehensive income differences |
Currency | Retained earnings |
profit for the |
Net Attributable to equity holders of controlling year the parents interests |
Non | Total equity |
||
| Balances as of 1 January 2023 | 181,054 | 2,640,616 | 1,905,035 | (686,639) | (1,387,777) | 1,165,040 | 745,405 | 443,423 | 16,045,882 10,516,595 31,568,634 | 83,541 31,652,175 | |||
| Transfers Transaction with non-controlling shareholders |
- - |
- - |
- - |
- - |
- - |
(14,915) - |
- - |
- - |
- | 10,531,510 (10,516,595) - |
- - |
- 87,052 |
- 87,052 |
| Total comprehensive income | - | - | - | - | - | 4,157 | (74,423) | (36,085) | - | 2,399,623 | 2,293,272 | 9,902 | 2,303,174 |
| Net income for the year Foreign currency translation differences Gain on revaluation and measurement Property, plant and equipment |
- - - - |
- - - - |
- - - - |
- - - - |
- - - - |
- - - 4,157 |
- - (74,423) - |
- (36,085) - - |
- - - - |
2,399,623 - - - |
2,399,623 (36,085) (74,423) 4,157 |
9,902 - - - |
2,409,525 (36,085) (74,423) 4,157 |
| Balances as of 31 March 2023 | 181,054 | 2,640,616 | 1,905,035 | (686,639) | (1,387,777) | 1,154,282 | 670,982 | 407,338 | 26,577,392 | 2,399,623 33,861,906 | 180,495 34,042,401 | ||
| Balances as of 1 January 2024 | 181,054 | 2,640,616 | 1,141,289 | (686,639) | (1,889,954) | 2,118,064 | 744,591 | 352,599 | 26,690,751 10,158,651 41,451,022 | 264,439 41,715,461 | |||
| Transfers Transaction with non-controlling shareholders Acquisition of a subsidiary |
- - - |
- - - |
288,094 - - |
- - - |
- - - |
(20,670) - - |
- - - |
- - - |
- 41,836 |
9,891,227 (10,158,651) - - |
- - 41,836 |
- (20,698) - |
- (20,698) 41,836 |
| Total comprehensive income | - | - | - | - | - | 4,954 | (40,002) | (158,563) | - | 1,241,562 | 1,047,951 | 24,474 | 1,072,425 |
| Net income for the year Foreign currency translation differences Gain on revaluation and measurement Revaluation fund of property, plant and equipment |
- - - - |
- - - - |
- - - - |
- - - - |
- - - - |
- - - 4,954 |
- - (40,002) - |
- (158,563) - - |
- - - - |
1,241,562 - - - |
1,241,562 (158,563) (40,002) 4,954 |
24,474 - - - |
1,266,036 (158,563) (40,002) 4,954 |
| Balances as of 31 March 2024 | 181,054 | 2,640,616 | 1,429,383 | (686,639) | (1,889,954) | 2,102,348 | 704,589 | 194,036 | 36,623,814 | 1,241,562 42,540,809 | 268,215 42,809,024 |
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
| Notes | Unaudited 1 January - 31 March 2024 |
Unaudited 1 January - 31 March 2023 |
|
|---|---|---|---|
| Cash flows from operating activities: | |||
| Net profit for the period | 1,266,036 | 2,409,525 | |
| Adjustments related to reconciliation of | |||
| net profit for the period | 3,849,967 | 2,866,030 | |
| Adjustments for depreciation and amortisation expenses | 11 | 1,833,903 | 1,538,597 |
| Adjustments for impairment on receivables | 12 | 4,013 | 10,032 |
| Adjustments for inventory provisions | 6 | (15,102) | (5,403) |
| Adjustments for impairment on property, plant and equipment | 3,13 | 6,035 | 2,689 |
| Adjustments for provision for employee benefits | 9 | 147,296 | 187,198 |
| Adjustments for provision for litigation | 8 | 33,380 | 20,920 |
| Adjustments for other provisions | (51,906) | 3,567 | |
| Adjustments for interest income | 14 | (571,421) | (424,103) |
| Adjustments for interest expense | 15 | 568,578 | 572,353 |
| Adjustments for deferred financing | |||
| due to forward purchases expenses | 12 | 2,459,123 | 717,619 |
| Adjustments for unearned finance income | |||
| from sales | 12 | (406,381) | (124,985) |
| Adjustments for unrealized foreign exchange differences | 7 | 9,674 | 18,304 |
| Adjustments for fair value losses | |||
| arising from derivatives | 15 | 14,020 | 12,260 |
| Adjustments for income tax expense | 16 | 614,249 | 996,046 |
| Gains on sale of | |||
| property plant and equipment | 13 | (1,866) | (7,176) |
| Adjustments for monetary gain | (793,628) | (651,888) | |
| Changes in net working capital | 1,780,072 | (2,198,720) | |
| Adjustments for (increase) in trade receivables | (691,750) | (149,268) | |
| Adjustments for decrease/(increase) in inventories | 2,583,849 | (1,989,590) | |
| Adjustments for (increase) in other receivables | |||
| related with operations | (366,839) | (110,872) | |
| Adjustments for decrease in trade payables | (3,154,529) | (763,557) | |
| Adjustments for increase in other payables | |||
| related with operations | 3,409,341 | 814,567 | |
| Cash flows from operating activities | 6,896,075 | 3,076,835 | |
| Employee benefits paid | 9 | (340,595) | (71,583) |
| Interest received | 407,017 | 128,249 | |
| Interest paid | (2,820,399) | (774,913) | |
| Taxes paid | (34,330) | (23,950) | |
| Other provisions paid | (59,057) | (126,837) | |
| Net cash provided by operating activities | 4,048,711 | 2,207,801 |
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
| Notes | Unaudited 1 January - 31 March 2024 |
Unaudited 1 January - 31 March 2023 |
|
|---|---|---|---|
| Investing activities | |||
| Cash outflows from the purchase of | |||
| tangible and intangible assets | 3, 4 | (1,765,319) | (852,706) |
| Cash inflows from the sale of | |||
| tangible and intangible assets | 6,233 | 14,924 | |
| Cash flows from investing activities | (1,759,086) | (837,782) | |
| Financing activities | |||
| Proceeds from borrowings | 7 | - | 275,765 |
| Cash outflows from repayments of borrowings | 7 | (510,804) | (552,608) |
| Cash outflows from repayment of derivative instruments | - | (7,337) | |
| Interest received | 14 | 571,421 | 424,103 |
| Interest paid | (106,451) | (165,088) | |
| Cash outflows from payments | |||
| of lease liabilities | (746,969) | (690,310) | |
| Cash flows from financing activities | (792,803) | (715,475) | |
| Monetary loss on cash and cash equivalents | (1,638,972) | (1,565,862) | |
| Effect of foreign currency translation differences on cash and cash equivalents |
(42,763) | 67,179 | |
| Net decrease in cash and cash equivalents | (184,913) | (844,139) | |
| Cash and cash equivalents at the begining of the period | 14,215,985 | 14,557,893 | |
| Cash and cash equivalents at the end of the period | 14,031,072 | 13,713,754 |
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
Migros Ticaret A.Ş., (collectively referred to as "Migros" or the "Company"), was established on 19 March 2008 and is registered in Istanbul, Turkey under the Turkish Commercial Code. (Migros Türk Ticaret Anonim Şirketi, which was established in 1954, merged with its parent company Moonlight Perakendecilik ve Ticaret Anonim Şirketi ("Moonlight Perakendecilik") on 30 April 2009 and the trade name of Moonlight Retailing was changed as Migros Ticaret A.Ş.)
The Company and its subsidiaries together will be referred as "the Group".
The company is controlled by AG Anadolu Grubu Holding A.Ş., its parent company. AG Anadolu Grubu Holding A.Ş. is controlled by AG Sınai Yatırım ve Yönetim A.Ş., and AG Sınai Yatırım ve Yönetim A.Ş. is a management company that ultimately manages, with equal representation of and by way of equal management by the Süleyman Kamil Yazıcı family and the Özilhan family, the affiliates of AG Anadolu Grubu Holding A.Ş. AG Anadolu Grubu Holding A.Ş. holds a 50% indirect share.
The Group is mainly engaged in retail sales in food & beverages, consumer goods and wholesale. Other than that the Group is also engaged in online food retailing, takeout food, payment and e-money services, logistic (motorcycle courier) services, and shopping mall management.
As of 31 March 2024, the Group has a total sales area of 1,945,632 m2 (31 December 2023: 1,930,340 m2) with a retail store area of 1,926,542 m2 and a wholesale store area of 19.090 m2, 3,358 retail stores and 29 wholesale stores, operates in a total of 3,387 (31 December 2023: 3,363) stores. As of the end of the period as of 31 March 2024, the total number of employees of the Group is 52,108. (31 December 2023: 50,915). Retailing is the Group's core business, accounting for approximately 96% (31 December 2023: 97%) of gross sales.
The address of the registered office is as follows:
Migros Ticaret A.Ş. Atatürk Mah., Turgut Özal Blv. No: 7 Ataşehir İstanbul
These interim condensed consolidated financial statements have been approved for issue by the Board of Directors ("BOD") on 23 May 2024 and signed by Ö. Özgür Tort, General Manager, and Ferit Cem Doğan, Assistant General Manager, on behalf of the BoD. The owners of the Company and regulatories have the power to amend the consolidated financial statements after the issue in the General Assembly meeting of the Company.
The Company has the following subsidiaries (the "Subsidiaries"). The nature of the business of the Subsidiaries and for the purpose of the consolidated financial statements, their respective geographical segments are as follows:
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
| Subsidiaries | incorporation | Country of Geographical segment |
Nature of business |
31 March 2024 (%) |
31 December 2023 (%) |
|---|---|---|---|---|---|
| Ramstore Kazakhstan LLC ("Ramstore Kazakhstan"). |
Kazakhstan | Kazakhstan | Shopping center management |
100.0 | 100.0 |
| Mimeda Medya Platform A.Ş. | Turkey | Turkey | Media | 100.0 | 100.0 |
| Moneypay Ödeme ve Elektronik Para Hizmetleri A.Ş. |
Turkey | Turkey | Services limited by e-money legislation |
80.0 | 80.0 |
| Paket Lojistik ve Teknoloji A.Ş. (***) |
Turkey | Turkey | Logistics | 92.1 | 75.0 |
| Dijital Platform Gıda Hizmetleri A.Ş. |
Turkey | Turkey | Online food retaling |
93.0 | 93.0 |
| Migen Enerji ve Elektrikli Şarj Hizmetleri A.Ş. (*) |
Turkey | Turkey | Charging service |
100.0 | 100.0 |
| CRC Danışmanlık ve Organizasyon A.Ş. (**) |
Turkey | Turkey | Packaged food production |
50.0 | 50.0 |
(*) It is not included in the scope of consolidation on the grounds of materiality.
(**) The share corresponding to 30% of the paid capital of CRC Danışmanlık ve Organizasyon A.Ş. was taken over by Migros Ticaret A.Ş. and the share corresponding to 20% was taken over by Digital Platform Gıda Hizmetleri A.Ş. on 26 December 2023.
(***) Migros Ticaret A.Ş.'s (Migros) subsidiary Dijital Platform Gıda Hizmetleri A.Ş. operating in online business acquired the shares corresponding to 18.3% of paid in capital of Paket Lojistik ve Teknoloji A.Ş. (Paket Taxi), which provides logistrics services for Migros's online operations and in which Dijital Platform Gıda Hizmetleri A.Ş. has shareholding of 75%, from the other shareholders of Paket Taxi.
The companies of the Group operating in Turkey keep their accounting records and legal financial statements in accordance with the accounting and financial reporting standards ("CMB Financial Reporting Standards") accepted by the Capital Markets Board ("CMB"), Turkish Commercial Code ("TTK") and in Turkish Lira in accordance with the provisions of the Tax Legislation and the requirements of the Uniform Chart of Accounts published by the Ministry of Finance. The subsidiary operating abroad, on the other hand, prepares its accounting records and statutory financial statements in accordance with the laws and regulations of the country in which it operates.
The interim condensed consolidated financial statements are based on the statutory financial statements of the Group's subsidiaries and presented in Turkish Lira in accordance with the CMB financial reporting standards with certain adjustments and reclassifications for the purpose of fair presentation. Such adjustments are primarily related to application of consolidation accounting, accounting for deferred taxes on temporary differences, accounting for employment termination benefits on an actuarial basis and accruals for various expenses. Except for the financial assets carried from their fair values and assets and liabilities, financial statements are prepared on historical cost basis.
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
The interim condensed consolidated financial statements have been prepared in accordance with the provisions of the Capital Markets Board's Communiqué Series II, No. 14.1 "Principles of Financial Reporting in the Capital Markets" ("Communiqué") published in the Official Gazette dated 13 June 2013 and numbered 28676. Pursuant to Article 5, the Turkish Financial Reporting Standards, which were put into effect by the Public Oversight, Accounting and Auditing Standards Authority, and their annexes and comments are taken as basis.
In the scope of the CMB's "Communiqué on Financial Reporting in Capital Market" Numbered II- 14.1 (Communiqué), the Group has prepared condensed consolidated interim financial statements in accordance with TAS 34 "Interim Financial Reporting". The financial statements and explanatory notes are presented using the compulsory standard formats as published by the Communiqué. In accordance with the TAS, the entities are allowed to prepare a complete set of interim financial statements in accordance with TAS 34, "Interim Financial Reporting". In this respect the Group has preferred to prepare condensed consolidated financial statements in the interim periods and prepared the aforementioned condensed consolidated financial statements in compliance with CMB Financial Reporting Standards.
Furthermore in accordance with the Communiqué and announcements regarding the explanations of the Communiqué, guarantee pledge, mortgage table, foreign currency position table, total export and total import amounts and hedging amount of total foreign currency liabilities are presented in the interim condensed consolidated financial statements disclosures (Note 8, 20).
The consolidated financial statements of the Group are prepared comparatively with the previous period in order to enable the determination of financial position and performance trends. In order to comply with the presentation of the current period interim consolidated financial statements, comparative information is reclassified when deemed necessary and significant differences are disclosed.
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
In case of changes and errors in accounting policies and accounting estimates, significant changes made, and significant accounting errors identified are applied retrospectively and prior period financial statements are restated. Changes in accounting estimates are applied in the current period when the change is made if they are related to only one period, and if they are related to future periods, they are applied both in the period when the change is made and prospectively.
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The consolidated financial statements are presented in TRY, which is the functional currency of Migros Ticaret A.Ş. and the reporting currency of the Group.
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
With the announcements made by the Public Oversight Accounting and Auditing Standards Authority (POA) on 23 November 2023, entities applying TFRSs have started to apply inflation accounting in accordance with TAS 29 Financial Reporting in Hyperinflation Economies as of financial statements for the interim reporting period ending on or after 31 March 2024. TAS 29 is applied to the financial statements, including the consolidated financial statements, of any entity whose functional currency is the currency of a hyperinflationary economy. According to the standard, financial statements prepared in the currency of a hyperinflationary economy are presented in terms of the purchasing power of that currency at the balance sheet date. Prior period financial statements are also presented in the current measurement unit at the end of the reporting period for comparative purposes. The Group has therefore presented its consolidated financial statements as of 31 March 2023 and 31 December 2023, on the purchasing power basis as of 31 March 2024.
Pursuant to the decision of the Capital Markets Board (SPK) dated 28 December 2023 and numbered 81/1820, it has been decided that issuers and capital market institutions subject to financial reporting regulations that apply Turkish Accounting/Financial Reporting Standards will apply inflation accounting by applying the provisions of IAS 29 starting from their annual financial reports for the periods ending on 31 December 2023.
The adjustments made in accordance with IAS 29 were made using the adjustment coefficient obtained from the Consumer Price Index (CPI) of Turkey published by the Turkish Statistical Institute ("TÜİK"). As of 31 March 2024, the indices and adjustment coefficients used in the adjustment of the consolidated financial statements are as follows:
| Three year compound | |||
|---|---|---|---|
| Date | Index | Coefficient | interest rate |
| 31.03.2024 | 2,139.47 | 1.00000 | 211% |
| 31.12.2023 | 11,859.38 | 1.15063 | 268% |
| 31.03.2023 | 1,296.75 | 1.68495 | 152% |
The main elements of the Group's adjustment process for financial reporting in hyperinflationary economies are as follows:
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
The outline of the TAS 29 indexing operations is as follows:
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
These changes are not expected to have a significant impact on the financial status and performance of the Group.
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
Movement of property, plant and equipments period ended on 31 March 2024 is as follows;
| Currency | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 1 January 2024 |
Additions | Acquisition | Disposals | Impairment loss(*) |
Transfers | translation differences |
31 March 2024 |
||
| Cost | |||||||||
| Lands | 2,195,185 | - | - | - | - | - | (25,273) | 2,169,912 | |
| Buildings | 4,308,792 | 18,085 | - | - | - | - | (21,673) | 4,305,204 | |
| Leasehold improvements | 12,842,687 | 184,028 | 1,001 | - | (11,383) | - | - | 13,016,333 | |
| Machinery and equipments | 16,787,566 | 697,495 | 84,163 | - | - | - | (5,009) | 17,564,215 | |
| Motor vehicles | 684,444 | 6,030 | 2,097 | - | - | - | - | 692,571 | |
| Furniture and fixtures | 7,781,375 | 215,756 | 7,995 | (3,012) | - | - | (1,372) | 8,000,742 | |
| Construction in progress | 1,098,831 | 520,766 | 19,350 | - | - | - | - | 1,638,947 | |
| 45,698,880 | 1,642,160 | 114,606 | (3,012) | (11,383) | - | (53,327) | 47,387,924 | ||
| Accumulated depreciation | |||||||||
| Buildings | (330,198) | (31,403) | - | - | - | - | (88,142) | (449,743) | |
| Leasehold improvements | (8,637,339) | (252,130) | (861) | - | 5,348 | - | - | (8,884,982) | |
| Machinery and equipments | (8,771,510) | (337,883) | (36,119) | - | - | - | 4,209 | (9,141,303) | |
| Motor vehicles | (189,392) | (18,433) | (2,288) | - | - | - | - | (210,113) | |
| Furniture and fixture | (4,418,730) | (138,986) | (5,092) | 1,523 | - | - | 1,335 | (4,559,950) | |
| (22,347,169) | (778,835) | (44,360) | 1,523 | 5,348 | - | (82,598) | (23,246,091) | ||
| Net book value | 23,351,711 | 24,141,833 |
(*) Impairment loss amounting to TRY 6,035 consists of leasehold improvements of the stores closed in 2024 (Note 13).
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
Movement of property, plant and equipments period ended on 31 March 2023 is as follows:
| Currency | |||||||
|---|---|---|---|---|---|---|---|
| 1 January | Impairment | translation | 31 March | ||||
| 2023 | Additions | Disposals | loss(*) | Transfers | differences | 2023 | |
| Cost | |||||||
| Lands | 2,502,183 | - | - | - | - | (9,257) | 2,492,926 |
| Buildings | 3,386,204 | 217 | - | - | 2,391 | (16,834) | 3,371,978 |
| Leasehold improvements | 11,393,435 | 39,733 | - | (2,731) | 57,546 | (2,910) | 11,485,073 |
| Machinery and equipments | 14,259,872 | 19,355 | (1,697) | - | 172,802 | (2,460) | 14,447,872 |
| Motor vehicles | 400,920 | 59,952 | (11,195) | - | - | - | 449,677 |
| Furniture and fixtures | 6,935,460 | 38,557 | (79) | - | 84,972 | (559) | 7,058,351 |
| Construction in progress | 774,578 | 674,202 | (182) | - | (317,711) | (3,051) | 1,127,836 |
| 39,652,652 | 832,016 | (13,153) | (2,731) | - | (35,071) | 40,443,713 | |
| Accumulated depreciation | |||||||
| Buildings | (263,720) | (20,701) | - | - | - | (59,592) | (344,013) |
| Leasehold improvements | (7,840,797) | (186,024) | - | 42 | - | 1,110 | (8,025,669) |
| Machinery and equipments | (8,079,812) | (255,728) | - | - | - | 2,081 | (8,333,459) |
| Motor vehicles | (114,861) | (20,954) | 5,405 | - | - | - | (130,410) |
| Furniture and fixtures | (4,124,586) | (115,689) | - | - | - | 472 | (4,239,803) |
| (20,423,776) | (599,096) | 5,405 | 42 | - | (55,929) | (21,073,354) | |
| Net book value | 19,228,876 | 19,360,359 |
(*) Impairment loss amounting to TRY 2,689 consists of leasehold improvements of the stores closed in 2023 (Note:13).
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
Movement of intangible assets period ended on 31 March 2024 and 2023 are as follows;
| 1 January 2024 |
Additions | Acquisition | Disposals (-) | Currency translation differences |
31 March 2024 |
|
|---|---|---|---|---|---|---|
| Cost | ||||||
| Trademark Rent agreements |
8,680 121,871 |
- - |
- - |
- | - - |
8,680 121,871 |
| Rights | 3,225,743 | 43,828 | 1,719 | - | - | 3,271,290 |
| Other intangible | ||||||
| … assets | 1,682,620 | 79,331 | 15 | (14,709) | 6,635 | 1,753,892 |
| 5,038,914 | 123,159 | 1,734 | (14,709) | 6,635 | 5,155,733 | |
| Accumulated amortisation | ||||||
| Rent agreements | (121,871) | - | - | - | - | (121,871) |
| Rights | (2,288,326) | (20,546) | (1,204) | - | (2,310,076) | |
| Other intangible | ||||||
| … assets | (1,387,554) | (43,226) | (15) | 11,831 | (3,576) | (1,422,540) |
| (3,797,751) | (63,772) | (1,219) | 11,831 | (3,576) | (3,854,487) | |
| Net book value | 1,241,163 | 1,301,246 | ||||
| 1 January 2023 |
Additions | Acquisition | Disposals (-) | Currency translation differences |
31 March 2023 |
|
| Cost | ||||||
| Trademark | 8.679 | - | - | - | - | 8.679 |
| Rent agreements | 121.871 | - | - | - | - | 121.871 |
| Rights Other intangible |
2.445.125 | 8.172 | - | - | - | 2.453.297 |
| … assets | 1.664.608 | 12,518 | - | - | - | 1,677,126 |
| 4.240.283 | 20,690 | - | - | - | 4,260,973 | |
| Accumulated amortisation | ||||||
| Rent agreements | (119.182) | (327) | - | - | - | (119.509) |
| Rights Other intangible |
(1.848.702) | (51.571) | - | - | - | (1.900.273) |
| … assets | (1.392.148) | (30.755) | - | - | - | (1.422.903) |
| (3.360.032) | (82.653) | - | - | - | (3.442.685) | |
| Net book value | 880.251 | 818,288 |
Amortisation expenses related to intangible assets have been accounted under marketing expenses.
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
For 31 March 2024 and 2023, movement on right of use assets is as follows;
| Cost | 1 January 2024 |
Additions | Disposals | 31 March 2024 |
|---|---|---|---|---|
| Buildings | 32,712,869 | 3,534,155 | (236,457) | 36,010,567 |
| 32,712,869 | 3,534,155 | (236,457) | 36,010,567 | |
| Accumulated amortisation | ||||
| Buildings | (14,042,541) | (991,296) | 120,738 | (14,913,099) |
| (14,042,541) | (991,296) | 120,738 | (14,913,099) | |
| Net book value | 18,670,328 | 21,097,468 | ||
| Cost | 1 January 2023 |
Additions | Disposals | 31 March 2023 |
| Buildings | 26,721,767 | 1,700,030 | - | 28,421,797 |
| 26,721,767 | 1,700,030 | - | 28,421,797 | |
| Accumulated amortisation | ||||
| Buildings | (10,222,819) | (856,848) | - | (11,079,667) |
| (10,222,819) | (856,848) | - | (11,079,667) | |
| Net book value | 16,498,948 | 17,342,130 |
Amortisation expenses related to right of use asset have been accounted under marketing expenses.
| 31 March 2024 | 31 December 2023 | |
|---|---|---|
| Finished goods and commodities | 22,539,449 | 25,108,443 |
| Work in progress | 403,809 | 372,962 |
| Raw materials | 208,618 | 195,861 |
| Other | 86,605 | 79,448 |
| Less: Provision for net realiazable value | (509,462) | (524,564) |
| 22,729,019 | 25,232,150 |
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
| 31 March 2024 | ||||
|---|---|---|---|---|
| Effective | In original | Total TRY |
||
| interest rate | currency | equivalent | ||
| Short-term borrowings | ||||
| Fixed interest rate - TRY |
15,36% | 261,430 | 261,430 | |
| Total short-term borrowings |
261,430 | |||
| Current portion of long-term borrowings |
||||
| Fixed interest rate - TRY |
25,40% | 283,107 | 283,107 | |
| Floating interest rate - TRY |
46,49% | 242,191 | 242,191 | |
| Kazakhstan loan - Tenge |
13,97% | 976,270 | 70,693 | |
| Total current portion of long-term borrowings |
595,991 | |||
| Total short-term borrowings |
857,421 | |||
| Long-term borrowings |
||||
| Fixed interest rate - TRY |
30,35% | 367,075 | 367,075 | |
| Floating interest rate - TRY |
46,49% | 351,165 | 351,165 | |
| Kazakhstan loan - Tenge |
13,97% | 61,206 | 4,432 | |
| Total long-term borrowings |
722,672 | |||
| Total financial liabilities | 1,580,093 |
The redemption schedule of borrowings with effective interest rate on 31 March 2024 is as follows:
| Tenge loan TRY equivalent |
TRY Loan | Total TRY equivalent |
|
|---|---|---|---|
| 1 April 2024 - 31 March 2025 | 70,693 | 786,728 | 857,421 |
| 1 April 2025 - 31 March 2026 | 4,432 | 558,630 | 563,062 |
| 1 April 2026 - 14 December 2026 | - | 159,610 | 159,610 |
| 75,125 | 1,504,968 | 1,580,093 |
The fair value of borrowings on 31 March 2024 is TRY 1,444,272.
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
The redemption schedule of principal amounts of borrowings on 31 March 2024 is as follows:
| Tenge loan | Total | ||
|---|---|---|---|
| TRY equivalent | TRY Loan | TRY equivalent | |
| 1 April 2024 - 31 March 2025 | 60,817 | 469,031 | 556,848 |
| 1 April 2025 - 31 March 2026 | 12,399 | 671,705 | 684,104 |
| 1 April 2026 - 14 December 2026 | - | 235,408 | 235,408 |
| 73,216 | 1,403,144 | 1,476,360 |
The redemption schedule of contractual cash outflows, which consists of principal and interest, of borrowings on 31 March 2024 is as follows:
| Tenge loan | Total | ||
|---|---|---|---|
| TRY equivalent | TRY Loan | TRY equivalent | |
| 1 April 2024 - 31 March 2025 | 67,386 | 886,711 | 954,097 |
| 1 April 2025 - 31 March 2026 | 13,067 | 814,721 | 827,788 |
| 1 April 2026 - 14 December 2026 | - | 281,309 | 281,309 |
| 80,453 | 1,982,741 | 2,063,194 |
The Group has the obligation to comply with the various credit commitments in the loan agreement in the interest of the said bank credits. The financial ratios calculated on the financial statements as of 31 March 2024 are in line with the provisions of the bank loan agreement.
The movement schedule of borrowings as of 31 March 2024 and 2023 are as follows;
| 2024 | 2023 | |
|---|---|---|
| Opening balance, 1 January | 2,323,338 | 5,006,739 |
| Proceeds of borrowings | - | 275,765 |
| Payments (-) | (510,804) | (552,608) |
| Foreign exchange losses | 9,674 | 18,304 |
| Changes in interest accrual |
47,914 | 21,386 |
| Monetary gain | (290,029) | (591,096) |
| Closing balance, 31 March | 1,580,093 | 4,178,490 |
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
| 31 December 2023 | ||||
|---|---|---|---|---|
| Effective | In original | Total TRY | ||
| interest rate | currency | equivalent | ||
| Short-term borrowings | ||||
| Fixed interest rate - TRY |
23,45% | 460,821 | 460,821 | |
| Total short-term borrowings | 460,821 | 460,821 | ||
| Current portion of long-term borrowings |
||||
| Fixed interest rate - TRY |
21,47% | 585,418 | 585,418 | |
| Floating interest rate - TRY |
29,22% | 193,634 | 193,634 | |
| Kazakhstan loan - Tenge |
13,97% | 1,156,638 | 86,533 | |
| Total current portion of long-term borrowings |
865,585 | |||
| Total short-term borrowings | 1,326,406 | |||
| Long-term borrowings |
||||
| Fixed interest rate - TRY |
28,70% | 573,760 | 573,760 | |
| Floating interest rate - TRY |
29,22% | 407,861 | 407,861 | |
| Kazakhstan loan - Tenge |
13,97% | 204,646 | 15,311 | |
| Total long-term borrowings |
996,932 | |||
| Total financial liabilities | 2,323,338 |
The redemption schedule of borrowings with effective interest rate on 31 December 2023 is as follows:
| Tenge loan | Total | ||
|---|---|---|---|
| TRY equivalent | TRY Loan | TRY equivalent | |
| 1 January 2024 - 31 December 2024 | 86,533 | 1,239,873 | 1,326,406 |
| 1 January 2025 - 31 December 2025 | 15,310 | 793,460 | 808,770 |
| 1 January 2026 - 14 December 2026 | - | 188,162 | 188,162 |
| 101,843 | 2,221,495 | 2,323,338 |
The fair value of borrowings on 31 December 2023 is TRY 2,189,562.
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
The redemption schedule of principal amounts of borrowings on 31 December 2023 is as follows:
| Tenge loan TRY equivalent |
TRY Loan | Total TRY equivalent |
|
|---|---|---|---|
| 1 January 2024 - 31 December 2024 | 75,239 | 948,090 | 1,023,329 |
| 1 January 2025 - 31 December 2025 | 19,216 | 946,884 | 966,100 |
| 1 January 2026 - 14 December 2026 | - | 270,870 | 270,870 |
| 94,455 | 2,165,844 | 2,260,299 |
The redemption schedule of contractual cash outflows, which consists of principal and interest, of borrowings on 31 December 2023 is as follows:
| Tenge loan | Total | |||
|---|---|---|---|---|
| TRY equivalent | TRY Loan | TRY equivalent | ||
| 1 January 2024 - 31 December 2024 | 84,708 | 1,365,706 | 1,450,414 | |
| 1 January 2025 - 31 December 2025 | 20,581 | 1,160,382 | 1,180,963 | |
| 1 January 2026 - 14 December 2026 | - | 323,685 | 323,685 | |
| 105,289 | 2,849,773 | 2,955,062 |
| Short-term provisions | 31 March 2024 |
31 December 2023 |
|---|---|---|
| Provision for litigation | 157,116 | 166,612 |
| Provision for personnel expenses | 16,733 | 74,872 |
| Customer loyalty programs | 10,987 | 4,754 |
| 184,836 | 246,238 |
There are various lawsuits filed against or in favour of the Group, Receivables, rent, or labour disputes constitute the majority of these lawsuits. The Group management estimates the outcomes of these lawsuits and estimates their financial impact according to which the necessary provisions are accounted.
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
Movements in the provision for litigation during the period are as follows:
| 2024 | 2023 | |
|---|---|---|
| Opening balance, 1 January |
166,612 | 287,800 |
| Increase during period | 33,380 | 20,920 |
| Payments (-) | (15,229) | (24,381) |
| Monetary gain | (27,647) | (134,595) |
| Closing balance, 31 March |
157,116 | 149,744 |
| Total | ||||
|---|---|---|---|---|
| TRY equivalent |
TRY | USD | EUR | |
| A, CPM given on behalf of the Company's legal personality |
3,711,153 | 3,701,352 | 282 | 20 |
| B, CPM given on behalf of fully consolidated subsidiaries |
75,125 | - | 2,327 | - |
| Total collaterals, pledges and mortgages | 3,786,278 | 3,701,352 | 2,609 | 20 |
| Total | ||||
|---|---|---|---|---|
| TRY equivalent | TRY | USD | EUR | |
| A, CPM given on behalf of the Company's legal personality B, CPM given on behalf of fully consolidated |
1,865,160 | 1,855,591 | 282 | 20 |
| subsidiaries | 101,843 | - | 3,227 | - |
| Total collaterals, pledges and mortgages | 1,967,003 | 1,855,591 | 3,509 | 20 |
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
Guarantees given on 31 March 2024 and 31 December 2023 are as follows:
| 31 March 2024 |
31 December 2023 |
|
|---|---|---|
| Letter of guarantees given | 3,786,278 | 1,967,003 |
| 3,786,278 | 1,967,003 |
Guarantees received on 31 March 2024 and 31 December 2023 are as follows:
| 31 March 2024 |
31 December 2023 |
|
|---|---|---|
| Guarantees obtained from customers | 2,222,513 | 1,942,627 |
| Mortgages obtained from customers | 37,510 | 40,573 |
| 2,260,023 | 1,983,200 | |
| NOTE 9 - EMPLOYEE BENEFITS |
||
| 31 March 2024 |
31 December 2023 |
|
| Payables to personnel | 1,354,799 | 1,023,322 |
| Social security payables | 1,187,593 | 863,955 |
| 2,542,392 | 1,887,277 | |
| 31 March 2024 |
31 December 2023 |
|
| Provision for employment termination benefits | 1,012,343 | 1,375,413 |
| Provision for unused vacation | 938,489 | 1,079,010 |
| 1,950,832 | 2,454,423 |
Movement of provision for unused vacation for the periods ended on 31 March 2024 and 2023 is as follows:
| 2024 | 2023 | |
|---|---|---|
| Opening balance, 1 January |
1,079,010 | 1,083,192 |
| Increase during period | 77,276 | 89,634 |
| Payments | (75,980) | (340,539) |
| Monetary gain | (141,817) | (117,600) |
| Closing balance, 31 March |
938,489 | 714,687 |
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
Movement of provision for employee termination benefits for the periods ended on 31 March 2024 and 2023 is as follows:
| 2024 | 2023 | |
|---|---|---|
| Opening balance, 1 January |
1,375,413 | 2,425,457 |
| Provision for the year | 70,020 | 97,564 |
| Used in year (-) |
(264,615) | (1,084,086) |
| Monetary gain | (168,475) | (260,895) |
| Closing balance, 31 March |
1,012,343 | 1,178,040 |
Under the Turkish Labour Law, the Company is required to pay termination benefits to each employee who has completed one year of service and who reaches the retirement age, whose employment is terminated without due cause, is enlisted for military service, or passed away. The termination benefit to be paid is one month wage per a service year up to the maximum employment termination benefit.
In the interim condensed consolidated financial statements as of 31 March 2024 and consolidated financial statements as of 31 December 2023, the Group reflected a liability calculated using the projected unit credit method and based upon factors derived using their experience of personnel terminating their services and being eligible to receive retirement pay and discounted by using the current market yield at the balance sheet date on government bonds.
The principal assumption is that the maximum liability for each year of service will increase in line with inflation. Thus, the discount rate applied represents the expected real rate after adjusting for the anticipated effects of future inflation. As the maximum liability is revised once every six months, the maximum amount of TRY 35,058.58 effective from 1 January 2024 has been taken into consideration in calculating the reserve for employment termination benefit of the Group.
| 1 January - 31 March 2024 |
1 January - 31 March 2023 |
|
|---|---|---|
| Domestic sales | 53,126,178 | 47,940,068 |
| Other sales | 93,700 | 72,077 |
| Gross sales | 53,219,878 | 48,012,145 |
| Discounts and returns (-) | (813,573) | (1,036,244) |
| Sales revenue, net | 52,406,305 | 46,975,901 |
| Cost of sales (-) |
(41,741,539) | (37,673,758) |
| Gross profit | 10,664,766 | 9,302,143 |
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
Details of domestic and foreign sales before other sales, discounts and returns are as follows:
| 1 January - 31 March 2024 |
1 January - 31 March 2023 |
|
|---|---|---|
| Retail sales | 50,947,397 | 45,996,262 |
| Wholesale sales | 1,939,069 | 1,702,067 |
| Rent income | 239,712 | 241,739 |
| 53,126,178 | 47,940,068 | |
| NOTE 11 - EXPENSE BY NATURE |
||
| 1 January - 31 March 2024 |
1 January - 31 March 2023 |
|
| Personnel expenses | 6,148,275 | 4,610,805 |
| Depreciation and amortisation expenses | 1,833,903 | 1,538,597 |
| Rent and common area expenses |
1,340,575 | 1,185,184 |
| Energy expenses |
528,401 | 981,062 |
| Porterage and cleaning expenses | 406,150 | 300,253 |
| Information technology maintenance expenses |
377,150 | 277,828 |
| Advertising expenses |
308,019 | 228,139 |
| Security expenses |
132,741 | 81,863 |
| Repair and maintanence expenses |
108,846 | 93,838 |
| Communication expenses |
81,787 | 54,301 |
| Taxes and other fee expenses |
52,673 | 35,423 |
| Other | 526,659 | 418,927 |
| 11,845,179 | 9,806,220 | |
| Marketing expenses | 1 January - 31 March 2024 |
1 January - 31 March 2023 |
| Personnel expenses | 5,261,488 | 4,011,355 |
| Depreciation and amortisation expenses | 1,833,903 | 1,538,597 |
| Rent and common area expenses |
1,327,814 | 1,174,575 |
| Energy expenses |
521,979 | 980,892 |
| Porterage and cleaning expenses | 393,701 | 291,742 |
| Information technology maintenance expenses | 353,684 | 265,452 |
| Advertising expenses |
308,019 | 227,303 |
| Security expenses |
127,284 | 78,963 |
| Repair and maintenance expenses | 106,542 | 92,056 |
| Communication expenses |
78,919 | 50,008 |
| Taxes and other fee expenses |
44,516 | 30,162 |
| Other | 377,082 | 284,761 |
| 10,734,931 | 9,025,866 |
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
| General administrative expenses | 1 January - 31 March 2024 |
1 January - 31 March 2023 |
|---|---|---|
| Personnel expenses | 886,787 | 599,450 |
| Other | 223,461 | 180,904 |
| 1,110,248 | 780,354 |
Expenses by nature in cost of sales for the periods 1 January - 31 March 2024 and 2023 are as follows:
| 1 January - 31 March 2024 |
1 January - 31 March 2023 |
|
|---|---|---|
| Cost of goods sold | 41,538,448 | 37,614,160 |
| Cost of service rendered | 203,091 | 59,598 |
| 41,741,539 | 37,673,758 |
Cost of trade goods include discounts, incentives and volume rebates obtained from suppliers. Service costs comprise energy, advertising, cleaning, security and administrative expenses incurred in the Group's shopping malls.
| Other operating income | 1 January - 31 March 2024 |
1 January - 31 March 2023 |
|---|---|---|
| Interest income on term sales | 406,381 | 124,985 |
| Other | 37,417 | 34,479 |
| 443,798 | 159,464 | |
| Other operating expenses | 1 January - 31 March 2024 |
1 January - 31 March 2023 |
| Interest expense on term purchases (*) | 2,459,123 | 717,619 |
| Litigation provision | 33,380 | 20,920 |
| Bad debt provision expense | 4,013 | 10,032 |
| Other | 23,092 | 99,606 |
| 2,519,608 | 848,177 |
(*) Forward purchases are discounted to the assumed cash value with relevant GDS interest rates separately for each month, and as a result, forward purchase interest expenses are calculated. Average interest rate in 2024 is 45,5%; (2023 9,7%).
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
| Income from investing activities | 1 January - 31 March 2024 |
1 January - 31 March 2023 |
|---|---|---|
| Gain on sale of property, plant, and equipment | 1,866 | 7,176 |
| 1,866 | 7,176 | |
| Expense from investing activities | 1 January - 31 March 2024 |
1 January - 31 March 2023 |
| Losses from leasehold improvements of closed stores (Note 3) |
6,035 | 2,689 |
| 6,035 | 2,689 | |
| NOTE 14 - FINANCIAL INCOME |
||
| 1 January - 31 March 2024 |
1 January - 31 March 2023 |
|
| Interest income on bank deposits | 571,421 | 424,103 |
| 1 January - 31 March 2024 |
1 January - 31 March 2023 |
|
|---|---|---|
| Credit card commision expense | 721,527 | 203,454 |
| Interest expense on lease liabilities | 440,961 | 382,762 |
| Interest expense on bank borrowings | 127,617 | 189,591 |
| Interest expense on employee termination benefits | 40,091 | 51,640 |
| Foreign exchange losses | 20,908 | 20,981 |
| Financial expense on derivatives | 14,020 | 12,260 |
| Other | 12,145 | 29,963 |
| 1,377,269 | 890,651 |
Foreign exchange gains 157,396 108,293
728,817 532,396
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
| 31 March 2024 | 31 December 2023 | |
|---|---|---|
| Corporate and income taxes payable | 218,941 | 599,298 |
| Less: Prepaid current income taxes | (71,384) | (463,762) |
| Current tax liabilities | 147,557 | 135,536 |
| 31 March 2024 | 31 December 2023 | |
| Deferred tax assets | 1,284,226 | 1,257,596 |
| Deferred tax liabilities | (4,207,340) | (3,643,654) |
| Deferred tax liabilities, net | (2,923,114) | (2,386,058) |
The Group is subject to taxation in accordance with the tax regulations and the legislation effective in the countries in which the Group companies operate. In Turkey, the tax legislation does not permit a parent company and its subsidiaries to file a consolidated tax return. Therefore, provision for taxes, as reflected in the consolidated financial statements, has been calculated on a separate-entity basis.
In Turkey, corporate tax rate is 25% (31 December 2023: 25%).
The Group calculates deferred income tax assets and liabilities based on the temporary difference between the financial statements prepared in accordance with TFRS and the financial statements prepared in accordance with TFRS. Future periods to deferred tax assets and liabilities are calculated based on the liability method on temporary differences for the rates used as of 31 March 2024, Turkey and Kazakhstan respectively 25% and 20% (2023: 25% and 20%).
Earnings from the Group's investments subject to incentive certificates are subject to corporate tax at reduced rates from the accounting period in which the investment starts to be operated partially or completely until the investment contribution amount is reached. In this context, as of 31 March 2024, the Group has recognized deferred tax assets amounting to TRY 34,393 (31 December 2023:TRY 9,206) which will be utilized in the foreseeable future. As a result of the recognition of the tax advantage as of 31 March 2024, deferred tax income amounting to TRY 26,392 has been recognized in the statement of profit or loss for the period 1 January - 31 March 2024.
Within the scope of the incentive certificates summarized above, a reduced corporate tax advantage has not been used in the current period statutory tax provision (31 December 2023: Null).
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
R&D Incentives
The Group capitalizes R&D expenditures in its statutory books within the scope of Law No, 5746, In accordance with the provisions of the same law, the Group uses R&D discount exemption for the portion of the expenditures allowed by the law by calculating the R&D expenditures made by the Group within the framework of the relevant legislation.
The Group has recognized deferred tax assets amounting to TRY 31,785 (31 December 2023: Null) which will be utilized in the foreseeable future.
The details of taxation on income for the periods ended 31 March 2024 and 2023 are as follows:
| 1 January - 31 March 2024 |
1 January - 31 March 2023 |
|
|---|---|---|
| Current period income tax expense (-) |
(48,126) | - |
| Deferred tax expense (-) | (566,123) | (996,046) |
| Current period tax expense (-) |
(614,249) | (996,046) |
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
The composition of cumulative temporary differences and the related deferred income tax assets and liabilities in respect of items for which deferred income tax has been provided as of 31 March 2024 and 31 December 2023 using the currently enacted tax rates, is as follows:
| Cumulative temporary differences |
Deferred tax assets/(liabilities) |
|||
|---|---|---|---|---|
| 31 March 2024 | 31 December 2023 | 31 March 2024 | 31 December 2023 | |
| Deferred tax assets: | ||||
| Inventories | 2,273,948 | 1,612,673 | 568,487 | 403,168 |
| Short-term provisions | 1,144,965 | 1,358,397 | 286,594 | 339,980 |
| Provision for employee | ||||
| termination benefits | 997,672 | 1,361,652 | 250,756 | 341,976 |
| Finance income not accrued from | ||||
| future sales | 36,422 | 35,785 | 9,106 | 8,946 |
| Other | 690,677 | 662,562 | 169,283 | 163,526 |
| Deferred tax assets | 1,284,226 | 1,257,596 | ||
| Deferred tax liabilities: | ||||
| Impact of TFRS 16 | (10,460,223) | (9,400,348) | (2,615,056) | (2,350,087) |
| Property, plant and equiment and | ||||
| intangible liabilities | (5,046,644) | (3,573,920) | (908,396) | (643,306) |
| Finance expense not accrued from | ||||
| future sales | (1,967,046) | (1,605,770) | (491,761) | (401,442) |
| Fair value changes of | ||||
| Financial investments | (626,711) | (829,397) | (188,013) | (248,819) |
| Fair value change of derivative | ||||
| financial instruments | (16,456) | - | (4,114) | - |
| Deferred tax liabilities | (4,207,340) | (3,643,654) | ||
| Total deferred tax liabilities, net | (2,923,114) | (2,386,058) |
Movements of deferred tax assets and liabilities are as follows:
| 2024 | 2023 | |
|---|---|---|
| Opening balance, 1 January | (2,386,058) | (960,729) |
| Deferred tax expense from continuing operations (-) |
(566,123) | (996,046) |
| Recognized on other comprehensive income | 22,098 | 28,965 |
| Currency translation differences | 6,969 | 6,904 |
| Closing balance, 31 March | (2,923,114) | (1,920,906) |
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
The shareholders of the Company and their shareholdings stated at historical amounts at 31 March 2024 and 31 December 2023 are stated below:
| 31 March 2024 | 31 December 2023 | |||
|---|---|---|---|---|
| TRY | Share | TRY | Share | |
| MH Perakendecilik ve Ticaret A.Ş. | 89,046 | 49,18% | 89,046 | 49,18% |
| Migros Ticaret A.Ş. | 2,962 | 1,64% | 2,962 | 1,64% |
| Other | 89,046 | 49,18% | 89,046 | 49,18% |
| Nominal paid capital | 181,054 | 100,00% | 181,054 | 100,00% |
| Share capital adjustment differences (*) | 2,640,616 | 2,640,616 | ||
| Adjusted share capital | 2,821,670 | 2,821,670 | ||
| Treasury shares | (686,639) | (686,639) |
(*) Share capital adjustment differences refer to the difference between the total amounts of cash and cash equivalent additions to capital adjusted in accordance with TFRS published by the KGK and their preadjustment amounts. Capital adjustment differences have no use other than being added to capital.
As of March 31, 2024 breakdown of the equity in the financial statements prepared in accordance with the Tax Procedure Law are as follows.
| 31 March 2024 |
|||
|---|---|---|---|
| PPI Indexed Legal Records |
CPI Indexed Records |
Amounts followed in Accumulated Profit/ Loss |
|
| Share capital adjustment differences | 3,294,881 | 2,640,616 | 654,265 |
| Other reserves | 2,361,318 | 1,429,383 | 931,935 |
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
As of 31 March 2024, and 31 December 2023, due from and due to related parties are as follows:
| Trade receivables from related parties | 31 March 2024 |
31 December 2023 |
|---|---|---|
| Coca Cola İçecek A.Ş. | 11,737 | - |
| Anadolu Sağlık Merkezi İktisadi İşletmesi (ASM) | 911 | 750 |
| Anadolu Etap Penkon Gıda ve İçecek Ürünleri San. ve Tic. A.Ş. |
- | 166 |
| Other | 320 | 1,040 |
| 12,968 | 1,956 | |
| Trade payables to related parties | 31 March 2024 |
31 December 2023 |
| Anadolu Efes Pazarlama ve Dağıtım Ticaret A.Ş. | 774,991 | 740,832 |
| Coca Cola Satış ve Dağıtım A.Ş. | 667,051 | 566,376 |
| AEH Anadolu Etap Penkon Gıda ve | ||
| Tarım Ürünleri San. ve Tic. A.Ş. |
113,439 | 41,768 |
| AEH Sigorta Acenteliği A.Ş. | 103,901 | 1,853 |
| Adel Kalemcilik Ticaret ve San, A.Ş. |
24,503 | 52,480 |
| AG Anadolu Grubu Holding A.Ş. | - | 27,928 |
| Other | 3,292 | 14,478 |
| 1,687,177 | 1,445,715 |
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
Significant transactions regarding purchases and sales with related parties for the periods ending on 31 March 2024 and 2023 are as follows:
| 1 January- | 1 January | |
|---|---|---|
| Inventory purchases | 31 March 2024 |
31 March 2023 |
| Coca Cola Satış ve Dağıtım A.Ş. |
689,326 | 674,111 |
| Anadolu Efes Paz, ve Dağıtım Ticaret A.Ş. |
592,697 | 582,079 |
| AEP Anadolu Etap Penkon Gıda ve |
||
| Tarım Ürünleri San. ve Tic. A.Ş. |
37,019 | 24,536 |
| Adel Kalemcilik Ticaret ve San. A.Ş. |
66 | 20,236 |
| 1,319,108 | 1,300,962 | |
| 1 January- | 1 January | |
| 31 March | 31 March | |
| Other transactions | 2024 | 2023 |
| Other income | (6,993) | (7,597) |
| Other transactions, net | (6,993) | (7,597) |
The Group has determined key management personnel as chairman, members of board of directors, general manager, and vice general managers.
Total compensation provided to key management personnel by Group for the period ended 31 March 2024 and 2023 is as follows:
| 1 January- 31 March 2024 |
1 January 31 March 2023 |
|
|---|---|---|
| Short-term benefits | 102,639 | 130,765 |
| 102,639 | 130,765 |
Key management compensation paid or payable consists of benefits, salaries, premiums, individual pension premiums, vehicle rents and SSI and employer shares.
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
Basic earnings per share is calculated by dividing net income for the period by the weighted average number of ordinary shares outstanding during the related period. The Company has no diluted instruments.
| 1 January - 31 March 2024 |
1 January - 31 March 2023 |
|
|---|---|---|
| Net profit attributable to shareholders |
1,241,562 | 2,399,623 |
| Weighted average number of shares with | ||
| Kr1 face value each ('000) |
18,105,233 | 18,105,233 |
| Earnings per share ("TRY") |
6.86 | 13.25 |
There is no difference between basic and diluted earnings per share for any of the periods.
The Group is exposed to foreign exchange risk primarily arising from the borrowings denominated in foreign currencies. Aforementioned foreign exchange risk is monitored and limited with derivative instruments. On 31 March 2024, if Euro, US dollar and Japanese Yen had appreciated against TRY by 20% and all other variables had remained constant, the profit for the period before tax as a result of foreign exchange rate difference arising out of assets and liabilities denominated in Euro, US Dollar and 100 Japanese Yen would have been high in the amount of TRY 589,921 (31 December 2023: TRY 588,593).
The profit before tax effect can be broken down in terms of currencies in such a way that that the change amounting to TRY 12,828 is due to the change in Euro, the change amounting to TRY 54,653 is due to US dollar and the change amounting to TRY 522,440 is due to Japanese Yen. (31 December 2023: The effect of the change in the Euro isTRY 175,366 the effect of the change in the US Dollar is TRY 413,227).
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
| FOREIGN CURRENCY POSITION | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 31 March 2024 | 31 December 2023 | ||||||||
| Total TRY equivalent |
USD | EUR | 100 JPY |
Other TRY equivalent |
Total TRY equivalent |
USD | EUR | Other TRY equivalent |
|
| Monetary financial assets | 2,967,425 | 8,473 | 1,843 | 122,755 | 17,529 | 2,963,524 | 61,006 | 23,394 | 20,255 |
| Current assets | 2,967,425 | 8,473 | 1,843 | 122,755 | 17,529 | 2,963,524 | 61,006 | 23,394 | 20,255 |
| Total assets | 2,967,425 | 8,473 | 1,843 | 122,755 | 17,529 | 2,963,524 | 61,006 | 23,394 | 20,255 |
| Trade payables | 291 | 9 | - | - | - | 305 | 9 | - | - |
| Current liabilities | 291 | 9 | - | - | - | 305 | 9 | - | - |
| Non-monetary other liabilities | - | - | - | - | - | - | - | - | - |
| Non-current liabilities | - | - | - | - | - | - | - | - | - |
| Total liabilities | 291 | 9 | - | - | - | 305 | 9 | - | - |
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
| FOREIGN CURRENCY POSITION | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 31 March 2024 | 31 December 2023 | ||||||||
| Total TRY | 100 Other TRY |
Total TRY | Other TRY | ||||||
| equivalent | USD | EUR | JPY | equivalent | equivalent | USD | EUR | equivalent | |
| Net asset/(liability) position of | |||||||||
| off-balance sheet derivatives (A-B) | - | - | - | - | - | - | - | - | - |
| A. Total amount of off-balance sheet |
|||||||||
| derivative financial assets | - | - | - | - | - | - | - | - | - |
| B. Total amount of off-balance sheet |
|||||||||
| derivative financial liabilities | - | - | - | - | - | - | - | - | - |
| Net foreign currency asset/(liability) |
|||||||||
| position | 2,967,134 | 8,464 | 1,843 | 122,755 | 17,529 | 2,963,219 | 60,997 | 23,394 | 20,255 |
| Net foreign currency asset/(liability) | |||||||||
| position of monetary items |
2,967,134 | 8,464 | 1,843 | 122,755 | 17,529 | 2,963,219 | 60,997 | 23,394 | 20,255 |
| Fair value hedge funds of | |||||||||
| foreign currency | - | - | - | - | - | 479,877 | 14,167 | - | - |
| Hedge amount of foreign currency assets | - | - | - | - | - | - | - | - | - |
| Hedge amount of foreign currency liabilities | |||||||||
| Import | 65,005 | 1,946 | - | - | - | 648,488 | 15,330 | - | - |
(Amounts expressed in thousands of TRY based on the purchasing power of Turkish Lira ("TRY") unless otherwise indicated.)
Foreign currency sensitivity analysis as of 31 March 2024 and 31 December 2023 is as follows:
| Gain/Loss | ||
|---|---|---|
| Foreign exchange appreciation |
Foreign exchange depreciation |
|
| 20% change in Euro exchange rate |
||
| Euro net asset/liability | 12,828 | (12,828) |
| 20% change in USD exchange rate USD net asset/liability |
54,653 | (54,653) |
| 20% change in JPY exchange rate |
||
| JPY net asset/liability |
522,440 | (522,440) |
| Net effect | 589,921 | (589,921) |
| Gain/Loss | ||
|---|---|---|
| Foreign exchange appreciation |
Foreign exchange depreciation |
|
| 20% change in Euro exchange rate Euro net asset/liability |
175,366 | (175,366) |
| 20% change in USD exchange rate USD net asset/liability |
413,227 | (413,227) |
| Net effect | 588,593 | (588,593) |
Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation, and is best evidenced by a quoted market price, if one exists.
None.
The Group calculates the EBITDA by deducting general administrative expenses and selling, marketing and distribution expenses and adding depreciation expenses, unused vacation liability paid in current period, employee termination benefit provision expense, unusued vacation liability expense on gross profit amount in consolidated statements of income.
| TFRS 16 Effect |
TFRS 16 Effect |
Before TFRS 16 |
Before TFRS 16 |
|||
|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |
| Revenue | 52,406,305 | 46,975,901 | - | - | 52,406,305 | 46,975,901 |
| Cost of goods sold (-) | (41,741,539) | (37,673,758) | 108,704 | 104,040 | (41,850,243) | (37,777,798) |
| Gross profit | 10,664,766 | 9,302,143 | 108,704 | 104,040 | 10,556,062 | 9,198,103 |
| General administrative | ||||||
| expenses (-) | (1,110,248) | (780,354) | - | - | (1,110,248) | (780,354) |
| Marketing expenses (-) | (10,734,931) | (9,025,866) | (353,031) | (270,578) | (10,381,900) | (8,755,288) |
| Addition: Depreciation and | ||||||
| amortisation expenses | 1,833,903 | 1,538,597 | 991,296 | 856,848 | 842,607 | 681,749 |
| EBITDA | 653,490 | 1,034,520 | 746,969 | 690,310 | (93,479) | 344,210 |
| Addition: Provision for employment termination |
||||||
| benefit and unused vacation | (75,027) | 51,922 | - | - | (75,027) | 51,922 |
| EBITDA | 578,463 | 1,086,442 | 746,969 | 690,310 | (168,506) | 396,132 |
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